Sunoco 2015 Annual Report Download - page 88

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Debt Guarantee
The Partnership currently serves as guarantor of the senior notes and of any obligations under the $2.50 billion Credit
Facility. This guarantee is full and unconditional. See Note 20 for supplemental condensed consolidating financial information.
11. Commitments and Contingent Liabilities
Total rental expense for the years ended December 31, 2015, 2014 and 2013 amounted to $22, $18, and $12 million,
respectively. The Partnership, as lessee, has non-cancelable operating leases for office space and equipment for which the
aggregate amount of future minimum annual rentals as of December 31, 2015 is as follows:
Year Ended December 31, (in millions)
2016 $ 8
2017 8
2018 4
2019 3
2020 3
Thereafter —
Total $ 26
The Partnership is subject to numerous federal, state and local laws which regulate the discharge of materials into the
environment or that otherwise relate to the protection of the environment. These laws and regulations result in liabilities and
loss contingencies for remediation at the Partnership's facilities and at third-party or formerly owned sites. At December 31,
2015 and 2014, there were accrued liabilities for environmental remediation in the consolidated balance sheets of $6 and $14
million, respectively. The accrued liabilities for environmental remediation do not include any amounts attributable to
unasserted claims, since there are no unasserted claims that are probable of settlement or reasonably estimable, nor have any
recoveries from insurance been assumed. Charges against income for environmental remediation totaled $8, $15, and $10,
million for the years ended December 31, 2015, 2014, and 2013, respectively. The Partnership maintains insurance programs
that cover certain of its existing or potential environmental liabilities. Claims for recovery of environmental liabilities and
previous expenditures that are probable of realization were not material in relation to the Partnership's consolidated financial
position at December 31, 2015 and 2014.
Total future costs for environmental remediation activities will depend upon, among other things, the identification of any
additional sites; the determination of the extent of the contamination at each site; the timing and nature of required remedial
actions; the technology available and needed to meet the various existing legal requirements; the nature and extent of future
environmental laws, inflation rates and the determination of the Partnership's liability at multi-party sites, if any, in light of
uncertainties with respect to joint and several liability; and the number, participation levels and financial viability of other
parties. Management believes it is reasonably possible that additional environmental remediation losses will be incurred. At
December 31, 2015, the aggregate of the estimated maximum additional reasonably possible losses, which relate to numerous
individual sites, totaled $9 million.
The Partnership is a party to certain pending and threatened claims. Although the ultimate outcome of these claims cannot
be ascertained at this time, nor can a range of reasonably possible losses be determined, it is reasonably possible that some
portion of them could be resolved unfavorably to the Partnership. Management does not believe that any liabilities which may
arise from such claims and the environmental matters discussed above would be material in relation to the Partnership's results
of operations, financial position or cash flows at December 31, 2015. Furthermore, management does not believe that the
overall costs for such matters will have a material impact, over an extended period of time, on the Partnership's financial
position, results of operations or cash flows.
Sunoco has indemnified the Partnership for 30 years from environmental and toxic tort liabilities related to the assets
contributed to the Partnership, that arose from the operation of such assets prior to the closing of the February 2002 initial
public offering ("IPO"). Sunoco has also indemnified the Partnership for 100 percent of all losses asserted within the first 21
years after the closing of the IPO. Sunoco's share of liability for claims asserted thereafter will decrease by 10 percent per year.
For example, for a claim asserted during the twenty-third year after closing of the IPO, Sunoco would be required to indemnify
the Partnership for 80 percent of its loss. There is no monetary cap on the amount of indemnity coverage provided by Sunoco.
The Partnership has agreed to indemnify Sunoco for events and conditions associated with the operation of the Partnership's
assets that occur on or after the closing of the IPO and for environmental and toxic tort liabilities to the extent Sunoco is not
required to indemnify the Partnership.