World Fuel Services 2013 Annual Report Download - page 73

We have exited several businesses which handled hazardous and non-hazardous waste. We treated and/or transported this waste to
various disposal facilities. We may be held liable as a potentially responsible party for the clean-up of such disposal facilities or be
required to clean up facilities previously operated by us, pursuant to current U.S. federal and state laws and regulation. In addition,
compliance with existing and future environmental laws regulating underground storage tanks located at the retail gasoline stations
that we operate may require significant capital expenditures and increased operating and maintenance costs. The remediation costs
and other costs required to clean up or treat contaminated sites could be substantial. We pay tank registration fees and other taxes to
state trust funds established in our operating areas and maintain private insurance coverage in support of future remediation
obligations. These state trust funds or other responsible third parties including insurers are expected to pay or reimburse us for
remediation expenses less a deductible. To the extent third parties do not pay for remediation as we anticipate, we will be obligated to
make these payments. These payments could materially adversely affect our financial condition, results of operations and cash flows.
Reimbursements from state trust funds will be dependent on the maintenance and continued solvency of the various funds.
Although we continuously review the adequacy of our insurance coverage, we may lack adequate coverage for various risks, including
environmental claims. Furthermore, our ability to obtain and maintain adequate insurance and the cost of such insurance may be
affected by significant claims, such as the Lac-M ´ egantic derailment described below, and conditions in the insurance market over
which we have no control. An uninsured or under-insured claim arising out of our activities, if successful and of sufficient magnitude,
will have a material adverse effect on our financial position, results of operations and cash flows.
Legal Matters
Lac-M ´ egantic, Quebec
We, on behalf of DPTS Marketing LLC (‘‘DPM’’), a crude oil marketing joint venture in which we own a 50% membership interest,
purchased crude oil from various producers in the Bakken region of North Dakota. Dakota Petroleum Transport Solutions, LLC
(‘‘DPTS’’), a crude oil transloading joint venture in which we also own a 50% membership interest, arranged for the transloading of the
crude oil for DPM into tank cars at the joint venture’s facility in New Town, North Dakota. We leased the tank cars used in the
transloading from a number of third party lessors and subleased these tank cars to DPM. We, on behalf of DPM, contracted with
Canadian Pacific Railway (‘‘CPR’’) for the transportation of the tank cars and the crude oil from New Town, North Dakota to a customer
in New Brunswick, Canada. CPR subcontracted a portion of that route to Montreal, Maine and Atlantic Railway (‘‘MMA’’). On July 6,
2013, the freight train operated by MMA with tank cars carrying approximately 50,000 barrels of the crude oil derailed in Lac-M ´ egantic,
Quebec. The derailment resulted in significant loss of life, damage to the environment from spilled crude oil and extensive property
damage.
In 2013, we, certain of our subsidiaries, DPM and DPTS, along with a number of third parties, including MMA and certain of its
affiliates, as well as several manufacturers and lessors of tank cars, were named as defendants in twenty complaints filed in Illinois.
The complaints generally allege wrongful death and negligence in the failure to provide for the proper and safe transportation of crude
oil and seek economic and compensatory damages, as well as costs. In addition, in 2013, we, certain of our subsidiaries, DPM and
DPTS, along with a number of other third parties, including CPR, MMA and certain of its affiliates, several manufacturers and lessors of
tank cars, as well as the intended purchaser and certain suppliers of the crude oil, were named as defendants in a motion filed in
Quebec Superior Court to authorize the bringing of a class-action lawsuit seeking economic, compensatory and punitive damages, as
well as costs. The motion generally alleges wrongful death and negligence in the failure to provide for the proper and safe
transportation of crude oil.
Furthermore, in 2013, an order was issued by the government of Quebec against MMA and us, which was subsequently modified and
added CPR as a party. The orders require MMA, CPR and us to recover the spilled crude oil caused by the incident and to otherwise
fully remediate the impact of the incident on the environment. We have filed a contestation of these orders before the Tribunal
administratif du Qu ´ ebec, an administrative body responsible for hearing such proceedings, challenging the legality and validity of the
orders on various grounds.
In addition to these proceedings, we have received demands for indemnification from certain tank car lessors pursuant to our lease
agreements with such parties. We are currently assessing the merits of these demands as well as of the underlying claims for which
such indemnification is sought. Additional claims, lawsuits, proceedings, investigations and orders may be filed, commenced or issued
with respect to the incident, which may involve civil claims for damages or governmental investigative, regulatory or enforcement
actions against us.
While we and our joint ventures, DPM and DPTS, maintain insurance to mitigate the costs of environmental releases as well as other
results of unexpected events, including loss of life, property damage and defense costs, there can be no guarantee that our insurance
will be adequate to cover all liabilities that may be incurred as a result of this incident.
67