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Environmental Obligations | 9 Months Ended
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Sep. 30, 2012
Environmental Remediation Obligations [Abstract] |
Environmental Obligations | Environmental Obligations We have reserves for potential environmental obligations, which management consider probable and for which a reasonable estimate of the obligation could be made. Accordingly, we have reserves of $238.4 million and $251.2 million, excluding recoveries, at September 30, 2012 and December 31, 2011, respectively. The estimated reasonably possible environmental loss contingencies, net of expected recoveries, exceed amounts accrued by approximately $160 million at September 30, 2012. This amount has been increased by $50 million during the second quarter of 2012 due to events that have occurred at our Pocatello and Middleport sites described further below within this note. This reasonably possible estimate is based upon information available as of the date of the filing and the actual future losses may be higher given the uncertainties regarding the status of laws, regulations, enforcement policies, the impact of potentially responsible parties, technology and information related to individual sites. The liabilities arising from potential environmental obligations that have not been reserved for at this time may be material to any one quarter's or year's results of operations in the future. However, we believe any such liability arising from such potential environmental obligations is not likely to have a material adverse effect on our liquidity or financial condition as it may be satisfied over many years. The table below is a roll forward of our total environmental reserves, continuing and discontinued, from December 31, 2011 to September 30, 2012:
(in Millions) | Operating and Discontinued Sites Total
Total environmental reserves, net of recoveries at December 31, 2011 | $ | 226.9 |
Provision | 19.4 |
Spending, net of recoveries | (26.2 | )
Net change | (6.8 | )
Total environmental reserves, net of recoveries at September 30, 2012 | $ | 220.1 |
Environmental reserves, current, net of recoveries (1) | 24.2 |
Environmental reserves, long-term continuing and discontinued, net of recoveries (2) | 195.9 |
Total environmental reserves, net of recoveries at September 30, 2012 | $ | 220.1 |
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(1) | “Current” includes only those reserves related to continuing operations. These amounts are included within "Accrued and other liabilities" on the condensed consolidated balance sheets.
(2) | These amounts are included in “Environmental liabilities, continuing and discontinued” on the condensed consolidated balance sheets.
At September 30, 2012 and December 31, 2011, we have recorded recoveries representing probable realization of claims against U.S. government agencies, insurance carriers and other third parties. Recoveries are recorded as either an offset to the “Environmental liabilities, continuing and discontinued” or as “Other assets” in the condensed consolidated balance sheets. The table below is a roll forward of our total recorded recoveries from December 31, 2011 to September 30, 2012:
(in Millions) | 12/31/2011 |  | Increase in Recoveries |  | Cash Received |  | 9/30/2012
Environmental liabilities, continuing and discontinued | $ | 24.3 |  |  | $ | — |  |  | $ | 6.0 |  |  | $ | 18.3 |
Other assets | 58.3 |  |  | — |  |  | 9.7 |  |  | 48.6 |
Total | $ | 82.6 |  |  | — |  |  | $ | 15.7 |  |  | $ | 66.9 |
Our net environmental provisions relate to costs for the continued cleanup of both operating sites and for certain discontinued manufacturing operations from previous years. The net provisions are comprised as follows:
| Three Months Ended September 30 |  | Nine Months Ended September 30
(in Millions) | 2012 |  | 2011 |  | 2012 |  | 2011
Continuing operations (1) | $ | 1.0 |  |  | $ | 1.1 |  |  | $ | 3.5 |  |  | $ | 4.1 |
Discontinued operations (2) | 3.9 |  |  | 3.6 |  |  | 15.9 |  |  | 19.7 |
Net environmental provision | $ | 4.9 |  |  | $ | 4.7 |  |  | $ | 19.4 |  |  | $ | 23.8 |
____________________ (1) Recorded as a component of “Restructuring and other charges (income)” on our condensed consolidated statements of income. See Note 8. (2) Recorded as a component of “Discontinued operations, net of income taxes" on our consolidated statements of income. See Note 10. On our condensed consolidated balance sheets, the net environmental provisions are recorded to the following balance sheet captions:
| Three Months Ended September 30 |  | Nine Months Ended September 30
(in Millions) | 2012 |  | 2011 |  | 2012 |  | 2011
Environmental reserves (1) | $ | 4.9 |  |  | $ | 5.0 |  |  | $ | 19.4 |  |  | $ | 35.1 |
Other assets (2) | — |  |  | (0.3 | ) |  | — |  |  | (11.3 | )
Net environmental provision | $ | 4.9 |  |  | $ | 4.7 |  |  | $ | 19.4 |  |  | $ | 23.8 |
____________________ (1) See above roll forward of our total environmental reserves as presented on our condensed consolidated balance sheets. (2) Represents certain environmental recoveries. A more complete description of our environmental contingencies and the nature of our potential obligations are included in Notes 1 and 10 to our 2011 consolidated financial statements in our 2011 Form 10-K. The following represents significant updates that occurred in 2012 to these contingencies. Pocatello Our decommissioned Pocatello plant partially resides on fee land of the Shoshone-Bannock Tribes' (the “Tribes”) reservation. For a number of years, we engaged in disputes with the Tribes concerning their attempts to regulate our activities on the reservation. On March 6, 2006, a U.S. District Court Judge found that the Tribes were a third-party beneficiary of a 1998 RCRA Consent Decree and ordered us to apply for any applicable Tribal permits relating to the nearly-complete RCRA Consent Decree work. The third-party beneficiary ruling was later reversed by the Ninth Circuit Court of Appeals, but the permitting process continued in the tribal legal system. We applied for the tribal permits, but preserved objections to the Tribes' jurisdiction. In addition, in 1998, the Tribes and we entered into an agreement (“1998 Agreement”) that required us to pay the Tribes $1.5 million per year for waste generated from operating our Pocatello plant and stored on site. We paid $1.5 million per year until December 2001 when the plant closed. In our view the agreement was terminated, as the plant was no longer generating waste. The Tribes claim that the 1998 Agreement has no end date. On April 25, 2006 the Tribes' Land Use Policy Commission issued us a Special Use Permit for the “disposal and storage of waste” at the Pocatello plant and imposed a $1.5 million per annum permit fee. The permit and fee was affirmed by the Tribal Business Council on July 21, 2006. We sought review of the permit and fee in Tribal Court, in which the Tribes also brought a claim for breach of the 1998 Agreement. On May 21, 2008, the Tribal Court reversed the permit and fee, finding that they were not authorized under tribal law, and dismissed the Tribes' breach of contract claim. The Tribes appealed to the Tribal Court of Appeals. On May 8, 2012, the Tribal Court of Appeals reversed the May 21, 2008 Tribal Court decision and issued a decision finding the permit and fee validly authorized and ordering us to pay waste permit fees in the amount of $1.5 million per annum for the years 2002-2007 ($9.0 million in total), the Tribes' demand as set forth in the lawsuit. It also reinstated the breach of contract claim. To date, the Tribes have not demanded fees for any years subsequent to 2007. Following the issuance of the Tribal Appellate Court's decision, the Tribes filed a motion to correct errors in the Court's decision and to seek fees and costs on appeal. We opposed that motion and filed our own motion to strike certain portions of the decision and supplement the record. Those motions are scheduled to be heard in November 2012. After we exhaust the Tribal administrative and judicial process, we intend to file an action in the United States District Court seeking declaratory and injunctive relief on the grounds that the Tribes lacked jurisdiction over us. We will argue that in accordance with a U.S. Supreme Court decision, we neither consented to jurisdiction, nor engaged in conduct that threatened the political integrity, economic security or health and welfare of tribal members; therefore the exceptions under which Tribes may assert jurisdiction over non-Indian owners of fee land within a reservation have not been met. Should we prevail on that theory and the Tribes subsequently try to enforce the 1998 Agreement in federal court, we have a number of defenses, including the termination of the agreement. We have estimated a reasonably possible loss for this matter and it has been reflected in our total reasonably possible loss estimate previously discussed within this note. Please see our 2011 Form 10-K for additional Pocatello environmental matters. Middleport At our Middleport, NY facility our decommissioned arsenic operations were the subject of an Administrative Order on Consent (“AOC”) entered into with the EPA and New York State Departments of the Environment and Health (the “Agencies”). The AOC requires us to (1) define the nature and extent of contamination caused by our historical plant operations, (2) take interim corrective measures and (3) evaluate Corrective Action Management Alternatives (“CMA”) for discrete contaminated areas. We have previously defined the nature and extent of the contamination and have constructed an engineered cover, closed the RCRA regulated surface water impoundments and are collecting and treating both surface water runoff and ground water, all of which has satisfied the first two requirements of the AOC. We continue to work with the Agencies to come to an acceptable remedy for two off-site areas for which we have submitted a draft corrective measures study (“CMS”). We recommended a CMA that would remediate approximately 150 residential properties to a standard of 20 parts per million (ppm) on average, with a maximum arsenic concentration that varies based on land use considerations. In the second quarter of 2010 we adjusted our estimated liability for clean up to reflect the costs associated with our recommended CMA. On June 15, 2012, the Agencies issued a draft Statement of Basis under RCRA that proposes a CMA that would require us to remediate contamination in approximately 180 residential properties in Middleport to a standard of 20 ppm on a point-to-point basis. We believe that this proposed CMA is overly conservative and not supported under New York State law. The Middleport community has expressed objections to the Agencies' draft Statement of Basis on the grounds that it is not supported by site-specific risk assessment and would be disruptive to the community. The Agencies are in the process of reviewing comments received during the public comment period, which closed on August 13, 2012. The amount of our reserve recorded for this site is $50.3 million and $47.0 million at September 30, 2012 and December 31, 2011, respectively. Our reserve continues to include the estimated liability for clean-up to reflect the costs associated with our recommended CMA. However, we have increased our estimated reasonably possible environmental loss contingencies exposure to reflect the additional cost of the CMA proposed in the draft Statement of Basis.

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- Definition The entire disclosure for environmental loss contingencies, such as presence of hazardous waste, relevant information from reports issued by regulators, and estimated costs to achieve compliance with regulatory requirements. This element may be used for all of an entity's disclosures about environmental loss contingencies. + References Reference 1: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 410 -SubTopic 30 -Section 50 -Paragraph 4 -URI http://asc.fasb.org/extlink&oid=6393242&loc=d3e13185-110859 Reference 2: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 410 -SubTopic 30 -Section 50 -Paragraph 10 -URI http://asc.fasb.org/extlink&oid=6393242&loc=d3e13237-110859 Reference 3: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 450 -SubTopic 20 -Section S99 -Paragraph 1 -Subparagraph (SAB TOPIC 5.Y.Q2) -URI http://asc.fasb.org/extlink&oid=6572457&loc=d3e149879-122751 Reference 4: http://www.xbrl.org/2003/role/presentationRef -Publisher SEC -Name Staff Accounting Bulletin (SAB) -Number Topic 5 -Section Y Reference 5: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 410 -SubTopic 30 -Section 50 -Paragraph 17 -URI http://asc.fasb.org/extlink&oid=6393242&loc=d3e13328-110859 Reference 6: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 410 -SubTopic 30 -Section 50 -Paragraph 12 -URI http://asc.fasb.org/extlink&oid=6393242&loc=d3e13296-110859 Reference 7: http://www.xbrl.org/2003/role/presentationRef -Publisher AICPA -Name Statement of Position (SOP) -Number 96-1 -Paragraph 152, 163, 172 -LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy. + Details
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