NOTE 8

ENVIRONMENTAL LIABILITIES AND EXPENDITURES

Occidental’s operations are subject to stringent federal, state, local and foreign laws and regulations related to improving or maintaining environmental quality.

ENVIRONMENTAL REMEDIATION

The laws that require or address environmental remediation, including CERCLA and similar federal, state, local and foreign laws, may apply retroactively and regardless of fault, the legality of the original activities or the current ownership or control of sites. OPC or certain of its subsidiaries participate in or actively monitor a range of remedial activities and government or private proceedings under these laws with respect to alleged past practices at operating, closed and third-party sites. Remedial activities may include one or more of the following: investigation involving sampling, modeling, risk assessment or monitoring; cleanup measures including removal, treatment or disposal; or operation and maintenance of remedial systems. The environmental proceedings seek funding or performance of remediation and, in some cases, compensation for alleged property damage, punitive damages, civil penalties, injunctive relief and government oversight costs.

As of December 31, 2015, Occidental participated in or monitored remedial activities or proceedings at 149 sites. The following table presents Occidental’s environmental remediation reserves as of December 31, 2015, 2014 and 2013, the current portion of which is included in accrued liabilities ($70 million in 2015, $79 million in 2014, and $78 million in 2013) and the remainder in deferred credits and other liabilities — other ($316 million in 2015, $255 million in 2014, and $252 million in 2013). The reserves are grouped as environmental remediation sites listed or proposed for listing by the U.S. Environmental Protection Agency on the CERCLA NPL sites and three categories of non-NPL sites — third-party sites, Occidental-operated sites and closed or non-operated Occidental sites.

($ amounts in millions)	2015			2014			2013

	Number of Sites	Reserve Balance		Number of Sites	Reserve Balance		Number of Sites	Reserve Balance

NPL sites	34	$	27	30	$	23	31	$	25
Third-party sites	66	128		67	101		74	83
Occidental-operated sites	18	107		17	107		20	118
Closed or non-operated Occidental sites	31	124		31	103		32	104

Total	149	$	386	145	$	334	157	$	330

As of December 31, 2015, Occidental’s environmental reserves exceeded $10 million each at 13 of the 149 sites described above, and 101 of the sites had reserves from $0 to $1 million each.

As of December 31, 2015, two sites — a landfill in western New York owned by Occidental and a remediation site in Texas — accounted for 62 percent of its reserves associated with NPL sites. In connection with the 1986 acquisition of Diamond Shamrock Chemicals Company (DSCC) stock, Maxus Energy Corporation has retained the liability and is indemnifying Occidental for 14 of the remaining NPL sites.

As of December 31, 2015, Maxus has also retained the liability and is indemnifying Occidental for 8 of the 66 third-party sites. Three of the remaining 58 third-party sites — a former copper mining and smelting operation in Tennessee, an active plant outside of the United States and an active refinery in Louisiana where Occidental reimburses the current owner for certain remediation activities — accounted for 50 percent of Occidental’s reserves associated with these sites.

Four sites — chemical plants in Kansas, Louisiana, Texas and New York — accounted for 59 percent of the reserves associated with the Occidental-operated sites.

Five other sites — a landfill in western New York, former chemical plants in Tennessee, Delaware and Washington and a closed coal mine in Pennsylvania — accounted for 70 percent of the reserves associated with closed or non-operated Occidental sites.

Environmental reserves vary over time depending on factors such as acquisitions or dispositions, identification of additional sites and remedy selection and implementation. The following table presents environmental reserve activity for the past three years:

(in millions)	2015			2014			2013


Balance — Beginning of Year	$	334		$	330		$	344
Remediation expenses and interest accretion	117			79			60
Spin-off of California Resources	—			(7		)	—
Payments	(65		)	(68		)	(74		)


Balance — End of Year	$	386		$	334		$	330

Based on current estimates, Occidental expects to expend funds corresponding to approximately half of the current environmental reserves at the sites described above over the next three to four years and the balance at these sites over the subsequent 10 or more years. Occidental believes its range of reasonably possible additional losses beyond those liabilities recorded for environmental remediation at these sites could be up to $370 million.

ENVIRONMENTAL COSTS

Occidental’s environmental costs, some of which include estimates, are presented below for each segment for each of the years ended December 31:

(in millions)	2015		2014		2013

Operating Expenses
Oil and Gas	$	93	$	103	$	100
Chemical	74		80		75
Midstream and Marketing	13		11		13


	$	180	$	194	$	188


Capital Expenditures
Oil and Gas	$	122	$	143	$	67
Chemical	41		35		14
Midstream and Marketing	4		11		5


	$	167	$	189	$	86


Remediation Expenses
Corporate	$	117	$	79	$	60

Operating expenses are incurred on a continual basis. Capital expenditures relate to longer-lived improvements in properties currently operated by Occidental. Remediation expenses relate to existing conditions from past operations.