UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
_____________
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
The Securities Exchange Act of 1934
_____________
Date of Report (Date of earliest event reported):
June 28, 2002
United States Steel Corporation
(Exact name of registrant as specified in its charter)
Delaware 1-16811 25-1897152
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(State or other jurisdiction of (Commission File Number) (IRS Employer
incorporation) Identification No.)
600 Grant Street, Pittsburgh, PA 15219-2800
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(Address of principal executive offices) (Zip Code)
(412) 433-1121
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(Registrant's telephone number,
including area code)
Item 5. Other Events
United States Steel Corporation files this Report on Form 8-K to update the
litigation disclosure in its Annual Report on Form 10-K for the year ended
December 31, 2001 and it Quarterly Report on Form 10-Q for the quarter ended
March 31, 2002.
Asbestos
United States Steel is a defendant in a large number of cases in which
approximately 18,000 claimants allege injury resulting from exposure to
asbestos. Nearly all of these cases involve multiple defendants. These claims
fall into three major groups: (1) claims made under certain federal and general
maritime laws by employees of the Great Lakes Fleet or Intercoastal Fleet,
former operations of United States Steel; (2) claims made by persons who
performed work at United States Steel facilities; and (3) claims made by
industrial workers allegedly exposed to an electrical cable product formerly
manufactured by United States Steel. To date, all actions resolved have been
either dismissed or resolved for immaterial amounts. In 2001, United States
Steel disposed of claims from approximately 11,300 claimants with aggregate
total payments of less than $200,000 and approximately 10,000 new claims were
filed. The factual issues with respect to each claimant vary considerably due to
the nature and duration of the alleged exposure of each individual claimant to
United States Steel products or premises, the exposure of each individual
claimant to products or premises of other defendants, the nature and seriousness
of the alleged injuries asserted by each claimant and the other possible causes
of any such injuries (such as the use of tobacco products or exposure to other
substances). In addition, because most claimants assert their claims against
multiple defendants, fail to allege specific damage amounts in their complaints,
fail to allocate the alleged liability among the various defendants, and
frequently amend their complaints including any allegations of amounts sought,
it is not possible to reasonably estimate the amount claimed by any given
claimant or the claimants as a whole in pending cases. In the cases where the
claimants have asserted specific dollar damages against United States Steel, the
amounts claimed are not material either individually or in the aggregate. It is
also not possible to predict the outcome of these matters; however, based upon
present knowledge, management believes that it is unlikely that the resolution
of the pending actions in the aggregate will have a material adverse effect on
our financial condition. Among the factors that management considered in
reaching this conclusion are: (1) that United States Steel has been subject to a
total of approximately 32,000 asbestos claims over the last twelve years that
have been administratively dismissed due to the failure of the claimants to
present any medical evidence supporting their claims, (2) that over the last
several years the total number of pending claims has remained steady, (3) that
it has been many years since United States Steel employed maritime workers or
manufactured electrical cable and (4) United States Steel's history of trial
outcomes, settlements and dismissals. This statement of belief is a forward-
looking statement. Predictions as to the outcome of pending litigation are
subject to substantial uncertainties with respect to (among other things)
factual and judicial determinations, and actual results could differ materially
from those expressed in this forward-looking statement.
Environmental
The following is a summary of the proceedings of United States Steel that
were pending or contemplated as of March 31, 2002, under federal and state
environmental laws. Except as described herein, it is not possible to
accurately predict the ultimate outcome of these matters. Claims under CERCLA
and related state acts have been raised by the United States Environmental
Protection Agency ("EPA") and various state environmental agencies with respect
to the cleanup of various waste disposal and other sites. CERCLA is intended to
expedite the cleanup of hazardous substances without regard to fault. Primary
responsible parties ("PRPs") for each site include present and former owners and
operators of, transporters to and generators of the substances at the site.
Liability is strict and can be joint and several. Because of various factors
including the ambiguity of the regulations, the difficulty of identifying the
responsible parties for any particular site, the complexity of determining the
relative liability among them, the uncertainty as to the most desirable
remediation techniques and the amount of damages and cleanup costs and the time
period during which such costs may be incurred, it is impossible to reasonably
estimate United States Steel's ultimate cost of compliance with CERCLA.
Projections, provided in the following paragraphs, of spending for and/or
timing of completion of specific projects are forward-looking statements. These
forward-looking statements are based on certain assumptions including, but not
limited to, the factors provided in the preceding paragraph. To the extent that
these assumptions prove to be inaccurate, future spending for, or timing of
completion of environmental projects may differ materially from those stated in
forward-looking statements.
At March 31, 2002, United States Steel had been identified as a PRP at a
total of 20 CERCLA sites. Based on currently available information, which is in
many cases preliminary and incomplete, management believes that United States
Steel liability for cleanup and remediation costs in connection with 8 of these
sites will be between $100,000 and $1 million per site and 8 will be under
$100,000. We do not currently believe our liability with respect to any of
these sites will be material.
At the remaining 4 sites, management expects that United States Steel's
share in the remaining cleanup costs at any single site will not exceed $5
million, although it is not possible to accurately predict the amount of sharing
in any final allocation of such costs. The following is a summary of the status
of these sites:
1. Pursuant to a Response Order by Consent (In the Matter of United States
Steel Corporation, Duluth Minnesota (St. Louis Superfund Site)) issued by
the State of Minnesota Pollution Control Agency on March 26, 1985, United
States Steel spent a total of approximately $11.4 million for cleanup
through 2001 at its former Duluth Minnesota Works. The EPA has consolidated
and included the Duluth Works site with the St. Louis River and Interlake
sites on the EPA's National Priorities List. The Duluth Works cleanup has
proceeded since 1989. United States Steel is conducting an engineering study
of the estuary sediments. Depending upon the method and extent of
remediation at this site, future costs are presently unknown and
indeterminable.
2. The D'Imperio/Ewan sites in New Jersey are waste disposal sites where a
former subsidiary allegedly disposed of used paint and solvent wastes. In
two cases filed in the United States District Court of New Jersey, one on
November 4, 1992, United States of America v. Jerome Lightman et. al,
(D'Imperio Property), and the other in June of 1990, United States of
America v., Jerome Lightman, et. al, (Ewan Property) , United States Steel
has entered into a settlement agreement with the major PRPs at the sites
which fixes United States Steel's share of liability at approximately $1.2
million, $624,000 of which has already paid. The balance, which is expected
to be paid over the next several years, has been accrued.
3. Although no legal action was formally filed, in 1988, United States Steel
and three other PRPs agreed to the issuance of an administrative order by
the EPA to undertake emergency removal work at the Municipal & Industrial
Disposal Co. site in Elizabeth, Pa. The cost of such removal, which has been
completed, was approximately $4.2 million, of which United States Steel paid
$3.4 million. The EPA has indicated that further remediation of this site
may be required in the future, but it has not conducted any assessment or
investigation to support what remediation would be required. In October
1991, the Pennsylvania Department of Environmental Resources ("PaDER")
placed the site on the Pennsylvania State Superfund list and began a
Remedial Investigation ("RI") that was issued in 1997. It is not possible to
estimate accurately the cost of any remediation or the shares in any final
allocation formula; however, based on presently available information,
United States Steel may have been responsible for as much as 70% of the
waste material deposited at the site. On October 10, 1995, the U.S.
Department of Justice ("DOJ") filed a complaint in the U.S. District Court
for Western Pennsylvania against United States Steel and other Municipal &
Industrial Disposal Co. defendants to recover alleged costs incurred at the
site. In June 1996, United States Steel agreed to pay $245,000 to settle the
government's claims for costs against it, American Recovery, and Carnegie
Natural Gas. In 1996, United States Steel filed a cost recovery action
against parties who did not contribute to the cost of the removal activity
at the site. United States Steel reached a settlement in principle with all
of the parties except the site owner. PaDER issued its Final Feasibility
Study Report for the entire site in August 2001. The report identifies and
evaluates feasible remedial alternatives and selects three preferred
alternatives. These alternatives are estimated to cost from $17 million to
$20 million. Consultants for United States Steel have concluded that a less
costly alternative should be employed at the site, which is estimated to
cost $5.5 million. Based on the allocation of the liability that has been
recognized for the past site cleanup activities, the United States Steel
share of costs for this remedy would be approximately $3.7 million. United
States Steel is in the process of negotiating a consent decree with the
Pennsylvania Department of Environmental Protection ("PADEP", formerly
PaDER). United States Steel has submitted a conceptual remediation plan,
which PADEP has approved. United States Steel will be submitting a remedial
design plan based on the remediation plan.
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PADEP is also seeking reimbursement for approximately $2 million in costs.
United States Steel could potentially be held responsible for an
undetermined share of those costs.
In addition, there are 13 sites related to United States Steel where
information requests have been received or there are other indications that
United States Steel may be a PRP under CERCLA. Because no lawsuits have been
filed or any claims asserted with respect to any of these sites, sufficient
information is not presently available to confirm the existence of liability or
make any judgment as to the amount thereof.
There are also 34 additional sites related to United States Steel where
remediation is being sought under other environmental statutes, both federal and
state, or where private parties are seeking remediation through discussions or
litigation. Based on currently available information, which is in many cases
preliminary and incomplete, management believes that liability for cleanup and
remediation costs in connection with 5 of these sites will be under $100,000 per
site, another 2 sites have potential costs between $100,000 and $1 million per
site, and 8 sites may involve remediation costs between $1 million and $5
million. Another 3 sites, including the Grand Calumet River remediation at Gary
Works, the Peters Creek Lagoon remediation at Clairton, and the potential claim
for investigation, restoration and compensation of injuries to sediments in the
East Branch of the Grand Calumet River near Gary Works, have or are expected to
have costs for remediation, investigation, restoration or compensation in excess
of $5 million. Potential costs associated with remediation at the remaining 16
sites are not presently determinable. We do not currently believe our liability
with respect to any of these 34 sites will be material.
The following is a discussion of remediation activities at the major
domestic United States Steel facilities:
Gary Works
On January 26, 1998, pursuant to an action filed by the EPA in the United
States District Court for the Northern District of Indiana titled United States
of America v. USX, U. S. Steel entered into a consent decree with the EPA which
resolved alleged violations of the Clean Water Act National Pollution Discharge
Elimination System ("NPDES") permit at Gary Works and provides for a sediment
remediation project for a section of the Grand Calumet River that runs through
Gary Works. Contemporaneously, U. S. Steel entered into a consent decree with
the public trustees, which resolves potential liability for natural resource
damages on the same section of the Grand Calumet River. In 1999, U. S. Steel
paid civil penalties of $2.9 million for the alleged water act violations and
$0.5 million in natural resource damages assessment costs. In addition, U. S.
Steel will pay the public trustees $1 million at the end of the remediation
project for future monitoring costs and U. S. Steel is obligated to purchase and
restore several parcels of property that have been or will be conveyed to the
trustees. During the negotiations leading up to the settlement with EPA,
capital improvements were made to upgrade plant systems to comply with the NPDES
requirements. The sediment remediation project is an approved final interim
measure under the corrective action program for Gary Works. As of March 31,
2001, project costs have amounted to $6 million with another $32.4 million
presently projected to complete the project over the next two years. Estimated
remediation and monitoring costs for this project have been accrued.
Construction began in January on a Corrective Action Management Unit (CAMU) to
contain the dredged material on company property north of the river between
Bridge Street and the former American Juice factory. Removal of PCB-contaminated
sediment will start in October at the river's headwaters.
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In October 1996, United States Steel was notified by the Indiana Department
of Environmental Management ("IDEM") acting as lead trustee, that IDEM and the
U.S. Department of the Interior had concluded a preliminary investigation of
potential injuries to natural resources related to releases of hazardous
substances from various municipal and industrial sources along the east branch
of the Grand Calumet River and Indiana Harbor Canal. The public trustees
completed a preassessment screen pursuant to federal regulations and have
determined to perform a Natural Resources Damages Assessment. United States
Steel was identified as a PRP along with 15 other companies owning property
along the river and harbor canal. United States Steel and eight other PRPs have
formed a joint defense group. In 2000, the trustees concluded their assessment
of sediment injuries, which includes a technical review of environmental
conditions. The PRP joint defense group has proposed terms for the settlement
of this claim which have been endorsed by representatives of the trustees and
the EPA to be included in a consent decree that United States Steel expects to
resolve this claim. No formal legal proceedings have been filed in this matter.
On October 23, 1998, a final Administrative Order on Consent was issued by
EPA addressing Corrective Action for Solid Waste Management Units throughout
Gary Works. This order requires United States Steel to perform a RCRA Facility
Investigation ("RFI") and a Corrective Measure Study ("CMS") at Gary Works. The
Current Conditions Report, United States Steel's first deliverable, was
submitted to EPA in January 1997 and was approved by EPA in 1998. The First
Phase 1 RFI Work Plan, for facility wide groundwater issues, was approved and
sampling began in 2001. Phase I Sampling and Analysis Plans for the Process
Sewers, Sheet and Tin, East Lake/East End, the West End and the Coke Plant areas
have been submitted to EPA and are expected to be approved by EPA in 2002. The
costs of these studies are minimal and, until they are complete, it is
impossible to assess whether any additional expenditures will be necessary.
On October 21, 1994 and again on December 30, 1994, IDEM issued notices of
violation ("NOVs") relating to Gary Works alleging various violations of air
pollution requirements. In early 1996, United States Steel paid a $6 million
penalty and agreed to install additional pollution control equipment and to
implement environmental protection programs over a period of several years. A
substantial portion of these programs has been implemented, with expenditures
through 2001 of approximately $101 million. The cost to complete these programs
is presently indeterminable. On March 8, 1999, United States Steel entered into
an agreed order with IDEM to resolve outstanding air issues. United States
Steel paid a penalty of $207,400 and installed equipment at the No. 8 Blast
Furnace and the No. 1 BOP to reduce air emissions. On November 30, 1999, IDEM
issued an NOV alleging various air violations at Gary Works. An agreed order is
being negotiated and we anticipate this matter will be settled for less than $1
million.
Clairton
On February 12, 1987, U. S. Steel and PADER entered into a Consent Order to
resolve an incident in January 1985 involving the alleged unauthorized discharge
of benzene and other organic pollutants from Clairton Works in Clairton, Pa.
(In the Matter of USX Clairton Works, filed in the United States District Court
for the Western District of Pennsylvania.) That Consent Order required U. S.
Steel to pay a penalty of $50,000 and a monthly payment of $2,500 for five
years. In 1990, U. S. Steel and the PADER reached agreement to amend the
Consent Order. Under the amended Order, U. S. Steel agreed to remediate the
Peters Creek Lagoon (a former coke plant waste disposal site); to pay a penalty
of $300,000; and to pay a monthly penalty of up to $1,500 each
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month until the former disposal site is closed. Remediation costs have amounted
to $10.0 million with another $1.1 million presently estimated to complete the
project.
Fairless Works
In January 1992, United States Steel commenced negotiations with the EPA
regarding the terms of an Administrative Order on consent, pursuant to the RCRA,
under which United States Steel would perform a RFI and a CMS at Fairless Works.
A Phase I RFI report was submitted during the third quarter of 1997. A Phase
II/III RFI will be submitted following EPA approval of the Phase I report. The
RFI/CMS will determine whether there is a need for, and the scope of, any
remedial activities at Fairless Works.
Fairfield Works
In December 1995, United States Steel reached an agreement in principle
with the EPA and the DOJ with respect to alleged RCRA violations at Fairfield
Works. A consent decree was signed by United States Steel, the EPA and the DOJ
and filed with the United States District Court for the Northern District of
Alabama (United States of America v. USX Corporation) on December 11, 1997,
under which United States Steel will pay a civil penalty of $1 million,
implement two SEPs costing a total of $1.75 million and implement a RCRA
corrective action at the facility. One SEP was completed during 1998 at a cost
of $250,000. The second SEP is under way. As of February 22, 2000, the Alabama
Department of Environmental Management assumed primary responsibility for
regulation and oversight of the RCRA corrective action program at Fairfield
Works, with the approval of the EPA. The first RFI work plan for the site was
submitted for agency approval in the first quarter of 2001.
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
UNITED STATES STEEL CORPORATION
By: /s/ Larry G. Schultz
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Larry G. Schultz
Vice President and Controller
Dated: June 28, 2002
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