Notes to Condensed Consolidated Financial Statements (Unaudited)

1. Basis of Presentation and Significant Accounting Policies

United States Steel Corporation (U. S. Steel, or the Company) produces and sells steel products, including flat-rolled and tubular products, in North America and Europe. Operations in North America also include iron ore and coke production facilities, railroad services and real estate operations. Operations in Europe also include coke production facilities.

The year-end Consolidated Balance Sheet data was derived from audited statements but does not include all disclosures required for complete financial statements by accounting principles generally accepted in the United States of America (U.S. GAAP). The other information in these condensed financial statements is unaudited but, in the opinion of management, reflects all adjustments necessary for a fair statement of the results for the periods covered. All such adjustments are of a normal recurring nature unless disclosed otherwise. These condensed financial statements, including notes, have been prepared in accordance with the applicable rules of the Securities and Exchange Commission and do not include all of the information and disclosures required by U.S. GAAP for complete financial statements. Additional information is contained in the United States Steel Corporation Annual Report on Form 10-K for the fiscal year ended December 31, ~~2017,~~2018, which should be read in conjunction with these condensed financial statements.

2. New Accounting Standards

In ~~February~~August 2018, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update ~~(ASU) 2018-02,~~ ~~Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income~~ 2018-14, Compensation - Retirement Benefits - Defined Benefit Plans- General (Subtopic 715-20), Disclosure Framework - Changes to the Disclosure Requirements for Defined Benefit Plans (ASU ~~2018-02)~~2018-14). ASU ~~2018-02 allows a reclassification from Accumulated Other Comprehensive Income to Retained Earnings~~2018-14 removes certain disclosures that the FASB no longer considers cost beneficial, adds certain disclosure requirements and clarifies others. ASU 2018-14 is effective for ~~stranded tax effects resulting from the Tax Cuts and Jobs Act. The amendments in this ASU are effective~~public companies for fiscal years beginning after December 15, ~~2018 and for interim periods therein. Early~~2020, with early adoption ~~of ASU 2018-02 is~~ permitted. U. S. Steel is currently assessing the impact of the ASU ~~but does not believe this ASU will have a material impact~~ on its ~~overall Consolidated Financial Statements.~~defined benefit plan disclosures.

In June 2016, the FASB issued ASU 2016-13, Financial Instruments - Credit Losses (Topic 326): Measurementof Credit Losses on Financial Instruments ~~(ASU~~(ASU 2016-13), which adds an impairment model that is based on expected losses rather than incurred losses. Under ASU 2016-13, an entity recognizes as an allowance its estimate of expected credit losses, which the FASB believes will result in more timely recognition of such losses. ASU 2016-13 is effective for public companies for fiscal years beginning after December 15, 2019 including interim reporting periods, with early adoption permitted. U. S. Steel is currently assessing the impact of the ASU, but does not believe this ASU will have a material impact on its overall Condensed Consolidated Financial Statements.

3. Recently Adopted Accounting Standards

In February 2016, the FASB issued ASU 2016-02, Leases (ASU 2016-02). ~~ASU 2016-02 supersedes prior lease accounting guidance.~~ Under ASU 2016-02, for operating leases, a lessee should recognize in its statement of financial position a liability to make lease payments and a right-of-use asset representing its right to use the underlying asset for the lease term; recognize a single lease cost, which is allocated over the lease term, generally on a straight line basis, and classify all cash payments within operating activities in the statement of cash flows. For ~~financing~~finance leases, a lessee is required to recognize a right-of-use asset and a lease liability; recognize interest on the lease liability separately from amortization of the right-of-use asset, and classify repayments of the principal portion of the lease liability within financing activities and payments of interest on the lease liability within operating activities in the statement of cash flows. For leases with a term of 12 months or less, a lessee is permitted to make an accounting policy election not to recognize lease assets and lease liabilities. In addition, at the inception of a contract, an entity should determine whether the contract is or contains a lease. ASU 2016-02 is effective for public entities for fiscal years beginning after December 15,July 2018, including interim periods within those fiscal years, using a modified retrospective approach. U. S. Steel is completing its inventory of leases and developing an estimated impact of the financial statement implications of adopting ASU 2016-02, which will include recognizing the lease liability and related right-of-use asset on our balance sheet.

3. ~~Recently Adopted Accounting Standards~~

~~In August 2017,~~ the FASB issued ASU ~~2017-12,~~ ~~Derivatives and Hedging~~2018-11, Leases (Topic ~~815): Targeted~~842) -Targeted Improvements ~~to Accounting for Hedging Activities~~ (ASU ~~2017-12)~~2018-11), which ~~amends and simplifies hedge accounting guidance so that companies could more accurately present~~provides an option to use a modified retrospective transition method at the ~~economic effects of risk management activities in the~~

~~financial statements. ASU 2017-12 is effective for fiscal years beginning after December 15, 2018 and interim periods within those fiscal years with early~~ adoption ~~permitted.~~date. U. S. Steel adopted the ~~provisions of ASU 2017-12 on January 1, 2018. The adoption did not result in a material impact to our financial results; however, we expanded our use of hedge~~new lease accounting standard effective January 1, ~~2018 as well as our disclosures of derivative activity. See Note 14 for further details.~~

~~In May 2017,~~2019 using the ~~FASB issued ASU 2017-09,~~ ~~Compensation – Stock Compensation: Scope of Modification Accounting~~ ~~(ASU 2017-09). The amendments included~~optional modified retrospective transition method outlined in ASU 2017-09 provide guidance about which changes to the terms and conditions of a share-based payment award require an entity to apply modification accounting. The amendments in this update will be applied prospectively to an award modified on or after the adoption date. On January 1, 2018, U. S. Steel adopted the provisions of ASU 2017-09 and the adoption did not have an impact on its Consolidated Financial Statements.

~~In March 2017, the FASB issued ASU 2017-07,~~ ~~Compensation - Retirement Benefits~~ (ASU 2017-07). ASU 2017-07 requires an employer who offers defined benefit and postretirement benefit plans to report the service cost component of the net periodic benefit cost in the same line item or items as other compensation cost arising from services rendered by employees during the period. The other components of net periodic benefit costs are required to be presented on a retrospective basis in the income statement separately from the service cost component and outside a subtotal of income from operations, if one is presented. The ASU also allows for the service cost component of net periodic benefit cost to be eligible for capitalization into inventory when applicable. ASU 2017-07 was effective for periods beginning after December 15, 2017, including interim periods within those annual periods; early adoption was permitted. U. S. Steel adopted ASU 2017-07 on January 1, 2018. U. S. Steel has historically capitalized the service cost component of net periodic benefit cost into inventory, when applicable, and will continue to do so prospectively.

The effect of the retrospective presentation change related to the net periodic benefit cost of our defined benefit pension and other post-employment benefits (OPEB) plans on our consolidated statement of operations was as follows:

Three Months Ended June 30, 2017
Statement of Operations (In millions)
As Revised Previously Reported Effect of Change Higher/(Lower)
Cost of Sales $ 2,723
$ 2,725
$ (2 )
Selling, general and administrative expenses 67
79
(12 )
Net periodic benefit cost (other than service cost) 14
—
14

Six Months Ended June 30, 2017
Statement of Operations (In millions)
As Revised Previously Reported Effect of Change Higher/(Lower)
Cost of Sales $ 5,282
$ 5,286
$ (4 )
Selling, general and administrative expenses 148
176
(28 )
Net periodic benefit cost (other than service cost) 32
—
32

~~In November 2016, the FASB issued ASU 2016-18,~~ ~~Statement of Cash Flows (Topic 230): Restricted Cash~~ (ASU 2016-18). The ASU reduced diversity in practice in the classification and presentation of changes in restricted cash on the statement of cash flows by including restricted cash and restricted cash equivalents with cash and cash equivalents when reconciling the beginning-of-period and end-of-period total amounts shown on the statement of cash flows. On January 1, 2018, U. S. Steel adopted the provisions of ASU 2016-18 using a retrospective transition method.2018-11. As a result ~~the Change in Restricted Cash, Net line that was included in the Investing Activities section~~ of the ~~Consolidated Statement~~adoption, an operating lease asset and current and noncurrent liabilities for operating leases were recorded, and there was an insignificant reduction in prior year retained earnings for the cumulative effect of Cash Flows has been eliminated as changes in restricted cash are now included in the beginning-of-period and end-of-period total cash, cash equivalents and restricted cash amounts. Expanded disclosures have been included, which describe the components of cash shown on the Company's Consolidated Statements of Cash Flows.adoption for operating leases where payment started after lease commencement. See Note 68 for further details.

~~In August 2016,~~U. S. Steel's adoption of the ~~FASB issued ASU 2016-15,~~ ~~Statement of Cash Flows: Classification of Certain Cash Receipts and Cash Payments~~ ~~(ASU 2016-15). ASU 2016-15 reduced diversity in practice in how certain transactions are classified in the statement of cash flows by addressing eight specific cash receipt and cash payment issues. On~~following ASU's effective January 1, 2018, U. S. Steel adopted the provisions of ASU 2016-15 using a retrospective transition method. As a result, all payments to extinguish debt will now be presented as cash outflows from financing activities on our Consolidated Statement of Cash Flows in accordance with ASU 2016-15. U. S. Steel has historically presented make-whole premiums as cash outflows from operating activities. The other cash receipt and cash payment items addressed in ASU 2016-15 did not have an impact on the Company’s Consolidated Statement of Cash Flows. Since payments to extinguish debt during the six months ended June 30, 2017 were immaterial, there was no retrospective adjustment to our Consolidated Statement of Cash Flows. Additionally, the Company has elected to use the cumulative earnings approach as defined in ASU 2016-15 to classify distributions received from equity method investees.

~~In May 2014, the FASB issued ASU No. 2014-09,~~ ~~Revenue from Contracts with Customers~~ (ASU 2014-09). ASU 2014-09 and its related amendments (Revenue Recognition Standard) outline a single comprehensive model for entities to use in accounting for revenue arising from contracts with customers and superseded most previous revenue recognition guidance.On January 1, 2018, U. S. Steel adopted the Revenue Recognition Standard using the full retrospective method. Generally, U. S. Steel’s performance obligations are satisfied, control of our products is transferred, and revenue is recognized at a single point in time. ~~The adoption~~2019 did not have a ~~financial statement~~material impact toon U. S. ~~Steel but did result in expanded disclosures. See Note 5 for further details.~~Steel's financial position, results of operations or cash flows:



Accounting Standard Update
2018-07	Compensation - Stock Compensation (Topic 718): Improvements to Nonemployee Share-Based Payment Accounting
2018-15	Intangibles - Goodwill and Other - Internal Use Software (Subtopic 350-40): Customer's Accounting for Implementation Costs in a Cloud Computing Arrangement That is a Service Contract

4. Segment Information

U. S. Steel has three reportable segments: (1) Flat-Rolled Products (Flat-Rolled), which consists of the following three commercial entities that directly interact with our customers and service their needs: (i) automotive solutions, (ii) consumer solutions, and (iii) industrial, service center and mining solutions; (2) U. S. Steel Europe (USSE); and (3) Tubular Products (Tubular). The results of our railroad and real estate businesses that do not constitute reportable segments are combined and disclosed in the Other Businesses category.

The chief operating decision maker evaluates performance and determines resource allocations based on a number of factors, the primary measure being earnings (loss) before interest and income taxes. Earnings (loss) before interest and income taxes for reportable segments and Other Businesses does not include net interest and other financial costs (income), income taxes, and certain other items that management believes are not indicative of future results.

The accounting principles applied at the operating segment level in determining earnings (loss) before interest and income taxes are generally the same as those applied at the consolidated financial statement level. Intersegment sales and transfers are accounted for at market-based prices and are eliminated at the corporate consolidation level. Corporate-level selling, general and administrative expenses and costs related to certain former businesses are allocated to the reportable segments and Other Businesses based on measures of activity that management believes are reasonable.

The results of segment operations for the three months ended June 30, ~~2018~~2019 and ~~2017~~2018 are:



(In millions) Three Months Ended June 30, 2019	Customer Sales		Intersegment Sales			Net Sales			Earnings from investees		Earnings (loss) before interest and income taxes
Flat-Rolled	$	2,539	$	95		$	2,634		$	26	$	134
USSE	678		3			681			—		(10		)
Tubular	316		1			317			2		(6		)
Total reportable segments	3,533		99			3,632			28		118
Other Businesses	12		30			42			—		10
Reconciling Items and Eliminations	—		(129		)	(129		)	—		(13		)
Total	$	3,545	$	—		$	3,545		$	28	$	115

Three Months Ended June 30, 2018
Flat-Rolled	$	2,435	$	59		$	2,494		$	17	$	224
USSE	848		15			863			—		115
Tubular	309		2			311			2		(35		)
Total reportable segments	3,592		76			3,668			19		304
Other Businesses	17		32			49			—		17
Reconciling Items and Eliminations	—		(108		)	(108		)	—		(20		)
Total	$	3,609	$	—		$	3,609		$	19	$	301

(In millions) Three Months Ended June 30, 2018
Customer
Sales Intersegment
Sales Net
Sales Earnings
from
investees Earnings (loss) before interest and income taxes
Flat-Rolled $ 2,435
$ 59
$ 2,494
$ 17
$ 224
USSE 848
15
863
—
115
Tubular 309
2
311
2
(35 )
Total reportable segments 3,592
76
3,668
19
304
Other Businesses 17
32
49
—
17
Reconciling Items and Eliminations —
(108 ) (108 ) —
(20 )
Total $ 3,609
$ —
$ 3,609
$ 19
$ 301

Three Months Ended June 30, 2017
Flat-Rolled $ 2,151
$ 92
$ 2,243
$ 14
$ 220
USSE 740
12
752
—
55
Tubular 234
—
234
2
(29 )
Total reportable segments 3,125
104
3,229
16
246
Other Businesses 19
29
48
—
9
Reconciling Items and Eliminations —
(133 ) (133 ) —
72
Total $ 3,144
$ —
$ 3,144
$ 16
$ 327

The results of segment operations for the six months ended June 30, ~~2018~~2019 and ~~2017~~2018 are:



(In millions) Six Months Ended June 30, 2019	Customer Sales		Intersegment Sales			Net Sales			Earnings from investees		Earnings (loss) before interest and income taxes
Flat-Rolled	$	4,944	$	164		$	5,108		$	33	$	229
USSE	1,415		6			1,421			—		19
Tubular	659		3			662			4		4
Total reportable segments	7,018		173			7,191			37		252
Other Businesses	26		60			86			—		18
Reconciling Items and Eliminations	—		(233		)	(233		)	—		(44		)
Total	$	7,044	$	—		$	7,044		$	37	$	226

Six Months Ended June 30, 2018
Flat-Rolled	$	4,482	$	116		$	4,598		$	19	$	257
USSE	1,671		16			1,687			—		225
Tubular	575		2			577			3		(62		)
Total reportable segments	6,728		134			6,862			22		420
Other Businesses	30		63			93			—		28
Reconciling Items and Eliminations	—		(197		)	(197		)	—		(10		)
Total	$	6,758	$	—		$	6,758		$	22	$	438

(In millions) Six Months Ended June 30, 2018
Customer
Sales Intersegment
Sales Net
Sales Earnings
from
investees Earnings (loss) before interest and income taxes
Flat-Rolled $ 4,482
$ 116
$ 4,598
$ 19
$ 257
USSE 1,671
16
1,687
—
225
Tubular 575
2
577
3
(62 )
Total reportable segments 6,728
134
6,862
22
420
Other Businesses 30
63
93
—
28
Reconciling Items and Eliminations —
(197 ) (197 ) —
(10 )
Total $ 6,758
$ —
$ 6,758
$ 22
$ 438

Six Months Ended June 30, 2017
Flat-Rolled $ 4,016
$ 113
$ 4,129
$ 17
$ 132
USSE 1,413
24
1,437
—
142
Tubular 405
1
406
3
(86 )
Total reportable segments 5,834
138
5,972
20
188
Other Businesses 35
60
95
—
22
Reconciling Items and Eliminations —
(198 ) (198 ) —
37
Total $ 5,869
$ —
$ 5,869
$ 20
$ 247

The following is a schedule of reconciling items to consolidated earnings ~~(loss)~~ before interest and income taxes:



	Three Months Ended June 30,						Six Months Ended June 30,
(In millions)	2019			2018			2019			2018
Items not allocated to segments:
December 24, 2018 Clairton coke making facility fire	$	(13	)	$	—		$	(44	)	$	—
Gain on equity investee transactions	—			18			—			18
Granite City Works restart costs	—			(36		)	—			(36		)
Granite City Works adjustment to temporary idling charges	—			(2		)	—			8
Total reconciling items	$	(13	)	$	(20	)	$	(44	)	$	(10	)

Three Months Ended June 30, Six Months Ended June 30,
(In millions) 2018 2017 2018 2017
Items not allocated to segments:

Gain on equity investee transactions $ 18
$ —
$ 18
$ —
Granite City Works restart costs (36 ) —
(36 ) —
Granite City Works adjustment to temporary idling charges (2 ) —
8
—
Loss on shutdown of certain tubular assets ^(a)
—
—
—
(35 )
Gain associated with retained interest in U. S. Steel Canada Inc. (Note 23) —
72
—
72
Total reconciling items $ (20 ) $ 72
$ (10 ) $ 37

^(a) ~~Included in Restructuring and other charges in the Consolidated Statement of Operations. See Note 21 to the Consolidated Financial Statements.~~5. Revenue

5. ~~Revenue~~

Revenue is generated primarily from contracts to produce, ship and deliver steel products, and to a lesser extent, to deliver raw materials such as iron ore pellets, to deliver coke by-productsand for railroad services and real estate sales. Generally, U. S. Steel’s performance obligations are satisfied, control of our products is transferred, and revenue is recognized at a single point in time, when title transfers to our customer for product shipped or ~~when~~ services are provided. Revenues are recorded net of any sales incentives. Shipping and other transportation costs charged to customers are treated as fulfillment activities and are recorded in both revenue and cost of sales at the time control is transferred to the customer. Costs related to obtaining sales contracts are incidental and are expensed when incurred. Because customers are invoiced at the time title transfers and U. S. Steel’s right to consideration is unconditional at that time, U. S. Steel does not maintain contract asset balances. Additionally, U. S. Steel does not maintain contract liability balances, as performance obligations are satisfied prior to customer payment for product. U. S. Steel offers industry standard payment terms.

U. S. Steel has three reportable segments: Flat-Rolled, USSE and Tubular. Flat-Rolled primarily generates revenue from sheet and coated product sales to North American customers. Flat-Rolled also sells slabs, iron ore pellets and coke making by-products. USSE sells slabs, sheet, strip mill plate, coated products and spiral welded pipe to customers primarily in the Eastern European market. Tubular sells seamless and electric resistance welded (ERW) steel casing and tubing (commonly known as oil country tubular goods or OCTG), standard and line pipe and mechanical tubing and primarily serves customers in the oil, gas and petrochemical markets. Revenue from our railroad and real estate businesses is reported in the Other Businesses category in our segment reporting structure. The following tables disaggregate our revenue by product for each of our reportable business segments for the three months and six months ended June 30, ~~2018~~2019 and ~~2017,~~2018, respectively:

Net Sales by Product (In millions):


(In millions) Three Months Ended June 30, 2018	Flat-Rolled		USSE		Tubular		Other Businesses		Total
Three Months Ended June 30, 2019											Flat-Rolled		USSE		Tubular		Other Businesses		Total
Semi-finished	$	1	$	52	$	—	$	—	$	53	$	121	$	5	$	—	$	—	$	126
Hot-rolled sheets	640		339		—		—		979		682		287		—		—		969
Cold-rolled sheets	735		104		—		—		839		643		82		—		—		725
Coated sheets	797		310		—		—		1,107		816		269		—		—		1,085
Tubular products	—		13		299		—		312		—		11		311		—		322
All Other^(a)	262		30		10		17		319		277		24		5		12		318
Total	$	2,435	$	848	$	309	$	17	$	3,609	$	2,539	$	678	$	316	$	12	$	3,545

LIQUIDITY AND CAPITAL RESOURCES

The following table summarizes U. S. Steel’s liquidity as of June 30, ~~2018~~2019:

(Dollars in millions)

Cash and cash equivalents $ 1,231
Amount available under $1.5 Billion Credit Facility Agreement 1,500

Amount available under USSK credit facilities 290

Total estimated liquidity $ 3,021



(Dollars in millions)
Cash and cash equivalents	$	651
Amount available under $1.5 Billion Credit Facility Agreement	1,500
Amount available under USSK credit facilities	329
Total estimated liquidity	$	2,480

As of June 30, ~~2018~~2019, ~~$136~~$122 million of the total cash and cash equivalents was held by our foreign subsidiaries. Substantially all of the liquidity attributable to our foreign subsidiaries can be accessed without the imposition of income taxes as a result of the election effective December 31, 2013 to liquidate for U.S. income tax purposes a foreign subsidiary that holds most of our international operations.

On February 26, 2018, U. S. Steel entered into the Credit Facility Agreement, replacing its Third Amended and Restated Credit Agreement. The Credit Facility Agreement maintains the facility size of $1.5 billion and extends the maturity date to 2023.

As of June 30, ~~2018,~~2019, there were no amounts drawn under the $1.5 billion Credit Facility Agreement. U. S. Steel must maintain a fixed charge coverage ratio of at least 1.00 to 1.00 for the most recent four consecutive quarters when availability under the Credit Facility Agreement is less than the greater of 10 percent of the total aggregate commitments and $150 million. Based on the four quarters as of June 30, ~~2018,~~2019, we would have met this covenant. If we are unable to meet this covenant in future periods, the amount available to the Company under this facility would be reduced by $150 million. The Credit Facility Agreement expires in February 2023.

At June 30, ~~2018,~~2019, USSK had no borrowings of €200 million (approximately $228 million) under its €~~200~~€460 million (approximately ~~$233~~$524 million) unsecured revolving credit ~~facility (the USSK Credit Agreement).~~facility. The USSK Credit Agreement contains certain USSK financial covenants, ~~as well as other customary terms~~including a maximum net debt to EBITDA ratio and ~~conditions.~~a minimum stockholders' equity to assets ratio. At June 30, ~~2018,~~2019, USSK had ~~full~~ availability of €260 million (approximately $296 million) under the USSK Credit Agreement. ~~Currently, the~~The USSK Credit Agreement expires in ~~July 2021.~~September 2023.

At June 30, ~~2018,~~2019, USSK had no borrowings under its ~~€40~~€20 million and €10 million unsecured credit facilities (collectively, approximately ~~$58~~$34 million) and the ~~aggregate~~ availability was approximately ~~$57~~$33 million due to approximately $1 million of customs and other guarantees outstanding. The €40 million credit facility expires in December 2018. Currently, the €10 million credit facility also expires in December 2018, but can be extended one additional year to the final maturity date at the mutual consent of USSK and its lender.

During the three months ended June 30, 2018, U. S. Steel repurchased approximately $31 million of its 7.375% Senior Notes due 2020 (2020 Senior Notes) at a weighted average price of 106.946 percent of par through a series of open market purchases. Additionally, in July 2018, U. S. Steel repurchased an additional $44 million of its 2020 Senior Notes for a weighted average price 107.234 percent of par.

In March 2018, U. S. Steel issued $650 million aggregate principal amount of 2026 Senior Notes. U. S. Steel received net proceeds from the offering of approximately $640 million after fees of approximately $10 million related to the underwriting and third-party expenses. The net proceeds from the issuance of the 2026 Senior Notes, together with cash on hand, were used to repurchase all of our outstanding 2021 Senior Secured Notes (see Note 15 to the Consolidated Financial Statements, "Debt" for further details). U. S. Steel will pay interest on the notes semi-annually in arrears on March 15th and September 15th of each year, commencing on September 15, 2018.

We may from time to time seek to retire or repurchase our outstanding long-term debt through open market purchases, privately negotiated transactions, exchange transactions, redemptions or otherwise. Such purchases or exchanges, if any, will depend on prevailing market conditions, our liquidity requirements, and other factors and may be commenced or suspended at any time. The amounts involved may be material.

We use surety bonds, trusts and letters of credit to provide financial assurance for certain transactions and business activities. The use of some forms of financial assurance and cash collateral have a negative impact on liquidity. U. S. Steel has committed ~~$174~~$180 million of liquidity sources for financial assurance purposes as of June 30, ~~2018~~.2019. Increases in certain of these commitments which use collateral are reflected within cash, cash equivalents and restricted cash on the Condensed Consolidated Statement of Cash Flows.

At June 30, ~~2018,~~2019, in the event of a change in control of U. S. Steel, the following may occur: (a) debt obligations totaling ~~$2,151~~$1,978 million as of June 30, ~~2018~~2019 may be declared due and payable; (b) the Credit Facility Agreement and the USSK credit facilities may be terminated and any amounts outstanding declared due and payable; and (c) U. S. Steel may be required to either repurchase the leased Fairfield slab caster for ~~$24~~$21 million or provide a cash collateralized letter of credit to secure the remaining obligation.

The maximum guarantees of the indebtedness of unconsolidated entities of U. S. Steel totaled $4 million at June 30, ~~2018~~.2019. If any default related to the guaranteed indebtedness occurs, U. S. Steel has access to its interest in the assets of the investees to reduce its potential losses under the guarantees.

Our major cash requirements in ~~2018~~2019 are expected to be for capital expenditures, including asset revitalization, employee benefits and operating costs, which includes purchases of raw materials. We finished the second quarter of ~~2018~~2019 with ~~$1,231~~$651 million of cash and cash equivalents and ~~$3.0~~$2.5 billion of total liquidity. Available cash is left on deposit with financial institutions or invested in highly liquid securities with parties we believe to be creditworthy.

U. S. Steel management believes that U. S. Steel's liquidity will be adequate to satisfy our obligations for the foreseeable future, including obligations to complete currently authorized capital spending programs. Future requirements for U. S. Steel’s business needs, including the funding of acquisitions and capital expenditures, scheduled debt maturities, repurchase of debt, share buyback, contributions to employee benefit plans, and any amounts that may ultimately be paid in connection with contingencies, are expected to be financed by a combination of internally generated funds (including asset sales), proceeds from the sale of stock, borrowings, refinancings and other external financing sources.

Environmental Matters, Litigation and Contingencies

Some of U. S. Steel’s facilities were in operation before 1900. Although management believes that U. S. Steel’s environmental practices have either led the industry or at least been consistent with prevailing industry practices, hazardous materials may have been released at current or former operating sites or delivered to sites operated by third parties.

Our U.S. facilities are subject to environmental laws applicable in the U.S., including the Clean Air Act (CAA), the Clean Water Act (CWA), the Resource Conservation and Recovery Act (RCRA) and the Comprehensive Environmental Response, Compensation and Liability Act (CERCLA), as well as state and local laws and regulations.

U. S. Steel has incurred and will continue to incur substantial capital, operating, and maintenance and remediation expenditures as a result of environmental laws and regulations, related to release of hazardous materials, which in recent years have been mainly for process changes to meet CAA obligations and similar obligations in Europe.

Midwest Plant Incident

On April 11, 2017, there was a process waste water release at our Midwest Plant (Midwest) in Portage, Indiana that impacted a water outfall that discharges to Burns Waterway near Lake Michigan. U. S. Steel identified the source of the release and made the necessary repairs. We determined that all repairs were safely working as intended and, on April 14, 2017, resumed operations in a controlled, phased and highly monitored approach with extensive input from participating government agencies. The Company has since implemented substantial operational, process and notification improvements at Midwest. The Company has been presented with cost reimbursements, loss of use and penalty requests from the involved governmental agencies. ~~Separately, the Company was placed on notice of potential citizens’ enforcement suits regarding the April 2017 incident and other historical alleged CWA and Permit violations at Midwest.~~ In January of 2018, The Surfrider Foundation and the City of Chicago initiated suits in the Northern District of Indiana alleging ~~such violations.~~CWA and Permit violations at Midwest. On April 2, 2018, the U.S. ~~EPA~~Environmental Protection Agency (U.S. EPA) and the State of Indiana initiated a separate action against the Company and lodged a Consent Decree negotiated between U. S. Steel and the relevant governmental agencies consisting of all material terms to resolve the CWA and National Pollutant Discharge Elimination System (NPDES) violations at the Midwest Plant. A public comment period for the Consent Decree ensued. The suits that the Surfrider Foundation and the City of Chicago filed are currently stayed. The Surfrider Foundation and the City of Chicago ~~initially agreed~~also filed motions, which were granted, to ~~stay their actions pending finalization of~~intervene in the Consent Decree ~~but recently filed a motion~~case. U. S. Steel continues to ~~lift that stay. The public comment period for the Consent Decree was extended to sixty days and has since closed. The~~work with United States Department of Justice, U.S. EPA, and ~~the State~~Indiana Department of ~~Indiana are currently reviewing the public comments~~Environmental Management (IDEM) towards a finalized Consent Decree.

EU Environmental Requirements and ~~U. S. Steel is awaiting their response to those comments.~~

Slovak Operations

~~A Memorandum~~Under the Emissions Trading Scheme (ETS), USSK's final allocation of ~~Understanding (MOU) was signed~~allowances for the Phase III period, which covers the years 2013 through 2020 is 48 million allowances. We estimate a shortfall of approximately 14 million allowances for the Phase III period. Based on projected future production levels, we started to purchase allowances in ~~March 2013 between U. S. Steel and~~ the ~~government~~third quarter of ~~Slovakia. The MOU outlines areas~~2017 to meet the annual compliance submission in ~~which~~ the ~~government and U. S. Steel will work together~~future. As of June 30, 2019, we have purchased approximately 12 million European Union Allowances totaling €132 million (approximately $150 million). However, due to ~~help create~~ a ~~more competitive environment and conditions for USSK. Incentives the government~~number of ~~Slovakia agreed to provide include potential participation in a renewable energy program that provides the opportunity to reduce electricity costs, as well~~variables such as the potential for government grants and other support concerning investments in environmental control technology. Although there are many conditions and uncertainties regarding the grants, including matters controlled by the European Union (EU), thefuture market value of ~~these incentives as stated in~~allowances, future production levels and future emissions intensity levels, we cannot reliably estimate the ~~MOU could be as much as €75 million (approximately $87 million). We currently expect~~full cost of complying with the total amount of EU funds will be as much as €78 million (approximately $91 million). The final grant value will depend on actual project spending and eligible costs. The MOU expired in March 2018; however, USSK will continue to receive the incentive funding for the approved BAT projects through their completion.ETS regulations at this time.

The EU’s ~~Industry Emission~~Industrial Emissions Directive requires implementation of EU determined best available techniques (BAT) for iron and steel production, to reduce environmental impacts as well as compliance with BAT associated emission levels. This directive includes operational requirements for air emissions, wastewater discharges, solid waste disposal and energy conservation, dictates certain operating practices and imposes stricter emissions limits. Producers were required to be in compliance with the iron and steel BAT by March 8, 2016, unless specific exceptions or extensions were granted by the Slovak environmental authority. USSK updated existing operating permits for different facilities involved in producing iron and steel in the plant in accordance with the new BAT requirements. Through this process for some facilities, USSK has obtained extensions from the 2016 compliance deadline in order to meet or exceed the BAT requirements. Compliance with stricter emissions limits going beyond BAT requirements makes us eligible for EU funding support and prepares us for any further tightening of environmental protection standards. Our most recent broad estimate of ~~likely total~~future capital expenditures for projects ~~to comply with or~~that go beyond ~~the~~ BAT requirements ~~for~~is up to €138 million (approximately $157 million) over the 2017 to 2020 program ~~period is €138 million (approximately $161 million). During 2017,~~period. These costs may be mitigated if USSK ~~expended €2 million (approximately $1 million) toward the total estimated capital expenditures for the 2017 to 2020 program period.~~

The EU has various programs under which funds are allocated to member states to implement broad public policies which are then awarded by the member states to public and private entities on a competitive basis. The funding intensity under these programs currently ranges from 55 percent of defined eligible costs on a project under the standard state scheme to 90 percent under an approved ad hoc scheme to improve the air quality in the Košice region of Slovakia. Based on our list of projects that comprise the approximate €138 million (approximately $161 million) of spending noted, we currently believe we will be eligible to receive up to €78 million (approximately $91 million) of incentive grants. This could potentially reduce our net cash expenditures to approximately €60 million (approximately $70 million). The actual amount of capital spending will be dependent upon, among other things, the actual amount of incentive grants received. In order to receive full grant amounts, USSK is required to complycomplies with certain financial covenants, which are assessed annually. USSK complied with these covenants as of June 30, ~~2018.~~2019. If we are unable to meet these covenants in the future, USSK might be required to provide additional collateral (e.g. bank guarantee) to secure ~~potential claims from~~ the ~~Slovak Government for repayment~~full value of ~~a portion of the grant funds received.~~

~~We also believe there will~~estimated expenditures. There could be increased operating costs associated with these projects, such as increased energy and maintenance costs. We are currently unable to reliably estimate what the increase in operating costs will be as many projects are still in the development stage.

On March 28, 2017, the Regional Court in Košice issued an ex parte judicial lien on USSK's real property to plaintiffs in an ongoing legal case. Following a decision of the Supreme Court, which reversed and remanded the lien petition to the Regional Court, the lien has been removed. The Regional Court, which had originally issued the ex parte judicial lien, has decided that the imposition of a lien is not warranted and has not re-imposed the lien. The underlying case is still ongoing.

For further discussion of laws applicable in Slovakia and the EU and their impact on USSK, see Note 22 to the Condensed Consolidated Financial Statements, “Contingencies and Commitments - Environmental Matters, EU Environmental Requirements.”

New and Emerging Environmental Regulations

United States and European Greenhouse Gas Emissions Regulations

Future compliance with CO₂emission requirements may include substantial costs for emission allowances, restriction of production and higher prices for coking coal, natural gas and electricity generated by carbon based systems. Because we cannot predict what requirements ultimately will be imposed in the U.S. and Europe, it is difficult to estimate the likely impact on U. S. Steel, but it could be substantial. On March 28, 2017, President Trump signed Executive Order 13783 instructing the ~~Environmental Protection Agency (EPA)~~U.S. EPA to review the Clean Power Plan. On October 16, 2017, the U.S. EPA proposed to repeal the Clean Power Plan after reviewing the plan pursuant to President Trump’s executive order. Any repeal and/or replacement of the Clean Power Plan is likely to be challenged by various proponents of the plan, such as environmental groups and certain states. Any impacts to our operations as a result of any future greenhouse gas regulations are not estimable at this time since the matter is unsettled. In any case, to the extent expenditures associated with any greenhouse gas regulation, as with all costs, are not ultimately reflected in the prices of U. S. Steel's products and services, operating results will be reduced. In addition, on April 2, 2018, EPA Administrator Scott Pruitt signed a notice in which the EPA withdrew from its prior January 12, 2017 Final Determination regarding greenhouse gas emission standards for model year (MY) 2022-2025 light duty vehicles. In the April 2, 2018 notice, the EPA provided its new determination that the greenhouse gas emission standards for MY 2022-2025 light duty vehicles are not appropriate in light of the record before the EPA and, therefore, the standards should be revised. The EPA, in partnership with the National Highway Traffic Safety Administration, will initiate a notice and comment rulemaking in a forthcoming Federal Register notice to further consider appropriate standards for MY 2022-2025 light-duty vehicles. California and other states

There have ~~threatened to sue the EPA over the Agency’s withdrawal of the prior determination. There were~~been no material changes in U. S. Steel’s exposure to European Greenhouse Gas Emissions regulations since December 31, ~~2017.~~2018.

United States - Air

The CAA imposes stringent limits on air emissions with a federally mandated operating permit program and civil and criminal enforcement sanctions. The CAA requires, among other things, the regulation of hazardous air pollutants through the development and promulgation of National Emission Standards for Hazardous Air Pollutants (NESHAP) and Maximum Achievable Control Technology (MACT) Standards. The U.S. EPA has developed various industry-specific MACT standards pursuant to this requirement. The CAA requires the U.S. EPA to promulgate regulations establishing emission standards for each category of Hazardous Air Pollutants. The U.S. EPA also must conduct risk assessments on each source category that is already subject to MACT standards and determine if additional standards are needed to reduce residual risks.

While our operations are subject to several different categories of NESHAP and MACT standards, the principal impact of these standards on U. S. Steel operations includes those that are specific to coke making, iron making, steel making and iron ore processing.

The U.S. EPA is currently in the process of completing a Residual Risk and Technology Review of the Integrated Iron and Steel MACT regulations, Coke MACT regulations, and Taconite Iron Ore Processing MACT regulations as required by the CAA. The U.S. EPA is under a court order to complete the Residual Risk and Technology Review of the Integrated Iron and Steel regulations no later than March 13, 2020; and to complete the Residual Risk and Technology Review of the Taconite Iron Ore Processing Regulations by June 30, 2020. Because the U.S. EPA has not completed its review, any impacts related to the U.S. EPA’s review of these standards cannot be estimated at this time.

On March 12, 2018, the New York State Department of Environmental Conservation (DEC) submitted a CAA Section ~~126~~126(b) petition to the U.S. EPA. In the petition, the DEC asserts that stationary sources from the following nine states are interfering with attainment or maintenance of the 2008 and 2015 ozone National Ambient Air Quality Standards (NAAQS) in New ~~York state:~~York: Illinois, Indiana, Kentucky, Maryland, Michigan, Ohio, Pennsylvania, Virginia, and West Virginia. DEC is requesting the U.S. EPA to require sources of nitrogen oxides in the nine states to reduce such emissions. ~~Under the CAA, unless extended, the EPA has 60-days to approve or deny the petition.~~ On May 4, 2018, citing Section 307(d)(10) of the CAA, the U.S. EPA issued a notice extending the deadline for the agency to respond to the petition until November 9, 2018. ~~The~~On May 20, 2019, U.S. EPA indicated the extension is justified because more time is needed to review the petition and to solicit public comment. EPA approval of the petition could potentially result in increased capital and operating costs to our operationspublished a notice in the ~~states identified~~Federal Register in which it proposed to deny DEC’s 126(b) petition. The public comment period for the ~~petition.~~proposed action closed on July 15, 2019.

The CAA also requires the U.S. EPA to develop and implement NAAQS for criteria pollutants, which include, among others, particulate matter (PM) - consisting of PM₁₀ and PM_2.5, lead, carbon monoxide, nitrogen dioxide, SOsulfur dioxide (SO₂), and ozone.

In June 2010, the U.S. EPA significantly lowered the primary NAAQS for SO₂ from 140 parts per billion (ppb) on a 24-hour basis to an hourly standard of 75 ppb. Subsequently, ~~the~~U.S. EPA designated the areas in which Great Lakes Works and

Mon Valley Works facilities are located as nonattainment with the 2010 standard for the SO₂ NAAQS. The ~~non-attainment~~non-

attainment designation requires the ~~facilities~~region to implement operational and/or capital improvements to demonstrate attainment with the 2010 standard. U. S. Steel worked with the Allegheny County Health Department (ACHD) in developing a State Implementation Plan (SIP) for the Allegheny County portion of the Pennsylvania SIP that includes reductions of SO₂ and improved dispersion from U. S. Steel sources. ~~The SIP is currently being reviewed by~~On November 19, 2018, U.S. EPA published a proposed rule to approve the ~~EPA.~~SIP. Comments on the proposed rule were accepted until December 19, 2018. In addition, as noted in the Legal Proceedings section, U. S. Steel continues to work with the regulatory authorities to address the Wayne County, Michigan (where Great Lakes Works is located) nonattainment status. The operational and financial impacts of the SO₂ NAAQS isare not estimated to be material at this time.

In October 2015, the U.S. EPA lowered the NAAQS for ozone from 75 ppb to 70 ppb. On November 6, 2017, the U.S. EPA designated most areas in which we operate as attainment with the 2015 standard. In a separate ruling, on June 4, 2018, the U.S. EPA designated other areas in which we operate as “marginal nonattainment” with the 2015 ozone standard. While on December 6, 2018, U.S. EPA published a final rule regarding implementation of the 2015 ozone standard. Because ~~any~~no state regulatory or permitting actions to bring the ozone nonattainment areas into attainment have yet to be proposed or developed for U. S. Steel facilities, the operational and financial impact of the ozone NAAQS cannot be reasonably estimated at this time.

On December 14, 2012, the U.S. EPA lowered the annual standard for PM_2.5 from 15 micrograms per cubic meter (ug/m3) to 12 ug/m3, and retained the PM_2.5 24-hour and PM₁₀ NAAQS rules. In December 2014, the U.S. EPA designated some areas in which U. S. Steel operates as nonattainment with the 2012 annual PM_2.5 standard. On April 6, 2018, the U.S. EPA published a notice that Pennsylvania, California and Idaho failed to submit a SIP to demonstrate attainment with the 2012 fine particulate standard by the deadline established by the CAA. As a result of the notice, Pennsylvania, a state in which we operate, is required to submit a SIP to the U.S. EPA no later than November 7, 2019 to avoid sanctions. ~~Because it is early~~On April 29, 2019, the ACHD published a draft SIP for the Allegheny County nonattainment area which demonstrates that all of Allegheny County will meet its reasonable further progress requirements and be in attainment with the ~~SIP development stages, any impacts to U. S. Steel cannot be reasonably estimated at this time.~~2012 PM_2.5 annual and 24-hour NAAQS by December 31, 2021 with the existing controls that are in place.

In 2010, the U.S. EPA retained the annual nitrogen dioxide NAAQS standard, but created a new 1-hour NAAQS and established new data reduction and monitoring requirements. While the U.S. EPA has classified all areas as being in attainment or unclassifiable, it is requiring implementation of a network of monitoring stations to assess air quality. Until the network is implemented and further designations are made, the impact on operations at U. S. Steel facilities cannot be reasonably ~~estimated at this time.~~estimated.

In July 2018, the ACHD provided U. S. Steel, ACHD Regulation Subcommittee members and interested parties with draft regulations that would modify the existing air regulations applicable to coke plants in Allegheny County. While ACHD currently has some of the most stringent air regulations in the country governing coke plants, which apply to U. S. Steel’s coke plant in Clairton, Pennsylvania (the only remaining coke plant in Allegheny County and one of two remaining in Pennsylvania), the draft regulations would reduce the current allowable emissions from coke plant operations and would be more stringent than the Federal Best Available Control Technology and Lowest Achievable Emission Rate requirements. In various meetings with ACHD, U. S. Steel has raised significant objections, in particular, that ACHD has not demonstrated that continuous compliance with the draft rule is economically and technologically feasible. While U. S. Steel continues to meet with ACHD regarding the draft rule, U. S. Steel believes that any rule promulgated by ACHD must comply with their statutory authority. If the draft rule or similar rule is adopted, the financial and operational impacts to U. S. Steel could be material. In U. S. Steel’s June 27, 2019, Settlement Agreement with ACHD, in which the appeals of four recently issued Orders were resolved as discussed in the Legal Proceedings, to assist in developing rules objectively and with technical justification, U. S. Steel and ACHD agreed to certain procedures that ACHD will follow in developing a new rule.

Environmental Remediation

In the United States, U. S. Steel has been identified as a potentially responsible party (PRP) at ~~seven~~eight sites under CERCLA as of June 30, ~~2018.~~2019. Of these, there are ~~two~~three sites where information requests have been received or there are other indications that U. S. Steel may be a PRP under CERCLA, but where sufficient information is not presently available to confirm the existence of liability or to make a reasonable estimate with respect to any potential liabilities. There are also 17 additional sites where U. S. Steel may be liable for remediation costs in excess of $100,000 under other environmental statutes, both federal and state, or where private parties are seeking to impose liability on U. S. Steel for remediation costs through discussions or litigation. At many of these sites, U. S. Steel is one of a number of parties involved and the total cost of remediation, as well as U. S. Steel’s share, is frequently dependent upon the outcome of ongoing investigations and remedial studies. U. S. Steel accrues for environmental remediation activities

when the responsibility to remediate is probable and the amount of associated costs is reasonably estimable. As environmental remediation matters proceed toward ultimate resolution or as remediation obligations arise, charges in excess of those previously accrued may be required.

For further discussion of relevant environmental matters, see ~~"Part II. Other information - Item~~"Item 1. Legal Proceedings - Environmental Proceedings."

The total accrual for such liabilities at June 30, 2018 was $179 million. These amounts exclude liabilities related to asset retirement obligations, disclosed in Note 16 to the Consolidated Financial Statements.

U. S. Steel is the subject of, or a party to, a number of pending or threatened legal actions, contingencies and commitments involving a variety of matters, including laws and regulations relating to the environment. The ultimate resolution of these contingencies could, individually or in the aggregate, be material to the Consolidated Financial Statements.

OFF-BALANCE SHEET ARRANGEMENTS

U. S. Steel did not enter into any new material off-balance sheet arrangements during the second quarter of ~~2018.~~

2019.

~~GUIDANCE~~

The success to date of our ongoing $2 billion asset revitalization program, as well as our earnings power in the current market, makes us increasingly optimistic about future investments that will drive long-term profitable growth.

We currently expect that third quarter 2018 adjusted EBITDA will be approximately $525 million. We expect our Flat-rolled segment results to continue to improve as more of our adjustable contract and spot shipments realize the benefit of second quarter increases in index prices, partially offset by higher planned outage costs. We expect results for our Tubular segment to turn positive as selling price increases catch up to the rising substrate costs we saw in the first half of the year. We expect results for our European segment to be lower in the third quarter, primarily due to planned outages that coincide with normal seasonal customer demand patterns.

~~Based on our progress to date, we are increasing full-year 2018 adjusted EBITDA guidance to approximately $1.85 - $1.90 billion.~~

~~Please refer to the table below for the reconciliation of Guidance net earnings to adjusted EBITDA.~~

UNITED STATES STEEL CORPORATION
RECONCILIATION OF ADJUSTED EBITDA GUIDANCE
Year Ended Year Ended
Quarter Ended Dec. 31 Dec. 31
Sept. 30 2018 2018
(Dollars in millions) 2018 (Low end of range) (High end of range)
Reconciliation to Projected Adjusted EBITDA Included in Guidance
Projected net earnings attributable to United States Steel Corporation included in Guidance $ 288
$ 925
$ 975
Estimated income tax expense 22
50
50
Estimated net interest and other financial costs 61
315
315
Estimated depreciation, depletion and amortization 129
520
520
Gain on equity investee transactions —
(18 ) (18 )
Granite City Works blast furnace B restart costs —
36
36
Estimated Granite City Works blast furnace A restart costs 25
30
30
Granite City works adjustment to temporary idling charges —
(8 ) (8 )
Projected adjusted EBITDA included in Guidance $ 525
$ 1,850
$ 1,900

We present earnings (loss) before interest, income taxes, depreciation and amortization (EBITDA) and adjusted EBITDA, which are non-GAAP measures, as additional measurements to enhance the understanding of our operating performance. We believe that EBITDA, considered along with net earnings (loss), is a relevant indicator of trends relating to our operating performance and provides management and investors with additional information for comparison of our operating results to the operating results of other companies.

Adjusted EBITDA is a non-GAAP measure that excludes the effects of gains on the sale of ownership interests in equity investees, facility restart costs and significant temporary idling charges. We present adjusted EBITDA to enhance the understanding of our ongoing operating performance and established trends affecting our core operations, by excluding the effects of items such as gains on the sale of ownership interests in equity investees, facility restart costs and significant temporary idling charges that can obscure underlying trends. U. S. Steel's management considers adjusted EBITDA as an alternative measure of operating performance and not as an alternative measure of the Company's liquidity. U. S. Steel’s management considers adjusted EBITDA useful to investors by facilitating a comparison of our operating performance to the operating performance of our competitors. Additionally, the presentation of adjusted EBITDA provides insight into management’s view and assessment of the Company’s ongoing operating performance, because management does not consider the adjusting items when evaluating the Company’s financial performance or in preparing the Company’s annual financial Guidance. Adjusted EBITDA should not be

considered a substitute for net earnings (loss) or other financial measures as computed in accordance with U.S. GAAP and is not necessarily comparable to similarly titled measures used by other companies.

INTERNATIONAL TRADE

U. S. Steel continues to face import competition, ~~from foreign steel producers, many~~much of which ~~are heavily subsidized~~is unfairly-traded, supported by ~~their~~foreign governments, and ~~dump~~fueled by massive global steel ~~into our markets. Trade-distorting~~overcapacity. Such practices, policies and ~~practices, coupled with global steel~~ overcapacity impact ~~pricing in our markets and influence~~ the Company's ~~ability to compete on a level playing field.~~operational and financial performance. U. S. Steel continues to lead the industry in efforts to address ~~dumped and subsidized steel imports~~these challenges that ~~injure~~threaten the Company, our workers, our stockholders, and our country’s national and economic security.

~~On April 19, 2017, the U.S. Department~~Through a series of ~~Commerce (DOC) initiated an investigation under~~Presidential Proclamations pursuant to Section 232 of the Trade Expansion Act of 1962, as of the date of this filing, U.S. imports of certain steel products are subject to ~~determine~~a 25 percent tariff, except for imports from: (1) Argentina, Brazil, and South Korea, which are subject to restrictive quotas; (2) Canada and Mexico, which are currently not subject to either tariffs or quotas but tariffs could be re-imposed on surging product groups after consultations; and (3) Australia, which is not subject to tariffs, quotas, or an anti-surge mechanism.

In May 2019, the ~~effects of steel~~Section 232 tariffs for imports from Turkey were adjusted from 50 to 25 percent. Also in May 2019, the United States announced agreements with Canada and Mexico to eliminate the Section 232 tariffs on imports from Canada and Mexico; eliminate the retaliatory tariffs on U.S. ~~national security. On May 24, 2017, U. S. Steel testified at the DOC public hearing~~exports to Canada and ~~remained active throughout the investigation. On January 11, 2018, the DOC submitted its investigation report~~Mexico; terminate World Trade Organization (WTO) disputes regarding Section 232 and retaliation; implement effective measures to ~~the President. On March 8, 2018, the President signed Proclamation 9705 imposing 25 percent~~prevent unfairly traded imports and transshipment, to monitor for import surges, re-impose Section 232 tariffs on ~~steel imports from all countries except for Canada~~import surges after consultations; and ~~Mexico. On March 19, 2018, the DOC published the requirements and~~limit retaliation to steel.

The U.S. Department of Commerce (DOC) is managing a process ~~for~~in which U.S. companies tomay request ~~and~~and/or oppose temporary product exclusions from the ~~25 percent tariff. Companies~~Section 232 tariffs or quotas. Over 77,000 exclusions have 30 days from the publication of an exclusion request to submit opposition comments, and each request should be adjudicated in roughly 90 days. On March 22, 2018, the President signed Proclamation 9711 temporarily exempting steel imports from Argentina, Australia, Brazil, Canada, the European Union (EU), Mexico, and South Korea from the 25 percent tariffs until May 1, 2018. On April 30, 2018, the President signed Proclamation 9740 that (a) extended the exemptionbeen requested for steel ~~imports from Argentina, Australia,~~products. U. S. Steel is opposing exclusion requests for products that are the same as, or substitute products for, those U. S. Steel produces.

Several legal challenges and ~~Brazil due to agreements~~retaliatory trade measures have been initiated in ~~principle on alternative means~~response to the ~~tariffs~~Section 232 action. In June 2019, the Supreme Court denied the American Institute for International Steel’s (AIIS) petition for writ of certiorari in AIIS’ constitutional challenge to ~~address imports’ threat to national security; (b) extended~~ the exemption for steel imports from Canada, the EU, and Mexico from the tariffs until June 1, 2018; and (c) imposed an annual restrictive quota and other measures on steel imports from South Korea in lieuSection 232 statute. AIIS’ appeal of the ~~tariffs, retroactive to January 1, 2018. On June 5, 2018,~~U.S. Court of International Trade’s (CIT) March 2019 decision upholding the ~~President signed Proclamation 9759 that imposed annual restrictive quotas on steel imports from Argentina and Brazil, retroactive to January 1, 2018. As a result, since June 1, 2018,~~constitutionality of the ~~25 percent tariffs apply to steel imports from Canada,~~Section 232 statute is still pending before the ~~EU, and Mexico. China, Canada,~~U.S. Court of Appeals for the ~~EU, India, Mexico, Norway, and Russia~~Federal Circuit (CAFC). Multiple countries have challenged the Section 232 action ~~by filing requests for consultation with~~at the WTO, imposed retaliatory tariffs, and/or acted to safeguard their domestic steel industries from increased steel imports. In turn, the United States has challenged the retaliation at the ~~World Trade Organization (WTO). China,~~WTO. Decisions in these WTO disputes are not expected until the ~~EU, India, Japan, and Turkey have also requested consultations regarding~~fourth quarter of 2019 at the earliest.

Since its implementation in March 2018, the Section 232 action ~~under the WTO’s Agreement on Safeguards. On June 27, 2018, the American Institute for International Steel (AIIS) and AIIS members Sim-Tex and Kurt Orban Partners filed a complaint at~~has supported the U.S. ~~Court of International Trade (CIT) challenging the constitutionality of~~steel industry's and U. S. Steel’s multiple restarts and investment initiatives. The Company continues to actively defend the Section 232 ~~statute.~~action through all available tools and strategies, including by highlighting these benefits and the importance of maintaining the Section 232 action.

In February 2019, the European Commission (EC) imposed a definitive tariff rate quota (TRQ) safeguard on certain steel imports: 25 percent tariffs on certain steel imports that exceed quotas based on 105 percent of average import volumes for 2015-2017 and increasing 5 percent annually, effective February 2019 through June 2021. In May 2019, the EC initiated a review of the safeguard with a decision on any changes to the safeguard expected by late September 2019. In July 2019, the EC increased its safeguard quotas by 5 percent, pursuant to automatic increase provisions, despite the current EC review and the significant opposition to the increase from the EU steel industry.

Antidumping (AD) and countervailing (CVD or antisubsidy) duties apply in addition to the Section 232 tariffs and quotas and the EC’s TRQ safeguard, and AD/CVD orders will last beyond the Section 232 action and EC’s TRQ safeguard. Thus, U. S. Steel continues to actively defend and maintain the 54 ~~antidumping (AD)~~U.S. AD/CVD orders and ~~countervailing duty (CVD)~~11 EU AD/CVD orders

covering products U. S. Steel produces in multiple proceedings before the DOC, U.S. International Trade Commission ~~(USITC)~~(ITC), CIT, CAFC, the ~~CIT, the U.S. Court of Appeals for the Federal Circuit,~~EC and European courts, and the WTO.

~~On May 17,~~In 2018, ~~in response to circumvention petitions filed by U. S. Steel~~following an investigation of China’s technology transfer and ~~other domestic steel producers in September 2016, the DOC found that imports of cold-rolled and corrosion-resistant steel from Vietnam made from Chinese substrate are covered~~intellectual property violations by the ~~AD/CVD orders on such imports from China. As a result~~U.S. Trade Representative (USTR) under Section 301 of the ~~DOC’s final determination,~~Trade Act of 1974, the United States imposed 10 and 25 percent tariffs on approximately $250 billion of U.S. imports of cold-rolled steel from Vietnam made from Chinese hot-rolled steel are subject to 522.23% cash deposit requirements and U.S. imports of corrosion-resistant steel from Vietnam made from Chinese hot- or cold-rolled steel are subject to 238.48% cash deposit requirements, both retroactive to November 4, 2016. On June 12, 2018, U. S. Steel and other domestic producers filed additional similar circumvention petitions on: (1) imports of cold-rolled and corrosion-resistant steel from Vietnam made from Korean substrate; and (2) imports of corrosion-resistant steel from Vietnam made from Taiwanese substrate.

On May 31, 2018, the USITC unanimously voted (5-0) to continue the 2000 AD order on tin mill products from Japan for another five years. Thus, AD duties of up to 95.29% will continue to apply to covered tin mill imports from Japan.

On December 12, 2016, China filed a complaint at the WTO against the U.S. and the EU alleging that the U.S. and EU are violating their treaty obligations by continuing to use the non-market economy (NME) methodology for price comparisons in antidumping duty investigations and reviews. On April 3, 2017, the DOC issued a notice requesting comments and information on whether China should continue to be treated as a NME country under U.S. AD laws. U. S. Steel and other domestic producers submitted comments to the DOC on May 10, 2017. On October 26, 2017, the DOC issued a memorandum concluding that it will continue to use the NME methodology for AD proceedings involving imports from China, ~~because~~including finished steel couplings, some products used in steel production and certain downstream products. In May 2019, the ~~state continues~~Section 301 tariffs on certain imports from China increased from 10 to ~~fundamentally distort China’s economy.~~25 percent. As of the date of this filing, the United States plans to impose 10 percent tariffs on the approximately $300 billion of imports from China ~~then requested additional consultations with~~that are currently not subject to the ~~U.S. regarding its WTO complaint. The outcome of these WTO disputes may impact U.S. AD orders on Chinese goods,~~Section 301 tariffs, including many steel ~~products.~~products, effective September 1. The United States continues to negotiate with China on structural trade issues, including China's subsidies and government support of its steel industry.

The G-20’s Global Forum on Steel Excess Capacity continues to work to reduce global steel overcapacity, currently estimated at 425 million tons. The Organization for Economic Co-operation and Development Steel Committee and trilateral negotiations between the United States, EU, and Japan also continue to address global steel overcapacity.

U. S. Steel ~~continually assesses the impact of imports and global excess capacity on our business, and continues~~will continue to execute a broad, global strategy to ~~enhance the means~~maximize opportunities and ~~manner that it competes in the U.S. market~~navigate challenges presented by imports, global steel overcapacity, and ~~internationally.~~international trade law and policy developments.

NEW ACCOUNTING STANDARDS

See Notes 2 and 3 to the Condensed Consolidated Financial Statements in Part I Item 1 of this Form 10-Q.



Item 3.	QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

There were no material changes in U. S. Steel's exposure to market risk from December 31, ~~2017.~~2018.



Item 4.	CONTROLS AND PROCEDURES

EVALUATION OF DISCLOSURE CONTROLS AND PROCEDURES

U. S. Steel has evaluated the effectiveness of the design and operation of its disclosure controls and procedures as of June 30, ~~2018~~2019. These disclosure controls and procedures are the controls and other procedures that were designed to ensure that information required to be disclosed in reports that are filed with or submitted to the U.S. Securities and Exchange Commission are: (1) accumulated and communicated to management, including the Chief Executive Officer and Chief Financial Officer, to allow timely decisions regarding required disclosures and (2) recorded, processed, summarized and reported within the time periods specified in applicable law and regulations. Based on this evaluation, the Chief Executive Officer and Chief Financial Officer concluded that, as of June 30, ~~2018~~2019, U. S. Steel’s disclosure controls and procedures were effective.

CHANGES IN INTERNAL CONTROL OVER FINANCIAL REPORTING

There have not been any changes in U. S. Steel’s internal control over financial reporting that occurred during the fiscal quarter covered by this quarterly report, which have materially affected, or are reasonably likely to materially affect, U. S. Steel’s internal control over financial reporting.

UNITED STATES STEEL CORPORATION

SUPPLEMENTAL STATISTICS (Unaudited)


	Three Months Ended June 30,						Six Months Ended June 30,							Three Months Ended June 30,						Six Months Ended June 30,
(Dollars in millions)	2018			2017			2018			2017			(Dollars in millions)	2019			2018			2019			2018
SEGMENT EARNINGS (LOSS) BEFORE INTEREST AND INCOME TAXES:													SEGMENT EARNINGS (LOSS) BEFORE INTEREST AND INCOME TAXES:
Flat-Rolled	$	224		$	220		$	257		$	132		Flat-Rolled	$	134		$	224		$	229		$	257
U. S. Steel Europe	115			55			225			142			U. S. Steel Europe	(10		)	115			19			225
Tubular	(35		)	(29		)	(62		)	(86		)	Tubular	(6		)	(35		)	4			(62		)
Total reportable segments	304			246			420			188
													Total reportable segments	118			304			252			420
Other Businesses	17			9			28			22			Other Businesses	10			17			18			28
Items not allocated to segments:													Items not allocated to segments:
Gain on equity investee transactions	18			—			18			—
Granite City Works restart costs	(36		)	—			(36		)	—
Granite City Works adjustment to temporary idling charges	(2		)	—			8			—
Gain associated with retained interest in U. S. Steel Canada Inc.	—			72			—			72
Loss on shutdown of certain tubular assets	—			—			—			(35		)
													December 24, 2018 Clairton coke making facility fire	(13		)	—			(44		)	—
													Gain on equity investee transactions	—			18			—			18
													Granite City Works restart costs	—			(36		)	—			(36		)
													Granite City Works adjustment to temporary idling charges	—			(2		)	—			8
Total earnings before interest and income taxes	$	301		$	327		$	438		$	247		Total earnings before interest and income taxes	$	115		$	301		$	226		$	438
CAPITAL EXPENDITURES													CAPITAL EXPENDITURES
Flat-Rolled	$	142		$	47		318			72			Flat-Rolled	$	254		$	142		$	501		$	318
U. S. Steel Europe	17			20			38			34			U. S. Steel Europe	41			17			75			38
Tubular	13			4			24			11			Tubular	29			13			48			24
Other Businesses	1			2			1			3			Other Businesses	2			1			4			1
Total	$	173		$	73		$	381		$	120
													Total	$	326		$	173		$	628		$	381
OPERATING STATISTICS													OPERATING STATISTICS
Average realized price: ($/net ton) ^(a)
Flat-Rolled	$	819		$	742		780			731
U. S. Steel Europe	707			620			707			607
Tubular	1,449			1,234			1,420			1,173
Steel Shipments:^(a)(b)
Flat-Rolled	2,584			2,497			5,118			4,901
U. S. Steel Europe	1,156			1,157			2,283			2,266
Tubular	201			180			382			324
Intersegment Shipments:^(b)
Flat-Rolled to Tubular	65			94			132			94
U. S. Steel Europe to Flat-Rolled	22			25			22			47
Raw Steel Production:^(b)
Flat-Rolled	2,841			2,711			5,626			5,425
U. S. Steel Europe	1,308			1,285			2,600			2,543
Raw Steel Capability Utilization: ^(c)
Flat-Rolled	67		%	64		%	67		%	64		%
U. S. Steel Europe	105		%	103		%	105		%	103		%
Average realized price: ($/net ton unless otherwise noted)^(a)													Average realized price: ($/net ton unless otherwise noted)^(a)
													Flat-Rolled	$	779		$	819		$	789		$	780
													U. S. Steel Europe	652			707			661			707
													U. S. Steel Europe (€/net ton)	580			593			585			584
													Tubular	1,524			1,449			1,537			1,420
Steel shipments (thousands of net tons):^(a)													Steel shipments (thousands of net tons):^(a)
													Flat-Rolled	2,804			2,584			5,529			5,118
													U. S. Steel Europe	1,004			1,156			2,068			2,283
													Tubular	195			201			402			380
Intersegment steel (unless otherwise noted) shipments (thousands of net tons):													Intersegment steel (unless otherwise noted) shipments (thousands of net tons):
													Flat-Rolled to Tubular	52			65			133			132
													Flat-Rolled to U. S. Steel Europe (iron ore pellets and fines)	189			—			189			—
													U. S. Steel Europe to Flat-Rolled	—			22			—			22
Raw steel production (thousands of net tons):													Raw steel production (thousands of net tons):
													Flat-Rolled	2,984			2,841			6,059			5,626
													U. S. Steel Europe	1,148			1,308			2,307			2,600
Raw steel capability utilization:^(b)													Raw steel capability utilization:^(b)
													Flat-Rolled	70		%	67		%	72		%	67		%
													U. S. Steel Europe	92		%	105		%	93		%	105		%


^(a)Excludes intersegment transfers. ^(b)Based on annual raw steel production capability of 17.0 million net tons for Flat-Rolled and 5.0 million net tons for USSE. ^(a)	~~Excludes intersegment transfers.~~


^(b)	~~Thousands of net tons.~~


^(c)	~~Based on annual raw steel production capability of 17.0 million net tons for Flat-Rolled and 5.0 million net tons for USSE.~~

PART II. OTHER INFORMATION

Item 1. LEGAL PROCEEDINGS

GENERAL LITIGATION

On April 11, 2017, there was a process waste water release at our Midwest Plant (Midwest) in Portage, Indiana that impacted a water outfall that discharges to Burns Waterway near Lake Michigan. U. S. Steel identified the source of the release and made the necessary repairs. We determined that all repairs were safely working as intended and, on April 14, 2017, resumed operations in a controlled, phased and highly monitored approach with extensive input from participating government agencies. The Company has since implemented substantial operational, process and notification improvements at Midwest. The Company has been presented with cost reimbursements, loss of use and penalty requests from the involved governmental agencies. ~~Separately, the Company was placed on notice of potential citizens’ enforcement suits regarding the April 2017 incident and other historical alleged CWA and Permit violations at Midwest.~~ In January of 2018, The Surfrider Foundation and the City of Chicago initiated suits in the Northern District of Indiana alleging ~~such violations.~~CWA and Permit violations at Midwest. On April 2, 2018, the U.S. EPA and the State of Indiana initiated a separate action against the Company and lodged a Consent Decree negotiated between U. S. Steel and the relevant governmental agencies consisting of all material terms to resolve the CWA and NPDES violations at the Midwest Plant. A public comment period for the Consent Decree ensued. The suits that the Surfrider Foundation and the City of Chicago filed are currently stayed. The Surfrider Foundation and the City of Chicago ~~initially agreed~~also filed motions, which were granted, to ~~stay their actions pending finalization of~~intervene in the Consent Decree ~~but recently filed a motion~~case. U. S. Steel continues to ~~lift that stay. The public comment period for the Consent Decree was extended to sixty days and has since closed. The~~work with United States Department of Justice, U.S. EPA, and ~~the State of Indiana are currently reviewing the public comments and U. S. Steel is awaiting their response to those comments.~~

IDEM towards a finalized Consent Decree.

On ~~August 9, 2017,~~November 30, 2018, the Minnesota Pollution Control Agency (MPCA) issued ~~rulemaking proposals~~a new Water Discharge Permit for the Minntac Tailings Basin waters. The Permit contains new sulfate limitations applicable to ~~replace~~water in the ~~current sulfate standard with an equation-based standard. As part of~~Tailings Basin and groundwater flowing from U. S. Steel’s property. The MPCA also acted on the ~~rulemaking process, an Administrative Law Judge (ALJ) was appointed to preside over public hearings~~same date, denying the Company’s requests for variances from ground and ~~comments. The Company and others challenged the~~surface water standards and ~~presented evidence that~~request for a contested case hearing. U. S. Steel filed appeals with the ~~standards were unsupported by science and that~~Minnesota Court of Appeals on December 19, 2018 challenging the MPCA failed to consider associated costs as part of the rulemaking process. On January 9, 2018, the ALJ rejected the MPCA’s proposals, concluding that the MPCA failed to comply with state law requirements for drafting and adopting a new standard, that portions of the rule were unsupportedactions taken by the ~~MPCA’s evidence~~MPCA. Separate appeals have been filed by a Minnesota Native American Tribe (Fond du Lac Band) and ~~that~~a nonprofit environmental group (Water Legacy). U. S. Steel has filed Petitions to Intervene in both cases. The briefing is now complete and the ~~MPCA proposal was unconstitutional due to vagueness. On March 28, 2018,~~matter is pending a determination by the ~~MPCA submitted comments to the Chief ALJ seeking revisions to these determinations.~~Court.

On October 2, 2017, an Amended Shareholder Class Action Complaint was filed in Federal Court in the Western District of Pennsylvania consolidating previously-filed actions. Separately, four related shareholder derivative lawsuits were filed in State and Federal courts in Pittsburgh, Pennsylvania. The underlying consolidated class action lawsuit alleges that U. S. Steel, certain current and former officers, an upper level manager of the Company and the financial underwriters who participated in the August 2016 secondary public offering of the Company's common stock (collectively, Defendants) violated federal securities laws in making false statements and/or failing to discover and disclose material information regarding the financial condition of the Company. The lawsuit claims that this conduct caused a prospective class of plaintiffs to sustain damages during the period from January 27, 2016 to April 25, 2017 as a result of the prospective class purchasing the Company's common stock at artificially inflated prices and/or suffering losses when the price of the common stock dropped. The derivative lawsuits generally make the same allegations against the same officers and also allege that certain current and former members of the Board of Directors failed to exercise appropriate control and oversight over the Company and were unjustly compensated. ~~They~~The plaintiffs seek to recover losses that were allegedly sustained. The class action Defendants moved to dismiss plaintiffs’ claims. On September 29, 2018 the Court ruled on those motions granting them in part and denying them in part. On March 18, 2019, the plaintiffs withdrew the claims against the Defendants related to the 2016 secondary offering. Therefore, the underwriters are no longer parties to the case. The Company isand the individual defendants are vigorously defending ~~these matters.~~the remaining claims.

ENVIRONMENTAL PROCEEDINGS

The following is a summary of the proceedings of U. S. Steel that were pending or contemplated as of June 30, ~~2018,~~2019, under federal and state environmental laws. Information about specific sites where U. S. Steel is or has been engaged in significant clean up or remediation activities is also summarized below. Except as described herein, it is not possible to accurately predict the ultimate outcome of these matters.

CERCLA Remediation Sites

Claims under the Comprehensive Environmental Response, Compensation and Liability Act (CERCLA) have been raised with respect to the cleanup of various waste disposal and other sites. Under CERCLA, potentially responsible parties (PRPs) for a site include current owners and operators, past owners and operators at the time of disposal,

persons who arranged for disposal of a hazardous substance at a site, and persons who transported a hazardous substance to a site. CERCLA imposes strict and joint and several liabilities. 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, we are unable to reasonably estimate U. S. Steel’s ultimate liabilities under CERCLA.

As of June 30, ~~2018,~~2019, U. S. Steel has received information requests or been identified as a PRP at a total of ~~seven~~eight CERCLA sites, ~~two~~three of which have liabilities that have not been resolved. Based on currently available information, which is in many cases preliminary and incomplete, management believes that U. S. Steel’s liability for CERCLA cleanup and remediation costs at the other five sites will be between $100,000 and $1 million for four of the sites, and over $5 million for one site as described below.

Duluth Works

The former U. S. Steel Duluth Works site was placed on the National Priorities List under CERCLA in 1983 and on the State of Minnesota’s Superfund list in 1984. Liability for environmental remediation at the site is governed by a Response Order by Consent executed with the MPCA in 1985 and a Record of Decision signed by MPCA in 1989. U. S. Steel has partnered with the Great Lakes National Program Office (GLNPO) of ~~USEPA~~U.S. EPA Region 5 to address contaminated sediments in the St. Louis River Estuary and several other Operable Units that could impact the Estuary if not addressed. An amendment to the Project Agreement between U. S. Steel and GLNPO was executed during the second quarter of 2018 to recognize the costs associated with implementing the proposed remedial plan at the site.

While work continues on completion of the remedial design and educating the public and key stakeholders on the details of the plan, there has been no material change in the status of the project during the six months ended June 30, ~~2018.~~2019. Additional study, investigation, design, oversight costs, and implementation of U. S. Steel's preferred remedial alternatives on the upland property and Estuary are currently estimated as of June 30, ~~2018~~2019 at approximately ~~$47~~$45 million.

RCRA and Other Remediation Sites

U. S. Steel may be liable for remediation costs under other environmental statutes, both federal and state, or where private parties are seeking to impose liability on U. S. Steel for remediation costs through discussions or litigation. There are 17 such sites where remediation is being sought involving amounts in excess of $100,000. 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 7seven sites have potential costs between $100,000 and $1 million per site, 5five sites may involve remediation costs between $1 million and $5 million per site and 5five sites are estimated to or could have, costs for remediation, investigation, restoration or compensation in excess of $5 million per site.

For more information on the status of remediation activities at U. S. Steel’s significant sites, see the discussions related to each site below.

Gary Works

On October 23, 1998, the ~~Environmental Protection Agency (EPA)~~U.S. EPA issued a final Administrative Order on Consent (Order) addressing Corrective Action for Solid Waste Management Units (SWMU) throughout Gary Works. This Order requires U. S. Steel to perform a Resource Conservation and Recovery Act (RCRA) Facility Investigation (RFI), a Corrective Measures Study (CMS) and Corrective Measure Implementation. ~~While work continues~~Evaluations are underway at six groundwater areas on ~~several items, there has been no material change in~~ the ~~status~~east side of the ~~project during~~facility and it is likely that corrective measures will be required, but it is not possible at this time to define a scope or estimate costs for what may be required by the ~~six months ended June 30, 2018.~~U.S. EPA. Until the remaining Phase I work and Phase II field investigations are completed, it is not possible to assess what additional expenditures will be necessary for Corrective Action projects at Gary Works. In total, the accrued liability for Corrective Action projects is approximately ~~$26~~$25 million as of June 30, ~~2018,~~2019, based on our current estimate of known remaining costs. Significant additional costs associated with the six groundwater areas at this site are possible and are referenced in Note 22 to the Condensed Consolidated

Financial Statements “Contingencies and Commitments - Environmental Matters - Remediation Projects - Projects with Ongoing Study and Scope Development.”

Geneva Works

At U. S. Steel’s former Geneva Works, liability for environmental remediation, including the closure of three hazardous waste impoundments and facility-wide corrective action, has been allocated between U. S. Steel and the current property owner pursuant to an agreement and a permit issued by the Utah Department of Environmental Quality

(UDEQ). Having completed the investigation on a majority of the remaining areas identified in the permit, U. S. Steel has determined the most effective means to address the remaining impacted material is to manage those materials in a previously approved on-site Corrective Action Management Unit (CAMU). ~~While preliminary approval~~U. S. Steel awarded a contract for the implementation of the ~~conceptual~~ CAMU ~~design has been granted by the UDEQ, there has been no material change in the status of the~~ project during the ~~six months ended June 30, 2018.~~fourth quarter of 2018 and submitted several design documents to UDEQ for approval. Construction, waste stabilization and placement along with closure of the CAMU are expected to be complete in 2020. U. S. Steel has an accrued liability of approximately ~~$62~~$58 million as of June 30, ~~2018,~~2019, for our estimated share of the remaining costs of remediation.

USS-POSCO Industries (UPI)

A joint venture in Pittsburg, California between subsidiaries of U. S. Steel and POSCO, UPI's facilities were previously owned and operated solely by U. S. Steel which retains primary responsibility for the existing environmental conditions. ~~Work~~U. S. Steel continues to monitor the impacts of the remedial plan implemented in 2016 to address groundwater impacts from trichloroethylene at SWMU 4. Evaluations continue for the three SWMUs known as the Northern Boundary Group and it is likely that corrective measures will be required, but it is not possible at this time to define a scope or estimate costs for what may be required by the California Department of Toxic Substances Control. As such, there has been no material change in the status of the project during the six months ended June 30, ~~2018.~~2019. As of June 30, ~~2018,~~2019, approximately $1 million has been accrued for ongoing environmental studies, investigations and remedy monitoring. Significant additional costs associated with this site are possible and are referenced in Note 22 to the Condensed Consolidated Financial Statements “Contingencies and Commitments - Environmental Matters - Remediation Projects - Projects with Ongoing Study and Scope Development.”

Fairfield Works

A consent decree was signed by U. S. Steel, the U.S EPA and the U.S. Department of Justice and filed with the United States District Court for the Northern District of Alabama (United States of America v. USX Corporation) in December 1997. In accordance with the consent decree, U. S. Steel initiated a RCRA corrective action program at the Fairfield Works facility. The Alabama Department of Environmental Management, with the approval of the U.S EPA, assumed primary responsibility for regulation and oversight of the RCRA corrective action program at Fairfield Works. While work continues on different aspects of the program, there has been no material change in the status of the project during the six months ended June 30, ~~2018.~~2019. In total, the accrued liability for remaining work under the Corrective Action Program, was approximately ~~$201,000~~$271,000 at June 30, ~~2018.~~2019. Significant additional costs associated with this site are possible and are referenced in Note 22 to the Condensed Consolidated Financial Statements “Contingencies and Commitments - Environmental Matters - Remediation Projects - Projects with Ongoing Study and Scope Development.”

Fairless Plant

In April 1993, U. S. Steel entered into a consent order with the U.S EPA pursuant to RCRA, under which U. S. Steel would perform Interim Measures (IM), an RFI and CMS at our Fairless Plant. A Phase I RFI Final Report was submitted in September of 1997. With U.S EPA’s agreement, in lieu of conducting subsequent phases of the RFI and the CMS, U. S. Steel has been working through the Pennsylvania Department of Environmental Protection Act 2 Program to characterize and remediate facility parcels for redevelopment. While work continues on these items, there has been no material change in the status of the project during the six months ended June 30, ~~2018.~~2019. As of June 30, ~~2018,~~2019, the accrued liability to maintain the interim measures, and clear properties through the Act 2 process is approximately ~~$270,000.~~$214,000. Significant additional costs associated with this site are possible and are referenced in Note 22 to the Condensed Consolidated Financial Statements “Contingencies and Commitments - Environmental Matters - Remediation Projects - Projects with Ongoing Study and Scope Development.”

Lorain Tubular Operations

In September 2006, U. S. Steel and the Ohio Environmental Protection Agency (OEPA) commenced discussions about RCRA Corrective Action at Lorain Tubular Operations. A Phase I RFI on the identified SWMUs and Areas of Contamination was submitted in March 2012. While discussions continue with OEPA on ~~finalizing~~drafting the Statement of Basis identifying potential remedies to address areas documented in the Phase II RFI, ~~report that addresses additional investigations of soil, site wide groundwater and the pipe mill lagoon,~~ there has been no material change in the status of the project during the six months ended June 30, ~~2018.~~2019. As of June 30, ~~2018,~~2019, costs to complete additional projects are estimated to be approximately ~~$101,000.~~$81,000. Significant additional costs associated with this site are possible and are referenced in Note 22 to the Condensed Consolidated Financial Statements “Contingencies and Commitments - Environmental Matters - Remediation Projects - Projects with Ongoing Study and Scope Development.”

Joliet Works

The 50-acre parcel at the former Joliet Works is enrolled in the Illinois Environmental Protection Agency’s (IEPA) voluntary Site Remediation Program (the Program). The Program requires investigation and establishment of cleanup objectives followed by submission/approval of a Remedial Action Plan to meet those objectives. The 50-acre parcel was divided into four ~~(4)~~ subareas with remedial activities completed in 2015 for three ~~(3)~~ of the subareas. While work continues to define the requirements for further investigation of the remaining subarea, there has been no material change in the status of the project during the six months ended June 30, ~~2018.~~2019. U. S. Steel has an accrued liability of ~~$287,000~~$273,000 as of June 30, ~~2018.~~2019. Significant additional costs associated with this site are possible and are referenced in Note 22 to the Condensed Consolidated Financial Statements “Contingencies and Commitments - Environmental Matters - Remediation Projects - Projects with Ongoing Study and Scope Development.”

Cherryvale (KS) Zinc

In April 2003, U. S. Steel and Salomon Smith Barney Holdings, Inc. (SSB) entered into a Consent Order with the Kansas Department of Health & Environment (KDHE) concerning a former zinc smelting operation in Cherryvale, Kansas. Remediation of the site proper was essentially completed in 2007. The Consent Order was amended on May 3, 2013, to require investigation (but not remediation) of potential contamination beyond the boundary of the former zinc smelting operation. On November 22, 2016, KDHE approved a State Cooperative Final Agency Decision Statement that identified the remedy selected to address potential contamination beyond the boundary of the former zinc smelting site. ~~Work continues on finalizing the institutional controls required under the Plan while the~~The Removal Action Design Plan was approved during the second quarter of 2018. AsThe Waste Deposition Area design and the Interim Risk Management Plan (which includes institutional controls) were approved by KDHE during the fourth quarter of 2018. An amended consent order for remediation was signed in May 2019 and a remediation contract was executed in June 2019.U. S. Steel has an accrued liability of approximately $10 million as of June 30, ~~2018, an accrual~~2019, for our estimated share of ~~approximately $268,000 remains available for addressing these outstanding issues. Significant additional costs associated with this site are possible and are referenced in Note 22 to~~ the ~~Consolidated Financial Statements “Contingencies and Commitments - Environmental Matters - Remediation Projects - Projects with Ongoing Study and Scope Development.”~~cost of remediation.

South Works

On August 29, 2017, U. S. Steel was notified by the U.S. Coast Guard of a sheen on the water in the North Vessel Slip at our former South Works in Chicago, Illinois. U. S. Steel has been working with the IEPA under their voluntary Site Remediation Program since 1993 to evaluate the condition of the property including the North Vessel Slip. The result of this cooperative effort has been the issuance of a series of “No Further Remediation” (NFR) notices to U. S. Steel including one specific to the North Vessel Slip. U. S. Steel has notified the IEPA of the potential changed condition and is working closely with the IEPA and the U. S. Coast Guard to determine the source of the sheen and options to address the issue. U. S. Steel has an accrued liability of ~~$29,000~~$22,000 as of June 30, ~~2018.~~2019.

Air Related Matters

Gary Works

In November 2018, the Indiana Department of Environmental Management (IDEM) advised U. S. Steel that it intends to address certain deviations from the Gary Works Title V Permit that were to have occurred in late 2017 and the first three quarters of 2018 in an enforcement action that it anticipates would be resolved through an Agreed Order. IDEM indicated that it intends to address the following issues in the action: intermittent exceedances of opacity standards at the steel producing roof monitor; deviations from certain miscellaneous inspection requirements; exceedance of the hydrochloric acid limit at the pickle line (which U. S. Steel has since demonstrated compliance); and exceedance of

the particulate matter limit at the iron pellet screeners. Generally, the deviations were self-disclosed by U. S. Steel in reports submitted to IDEM. U. S. Steel is currently working with IDEM to resolve the issues.

Great Lakes Works

In June 2010, the EPA significantly lowered the primary ~~National Ambient Air Quality Standards~~ (NAAQS) for SO₂ from 140 ~~parts per billion (ppb)~~ppb on a 24-hour basis to an hourly standard of 75 ppb. Based upon the 2009-2011 ambient air monitoring data, the U.S. EPA designated the area in which Great Lakes Works is located as nonattainment with the 2010 SO₂ NAAQS.

As a result, pursuant to the CAA, the Michigan Department of ~~Environmental Quality (MDEQ) must~~Environment, Great Lakes and Energy (EGLE) was required to submit a SIP to the U.S. EPA that demonstrates that the entire nonattainment area (and not just the monitor) ~~will~~would be in attainment by October 2018 by using conservative air dispersion modeling. To develop the SIP, U. S. Steel met with ~~MDEQ~~EGLE on multiple occasions and had offered reduction plans to ~~MDEQ~~EGLE but the parties could not agree to a plan. ~~MDEQ,~~EGLE, instead promulgated Rule 430 which was solely directed at U. S. Steel. The Company challenged Rule 430 before the Michigan Court of Claims who by Order dated October 4, 2017, granted the Company’s motion for summary disposition voiding Rule 430 finding that it violated rule-making provisions of the Michigan Administrative Procedures Act and Michigan Constitution. Since Rule 430 has been invalidated and EGLE's SIP has not been approved, U.S. EPA has indicated that it would promulgate a Federal Implementation Plan (FIP). pursuant to its obligations and authority under the CAA. Because development of the FIP is in the early stages, the impacts of the nonattainment designation to the Company are not estimable at this time.

On January ~~31, 2018,~~17, 2019, U. S. Steel ~~received a Violation Notice from MDEQ~~and EGLE met to discuss resolution of violations that were alleged to have occurred intermittently in ~~which MDEQ alleges that~~2017 and 2018 regarding opacity from: the D4 Blast Furnace slag pit, D4 Blast Furnace backdraft stack, B2 Blast Furnace casthouse roof monitor, B2 Blast Furnace backdraft stack, and Basic Oxygen Furnace Shop Roof Monitor; and exceedances of applicable limits at the pickle line. Subsequent to the meeting in late February, EGLE advised U. S. Steel ~~exceeded the applicable six-minute opacity standard at the B2 Blast Furnace Casthouse on October 25, 2017.~~that it was assessing a civil penalty of $378,883 for these alleged violations. U. S. Steel ~~responded~~and EGLE continue to ~~the notice on February 21, 2018. No penalty has been assessed.~~negotiate resolution.

On May 27, 2015, Great Lakes Works received a Violation Notice in which MDEQ alleged that U. S. Steel did not obtain a required permit to install a BOP vessel replacement that occurred in November 2014. U. S. Steel responded to MDEQ on June 17, 2015. While the resolution of the matter is uncertain at this time, it is not anticipated that the resolution will be material to U. S. Steel.

Granite City Works

In October 2015, Granite City Works received a Violation Notice from IEPA in which the IEPA alleges that U. S. Steel violated the emission limits for nitrogen oxides (NOx) and volatile organic compounds from the Basic Oxygen Furnace Electrostatic Precipitator Stack. In addition, the IEPA alleges that U. S. Steel exceeded its natural gas usage limit at its CoGeneration Boiler. U. S. Steel responded to the notice and is currently discussing resolution of the matter with IEPA.

Although discussions with IEPA regarding the foregoing alleged violations are ongoing and the resolution of these matters is uncertain at this time, it is not anticipated that the result of those discussions will be material to U. S. Steel.

Minnesota Ore Operations

On February 6, 2013, the U.S. EPA published a FIP that applies to taconite facilities in Minnesota. The FIP establishes and requires emission limits and the use of low NOx reduction technology on indurating furnaces as Best Available Retrofit ~~Technology.~~Technology (BART). While U. S. Steel installed low NOx burners on three furnaces at Minntac and is currently obligated to install low NOx burners on the two other furnaces at Minntac pursuant to existing agreements and permits, the rule would require the installation of a low NOx burner on the one furnace at Keetac for which U. S. Steel did not have an otherwise existing obligation. U. S. Steel estimates expenditures associated with the installation of low NOx burners of as much as $25 to $30 million. In 2013, U. S. Steel filed a petition for administrative reconsideration to the U.S. EPA and a petition for judicial review of the 2013 FIP and denial of the Minnesota SIP to the Eighth Circuit. In April 2016, the EPA promulgated a revised FIP with the same substantive requirements for U. S. Steel. In June 2016, U. S. Steel filed a petition for administrative reconsideration of the 2016 FIP to the U.S. EPA and a petition for judicial review of the 2016 FIP before the Eighth Circuit Court of Appeals. While the proceedings regarding the petition for judicial review of the 2013 FIP remained stayed, oral arguments regarding the petition for judicial review of the 2016 FIP were heard by the Eighth Circuit Court of Appeals on November 15, 2017. Thus, both petitions for judicial review remain with the Eighth Circuit. On December 4, 2017, U.S. EPA published a notification in the Federal Register in which the U.S. EPA denied U. S. Steel’s administrative petitions for reconsideration and stay of the 2013 FIP and 2016 FIP. On February 1, 2018, U. S. Steel filed a petition for judicial review of U.S. EPA’s denial of the administrative petitions for reconsideration to the ~~8th~~Eighth Circuit Court of Appeals. U. S. Steel continues to defend its three petitions

that are before the Eighth Circuit Court of Appeals regarding BART requirements at Minntac and Keetac while pursuing a resolution that would include an equitable revision to the FIP.

Mon Valley Works

On November 9, 2017, U.S. EPA Region III and ACHD jointly issued a Notice of Violation (NOV) regarding the Company’s Edgar Thomson facility in Braddock, PA. In addition, on November 20, 2017, ACHD issued a separate, but related NOV to the Company regarding the Edgar Thomson facility. In the NOVs, based upon their inspections and review of documents collected throughout the last two years, the agencies allege that the Company has violated the CAA by exceeding the allowable visible emission standards from certain operations during isolated events. In addition, the agencies allege that the Company has violated certain maintenance, reporting, and recordkeeping requirements. U. S. Steel met with U.S. EPA Region III and ACHD on December 18, ~~2017.~~2017 and again on August 15, 2018. ACHD, U.S. EPA Region III and U. S. Steel continue to negotiate a potential resolution of the matter.

U. S. Steel received a civil enforcement order with an assessed penalty in the amount of $263,375 from the ACHD on April 4, 2018. The allegations in the order are based on events that were alleged to have occurred in February and March of 2016. The allegations were the subject of Occupational Safety and Health Administration (OSHA) citations that were resolved through a settlement agreement after U. S. Steel contested the OSHA citations. Specifically, the ACHD alleges that U. S. Steel failed to properly abate asbestos-containing material in conformance with applicable permits and regulations. After meeting with U. S. Steel, on May 3, 2018, the ACHD vacated the original order and issued a new order reducing the penalty to $198,625 for alleged violations of the asbestos Operating and Maintenance Permit. U. S. Steel appealed the new order on June 4, 2018. In addition, the ACHD issued three new civil enforcement orders on June 3, 2018, assessing a total penalty of $91,100 for the Company’s alleged failure to submit quarterly reports of asbestos removed under its Operating and Maintenance Permits at the Irvin Works, Edgar Thomson, and

Clairton plants in 2015, 2016, 2017, and the first quarter of 2018. The Company appealed the June 3, 2018 orders on June 28, 2018. The parties are currently engaged in negotiations to resolve the asbestos matters with the ACHD.

On June 28, 2018, U. S. Steel received an Enforcement Order from the ACHD for the Clairton ~~plant~~Plant for alleged violations of various environmental permit and regulatory requirements pertaining to air emissions. The total penalty demand is $1,091,950 for alleged violations that were to have occurred in late 2017 and early 2018. ACHD ordered U. S. Steel to conduct a SO₂ stack ~~test~~tests of C Battery Quench Tower exhaust. ACHD also ordered U. S. Steel to provide an assessment of all emissions points at the Clairton facility to ACHD; and to propose measures, for ACHD approval, to reduce SO₂, particulate matter and visible emissions within sixty days of receipt of the Order. In the Order, ACHD demanded that if U. S. Steel fails to meet any requirements in the Order, U. S. Steel shall place its two worst performing batteries on hot idle until ACHD determines U. S. Steel is in compliance with the Order. U. S. Steel ~~intends~~has appealed the Order and posted the penalty amount in an escrow account. A hearing was held December 3 - 6, 2018 and post-hearing briefing concluded on March 29, 2019.

On November 14, 2018, U. S. Steel received a revised Administrative Order from the ACHD with an assessed penalty of $613,716 for alleged violations regarding fugitive emission sources (coke oven doors, lids, offtakes, charging, high opacity doors and soaking) at the Clairton Plant that were alleged to ~~vigorously defend~~have occurred during the second quarter of 2018. On December 12, 2018, U. S. Steel appealed the Administrative Order.

On March 29, 2019, ACHD issued Enforcement Order #190305, in which ACHD assessed a civil penalty of $707,568 for alleged battery fugitive emissions violations that were to have occurred during the third and fourth quarters of 2018. On April 25, 2019, U. S. Steel appealed Administrative Order #190305 and placed the civil penalty into escrow.

On May 10, 2019, ACHD issued Enforcement Order #190501, in which ACHD assessed a civil penalty of $337,670 for alleged battery fugitive emissions violations that were to have occurred during the first quarter of 2019. On June 4, 2019, U. S. Steel appealed Administrative Order #190501 and placed the civil penalty into escrow.

All four appeals were consolidated. On June 27, 2019, U. S. Steel and ACHD entered into a Settlement Agreement that is now in effect resolving the four appeals discussed above. A comment period expired on July 31, 2019 after a public hearing that was held on July 30, 2019.

On December 24, 2018, U. S. Steel's Clairton Plant experienced a fire, affecting portions of the facility involved in desulfurization of the coke oven gas generated during the coking process. With the desulfurization process out of operation as a result of the fire, U. S. Steel was not able to certify compliance with Clairton Plant’s Title V permit levels for sulfur emissions. U. S. Steel promptly notified ACHD, which has regulatory jurisdiction for the Title V permit, and updated the ACHD regularly on our efforts to mitigate any potential environmental impacts until the desulfurization process was returned to normal operations. Of the approximately 2,400 hours between the date of the fire and April 4, 2019, when the Company resumed desulfurization, there were ten intermittent hours where average SO₂ emissions exceeded the hourly NAAQS for SO₂ at the Allegheny County regional air quality monitors located in Liberty and North Braddock boroughs which are near U. S. Steel's Mon Valley Works facilities. ACHD has asserted that these emission levels were the result of our inability to complete the desulfurization process following the fire and informed U. S. Steel that it will pursue enforcement action against the Company following restoration of the desulfurization process to normal operations. On February 13, 2019, PennEnvironment and Clean Air Council, both environmental, non-governmental organizations, sent U. S. Steel a 60-day notice of intent to sue letter pursuant to the CAA. The letter alleges Title V permit violations at the Clairton, Irvin, and Edgar Thomson facilities as a result of the December 24, 2018 Clairton Plant fire. The 60-day notice letter also alleged that the violations caused adverse public health and welfare impacts to the communities surrounding the Clairton, Irvin, and Edgar Thomson facilities. PennEnvironment and Clean Air Council subsequently filed a Complaint in Federal Court in the Western District of Pennsylvania on

April 29, 2019 to which U. S. Steel has responded. On May 3, 2019, ACHD filed a motion to intervene in the lawsuit which was granted by the Court. On June 25, 2019, ACHD filed its Complaint in Intervention, seeking injunctive relief and civil penalties regarding the alleged Permit violations following the December 24, 2018 fire.

On May 2, 2019 the Environmental Integrity Project, the Breathe Project and Clean Air Council, environmental, non-governmental organizations, issued a separate 60-day notice of intent to sue letter contending that the Company violated the CERCLA notification requirements with respect to the Clairton fire.

In addition, as a result of the fire and our temporary inability to desulfurize coke oven gas, on February 28, 2019, the ACHD issued an Enforcement Order that would have required U. S. Steel to take immediate measures to significantly reduce the production of coke oven gas that would have put the safety of employees, contractors and the public at risk. On March 1, 2019, U. S. Steel filed a notice of appeal of the Order, submitted a petition for stay of the Order, and requested an emergency status conference. On March 1, 2019, after hearing U. S. Steel's testimony, the ACHD Hearing Officer ordered a temporary stay of the Order. ~~While~~After meeting with U. S. Steel, on March 12, 2019, the ~~outcome~~ACHD issued a revised order that superseded the February 28, 2019 Order. On April 4, 2019, U. S. Steel completed repairs to the desulphurization equipment which enabled us to resume desulfurizing all of the coke oven gas generated. No penalty was assessed in the February 28 or March 12 orders. U. S. Steel fully complied with the revised order.

On April 24, 2019, U. S. Steel was served with a class action complaint that was filed in the Allegheny Court of Common Pleas related to the December 24, 2018 fire at Clairton. The complaint asserts common law nuisance and negligence claims and seeks compensatory and punitive damages that allegedly were the result of U. S. Steel's conduct that resulted in the fire and U. S. Steel's operations subsequent to the fire. U. S. Steel is ~~uncertain, an unfavorable resolution could have a material impact on~~vigorously defending the ~~Company's financial results.~~matter.

ASBESTOS LITIGATION

As of June 30, ~~2018,~~2019, U. S. Steel was a defendant in approximately ~~760~~777 active cases involving approximately ~~2,300~~2,360 plaintiffs. The vast majority of these cases involve multiple defendants. ~~At December 31, 2017, U. S. Steel was a defendant in approximately 820 active cases involving approximately 3,315 plaintiffs.~~ About 1,540, or approximately 6765 percent, of these plaintiff claims are currently pending in jurisdictions which permit filings with massive numbers of plaintiffs. At December 31, 2018, U. S. Steel was a defendant in approximately 755 active cases involving approximately 2,320 plaintiffs. Based upon U. S. Steel’s experience in such cases, ~~we believe~~it believes that the actual number of plaintiffs who ultimately assert claims against U. S. Steel will likely be a small fraction of the total number of plaintiffs.

The following table shows activity with respect to asbestos litigation:


Period ended	Opening Number of Claims	Claims Dismissed, Settled and Resolved (a)	New Claims	Closing Number of Claims	Opening Number of Claims	Claims Dismissed, Settled and Resolved^(a)	New Claims	Closing Number of Claims
December 31, 2015	3,455	415	275	3,315
December 31, 2016	3,315	225	250	3,340	3,315	225	250	3,340
December 31, 2017	3,340	275	250	3,315	3,340	275	250	3,315
June 30, 2018	3,315	1,160	145	2,300
December 31, 2018					3,315	1,285	290	2,320
June 30, 2019					2,320	100	140	2,360

(a) The period ending ~~June 30,~~December 31, 2018 includes approximately 1,000 dismissed cases previously pending in the State of Texas.

Historically, asbestos-related claims against U. S. Steel fall into three groups: (1) claims made by persons who allegedly were exposed to asbestos on the premises of U. S. Steel facilities; (2) claims made by persons allegedly exposed to products manufactured by U. S. Steel; and (3) claims made under certain federal and maritime laws by employees of former operations of U. S. Steel.

The amount U. S. Steel accrues for pending asbestos claims is not material to U. S. Steel’s financial condition. However, U. S. Steel is unable to estimate the ultimate outcome of asbestos-related claims due to a number of uncertainties, including: (1) the rates at which new claims are filed, (2) the number of and effect of bankruptcies of other companies traditionally defending asbestos claims, (3) uncertainties associated with the variations in the litigation process from jurisdiction to jurisdiction, (4) uncertainties regarding the facts, circumstances and disease process with each claim, and (5) any new legislation enacted to address asbestos-related claims.

Further, U. S. Steel does not believe that an accrual for unasserted claims is required. At any given reporting date, it is probable that there are unasserted claims that will be filed against the Company in the future. In 2018, the Company

engaged an outside valuation consultant to assist in assessing its ability to estimate an accrual for unasserted claims. This assessment was based on the Company's settlement experience, including recent claims trends. The analysis focused on settlements made over the last several years as these claims are likely to best represent future claim characteristics. After review by the valuation consultant and U. S. Steel management, it was determined that the Company could not estimate an accrual for unasserted claims.

Despite these uncertainties, management believes that the ultimate resolution of these matters will not have a material adverse effect on U. S. Steel’s financial ~~condition, although the resolution of such matters could significantly impact results of operations for a particular quarter.~~condition.

~~Item 1A. RISK FACTORS~~

~~We face risks relating to changes in U.S. and foreign tariffs, trade agreements, laws, and policies~~

Through a series of Presidential Proclamations pursuant to Section 232 of the Trade Expansion Act of 1962, the U.S. government recently imposed restrictive quotas on certain steel imports from Argentina, Brazil, and Korea, and a 25 percent tariff on certain steel imports from all other countries except Australia. The Section 232 national security tariffs and quotas on steel imports currently provide U. S. Steel and other domestic steel producers critical relief from import competition. With no scheduled end date, the duration of the Section 232 relief is not known. Further, the U.S. government may negotiate alternatives to the Section 232 tariffs for certain countries. The U.S. Department of Commerce continues to administer its Section 232 product exclusion process. The Section 232 action on aluminum and steel imports, potential Section 232 action on other products, and recent and potential additional U.S. import tariffs imposed under Section 301 of the Trade Act of 1974 have resulted in the possibility of tariffs being applied to materials and/or items we purchase from subject countries or regions as part of our manufacturing process, and may result in additional, retaliatory action by foreign governments on U.S. exports of a range of products. All of the above poses a degree of uncertainty to our financial and operational performance, our customers, and overall economic conditions, all of which could impact steel demand and our performance. Thus, the overall impact of the Section 232 relief on our future financial and operational performance remains uncertain.

~~Item 2. Unregistered Sales of Equity Securities and Use of Proceeds~~

Period
(a) Total Number of Shares (or Units) Purchased

(b)
Average Price Paid per Share (or Unit)

(c)
Total Number of Shares (or Units) Purchased as Part of Publicly Announced
Plans or Programs

(d)
Maximum Number (or Approximate Dollar Value) of Shares (or Units) that May Yet Be Purchased Under the
Plans or Programs

June 1, 2018 - June 30, 2018 3,137 $ 37.615
— —



Item 4.	MINE SAFETY DISCLOSURES

The information concerning mine safety violations and other regulatory matters required by Section 150 of the Dodd-Frank Wall Street Reform Act and Item 104 of Regulation S-K is included in Exhibit 95 to this Form 10-Q.



Item 5.	~~OTHER INFORMATION~~ISSUER PURCHASES OF EQUITY SECURITIES

~~None.~~

Purchases of Equity Securities by the Issuer and the Affiliated Purchasers

Share repurchase activity under the Company's stock repurchase program during the three months ended June 30, 2019 was as follows:



Period	Total Number of Shares Purchased	Average Price Paid per Share		Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs	Approximate Dollar Value of Shares that May Yet Be Purchased Under the Plans or Programs ^(a)
April 1 - 30, 2019	557,673	$	17.637	557,673	$	173,113,900
May 1 - 31, 2019	770,162	$	14.719	770,162	$	161,778,200
June 1 - 30, 2019	520,481	$	13.107	520,481	$	154,956,300
Quarter ended June 30, 2019	1,848,316	$	15.145	1,848,316	$	154,956,300

^(a)On November 1, 2018, the Company announced that its Board of Directors authorized a stock repurchase program to repurchase up to $300 million of our outstanding common stock over a two-year period at the discretion of management, of which approximately $145 million had been utilized as of June 30, 2019. The Company’s stock repurchase program does not obligate it to acquire any specific number of shares. Under this program, the shares will be purchased from time to time at prevailing market prices, through open market or privately negotiated transactions, depending upon market conditions.



Item 6.	EXHIBITS




~~10.1~~		~~Summary of Realistically Achievable Potential (RAP) Incentive Program awards under the United States Steel Corporation 2016 Omnibus Incentive Compensation Plan.~~
31.1		Certification of Chief Executive Officer required by Rules 13a-14(a) or 15d-14(a) of the Securities Exchange Act of 1934, as promulgated by the Securities and Exchange Commission pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

31.2		Certification of Chief Financial Officer required by Rules 13a-14(a) or 15d-14(a) of the Securities Exchange Act of 1934, as promulgated by the Securities and Exchange Commission pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

32.1		Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

32.2		Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

95		Mine Safety Disclosure required under Section 1503 of the Dodd-Frank Wall Street Reform and Consumer Protection Act.

101 INS		XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.

101 SCH		XBRL Taxonomy Extension Schema Document

101 CAL		XBRL Taxonomy Extension Calculation Linkbase Document

101 DEF		XBRL Taxonomy Extension Definition Linkbase Document

101 LAB		XBRL Taxonomy Extension Label Linkbase Document

101 PRE		XBRL Taxonomy Extension Presentation Linkbase Document

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 chief accounting officer thereunto duly authorized.



UNITED STATES STEEL CORPORATION

By		/s/ ~~Colleen M. Darragh~~Kimberly D. Fast

		~~Colleen M. Darragh~~Kimberly D. Fast
		~~Vice President &~~Acting Controller

August 2, ~~2018~~2019

WEB SITE POSTING

This Form 10-Q will be posted on the U. S. Steel web site, www.ussteel.com, within a few days of its filing.

~~-60-~~-59-



Delaware	1-16811	25-1897152
(State or other jurisdiction of incorporation)	(Commission File Number)	(IRS Employer Identification No.)



600 Grant Street	Pittsburgh	PA	15219-2800
(Address of principal executive offices)			(Zip Code)



Title of each class	Trading Symbol	Name of each exchange on which registered
United States Steel Corporation Common Stock	X	New York Stock Exchange
United States Steel Corporation Common Stock	X	Chicago Stock Exchange



			Page
PART I – FINANCIAL INFORMATION
	Item 1.	Financial Statements:
		Condensed Consolidated Statement of Operations (Unaudited)	1
		Condensed Consolidated Statement of Comprehensive Income (Loss) (Unaudited)	2
		Condensed Consolidated Balance Sheet (Unaudited)	3
		Condensed Consolidated Statement of Cash Flows (Unaudited)	4
		Notes to Condensed Consolidated Financial Statements (Unaudited)	5
	Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	30
	Item 3.	Quantitative and Qualitative Disclosures about Market Risk	47
	Item 4.	Controls and Procedures	48
	~~Item 4.~~	~~Controls and Procedures~~Supplemental Statistics (Unaudited)	49
				~~Supplemental Statistics (Unaudited)~~	50
PART II – OTHER INFORMATION
	Item 1.	Legal Proceedings	5150
	Item ~~1A.~~4.	~~Risk Factors~~	57
	~~Item 2.~~	~~Unregistered Sales of Equity Securities and Use of Proceeds~~Mine Safety Disclosure	58
	Item 4.5.	~~Mine Safety Disclosure~~Issuer Purchases of Equity Securities	5958
	Item 6.	Exhibits	58
SIGNATURE			59
~~SIGNATURE~~WEB SITE POSTING			60
~~WEB SITE POSTING~~			6059


(Dollars in millions)	June 30, 2018			December 31, 2017			June 30, 2019			December 31, 2018
Assets
Current assets:
Cash and cash equivalents (Note 6)	$	1,231		$	1,553		$	651		$	1,000
Receivables, less allowance of $28 and $28	1,430			1,173
Receivables from related parties (Note 20)	226			206
Inventories (Note 13)	1,848			1,738
Receivables, less allowance of $28 and $29							1,420			1,435
Receivables from related parties (Note 21)							218			224
Inventories (Note 7)							2,166			2,092
Other current assets	77			85			92			79
Total current assets	4,812			4,755			4,547			4,830
Operating lease assets (Note 8)							237			—
Property, plant and equipment	15,378			15,086			16,584			16,008
Less accumulated depreciation and depletion	10,977			10,806			11,351			11,143
Total property, plant and equipment, net	4,401			4,280			5,233			4,865
Investments and long-term receivables, less allowance of $11 and $11	498			480
Intangibles – net (Note 7)	162			167
Deferred income tax benefits (Note 11)	56			56
Investments and long-term receivables, less allowance of $5 in both periods							550			513
Intangibles – net (Note 9)							154			158
Deferred income tax benefits (Note 13)							433			445
Other noncurrent assets	129			124			137			171
Total assets	$	10,058		$	9,862		$	11,291		$	10,982
Liabilities
Current liabilities:
Accounts payable and other accrued liabilities	$	2,239		$	2,096		$	2,498		$	2,454
Accounts payable to related parties (Note 20)	92			74
Accounts payable to related parties (Note 21)							117			81
Payroll and benefits payable	386			347			334			440
Accrued taxes	135			132			111			118
Accrued interest	46			69			39			39
Current portion of long-term debt (Note 15)	4			3
Current operating lease liabilities (Note 8)							54			—
Current portion of long-term debt (Note 16)							70			65
Total current liabilities	2,902			2,721			3,223			3,197
Long-term debt, less unamortized discount and debt issuance costs (Note 15)	2,541			2,700
Noncurrent operating lease liabilities (Note 8)							188			—
Long-term debt, less unamortized discount and debt issuance costs (Note 16)							2,345			2,316
Employee benefits	692			759			926			980
Deferred income tax liabilities (Note 11)	6			6
Deferred income tax liabilities (Note 13)							18			14
Deferred credits and other noncurrent liabilities	311			355			279			272
Total liabilities	6,452			6,541			6,979			6,779
Contingencies and commitments (Note 22)
Stockholders’ Equity (Note 18):
Common stock (177,179,937 and 176,424,554 shares issued) (Note 12)	177			176
Treasury stock, at cost (31,240 shares and 1,203,344 shares)	(1		)	(76		)
Stockholders’ Equity (Note 19):
Common stock (178,533,023 and 177,386,430 shares issued) (Note 14)							179			177
Treasury stock, at cost (7,176,841 shares and 2,857,578 shares)							(155		)	(78		)
Additional paid-in capital	3,900			3,932			3,936			3,917
Retained earnings	347			133			1,314			1,212
Accumulated other comprehensive loss (Note 19)	(818		)	(845		)
Accumulated other comprehensive loss (Note 20)							(963		)	(1,026		)
Total United States Steel Corporation stockholders’ equity	3,605			3,320			4,311			4,202
Noncontrolling interests	1			1			1			1
Total liabilities and stockholders’ equity	$	10,058		$	9,862		$	11,291		$	10,982



	~~[X]~~☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934



	~~[ ]~~☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934



	Three Months Ended June 30,						Six Months Ended June 30,
(Dollars in millions, except per share amounts)	2019			2018			2019			2018
Net sales:
Net sales	$	3,175		$	3,242		$	6,299		$	6,063
Net sales to related parties (Note 21)	370			367			745			695
Total (Note 5)	3,545			3,609			7,044			6,758
Operating expenses (income):
Cost of sales (excludes items shown below)	3,227			3,121			6,399			5,929
Selling, general and administrative expenses	82			92			160			170
Depreciation, depletion and amortization	150			130			293			258
Earnings from investees	(28		)	(19		)	(37		)	(22		)
Gain on equity investee transactions (Note 25)	—			(18		)	—			(18		)
Net loss on disposal of assets	—			1			4			2
Other (income) expense, net	(1		)	1			(1		)	1
Total	3,430			3,308			6,818			6,320
Earnings before interest and income taxes	115			301			226			438
Interest expense	31			43			65			93
Interest income	(5		)	(5		)	(10		)	(10		)
Loss on debt extinguishment (Note 11)	—			28			—			74
Other financial costs (benefits)	5			(8		)	2			2
Net periodic benefit cost (other than service cost)	23			17			46			34
Net interest and other financial costs (Note 11)	54			75			103			193
Earnings before income taxes	61			226			123			245
Income tax (benefit) provision (Note 13)	(7		)	12			1			13
Net earnings	68			214			122			232
Less: Net earnings attributable to noncontrolling interests	—			—			—			—
Net earnings attributable to United States Steel Corporation	$	68		$	214		$	122		$	232
Earnings per common share (Note 14):
Earnings per share attributable to United States Steel Corporation stockholders:
-Basic	$	0.39		$	1.21		$	0.71		$	1.32
-Diluted	$	0.39		$	1.20		$	0.70		$	1.30



	Three Months Ended June 30,						Six Months Ended June 30,
(Dollars in millions, except per share amounts)	2018			2017			2018			2017
Net sales:
Net sales	$	3,242		$	2,787		$	6,063		$	5,199
Net sales to related parties (Note 20)	367			357			695			670
Total (Note 5)	3,609			3,144			6,758			5,869
Operating expenses (income):
Cost of sales (excludes items shown below)	3,121			2,723			5,929			5,282
Selling, general and administrative expenses	92			67			170			148
Depreciation, depletion and amortization	130			121			258			258
Earnings from investees	(19		)	(16		)	(22		)	(20		)
Gain associated with retained interest in U. S. Steel Canada Inc. (Note 23)	—			(72		)	—			(72		)
Restructuring and other charges (Note 21)	—			(1		)	—			32
Net gain on disposal of assets	(17		)	—			(16		)	(1		)
Other expense (income), net	1			(5		)	1			(5		)
Total	3,308			2,817			6,320			5,622
Earnings before interest and income taxes	301			327			438			247
Interest expense	43			55			93			113
Interest income	(5		)	(4		)	(10		)	(8		)
Loss on debt extinguishment (Note 9)	28			1			74			1
Other financial (benefits) costs	(8		)	16			2			25
Net periodic benefit cost (other than service cost) (Note 3) ^(a)	17			14			34			32
Net interest and other financial costs (Note 9)	75			82			193			163
Earnings before income taxes	226			245			245			84
Income tax provision (benefit) (Note 11)	12			(16		)	13			3
Net earnings	214			261			232			81
Less: Net earnings attributable to noncontrolling interests	—			—			—			—
Net earnings attributable to United States Steel Corporation	$	214		$	261		$	232		$	81
Earnings per common share (Note 12):
Earnings per share attributable to United States Steel Corporation stockholders:
-Basic	$	1.21		$	1.49		$	1.32		$	0.46
-Diluted	$	1.20		$	1.48		$	1.30		$	0.46



	Three Months Ended June 30, 2017
Statement of Operations (In millions)		As Revised		Previously Reported		Effect of Change Higher/(Lower)
Cost of Sales		$	2,723	$	2,725	$	(2	)
Selling, general and administrative expenses		67		79		(12		)
Net periodic benefit cost (other than service cost)		14		—		14



	Six Months Ended June 30, 2017
Statement of Operations (In millions)		As Revised		Previously Reported		Effect of Change Higher/(Lower)
Cost of Sales		$	5,282	$	5,286	$	(4	)
Selling, general and administrative expenses		148		176		(28		)
Net periodic benefit cost (other than service cost)		32		—		32



(In millions)	June 30, 2018		June 30, 2017
Cash and cash equivalents	$	1,231	$	1,522
Restricted cash in other current assets	5		1
Restricted cash in other noncurrent assets	36		42
Total cash, cash equivalents and restricted cash	$	1,272	$	1,565



(In millions)	Balance Sheet Location	June 30, 2019
Assets
Operating	Operating lease assets ^(a)	$	237
Finance	Property, plant and equipment ^(b)	49
Total Lease Assets		$	286

Liabilities
Current
Operating	Current operating lease liabilities	$	54
Finance	Current portion of long-term debt	8
Non-Current
Operating	Noncurrent operating lease liabilities	188
Finance	Long-term debt less unamortized discount and issue costs	48
Total Lease Liabilities		$	298



(In millions)	Classification	Three Months Ended June 30, 2019		Six Months Ended June 30, 2019
Operating Lease Cost ^(a)	Cost of sales	$	20	$	40
Operating Lease Cost	Selling, general and administrative expenses	3		6
Finance Lease Cost
Amortization	Depreciation, depletion and amortization	1		2
Interest	Interest expense	1		1
Total Lease Cost		$	25	$	49



(In millions)	Capital Leases		Operating Leases
2019	$	5	$	66
2020	5		55
2021	5		45
2022	11		37
2023	—		28
After 2023	—		72
Total minimum lease payments	$	26	$	303
Less imputed interest costs	4
Present value of net minimum lease payments included in long-term debt	$	22


	2018			2017			2019			2018
Grant Details	Shares^(a)	Fair Value^(b)		Shares^(a)	Fair Value^(b)		Shares^(a)	Fair Value^(b)		Shares^(a)	Fair Value^(b)
Stock Options	—	$	—	632,050	$	17.43
Restricted Stock Units	728,945	$	41.52	336,120	$	36.59	1,002,400	$	23.78	728,945	$	41.52
Performance Awards ^(c)
TSR	79,190	$	61.57	156,770	$	42.45	210,520	$	29.22	79,190	$	61.57
ROCE ^(d)	247,510	$	43.50	—	$	—
ROCE							526,140	$	23.92	247,510	$	43.50



	June 30, 2019
Weighted average lease term
Finance	6 years
Operating	6 years

Weighted average discount rate
Finance	6.32	%
Operating	7.83	%



		As of June 30, 2019						As of December 31, 2018
(In millions)	Useful Lives	Gross Carrying Amount		Accumulated Amortization		Net Amount		Gross Carrying Amount		Accumulated Amortization		Net Amount
Customer relationships	22 Years	$	132	$	73	$	59	$	132	$	70	$	62
Patents	10-15 Years	22		8		14		22		7		15
Other	4-20 Years	14		8		6		14		8		6
Total amortizable intangible assets		$	168	$	89	$	79	$	168	$	85	$	83



		As of June 30, 2018						As of December 31, 2017
(In millions)	Useful Lives	Gross Carrying Amount		Accumulated Amortization		Net Amount		Gross Carrying Amount		Accumulated Amortization		Net Amount
Customer relationships	22 Years	$	132	$	67	$	65	$	132	$	64	$	68
Patents	10-15 Years	22		6		16		22		5		17
Other	4-20 Years	14		8		6		15		8		7
Total amortizable intangible assets		$	168	$	81	$	87	$	169	$	77	$	92


	Pension Benefits						Other Benefits						Pension Benefits						Other Benefits
(In millions)	2018			2017			2018			2017			2019			2018			2019			2018
Service cost	$	12		$	12		$	4		$	5		$	11		$	12		$	3		$	4
Interest cost	58			59			23			24			59			58			23			23
Expected return on plan assets	(90		)	(97		)	(21		)	(17		)	(81		)	(90		)	(20		)	(21		)
Amortization of prior service cost	—			—			8			7			1			—			7			8
Amortization of actuarial net loss	38			37			1			1			33			38			1			1
Net periodic benefit cost, excluding below	18			11			15			20			23			18			14			15
Multiemployer plans	15			14			—			—			19			15			—			—
Net periodic benefit cost	$	33		$	25		$	15		$	20		$	42		$	33		$	14		$	15



	Three Months Ended June 30,		Six Months Ended June 30,
(In thousands)	2019	2018	2019	2018
Securities granted under the 2016 Omnibus Incentive Compensation Plan, as amended	3,758	1,832	3,430	1,572



Hedge Contracts	Classification	June 30, 2019		June 30, 2018
Natural gas (in mmbtus)	Commodity purchase swaps	64,354,000		13,845,000
Tin (in metric tons)	Commodity purchase swaps	990		705
Zinc (in metric tons)	Commodity purchase swaps	13,942		13,468
Hot-rolled coils (in tons)	Sales swaps	—		60,000
Foreign currency (in millions of euros)	Foreign exchange forwards	€	301	€	266
Foreign currency (in millions of CAD)	Foreign exchange forwards	C$	40	C$	—



(In millions) Designated as Hedging Instruments	Balance Sheet Location	June 30, 2019		December 31, 2018
Sales swaps	Accounts payable	$	—	$	1
Commodity purchase swaps	Accounts receivable	2		2
Commodity purchase swaps	Accounts payable	11		17
Commodity purchase swaps	Investments and long-term receivables	2		—
Commodity purchase swaps	Other long-term liabilities	5		1
Foreign exchange forwards	Accounts payable	—		1
Foreign exchange forwards	Other long-term liabilities	—		1

Not Designated as Hedging Instruments
Foreign exchange forwards	Accounts receivable	6		12
Foreign exchange forwards	Accounts payable	1		—


	Gain (Loss) on Derivatives in AOCI							Amount of Gain (Loss) Recognized in Income						Gain (Loss) on Derivatives in AOCI							Amount of Gain (Loss) Recognized in Income
(In millions)	Three Months Ended June 30, 2018			Three Months Ended June 30, 2017			Location of Reclassification from AOCI ^(a)	Three Months Ended June 30, 2018			Three Months Ended June 30, 2017			Three Months Ended June 30, 2019			Three Months Ended June 30, 2018			Location of Reclassification from AOCI ^(a)	Three Months Ended June 30, 2019			Three Months Ended June 30, 2018
Sales swaps ^(b)	$	(3	)	$	—		Net sales	$	(3	)	$	—		$	—		$	(3	)	Net sales	$	—		$	(3	)
Commodity purchase swaps	—			(3		)	Cost of sales ^(c)	(2		)	(4		)	(15		)	—			Cost of sales ^(c)	(6		)	(2		)
Foreign exchange forwards														1			—			Cost of sales	—			—



		Amount of Gain (Loss) Recognized in Income
(In millions)	Consolidated Statement of Operations Location	Three Months Ended June 30, 2018		Three Months Ended June 30, 2017
Sales swaps ^(a)	Net sales	$	—	$	(2	)
Foreign exchange forwards	Other financial costs	19		(11		)



(In millions)	Interest Rates %	Maturity	June 30, 2019		December 31, 2018
2037 Senior Notes	6.650	2037	$	350	$	350
2026 Senior Notes	6.250	2026	650		650
2025 Senior Notes	6.875	2025	750		750
Environmental Revenue Bonds	5.750 - 6.875	2019 - 2042	400		400
Fairfield Caster Lease		2022	21		22
Other finance leases and all other obligations		2019 - 2029	41		6
Fourth Amended and Restated Credit Agreement	Variable	2023	—		—
USSK Credit Agreement	Variable	2023	228		229
USSK credit facilities	Variable	2021	—		—
Total Debt			2,440		2,407
Less unamortized discount and debt issuance costs			25		26
Less short-term debt and long-term debt due within one year			70		65
Long-term debt			$	2,345	$	2,316



Year	Redemption Price
2021	103.125	%
2022	101.563	%
2023 and thereafter	100.000	%


Six Months Ended June 30, 2018 (In millions)	Total			Retained Earnings			Accumulated Other Comprehensive (Loss) Income			Common Stock		Treasury Stock			Paid-in Capital			Non- Controlling Interest
Six Months Ended June 30, 2019 (In millions)																				Total			Retained Earnings			Accumulated Other Comprehensive (Loss) Income			Common Stock		Treasury Stock			Paid-in Capital		Non- Controlling Interest
Balance at beginning of year	$	3,321		$	133		$	(845	)	$	176	$	(76	)	$	3,932		$	1	$	4,203		$	1,212		$	(1,026	)	$	177	$	(78	)	$	3,917	$	1
Comprehensive income (loss):
Net earnings	232			232																54			54
Other comprehensive income (loss), net of tax:
Pension and other benefit adjustments	93						93													32						32
Currency translation adjustment	(47		)				(47		)											(17		)				(17		)
Derivative financial instruments	(19		)				(19		)											15						15
Employee stock plans	44									1		75			(32		)			2									1		(6		)	7
Common stock repurchased																				(42		)									(42		)
Dividends paid on common stock	(18		)	(18		)														(9		)	(9		)
Balance at June 30, 2018	$	3,606		$	347		$	(818	)	$	177	$	(1	)	$	3,900		$	1
Cumulative effect upon adoption of lease accounting standard																				(2		)	(2		)
Balance at March 31, 2019																				4,236			1,255			(996		)	178		(126		)	3,924		1
Comprehensive income (loss):
Net earnings																				68			68
Other comprehensive income (loss), net of tax:
Pension and other benefit adjustments																				32						32
Currency translation adjustment																				12						12
Derivative financial instruments																				(11		)				(11		)
Employee stock plans																				12									1		(1		)	12
Common stock repurchased																				(28		)									(28		)
Dividends paid on common stock																				(9		)	(9		)
Balance at June 30, 2019																				$	4,312		$	1,314		$	(963	)	$	179	$	(155	)	$	3,936	$	1



Six Months Ended June 30, 2017 (In millions)	Total			Accumulated Deficit			Accumulated Other Comprehensive (Loss) Income			Common Stock		Treasury Stock			Paid-in Capital			Non- Controlling Interest
Balance at beginning of year	$	2,275		$	(250	)	$	(1,497	)	$	176	$	(182	)	$	4,027		$	1
Comprehensive income (loss):
Net earnings	81			81
Other comprehensive income (loss), net of tax:
Pension and other benefit adjustments	92						92
Currency translation adjustment	105						105
Derivative financial instruments	(3		)				(3		)
Employee stock plans	19											86			(67		)
Dividends paid on common stock	(18		)												(18		)
Other	4			4
Balance at June 30, 2017	$	2,555		$	(165	)	$	(1,303	)	$	176	$	(96	)	$	3,942		$	1


(In millions) ^(a)	Pension and Other Benefit Items			Foreign Currency Items			Unrealized Gain (Loss) on Derivatives			Total			Pension and Other Benefit Items			Foreign Currency Items			Unrealized Gain (Loss) on Derivatives			Total
Balance at December 31, 2017	$	(1,309	)	$	463		$	1		$	(845	)
Balance at December 31, 2018													$	(1,416	)	$	403		$	(13	)	$	(1,026	)
Other comprehensive income before reclassifications	186			(47		)	(18		)	121			1			(5		)	15			11
Amounts reclassified from AOCI ^(b)(a)	(93		)	—			(1		)	(94		)	63			—			(11		)	52
Net current-period other comprehensive income	93			(47		)	(19		)	27			64			(5		)	4			63
Balance at June 30, 2019													$	(1,352	)	$	398		$	(9	)	$	(963	)

Balance at December 31, 2017													$	(1,309	)	$	463		$	1		$	(845	)
Other comprehensive income before reclassifications ^(b)													—			(47		)	(18		)	(65		)
Amounts reclassified from AOCI ^(a)(b)													93			—			(1		)	92
Net current-period other comprehensive income													93			(47		)	(19		)	27
Balance at June 30, 2018	$	(1,216	)	$	416		$	(18	)	$	(818	)	$	(1,216	)	$	416		$	(18	)	$	(818	)



		Amount reclassified from AOCI
		Three Months Ended June 30,						Six Months Ended June 30,
(In millions) ^(a)	Details about AOCI components	2018			2017			2018			2017
	Amortization of pension and other benefit items
	Prior service costs ^(b)	$	(8	)	$	(7	)	$	(15	)	$	(14	)
	Actuarial losses ^(b)	(39		)	(38		)	(78		)	(76		)
	Settlement, termination and curtailment losses ^(b)	—			—			—			(4		)
	Total pensions and other benefits items	(47		)	(45		)	(93		)	(94		)
	Derivative reclassifications to Consolidated Statements of Operations	2			—			(1		)	—
	Total before tax	(45		)	(45		)	(94		)	(94		)
	Tax benefit ^(c)	—			—			—			—
	Net of tax	$	(45	)	$	(45	)	$	(94	)	$	(94	)



		Amount reclassified from AOCI ^(c)
		Three Months Ended June 30,					Six Months Ended June 30,
(In millions)	Details about AOCI components	2019			2018		2019			2018
	Amortization of pension and other benefit items
	Prior service costs ^(a)	$	8		$	8	$	15		$	15
	Actuarial losses ^(a)	34			39		68			78
	Total pensions and other benefits items	42			47		83			93
	Derivative reclassifications to Condensed Consolidated Statements of Operations	(1		)	2		(14		)	(1		)
	Total before tax	41			49		69			92
	Tax provision ^(b)	(10		)	—		(17		)	—
	Net of tax	$	31		$	49	$	52		$	92



	Employee Related			Exit
(in millions)	Costs			Costs			Total
Balance at December 31, 2017	$	4		$	34		$	38
Cash payments/utilization	(2		)	(14		)	(16		)
Balance at June 30, 2018	$	2		$	20		$	22



Period ended	Opening Number of Claims	Claims Dismissed, Settled and Resolved ^(a)	New Claims	Closing Number of Claims
December 31, 2016	3,315	225	250	3,340
December 31, 2017	3,340	275	250	3,315
December 31, 2018	3,315	1,285	290	2,320
June 30, 2019	2,320	100	140	2,360



(In millions)	Six Months Ended June 30, 2019
Beginning of period	$	187
Accruals for environmental remediation deemed probable and reasonably estimable	2
Obligations settled	(7		)
End of period	$	182



Remainder of 2019	2020	2021	2022	2023	Later Years	Total
$358	$554	$390	$322	$317	$717	$2,658