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Commitments and Contingencies | 12 Months Ended
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Dec. 31, 2018
Commitments And Contingencies Disclosure [Abstract] |
Commitments and Contingencies | Note 15 — Commitments and Contingencies We are involved in litigation, investigations and claims arising out of the normal conduct of our business, including those relating to commercial transactions, environmental, employment and health and safety matters. While it is impossible to predict the ultimate resolution of litigation, investigations and claims asserted against us, we believe, based upon our examination of currently available information, our experience to date, and advice from legal counsel, that, after taking into account our existing insurance coverage and amounts already provided for, the currently pending legal proceedings against us will not have a material adverse impact on our consolidated results of operations, financial position or cash flows. Environmental Matters We have been named as a potentially responsible party (“PRP”) with respect to the below hazardous waste disposal sites that we do not own or possess, which are included on, or proposed to be included on, the Superfund National Priority List of the U.S. Environmental Protection Agency (“EPA”) or on equivalent lists of various state governments. Because the Federal Comprehensive Environmental Response, Compensation and Liability Act (“CERCLA” or “Superfund”) allows for joint and several liability in certain circumstances, we could be responsible for all remediation costs at such sites, even if we are one of many PRPs. We believe, based on the amount and nature of our waste, and the number of other financially viable PRPs, that our liability in connection with such environmental matters will not be material. Lower Passaic River Study Area Hexcel together with approximately 48 other PRPs that comprise the Lower Passaic Cooperating Parties Group (the “CPG”). are subject to a May 2007 Administrative Order on Consent (“AOC”) with the EPA requiring the CPG to perform a Remedial Investigation/Feasibility Study of environmental conditions of a 17-mile stretch of the Passaic River in New Jersey (the “Lower Passaic River”). We were included in the CPG based on our operations at our former manufacturing site in Lodi, New Jersey. In March 2016, the EPA issued a Record of Decision (“ROD”) setting forth the EPA’s selected remedy for the lower eight miles of the Lower Passaic River at an expected cost ranging from $0.97 billion to $2.07 billion. This estimate does not include any costs related to a future remedy for the upper nine miles of the Lower Passaic River. In August 2017, the EPA appointed an independent third party allocation expert to make recommendations on the relative liability of approximately 120 identified non-government PRP’s, which is not expected to be completed until 2020. In October 2016, pursuant to a settlement agreement with the EPA, Occidental Chemical Corporation (“OCC”), one of the PRPs commenced performance of the remedial design required by the ROD, reserving its right of cost contribution from all other PRPs. In June 2018, OCC filed suit against approximately 120 parties, including Hexcel, in the U.S. District Court of the District of New Jersey Seeking cost recovery and contribution under CERCLA related to the Lower Passaic River. We do not know whether this litigation will impact the EPA’s allocation process or the ultimate outcome of the matter. The accrual balance related to the Lower Passaic River site was $2.1 million as of December 31, 2018 and $2.0 million at December 2017. Given the uncertainty associated with the many elements of the Superfund process for the Lower Passaic River, the amounts accrued may not be indicative of the amounts for which we will ultimately be responsible. Omega Chemical Corporation Superfund Site We are a PRP at a former Omega Chemical Corporation (“Omega”) chemical waste site in Whittier, California. The PRPs at the Omega site have established the Omega Chemical Site a PRP Organized Group, (the “OPOG”), and are currently investigating and remediating soil and groundwater at the site pursuant to a Consent Decree with the EPA. OPOG has attributed approximately either 1.2% or 2.1% of the waste tonnage sent to the site to Hexcel based on different sections within the Omega site. In addition, the EPA is investigating the scope of regional groundwater contamination in the vicinity of the Omega site and issued a ROD finding that the OPOG members will be required to remediate the regional groundwater contamination in that vicinity as well. As a member of OPOG, Hexcel will incur costs associated with the investigation and remediation of the Omega site and the regional groundwater remedy, though our ultimate liability, if any, in connection with this matter cannot be determined at this time. The total accrued liability relating to potential liability for both the Omega site and regional groundwater remedies was $0.3 million and $0.6 million at December 31, 2018 and 2017, respectively. Environmental remediation reserve activity for the three years ended December 31, 2018 was as follows:
(In millions) |  | 2018 |  |  | 2017 |  |  | 2016 |
Beginning remediation accrual balance |  | $ | 2.8 |  |  | $ | 3.2 |  |  | $ | 2.9 |
Current period expenses |  |  | 0.3 |  |  |  | 0.1 |  |  |  | 1.2 |
Cash expenditures |  |  | (0.4 | ) |  |  | (0.5 | ) |  |  | (0.9 | )
Ending remediation accrual balance |  | $ | 2.7 |  |  | $ | 2.8 |  |  | $ | 3.2 |
Environmental Summary Our estimate of liability as a PRP and our remaining costs associated with our responsibility to remediate the Lower Passaic River, New Jersey and other sites are accrued in the consolidated balance sheets. As of December 31, 2018 and 2017, our aggregate environmental related accruals were $2.7 million and $2.8 million, respectively. As of December 31, 2018 and 2017, $0.8 million and $0.9 million, respectively, were included in current other accrued liabilities with the remainder included in other non-current liabilities. As related to certain environmental matters, the accruals were estimated at the low end of a range of possible outcomes since no amount within the range is a better estimate than any other amount. If we had accrued, for those sites where we are able to estimate our liability, at the high end of the range of possible outcomes, our accrual would have been $16 million higher at December 31, 2018 and 2017. These accruals can change significantly from period to period due to such factors as additional information on the nature or extent of contamination, the methods of remediation required, changes in the apportionment of costs among responsible parties and other actions by governmental agencies or private parties, or the impact, if any, of being named in a new matter. Environmental remediation spending charged directly to our reserve balance was $0.4 million and $0.5 million for the years ended December 31, 2018 and 2017, respectively. In addition, our operating costs relating to environmental compliance charged directly to expense were $15.6 million and $9.9 million for the years ended December 31, 2018 and 2017. Product Warranty Warranty expense for the years ended December 31, 2018, 2017 and 2016, and accrued warranty cost, included in “other accrued liabilities” in the consolidated balance sheets were as follows:
|  | Product |
(In millions) |  | Warranties |
Balance as of December 31, 2015 |  | $ | 6.1 |
Warranty expense |  |  | 5.1 |
Deductions and other |  |  | (5.7 | )
Balance as of December 31, 2016 |  | $ | 5.5 |
Warranty expense |  |  | 3.0 |
Deductions and other |  |  | (4.9 | )
Balance as of December 31, 2017 |  | $ | 3.6 |
Warranty expense |  |  | 4.6 |
Deductions and other |  |  | (3.4 | )
Balance as of December 31, 2018 |  | $ | 4.8 |

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