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Commitments, Contingencies and Legal Proceedings | 12 Months Ended
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Dec. 31, 2018
Commitments And Contingencies Disclosure [Abstract] |
Commitments, Contingencies and Legal Proceedings |
21. | COMMITMENTS, CONTINGENCIES AND LEGAL PROCEEDINGS
Contractual Commitments The following table summarizes the minimum annual payments due on noncancelable operating leases and other similar contractual obligations having initial or remaining terms in excess of one year:
In thousands |  | Leases |  |  |  | Other |
2019 |  | $ | 5,020 |  |  |  | $ | 84,451 |
2020 |  |  | 3,861 |  |  |  |  | 22,249 |
2021 |  |  | 2,515 |  |  |  |  | 2,483 |
2022 |  |  | 1,426 |  |  |  |  | 306 |
2023 |  |  | 584 |  |  |  |  | 49 |
Thereafter |  |  | 383 |  |  |  |  | 2 |
Other contractual obligations primarily represent minimum purchase commitments under energy supply contracts and other purchase obligations. At December 31, 2018, required minimum annual payments due under operating leases and other similar contractual obligations aggregated $13.8 million and $109.5 million, respectively. Fox River - Neenah, Wisconsin Background. We have previously reported that we face significant uncertainties associated with environmental claims arising out of the presence of polychlorinated biphenyls (“PCBs”) in sediments in the lower Fox River, on which our former Neenah facility was located, and in the Bay of Green Bay Wisconsin (collectively, the “Site”). Subject to certain procedural steps and court approvals, we have resolved many of those uncertainties as described below. Since the early 1990s, the United States, the State of Wisconsin and two Indian tribes (collectively, the “Governments”) have pursued a cleanup of a 39-mile stretch of river from Little Lake Butte des Morts into Green Bay and natural resource damages (“NRDs”). The United States originally notified several entities that they were potentially responsible parties (“PRPs”); however, after giving effect to settlements reached with the Governments, the remaining PRPs exposed to continuing obligations to implement the remainder of the cleanup consist of us, Georgia Pacific Consumer Products, L.P. (“Georgia Pacific”) and NCR Corporation (“NCR”). The United States Environmental Protection Agency (“EPA”) has divided the Site into five “operable units”, including the most upstream portion of the Site on which our facility was located (“OU1”) and four downstream reaches of the river and bay (“OU2-5”). We, with contributions of certain other PRPs, implemented the remedial action in OU1 under a consent decree with the Governments. That work is complete, other than on-going monitoring and maintenance. For OU2-5, work has proceeded primarily under a Unilateral Administrative Order (“UAO”) issued in November 2007 by the EPA to us and seven other respondents. The majority of the work in OU 2-5 has been funded or conducted by parties other than us. Prior to the UAO, we contributed to a project in that area. Since the issuance of the UAO we have conducted about $13.4 million of cleanup work under the UAO in 2015 and 2016. The cleanup is expected to continue at least through 2019 and decommissioning thereafter. Litigation and Settlement. In 2008, in an allocation action, NCR and Appvion sued us and many other defendants in an effort to allocate among the liable parties the costs of cleaning up this Site and compensating the Governments for their costs and the natural resource trustees for NRDs. This case has been called the “Whiting litigation.” In 2010, in an enforcement action, the Governments sued us and other defendants for (a) an injunction to require implementation of the cleanup ordered by the 2007 UAO, (b) recovery of the Governments’ past and future costs of response, (c) recovery of NRDs, and (d) recovery of a declaration of liability for the Site. After appeals, the Governments did not obtain an injunction and they withdrew their claims for NRDs. The Governments obtained a declaration of our liability to comply with the 2007 UAO. The Governments’ cost claims remained pending. On January 17, 2017, the United States filed a consent decree with the federal district court among the United States, Wisconsin, NCR, and Appvion (the “NCR/Appvion consent decree”) under which NCR would agree to complete the remaining cleanup and both NCR and Appvion would agree not to seek to recover from us or anyone else any amounts they have spent or will spend, and we and others would be barred from seeking claims against NCR or Appvion. The federal district court entered a somewhat revised version of the NCR/Appvion consent decree on August 23, 2017. Under the consent decree, if it were to withstand appeal, we faced exposure to: (i) government past oversight costs, (ii) government future oversight costs, (iii) long term monitoring and maintenance, and (iv) depending on the reason, a further remedy if necessary in the event the currently ordered remedy fails, over 30 or more years, to achieve its objectives. As the result of earlier settlements, Georgia Pacific is only jointly liable with us to the Governments for monitoring and maintenance costs incurred in the most downstream three miles of the river (“OU4b”) and the bay of Green Bay (“OU5”). We and Georgia Pacific had claims against each other to reallocate the costs that we have each incurred or will incur. We have settled those claims. Under this settlement, Georgia Pacific has agreed to implement the monitoring and maintenance in OU4b and OU5 and we are responsible for monitoring and maintenance of all other upstream Operable Units. We paid Georgia Pacific $9.5 million in August 2017. The NCR/Appvion consent decree and our settlement with Georgia Pacific resulted in all claims among the responsible parties being barred, waived, or withdrawn. Accordingly, on October 10, 2017, the federal district court approved a stipulation dismissing all remaining claims in the Whiting litigation. Therefore, unless certain limited circumstances occur permitting reassertion of claims, we are not subject to claims for reallocation of costs or damages incurred by any of the other parties and we cannot seek contribution or reallocation from them. On October 20, 2017, we appealed the district court’s approval of the NCR/Appvion consent decree. We contend that the court did not do what was required to properly conclude that the NCR/Appvion consent decree was substantially fair to us. We contend that the consent decree was unfair to us because the costs we have already incurred and the costs that we would have to incur were the NCR/Appvion consent decree to remain in effect and the governments to recover their full claims would exceed our fair share of costs for this site. In January 2019, we reached an agreement with the United States, the State of Wisconsin, and Georgia-Pacific to resolve all remaining claims among those parties. A consent decree (“Glatfelter consent decree”) documenting that agreement was lodged in the federal district court on January 3, 2019. After an opportunity for public comment, the United States may move for entry of that consent decree. If entered, all litigation, including our appeal from entry of the NCR/Appvion consent decree would be concluded. Under the Glatfelter consent decree, we have settled the United States’ and Wisconsin’s claims for response costs paid by them before October 2018 and for NRDs. In addition, we are primarily responsible for long-term monitoring and maintenance in OU2-OU4a and for reimbursement of government oversight costs paid after October 2018. Finally, we remain responsible for our obligation to continue long-term monitoring and maintenance under our OU1 consent decree. Cost estimates. The Glatfelter consent decree calls for payment of $20.5 million to the United States in satisfaction of the governments’ claims for costs incurred prior to October 2018, and NRDs. In January 2019, we paid that amount into a court registry account, as required under the consent decree, and that amount will be disbursed to various government funds upon request of the United States should the decree be entered. We remain subject to our remaining obligations under the OU1 consent decree, which now consist of long-term monitoring and maintenance. Furthermore, assuming that the Glatfelter consent decree is entered we are primarily responsible for long term monitoring and maintenance in OU2-OU4a over a period of at least 30 years. The monitoring activities consist of, among others, testing fish tissue, sampling water quality and sediment, and inspections of the engineered caps. In the first quarter of 2018, we entered into a fixed-price, 30-year agreement with a third party for the performance of all of our monitoring and maintenance obligations in OU1 through OU4a with limited exceptions, such as, for extraordinary amounts of cap maintenance or replacement. Our obligation under this agreement is included in our total reserve for the Site. If the Glatfelter consent decree is entered, we will be permitted to pay for this contract using the remaining balance of the escrow account established by us and WTM I Company (“WTM I”) another PRP, under the OU1 consent decree during any period that the balance in that account exceeds the amount due under our fixed-price contract. We are obligated to make the regular payments under that fixed-price contract until the remaining amount due is paid down to below the OU1 escrow account balance. The difference at present is approximately $2 million. We are also required to secure the payment of that difference with a renewal letter of credit or another instrument in the interim. We and WTM I executed documents for the withdrawal of WTM I from the entity we jointly formed for the performance of the OU1 work and for the release of all claims between us related to the Site. The court overseeing WTM I’s bankruptcy approved this action in May 2018. As a result, we assumed WTM I’s portion of the OU1 escrow account totaling approximately $4.7 million, and have recorded a corresponding increase of the same amount to our Fox River reserve for potential liabilities associated with the river that we believe may ultimately be satisfied with funds from the escrow account. At December 31, 2018, the combined account balance totaled $8.9 million which is included in the consolidated balance sheet under the caption “other assets” Under the consent decree, we will be responsible for reimbursement of government oversight costs paid from October 2018 and later over approximately the next 30 years. We anticipate that a significant portion of the oversight costs will be incurred in the next few years until such time as remediation is completed. Once completed, costs will be an order of magnitude lower in most years during the period of long-term monitoring and maintenance. Reserves for the Site. Our reserve for past and future government oversight costs and long-term monitoring and maintenance is set forth below:
|  | Year ended December 31 |
In thousands |  |  | 2018 |  |  |  |  | 2017 |
Balance at January 1, |  | $ | 43,144 |  |  |  | $ | 52,788 |
Payments |  |  | (3,054 | ) |  |  |  | (9,644 | )
Assumption of WTM I escrow |  |  | 4,746 |  |  |  |  | - |
Accretion |  |  | 165 |  |  |  |  | - |
Balance at December 31, |  | $ | 45,001 |  |  |  | $ | 43,144 |
The payments set forth above primarily represent cash paid under the recently-entered long-term monitoring and maintenance agreement. Of our total reserve for the Fox River, $23.0 million is recorded in the accompanying December 31, 2018 consolidated balance sheet under the caption “Environmental liabilities” and the remaining $22.0 million is recorded under the caption “Other long term liabilities.” Range of Reasonably Possible Outcomes. Based on our analysis of all available information, including but not limited to decisions of the courts, official documents such as records of decision, discussions with legal counsel, cost estimates for future monitoring and maintenance and other post-remediation costs to be performed at the Site, we do not believe that our costs associated with the Fox River matter could exceed the aggregate amounts accrued by a material amount. Summary. Our current assessment is that we expect the Glatfelter consent decree will be entered by the federal district court and therefore, the Fox River matter will not have a material adverse impact on us. However, if the consent decree is not entered by the district court, there can be no assurances our reserves will be adequate to provide for future obligations related to this matter.

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