LEGAL PROCEEDINGS, COMMITMENTS AND CONTINGENCIES

This note provides details about our:


•	legal proceedings,


•	environmental matters and


•	commitments and other contingencies.

LEGAL PROCEEDINGS

We are party to various legal proceedings arising in the ordinary course of business. We are not currently a party to any legal proceeding that management believes could have a material adverse effect on our long-term consolidated financial position, results of operations or cash flows.

ENVIRONMENTAL MATTERS

Our environmental matters include:


•	site remediation and


•	asset retirement obligations.

Site Remediation

Under the Comprehensive Environmental Response, Compensation and Liability Act — commonly known as the Superfund — and similar state laws, we:


•	are a party to various proceedings related to the cleanup of hazardous waste sites and


•	have been notified that we may be a potentially responsible party related to the cleanup of other hazardous waste sites for which proceedings have not yet been initiated.

We have received notification and have acknowledged that we are a potentially responsible party in a portion of the Kalamazoo River Superfund site in southwest Michigan. Our involvement in the remediation site is based on our former ownership of the Plainwell, Michigan mill located within the remediation site. In 2015 we received invitations from the Environmental Protection Agency (the “EPA”) to negotiate an administrative order on consent for a contaminant removal action for a portion of the site. Two other parties received the same invitations. All parties are in contact with the EPA as to the work required and the terms of any consent order. According to the EPA, this Superfund site encompasses 77 miles of the Kalamazoo River from a location east of the city of Kalamazoo to the river mouth at Lake Michigan. The EPA’s 2015 invitations concern a stretch of the river approximately 1.7 miles long that the EPA refers to as the Otsego Township Dam Area. Several other companies also operated upstream pulp mills. At this time we are unable to estimate the timing and extent of future cash flows related to our involvement in this site remediation.

Our established reserves. We have established reserves for estimated remediation costs on the active Superfund sites and other sites for which we are responsible. These reserves are recorded in "Accrued liabilities" and "Other liabilities" in our Consolidated Balance Sheet.

Changes in the Reserve for Environmental Remediation



DOLLAR AMOUNTS IN MILLIONS
Reserve balance as of December 31, 2014	$	29
Reserve charges and adjustments, net	15
Payments	(7		)
Reserve balance as of December 31, 2015	$	37
Total active sites as of December 31, 2015	38

We change our accrual to reflect:


•	new information on any site concerning implementation of remediation alternatives,


•	updates on prior cost estimates and new sites and


•	costs incurred to remediate sites.

Estimates. We believe it is reasonably possible, based on currently available information and analysis, that remediation costs for all identified sites may exceed our existing reserves by up to $116 million.

This estimate, in which those additional costs may be incurred over several years, is the upper end of the range of reasonably possible additional costs. The estimate:


•	is much less certain than the estimates on which our accruals currently are based, and


•	uses assumptions that are less favorable to us among the range of reasonably possible outcomes.

In estimating our current accruals and the possible range of additional future costs, we:


•	assumed we will not bear the entire cost of remediation of every site,


•	took into account the ability of other potentially responsible parties to participate, and


•	considered each party’s financial condition and probable contribution on a per-site basis.

We have not recorded any amounts for potential recoveries from insurance carriers.

Asset Retirement Obligations

We have obligations associated with the retirement of tangible long-lived assets consisting primarily of reforestation obligations related to forest management licenses in Canada and obligations to close and cap landfills. Some of our sites have asbestos containing materials. We have met our current legal obligation to identify and manage these materials. In situations where we cannot reasonably determine when asbestos containing materials might be removed from the sites, we have not recorded an accrual because the fair value of the obligation cannot be reasonably estimated. These obligations are recorded in "Accrued liabilities" and "Other liabilities" in our Consolidated Balance Sheet.

Changes in the Reserve for Asset Retirement Obligations



DOLLAR AMOUNTS IN MILLIONS
Reserve balance as of December 31, 2014	$	40
Reserve charges and adjustments, net	10
Payments	(11		)
Other adjustments⁽¹⁾	(5		)
Reserve balance as of December 31, 2015	34
(1) Primarily related to a foreign currency remeasurement gain for our Canadian reforestation obligation.

COMMITMENTS AND OTHER CONTINGENCIES

Our commitments and contingencies include:


•	guarantees of debt and performance,


•	purchase obligations for goods and services and


•	operating leases.

Guarantees

We have guaranteed the performance of the buyer/lessee of a timberlands lease we sold in 2005. Future payments on the lease — which expires in 2023 — are $15 million.

Purchase Obligations

Our purchase obligations as of December 31, 2015 were:



DOLLAR AMOUNTS IN MILLIONS
	DECEMBER 31, 2015
2016	$	84
2017	$	33
2018	$	8
2019	$	2
2020	$	2
Thereafter	$	17

Purchase obligations for goods or services are agreements that:


•	are enforceable and legally binding,


•	specify all significant terms and


•	cannot be canceled without penalty.

The terms include:


•	fixed or minimum quantities to be purchased,


•	fixed, minimum or variable price provisions, and


•	an approximate timing for the transaction.

Our purchase obligations include items such as:


•	stumpage and log purchases,


•	energy and


•	other service and supply contracts.

Operating Leases

Our rent expense was:



DOLLAR AMOUNTS IN MILLIONS
	2015		2014		2013
Rent expense	$	31	$	32	$	38

We have operating leases for:


•	various equipment, including logging equipment, lift trucks, automobiles and office equipment; and


•	office and wholesale space.

Commitments

Our operating lease commitments as of December 31, 2015 were:



DOLLAR AMOUNTS IN MILLIONS
	DECEMBER 31, 2015
2016	$	27
2017	$	26
2018	$	21
2019	$	17
2020	$	14
Thereafter	$	105