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Commitments and Contingencies
12 Months Ended
Dec. 31, 2021
Commitments and Contingencies Disclosure [Abstract]  
Commitments And Contingencies Disclosure [Text Block]
Note 26 – Commitments and Contingencies
In 1992, the Company identified certain soil and groundwater contamination
 
at AC Products, Inc. (“ACP”), a wholly owned
subsidiary.
 
In voluntary coordination with the Santa Ana California Regional Water
 
Quality Board, ACP has been remediating the
contamination, the principal contaminant of which is perchloroethylene
 
(“PERC”).
 
In 2004, the Orange County Water
 
District
(“OCWD”) filed a civil complaint against ACP and other parties seeking
 
to recover compensatory and other damages related to the
investigation and remediation of the contamination in the groundwater.
 
Pursuant to a settlement agreement with OCWD, ACP agreed,
among other things, to operate the two groundwater treatment systems to hydraulically
 
contain groundwater contamination emanating
from ACP’s site until the concentrations
 
of PERC released by ACP fell below the current Federal maximum contaminant level for
four consecutive quarterly sampling events.
 
In 2014, ACP ceased operation at one of its two groundwater treatment systems,
 
as it had
met the above condition for closure.
 
In 2020, the Santa Ana Regional Water
 
Quality Control Board asked that ACP conduct some
additional indoor and outdoor soil vapor testing on and near the ACP site to confirm
 
that ACP continues to meet the applicable local
standards and ACP performed such testing program
 
work in 2021 and will continue into 2022.
 
As of December 31, 2021, ACP
believes it is close to meeting the conditions for closure of the remaining groundwater
 
treatment system but continues to operate this
system while in discussions with the relevant authorities.
As of December 31, 2021, the Company believes that the range of potential
 
-known liabilities associated with the balance of ACP
water remediation program is approximately $
0.1
 
million to $
1.0
 
million.
 
The low and high ends of the range are based on the length
of operation of the treatment system as determined by groundwater modeling.
 
Costs of operation include the operation and
maintenance of the extraction well, groundwater monitoring and
 
program management.
 
An inactive subsidiary of the Company that was acquired in 1978
 
sold certain products containing asbestos, primarily on an
installed basis, and is among the defendants in numerous lawsuits alleging injury
 
due to exposure to asbestos.
 
The subsidiary
discontinued operations in 1991 and has no remaining assets other than
 
proceeds received from insurance settlements.
 
To date, the
overwhelming majority of these claims have been disposed of without
 
payment and there have been no adverse judgments against the
subsidiary.
 
Based on a continued analysis of the existing and anticipated future claims against this subsidiary,
 
it is currently projected
that the subsidiary’s total liability over
 
the next 50 years for these claims is approximately $
0.4
 
million (excluding costs of defense).
 
Although the Company has also been named as a defendant in certain of these
 
cases, no claims have been actively pursued against the
Company, and the
 
Company has not contributed to the defense or settlement of any of these cases pursued against
 
the subsidiary.
 
These cases were originally handled by the subsidiary’s
 
primary and excess insurers who had agreed in 1997 to pay all defense
costs and be responsible for all damages assessed against the subsidiary arising
 
out of existing and future asbestos claims up to the
aggregate limits of their policies.
 
A significant portion of this primary insurance coverage was provided
 
by an insurer that is
insolvent, and the other primary insurers asserted that the aggregate limits
 
of their policies had been exhausted.
 
The subsidiary
challenged the applicability of these limits to the claims being brought
 
against the subsidiary.
 
In response, two of the three carriers
entered into separate settlement and release agreements with the subsidiary
 
in 2005 and 2007 for $
15.0
 
million and $
20.0
 
million,
respectively.
 
In 2007, the subsidiary and the remaining primary insurance carrier
 
entered into a Claim Handling and Funding Agreement, under
which the carrier is paying
27
% of defense and indemnity costs incurred by or on behalf of the subsidiary
 
in connection with asbestos
bodily injury claims.
 
The agreement continues until terminated and can only be terminated by either party
 
by providing a minimum of
two years prior written notice.
 
As of December 31, 2021, no notice of termination has been given under
 
this agreement.
 
At the end of the term of the agreement, the subsidiary
 
may choose to again pursue its claim against this insurer regarding the
application of the policy limits.
 
The Company believes that, if the coverage issues under the primary policies with
 
the remaining
carrier are resolved adversely to the subsidiary and
 
all settlement proceeds were used, the subsidiary may have limited additional
coverage from a state guarantee fund established following the insolvency
 
of one of the subsidiary’s primary
 
insurers.
 
Nevertheless,
liabilities in respect of claims may exceed
 
the assets and coverage available to the subsidiary.
If the subsidiary’s assets and insurance
 
coverage were to be exhausted, claimants of the subsidiary may actively pursue claims
against the Company because of the parent-subsidiary relationship.
 
The Company does not believe that such claims would have merit
or that the Company would be held to have liability for any unsatisfied obligations
 
of the subsidiary as a result of such claims.
 
After
evaluating the nature of the claims filed against the subsidiary
 
and the small number of such claims that have resulted in any payment,
the potential availability of additional insurance coverage at the subsidiary
 
level, the additional availability of the Company’s
 
own
insurance and the Company’s strong
 
defenses to claims that it should be held responsible for the subsidiary’s
 
obligations because of
the parent-subsidiary relationship, the Company believes it is not probable
 
that the Company will incur losses.
 
The Company has
been successful to date having claims naming it dismissed during
 
initial proceedings.
 
Since the Company may be in this stage of
litigation for some time, it is not possible to estimate additional losses or range of
 
loss, if any.
 
The Company is party to environmental matters related to certain domestic
 
and foreign properties.
 
These environmental matters
primarily require the Company to perform long-term monitoring
 
as well as operating and maintenance at each of the applicable sites.
 
During the year ended December 31, 2021, there have been no significant
 
changes to the facts or circumstances of these matters, aside
from ongoing monitoring and maintenance activities and routine payments
 
associated with each of these sites.
 
The Company
continually evaluates its obligations related to such matters, and
 
based on historical costs incurred and projected costs to be incurred
over the next 27 years, has estimated the present value range of costs for
 
all of these environmental matters, on a discounted basis, to
be between approximately $
5.0
 
million and $
6.0
 
million as of December 31, 2021, for which $
5.6
 
million is accrued within other
accrued liabilities and other non-current liabilities on the Company’s
 
Consolidated Balance Sheet as of December 31, 2021.
 
Comparatively,
 
as of December 31, 2020, the Company had $
6.0
 
million accrued for with respect to these matters.
The Company’s Sao Paulo,
 
Brazil site was required under Brazilian environmental, health and safety regulations
 
to perform an
environmental assessment as part of a permit renewal process.
 
Initial investigations identified soil and ground water contamination
 
in
select areas of the site.
 
The site has conducted a multi-year soil and groundwater investigation and corresponding
 
risk assessments
based on the result of the investigations.
 
In 2017, the site had to submit a new 5-year permit renewal request and was asked to
complete additional investigations to further delineate the site based on review
 
of the technical data by the local regulatory agency,
Companhia Ambiental do Estado de São Paulo (“CETESB”).
 
Based on review of the updated investigation data, CETESB issued a
Technical Opinion
 
regarding the investigation and remedial actions taken to date.
 
The site developed an action plan and submitted it
to CETESB in 2018 based on CETESB requirements.
 
The site intervention plan primarily requires the site, amongst other actions,
 
to
conduct periodic monitoring for methane in soil vapors, source zone
 
delineation, groundwater plume delineation, bedrock aquifer
assessment, update the human health risk assessment, develop a current
 
site conceptual model and conduct a remedial feasibility study
and provide a revised intervention plan.
 
In 2019, the site submitted a report on the activities completed including the revised site
conceptual model and results of the remedial feasibility study and recommended
 
remedial strategy for the site.
 
Other environmental matters include participation in certain payments
 
in connection with four currently active environmental
consent orders related to certain hazardous waste cleanup activities under
 
the U.S. Federal Superfund statute.
 
The Company has been
designated a potentially responsible party (“PRP”) by the Environmental
 
Protection Agency along with other PRPs depending on the
site, and has other obligations to perform cleanup activities at certain
 
other foreign subsidiaries.
 
These environmental matters
primarily require the Company to perform long-term monitoring
 
as well as operating and maintenance at each of the applicable sites.
 
The Company believes, although there can be no assurance regarding the
 
outcome of other unrelated environmental matters, that
it has made adequate accruals for costs associated with other environmental
 
problems of which it is aware.
 
Approximately $
0.4
million and $
0.1
 
million were accrued as of December 31, 2021 and 2020, respectively,
 
to provide for such anticipated future
environmental assessments and remediation costs.
During the fourth quarter of 2020, one of the Company’s
 
subsidiaries received a notice of inspection from a taxing authority in a
country where certain of its subsidiaries operate which related to a non-income
 
(indirect) tax that may be applicable to certain products
the subsidiary sells.
 
During the third quarter of 2021, the Company’s
 
subsidiary received notice from the
 
taxing authority that the
inspection was closed, with no tax assessment issued.
 
Based on this development, during the third quarter of 2021, the Company
reversed its previously recorded $
1.8
 
million liability related to this matter.
 
The Company also reversed the associated $
1.1
 
million
indemnification receivable, as the asserted tax liability in part related
 
to a Houghton entity acquired in the Combination and for the
periods prior to the Combination, for which the Company would have rights to indemnification
 
from Houghton’s former owners.
 
Based on all available information as of the date of this report, the Company
 
does not anticipate further tax liabilities related to this
matter to be asserted by the taxing authority.
 
During 2021, one of the Company’s
 
Brazilian subsidiaries received a notice that it had prevailed on an existing
 
legal claim in
regard to certain non-income (indirect) taxes that had been previously
 
charged and paid.
 
The matter specifically relates to companies’
rights to exclude the state tax on goods circulation
 
(a valued-added-tax or
VAT
equivalent, known in Brazil as “ICMS”) from the
calculation of certain additional indirect taxes (specifically the program of
 
social integration (“PIS”) and contribution for the financing
of social security (“COFINS”)) levied by the Brazilian States on the sale of goods.
 
In May 2021, the Brazilian Supreme Court
concluded that ICMS should not be included in the tax base of PIS and
 
COFINS, and confirmed the methodology for calculating the
PIS and COFINS tax credit claims to which taxpayers are entitled.
 
The Company’s Brazilian entities had
 
previously filed legal or
administrative disputes on this matter and are entitled to receive tax credits and
 
interest dating back to five years preceding the date of
their legal claims.
 
As a result of these court rulings, during the second quarter of 2021,
 
the Company recognized non-income tax
credits of
67.0
 
million BRL or approximately $
13.3
 
million, which included approximately $
8.4
 
million for the PIS and COFINS tax
credits as well as interest on these tax credits of $
4.9
 
million, and is recorded within prepaid and other current assets on the
Company’s Consolidated
 
Balance Sheet.
 
The tax credits to which the Company’s
 
Brazilian subsidiaries are entitled are claimable
once registered with the Brazilian tax authorities.
 
The Company submitted its formal claim for tax credits in October 2021.
 
These tax
credits can be used to offset future Brazilian federal taxes and
 
the Company currently anticipates using the full amount of credits
during the five year period of time permitted.
 
During the third quarter of 2021, the Brazilian Supreme Court ruled that interest income
to which companies are entitled for matters such as this claim should not be
 
taxable, which resulted in a reduction to the estimated
income tax expense associated with the tax credits recorded.
 
In connection with obtaining regulatory approvals for the Combination,
 
certain steel and aluminum related product lines of
Houghton were divested in August 2019.
 
In July 2021, the entity that acquired these divested product lines submitted an
indemnification claim for certain alleged breaches of representation made
 
by Houghton in the agreement pursuant to which such assets
had been divested.
 
The Company and the acquirer have agreed to extend the period for
 
a possible negotiated resolution of this claim
through March 31, 2022 so that both parties can evaluate the other’s
 
positions with respect to the subject matters of the claim.
 
The
Company is evaluating the merits of the alleged losses in the indemnification
 
claim received.
 
As of the date of this Report, the
Company does not believe it is reasonably possible to determine or quantify
 
any possible exposure.
During the third quarter of 2021, two of the Company’s
 
locations suffered property damages as a result of flooding and fire,
respectively.
 
The Company maintains property insurance for all of its facilities globally.
 
In Conshohocken, Pennsylvania, the
Company’s global headquarters
 
as well as its laboratory experienced property damages as a result of flooding from
 
Hurricane Ida.
 
Also, one of the Company’s North
 
American production facilities in its Global Specialty Businesses segment experienced an
 
electrical
fire that resulted in damage and the temporary shutdown of production,
 
and also required remediation, cleaning and subsequent
restoration.
 
The Company, its insurance
 
adjuster and insurance carrier are actively managing the remediation and restoration activities
associated with these events and at this time the Company has concluded, based
 
on all available information and discussions with its
insurance adjuster and insurance carrier,
 
that the losses incurred during the third quarter of 2021 will be covered under
 
the Company’s
property insurance coverage, net of an aggregate deductible of $
2.0
 
million.
 
The Company has received payments from its insurers of
$
2.1
 
million and has recorded an insurance receivable associated with these events
 
(and a gain on insurance recoveries for losses
incurred) of $
0.7
 
million as of December 31, 2021.
 
The Company and its insurance carrier are in early stages of reviewing the impact
of the electrical fire on the production facility’s
 
operations as it relates to a potential business interruption insurance claim; however,
as of the date of this Report, the Company cannot reasonably estimate any probable
 
amount of business interruption insurance claim
recoverable, therefore the Company has not recorded a gain contingency
 
for a possible business interruption insurance claim as of
December 31, 2021.
The Company is party to other litigation which management currently
 
believes will not have a material adverse effect on the
Company’s results of operations,
 
cash flows or financial condition. In addition, the Company has an
 
immaterial amount of contractual
purchase obligations.