Commitments. We have a variety of financial commitments, including purchase agreements, forward foreign exchange and forward sales contracts, indebtedness, and letters of credit (see Note 3, Note 8, and Note 9).

CAROs. The inputs in estimating the fair value of CAROs include: (i) the timing of when any such CARO cash flows may be incurred; (ii) incremental costs associated with special handling or treatment of CARO materials; and (iii) the credit-adjusted risk-free rate applicable at the time additional CARO cash flows are estimated. The majority of these inputs are considered Level 3 inputs as they involve significant judgment from us.

The following table summarizes activity relating to CARO liabilities (in millions of dollars):


	Year Ended December 31,
	2025			2024			2023
Beginning balance	$	11.7		$	10.9		$	10.1
Liabilities added during the period		—			—			—
Liabilities settled during the period		(0.3	)		(0.1	)		—
Accretion expense		1.0			0.9			0.8
Ending balance	$	12.4		$	11.7		$	10.9

The estimated fair values of CARO liabilities were based upon the application of a weighted-average credit-adjusted risk-free rate of 8.34% and 8.30% at December 31, 2025 and December 31, 2024, respectively. CAROs are included in Other accrued liabilities or Long-term liabilities, as appropriate.

Environmental Contingencies. We are subject to several environmental laws and regulations, potential fines or penalties assessed for alleged breaches of such laws and regulations, and potential claims based upon such laws and regulations. We are also subject to legacy environmental contingencies related to activities that occurred at our operating facilities prior to July 6, 2006, which represent the majority of our environmental accruals of $17.9 million as of December 31, 2025. This accrual represents our undiscounted estimate of costs reasonably expected to be incurred based on current laws and regulations, available facts, existing technologies, and our assessment of the likely remediation actions to be taken.

At Trentwood, we continue to pursue remediation activities in coordination with the Washington State Department of Ecology (“Ecology”), primarily to address the historical use of oils containing polychlorinated biphenyls (“PCBs”). During 2024, we implemented a full-scale Ultraviolet Light Advanced Oxidation Process (“UV/AOP”) for PCB removal. We are currently working with Ecology, as required by the Amended Agreed Order, to finalize details of the UV/AOP and to determine future remediation steps to be taken at which time there may be revisions to our estimated liabilities for this matter.

At Newark, pursuant to a consent agreement with the Ohio Environmental Protection Agency (“OEPA”), we submitted an Alternate Arrays Document (“AAD”) to the OEPA for review in 2023. During the quarter ended September 30, 2024, we increased our accrual by $2.9 million to reflect preliminary estimates for the most likely remediation activities, as laid out in the AAD. Based on input received from the OEPA, we plan to submit a revised AAD to the OEPA in 2026. Once the revised AAD is reviewed and accepted by the OEPA, a final feasibility study will be submitted to the OEPA, which we expect to occur in 2026.

The following table presents the changes in our environmental accrual. We classify the short-term and long-term liabilities within Other accrued liabilities and Long-term liabilities, respectively, on our Consolidated Balance Sheets (in millions of dollars):


	Year Ended December 31,
	2025			2024			2023
Beginning balance	$	18.4		$	17.0		$	17.7
Additional accruals		0.5			4.2			1.2
Less: expenditures		(1.0	)		(2.8	)		(1.9	)
Ending balance	$	17.9		$	18.4		$	17.0

Based on approved and proposed remediation action plans for the various facilities, we expect that the implementation and ongoing monitoring could occur over a period of 30 or more years. As additional facts are developed, feasibility studies are completed, remediation plans are modified, necessary regulatory approvals for the implementation of remediation are obtained, alternative technologies are developed and/or other factors change, there may be revisions to management’s estimates, and actual costs may exceed the current environmental accruals by up to $14.1 million. Changes to our estimates may occur within the next 12 months as new information becomes available.

Other Contingencies. We are party to various lawsuits, claims, investigations and administrative proceedings that arise in connection with past and current operations. We evaluate such matters on a case-by-case basis and our policy is to vigorously contest any such claims we believe are without merit. We accrue for a legal liability when it is both probable that a liability has been incurred and the amount of the loss is reasonably estimable. Quarterly, in addition to when changes in facts and circumstances require it, we review and adjust these accruals to reflect the impacts of negotiations, settlements, rulings, advice of legal counsel, and other information and events pertaining to a particular case. While uncertainties are inherent in the final outcome of such matters and it is presently impossible to determine the actual cost that may ultimately be incurred, we believe that we have sufficiently accrued for such matters and that the ultimate resolution of pending matters will not have a material impact on our consolidated financial position, operating results or liquidity.