COMMITMENTS AND CONTINGENCIES	12 Months Ended
Oct. 31, 2017
COMMITMENTS AND CONTINGENCIES
COMMITMENTS AND CONTINGENCIES	14. COMMITMENTS AND CONTINGENCIES Corn Purchase Commitments At October 31, 2017, GFE had cash and basis contracts for forward corn purchase commitments for approximately 3,041,000 bushels for deliveries through December 2018. At October 31, 2017, HLBE had cash and basis contracts for forward corn purchase commitments for approximately 1,769,000 bushels for deliveries through October 2018. Ethanol Marketing Agreement GFE currently has an ethanol marketing agreement with Eco-Energy, Inc., an unrelated party (“Eco-Energy”). Pursuant to this marketing agreement, Eco-Energy purchases the entire ethanol output of GFE’s ethanol plant and arranges for the transportation of ethanol; however, GFE is responsible for securing all of the rail cars necessary for the transport of ethanol by rail except for 43 rail cars leased to GFE by Eco-Energy under the marketing agreement. GFE pays Eco-Energy a marketing fee per gallon of ethanol sold in consideration of Eco-Energy’s services, as well as a fixed lease fee for rail cars leased from Eco-Energy to GFE. During the third quarter of 2016, GFE amended its marketing agreement extending the term of the marketing agreement to December 31, 2019, with automatic renewals for additional three terms of three-year periods unless terminated by either party by providing written notice to the other party at least 90 days prior to the end of the then current term. Additionally, the amendment provides for certain negotiated changes to the marketing fees payable to Eco-Energy by GFE and the timing of payments by Eco-Energy to GFE for the ethanol Eco-Energy purchases from GFE. The changes to the marketing fee and timing of payments by Eco-Energy were negotiated based on prevailing market-rate conditions for comparable ethanol marketing services. HLBE has an ethanol marketing agreement with Eco-Energy, an unrelated party, for the sale of ethanol. Under this marketing agreement, Eco-Energy purchases, markets and resells 100% of the ethanol produced at HLBE’s ethanol production facility and arranges for the transportation of HLBE’s ethanol. HLBE pays Eco-Energy a marketing fee per gallon of ethanol sold in consideration of Eco-Energy’s services, as well as a fixed lease fee for rail cars leased from Eco-Energy to the HLBE. During the third quarter of 2016, HLBE entered into an amendment with Eco-Energy extending the term of the marketing agreement to December 31, 2019, with automatic renewals for additional three terms of three-year periods unless terminated by either party by providing written notice to the other party at least 90 days prior to the end of the then current term. Additionally, the amendment provides for certain negotiated changes to the marketing fees payable to Eco-Energy by HLBE and the timing of payments by Eco-Energy to GFE for the ethanol Eco-Energy purchases from GFE. The changes to the marketing fee and timing of payments by Eco-Energy were negotiated based on prevailing market-rate conditions for comparable ethanol marketing services. Ethanol marketing fees and commissions totaled approximately $1,159,000, $1,256,000 and $1,234,000 for the fiscal years ended October 31, 2017, 2016, and 2015, respectively, and are included net within revenues. Ethanol Contracts At October 31, 2017, GFE had fixed and basis contracts to sell approximately $18,889,000 of ethanol for various delivery periods through March 2018, which approximates 56% of its anticipated ethanol sales for this that period. At October 31, 2017, HLBE had fixed and basis contracts to sell approximately $18,414,000 of ethanol for various delivery periods through March 2018, which approximates 52% of its anticipated ethanol sales for this that period. Distillers Grain Marketing Agreement GFE has a distillers’ grains marketing agreement with RPMG, Inc. (“RPMG”), an unrelated party, for the purpose of marketing and selling all distillers’ grains produced by GFE. The contract commenced on February 1, 2011 with an initial term of one year, and will continue to remain in effect until terminated by either party at its unqualified option, by providing written notice of not less than 90 days to the other party. Distillers’ grains commissions to RPMG totaled approximately $276,000, $335,000 and $421,000 for the fiscal years ended October 31, 2017, 2016, and 2015, respectively, and are included net within revenues. At October 31, 2017, GFE had forward contracts to sell approximately $1,459,000 of distillers’ grain for deliveries through November 2017, which approximates 92% of its anticipated distillers’ grain sales during that period. HLBE has a distillers’ grains off-take agreement with Gavilon Ingredients, LLC (“Gavilon”), an unrelated party. Under this agreement, Gavilon purchases all of the distillers’ grains produced at HLBE’s ethanol plant in exchange for a service fee. The contract commenced on November 1, 2013 with an initial term of six months, and will continue to remain in effect until terminated by either party at its unqualified option, by providing written notice of not less than 60 days to the other party. Distillers’ grains commissions to Gavilon totaled approximately $268,000, $283,000 and $308,000 for the fiscal years ended October 31, 2017, 2016, and 2015, respectively, and are included net within revenues. At October 31, 2017, HLBE had forward contracts to sell approximately $2,006,000 of distillers’ grains for delivery in March 2018, which approximates 27% of its anticipated distillers’ grain sales during that period. Corn Oil Marketing Agreement GFE has a corn oil marketing agreement with RPMG, an unrelated party, for the purpose of marketing and selling all corn oil produced by GFE. The contract commenced on April 29, 2010 with an initial term of one year, and will continue to remain in effect until terminated by either party at its unqualified option, by providing written notice of not less than 90 days to the other party. HLBE has a corn oil marketing agreement with RPMG, an unrelated party, for the purpose of marketing and selling all corn oil produced by HLBE. The contract commenced on November 1, 2013 with an initial term of one year, and will continue to remain in effect until terminated by either party at its unqualified option, by providing written notice of not less than 90 days to the other party. Corn oil commissions totaled approximately $176,000, $166,000 and $125,000 for the fiscal years ended October 31, 2017, 2016, and 2015, respectively, and are included net within revenues. At October 31, 2017, GFE had forward contracts to sell approximately $423,000 of corn oil for delivery through December 2017, which approximates 48% of its anticipated corn oil sales for this that period. At October 31, 2017, HLBE had forward contracts to sell approximately $763,000 of corn oil for delivery through December 2017, which approximates 90% of its anticipated corn oil sales for this that period. Contract for Natural Gas Pipeline to Plant GFE has an agreement with an unrelated company for the construction of and maintenance of 9.5 miles of natural gas pipeline that will serve the GFE plant. The agreement requires the Company to receive a minimum of 1,400,000 DT of natural gas annually through the term of the agreement. The Company is charged a fee based on the amount of natural gas delivered through the pipeline. HLBE has a facilities agreement with Northern Border Pipeline Company which allows us access to an existing interstate natural gas pipeline located approximately 16 miles north from the HLBE plant. Agrinatural was formed to own and operate the pipeline and transports gas to the Company pursuant to a transportation agreement The Company also has a base agreement for the sale and purchase of natural gas with Constellation NewEnergy-Gas Division, LLC (“Constellation”). This agreement runs until March 31, 2019. Water Agreements In October 2003, HLBE entered into an industrial water supply development and distribution agreement with the City of Heron Lake for 15 years. HLBE has the exclusive rights to the first 6,000 gallons per minute of capacity that is available from the well, and provides for HLBE, combined with an unrelated company, to approve any other supply contracts that the City may enter into. In consideration, HLBE will pay one half of the City’s water well bond payments of $735,000, plus a 5% administrative fee, totaling approximately $594,000, and operating costs, relative to HLBE’s water usage, plus a 10% profit. These costs will be paid as water usage fees. HLBE recorded an assessment of approximately $367,000 with long-term debt as described in Note 8. HLBE pays operating and administrative expenses of approximately $12,000 per year. In May 2006, HLBE entered into a water treatment agreement with the City of Heron Lake and Jackson County for 30 years. HLBE will pay for operating and maintenance costs of the plant in exchange for receiving treated water. In addition, HLBE agreed to an assessment for a portion of the capital costs of the water treatment plant. HLBE recorded assessments with long-term debt of $500,000 and $3,550,000 in fiscal 2007 and 2006, respectively, as described in Note 8. HLBE paid operating and maintenance expenses of approximately $92,000, $24,000, and $57,000 in fiscal 2017, 2016, and 2015, respectively. Railcar Damages In accordance with certain railcar lease agreements, at expiration, the Company is required to return the railcars in good condition, less normal wear and tear. Primarily due to the ongoing maintenance and repair activities performed on its railcars, the Company has determined that no accrual for leased railcars is necessary and an estimate of the possible range of loss cannot be made.

14. COMMITMENTS AND CONTINGENCIES

Corn Purchase Commitments

At October 31, 2017, GFE had cash and basis contracts for forward corn purchase commitments for approximately 3,041,000 bushels for deliveries through December 2018.

At October 31, 2017, HLBE had cash and basis contracts for forward corn purchase commitments for approximately 1,769,000 bushels for deliveries through October 2018.

Ethanol Marketing Agreement

GFE currently has an ethanol marketing agreement with Eco-Energy, Inc., an unrelated party (“Eco-Energy”). Pursuant to this marketing agreement, Eco-Energy purchases the entire ethanol output of GFE’s ethanol plant and arranges for the transportation of ethanol; however, GFE is responsible for securing all of the rail cars necessary for the transport of ethanol by rail except for 43 rail cars leased to GFE by Eco-Energy under the marketing agreement. GFE pays Eco-Energy a marketing fee per gallon of ethanol sold in consideration of Eco-Energy’s services, as well as a fixed lease fee for rail cars leased from Eco-Energy to GFE. During the third quarter of 2016, GFE amended its marketing agreement extending the term of the marketing agreement to December 31, 2019, with automatic renewals for additional three terms of three-year periods unless terminated by either party by providing written notice to the other party at least 90 days prior to the end of the then current term. Additionally, the amendment provides for certain negotiated changes to the marketing fees payable to Eco-Energy by GFE and the timing of payments by Eco-Energy to GFE for the ethanol Eco-Energy purchases from GFE. The changes to the marketing fee and timing of payments by Eco-Energy were negotiated based on prevailing market-rate conditions for comparable ethanol marketing services.

HLBE has an ethanol marketing agreement with Eco-Energy, an unrelated party, for the sale of ethanol. Under this marketing agreement, Eco-Energy purchases, markets and resells 100% of the ethanol produced at HLBE’s ethanol production facility and arranges for the transportation of HLBE’s ethanol. HLBE pays Eco-Energy a marketing fee per gallon of ethanol sold in consideration of Eco-Energy’s services, as well as a fixed lease fee for rail cars leased from Eco-Energy to the HLBE. During the third quarter of 2016, HLBE entered into an amendment with Eco-Energy extending the term of the marketing agreement to December 31, 2019, with automatic renewals for additional three terms of three-year periods unless terminated by either party by providing written notice to the other party at least 90 days prior to the end of the then current term. Additionally, the amendment provides for certain negotiated changes to the marketing fees payable to Eco-Energy by HLBE and the timing of payments by Eco-Energy to GFE for the ethanol Eco-Energy purchases from GFE. The changes to the marketing fee and timing of payments by Eco-Energy were negotiated based on prevailing market-rate conditions for comparable ethanol marketing services.

Ethanol marketing fees and commissions totaled approximately $1,159,000, $1,256,000 and $1,234,000 for the fiscal years ended October 31, 2017, 2016, and 2015, respectively, and are included net within revenues.

Ethanol Contracts

At October 31, 2017, GFE had fixed and basis contracts to sell approximately $18,889,000 of ethanol for various delivery periods through March 2018, which approximates 56% of its anticipated ethanol sales for this that period.

At October 31, 2017, HLBE had fixed and basis contracts to sell approximately $18,414,000 of ethanol for various delivery periods through March 2018, which approximates 52% of its anticipated ethanol sales for this that period.

Distillers Grain Marketing Agreement

GFE has a distillers’ grains marketing agreement with RPMG, Inc. (“RPMG”), an unrelated party, for the purpose of marketing and selling all distillers’ grains produced by GFE. The contract commenced on February 1, 2011 with an initial term of one year, and will continue to remain in effect until terminated by either party at its unqualified option, by providing written notice of not less than 90 days to the other party. Distillers’ grains commissions to RPMG totaled approximately $276,000, $335,000 and $421,000 for the fiscal years ended October 31, 2017, 2016, and 2015, respectively, and are included net within revenues.

At October 31, 2017, GFE had forward contracts to sell approximately $1,459,000 of distillers’ grain for deliveries through November 2017, which approximates 92% of its anticipated distillers’ grain sales during that period.

HLBE has a distillers’ grains off-take agreement with Gavilon Ingredients, LLC (“Gavilon”), an unrelated party. Under this agreement, Gavilon purchases all of the distillers’ grains produced at HLBE’s ethanol plant in exchange for a service fee. The contract commenced on November 1, 2013 with an initial term of six months, and will continue to remain in effect until terminated by either party at its unqualified option, by providing written notice of not less than 60 days to the other party. Distillers’ grains commissions to Gavilon totaled approximately $268,000, $283,000 and $308,000 for the fiscal years ended October 31, 2017, 2016, and 2015, respectively, and are included net within revenues.

At October 31, 2017, HLBE had forward contracts to sell approximately $2,006,000 of distillers’ grains for delivery in March 2018, which approximates 27% of its anticipated distillers’ grain sales during that period.

Corn Oil Marketing Agreement

GFE has a corn oil marketing agreement with RPMG, an unrelated party, for the purpose of marketing and selling all corn oil produced by GFE. The contract commenced on April 29, 2010 with an initial term of one year, and will continue to remain in effect until terminated by either party at its unqualified option, by providing written notice of not less than 90 days to the other party.

HLBE has a corn oil marketing agreement with RPMG, an unrelated party, for the purpose of marketing and selling all corn oil produced by HLBE. The contract commenced on November 1, 2013 with an initial term of one year, and will continue to remain in effect until terminated by either party at its unqualified option, by providing written notice of not less than 90 days to the other party.

Corn oil commissions totaled approximately $176,000, $166,000 and $125,000 for the fiscal years ended October 31, 2017, 2016, and 2015, respectively, and are included net within revenues.

At October 31, 2017, GFE had forward contracts to sell approximately $423,000 of corn oil for delivery through December 2017, which approximates 48% of its anticipated corn oil sales for this that period.

At October 31, 2017, HLBE had forward contracts to sell approximately $763,000 of corn oil for delivery through December 2017, which approximates 90% of its anticipated corn oil sales for this that period.

Contract for Natural Gas Pipeline to Plant

GFE has an agreement with an unrelated company for the construction of and maintenance of 9.5 miles of natural gas pipeline that will serve the GFE plant. The agreement requires the Company to receive a minimum of 1,400,000 DT of natural gas annually through the term of the agreement. The Company is charged a fee based on the amount of natural gas delivered through the pipeline.

HLBE has a facilities agreement with Northern Border Pipeline Company which allows us access to an existing interstate natural gas pipeline located approximately 16 miles north from the HLBE plant. Agrinatural was formed to own and operate the pipeline and transports gas to the Company pursuant to a transportation agreement The Company also has a base agreement for the sale and purchase of natural gas with Constellation NewEnergy-Gas Division, LLC (“Constellation”). This agreement runs until March 31, 2019.

Water Agreements

In October 2003, HLBE entered into an industrial water supply development and distribution agreement with the City of Heron Lake for 15 years. HLBE has the exclusive rights to the first 6,000 gallons per minute of capacity that is available from the well, and provides for HLBE, combined with an unrelated company, to approve any other supply contracts that the City may enter into. In consideration, HLBE will pay one half of the City’s water well bond payments of $735,000, plus a 5% administrative fee, totaling approximately $594,000, and operating costs, relative to HLBE’s water usage, plus a 10% profit. These costs will be paid as water usage fees. HLBE recorded an assessment of approximately $367,000 with long-term debt as described in Note 8. HLBE pays operating and administrative expenses of approximately $12,000 per year.

In May 2006, HLBE entered into a water treatment agreement with the City of Heron Lake and Jackson County for 30 years. HLBE will pay for operating and maintenance costs of the plant in exchange for receiving treated water. In addition, HLBE agreed to an assessment for a portion of the capital costs of the water treatment plant. HLBE recorded assessments with long-term debt of $500,000 and $3,550,000 in fiscal 2007 and 2006, respectively, as described in Note 8. HLBE paid operating and maintenance expenses of approximately $92,000, $24,000, and $57,000 in fiscal 2017, 2016, and 2015, respectively.

Railcar Damages

In accordance with certain railcar lease agreements, at expiration, the Company is required to return the railcars in good condition, less normal wear and tear. Primarily due to the ongoing maintenance and repair activities performed on its railcars, the Company has determined that no accrual for leased railcars is necessary and an estimate of the possible range of loss cannot be made.