Commitments and Contingencies

(a) Legal Proceedings

We received an initial notice from the tax authorities in Brazil during the fourth quarter of 2012 in connection with tax credits that were generated from the purchase of certain goods which were subsequently applied by us against taxes owed. The tax authorities are currently assessing R$7.0 million, or $2.2 million (converted at the September 30, 2017 exchange rate). We have appealed the assertion by the tax authorities in Brazil that the goods purchased were not eligible to earn the credits. While the outcome of this proceeding cannot be predicted with certainty, we do not expect this matter to have a material adverse effect upon our financial position, results of operations or cash flows.

As previously disclosed, on October 6, 2014, Taiwan-based LCY Chemical Corporation (“LCY”) filed a lawsuit against us in connection with our refusal to pay the $25.0 million termination fee upon a termination of the definitive agreement governing Kraton's combination with the SBC operations of LCY. On July 23, 2015, LCY's lawsuit was dismissed from the Delaware federal court on jurisdictional grounds. The statute of limitations governing LCY's claim under Delaware law expired in August 2017, and LCY is time-barred from reasserting its claim. Kraton did not incur any material adverse effect upon our financial position, results of operations or cash flows from the ultimate outcome of this matter.

We and certain of our subsidiaries, from time to time, are parties to various other legal proceedings, claims and disputes that have arisen in the ordinary course of business. These claims may involve significant amounts, some of which would not be covered by insurance. A substantial settlement payment or judgment in excess of our accruals could have a material adverse effect on our financial position, results of operations or cash flows. While the outcome of these proceedings cannot be predicted with certainty, we do not expect any of these existing matters, individually or in the aggregate, to have a material adverse effect upon our financial position, results of operations or cash flows.

(b) Asset Retirement Obligations.

The changes in the aggregate carrying amount of our asset retirement obligations are as follows:



	Nine Months Ended September 30,
	2017			2016
	(In thousands)
Beginning balance	$	8,863		$	10,078
Obligations assumed in Arizona Chemical Acquisition	—			1,908
Additional accruals	439			2,146
Accretion expense	241			303
Obligations settled	(3,065		)	(3,780		)
Foreign currency translation, net	484			138
Ending Balance	$	6,962		$	10,793

For a portion of our asset retirement obligations related to the decommissioning of the coal boilers at our Belpre, Ohio, facility, we have recorded a liability and corresponding receivable of $1.4 million and $3.8 million as of September 30, 2017 and 2016, respectively, pursuant to the indemnity included in the February 2001 separation agreement from Shell Chemicals.

As of September 30, 2017 and 2016, we have recorded an environment obligation and corresponding receivable of $3.3 million and $3.1 million, respectively, relating to an indemnification agreement with International Paper, our Chemical segment's former owner.

There have been no other material changes to our Commitments and Contingencies disclosed in our most recently filed Annual Report on Form 10-K.