Commitments and Contingencies

(a) Lease Commitments - accounted for under ASC 842 Leases

Substantially all our operating lease ROU assets and operating lease liability represents leases, with a term greater than one year, for railcars, office space and equipment used to conduct our operations. We currently have no finance leases. These leases were discounted using a rate of 3.125%, which is based on a weighted average borrowing rate of specific debt. Non-variable lease costs include the amortization of the asset recorded on a straight-line basis. Variable lease components are non-index based payments based on performance or usage of the underlying asset. We have no material lessor or sublease income.

The components of lease cost for operating leases are as follows:



	Three Months Ended March 31, 2019
	(In thousands)
Lease cost	$	4,576
Variable lease cost	191
Operating lease expense	$	4,767

The ROU assets for operating lease liabilities as of March 31, 2019 were comprised as follows:



Leased Asset Class	Polymer		Chemical		Percentage		Average Months Remaining on the Lease	Weighted Average in Months
	(in thousands)
Railcars	$	697	$	24,066	36.7	%	51	18.7
Buildings	13,439		9,820		34.5	%	34	11.7
Equipment	1,251		10,461		17.4	%	30	5.2
Land	6,509		42		9.7	%	475	46.1
Other	568		583		1.7	%	25	0.4
Total	$	22,464	$	44,972				82.2

The following tables show the undiscounted cash flows for the operating lease liabilities.



	March 31, 2019
	(In thousands)
April 1, 2019 through March 31, 2020	$	20,059
April 1, 2020 through March 31, 2021	17,315
April 1, 2021 through March 31, 2022	11,688
April 1, 2022 through March 31, 2023	7,490
April 1, 2023 through March 31, 2024	4,779
Thereafter	12,991
Total undiscounted operating lease liabilities	$	74,322

Present value discount	(6,407		)
Foreign currency and other	(479		)
Total discounted operating lease liabilities	$	67,436



	December 31, 2018
	(In thousands)
2019	$	19,065
2020	16,891
2021	12,385
2022	8,284
2023	5,137
Thereafter	8,498
Total undiscounted operating lease liabilities	$	70,260

(b) 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$9.6 million, or approximately $2.5 million. 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.

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.

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



	Three Months Ended March 31,
	2019			2018
	(In thousands)
Beginning balance	$	5,703		$	5,712
Accretion expense	91			85
Obligations settled	(206		)	(23		)
Foreign currency translation	(82		)	136
Ending balance	$	5,506		$	5,910

Pursuant to the indemnity included in the February 2001 separation agreement from Shell Chemical, we recorded a receivable of $0.2 million as of March 31, 2018.

Except for the presentation on the Condensed Consolidated Balance Sheets for the impact of ASU 842, there have been no other material changes to our Commitments and Contingencies disclosed in our most recently filed Annual Report on Form 10-K.