Note 10. Commitments and Contingencies

The Partnership is subject to contingencies, including legal proceedings and claims arising out of the normal course of business that cover a wide range of matters, including, among others, environmental matters and contract and employment claims.

Leases of Office Space and Computer Equipment

The Partnership has future commitments, principally for office space and computer equipment, under the terms of operating lease arrangements. The following provides total future minimum payments under leases with non‑cancellable terms of one year or more at December 31, 2018 (in thousands):


2019	$	3,280
2020		2,800
2021		2,783
2022		2,796
2023		2,860
Thereafter		6,882
Total	$	21,401

Total rent expense under the operating lease arrangements amounted to approximately $3.0 million, $2.9 million and $3.8 million for the years ended December 31, 2018, 2017 and 2016, respectively.

Terminal and Throughput Leases

The Partnership is a party to terminal and throughput lease arrangements with certain counterparties at various unrelated oil terminals. Certain arrangements have minimum usage requirements. The following provides future minimum lease and throughput commitments under these arrangements with non‑cancellable terms of one year or more at December 31, 2018 (in thousands):


2019	$	12,131
2020		7,239
2021		6,670
2022		4,426
2023		887
Thereafter		453
Total	$	31,806

Total rent expense related to terminal and throughput operating leases was approximately $16.2 million, $13.2 million and $14.4 million for the years ended December 31, 2018, 2017 and 2016, respectively. The increase in 2018 compared to 2017 and 2016 is due to an increase in storage capacity.

Leases of Gasoline Stations

The Partnership leases gasoline stations, primarily land and buildings, under operating leases with various expiration dates. The following provides future minimum lease commitments under these arrangements with non‑cancellable terms of one year or more at December 31, 2018 (in thousands):


2019	$	41,491
2020		39,370
2021		35,087
2022		31,122
2023		28,112
Thereafter		79,874
Total	$	255,056

Total expenses under these operating lease arrangements amounted to approximately $47.2 million, $42.9 million and $41.5 million for the years ended December 31, 2018, 2017 and 2016, respectively.

Leases of Gasoline Stations to Station Operators

The Partnership leases gasoline stations and certain equipment to gasoline station operators under operating leases with various expiration dates. The aggregate carrying value of the leased gasoline stations and equipment at December 31, 2018 was $479.1 million, net of accumulated depreciation of approximately $154.3 million. The following provides future minimum rental income under non‑cancellable operating leases associated with these properties at December 31, 2018 (in thousands):


2019	$	46,489
2020		25,644
2021		10,631
2022		1,436
2023		621
Thereafter		806
Total	$	85,627

Total rental income, which includes reimbursement of utilities and property taxes in certain cases, amounted to approximately $71.6 million, $68.8 million and $68.8 million for the years ended December 31, 2018, 2017 and 2016, respectively.

Sale-Leaseback Transaction

The Partnership is party to a master unitary lease agreement to lease back the real property assets sold with respect to 30 gasoline stations and convenience stores (see Note 7). The following provides future minimum lease payments, which are subject to annual adjustments based on a consumer price index based calculation, for the non-cancelable operating lease terms of one year or more at December 31, 2018 (in thousands):


2019	$	4,618
2020		4,704
2021		4,791
2022		4,879
2023		4,969
Thereafter		40,308
Total	$	64,269

The following provides future minimum sublease rentals from third-party tenants of certain of the sold sites for each of the next four years ending December 31:


2019	$	1,894
2020		1,182
2021		343
2022		10
Total	$	3,429

Total rental income from third-party tenants of the sold sites was $2.4 million, $2.3 million, and $1.2 million for the years ended December 31, 2018, 2017 and 2016, respectively. The increase in 2017 compared to 2016 is due to a full year of rental income in 2017 as compared to six months in 2016.

Leases of Railcars

The Partnership leases railcars through various lease arrangements with various expiration dates. The following provides future minimum lease commitments under these arrangements with non‑cancellable terms of one year or more at December 31, 2018 (in thousands):


2019	$	11,104
2020		2,079
2021		1,540
Total	$	14,723

Total expenses under these operating lease arrangements amounted to approximately $18.4 million, $20.9 million and $56.8 million for the years ended December 31, 2018, 2017 and 2016, respectively. On December 31, 2016, the Partnership voluntarily terminated a sublease for 1,610 railcars leased from a third party. The termination of the sublease eliminated lease payments related to these railcars of approximately $29.0 million and $30.0 million in 2018 and 2017, respectively, and future lease payments of approximately $13.0 million in 2019.

Leases of Barges

The Partnership leases barges through various time charter lease arrangements with various expiration dates. The following provides future minimum lease commitments under these arrangements with non-cancellable terms of one year or more at December 31, 2018 (in thousands):


2019	$	30,818
2020		17,020
2021		12,672
2022		7,713
2023		5,876
Total	$	74,099

Total expenses under these operating lease arrangements amounted to approximately $50.7 million, $54.9 million and $64.3 million for the years ended December 31, 2018, 2017 and 2016, respectively. The decrease in 2017 compared to 2016 is due to the Partnership leasing fewer barges.

Purchase Commitments

The Partnership has minimum retail gasoline volume purchase requirements with various unrelated parties. These gallonage requirements are purchased at the fair market value of the product at the time of delivery. Should these gallonage requirements not be achieved, the Partnership may be liable to pay penalties to the appropriate supplier. As of December 31, 2018, the Partnership has fulfilled all gallonage commitments. The following provides minimum volume purchase requirements at December 31, 2018 (in thousands of gallons):


2019		518,517
2020		415,900
2021		351,900
2022		231,300
2023		187,200
Thereafter		319,500
Total		2,024,317

Brand Fee Agreement

The Partnership entered into a brand fee agreement with ExxonMobil Corporation (“ExxonMobil”) which entitles the Partnership to operate retail gasoline stations under the Mobil‑branded trade name and related trade logos. The fees, which are based upon an estimate of the volume of gasoline and diesel to be sold at the gasoline stations acquired from ExxonMobil in 2010, are due on a monthly basis. The following provides total future minimum payments under the agreement with non‑cancellable terms of one year or more at December 31, 2018 (in thousands):


2019	$	9,000
2020		9,000
2021		9,000
2022		9,000
2023		9,000
Thereafter		13,500
Total	$	58,500

Total expenses reflected in cost of sales related this agreement were approximately $9.0 million for each of the years ended December 31, 2018, 2017 and 2016.

Port of Columbia County—Land and Equipment

The Partnership leases mobile equipment under non‑cancellable operating lease arrangements and has a continuing operating lease with the Port of Columbia County (formerly known as Port of St. Helens). The following provides total future minimum payments under these operating leases with initial terms one year or more at December 31, 2018 (in thousands):


2019	$	233
2020		230
2021		230
2022		230
2023		230
Thereafter		9,799
Total	$	10,952

Total rental expense was approximately $0.2 million for each of the years ended December 31, 2018, 2017 and 2016.

Other Commitments

In June 2014, the Partnership entered into a pipeline connection agreement with Meadowlark Midstream Company, LLC (“Meadowlark”) whereby Meadowlark would construct, own, operate and maintain a crude oil pipeline from its Divide County, North Dakota crude oil station to the Partnership’s Basin Transload crude oil storage facility in Columbus, North Dakota. In connection with the agreement, the Partnership is committed to a minimum take-or-pay throughput commitment of approximately $55.0 million over a seven–year period beginning after the commissioning of the pipeline which occurred in December of 2015. At December 31, 2018, the remaining commitment on the take-or-pay commitment was approximately $32.5 million.

In May 2014, the Partnership entered into a pipeline connection agreement with Tesoro High Plains Pipeline Company (“Tesoro High Plains”) whereby Tesoro High Plains would design, engineer, construct and place in service improvements on its pipeline system that will expand its capacity to ship crude oil from points in Dunn and McKenzie Counties, North Dakota to Ramberg Station/Beaver Lodge destination point in Williams County, North Dakota. In connection with this agreement, the Partnership is committed to a minimum take-or-pay throughput commitment of approximately $38.2 million over a seven–year period beginning after the commissioning of the pipeline, which occurred in January of 2015. At December 31, 2018, the remaining commitment on the take-or-pay commitment, including a quarterly take-or-pay of $1.4 million, was approximately $15.2 million.

In April 2014, Basin Transload, of which the Partnership owns a 60% membership interest, entered into a pipeline connection agreement with Tesoro Logistics (“Tesoro”) whereby Tesoro would build, own and operate a four‑mile pipeline lateral from its existing block gate valve in Mercer Country, North Dakota to the Partnership’s Beulah Rail Facility near Beulah, North Dakota. In connection with this agreement, Basin Transload was committed to a minimum take-or-pay throughput commitment of approximately $14.6 million over a five‑year period beginning after the commissioning of the pipeline, which occurred in January 2015. During the third quarter of 2017, this agreement was accelerated by Tesoro due to a lack of crude oil movement through the pipeline, and the Partnership recorded a $13.1 million expense. In October 2017, the Partnership paid the $13.1 million to Tesoro associated with the acceleration and corresponding termination of this agreement. At December 31, 2018, the remaining commitment on the take-or-pay commitment was $0.

In February 2013, the Partnership assumed natural gas transportation and reservation agreements, which have various expiration dates, with Northwest Natural Gas Company (“NW Natural Gas”) and the Northwest Pipeline system (“NW Pipeline”) whereby NW Natural Gas and NW Pipeline provide the Partnership with the transportation and reservation of firm natural gas delivered to the Partnership’s Oregon facility. At December 31, 2018, the remaining commitment on the transportation and reservation agreements over the next five years was approximately $5.8 million.

In February 2013, the Partnership assumed access right agreements with the Port of Columbia County (formerly known as Port of St. Helens) for access rights to the rail spur and dock located at the Partnership’s Oregon facility. The total expense under these agreements amounted to approximately $0.9 million, $1.0 million and $0.8 million for the years ended December 31, 2018, 2017 and 2016, respectively. At December 31, 2018, the remaining ratable commitment on these access right agreements, with expirations through 2066, was approximately $31.5 million.

Environmental Liabilities

Please see Note 13 for a discussion of the Partnership’s environmental liabilities.

Legal Proceedings

Please see Note 22 for a discussion of the Partnership’s legal proceedings.