We have at various points and may in the future become involved in various legal proceedings arising out of our operations in the normal course of business. These proceedings would be subject to the uncertainties inherent in any litigation, and we regularly assess the need for accounting recognition or disclosure of these contingencies. We would expect to defend ourselves vigorously in all such matters. Based on currently available information, we believe it is unlikely that the outcome of known matters would have a material adverse impact on our financial condition, results of operations or cash flows.

The Partnership leases retail stores, other property, and equipment under non-cancellable operating leases whose initial terms are typically 5 to 15 years, with some having a term of 40 years or more, along with options that permit renewals for additional periods. At the inception of each, we determine if the arrangement is a lease or contains an embedded lease and review the facts and circumstances of the arrangement to classify leased assets as operating or finance. The Partnership has elected not to record any leases with terms of 12 months or less on the balance sheet.

At this time, the majority of active leases within our portfolio are classified as operating leases. Operating leases are included in lease right-of-use (“ROU”) assets, operating lease current liabilities, and operating lease noncurrent liabilities in our consolidated balance sheets. Finance leases represent a small portion of the active lease agreements and are included in ROU assets and long-term debt in our consolidated balance sheets. The ROU assets represent our right to use an underlying asset for the lease term and lease liabilities represent our obligation to make minimum lease payments arising from the lease for the duration of the lease term.

Most leases include one or more options to renew, with renewal terms that can extend the lease term from 1 to 20 years or greater. The exercise of lease renewal options is typically at our discretion. Additionally, many leases contain early termination clauses; however, early termination typically requires the agreement of both parties to the lease. At lease inception, all renewal options reasonably certain to be exercised are considered when determining the lease term. At this time, the Partnership does not have leases that include options to purchase or automatic transfer of ownership of the leased property to the Partnership. The depreciable life of leased assets and leasehold improvements are limited by the expected lease term.

To determine the present value of future minimum lease payments, we use the implicit rate when readily determinable. At this time, many of our leases do not provide an implicit rate; therefore, to determine the present value of minimum lease payments we use our incremental borrowing rate based on the information available at lease commencement date. The ROU assets also include any lease payments made on or before the commencement date and exclude lease incentives.

Minimum rent payments are expensed on a straight-line basis over the term of the lease. In addition, some leases may require additional contingent or variable lease payments based on factors specific to the individual agreement. Variable lease payments we are typically responsible for include payment of real estate taxes, maintenance expenses and insurance.



		Three Months Ended June 30,						Six Months Ended June 30,
Lease cost	Classification	2020			2019			2020			2019
		(in millions)
Operating lease cost	Lease expense	$	14		$	14		$	26		$	26
Finance lease cost
Amortization of leased assets	Depreciation, amortization, and accretion	2			—			3			—
Interest on lease liabilities	Interest expense	—			—			1			—
Short term lease cost	Lease expense	1			1			2			2
Variable lease cost	Lease expense	1			1			2			2
Sublease income	Lease income	(10		)	(11		)	(20		)	(21		)
Net lease cost		$	8		$	5		$	14		$	9



	June 30,
Lease Term and Discount Rate	2020		2019
Weighted-average remaining lease term (years)
Operating leases	24		24
Finance leases	5		10
Weighted-average discount rate (%)
Operating leases	6	%	6	%
Finance leases	5	%	8	%



	Six Months Ended June 30,
Other information	2020			2019
	(in millions)
Cash paid for amount included in the measurement of lease liabilities
Operating cash flows from operating leases	$	(26	)	$	(28	)
Operating cash flows from finance leases	$	—		$	—
Financing cash flows from finance leases	$	(3	)	$	—
Leased assets obtained in exchange for new finance lease liabilities	$	—		$	—
Leased assets obtained in exchange for new operating lease liabilities	$	9		$	14



Maturity of lease liabilities	Operating leases		Finance leases		Total
	(in millions)
2020 (remainder)	$	25	$	4	$	29
2021	48		7		55
2022	46		7		53
2023	45		7		52
2024	44		4		48
Thereafter	840		5		845
Total lease payment	1,048		34		1,082
Less: interest	505		5		510
Present value of lease liabilities	$	543	$	29	$	572

The Partnership leases or subleases a portion of its real estate portfolio to third party companies as a stable source of long-term revenue. Our lessor and sublease portfolio consists mainly of operating leases with convenience store operators. At this time, most lessor agreements contain 5-year terms with renewal options to extend and early termination options based on established terms specific to the individual agreement.



	Three Months Ended June 30,				Six Months Ended June 30,
	2020		2019		2020		2019
	(in millions)
Fuel Distribution and Marketing lease income	$	29	$	31	$	59	$	63
All Other lease income	5		4		10		7
Total lease income	$	34	$	35	$	69	$	70