(15) Commitments and Contingencies

Environmental Liabilities

We are subject to the environmental protection and health and safety laws and related rules and regulations of the United States and of the individual states, municipalities and other local jurisdictions where we operate. The Company’s Shale Solutions business is subject to rules and regulations promulgated by the Texas Railroad Commission, the Texas Commission on Environmental Quality, the Louisiana Department of Natural Resources, the Louisiana Department of Environmental Quality, the Ohio Department of Natural Resources, the Pennsylvania Department of Environmental Protection, the North Dakota Department of Health, the North Dakota Industrial Commission, Oil and Gas Division, and the North Dakota State Water Commission and, in Montana, the rules and regulations of the Montana Department of Environmental Quality and the Montana Board of Oil and Gas, among others. These laws, rules and regulations address environmental, health and safety and related concerns, including water quality and employee safety. We have installed safety, monitoring and environmental protection equipment such as pressure sensors and relief valves, and have established reporting and responsibility protocols for environmental protection and reporting to such relevant local environmental protection departments as required by law.

The Company’s Industrial Solutions business involves the use, handling, storage and contracting for recycling or disposal of environmentally sensitive materials, such as waste motor oil and filters, solvents, transmission fluid, antifreeze, lubricants and degreasing agents. Accordingly, the Company’s Industrial Solutions business is subject to regulation by various federal, state, and local authorities with respect to health, safety and environmental quality and standards. The Industrial Solutions business is also subject to laws, ordinances, and regulations governing the investigation and remediation of contamination at facilities we operate or to which we send hazardous substances for treatment, recycling or disposal. In particular, the United States Comprehensive Environmental Response, Compensation and Liability Act, or “CERCLA,” imposes joint, strict, and several liability on owners or operators of facilities at, from, or to which a release of hazardous substances has occurred, parties that generated hazardous substances that were released at such facilities and parties that transported or arranged for the transportation of hazardous substances to such facilities. A majority of states have adopted statutes comparable to, and in some cases more stringent than, CERCLA.

Management believes the Company is in material compliance with all applicable environmental protection laws and regulations in the United States and the states in which the Company operates. The Company believes that there are no unrecorded liabilities in connection with the Company’s compliance with environmental laws and regulations. The consolidated balance sheet at December 31, 2013 included accruals totaling $1.5 million for various environmental matters, including the estimated cost to comply with a Louisiana Department of Environmental Quality requirement that the Company perform testing and monitoring at certain locations to confirm that prior spills were remediated in accordance with applicable requirements.

Leases

Included in property and equipment in the accompanying consolidated balance sheets are the following assets held under capital leases at December 31, 2013:

 

Leased equipment		$	18,475
Less accumulated depreciation			(5,843	)
Leased equipment		$	12,632

Capital lease obligations consist primarily of vehicle leases with periods expiring at various dates through 2017 at variable interest rates and fixed interest rates, which were approximately 3.30% at December 31, 2013. Capital lease obligations amounted to $18.8 million and $17.9 million at December 31, 2013 and 2012, respectively.

 

Future minimum lease payments, by year and in the aggregate, for capital leases are as follows at:

 

		December 31,
2014		$	5,228
2015			5,082
2016			4,580
2017			4,201
2018			1,188
Thereafter			—
Total minimum lease payments			20,279
Less amount representing executor costs			(266	)
Net minimum lease payments			20,013
Less amount representing interest (3.30% at December 31, 2013)			(1,195	)
Present value of net minimum lease payments		$	18,818

The Company also rents transportation equipment, real estate and certain office equipment under operating leases. Certain real estate leases require the Company to pay maintenance, insurance, taxes and certain other expenses in addition to the stated rentals. Lease expense under operating leases and rental contracts amounted to $7.5 million, $7.8 million and $0.6 million for the years ended December 31, 2013, 2012 and 2011, respectively.

Future minimum lease payments, by year and in the aggregate, for noncancelable operating leases with initial or remaining terms of one year or more are as follows at:

 

		December 31,
2014		$	4,444
2015			4,000
2016			3,669
2017			3,373
2018			2,237
Thereafter			2,987
Total minimum lease payments		$	20,710

Asset Retirement Obligations

At December 31, 2013, the Company had approximately $2.8 million of asset retirement obligations related to its disposal wells and landfill which are recorded in “Other long-term liabilities” in the accompanying consolidated balance sheet.

Surety Bonds and Letters of Credits

At December 31, 2013, the Company had surety bonds outstanding of approximately $5.2 million primarily to support financial assurance obligations related to its landfill and disposal wells. Additionally, the Company has agreed to indemnify its insurance carriers, subject to a complete reservation of rights, up to 9.0 million, for losses sustained in excess of the insurance coverage of $16.0 million in connection with the surety bond in connection with the Texas Jury Verdict (Note 16). At December 31, 2013, the Company had outstanding irrevocable letters of credit totaling $3.1 million to support various agreements, leases and insurance policies.

 

Capital Expenditures Commitment

The Company has entered into an agreement to purchase approximately $13.0 million of thermal desorption equipment for expansion of its solids treatment capabilities at its landfill site in North Dakota. As of December 31, 2013, approximately $7.1 million of purchases remained under this agreement.