Annual report pursuant to Section 13 and 15(d)

Environmental Liabilities

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Environmental Liabilities
12 Months Ended
Dec. 31, 2023
Environmental Remediation Obligations [Abstract]  
Environmental Liabilities

15. Environmental Liabilities

The Company is subject to certain federal and state environmental laws and regulations associated with sites at which it stores and sells fuel and other fuel products, as well as at owned and leased locations leased or subleased to dealers.

Costs incurred to comply with federal and state environmental regulations are accounted for as follows:

Annual payments for registration of storage tanks are recorded as prepaid expenses when paid and expensed throughout the year.
Environmental compliance testing costs of storage tanks are expensed as incurred.
Payments for upgrading and installing corrosion protection for tank systems and installation of leak detectors and overfill/spill devices are capitalized and depreciated over the expected remaining useful life of the relevant equipment, UST or the lease period of the relevant site in which the UST is installed, whichever is shorter.
Costs for removal of storage tanks located at the convenience stores, selected dealer locations and certain cardlock locations are classified under the asset retirement obligation section as described in Note 13.
A liability for future remediation costs of contaminated sites related to storage tanks as well as other exposures, is established when such losses are probable and reasonably estimable. Reimbursement for these expenses from government funds or from insurance companies is recognized as a receivable. The liabilities and receivables are not discounted to their present value. The net change in the reimbursement asset and liability for future remediation costs is recorded in store operating expenses in the consolidated statements of operations. The adequacy of the reimbursement asset and liability is evaluated by a third-party at least twice annually and adjustments are made based on past experience, changing environmental conditions and changes in government policy.

As of December 31, 2023 and 2022, environmental obligations totaled $13.4 million and $12.1 million, respectively. These amounts were recorded as other current and non-current liabilities in the consolidated balance sheets. Environmental reserves have been established on an undiscounted basis based upon internal and external estimates in regard to each site. It is reasonably possible that these amounts will be adjusted in the future due to changes in estimates of environmental remediation costs, the timing of the payments or changes in federal and/or state environmental regulations.

The Company maintains certain environmental insurance policies and participates in various state underground storage tank funds that entitle it to be reimbursed for environmental loss mitigation. Estimated amounts that will be recovered from its insurance policies and various state funds for the exposures totaled $7.5 million and $4.9 million as of December 31, 2023 and 2022, respectively, and were recorded as other current and non-current assets in the consolidated balance sheets.

The undiscounted amounts of future estimated payments and anticipated recoveries from insurance policies and various state funds as of December 31, 2023 were as follows:

 

 

 

Payments

 

 

Recoveries

 

 

Net
Obligations

 

 

 

(in thousands)

 

2024

 

$

4,100

 

 

$

2,228

 

 

$

1,872

 

2025

 

 

3,804

 

 

 

2,322

 

 

 

1,482

 

2026

 

 

2,572

 

 

 

1,769

 

 

 

803

 

2027

 

 

761

 

 

 

390

 

 

 

371

 

2028

 

 

526

 

 

 

209

 

 

 

317

 

Thereafter

 

 

1,652

 

 

 

599

 

 

 

1,053

 

Total Future Payments and Recoveries

 

$

13,415

 

 

$

7,517

 

 

$

5,898