|12 Months Ended|
Dec. 31, 2021
|Environmental Remediation Obligations [Abstract]|
15. Environmental Liabilities
The Company is subject to certain federal and state environmental laws and regulations associated with convenience store sites where it stores and sells fuel and other fuel products.
Costs incurred to comply with federal and state environmental regulations are accounted for as follows:
Annual payments for registration of underground storage tanks are recorded as prepaid expenses when paid and expensed throughout the year.
Environmental compliance testing costs of underground 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 UST or the lease period of the relevant site in which the UST is installed, whichever is shorter. Leak detectors installed are capitalized and depreciated over the expected remaining useful life of the equipment.
Costs for removal of underground storage tanks located at the convenience stores and selected independent dealer 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 underground 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, 2021 and 2020, environmental obligations totaled $12.9 million and $13.5 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 whether the federal and/or state regulations in which the Company operates, and which deal with the environment, will be amended.
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 $5.1 million and $5.6 million as of December 31, 2021 and 2020, 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, 2021 were as follows:
The entire disclosure for environmental loss contingencies, such as presence of hazardous waste, relevant information from reports issued by regulators, and estimated costs to achieve compliance with regulatory requirements. This element may be used for all of an entity's disclosures about environmental loss contingencies.
Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef