Commitments and Contingencies

Leases

The Partnership leases certain convenience store and other properties 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. Minimum rent is expensed on a straight-line basis over the term of the lease. In addition, certain leases require additional contingent payments based on sales or motor fuel volumes. We typically are responsible for payment of real estate taxes, maintenance expenses and insurance. These properties are either sublet to third parties or used for our convenience store operations.

Net rent expense consisted of the following:



	Year Ended December 31, 2017		Year Ended December 31, 2016		Year Ended December 31, 2015
	(in millions)
Cash rent:
Store base rent (1)(2)	$	66	$	66	$	67
Equipment and other rent (3)	14		14		12
Total cash rent	80		80		79
Non-cash rent:
Straight-line rent	1		1		—
Net rent expense	$	81	$	81	$	79

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(1)	Store base rent includes the Partnership's rent expense for leased convenience store properties which are subleased to third-party operators. The sublease income from these sites is recorded in rental income on the statement of operations and totaled $25 million, $25 million and $26 million for the years ended December 31, 2017, December 31, 2016, and December 31, 2015, respectively.


(2)	Store base rent includes contingent rent expense totaling $16 million, $18 million, and $20 million for the years ending December 31, 2017, December 31, 2016, and December 31, 2015, respectively.


(3)	Equipment and other rent consists primarily of vehicles and marine transportation vessels.

Future minimum lease payments, excluding sale-leaseback financing obligations (see Note 10), for future fiscal years are as follows (in millions):



2018	$	74
2019	64
2020	59
2021	53
2022	48
Thereafter	514
Total	$	812

Environmental Remediation

We are subject to various federal, state and local environmental laws and make financial expenditures in order to comply with regulations governing underground storage tanks adopted by federal, state and local regulatory agencies. In particular, at the federal level, the Resource Conservation and Recovery Act of 1976, as amended, requires the EPA to establish a comprehensive regulatory program for the detection, prevention, and cleanup of leaking underground storage tanks (e.g. overfills, spills, and underground storage tank releases).

Federal and state regulations require us to provide and maintain evidence that we are taking financial responsibility for corrective action and compensating third parties in the event of a release from our underground storage tank systems. In order to comply with these requirements, we have historically obtained private insurance in the states in which we operate. These policies provide protection from third-party liability claims. During 2017, our coverage was $10 million per occurrence and in the aggregate. Our sites continue to be covered by these policies.

We are currently involved in the investigation and remediation of contamination at motor fuel storage and gasoline store sites where releases of regulated substances have been detected. We accrue for anticipated future costs and the related probable state reimbursement amounts for remediation activities. Accordingly, we have recorded estimated undiscounted liabilities for these sites totaling $22 million and $40 million as of December 31, 2017 and 2016, respectively, which are classified as accrued expenses and other current liabilities and other noncurrent liabilities. As of December 31, 2017, we had $1 million in an escrow account to satisfy environmental claims related to the MACS acquisition and $8 million in two escrow accounts to satisfy environmental claims related to the Emerge acquisition.

Deferred Branding Incentives

We receive deferred branding incentives and other incentive payments from a number of our fuel suppliers. A portion of the deferred branding incentives may be passed on to our wholesale branded dealers under the same terms as required by our fuel suppliers. Many of the agreements require repayment of all or a portion of the amount received if we or our branded dealers elect to discontinue selling the specified brand of fuel at certain locations. As of December 31, 2017, the estimated amount of deferred branding incentives that would have to be repaid upon de-branding at these locations was $1.4 million. Of this amount, approximately $0.3 million would be the responsibility of the Partnership’s branded dealers under reimbursement agreements with the dealers. In the event a dealer were to default on this reimbursement obligation, we would be required to make this payment. No liability is recorded for the amount of dealer obligations which would become payable upon de-branding as no such dealer default is considered probable as of December 31, 2017. We have recorded $1.1 million and $1 million for deferred branding incentives, net of accumulated amortization, as of December 31, 2017 and 2016, respectively, under other non-current liabilities on our Consolidated Balance Sheets. The Partnership amortizes its retained portion of the incentives to income on a straight-line basis over the term of the agreements.

Contingent Consideration related to Aloha Acquisition

Pursuant to an earnout agreement associated with the Aloha Acquisition, we have recorded $15 million and $15 million, as of December 31, 2017 and 2016, respectively, under non-current liabilities on our Consolidated Balance Sheets. Earnout objectives achieved under this agreement during the period of December 16, 2014 through December 31, 2022 are paid annually in arrears. The fair value measurement of such future earnouts is categorized within Level 3 of the fair value hierarchy.