20. Commitments and Contingencies

Leases

The Company is obligated under certain operating leases and rental agreements for rail cars, office space, and other equipment. Future minimum annual commitments under such operating leases at September 30, 2017 are as follows:

2018	$	11,669
2019		10,002
2020		7,181
2021		5,220
2022		829
Thereafter		699

Expense related to operating leases and rental agreements was $2,676 and $1,765 for three months ended September 30, 2017 and 2016. Expense related to operating leases and rental agreements was $6,744 and $5,202 for the nine months ended September 30, 2017 and 2016.

Lease expense related to rail cars are included in cost of goods sold in the condensed consolidated income statements.

Litigation

The Company is periodically involved in litigation and claims incidental to its operation. Management believes that any pending litigation will not have a material impact the Company’s financial position.

Consulting Agreements

August 1, 2010, the Company entered into a consulting agreement related to the purchase of land with a third party. The third party acted as an agent for the Company to obtain options to purchase certain identified real property in Wisconsin, as well as obtain permits and approvals necessary to open, construct and operate a sand mining and processing facility on such real property. The third party’s compensation, which continues indefinitely, consists of reimbursement of certain expenses and $1 per each acre purchased as a closing fee. For the three months ended September 30, 2017 and 2016, the Company incurred no closing costs and expense reimbursements, respectfully. For the nine months ended September 30, 2017 and 2016, the Company incurred $19 and $0 of closing costs and expense reimbursements, respectfully.

The closing costs have been capitalized in property and equipment in the accompanying consolidated balance sheets when they relate to the acquisition of land.

In addition to the aforementioned fees, the third-party agreement provides for tonnage fees based upon mining operations. The payment of $0.50 per sold ton of certain grades of sand that have been mined and sold from the properties acquired under the consulting agreement continues indefinitely. The minimum annual tonnage fee is $200 per contract year, which runs from August 1 to July 31. During the three months ended September 30, 2017 and 2016, the Company incurred $133 and $71 related to tonnage fees, respectively. During the nine months ended September 30, 2017 and 2016, the Company incurred $362 and $169 related to tonnage fees, respectively.

Bonds

The Company entered into a performance bond with Jackson County, Wisconsin and Monroe County, Wisconsin for $4,400 and $900, respectively. The Company provided a performance bond to assure performance under the reclamation plan filed with each respective county. The Company entered into permit bonds amounting to $1,350 with certain towns and counties in which it operates to use designated town and county roadways. The Company provided these permit bonds to assure maintenance and restoration of the roadways. The Company has an outstanding $1,943 bond to assure performance under its agreement with a pipeline common carrier. As of September 30, 2017 and December 31, 2016, $486 and $971, respectively, of cash is being held as collateral related to the bond and is presented as restricted cash on the consolidated balance sheet.