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COMMITMENTS AND CONTINGENCIES
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Dec. 31, 2013
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| COMMITMENTS AND CONTINGENCIES [Abstract] | |||||||||||||||||||||||||||||||||||||||||
| COMMITMENTS AND CONTINGENCIES |
NOTE 12
COMMITMENTS AND CONTINGENCIES
Hazardous Waste
In connection with our waste management services, we handle both hazardous and non-hazardous waste, which we transport to our own, or other, facilities for destruction or disposal. As a result of disposing of hazardous substances, in the event any cleanup is required, we could be a potentially responsible party for the costs of the cleanup notwithstanding any absence of fault on our part.
Legal Matters
In the normal course of conducting our business, we are involved in various litigations. We are not a party to any litigation or governmental proceeding which our management believes could result in any judgments or fines against us that would have a material adverse affect on our financial position, liquidity or results of future operations.
Insurance
The Company has a 25-year finite risk insurance policy entered into in June 2003 with American International Group, Inc. (“AIG”), which provides financial assurance to the applicable states for our permitted facilities in the event of unforeseen closure. The policy, as amended, provides for a maximum allowable coverage of $39,000,000 and has available capacity to allow for annual inflation and other performance and surety bond requirements. We have made all of the required payments totaling $18,305,000, for this finite risk insurance policy, as amended, of which $14,472,000 has been deposited into a sinking fund account which represents a restricted cash account; $2,883,000 represented full/terrorism premium; and $950,000 represented fee payable to AIG. As of December 31, 2013, our financial assurance coverage amount under this policy totaled approximately $38,161,000. We have recorded $15,409,000 in our sinking fund related to the policy noted above in other long term assets on the accompanying balance sheets, which includes interest earned of $938,000 on the sinking fund as of December 31, 2013. Interest income for twelve months ended December 31, 2013, was approximately $27,000. On the fourth and subsequent anniversaries of the contract inception, we may elect to terminate this contract. If we so elect, AIG is obligated to pay us an amount equal to 100% of the sinking fund account balance in return for complete releases of liability from both us and any applicable regulatory agency using this policy as an instrument to comply with financial assurance requirements.
In August 2007, we entered into a second finite risk insurance policy for our PFNWR facility with AIG. The policy provided an initial $7,800,000 of financial assurance coverage with an annual growth rate of 1.5%, which at the end of the four year term policy, provides maximum coverage of $8,200,000. We have made all of the required payments on this policy, totaling $7,158,000, of which $5,700,000 has been deposited into a sinking fund account and $1,458,000 represented premium. As of December 31, 2013, we have recorded $5,898,000 in our sinking fund related to this policy in other long term assets on the accompanying balance sheets, which includes interest earned of $198,000 on the sinking fund as of December 31, 2013. Interest income for the twelve months ended December 31, 2013 totaled approximately $8,000. This policy is renewed annually at the end of the four year term with a nominal fee for the variance between the policy and coverage requirement. We have renewed this policy annually from 2011 to 2013 with an annual fee of $46,000. All other terms of the policy remain substantially unchanged.
Operating Leases
We lease certain facilities and equipment under operating leases. The following table lists future minimum rental payments as of December 31, 2013 under these leases for our continuing operations (in thousands):
We have no future minimum rental payment requirement for our discontinued operations as of December 31, 2013.
Total rent expense was $1,381,000, and $1,569,000, for 2013 and 2012, respectively for our continuing operations. These amounts included payments on non-cancelable operating leases of approximately $913,000 and $972,000 for 2013 and 2012, respectively. The remaining rent expense was for non-contractual monthly and daily rentals of specific use vehicles, machinery and equipment.
Total rent expense was $27,000 and $42,000 for 2013 and 2012, respectively for our discontinued operations. These amounts included payments on non-cancelable operating leases of approximately $0, and $5,000, respectively. The remaining rent expense was for non-contractual monthly and daily rentals of specific use vehicles, machinery and equipment.
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