NOTE 13

ACCRUED CLOSURE COSTS AND ARO

Accrued closure costs represent our estimated environmental liability to clean up our fixed-based regulated facilities as required by our permits, in the event of closure. Changes to reported closure liabilities (current and long-term) for the years ended December 31, 2018 and 2017, were as follows:

The Company recorded an additional $3,323,000 and $1,400,000 in closure liabilities in 2018 and 2017, respectively, due to changes in estimated future closure costs for our M&EC subsidiary which is in closure status (see “Note 4 – M&EC Facility” for further information of these additional closure liabilities recorded). The Company also recorded an additional $1,257,000 in closure liabilities in 2017 for its DSSI subsidiary due to changes in estimated future closure costs.

In 2018 and 2017, the Company had spending of approximately $4,991,000 and $1,872,000, respectively, in closure related activities for the M&EC subsidiary. In 2018 and 2017, the Company had spending of approximately $302,000 and $165,000, respectively, in closure related activities for the PFNWR subsidiary in connection with the closure of certain processing equipment/enclosure.

At December 31, 2018 and 2017, M&EC’s closure liabilities totaled approximately $1,142,000 and $2,791,000, respectively, with the entire amount classified as current.

The reported closure asset or ARO, is reported as a component of “Net Property and equipment” in the Consolidated Balance Sheets at December 31, 2018 and 2017 with the following activity for the years ended December 31, 2018 and 2017:

The impairment of ARO for 2017 resulted from the impairment of M&EC’s remaining tangible assets recorded in 2017 (See “Note 4 – M&EC Facility”). The adjustment made to ARO for 2017 was due to the increase in closure liabilities recorded for the DSSI subsidiary as discussed above.