COMMITMENTS AND CONTINGENCIES

Rail Service Agreements

We have rail service agreements at our terminal facilities with labor service providers that expire at various dates from 2017 through 2019. After the initial term of the agreements, the rail service contracts will continue to be in effect for consecutive one-year terms unless either party provides the other party written notice prior to the end of the term. Under these agreements, we incurred approximately $8.1 million, $7.7 million and $7.0 million in service fees for the years ended December 31, 2016, 2015 and 2014, respectively, which are recorded in "Subcontracted rail services" within our consolidated statements of operations.

The future minimum payments for these rail services agreements are as follows (in thousands):



Year ending December 31,
2017	$	7,105
2018	6,124
2019	3,704
Total	$	16,933

Operating Leases and Fleet Lease Income

We have non-cancellable operating leases for railroad tracks, land surfaces, and railcars that expire on various dates from 2016 through 2024. We incurred $0.4 million, $0.4 million and $0.3 million in lease expenses for buildings, offices, tracks and land for the years ended December 31, 2016, 2015 and 2014, respectively, which are recorded in "Operating and maintenance" within our consolidated statements of operations. Additionally, we incurred $6.2 million, $11.8 million and $8.8 million of fleet service expenses for railcar leases for the years ended December 31, 2016, 2015 and 2014, respectively, which are recorded in "Fleet leases" within our consolidated statements of operations.

The approximate amount of our future minimum lease payments under our non-cancellable operating leases are as follows (in thousands):



Year ending December 31,
2017	$	4,467
2018	4,071
2019	4,071
2020	4,072
2021	4,072
Thereafter	3,831
Total	$	24,584

We serve as an intermediary to assist our customers with obtaining railcars. In connection with our leasing of railcars from third parties, we simultaneously enter into lease agreements with our customers for non-cancellable terms that are designed to recover our costs associated with leasing the railcars as well as a fee for providing this service. Our lease agreements with customers require them to make monthly payments to us totaling $29.2 million under non-cancellable terms through 2022, which are concurrent with the payments we are required to make to our lessors under our non-cancellable operating leases as set forth in the table above. We record the revenue we derive from these leases in "Fleet leases" and "Fleet leases — related party" within our consolidated statements of operations.

The approximate amount of our future rental income under non-cancellable operating leases are as follows (in thousands):



Year ending December 31,
2017	$	5,789
2018	4,678
2019	4,678
2020	4,678
2021	4,678
Thereafter	4,678
Total	$	29,179

Contingent Liabilities

From time to time, we may be involved in legal, tax, regulatory and other proceedings in the ordinary course of business. We do not believe that we are currently a party to any such proceedings that will have a material adverse impact on our financial condition or results of operations.

In connection with the railcar services we provide, we regularly incur railcar cleanup and repair costs upon our return of these railcars to the lessors. We typically pass such costs on to our customers pursuant to the terms of our lease agreements with them. A legacy customer associated with a terminal sold by USD prior to our IPO has returned over 320 railcars to us, approximately 215 of which the lessors claim require additional cleaning and repair from alleged corrosion. We are currently in discussions with the lessors and our customer regarding the validity of these additional costs. We believe that our customer will ultimately be responsible for any costs associated with these returns, and USD has agreed to indemnify us to the extent that we are unable to recover any such costs from our customer.