HollyFrontier 2015 Annual Report Download - page 28

Table of Content
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The Comprehensive Environmental Response, Compensation and Liability Act (“CERCLA”), also known as “Superfund,” imposes
liability, without regard to fault or the legality of the original conduct, on certain classes of persons, including the current and past
owner or operator of the disposal site or sites from which there is a release of a “hazardous substance,” as well as persons that
disposed of or arranged for the disposal or treatment of the hazardous substances at the site or sites. Under CERCLA, such persons
may be subject to joint and several liability for such costs as the cost of cleaning up the hazardous substances that have been
released into the environment and for damages to natural resources. In the course of our historical operations, as well as in our
current normal operations, we have generated waste, some of which falls within the statutory definition of a “hazardous substance”
and some of which may have been disposed of at sites that may be subject to cleanup and cost recovery actions under CERCLA
by a government entity or other third party. Similarly, locations now owned or operated by us, where third parties have disposed
such hazardous substances in the past, may also be subject to cleanup and cost recovery actions under CERCLA. Under CERCLA,
liable parties may seek contribution from other liable parties to share in the costs of cleanup. Some states have enacted laws similar
to CERCLA which impose similar responsibilities and liabilities on responsible parties. It is also not uncommon for neighboring
landowners and other third parties to file claims under state law for personal injury and property damage allegedly caused by
hazardous substances or other pollutants released into the environment.
Oil Pollution Act - The Oil Pollution Act of 1990 (“OPA”) and regulations thereunder impose a variety of requirements on
“responsible parties” related to the prevention of oil spills and liability for damages resulting from such spills in United States
waters. A “responsible party” includes the owner or operator of an onshore facility. OPA assigns liability to each responsible party
for oil cleanup costs and a variety of public and private damages. While liability limits apply in some circumstances, a party cannot
take advantage of liability limits if the spill was caused by gross negligence or willful misconduct or resulted from violation of a
federal safety, construction or operating regulation. If the party fails to report a spill or to cooperate fully in the cleanup, liability
limits likewise do not apply. Few defenses exist to the liability imposed by OPA. OPA imposes ongoing requirements on a responsible
party, including the preparation of oil spill response plans and proof of financial responsibility to cover environmental cleanup
and restoration costs that could be incurred in connection with an oil spill.
As is the case with all companies engaged in industries similar to ours, we face potential exposure to future claims and lawsuits
involving environmental matters. These matters include soil and water contamination, air pollution, personal injury and property
damage allegedly caused by substances that we manufactured, handled, used, released or disposed of. We currently have
environmental remediation projects that relate to recovery, treatment and monitoring activities resulting from past releases of
refined product and crude oil into the environment. As of December 31, 2015, we had an accrual of $98.1 million related to such
environmental liabilities.
We are and have been the subject of various state, federal and private proceedings and inquiries relating to compliance with
environmental regulations and conditions, including those discussed above. Compliance with current and future environmental
regulations is expected to require additional expenditures, including expenditures for investigation and remediation, which may
be significant, at our refineries and at pipeline transportation facilities. To the extent that future expenditures for these purposes
are material and can be reasonably determined, these costs are disclosed and accrued, if applicable.
Occupational Health and Safety - Our operations are also subject to various laws and regulations relating to occupational health
and safety. We maintain a myriad of safety programs, safety-related maintenance programs, implement a regiment of training
requirements and otherwise comply with a host of occupational safety and health standards and regulations as part of our ongoing
efforts to ensure compliance with all applicable laws and regulations in this area. As part of our compliance efforts, we have
established hazard communications programs pursuant to the Occupational Safety and Health Administration’s (“OSHA”) hazard
communication standard, and state right-to-know standards where applicable, which require the communication of information
regarding chemical hazards in the workplace associated with chemicals manufactured or handled in our facilities. EPA regulations
under Title III of the Federal Superfund Amendment and Reauthorization Act and related federal or comparable state statutes also
require that information be maintained concerning hazardous materials used in or released from our operations and that this
information be provided to state and local government authorities and citizens under certain circumstances. Our operations are
also subject to OSHA Process Safety Management regulations, which are designed to prevent or minimize the consequences of
catastrophic releases of toxic, reactive, flammable or explosive chemicals. The EPA has imposed substantially similar requirements
under its Risk Management Plan regulations. Compliance with applicable state and federal occupational health and safety laws
and regulations, as well as environmental regulations, has required, and continues to require, substantial expenditures.
Occupational health and environmental legislation, regulations and regulatory programs change frequently. We cannot predict
what additional occupational health and environmental legislation or regulations will be enacted or become effective in the future
or how existing or future laws or regulations will be administered or interpreted with respect to our operations. Compliance with
more stringent laws or regulations or adverse changes in the interpretation of existing laws or regulations by government agencies
could have an adverse effect on our financial position and the results of our operations and could require substantial expenditures
for the installation and operation of systems and equipment that we do not currently possess.