HollyFrontier 2015 Annual Report Download - page 34

Table of Content
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The adoption of climate change legislation by Congress could result in increased operating costs and reduced demand for the
refined products we produce.
In December 2009, the EPA determined that emissions of carbon dioxide, methane and other greenhouse gas emissions, or “GHGs,”
present an endangerment to public health and the environment because emissions of such gases are, according to the EPA,
contributing to warming of the earth's atmosphere and other climatic changes. Based on these findings, the EPA has begun adopting
and implementing regulations to restrict emissions of GHGs under existing provisions of the federal CAA. For example, the EPA
adopted rules that require certain large stationary sources to obtain permits to authorize emissions of GHGs. The EPA has also
adopted rules requiring the reporting of GHG emissions from specified large GHG emission sources in the United States, including
petroleum refineries, on an annual basis. The EPA has also announced its intention to issue a New Source Performance Standard
directly regulating GHG emissions from refineries, although recent statements from EPA Administrator McCarthy indicate that
issuance of such Performance Standard is not imminent..
In addition, the U.S. Congress has from time to time considered adopting legislation to reduce emissions of GHGs and almost
one-half of the states have already taken legal measures to reduce emissions of GHGs primarily through the planned development
of GHG emission inventories and/or regional GHG cap and trade programs. These cap and trade programs generally work by
requiring major sources of emissions, such as electric power plants, or major producers of fuels, such as refineries and gas processing
plants, to acquire and on an annual basis surrender emission allowances. The number of allowances available for purchase is
reduced over time in an effort to achieve the overall GHG emission reduction goal.
The adoption of legislation or regulatory programs to reduce emissions of GHGs could require us to incur increased operating
costs, such as costs to purchase and operate emissions control systems, to acquire emissions allowances or comply with new
regulatory or reporting requirements. Any such legislation or regulatory programs could also increase the cost of consuming, and
thereby reduce demand for, the refined products that we produce. Consequently, legislation and regulatory programs to reduce
emissions of GHGs could have an adverse effect on our business, financial condition and results of operations.
In addition, some scientists have concluded that increasing concentrations of GHGs in the Earth's atmosphere may produce climate
changes that have significant physical effects, such as increased frequency and severity of storms, droughts, floods and other
climatic events. If any such events were to occur, they could have an adverse effect on our financial condition and results of
operations.
Our operations are subject to catastrophic losses, operational hazards and unforeseen interruptions for which we may not be
adequately insured.
Our operations are subject to catastrophic losses, operational hazards and unforeseen interruptions such as natural disasters, adverse
weather, accidents, fires, explosions, hazardous materials releases, cyber-attacks, power failures, mechanical failures and other
events beyond our control. These events could result in an injury, loss of life, property damage or destruction, as well as a curtailment
or an interruption in our operations and may affect our ability to meet marketing commitments.
We may not be able to maintain or obtain insurance of the type and amount we desire at reasonable rates and exclusions from
coverage may limit our ability to recover the amount of the full loss in all situations. As a result of market conditions, premiums
and deductibles for certain of our insurance policies could increase. In some instances, certain insurance could become unavailable
or available only for reduced amounts of coverage. We are not fully insured against all risks incident to our business and therefore,
we self-insure certain risks. If any refinery were to experience an interruption in operations, earnings from the refinery could be
materially adversely affected (to the extent not recoverable through insurance) because of lost production and repair costs.
The energy industry is highly capital intensive, and the entire or partial loss of individual facilities can result in significant costs
to both industry companies, such as us, and their insurance carriers. In recent years, several large energy industry claims have
resulted in significant increases in the level of premium costs and deductible periods for participants in the energy industry. As a
result of large energy industry claims, insurance companies that have historically participated in underwriting energy-related
facilities may discontinue that practice or demand significantly higher premiums or deductible periods to cover these facilities. If
significant changes in the number or financial solvency of insurance underwriters for the energy industry occur, or if other adverse
conditions over which we have no control prevail in the insurance market, we may be unable to obtain and maintain adequate
insurance at reasonable cost. In addition, we cannot assure you that our insurers will renew our insurance coverage on acceptable
terms, if at all, or that we will be able to arrange for adequate alternative coverage in the event of non-renewal. Further, our
underwriters could have credit issues that affect their ability to pay claims. If a significant accident or event occurs that is self-
insured or not fully insured, it could have a material adverse effect on our business, financial condition and results of operations.