PBF Energy 2012 Annual Report Download - page 35

Compliance with the complex array of federal, state and local laws relating to the protection of the
environment, product specification, health and safety is difficult. We may not be able to operate in compliance
with all environmental, product specification, health and safety requirements at all times. Violations of applicable
requirements could result in substantial fines and penalties, criminal sanctions, permit revocations, injunctions
and/or facility shutdowns, or claims for alleged personal injury, property damage or damage to natural resources.
Moreover, our business is subject to accidental spills, discharges or other releases of petroleum or other regulated
materials into the environment including at neighboring areas or third party storage, treatment or disposal
facilities. Certain environmental laws impose strict, and in certain circumstances, joint and several, liability for
costs of investigation and cleanup of such spills, discharges or releases on owners and operators of, as well as
persons who arrange for treatment or disposal of regulated materials at, contaminated sites. Under these laws, we
may be required to pay more than our fair share of any required investigation or cleanup of such sites.
We cannot predict what additional environmental, product specification, health and safety legislation or
regulations will be adopted in the future, or how existing or future laws or regulations will be administered or
interpreted with respect to our operations. Many of these laws and regulations are becoming increasingly
stringent, and the cost of compliance with these requirements can be expected to increase over time. For
example, in 2010 New York State adopted a Low-Sulfur Heating Oil mandate that beginning July 1, 2012
requires all heating oil sold in New York State to contain no more than 15 PPM sulfur. Not all of the heating oil
we produce meets this specification. In addition, on June 1, 2012, the EPA issued final amendments to the New
Source Performance Standards (“NSPS”) for petroleum refineries, including standards for emissions of nitrogen
oxides from process heaters and work practice standards and monitoring requirements for flares. We continue to
evaluate the regulation and amended standards, as may be applicable to the flare, process heaters and operations
at our refineries. We cannot currently predict the costs that we may have to incur, if any, to comply by July 1,
2015 with the amended NSPS, but these costs could be material. Furthermore, the EPA has announced that it
plans to propose new “Tier 3” motor vehicle emission and fuel standards. It has been reported that these new Tier
3 regulations may, among other things, lower the maximum average sulfur content of gasoline from 30 PPM to
10 PPM. If the Tier 3 regulations are eventually implemented and lower the maximum allowable content of
sulfur or other constituents in fuels that we produce, we may at some point in the future be required to make
significant capital expenditures and/or incur materially increased operating costs to comply with the new
standards. Expenditures or costs for environmental, product specification, health and safety compliance could
have a material adverse effect on our results of operations, financial condition and profitability.
We may also incur liability or be required to pay penalties for past contamination, and third parties may
assert claims against us for damages allegedly arising out of any past or future contamination. The potential
penalties and clean-up costs for past or future releases or spills, the failure of prior owners of our facilities to
complete their clean-up obligations, the liability to third parties for damage to their property, or the need to
address newly-discovered information or conditions that may require a response could be significant, and the
payment of these amounts could have a material adverse effect on our business, financial condition and results of
operations.
Furthermore, we operate in environmentally sensitive coastal waters where tanker, pipeline and refined
product transportation operations are closely regulated by federal, state and local agencies and monitored by
environmental interest groups.
Finally, transportation of crude oil and refined products over water involves inherent risk and subjects us to
the provisions of the Federal Oil Pollution Act of 1990 and the laws of various states. Among other things, these
laws require us to demonstrate in some situations our capacity to respond to a “worst case discharge” to the
maximum extent possible. There may be accidents involving tankers transporting crude oil or refined products,
and response service companies that we have contracted with, in the areas in which we transport crude oil and
refined products, may not respond to a “worst case discharge” in a manner that will adequately contain that
discharge, and we may be subject to liability in connection with a discharge.
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