PBF Energy 2012 Annual Report Download - page 37

Renewable fuels mandates may reduce demand for the refined fuels we produce, which could have a material
adverse effect on our results of operations and financial condition.
Pursuant to the Energy Policy Act of 2005 and the Energy Independence and Security Act of 2007, the EPA
has issued Renewable Fuel Standards, or RFS, implementing mandates to blend renewable fuels into the
petroleum fuels produced and sold in the United States. Under RFS, the volume of renewable fuels that obligated
refineries must blend into their finished petroleum fuels increases annually over time until 2022. In addition,
certain states have passed legislation that requires minimum biodiesel blending in finished distillates. On
October 13, 2010, the EPA raised the maximum amount of ethanol allowed under federal law from 10% to 15%
for cars and light trucks manufactured since 2007. The maximum amount allowed under federal law currently
remains at 10% ethanol for all other vehicles. Existing laws and regulations could change, and the minimum
volumes of renewable fuels that must be blended with refined petroleum fuels may increase. Because we do not
produce renewable fuels, increasing the volume of renewable fuels that must be blended into our products
displaces an increasing volume of our refinery’s product pool, potentially resulting in lower earnings and
profitability. In addition, in order to meet certain of these and future EPA requirements, we must purchase
credits, known as “RINS,” which have fluctuating costs.
Our pipelines are subject to federal and/or state regulations, which could reduce the amount of cash we
generate.
Our transportation activities are subject to regulation by multiple governmental agencies. The regulatory
burden on the industry increases the cost of doing business and affects profitability. Additional proposals and
proceedings that affect the oil industry are regularly considered by Congress, the states, the Federal Energy
Regulatory Commission, the United States Department of Transportation, and the courts. We cannot predict
when or whether any such proposals may become effective or what impact such proposals may have. Projected
operating costs related to our pipelines reflect the recurring costs resulting from compliance with these
regulations, and these costs may increase due to future acquisitions, changes in regulation, changes in use, or
discovery of existing but unknown compliance issues.
We are subject to strict laws and regulations regarding employee and process safety, and failure to comply
with these laws and regulations could have a material adverse effect on our results of operations, financial
condition and profitability.
We are subject to the requirements of the Occupational Safety & Health Administration, or OSHA, and
comparable state statutes that regulate the protection of the health and safety of workers. In addition, OSHA
requires that we maintain information about hazardous materials used or produced in our operations and that we
provide this information to employees, state and local governmental authorities, and local residents. Failure to
comply with OSHA requirements, including general industry standards, process safety standards and control of
occupational exposure to regulated substances, could have a material adverse effect on our results of operations,
financial condition and the cash flows of the business if we are subjected to significant fines or compliance costs.
Compliance with and changes in tax laws could adversely affect our performance.
We are subject to extensive tax liabilities, including federal, state, local and foreign taxes such as income,
excise, sales/use, payroll, franchise, property, gross receipts, withholding and ad valorem taxes. New tax laws
and regulations and changes in existing tax laws and regulations are continuously being enacted or proposed that
could result in increased expenditures for tax liabilities in the future. These liabilities are subject to periodic
audits by the respective taxing authorities, which could increase our tax liabilities. Subsequent changes to our tax
liabilities as a result of these audits may also subject us to interest and penalties. There can be no certainty that
our federal, state, local or foreign taxes could be passed on to our customers.
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