PBF Energy 2013 Annual Report Download - page 40

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Our operations are subject to federal, state and local laws regulating, among other things, the handling of
petroleum and other regulated materials, the emission and discharge of materials into the environment, waste
management, and remediation of discharges of petroleum and petroleum products, characteristics and composition
of gasoline and distillates and other matters otherwise relating to the protection of the environment. Our operations
are also subject to extensive laws and regulations relating to occupational health and safety.
We cannot predict what additional environmental, health and safety legislation or regulations may be adopted
in the future, or how existing or future laws or regulations may 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.
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 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, our Delaware City refinery and our Delaware City Rail Terminal are located in Delaware's coastal
zone where certain activities are regulated under the Delaware Coastal Zone Act and closely monitored by
environmental interest groups. On June 14, 2013, two administrative appeals were filed by the Sierra Club and
Delaware Audubon regarding a permit Delaware City Refining Company LLC (“DCR”) obtained to allow loading
of crude oil onto barges. The appeals allege that both the loading of crude oil onto barges and the operation of the
Delaware City rail unloading terminal violate Delaware’s Coastal Zone Act. The first appeal is Number 2013-1
before the State Coastal Zone Industrial Control Board (the “CZ Board”), and the second appeal is before the
Environmental Appeals Board and appeals Secretary’s Order No. 2013-A-0020. The CZ Board held a hearing on
the first appeal on July 16, 2013, and ruled in favor of DCR and the State of Delaware and dismissed the Appellants’
appeal for lack of standing. Sierra Club and Delaware Audubon have appealed that decision to the Delaware
Superior Court, New Castle County, Case No. N13A-09-001 ALR, and Delaware City Refining and the State have
filed cross-appeals. Briefs are due to be filed in this appeal in the first quarter of 2014 but no date has been set for
a decision by the Superior Court. A hearing on the second appeal before the Environmental Appeals Board, case
no. 2013-06, was held on January 13, 2014, and the Board ruled in favor of Delaware City Refining and the State
and dismissed the appeal for lack of jurisdiction. A written decision from the Board is pending, after which the
Appellants will again have the right to appeal the decision to Superior Court. If the Appellants in one or both of
these matters ultimately prevail, the outcome may have an adverse material effect on our financial condition, results
of operations or cash flows.
Risks Related to Our Indebtedness
Our substantial indebtedness could adversely affect our financial condition and prevent us from fulfilling our
obligations under our indebtedness.
Our substantial indebtedness may significantly affect our financial flexibility in the future. As of
December 31, 2013, we have total long-term debt including the Delaware Economic Development Authority Loan,
of $747.6 million, all of which is secured, and we could have incurred an additional $615.9 million of senior secured
indebtedness under our existing debt agreements. We may incur additional indebtedness in the future. Our strategy
includes executing future refinery acquisitions. Any significant acquisition would likely require us to incur
additional indebtedness in order to finance all or a portion of such acquisition. The level of our indebtedness has
several important consequences for our future operations, including that:
• a significant portion of our cash flow from operations will be dedicated to the payment of principal of, and
interest on, our indebtedness and will not be available for other purposes;