HollyFrontier 2014 Annual Report Download - page 30

Table of Content
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• difficulties in integrating the financial, technological and management standards, processes, procedures and controls of
an acquired business with those of our existing operations;
• liability for known or unknown environmental conditions or other contingent liabilities not covered by indemnification
or insurance;
• greater than anticipated expenditures required for compliance with environmental or other regulatory standards or for
investments to improve operating results;
• difficulties or delays in achieving anticipated operational improvements or benefits;
• incurrence of additional indebtedness to finance acquisitions or capital expenditures relating to acquired assets; and
• issuance of additional equity, which could result in further dilution of the ownership interest of existing stockholders.
Any acquisitions that we do consummate may have adverse effects on our business and operating results.
We may incur significant costs to comply with new or changing environmental, energy, health and safety laws and regulations,
and face potential exposure for environmental matters.
Refinery and pipeline operations are subject to federal, state and local laws regulating, among other things, the generation, storage,
handling, use and transportation of petroleum and hazardous substances by pipeline, truck, rail and barge, the emission and discharge
of materials into the environment, waste management, and characteristics and composition of gasoline and diesel fuels, and other
matters otherwise relating to the protection of the environment. Permits or other authorizations are required under these laws for
the operation of our refineries, pipelines and related operations, and these permits and authorizations are subject to revocation,
modification and renewal or may require operational changes, which may involve significant costs. Furthermore, a violation of
permit conditions or other legal or regulatory requirements could result in substantial fines, criminal sanctions, permit revocations,
injunctions, and/or refinery shutdowns. In addition, major modifications of our operations due to changes in the law could require
changes to our existing permits or expensive upgrades to our existing pollution control equipment, which could have a material
adverse effect on our business, financial condition, or results of operations. Over the years, there have been ongoing
communications, including notices of violations, about environmental matters between us and federal and state authorities, some
of which have resulted or will result in changes to operating procedures and in capital expenditures. Compliance with applicable
environmental laws, regulations and permits will continue to have an impact on our operations, results of our operations and capital
requirements.
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. The matters include, but are not limited to, soil, groundwater and waterway contamination, air
pollution, personal injury and property damage allegedly caused by substances which we manufactured, handled, used, released
or disposed.
We are and have been the subject of various state, federal and private proceedings relating to environmental regulations, conditions
and inquiries. Current and future environmental regulations are expected to require additional expenditures, including expenditures
for investigation and remediation, which may be significant, at our facilities. To the extent that future expenditures for these
purposes are material and can be reasonably determined, these costs are disclosed and accrued.
Our operations are also subject to various laws and regulations relating to occupational health and safety. We maintain safety,
training and maintenance programs as part of our ongoing efforts to ensure compliance with applicable laws and regulations.
Compliance with applicable health and safety laws and regulations has required and continues to require substantial expenditures.
Failure to appropriately manage occupational health and safety risks associated with our business could also adversely impact our
employees, communities, stakeholders, reputation and results of operations.
We cannot predict what additional 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. However,
new environmental laws and regulations, including new regulations relating to alternative energy sources and the risk of global
climate change, new interpretations of existing laws and regulations, increased governmental enforcement or other developments
could require us to make additional unforeseen expenditures. For example, the EPA has begun regulating certain sources of
greenhouse gas emissions, or “GHGs,” (including carbon dioxide, methane and nitrous oxides) from large stationary sources like
refineries under the authority of the CAA, and it is possible that Congress could pass federal legislation that creates a comprehensive
GHG regulatory program, either directly or indirectly, such as via a federal renewal energy standard. Also, new federal or state
legislation or regulatory programs that restrict emissions of GHGs in areas where we conduct business could adversely affect
demand for our products and our results of operations.