HollyFrontier 2014 Annual Report Download - page 31

Table of Content
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The costs of environmental and safety regulations are already significant and compliance with more stringent laws or regulations
or adverse changes in the interpretation of existing regulations by government agencies could have an adverse effect on the financial
position and the results of our operations and could require substantial expenditures for the installation and operation of systems
and equipment that we do not currently possess.
From time to time, new federal energy policy legislation is enacted by the U.S. Congress. For example, in December 2007, the
U.S. Congress passed the Energy Independence and Security Act, which, among other provisions, mandates annually increasing
levels for the use of renewable fuels such as ethanol, commencing in 2008 and escalating for 15 years, as well as increasing energy
efficiency goals, including higher fuel economy standards for motor vehicles, among other steps. These statutory mandates may
have the impact over time of offsetting projected increases in the demand for refined petroleum products in certain markets,
particularly gasoline. In the near term, the new renewable fuel standard presents ethanol production and logistics challenges for
both the ethanol and refining industries and may require additional capital expenditures or expenses by us to accommodate increased
ethanol use. Other legislative changes may similarly alter the expected demand and supply projections for refined petroleum
products in ways that cannot be predicted.
For additional information on regulations and related liabilities or potential liabilities affecting our business, see “Regulation”
under Items 1 and 2, “Business and Properties,” and Item 3, “Legal Proceedings.”
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 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’s rules relating to emissions of GHGs
from large stationary sources of emissions were, for the most part, upheld by the U.S. Supreme Court in 2014. 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.