Commitments and Contingencies

12 Months Ended

Dec. 31, 2023

Commitments and Contingencies Disclosure [Abstract]

(14) Commitments and Contingencies

Unconditional Purchase Obligations

The minimum required payments for unconditional purchase obligations as defined in ASC 440, Commitments, are as follows:


(in millions)	Unconditional Purchase Obligations
Year Ended December 31,
2024	$	73
2025	73
2026	67
2027	66
2028	66
Thereafter	147
	$	492

Expenses associated with these obligations are included in Direct operating expenses (exclusive of depreciation and amortization), and, for the years ended December 31, 2023, 2022, and 2021, totaled $72 million, $72 million, and $71 million, respectively.

Crude Oil Supply Agreement

The Petroleum Segment had a crude oil supply agreement with Vitol Inc. (“Vitol”) until December 31, 2023, pursuant to which Vitol supplied the Petroleum Segment with certain crude oil and intermediation logistics helping to reduce the amount of inventory held at certain locations and mitigate crude oil pricing risk. Volumes contracted under this agreement, as a percentage of the total crude oil purchases (in barrels), were approximately 26%, 34%, and 42% for the years ended December 31, 2023, 2022, and 2021, respectively. On June 28, 2023, the Company, through one of its indirect wholly owned subsidiaries, entered into a crude oil supply agreement (as amended, the “Gunvor Crude Oil Supply Agreement”) with Gunvor USA LLC (“Gunvor”), pursuant to which Gunvor will supply certain crude oil and intermediation logistics in connection with deliveries beginning on or about January 1, 2024. On December 21, 2023, we entered into that certain Amended and Restated Crude Oil Supply Agreement, which extended the initial term of the Gunvor Crude Oil Supply Agreement for one month, until January 31, 2026, and made certain other non-material updates. The term of the Gunvor Crude Oil Supply Agreement is subject to automatic one-year renewals following the expiration of the initial term in the absence of either party providing 180 days’ notice of termination.

As part of the transition of the crude oil supply agreement from Vitol to Gunvor, on December 31, 2023, the Company purchased the final inventory remaining under the crude oil supply agreement with Vitol and sold it to Gunvor on January 1, 2024. The inventory purchased from Vitol was included within Inventories on the Consolidated Balance Sheets as of December 31, 2023.

45Q Transaction

Under the agreements entered into in connection with the 45Q Transaction, the Company’s indirect subsidiary CRNF is obligated to meet certain minimum quantities of carbon oxide supply each year during the term of the agreement and is subject to fees of up to $15 million per year (reduced pro rata for partial years) to the unaffiliated third-party investors, subject to an overall $45 million cap, if these minimum quantities are not delivered. CVR Partners issued a guarantee to the unaffiliated third-party investors and certain affiliates involved in the 45Q Transaction of the payment and performance obligations of CRNF and CVRP JV, which include the aforementioned fees. This guarantee has no impacts on the accounting records of CVR Partners unless the parties fail to comply with the terms of the 45Q Transaction contracts.

Contingencies

Call Option Coverage Case - In January 2021, the Company’s primary and excess insurers (the “Insurers”) filed suit for declaratory judgment in the 434th Judicial District Court of Fort Bend County, Texas seeking determination that the Insurers owe no indemnity coverage under policies with coverage limits of $50 million for the Company’s December 2022 settlement of the consolidated lawsuits (collectively, the “Call Option Lawsuits”) filed by purported former unitholders of CVR Refining on behalf of themselves and an alleged class of similarly situated unitholders against the Company and certain of its affiliates (the “Call Defendants”) relating to the Company’s exercise of the call option under the CVR Refining Amended and Restated Agreement of Limited Partnership assigned to it by CVR Refining’s general partner including the Stipulation, Compromise and Release (the “Settlement”), which Settlement was entered into in August 2022 and had no further impact on the Company’s financial position or results of operations beyond the $79 million recognized within Other (expense) income, net in the Consolidated Statements of Operations for the year ended December 31, 2022 to reflect the estimated probable loss. In November 2022, the court granted summary judgment in favor of the Insurers, which the Company has appealed, and which appeal remains pending and in its earliest stages. Also in January 2021, the Company filed suit against the Insurers in the Superior Court of the State of Delaware (the “Superior Court”) alleging breach of contract and breach of the implied covenant of good faith and fair dealing against their primary and excess insurers relating to their denial of coverage of the Call Defendants’ defense expenses and indemnity, as well as other conduct of the Insurers relating to the Call Option Lawsuits, which complaint was amended in January 2023 to seek recovery from the Insurers of all of the amounts paid in settlement of the Call Option Lawsuits. While our appeal of the Texas court decision and our Superior Court lawsuit remain pending, the Company does not expect the outcome of these lawsuits to have a material adverse impact on the Company’s financial position, results of operations, or cash flows.

Renewable Fuel Standard - Coffeyville Resources Refining & Marketing, LLC (“CRRM”) and Wynnewood Refining Company, LLC (“WRC”, and together with CRRM, the “obligated-party subsidiaries”) are subject to the RFS implemented by the U.S. Environmental Protection Agency (the “EPA”), which requires obligated parties to either blend renewable fuels into their transportation fuels or purchase renewable fuel credits, known as RINs, in lieu of blending. The Petroleum Segment’s obligated-party subsidiaries are not able to blend the majority of their transportation fuels with renewable fuels and, unless their RFS obligations are waived or exempted, must either purchase RINs or obtain waiver credits for cellulosic biofuels in order to comply with the RFS. Additionally, the Petroleum Segment’s obligated-party subsidiaries purchase RINs generated from our renewable diesel operations, whose operating results are not included in either of our reportable segments, to partially satisfy their RFS obligations.

For the years ended December 31, 2023, 2022, and 2021, the Company’s obligated-party subsidiaries recognized a benefit of approximately $114 million and an expense of $435 million and $435 million, respectively, for their compliance with the RFS (based on the 2020, 2021, 2022, and 2023 renewable volume obligation (“RVO”), for the respective periods, excluding the impacts of any exemptions or waivers to which the Company’s obligated-party subsidiaries may be entitled). The recognized amounts are included within Cost of materials and other on the Consolidated Statements of Operations and represent costs to comply with the RFS obligation through purchasing of RINs not otherwise reduced by blending of ethanol, biodiesel, or renewable diesel. At each reporting period, to the extent RINs purchased and generated through blending are less than the RFS obligation (excluding the impact of exemptions or waivers to which the Company may be entitled), the remaining position is valued using RIN market prices at period end for each specific or closest vintage year. As of December 31, 2023 and 2022, the Company’s obligated-party subsidiaries’ RFS positions were approximately $329 million and $692 million, respectively, and are recorded in Other current liabilities on the Consolidated Balance Sheets.

RFS Disputes - In 2022, WRC joined certain other small refineries in bringing suit against the EPA in the United States Court of Appeals for the Fifth Circuit (the “Fifth Circuit”) challenging the EPA’s denials of WRC’s petitions for small refinery

exemptions (“SREs”) under the RFS in April 2022 for WRC’s 2018 petition and in June 2022 for WRC’s 2017, 2019, 2020 and 2021 SRE petitions (collectively, the “2022 Denials”), which denials were based on a new standard for evaluating SREs announced by the EPA in December 2021 and retroactively applied. WRC and certain other refineries also challenged the July 2023 denial by EPA of additional SRE petitions based on the new standard, including WRC’s 2022 SRE petition. The Fifth Circuit also granted WRC a stay of enforcement for the 2022 compliance period and held the case in abeyance pending resolution of lawsuits in the Fifth Circuit, the United States Courts of Appeals for the Eleventh Circuit and the United States Courts of Appeals for the District of Columbia Circuit (the “DC Circuit”) relating to the 2022 Denials (collectively, the “2022 Denials Case”). In November 2023, the Fifth Circuit issued an opinion in WRC’s lawsuit relating to the 2022 Denials holding that the 2022 Denials were impermissibly retroactive and that the EPA’s interpretation of the SRE provisions of the RFS was contrary to law and arbitrary and capricious as applied to the Fifth Circuit petitioners’ SRE petitions. The Fifth Circuit vacated those denials, including those for WRC for 2017 through 2021, and remanded those SRE petitions to EPA for further consideration consistent with the Fifth Circuit’s ruling. EPA has not yet taken action on those SRE petitions since remand. While WRC’s stay relating to the 2022 compliance year remains in effect until resolution of the 2022 Denials Cases, its stays relating to the preceding compliance periods expired in January 2024.

The Company’s other challenges against the EPA relating to the RFS remain pending, including:

•WRC’s challenges to the EPA’s Final Rules issued in June 2022 and June 2023 establishing the 2020-2022 RVOs and 2023-2025 RVOs, respectively; and

•WRC’s lawsuit against the EPA currently pending in the DC Circuit related to damages WRC incurred as a result of the EPA’s late grant of its 2018 SRE, which SRE was denied by the EPA in April 2022, which denial was vacated by the Fifth Circuit in November 2023 as noted above.

The Company cannot yet determine at this time the outcomes of these matters. While we intend to prosecute these actions vigorously, if these matters are ultimately concluded in a manner adverse to the Company, they could have a material effect on the Company’s financial position, results of operations, or cash flows.

Environmental, Health, and Safety (“EHS”) Matters

Clean Air Act Matter - CRRM and certain of its affiliates settled claims brought in the United States District Court for the District of Kansas (“D. Kan”) by the United States, on behalf of the EPA, and the State of Kansas, on behalf of the Kansas Department of Health and Environment (“KDHE”) seeking both statutory and stipulated penalties primarily relating to the Coffeyville Refinery’s flares, heaters, and related matters. The terms of the settlement are set forth in a Consent Decree (“CD”) that was entered by the D. Kan on January 10, 2024. The EPA and KDHE sought stipulated penalties under a 2012 Consent Decree (the “Stipulated Claims”), which amount CRRM previously deposited into a commercial escrow account which were legally restricted for use and included in Prepaid expenses and other current assets on our Consolidated Balance Sheets as of December 31, 2023; those escrowed funds were released in February 2024 and the settlement was paid. The settlement did not and is not expected in the future to have a material adverse impact on the Company’s financial position, results of operations, or cash flows.

Environmental Accruals - As of December 31, 2023 and 2022, environmental accruals which also include estimated costs for future remediation efforts at certain Petroleum Segment sites, totaled approximately $19 million and $22 million, respectively. These amounts are reflected in Other current liabilities or Other long-term liabilities depending on when the Company expects to expend such amounts.