What changed in this filing

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Item 1A. Risk Factors

2023-11-08 compared with 2022-11-02 · 172 added, 137 removed, 310 unchanged (50% of the section changed)

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Instead, they are based only on our current beliefs, expectations and assumptions regarding the future of our businesses, financial condition and results of operations, future plans and strategies, projections, anticipated events and trends, the economy and other future conditions.

Because forward-looking statements relate to the future, they are subject to inherent uncertainties, risks and changes in circumstances that are difficult to predict and many of which are outside of our control.

Our actual results and financial condition may differ materially from those indicated in the forward-looking statements.

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Our revenues, results of operations and cash flows are affected by market prices for commodities such as crude oil, natural gas, ethanol, fertilizer, grain, oilseed, flour, and crude and refined vegetable oils.

Commodity prices generally are affected by a wide range of factors beyond our control, including weather, plant disease, insect damage, drought, availability and adequacy of supply, availability of reliable rail and river transportation networks, industry labor availability, outbreaks of disease, inflation, government regulation and policies, global trade disputes, international conflicts, such as the ongoing war between Russia and Ukraine, and general political and economic conditions.

We are also exposed to fluctuating commodity prices as the result of our inventories of commodities, typically grain, fertilizer and petroleum products, and purchase and sale contracts at fixed or partially fixed prices.

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If these controls and strategies are not successful in mitigating our exposure to these fluctuations, we could be materially and adversely affected.

For example, fluctuations in commodity prices may result in significant noncash losses being incurred on our commodity-based derivatives, which may in turn materially and adversely

affect our operating results.

For example, fluctuations in commodity prices may result in significant noncash losses being incurred on our commodity-based derivatives,

which may in turn materially and adversely affect our operating results.

In addition, changes in market prices for commodities that we purchase without a corresponding change in the selling prices of those products can affect revenues and operating earnings.

Similarly, increased or decreased sales volumes without a corresponding change in the purchase and selling prices of those products can affect revenues and operating earnings.

In our energy operations, profitability depends largely on the margin between the cost of crude oil that we refine and the selling prices that we obtain for our refined products.

Similarly, increased or decreased sales volumes without a corresponding change in the purchase and/or selling prices of those products can affect revenues and operating earnings.

In our energy operations, profitability depends largely on the margin between the cost of crude oil that we refine and the selling prices we obtain for our refined products.

The prices for crude oil and for gasoline, diesel fuel and other refined petroleum products fluctuate widely.

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• domestic and foreign governmental regulations and taxes.

Many of these factors, including the ongoing war between Russia and Ukraine, have resulted in significant volatility in crude oil, refined petroleum products and natural gas supplies and prices.

Many of these factors, including the ongoing war between Russia and Ukraine and escalation of conflict in the Middle East, have resulted in significant volatility in crude oil, refined petroleum products and natural gas supplies and prices.

We expect that volatility to continue in fiscal 2024.

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Accordingly, we expect our margins and the profitability of our energy business to fluctuate, possibly significantly, over time.

In addition, our renewable fuels business produces ethanol, which is closely related to, or may be substituted for, petroleum products, and may be blended into gasoline to increase octane content.

Our renewable fuels business produces ethanol, which is closely related to, or may be substituted for, petroleum products, and may be blended into gasoline to increase octane content.

Therefore, the selling price of ethanol can be impacted by the selling prices of gasoline, diesel fuel and other octane enhancers.

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As the market for renewable fuels becomes more competitive, or if there are changes in the regulations, policies or standards affecting the demand for renewable fuels, our renewable fuels business may experience increased volatility in product margins, which could adversely affect our operating earnings.

In addition, in recent decades, there have been periods worldwide of both overproduction and underproduction of hydrocarbons and periods of both increased and relaxed energy conservation efforts.

Such conditions have resulted in periods of excess supply of, and reduced demand for, crude oil on a worldwide basis and for natural gas on a domestic basis.

These periods have been followed by periods of short supply of, and increased demand for, crude oil and natural gas.

The cycles of excess or short supply of crude oil or natural gas have placed pressure on prices and resulted in dramatic price fluctuations even during relatively short periods of seasonal market demand.

These fluctuations impact the accuracy of assumptions used in our budgeting process.

We are subject to political, economic, legal and other risks of doing business globally.

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This lack of legal certainty exposes our operations to increased risks, including increased difficulty in enforcing our agreements in those jurisdictions and increased risk of adverse actions by local government authorities, such as unilateral or forced renegotiation, modification or nullification of existing agreements or expropriations.

The ongoing war between Russia and Ukraine may adversely affect our business, financial condition and results of operations.

In February 2022, Russia invaded Ukraine.

The war has resulted in significant uncertainty and instability in the global commodities markets, including agricultural commodities and crude oil.

Ongoing wars and global conflicts may adversely affect our business, financial condition and results of operations.

In February 2022, Russia invaded Ukraine (the "war") and in October 2023, conflict escalated in the Middle East between Israel and Hamas.

The war between Russia and Ukraine and escalation of conflict in the Middle East have resulted in significant uncertainty and instability in the global commodities markets, including agricultural commodities and crude oil.

In response to the war, the United States and other North Atlantic Treaty Organization ("NATO") member states, as well as nonmember states, announced economic sanctions targeting Russia and certain Russian citizens and enterprises, including several large banks.

The continuation of the war may trigger a series of additional economic and other sanctions enacted by the United States, other NATO member states and other

In response, Russia announced export bans on various products, including agricultural commodities, through the end of calendar year 2022.

The continuation of the war may trigger a series of additional economic and other sanctions enacted by the United States, other NATO member states and other countries.

In response, Russia has announced export bans on various products, including agricultural commodities.

Although we do not maintain operations in Russia, it is a significant source of fertilizer for global markets.

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In addition, such sanctions put us at an increased risk of inadvertently trading with a sanctioned partner.

We maintain operations in Ukraine, which is a key international grain originating region.

We maintain limited operations in Ukraine, which is a key international grain-originating region.

Our operations in Ukraine have been dramatically disrupted because of the war;

Some of our Ukrainian employees have been forced to relocate to other countries and within Ukraine, with many unable to perform all or some work duties.

however, we continue to originate grain in Ukraine for safe transit through our Romanian export channels.

The ongoing war could cause harm to our employees and otherwise impair their ability to work for extended periods of time, as well as disrupt telecommunications systems, banks and other critical infrastructure necessary to conduct business in Ukraine.

Although we do not have significant fixed assets or infrastructure in Ukraine, we continue to have grain inventory in various facilities in Ukraine.

As a result of the war and related export bans on wheat, oats and other staples that were put in place by the Ukrainian government in March 2022, our ability to access or otherwise use these grain inventories in our export business has been limited and is expected to continue to be limited throughout the war.

In addition, our grain inventories in Ukraine are at increased risk of damage and expropriation.

The risk of cybersecurity incidents has also increased in connection with the ongoing war between Russia and Ukraine.

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support of Ukraine, could also adversely affect our operations.

The current war between Russia and Ukraine could also draw military or other intervention from additional countries, which could lead to a much larger war and/or additional sanctions imposed by the United States government and other governments that restrict business with specific persons, organizations or countries with respect to certain products or services.

The war between Russia and Ukraine and escalation of conflict in the Middle East could also draw military or other intervention from additional countries, which could lead to much larger wars, conflicts and/or additional sanctions imposed by the United States government and other governments that restrict business with specific persons, organizations or countries with respect to certain products or services.

If such escalation should occur or such sanctions are imposed, supply chain, trade routes and markets currently served by us could be adversely affected, which in turn could materially adversely affect our business operations and financial performance.

We may also experience negative reactions from our members, shareholders, lenders, employees, customers or other stakeholders as a result of our action or inaction related to the war between Russia and Ukraine.

Even if the war moderates or a resolution between Russia and Ukraine is reached, we expect that we will continue to experience ongoing financial and operational impacts resulting from the war for the foreseeable future as Ukraine rebuilds its economy and infrastructure.

Additionally, certain of the economic and other sanctions imposed, or that may be imposed, against Russia and its citizens and enterprises may continue for a period of time after any resolution has been reached.

Furthermore, the actions undertaken by western nations in response to Russia's actions have had, and may continue to have, adverse impacts on global financial markets.

Even if the war and global conflicts moderate or resolutions are reached, we expect that we will continue to experience ongoing financial and operational impacts resulting from the war and global conflicts for the foreseeable future.

Additionally, certain of the economic and other sanctions imposed, or that may be imposed, against participants in the war and global conflicts and its citizens and enterprises may continue for a period of time after any resolution has been reached.

Our business and operations and demand for our products are highly dependent on certain global and regional factors that are outside our control and could adversely impact our business.

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Weak global economic conditions and adverse conditions in financial and capital markets may adversely impact the financial condition and liquidity of some of our customers, suppliers and other counterparties, which could have a material adverse effect on our customers' abilities to pay for our products and on our business, financial condition, liquidity, results of operations and prospects.

Additionally, planted acreage and consequently the volume of fertilizer and crop protection products applied is partially dependent on government programs, grain prices and the perception held by producers of demand for production, all of which are outside our control.

Moreover, our business and operations may be affected by weather conditions, including those due to climate change, that are outside our control.

Additionally, planted acreage and consequently the volume of crop nutrient and crop protection products applied is partially dependent on government programs, grain prices and the perception held by producers of demand for production, all of which are outside our control.

Moreover, our business and operations may be affected by fluctuations in freight and logistics costs, disruptions in supply channels between parties and locations that include our suppliers, production and storage facilities,

tolling and packaging partners, distributors and customers, and weather conditions, including those due to climate change, that are outside our control.

The following are examples of factors that could impact our businesses:

• Weather conditions during the spring planting season and early summer crop nutrient and crop protection application season affect agronomy product volumes and profitability.

• Adverse weather conditions, such as heavy snow or rainfall and any flooding that results, may cause transportation delays and increased transportation costs or damage physical assets, especially facilities in low-lying areas near coasts and river banks or situated in hurricane-prone and rain-susceptible regions.

For example, in August 2021, our Myrtle

Grove, Louisiana, grain export terminal was damaged by Hurricane Ida and was not operational for approximately four weeks during storm recovery and cleanup.

As a result, we were required to divert scheduled export shipments through other export locations, resulting in transportation delays and increased transportation costs.

• Adverse weather conditions, such as drought, heavy snowfall or rainfall and any flooding that results, may cause transportation delays and increased transportation costs or damage physical assets, especially facilities in low-lying areas near coasts and riverbanks or situated in hurricane-prone and/or rain-susceptible regions.

• Changes in weather patterns may shift periods of demand for products or regions in which our products are produced or distributed, which could require us to revise our procurement and distribution processes.

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Emerging sustainability and other environmental priorities outside our control could also affect agricultural practices and future demand for agronomy products applied to crops and the volume of any such application.

These priorities could also impact demand for our grain and may require us to incur additional costs for increased due diligence and reporting.

These priorities could also impact demand for our grain and energy products, and may require us to incur additional costs for increased due diligence and reporting.

Accordingly, factors outside our control could materially and adversely affect our revenues, results of operations and cash flows.

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In response to global inflationary pressures, the U.S.

Federal Reserve and foreign equivalents have started raising interest rates, which has resulted in uncertainty and volatility in global financial markets and increased borrowing costs under certain of our credit facilities, including our five-year revolving credit facility and our 10-year term loan facility.

Federal Reserve and foreign equivalents have raised and appear poised to continue to raise interest rates, which has resulted in uncertainty and volatility in global financial markets and increased borrowing costs under certain of our credit facilities, including our five-year revolving credit facility and our 10-year term loan facility.

Inflation and its impacts, many of which are beyond our control, could escalate in the future.

We may not be able to pass on all of our increased costs as a result of inflation to customers.

To mitigate commodity cost increases, we have implemented various strategies that include, among other things, entering into contracted pricing with certain vendors, procuring commodities in periods of favorable market conditions and entering into various derivative instruments.

These actions may, in part, mitigate these increased costs, but even by increasing our product prices and passing some or all of our increased costs to customers or implementing cost savings efforts, we may not be able to fully offset these increased costs.

Additionally, increased prices may not be sustainable over time and may result in reduced sales volumes.

Accordingly, inflationary pressures could have a material and adverse effect on our results of operations.

Our business and operations have been, and may in the future, be adversely affected by epidemics, pandemics, outbreaks of disease and other adverse public health developments, including COVID-19.

Epidemics, pandemics, outbreaks of novel diseases and other adverse public health developments in countries and states where we operate may arise at any time.

Such developments, including the COVID-19 pandemic, have had, and in the future may have, an adverse effect on our business, financial condition and results of operations.

These effects include a potentially negative impact on the availability of our key personnel;

labor shortages and increased turnover;

temporary closures of our facilities or facilities of our members, business partners, customers, suppliers, third-party service providers or other vendors;

and interruption of domestic and global supply chains, distribution channels and liquidity and capital or financial markets.

In particular, restrictions on or disruptions of transportation, port closures or increased border controls or closures, or other impacts on domestic and global supply chains or distribution channels, could increase our costs for raw materials and commodity costs, increase demand for raw materials and commodities from competing purchasers, limit our ability to meet customer demand or otherwise have a material adverse effect on our business, financial condition and results of operations or cash flows.

Precautionary measures that we may take in the future intended to limit the impact of any epidemic, pandemic, disease outbreak or other public health development, may result in additional costs.

In addition, such epidemics, pandemics, disease outbreaks or other public health developments may adversely affect economies and financial markets throughout the world, such as the effect that COVID-19 has had on world economies and financial markets, which may affect our ability to obtain additional financing for our businesses and demand for our products and services.

The impact of such developments may also exacerbate the other risks discussed in this Item 1A, any of which could have a material effect on us.

The extent to which COVID-19 will impact our business and our financial results in the future will depend on future developments, which are highly uncertain and cannot be predicted.

Such developments may include ongoing spread of the virus;

disease severity;

outbreak duration;

extent of any reoccurrence of the coronavirus or any evolutions or mutations of the virus;

availability, administration and effectiveness of vaccines;

development of therapeutic treatments that can restore consumer and business economic confidence;

type and duration of actions that may be taken by governmental authorities in response to the outbreak;

and impact on the U.S.

and the global economy.

As a result, at the time of this filing, it is not possible to predict the overall future impact of COVID-19 on our business, liquidity, capital resources and financial results.

There can be no guarantee that our efforts to mitigate commodity cost increases due to inflationary pressures will be effective or, if they are effective, that they will have a material impact on maintaining or reducing costs.

We participate in highly competitive business markets and we may not be able to continue to compete successfully, which could have a material adverse effect on us.

We operate in several highly competitive business segments and our competitors may succeed in developing new or enhanced products that are better than ours, may be more successful in marketing and selling their products than we are, or may have more effective supply chain capability than we have.

We operate in highly competitive business segments and our competitors may succeed in developing new or enhanced products that are better than ours, may be more successful in marketing and selling their products than we are, or may have more effective supply chain capabilities than we have.

Competitive factors include price, service level, proximity to markets, access to transportation, product quality, marketing and risk management.

In particular, competitive pressures may restrict our ability to increase prices and maintain those price increases, including price increases made in response to commodity and other cost increases.

We may experience delays between the time that we take inflation-related pricing actions and the time that we realize the impact of those actions on our margins and results of operations.

In our business segments, we compete with companies that are larger and better known than we are and have greater marketing, financial, personnel and other resources than we do.

As a result, we may not be able to continue to compete successfully, which could have a material adverse effect on our business, financial condition, liquidity, results of operations and prospects.

Our revenues, margins, results of operations and cash flows could be materially and adversely affected if our members were to do business with others rather than with us.

For example, in conjunction with the recent increase in demand for renewable diesel feedstocks, we have experienced added competition for soybean oil refining capacity from traditional petroleum companies.

As a result, we may not

be able to continue to compete successfully, which could have a material adverse effect on our business, financial condition, liquidity, results of operations and prospects.

Our revenues, margins, results of operations and cash flows could be materially and adversely affected if our members were to do business with other companies rather than with us.

We do not have an exclusive relationship with our members and our members are not obligated to supply us with their products or purchase products from us.

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In addition, many governments have imposed, and in the future may impose, policies and regulations aimed at decreasing reliance on petroleum-based products, which could reduce demand for our energy products.

For example, Illinois has enacted comprehensive legislation that aims to phase out fossil fuels by 2045.

For example, California has passed legislation to ban new gasoline powered vehicles by 2035 and Illinois has enacted comprehensive legislation that aims to phase out fossil fuels by 2045.

As another example, in December 2021, the current U.S.

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In addition, a number of companies have announced their intention to phase out production of gasoline- and diesel-powered light-duty vehicles.

While these phaseouts primarily impact light-duty vehicles outside our primary markets, they are expected to further accelerate the decline in demand for gasoline, diesel fuel and other refined petroleum products.

Declining demand for our energy products, particularly diesel fuel sold for farming applications, could materially and adversely affect our revenues, results of operations and cash flows.

While these phaseouts primarily impact light-duty vehicles outside our primary markets, they are expected to accelerate the decline in demand for gasoline, diesel fuel and other refined petroleum products.

Declining demand for our energy products, particularly diesel fuel sold for farming and other heavy-duty equipment applications, could materially and adversely affect our revenues, results of operations and cash flows.

Consolidation among the producers of products we purchase and customers for products we sell could materially and adversely affect our revenues, results of operations and cash flows.

Consolidation has occurred among the producers and manufacturers of products we sell and purchase, including crude oil, fertilizer and grain, and it is highly likely that this consolidation will continue in the future.

Consolidation has occurred among the producers and manufacturers of products we sell and purchase, including crude oil, crop nutrients and grain, and it is highly likely this consolidation will continue in the future.

Consolidation could allow producers to negotiate pricing, supply availability and other contract terms that are less favorable to us.

In addition, consolidation also may increase the likelihood that consumers or end users of these products enter into supply relationships with a smaller number of producers, resulting in potentially higher prices for the products we purchase.

Consolidation has also occurred among local cooperatives that are the primary wholesale customers of our products, which has resulted in a smaller wholesale and retail customer base for our products and has intensified the competition for these customers.

It is highly likely that this consolidation will continue in the future.

Ongoing consolidation among distributors and brokers of food products and food retailers has altered the buying patterns of these businesses, as they have increasingly elected to work with product suppliers who can meet their needs nationwide rather than just regionally or locally.

If these cooperatives, distributors, brokers and retailers elect not to purchase our products, our revenues, results of operations and cash flows could be materially and adversely affected.

In the seed, fertilizer and crop protection markets, consolidation at both the producer and wholesale customer levels has increased the potential for direct sales from input manufacturers to cooperative customers and/or individual agricultural

producers, which would remove us from the supply chain and could have a material and adverse effect on our revenues, results of operations and cash flows.

In addition, consolidation may increase the likelihood that consumers or end users of these products enter into supply relationships with a smaller number of producers, resulting in potentially higher prices for the products we purchase.

Consolidation has occurred among member cooperatives that are the primary wholesale customers of our products, which has resulted in a smaller wholesale and retail customer base for our products and has intensified the competition for these customers.

It is highly likely this consolidation will continue in the future.

Ongoing consolidation among distributors and brokers of food products and food retailers has altered the buying patterns of those businesses, as they have increasingly elected to work with product suppliers who can meet their needs nationwide or globally, rather than just regionally or locally.

If these cooperatives, distributors, brokers and retailers elect to not purchase our products, our revenues, results of operations and cash flows could be materially and adversely affected.

In the seed, crop nutrient and crop protection markets, consolidation at both the producer and wholesale customer levels has increased the potential for direct sales from input manufacturers to cooperative customers and/or individual agricultural producers, which would remove us from the supply chain and could have a material and adverse effect on our revenues, results of operations and cash flows.

We are exposed to risk of nonperformance and nonpayment by counterparties.

We are exposed to risk of nonperformance and nonpayment by counterparties, whether pursuant to contracts or otherwise.

Risk of nonperformance and nonpayment by counterparties includes the inability or refusal of a counterparty to pay us, the inability or refusal to perform because of a counterparty's financial condition and liquidity, operational failures, labor issues, cybersecurity events, outbreaks of disease or for any other reason, and risk that the counterparty will refuse to perform a contract during a period of price fluctuations where contract prices are significantly different than current market prices.

In the event we experience significant nonperformance or nonpayment by counterparties, our financial condition, results of operations and cash flows could be materially and adversely affected.

Risk of nonperformance and nonpayment by counterparties includes the inability or refusal of a counterparty to pay us;

the inability or refusal to perform because of a counterparty's financial condition and liquidity, operational failures, labor issues, cybersecurity events, outbreaks of disease or for any other reason;

and risk that the counterparty will refuse to perform a contract during a period of price fluctuations where contract prices are significantly different than current market prices.

event we experience significant nonperformance or nonpayment by counterparties, our financial condition, results of operations and cash flows could be materially and adversely affected.

For example, we store inventory in third-party warehouses, and the operators of these warehouses may not adequately store or secure our inventory, or they may improperly sell that inventory to someone else, which could expose us to a loss of the value of that inventory.

In the event we experience any such nonperformance by a third-party warehouse operator, our financial condition, results of operations and cash flows could be materially and adversely affected.

As another example, if any of our counterparties experience a cyber breach or system failure, or does not respond or perform effectively in connection with such cyber breach or system failure, their businesses could be negatively impacted, and it may result in disruption to our supply chain or distribution channels, which could have a material adverse effect on our business.

As another example, if any of our counterparties experience a cybersecurity breach or system failure, or does not respond or perform effectively in connection with such cybersecurity breach or system failure, their businesses could be negatively impacted, and it may result in disruption to our supply chain or distribution channels, which could have a material adverse effect on our business.

Our business, profitability and liquidity may be adversely affected by deterioration in the credit quality of, or defaults by, third parties who owe us money.

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These parties may default on their obligations to us due to bankruptcy, lack of liquidity, operational failure or for other reasons.

If these counterparties do not pay us back, such that we experience significant defaults on their payment obligations to us, our financial condition, results of operations or cash flows could be materially and adversely affected.

If these counterparties do not pay us back and we experience significant defaults on their payment obligations to us, our financial condition, results of operations or cash flows could be materially and adversely affected.

We are also subject to the risk that our rights against borrowers and other third parties that owe us money may not be enforceable in all circumstances.

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In addition, the credit quality of borrowers and other third parties whose obligations we hold could deteriorate due to a number of factors, including deterioration in the value of collateral posted by those parties to secure their obligations to us pursuant to purchase contracts, loan agreements or other contracts.

If that deterioration occurs, the material adverse effects of third parties not performing their repayment obligations may be exacerbated if the collateral held by us cannot be realized or is liquidated at prices not sufficient to recover the full amount owed to us.

For example, certain loans and other financing arrangements we undertake with agricultural producers are typically secured by the counterparty's crops that are planted in the current year.

There is a risk that the value of the crop will not be sufficient to satisfy the counterparty's repayment obligations under the financing arrangement as a result of weather, crop growing conditions, other factors that influence the price, supply and demand for agricultural commodities or for other reasons.

If deterioration occurs, the material adverse effects of third parties not performing their repayment obligations may be exacerbated if the collateral held by us cannot be realized or is liquidated at prices not sufficient to recover the full amount owed to us.

For example, certain loans and other financing arrangements we undertake with agricultural producers are typically secured by the counterparty's crops planted in the current year.

There is a risk that the value of the crop will not be sufficient to satisfy the counterparty's repayment obligations under the financing arrangement as a result of weather;

crop-growing conditions;

other factors that influence the price, supply and demand for agricultural commodities;

or for other reasons.

In addition, disputes may arise as to the amount of collateral we are entitled to receive and the value of pledged assets.

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Default rates, downgrades and disputes with counterparties as to the valuation of collateral increase significantly in times of market stress and illiquidity.

With respect to our lending activity, we evaluate the collectability of both commercial and producer loans on a specific identification basis based on the amount and quality of the collateral obtained and record specific loan loss reserves when appropriate.

With respect to our lending activity, we evaluate the collectability of commercial and producer loans on a specific identification basis based on the amount and quality of the collateral obtained and record specific loan loss reserves when appropriate.

Consistent with accounting principles generally accepted in the United States ("U.S.

GAAP"), a general reserve is also maintained based on our best estimate of expected credit losses.

GAAP"), we maintain a general reserve based on our best estimate of expected credit losses.

For other forms of credit, we establish reserves as appropriate and consistent with U.S.

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Our business is affected by fluctuations in commodity prices, transportation costs, energy prices, foreign currency exchange rates and interest rates.

We monitor position limits, accounts receivables and other exposures and engage in other

strategies and controls to manage these risks.

We monitor position limits, accounts receivables and other exposures and engage in other strategies and controls to manage these risks.

Our monitoring efforts may not be effective at detecting a significant risk exposure and our controls and strategies may not be effective in adequately managing against the occurrence of a significant loss relating to a risk exposure.

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Actual or perceived quality, safety or health risks associated with our products could subject us to significant liability and damage our business and reputation.

If any of our food or animal feed products were to become adulterated or misbranded, we would need to recall those items and could experience product liability claims if either consumers or customers' livestock were injured or were claimed to be injured as a result.

If any of our food or animal feed products were to become adulterated or misbranded, we would need to recall those items and could experience product liability claims if either consumers or customers' livestock or pets were injured or were claimed to be injured as a result.

A widespread product recall or a significant product liability judgment could cause our products to be unavailable for a period of time or could cause a loss of consumer or customer confidence in our products.

Even if a product liability claim were unsuccessful or were not fully pursued, the negative publicity surrounding any assertion that our products caused illness or injury could adversely affect our business and reputation with existing and potential consumers and customers and our corporate and brand image.

Moreover, claims or liabilities of this sort might not be covered by our insurance or by any rights of indemnity or contribution that we may have against others.

The growing use of social and digital media by consumers has greatly increased the speed and extent that information or misinformation and opinions can be shared.

Negative posts or comments about us, our brands, or our products on social or digital media could seriously damage our brands and reputation.

Moreover, product liability claims or liabilities might not be covered by our insurance or by any rights of indemnity or contribution that we may have against others.

In addition, general public perceptions regarding the quality, safety or health risks associated with particular food or animal feed products, such as concerns regarding genetically modified crops, could reduce demand and prices for some of the products associated with our businesses.

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We do not insure against all potential losses and could be seriously harmed by unanticipated liabilities.

Our operations are subject to business interruptions due to unanticipated events such as explosions, fires, other natural disasters, war, terrorism, cyber attacks, industrial accidents, pipeline interruptions, transportation delays, equipment failures, crude oil or refined product spills, adverse weather conditions and labor disputes.

Our operations are subject to business interruptions due to unanticipated events such as explosions, fires, other natural disasters, war, terrorism, cyberattacks, industrial accidents, pipeline interruptions, transportation delays, equipment failures, crude oil or refined product spills, adverse weather conditions and labor disputes.

The following statements are examples of potential interruptions or losses.

• Our oil refineries and other facilities are potential targets for terrorist attacks that could halt or discontinue production.

• Our inability to negotiate acceptable contracts with unionized workers in our operations could result in strikes or work stoppages.

• Our corporate headquarters, the facilities we own or the significant inventories we carry could be damaged or destroyed by catastrophic events, adverse weather conditions or contamination.

• Someone may accidentally or intentionally introduce malware into our information technology systems or breach our computer systems or other cyber resources.

• An occurrence of a pandemic or epidemic disease, such as the COVID-19 pandemic, affecting a substantial part of our workforce or our customers could interrupt our business operations.

• Our corporate headquarters, the facilities we own and the inventories we carry could be damaged or destroyed by catastrophic events, adverse weather conditions or contamination.

• Someone may accidentally or intentionally introduce malware into our information technology systems or breach our computer systems or other cybersecurity resources.

• An occurrence of a pandemic or epidemic disease, such as the COVID-19 pandemic, could affect a substantial part of our workforce or our customers and interrupt our business operations.

The effects of any of these events could be significant.

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Uninsured losses and liabilities arising from operating hazards could have a material adverse effect on us.

In addition, if we experience insurable events, our insurance premiums could increase or insurance relating thereto may become unavailable to us.

In addition, our insurance premiums could increase or insurance coverage may become unavailable to us, particularly if we experience insurable events.

We may also be impacted by supply chain issues, due to factors largely beyond our control, which could escalate in future periods.

Any such issues could result in higher costs or operational disruptions, which could have an adverse impact on our business, financial condition and results of operations.

Our business and operations have been, and may in the future, be adversely affected by epidemics, pandemics, outbreaks of disease and other adverse public health developments, including COVID-19.

Epidemics, pandemics, outbreaks of novel diseases and other adverse public health developments in countries and states where we operate may arise at any time.

Such developments, including the COVID-19 pandemic, have had, and in the future may have, an adverse effect on our business, financial condition and results of operations.

These effects include a potentially negative impact on the availability of our key personnel;

labor shortages and increased turnover;

temporary closures of our facilities or facilities of our members, business partners, customers, suppliers, third-party service providers or other vendors;

and interruption of domestic and global supply chains, distribution channels and liquidity and capital or financial markets.

In particular, restrictions on or disruptions of transportation, port closures or increased border controls or closures, or

other impacts on domestic and global supply chains or distribution channels could increase our costs for raw materials and commodity costs, increase demand for raw materials and commodities from competing purchasers, limit our ability to meet customer demand or otherwise have a material adverse effect on our business, financial condition and results of operations or cash flows.

Precautionary measures we may take in the future intended to limit the impact of any epidemic, pandemic, disease outbreak or other public health development, may result in additional costs.

In addition, such epidemics, pandemics, disease outbreaks or other public health developments may adversely affect economies and financial markets throughout the world, such as the effect COVID-19 has had on world economies and financial markets, which may affect our ability to obtain additional financing for our businesses and demand for our products and services.

The impact of such developments may also exacerbate the other risks discussed in this Item 1A, any of which could have a material effect on us.

The extent to which COVID-19 will impact our business and our financial results in the future will depend on future developments, which are highly uncertain and cannot be predicted.

Such developments may include ongoing spread of the virus;

disease severity;

outbreak duration;

extent of any reoccurrence of the coronavirus or any evolutions or mutations of the virus;

availability, administration and effectiveness of vaccines;

development of therapeutic treatments that can restore consumer and business economic confidence;

type and duration of actions that may be taken by governmental authorities in response to the outbreak;

and impact on the U.S.

and the global economy.

While all of our facilities are currently operating normally, our internal task force is prepared to reestablish safety measures and protocols should infection rates of COVID-19 increase.

We continue to monitor local, regional and national government actions that could limit or restrict the movement of agricultural commodities or products or otherwise disrupt physical product flows or our ability to operate in the future.

As a result, at the time of this filing, it is not possible to predict the overall future impact of COVID-19 or any other adverse public health development on our business, liquidity, capital resources and financial results.

We are subject to workforce factors that could adversely affect our business and financial condition.

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The challenge of hiring new employees is exacerbated by the rural nature of our business, which provides for a smaller pool of skilled employable candidates.

A number of other factors may adversely affect the labor force available to us, including changes in the labor market as a result of the

COVID-19 pandemic and other socioeconomic and demographic changes, high employment levels, federal unemployment subsidies and other government regulations, unemployment programs and volatility in macroeconomic factors impacting the labor market.

A number of other factors may adversely affect the labor force available to us, including changes in the labor market as a result of the COVID-19 pandemic and other socioeconomic and demographic changes, high employment levels, federal unemployment subsidies and other government regulations, unemployment programs and volatility in macroeconomic factors impacting the labor market.

Moreover, there continues to be a tight labor market despite the COVID-19 pandemic having largely subsided.

Increases in remote work opportunities have also amplified the competition for employees and contractors.

To hire new employees, we may be forced to pay higher wages or offer other benefits that might impact our cost of labor.

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In addition, an increasingly competitive labor market may lead to increased turnover rates within our employee base.

Increased employee turnover results in significant time and expense relating to identifying recruiting, hiring, relocating and integrating qualified individuals.

High employee turnover of key personnel may further deplete our institutional knowledge base and erode our competitiveness.

These or other employee workforce factors could negatively impact our business, financial condition or results of operations.

Technological improvements could decrease the demand for our agronomy and energy products.

Technological advances in agriculture could decrease the demand for crop nutrients, energy and other crop input products and services we provide.

Technological improvements and sustainability initiatives could decrease the demand for our agronomy and energy products.

Technological advances in agriculture, as well as sustainability initiatives and practices, could decrease the demand for crop nutrients, energy and other crop input products and services we provide.

Genetically engineered seeds that resist disease and insects, or that meet certain nutritional requirements, could affect the demand for our crop nutrients and crop protection products.

Demand for fuel that we sell could decline as technology allows for more efficient usage of equipment or should alternative energy sources become more viable due to technological advances.

Demand for fuel we sell could decline as technology allows for more efficient usage of equipment or should alternative energy sources become more viable due to technological advances.

Declining demand for our products could materially and adversely affect our revenues, results of operations and cash flows.

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In addition, potential flaws in implementing the ERP or in the failure of any portion/module of the ERP to meet our needs or provide appropriate controls may pose risks to our ability to operate successfully and efficiently and with an effective system of internal controls.

There may be other challenges and risks to both our aging and current IT systems over time due to any number of causes, such as catastrophic events, availability of resources, power outages, security breaches or cyber attacks.

These challenges and risks could result in legal claims or proceedings, liability or penalties, disruption in operations, loss of valuable data, increased costs and damage to our reputation, all of which could adversely affect our business.

Our ongoing IT investments include those relating to cybersecurity, including technology, hired expertise and cybersecurity risk mitigation actions.

In addition, IT investments in new technology that could result in greater operational efficiency may further expose our IT systems to the risk of cyber attacks.

In addition, IT investments in new technology that could result in greater operational efficiency may further expose our IT systems to the risk of cyberattacks.

The increase in hybrid working where employees including third-party employees, access technology infrastructure remotely increases additional information technology and data security risks.

Like many companies, we continue to experience an increase in the number of sophisticated attempts by external parties to access and/or disrupt our networks without authorization, such as denial of service attacks, attempted malware infections, scanning activity and phishing e-mails.

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Although our systems were not breached, no data was lost or exposed and our operations were not significantly interrupted by this incident, there is no guarantee that a future incident would not have a greater impact on our operations, our data or our reputation.

We may incur significant costs protecting against or remediating cyber-based attacks or other cyber incidents.

There is no assurance that the measures we have taken to protect our information systems will prevent or limit the impact of a future cybersecurity incident.

We may incur significant costs protecting against or remediating cyber-based attacks or other cybersecurity incidents.

While we maintain a cybersecurity insurance policy that provides coverage for security incidents, we cannot be certain that our coverage will be adequate for liabilities actually incurred, that insurance will continue to be available to us on financially reasonable terms, or at all, or that any insurer will not deny coverage as to any future claim.

In addition, we are subject to laws and regulations in the United States and other jurisdictions regarding privacy, data protection and data security, including those related to collection, storage, handling, use, disclosure, transfer and security of personal data.

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Any violation of such laws and regulations, including as a result of a security or privacy breach, could subject us to legal claims, regulatory penalties and damage to our reputation.

For example, the SEC recently adopted rule, "Cybersecurity Risk Management, Strategy, Governance and Incident Disclosure," that enhances and standardizes disclosures regarding cybersecurity risk management and governance, as well as material cybersecurity incidents.

Under this new rule, we will be required to make annual disclosures describing our processes for identifying and managing material cybersecurity risks, management's role in assessing and managing such risks and the Board of Directors' oversight of cybersecurity risks.

We will also be required to disclose, in a Form 8-K, the nature, scope and timing of any material cybersecurity incidents identified and the material impact or reasonably likely material impact on the company.

We expect to face increased costs to comply with this new SEC cybersecurity rule, including increased costs for cybersecurity training and management.

Furthermore, the requirement to report cybersecurity incidents within such a short time frame could mean that there will not be sufficient time to halt a breach before having to report it, potentially giving hackers an advantage.

Increasing scrutiny and changing expectations from stakeholders with respect to our environmental, social and governance practices may expose us to new or additional risks.

Companies across all industries are facing increasing scrutiny from stakeholders related to their environmental, social and governance ("ESG") practices and disclosures, including practices and disclosures related to climate change, human capital management, diversity and inclusion, social and community impact, corporate culture and governance standards.

Investor advocacy groups, certain institutional investors, lenders, investment funds and other influential investors are also increasingly focused on ESG practices and disclosures and in recent years have placed increasing importance on the implications and social cost of their investments.

Regardless of the industry, investors' and other stakeholders' increased focus and activism related to ESG and similar matters may hinder access to capital or financing, as investors or lenders may determine to reallocate capital or not commit capital as a result of their assessment of a company's ESG practices and disclosures.

If we do not adapt or comply with investor, lender or stakeholder ESG expectations and standards, which are evolving, or if we are perceived to have not responded appropriately to the growing focus on ESG issues, regardless of whether there is a legal requirement to do so, we may suffer from reputational damage and our business or financial condition could be materially and adversely affected.

Conversely, if we comply with evolving investor, lender and stakeholder ESG expectations and standards, doing so could result in higher costs, disruption and diversion of management attention, an increased strain on our resources and heightened legal and regulatory risk, and could also threaten our credibility with other investors, lenders and stakeholders.

Investor advocacy groups, private litigants, government agencies, certain institutional investors, lenders, investment funds and other influential investors are also increasingly focused on ESG practices and disclosures and in recent years have placed increasing importance on the implications and social cost of their investments and whether companies should engage in ESG activities.

Across industries, investors' and other stakeholders' increased focus and activism related to ESG and similar matters may hinder access to capital or financing, as investors or lenders may determine to reallocate capital or not commit capital as a result of their assessment of a company's ESG practices and disclosures.

In addition, following recent Supreme Court decisions regarding diversity and inclusion activities those opposed to ESG initiatives have begun challenging ESG activities of other companies.

If we do not adapt or comply with investor, lender, private litigants, government agencies or stakeholder ESG expectations and standards, which are evolving, or if we are perceived to have not responded appropriately to the growing focus

on ESG issues and the opposition to ESG issues, regardless of whether there is a legal requirement to do so, we may suffer from reputational damage and our business or financial condition could be materially and adversely affected.

Conversely, if we comply with evolving investor, lender and stakeholder ESG expectations and standards, doing so could result in higher costs, disruption and diversion of management attention, increased strain on our resources and heightened legal and regulatory risk, and could also threaten our credibility with other investors, lenders, private litigants, government agencies and stakeholders.

Investors, lenders and other stakeholders are also increasingly focusing on issues related to environmental justice.

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the conduct of third-party counterparties;

constraint or disruptions to our supply chain and changes in carbon markets.

Failures or delays, whether actual or perceived, in achieving our strategies or expectations related to climate change and other environmental matters could adversely affect our business, operations and reputation, and increase risk of litigation.

constraint or disruptions to our supply chain and changes in carbon markets or carbon taxes.

We may be required to expend significant resources to achieve these strategies and expectations, which could significantly increase our operational costs.

There can be no assurance of the extent to which any of our strategies or expectations will be achieved or that any future investments we make in furtherance of achieving these strategies or expectations will meet customer or investor expectations.

While we continue to take important steps toward mitigation of climate risk and impact on climate change, transitioning our business to adapt to and comply with evolving policy, legal, and regulatory changes may impose substantial operational and compliance burdens.

As a result, climate change could negatively affect our business and operations.

Collecting, measuring and analyzing information relating to such matters can be costly, time-consuming, dependent on third-party cooperation and unreliable.

Furthermore, methodologies for measuring, tracking and reporting on such matters continue to change over time, which requires our processes and controls for such data to evolve as well.

Additionally, we may face increased pressure from customers, consumers, investors, activists, lenders and other stakeholders to modify our products or operations away from ingredients or activities that are considered to have a higher impact on climate change.

Such changes to methodologies or lack of progress and failures or delays in our strategies, whether actual or perceived, in achieving our strategies or expectations related to climate change and other environmental matters could adversely affect our business, operations and reputation, and increase risk of litigation.

Acquisitions, strategic alliances, joint ventures, divestitures and other nonordinary course-of-business events resulting from portfolio management actions and other evolving business strategies could affect future results.

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In particular, we generally cannot act on major business initiatives in our joint ventures without the consent of the other party or parties in those ventures.

Investments in joint ventures may, under certain circumstances, involve risks not present when a third-party is not involved, including the possibility that co-venturers might experience business or financial stresses that impact their ability to effectively operate the joint venture, or might become bankrupt or fail to fund their share of the business, in which case the joint venture may be unable to access needed growth capital without funding from us and/or any other remaining co-venturers.

Investments in joint ventures may, under certain circumstances, involve risks not present when a third party is not involved, including the possibility that co-venturers might experience business or financial stresses that impact their ability to effectively operate the joint venture, or might become bankrupt or fail to fund their share of the business;

in which case, the joint venture may be unable to access needed growth capital without funding from us and/or any other remaining co-venturers.

Co-venturers may have economic, tax or other business interests or goals that are inconsistent with our business interests or goals and may be in a position to take actions contrary to our policies or objectives.

Our co-venturers may take actions that are not within our control, which may expose our investments in joint ventures to the risk of lower values or returns.

Our co-venturers may take actions that are

not within our control, which may expose our investments in joint ventures to the risk of lower values or returns.

Joint venture investments may also lead to impasses.

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Each of these matters could have a material adverse effect on us.

We made certain assumptions and projections regarding the future of the markets served by our joint venture investments that included projected raw materiality availability and pricing, production costs, market pricing and demand for the joint venture's products.

We have made certain assumptions and projections regarding the future of the markets served by our joint venture investments that included projected raw materiality availability and pricing, production costs, market pricing and demand for the joint venture's products.

These assumptions were an integral part of the economics used to evaluate these joint venture investment opportunities prior to consummation.

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For example, assumptions we made in connection with our investment in CF Nitrogen may not align with future demand for nitrogen-based products or the cost or availability of natural gas, the primary feedstock utilized for CF Nitrogen's nitrogen-based products.

The collapse of certain banks and potentially other financial institutions may adversely impact us.

Since March 2023, there have been reports of bank instability across the globe, including several U.S.

banks shutting down with the Federal Deposit Insurance Corporation being appointed as a receiver.

Despite the steps taken to date by U.S.

agencies to protect depositors, this instability and subsequent pressure on banks could lead to failures of financial institutions to which we face direct or significant exposure, and may lead to significant disruptions to our operations, financial position and reputation.

The extent of such impacts is uncertain, and there may be additional risks that we have not yet identified.

We are taking steps to identify any potential impact and minimize any disruptions to our operations.

However, we cannot guarantee that we will be able to avoid negative consequences directly or indirectly from the foregoing events or other impacts on financial institutions.

Risks Related to Laws and Regulations

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Our business is subject to numerous government policies, mandates and regulations that could have an adverse effect on our operations or profitability.

For example, government policies, mandates and regulations related to genetically modified organisms, traceability standards, sustainable practices, product safety and labeling, and renewable and low-carbon fuels could have an adverse effect on our operations or profitability by, among other things, influencing the planting of certain crops, the location and size of crop production, trade of processed and unprocessed commodity products, volumes and types of imports and exports, availability and competitiveness of feedstocks as raw materials, and viability and volume of certain of our products.

For example, government policies, mandates and regulations related to genetically modified organisms, traceability standards, sustainable practices, product safety and labeling, and renewable and low-carbon fuels could have an adverse effect on our operations or profitability by, among other things, influencing the planting of certain crops, the location and extent of crop production, trade of processed and unprocessed commodity products, volumes and types of imports and exports, availability and competitiveness of feedstocks as raw materials, and viability and volume of certain of our products.

In our Energy segment, government policies, mandates and regulations designed to stop or impede development or production of petroleum-based products, such as those limiting or banning use of hydraulic fracturing, drilling or oilsands production or restricting the sale of new combustion-engine vehicles, could adversely affect our operations and profitability.

We could be the target of claims of false or deceptive advertising under U.S.

federal and state laws as well as foreign laws, including consumer protection statutes of some states.

The marketing of food products has come under increased regulatory scrutiny in recent years, and the food industry has been subject to an increasing number of proceedings and claims relating to alleged false or deceptive labeling and marketing under federal, state and foreign laws or regulations.

Changes in legal or regulatory requirements (such as new food safety requirements and revised nutrition facts labeling, including front-of-pack labeling, and serving size regulations) or evolving interpretations of existing legal or regulatory requirements may result in increased compliance costs, capital expenditures and other financial obligations that could adversely affect our business or financial results.

If we are found to be out of compliance with applicable laws and regulations in these areas, we could be subject to civil remedies, including fines, injunctions, termination of necessary licenses or permits, or recalls, as well as potential criminal sanctions, any of which could have a material adverse effect on our business.

In addition, changes in international trade agreements and trade disputes can adversely affect commodity trade flows by limiting or disrupting trade between countries or regions.

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These actions and uncertainties have led to significant volatility in commodity prices, disruptions in historical trade flows and shifts in planting patterns in the United States and South America, all of which have resulted in reduced volumes of grain exports overall and have presented challenges and uncertainties for our business.

Changes in trade policy, withdrawals from or material modifications to relevant international trade agreements and continued uncertainty could depress economic activity and restrict our access to suppliers and customers, and we cannot predict the effects of future trade policies, disputes or agreements on our business.

trade policies, disputes or agreements on our business.

Tariffs and trade restrictions that are implemented on products that we buy and/or sell could increase the cost of those products or adversely affect the availability of market access.

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Changes in federal income tax laws or in our tax status could increase our tax liability and reduce our net income significantly.

Current federal income tax laws, regulations and interpretations regarding the taxation of cooperatives allow us to exclude income generated through business with or for a member (patronage-sourced income) from our taxable income to the extent it is distributed back to our members.

If any changes are made to such federal income tax laws, regulations or interpretations, or if in the future we were not eligible to be taxed as a cooperative, our tax liability would significantly increase and our net income would significantly decrease.

Current federal income tax laws, regulations and interpretations, including those specific to the taxation of cooperatives, provide us certain income tax benefits such as allowing us to exclude income generated through business with or for a member (patronage-sourced income) from our taxable income to the extent it is distributed back to our members.

We continue to monitor potential changes to federal income tax laws, regulations or interpretations, such as the Inflation Reduction Act of 2022, H.R.

5376, to evaluate their potential impact on our business, tax position and financial results.

If in the future, for example, we were to be subject to a corporate alternative minimum tax, or we were not eligible to be taxed as a cooperative, our tax liability would significantly increase and our net income would significantly decrease.

We incur significant costs in complying with applicable laws and regulations.

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We may be unable to pass on those expenses to customers without experiencing volume and margin losses.

For example, the compliance burden and

impact on our operations and profitability as a result of the enactment of the Dodd-Frank Wall Street Reform and Consumer Protection Act ("Dodd-Frank") and related regulations continue to evolve, as federal agencies have implemented and continue to implement its many provisions through regulation.

For example, the compliance burden and impact on our operations and profitability as a result of the enactment of the Dodd-Frank Wall Street Reform and Consumer Protection Act ("Dodd-Frank") and related regulations continue to evolve, as federal agencies have implemented and continue to implement the act's many provisions through regulation.

These efforts to change the regulation of financial markets subject users of derivatives, such as CHS, to extensive oversight and regulation by the CFTC.

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These transactions typically take place on exchanges such as the CME.

Our hedging transactions and activities are subject to the rules and regulations of the exchanges we use and governing bodies, including the CME, the NYMEX, the CBOT, the MGEX and the CFTC.

Our hedging transactions and activities are subject to the rules and regulations of the exchanges we use and governing bodies, including the CME, NYMEX, CBOT, MGEX and CFTC.

All exchanges have broad powers to review required records, to investigate and enforce compliance and to punish noncompliance by entities subject to their jurisdiction.

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Any alleged or actual violation of these laws or regulations by us or our employees may subject us to government scrutiny, investigation, and civil and criminal penalties, and may limit our import and export abilities.

Furthermore, embargoes and sanctions imposed by the United States and other governments restricting or

prohibiting sales to specific persons or countries or based on product classification may expose us to potential criminal or civil sanctions.

Furthermore, embargoes and sanctions imposed by the United States and other governments restricting or prohibiting sales to specific persons or countries or based on product classification may expose us to potential criminal or civil sanctions.

We cannot predict the nature, scope or effect of future regulatory requirements to which our operations might be subject or the way existing laws and regulations might be administered or interpreted.

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In addition, new legislation, regulatory programs, or customer or other stakeholder expectations could require substantial expenditures for installation and operation of systems and equipment or for substantial modifications to existing equipment.

Also, pursuant to the Energy Independence and Security Act of 2007, the EPA has promulgated the Renewable Fuel Standard ("RFS"), which requires refiners to blend renewable fuels, such as ethanol and biodiesel, with their petroleum fuels or purchase renewable energy credits, known as Renewable Identification Numbers ("RINs"), in lieu of blending.

The EPA generally establishes new annual renewable fuel percentage standards for each compliance year in the preceding year.

Pursuant to the Energy Independence and Security Act of 2007, the EPA has promulgated the Renewable Fuel Standard ("RFS"), which requires refiners to blend renewable fuels, such as ethanol and biodiesel, with their petroleum fuels or purchase renewable energy credits, known as Renewable Identification Numbers ("RINs"), in lieu of blending.

The EPA generally establishes new annual renewable fuel percentage standards for each compliance year in the preceding year, which affects the domestic market for ethanol.

We generate RINs through our blending activities, but we cannot generate enough RINs to meet the needs of our refining capacity and RINs must be purchased on the open market.

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Continued RIN volatility could have a negative impact on our future refined fuels margins, as experienced during fiscal 2023.

In addition, certain states have established proposed laws around low-carbon fuel standards that require refiners to sell fuel with carbon intensity values at certain established benchmarks, or else purchase a sufficient number of credits on the open market to meet the benchmark.

Environmental liabilities and litigation could have a material adverse effect on us.

Many of our current and former facilities have been in operation for many years, and over that time, we and other operators of those facilities have generated, used, stored and disposed of substances or wastes that are or might be considered hazardous under applicable or future enacted environmental laws, including liquid fertilizers, chemicals and fuels stored in underground and aboveground tanks.

Many of our current and former facilities have been in operation for many years.

Over that time, we and other operators of those facilities have generated, used, stored and disposed of substances or wastes, including liquid fertilizers, chemicals and fuels stored in underground and aboveground tanks, that are or might be considered hazardous under applicable or future enacted environmental laws.

Any past or future actions in violation of applicable environmental laws could subject us to administrative penalties, fines, injunctions or other costs, such as capital expenditures.

In addition, an owner or operator of contaminated property and a party who sends hazardous materials to such site for treatment, storage, disposal or recycling can be liable for the cost of investigation and remediation under environmental laws.

In addition, an owner or operator of contaminated property and a party that sends hazardous materials to such site for treatment, storage, disposal or recycling can be liable for the cost of investigation and remediation under environmental laws.

In some instances, such liability exists regardless of fault.

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As a result, some financial institutions, funds and other sources of capital have reduced or restricted lending to, or investing in, companies that operate in the energy industry.

Limiting energy-related businesses' access to capital could make it more difficult for us to secure external financing, which could in turn restrict our current operations and our growth opportunities, adversely affect our operating results and restrict our ability to repay our existing debts.

Limiting energy-related businesses' access to capital could make it more difficult for us to secure external financing, which could in turn restrict our current operations and growth opportunities, adversely affect our operating results and restrict our ability to repay our existing debts.

Our cooperative structure limits our ability to access equity capital.

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These limitations may restrict our ability to raise equity capital and may adversely affect our ability to compete with enterprises that do not face similar restrictions.

Uncertainty regarding the transition away from the London Interbank Offered Rate ("LIBOR") and the replacement of LIBOR with an alternative reference rate may adversely affect interest rates under our credit facilities and dividend rates with respect to our Class B Series 2 Preferred Stock and Class B Series 3 Preferred Stock.

LIBOR has been the historical base rate of interest widely used as a global reference for setting interest rates on loans.

Some of our credit facilities, including our five-year revolving credit facility and our 10-year term loan facility, use LIBOR as the reference rate.

In addition, the terms of our Class B Reset Rate Cumulative Redeemable Preferred Stock, Series 2 ("Class B Series 2 Preferred Stock"), and our Class B Reset Rate Cumulative Redeemable Preferred Stock, Series 3 ("Class B Series 3 Preferred Stock"), provide that, beginning on March 24, 2024, in the case of our Class B Series 2 Preferred Stock, or on September 30, 2024, in the case of our Class B Series 3 Preferred Stock ("Initial Reset Date"), dividends on such preferred stock will accumulate at a rate equal to three-month LIBOR plus an applicable spread, not to exceed 8% per annum.

In 2017, the United Kingdom's Financial Conduct Authority (the "FCA"), which regulates LIBOR, announced that it intended to phase out LIBOR by the end of 2021.

On March 5, 2021, the FCA announced that representative LIBOR rates would no longer be available after June 30, 2023, in the case of overnight and one-, three-, six- and 12-month U.S.

dollar LIBOR rates, and December 31, 2021, in the case of all other LIBOR rates.

Federal Reserve, in conjunction with the Alternative Reference Rates Committee, a steering committee comprised of large U.S.

financial institutions, has announced the Secured Overnight Financing Rate ("SOFR") as its recommended alternative to U.S.

dollar LIBOR.

We have identified our contractual arrangements that will be impacted by the cessation of the remaining U.S.

dollar LIBOR settings.

We are actively working with counterparties to incorporate non-LIBOR reference rate and fallback language, when applicable, in new and existing contracts.

The composition and characteristics of SOFR are not the same as LIBOR.

As a result, there can be no assurance that SOFR or any other alternative reference rate will perform in the same manner as LIBOR would have at any time including without limitation, as a result of changes in interest and yield rates in the market, market volatility, or global or regional economic, financial, political, regulatory, judicial or other events.

The use of SOFR or another alternative reference rate could cause the interest rates on our borrowings under our applicable credit facilities to be materially different than expected, which could have an adverse effect on our financial position, results of operations and liquidity.

In addition, we will continue to be subject to risk on outstanding instruments that rely on LIBOR.

For example, although the rate at which dividends accumulate on our Class B Series 2 Preferred Stock and Class B Series 3 Preferred Stock may not exceed 8% per annum, there is currently uncertainty regarding the calculation of such rates following the applicable Initial Reset Date in the event that LIBOR ceases to exist.

The use of SOFR or another alternative reference rate or other reforms relating to the calculation of dividends on our Class B Series 2 Preferred Stock and Class B Series 3 Preferred Stock could cause the dividends we pay on our Class B Series 2 Preferred Stock and Class B Series 3 Preferred Stock following the applicable Initial Reset Date to be materially different than expected, which could have an adverse effect on our financial position, results of operations and liquidity and cause us to attempt to amend the terms of our Class B Series 2 Preferred Stock and Class B Series 3 Preferred Stock, including by seeking shareholder approval of any such amendment.

In addition, the overall financial market may be disrupted as a result of the phaseout and replacement of LIBOR.

Disruption in the financial market could have an adverse effect on our financial position, results of operations and liquidity.

UNRESOLVED STAFF COMMENTS

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What changed 10-K

Item 1A. Risk Factors