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Item 3. Legal Proceedings

2024-02-22 compared with 2023-02-23 · 35 added, 43 removed, 19 unchanged (80% of the section changed)

3 unchanged sentences

We are also subject to the following legal and environmental proceedings in addition to those described in Note 23 of our Consolidated Financial Statements included in this Form 10-K:

Countervailing Duty Petitions .

In 2020, we filed petitions with the DOC and the ITC that requested the initiation of countervailing duty investigations into imports of phosphate fertilizers from Morocco and Russia.

The purpose of the petitions was to remedy the distortions that we believe foreign subsidies have caused or are causing in the U.S.

market for phosphate fertilizers, and thereby restore fair competition.

On February 16, 2021, the DOC made final affirmative determinations that countervailable subsidies were being provided by those governments.

On March 11, 2021, the ITC made final affirmative determinations that the U.S.

phosphate fertilizer industry is materially injured by reason of subsidized phosphate fertilizer imports from Morocco and Russia.

As a result of these determinations, the DOC issued countervailing duty orders on phosphate fertilizer imports from Russia and Morocco, which are scheduled to remain in place for at least five years.

Currently, the cash deposit rates for such imports are approximately 20 percent for Moroccan producer OCP, 9 percent and 47 percent for Russian producers PhosAgro and Eurochem, respectively, and 17 percent for all other Russian producers.

The final determinations in the DOC and ITC investigations are subject to challenge before U.S.

federal courts and the World Trade Organization.

Mosaic has initiated actions at the U.S.

Court of International Trade contesting certain aspects of the DOC’s final determinations that, we believe, failed to capture the full extent of Moroccan and Russian phosphate fertilizer subsidies.

Moroccan and Russian producers have also initiated U.S.

Court of International Trade actions, seeking lower cash deposit rates and revocation of the countervailing duty orders.

Further, the cash deposit rates and the amount of countervailing duties owed by importers on such imports could change based on the results of the litigation as well as DOC’s annual administrative review proceedings.

The South Pasture Extension Mine Litigation.

On January 8, 2020, the Hardee County Mining Coordinator issued a Notice of Violation (“ NOV ”) for the failure by Mosaic to proceed with reclamation of two designated reclamation units within the South Pasture Mine footprint.

These two reclamation units comprise 166 acres of mined lands.

The NOV cites noncompliance with the County Land Development Regulations and with the conditions of Development of Regional Impact (“ DRI ”) Development Order 12-21 that was issued in 2012 to authorize continued mining at the South Pasture Mine, continued operation of the South Pasture beneficiation plant, and mining at the South Pasture Mine Extension.

Through the NOV, the county requested that Mosaic submit a revised reclamation plan and schedule to demonstrate when initial reclamation activities would be completed for the two reclamation units identified in the NOV.

The delay in meeting the required reclamation schedule at the two reclamation units is tied to the idling and eventual shutdown of the Plant City fertilizer plant and the idling of the South Pasture Mine beneficiation plant.

The Plant City Facility was first idled in late 2017.

In June 2019, Mosaic announced that the Plant City Facility would be closed permanently.

Given the relationship between the Plant City fertilizer plant and the South Pasture beneficiation plant, and facing adverse market conditions, Mosaic idled the South Pasture beneficiation plant in September 2018.

Idling that plant resulted in no tailings sand being produced by the processing of phosphate matrix.

As a result, there was no tailings sand available for use in backfilling reclamation at the South Pasture Mine, and specifically, the two reclamation units identified in the county’s January 8, 2020 NOV.

On March 10, 2020, Mosaic filed an “Application for Waiver and Reclamation Schedule Extension” to secure Board of County Commissioners (“ BOCC ”) approval of extended reclamation deadlines for the South Pasture Mine.

To obtain waiver relief from the BOCC, a quasi-judicial hearing would be required.

Extensive negotiations between Mosaic and county legal and technical staff resulted in an agreement that involved two separate but related actions:

(1) secure a waiver and reclamation schedule extension through formal action by the BOCC at a quasi-judicial public hearing;

and (2) enter into a settlement agreement that would require payment of a civil penalty by Mosaic for the non-compliance in meeting the required reclamation deadlines of the South Pasture Mine Development Order and the County Mining Ordinance.

The settlement agreement would also be presented and acted upon at a formal public hearing before the BOCC.

On May 7, 2020, a quasi-public judicial hearing was held before the Hardee County BOCC.

At that hearing, the BOCC voted unanimously to issue a waiver of the applicable reclamation deadlines of the South Pasture Development Order and the

county ordinance for three specific reclamation areas of the South Pasture Mine.

The waiver also included a negotiated alternative reclamation schedule that extends the deadline for completion of reclamation until the end of 2023.

At that same hearing, the BOCC approved a settlement agreement that resolved all outstanding non-compliance associated with reclamation obligations at the South Pasture Mine and required Mosaic to pay an agreed settlement amount of $249,000.

Mosaic has satisfied the payment obligation of the settlement agreement and continues to implement the alternative reclamation schedule, as required.

Monitoring programs have been put in place to ensure continued compliance with the waiver and settlement agreement.

Countervailing Duty Orders .

In April 2021, the U.S.

Department of Commerce ( “ DOC ” ) issued countervailing duty ( “ CVD ”) orders on imports of phosphate fertilizers from Morocco and Russia, in response to petitions filed by Mosaic.

The purpose of the petitions was to remedy the injury to the U.S.

phosphate fertilizer industry caused by imports that benefit from unfair foreign subsidies, and thereby restore fair competition.

CVD orders normally stay in place for at least five years, with possible extensions.

Moroccan and Russian producers have initiated actions at the U.S.

Court of International Trade ( “ CIT ” ) seeking to overturn the orders.

Mosaic has also made claims contesting certain aspects of DOC’s final determinations that, we believe, failed to capture the full extent of Moroccan and Russian subsidies.

These litigation challenges remain underway.

Most recently, in July and September 2023, the CIT issued three remand rulings – one addressing DOC’s determination in the CVD investigation of phosphate fertilizers from Russia, one addressing DOC’s determination in the CVD investigation of phosphate fertilizers from Morocco, and one addressing the U.S.

International Trade Commission’s determination in

antidumping and countervailing duty investigations of phosphate fertilizers from Russia and Morocco – instructing the agencies to reconsider certain aspects of the rulings that were the basis for issuing the CVD orders.

When a CVD order is in place, DOC normally conducts annual administrative reviews, which establish a final CVD assessment rate for past imports during a defined period, and a CVD cash deposit rate for future imports.

In November 2023, DOC announced the final results of the first administrative reviews for the CVD orders on phosphate fertilizers for Russia and Morocco, covering the period November 30, 2020 to December 31, 2021.

DOC calculated new subsidy rates of 2.12% for Moroccan producer OCP and 28.50% for Russian producer PhosAgro.

These determinations are subject to appeal to the CIT.

DOC is also conducting administrative reviews covering the period January 1, 2022 to December 31, 2022.

The applicable final CVD assessment rates and cash deposit rates for imports of phosphate fertilizer from Morocco and Russia could change as a result of these various proceedings and potential associated appeals, whether in federal courts or at the World Trade Organization.

The South Pasture Mine – Hardee County Enforcement Action.

On January 8, 2020, Hardee County issued a Notice of Violation (“ NOV ”) for Mosaic’s delay in meeting the required reclamation schedule for two designated reclamation units within the South Pasture Mine.

The delay resulted from idling the South Pasture beneficiation plant in 2018;

because the plant was idled, no sand was available for reclamation activities.

Acting on Mosaic’s “Application for Waiver and Reclamation Schedule Extension,” in May 2020, the Hardee County Board of County Commissioners approved:

(1) a waiver of the applicable reclamation deadlines of the South Pasture Development Order and Land Development Code;

(2) an alternative reclamation schedule;

and (3) a settlement agreement that resolved the NOV.

Mosaic timely paid the civil penalty required by the settlement agreement and continues to implement the approved alternative reclamation schedule, as required.

Monitoring programs are in place to ensure continued compliance with the Waiver and settlement agreement.

Cruz Litigation .

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On April 6, 2022, the court heard argument on the motions to dismiss filed by Mosaic and each other co-defendant.

In late March 2023, the court denied Mosaic's motions to dismiss, and discovery now is underway.

We intend to continue to vigorously defend this matter.

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Part 68, commonly known as the Risk Management Plan Rule (“ RMP Rule ”).

The NOPVOC relates to a compliance evaluation inspection conducted by EPA at the Faustina Plant from February 22-25, 2022 and alleges violations of the RMP Rule.

The NOPVOC relates to a compliance evaluation inspection conducted by the EPA at the Faustina Plant from February 22-25, 2022 and alleges violations of the RMP Rule.

We conferred with the EPA regarding the allegations in the NOPVOC on November 30, 2022.

The EPA provided a penalty calculation on January 19, 2023 which we are reviewing.

We intend to continue discussions with the agency.

We negotiated a Consent Agreement and Final Order (“ CAFO ”) with the agency that was filed on January 30, 2024.

The CAFO requires a penalty payment of $217,085 and the completion of two supplemental environmental projects:

(1) installation of ammonia monitors and monitoring at the plant for a period of two years and (2) donation of two generators to the St.

James Parish Department of Emergency Preparedness.

Mine Safety Disclosures.

1 unchanged sentence

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 3. Legal Proceedings