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Item 3. Legal Proceedings

2024-02-21 compared with 2023-02-22 · 41 added, 32 removed, 41 unchanged (64% of the section changed)

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Additionally, we have elected a $300,000 threshold to disclose certain proceedings arising under federal, state or local environmental laws when a governmental authority is a party to the proceedings.

The following matters are disclosed in accordance with that requirement.

We do not currently believe that the eventual outcome of any matters reported, individually or in the aggregate, could have a material adverse effect on our business, financial condition, results of operations or cash flows.

The below matters are disclosed in accordance with that requirement.

We do not currently believe that the eventual outcome of any matters previously reported, but still unresolved, individually or in the aggregate, could have a material adverse effect on our business, financial condition, results of operations or cash flows.

Further, our U.S.

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If a specific request for stipulated penalties meeting the reporting threshold set forth in SEC rules is made pursuant to these decrees based on a given reported exceedance, we will separately report that matter and the amount of the proposed penalty.

The EPA and U.S.

Department of Justice (DOJ) notified Phillips 66 that the government will seek penalties for alleged violations of the 2019 consent decree (Civil Action No.

3:18-cv-01484-SMY-GCS) at our Wood River Refinery.

We expect that penalties paid for the enforcement action will exceed $300,000.

We are working with EPA and DOJ to resolve this matter.

Index to Financial Statements

We received such a request in the first quarter of 2023, and we expect to receive a final demand for, alleged stipulated penalties arising from self-reported Clean Air Act violations at our Alliance, Borger, Sweeny and Wood River refineries.

The proposed penalties exceed $500,000 and would be pursued pursuant to the consent decree referenced above and a related Wood River Refinery consent decree.

There have been no further developments with respect to this matter.

The California Department of Toxic Substances Control (DTSC), served Phillips 66 Company (as successor to Tosco) and approximately 50 other potentially responsible parties with Imminent and Substantial Endangerment Determinations and Orders and Remedial Action Orders in November 2016 related to historic waste sent to certain California landfill sites that were operated by a now bankrupt party.

Since that time, we have been coordinating with other potentially responsible parties to negotiate a proposed settlement with DTSC regarding funding future operations, maintenance, and financial assurance for post-closure activities at the sites.

As part of the settlement process and Consent Decree in the matter, in December 2023 we agreed to pay approximately $4 million in full satisfaction of our potential liability at the Vine Hill landfill complex located in Martinez, California.

The company does not expect any future financial liabilities related to the Vine Hill landfill complex to be material.

On December 1, 2023, the South Coast Air Quality Management District (SCAQMD) issued a demand for penalties that exceeds the $300,000 reporting threshold.

The penalty demand proposes to resolve seven Notices of Violation (NOVs) issued between 2020 and 2022 for alleged violations of air permit and air pollution regulatory requirements at the Los Angeles Refinery.

We are working with SCAQMD to negotiate and resolve these NOVs.

Matters Previously Reported (unresolved or resolved since the quarterly report on Form 10-Q for the quarterly period ended September 30, 2023)

On July 2, 2020, the South Coast Air Quality Management District (SCAQMD) issued a demand for penalties totaling $2,697,575.

The penalty demand proposes to resolve 26 Notices of Violation (NOVs) issued between 2017 and 2020 for alleged violations of air permit and air pollution regulatory requirements at the Los Angeles Refinery.

We are working with SCAQMD to resolve these NOVs.

In 2018, the Colorado Department of Public Health and Environment (CDPHE) issued a Compliance Advisory in relation to an improperly permitted facility flare and related air emissions from flare operations at one of DCP LP’s gas processing plants, which DCP LP self-disclosed to CDPHE in December 2017.

Following information exchanges and discussions with CDPHE, a resolution was proposed pursuant to which the plant’s air permit would be revised, and DCP LP would be assessed an administrative penalty and economic benefit payment.

In 2018, the Colorado Department of Public Health and Environment (CDPHE) issued a Compliance Advisory in relation to an improperly permitted facility flare and related air emissions from flare operations at one of DCP Operating Company LP’s (DCP Operating LP) gas processing plants, which DCP Operating LP self-disclosed to CDPHE in December 2017.

Following information exchanges and discussions with CDPHE, a resolution was proposed pursuant to which the plant’s air permit would be revised, and DCP Operating LP would be assessed an administrative penalty and economic benefit payment.

A revised air permit was issued in May 2019, but the parties had not yet entered into a final settlement agreement to complete the matter.

Subsequently, in July 2020, CDPHE issued a Notice of Violation in relation to amine treater emissions at this plant, which DCP LP self-disclosed to CDPHE in April 2020.

DCP LP is engaging with CDPHE as to this and the flare-related matter, including possible settlement terms, although these matters, which have since been combined, may result in formal legal proceedings.

It is possible that resolution of this matter may include an administrative penalty and economic benefit payment, further revisions to the facility air permit, or installation of emissions management equipment, or a combination of these, that could result in costs that exceed $1 million.

See Note 16—Contingencies and Commitments, in the Notes to Consolidated Financial Statements, for additional information.

Subsequently, in July 2020, CDPHE issued a NOV in relation to amine treater emissions at this plant, which DCP Operating LP self-disclosed to CDPHE in April 2020.

Two additional and related NOVs were then issued in 2021 and 2023.

DCP Operating LP and the CDPHE have reached a tentative agreement to resolve these matters for aggregate monetary civil penalties of approximately $4 million.

As part of the settlement, DCP Operating LP will install emissions management equipment that will address the alleged violations.

A final order to resolve these matters is expected to be issued during the first quarter of 2024.

See “Dakota Access, LLC (Dakota Access) and Energy Transfer Crude Oil Company, LLC (ETCO)” section of Note 8—Investments, Loans and Long-Term Receivables and Note 16—Contingencies and Commitments, in the Notes to Consolidated Financial Statements, for additional information regarding Legal Proceedings and other regulatory actions.

MINE SAFETY DISCLOSURES

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Lashier President and Chief Executive Officer 62

Mitchell Executive Vice President and Chief Financial Officer 57

Zhanna Golodryga Executive Vice President, Emerging Energy and Sustainability 68

Harbison Executive Vice President, Refining 58

Mandell Executive Vice President, Marketing and Commercial 60

Mitchell Executive Vice President and Chief Financial Officer 56

Roberts Executive Vice President, Midstream and Chemicals 62

Allen Sutherland Executive Vice President, Government Affairs, General Counsel and Corporate Secretary 52

Harbison Senior Vice President, Refining 57

Scott Pruitt Vice President and Controller 59

* On February 22, 2023.

* As of February 21, 2024.

There are no family relationships among any of the executive officers named above or any member of our Board of Directors.

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Set forth below is information about the executive officers identified above.

Lashier is President and Chief Executive Officer of Phillips 66, a position he has held since July 2022.

Lashier is President and Chief Executive Officer, a position he has held since July 2022.

Previously, Mr.

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and as Executive Vice President, Commercial of CPChem from August 2015 to August 2017.

Zhanna Golodryga is Executive Vice President, Emerging Energy and Sustainability of Phillips 66, a position she has held since October 2022.

Mitchell is Executive Vice President and Chief Financial Officer, a position he has held since January 2016.

Previously, Mr.

Mitchell served as Vice President, Investor Relations from September 2014 to January 2016.

Zhanna Golodryga is Executive Vice President, Emerging Energy and Sustainability, a position she has held since October 2022.

Previously, Ms.

Golodryga served as Senior Vice President, Chief Digital and Administrative Officer from April 2017 to October 2022.

Mandell is Executive Vice President, Marketing and Commercial of Phillips 66, a position he has held since March 2019.

Harbison is Executive Vice President, Refining, a position he has held since June 2022.

Harbison previously served as Vice President, San Francisco Refinery from March 2021 to May 2022;

General Manager, San Francisco Refinery from June 2020 to February 2021;

Manager, Lake Charles Manufacturing Complex from February 2016 to May 2020 and Manager of the Ferndale Refinery from August 2014 to January 2016.

Mandell is Executive Vice President, Marketing and Commercial, a position he has held since March 2019.

Mandell served as Senior Vice President, Marketing and Commercial from August 2018 to March 2019;

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and President, Global Marketing from March 2015 to November 2016.

Mitchell is Executive Vice President and Chief Financial Officer of Phillips 66, a position he has held since January 2016.

Previously, Mr.

Mitchell served as Vice President, Investor Relations from September 2014 to January 2016.

Roberts is Executive Vice President, Midstream and Chemicals of Phillips 66, a position he has held since August 2018.

Roberts is Executive Vice President, Midstream and Chemicals, a position he has held since August 2018.

Previously, Mr.

Roberts served as Executive Vice President, Marketing and Commercial from January 2017 to August 2018 and as Executive Vice President, Strategy and Business Development from April 2016 to January 2017.

Allen Sutherland is Executive Vice President, Government Affairs, General Counsel and Corporate Secretary of Phillips 66, a position she has held since January 2022.

Sutherland previously served as Executive Vice President and Chief Legal Officer of Norfolk Southern Corporation from April 2020 to January 2022, Senior Vice President Government Relations and Chief Legal Officer from August 2019 to April 2020, Senior Vice President Law and Chief Legal Officer from April 2019 to August 2019, and Vice President Law from June 2018 to April 2019.

Allen Sutherland is Executive Vice President, Government Affairs, General Counsel and Corporate Secretary, a position she has held since January 2022.

Sutherland previously served as Executive Vice President and Chief Legal Officer of Norfolk Southern Corporation from April 2020 to January 2022;

Senior Vice President, Government Relations and Chief Legal Officer from August 2019 to April 2020;

Senior Vice President, Law and Chief Legal Officer from April 2019 to August 2019;

and Vice President, Law from June 2018 to April 2019.

Prior to joining Norfolk Southern Corporation, Ms.

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Chemical Safety and Hazard Investigation Board from August 2015 to June 2018.

Harbison is Senior Vice President, Refining of Phillips 66, a position he has held since June 2022.

Harbison previously served as Vice President, San Francisco Refinery from March 2021 to May 2022, General Manager, San Francisco Refinery from June 2020 to February 2021, Manager, Lake Charles Manufacturing Complex from February 2016 to May 2020 and Manager of the Ferndale Refinery from August 2014 to January 2016.

Index to Financial Statements

Scott Pruitt is Vice President and Controller of Phillips 66, a position he has held since August 2021.

Scott Pruitt is Vice President and Controller, a position he has held since August 2021.

Pruitt previously served as General Auditor from September 2020 to August 2021 and Assistant Controller from May 2012 to September 2020.

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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