Item 3. Legal Proceedings
Item 3. LEGAL PROCEEDINGS
From time to time, we may be involved in litigation and claims arising out of our operations in the normal course of business. Additionally, we have elected a $1 million threshold to disclose certain proceedings arising under federal, state or local environmental laws when a governmental authority is a party to the proceedings. During the fourth quarter of 2024, two new matters arose, and there were material developments with respect to two matters previously reported, that resolved those matters, which are all described below. Except as otherwise set forth herein, 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. refineries are implementing two separate consent decrees, regarding alleged violations of the Federal Clean Air Act, with the EPA, five states and one local air pollution agency. Some of the requirements and limitations contained in the decrees provide for stipulated penalties for violations. Stipulated penalties under the decrees are not automatic, but must be requested by one of the agency signatories. As part of periodic reports under the decrees or other reports required by permits or regulations, we occasionally report matters that could be subject to a request for stipulated penalties. 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.
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New Matters
In December 2024, the Bay Area Air Quality Management District (BAAQMD) offered to settle 172 notices of alleged violations of air regulations by the Rodeo Complex dating back to 2016. Settlement negotiations are underway, and resolution is expected in 2025.
In November 2024, Phillips 66 Company received an indictment from a federal grand jury in the United States District Court for the Central District of California alleging two counts of negligently violating the Clean Water Act and four counts of knowingly violating the Clean Water Act at its Los Angeles Refinery. If convicted of all charges, Phillips 66 would face a statutory maximum fine exceeding $1 million. The matter relates to alleged wastewater permit violations and is ongoing.
Matters Previously Reported (unresolved or resolved since the quarterly report on Form 10-Q for the quarterly period ended September 30, 2024)
As described further in the “Legal Proceedings” section of Note 17—Contingencies and Commitments, in the Notes to Consolidated Financial Statements, on February 17, 2022, Propel Fuels, Inc. (Propel Fuels) filed a lawsuit in the Superior Court of California, County of Alameda (the Propel Court), alleging that Phillips 66 Company misappropriated trade secrets related to Propel Fuels’ renewable fuels business. On October 16, 2024, a jury returned a verdict against Phillips 66 Company for $604.9 million in compensatory damages and issued a willfulness finding. In 2025, the Propel Court is expected to rule on motions anticipated to be filed by Propel Fuels seeking exemplary damages and attorneys’ fees. Propel Fuels has asked the Propel Court to grant treble damages and Phillips 66 Company has filed a brief in opposition to that request. Also in 2025, the Propel Court is expected to rule on Phillips 66 Company’s motions for a judgment in its favor as a matter of law, or in the alternative to reduce the jury’s verdict or to grant a new trial. Phillips 66 Company denies any wrongdoing and intends to vigorously defend its position. While Phillips 66 Company believes the jury verdict is not legally or factually supported and intends to pursue post-judgment remedies and file an appeal, there can be no assurances that such defense efforts will be successful. To the extent Phillips 66 Company is required to pay exemplary damages, it may have a material adverse effect on our financial position and results of operations.
On August 30, 2024, the Colorado Department of Public Health & Environment, Air Pollution Control Division (APCD) sent DCP Operating Company, LP (DCP) a Compliance Order on Consent alleging violations at its Enterprise Compressor Station of AQCC Regulation 7 and DCP’s permit conditions. This matter was resolved in the fourth quarter of 2024 with an agreement to pay a penalty and an economic benefit reimbursement totaling less than $1 million.
On May 12, 2023, the EPA, Region 6, sent DCP a Notice of Violation and Opportunity to Confer regarding alleged violations of 40 C.F.R. Part 60, Subpart OOOOa (NOV). The NOV alleged non-compliances at the Artesia and Eunice Natural Gas Processing Plants in New Mexico. This matter was resolved in the fourth quarter of 2024 with an agreement to implement scheduled corrective actions and pay a penalty of $1.9 million.
Dakota Access, LLC (Dakota Access) and Energy Transfer Crude Oil Company, LLC (ETCO)
See “Dakota Access, LLC (Dakota Access) and Energy Transfer Crude Oil Company, LLC (ETCO)” section of Note 9—Investments, Loans and Long-Term Receivables and Note 17—Contingencies and Commitments, in the Notes to Consolidated Financial Statements for additional information regarding Legal Proceedings and other regulatory actions.
Item 4. MINE SAFETY DISCLOSURES
Not applicable.
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INFORMATION ABOUT OUR EXECUTIVE OFFICERS
Name Position Held Age*
Mark E. Lashier Chairman and Chief Executive Officer 63
Kevin J. Mitchell Executive Vice President and Chief Financial Officer 58
Donald A. Baldridge Executive Vice President, Midstream and Chemicals 55
Zhanna Golodryga Executive Vice President, Emerging Energy and Sustainability 69
Richard G. Harbison Executive Vice President, Refining 59
Brian M. Mandell Executive Vice President, Marketing and Commercial 61
Vanessa L. Allen Sutherland Executive Vice President, Government Affairs, General Counsel and Corporate Secretary 53
Ann M. Kluppel Vice President and Controller 57
* As of February 21, 2025.
There are no family relationships among any of the executive officers named above or any member of our Board of Directors. The Board of Directors annually elects the officers to serve until a successor is elected and qualified or as otherwise provided in our By-Laws. Set forth below is the name, title and period of service of each executive officer identified above over the last five years.
Mark E. Lashier is Chairman and Chief Executive Officer, a position he has held since May 2024. Previously, Mr. Lashier served Phillips 66 as President and Chief Executive Officer from July 2022 to May 2024 and as President and Chief Operating Officer from April 2021 to July 2022. Mr. Lashier served as President and Chief Executive Officer of CPChem from August 2017 to April 2021.
Kevin J. Mitchell is Executive Vice President and Chief Financial Officer, a position he has held since January 2016.
Donald A. Baldridge is Executive Vice President, Midstream and Chemicals, a position he has held since June 2024. Previously, Mr. Baldridge served as Interim Chief Executive Officer of DCP Midstream from January 2023 to May 2024. Prior to that, he served as DCP Midstream’s President of Operations from January 2019 to December 2022.
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.
Richard G. Harbison is Executive Vice President, Refining, a position he has held since June 2022. Mr. 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; and Manager, Lake Charles Manufacturing Complex from February 2016 to May 2020.
Brian M. Mandell is Executive Vice President, Marketing and Commercial, a position he has held since March 2019.
Vanessa L. Allen Sutherland is Executive Vice President, Government Affairs, General Counsel and Corporate Secretary, a position she has held since January 2022. Ms. Sutherland previously served as Executive Vice President and Chief Legal Officer of Norfolk Southern Corporation from April 2020 to January 2022 and Senior Vice President, Government Relations and Chief Legal Officer of Norfolk Southern Corporation from August 2019 to April 2020.
Ann M. Kluppel is Vice President and Controller, a position she has held since May 2024. Ms. Kluppel previously served as General Auditor from August 2021 to May 2024. Prior to that, Ms. Kluppel served as Managing Director, Corporate Finance from January 2021 to August 2021, and as Manager, Midstream Financial Planning & Analysis from August 2018 to December 2020.
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PART II