PBF Energy (PBF) Risk Analysis

The U.S. federal government under previous presidential administrations took a number of actions to address GHG emissions. For example, both houses of Congress actively considered legislation to reduce emissions of GHGs, such as carbon dioxide and methane, including proposals to: (i) establish a cap-and-trade system, (ii) create a federal renewable energy or "clean" energy standard requiring electric utilities to provide a certain percentage of power from such sources, and (iii) create enhanced incentives for use of renewable energy and increased efficiency in energy supply and use. In addition, the EPA has taken steps to regulate GHGs under the existing federal CAA. The EPA has adopted regulations limiting GHG emissions for light-and medium-duty vehicles and heavy-duty highway vehicles. The EPA has also adopted regulations addressing the permitting of GHG emissions from stationary sources, and requiring the reporting of GHG emissions from specified large GHG emission sources, including refineries. However, the current U.S. presidential administration has expressed a different approach with respect to U.S. climate, environmental, and energy policies and has revoked many of the existing executive orders and directives, and has indicated an intention to modify or eliminate many of the aforementioned laws and regulations, several of which are also currently being litigated, or may be subject to future legal challenges. However, the ultimate timing and outcome with respect to any modifications or eliminations of such laws and regulations, which may require action by the U.S. Congress or a federal agency or department, as well as pending or future litigation, are currently unknown and are subject to considerable uncertainty. It is also currently uncertain whether and to what extent any U.S. state and local governments may still pursue the prior administration's agenda on such matters. In addition, various states, individually as well as in some cases on a regional basis, have taken steps to control GHG emissions, including adoption of GHG reporting requirements, cap-and-trade systems and renewable portfolio standards. For example, the State of California's AB 32 imposes a statewide cap on GHG emissions, including emissions from transportation fuels, with the aim of returning the state to 1990 emission levels by 2020. Also, in September 2016, the State of California enacted Senate Bill 32, which further reduces GHG emissions targets to 40 percent below 1990 levels by 2030. Two regulations implemented to achieve these goals are: (i) the cap-and-trade program that was implemented by California Air Resources Board ("CARB") in 2012 and amended in September 2025 by Assembly Bill 1207 and Senate Bill 840, to among other things, extend the program through 2045 and renamed it the Cap-and-Invest program (we refer to the amended program as the "Cap-and-Trade" program) and (ii) the Low Carbon Fuel Standard ("LCFS"), which was adopted by CARB in 2009. As originally adopted and currently in place, the Cap-and-Trade program places a cap on GHG emissions and requires us to acquire a sufficient number of credits to cover emissions from our refineries and our in-state sales of gasoline and diesel; the 2025 amendments to the Cap-and-Trade program are subject to the promulgation of additional rules. While it is currently uncertain whether and to what extent we will incur increased costs as a result of the Cap-and-Trade program regulatory requirements, if such costs are material, it could adversely affect our financial condition, results of operations and cash flows. As adopted, the LCFS required a 10% reduction in the carbon intensity of gasoline and diesel by 2020. In 2022, California enacted Assembly Bill 1279 which requires the state to achieve a GHG reduction target of 85 percent below 1990 levels by 2045 and overall carbon neutrality by 2045. CARB also amended the LCFS in 2024 to require a 30 percent reduction by 2030 and 90 percent reduction by 2045 in the carbon intensity of transportation fuels (compared to a 2010 baseline). Compliance is achieved through blending lower carbon intensity biofuels into gasoline and diesel or by purchasing credits. Compliance with each of these programs is facilitated through a market-based credit system. If sufficient credits are unavailable for purchase, if we are unable to pass through costs to our customers, if we have to pay a higher price for credits and/or if we are otherwise unable to meet our compliance obligations, our financial condition, results of operations and cash flows could be materially adversely affected. Additionally, on September 23, 2020, the California Governor issued Executive Order N-79-20 ("N-79-20 Order") intended to further reduce GHG emissions within the state. The N-79-20 Order sets a 2035 goal of no new sale of internal combustion engines for passenger cars and pickup trucks within California, and a 2045 goal of no new sale of internal combustion engine medium- and heavy-duty trucks, and off-road vehicles and equipment. However, the N-79-20 Order would still allow used internal combustion engine vehicles to be used and sold after these dates. In an effort to accomplish the 2035 goal, on August 25, 2022, CARB voted unanimously to adopt the Advanced Clean Cars II ("ACCII") regulations. According to CARB, the ACCII regulations will rapidly scale down light-duty passenger car, truck, and SUV emissions starting with the 2026 model year through 2035. The regulations are two-pronged. First, they amend the California Zero-emission Vehicle Regulation to require an increasing number of zero-emission vehicles, and rely on advanced vehicle technologies, including battery-electric, hydrogen fuel cell electric, and plug-in hybrid electric vehicles, to meet air quality and climate change emissions standards. Second, the regulations amend the California Low-emission Vehicle Regulations to include increasingly stringent standards for gasoline cars and heavier passenger trucks to continue to reduce smog-forming emissions while the sector transitions toward 100% electrification by 2035. Similar to the ACCII, on April 28, 2023, CARB voted unanimously to adopt the Advanced Clean Fleet ("ACF") regulations with the goal of achieving a zero-emission truck and bus fleet by 2045 everywhere feasible, and significantly earlier for certain market segments such as last mile delivery and drayage applications. The initial focus of ACF is on high-priority fleets with vehicles that are suitable for early electrification, their subhaulers, and entities that hire them. However, in June 2025, the current U.S. presidential administration signed into law three Congressional Review Act resolutions, approved by Congress, revoking CAA waivers that were granted by the previous presidential administration that allowed California to set its own stringent vehicle emissions standards (i.e., ACCII and ACF). California and other states have challenged the revocation of the CAA waivers. While the CAA resolutions are currently being litigated, it is currently uncertain whether and to what extent California, other states and local governments will still pursue the vehicle emission standards. In the event we do incur increased costs as a result of increased efforts to control GHG emissions through future adopted regulatory requirements, we may not be able to pass these costs to our customers. These future regulatory requirements also could adversely affect demand for the refined products that we produce. Any increased costs or reduced demand could materially and adversely affect our business and results of operations.