Company: DK
Filing Date: 2025-11-07
Form Type: 10-Q
Source: 0001628280-25-050541
Chunk: 183

Company: Delek US Holdings, Inc.
Filing Date: 2025-11-07
Form: 10-Q
Item: Part II, Item 1A
Chunk 183
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ITEM 1A. RISK FACTORS

Except as described below, there were no material changes during the nine months ended September 30, 2025 to the risk factors identified in the Company’s fiscal 2024 Annual Report on Form 10-K.

The availability and cost of RINs and other required credits could have an adverse effect on our financial condition and results of operations.

Pursuant to the 2007 Energy Independence and Security Act, the EPA promulgated the RFS-2 (“RFS”) regulations reflecting the increased volume of renewable fuels mandated to be blended into the nation's fuel supply. The regulations, in part, require refiners to add annually increasing amounts of “renewable fuels” to their petroleum products or purchase credits, known as RINs, in lieu of such blending. The RFS imposes a substantial financial obligation on each of our four small refineries. The cost of complying with the RFS is one of our highest operational costs, including significant additional costs to finance our compliance. These costs are highly volatile and unlike other refining companies Delek is not able to pass through its high compliance costs to its customers. 

Delek is an obligated party under the RFS, which requires us to obtain RINs to satisfy our annual Renewable Volume Obligation (“RVO”). While we are able to obtain many of the RINs required for compliance by blending renewable fuels manufactured by third parties or by our own biodiesel plants, we must also purchase RINs on the open market in order to comply with the quantity of renewable fuels we are required to blend under the RFS. The price and number of RINs an obligated party must acquire are impacted by government regulation requiring such credits, and also may be impacted by small refiner exemptions (“SREs”) granted by the EPA. In past years, the price of RINs has been highly volatile and the EPA’s decisions on SRE hardship petitions have been unduly delayed. Increasing RINs prices, inconsistent administration of the RFS by the EPA, and Delek’s market position has prevented us from passing through compliance costs of the program in the past and will likely continue in the future. While we cannot predict the future prices of RINs, the costs to obtain the necessary number of RINs could be material. Our future operating results are significantly dependent on the EPAs granting of SREs on a timely basis. If we are unable to pass the costs of compliance with the RFS on to our customers,