Company: DK
Filing Date: 2025-11-07
Form Type: 10-Q
Source: 0001628280-25-050541
Chunk: 223

Company: Delek US Holdings, Inc.
Filing Date: 2025-11-07
Form: 10-Q
Item: Part I, Item 8
Chunk 223
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4 compliance year, allowing the company to retain or monetize the valid RINs that would have otherwise been required for compliance. Delek was not able to benefit from a majority of the refunded RINs. The relief received also was not sufficient to offset our 2025 compliance obligation and thus Delek’s refineries will need to seek relief from EPA for the hardship imposed by the RFS for the 2025 compliance year.Some of the RINs returned or retained as a result of the SREs granted were recognized by the company based on weighted average RIN costs as of the date of compliance for each respective period. The cost of RINs for the years in which we have received the SREs were previously recorded in Cost of materials and other in prior periods based on the Consolidated Net RINs Obligation recorded for each period. The SREs resulted in a reduction of our Consolidated Net RINs Obligation and therefore a reduction within Cost of materials and other of approximately $280.8 million in the third quarter of 2025. Our RINs commitment contracts, which are forward contracts accounted for as derivatives (see  Note 11), are future commitments to purchase or sell RINs at fixed prices and quantities. The RINs commitment contracts are categorized as Level 2, and are measured at fair value based on quoted prices from an independent pricing service. 

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Notes to Condensed Consolidated Financial Statements (unaudited)

We elected to account for our Inventory Intermediation step-out liability at fair value in accordance with ASC 825, as it pertains to the fair value option. This standard permits the election to carry financial instruments and certain other items similar to financial instruments at fair value on the balance sheet, with all changes in fair value reported in earnings. With respect to the Inventory Intermediation Agreement, we apply fair value measurement as follows: (1) we determine fair value for our amended variable step-out liability based on changes in fair value related to market volatility based on a floating commodity-index price, and for our amended fixed step-out liability based on changes to interest rates and the timing and amount of expected future cash settlements where such obligation is categorized as Level 2. Gains (losses) related to changes in fair value due to commodity-index price are recorded as a component of cost of materials and other, and changes in fair value due to interest rate risk are recorded as a component of interest expense in the condensed consolidated statements of income; and (2