Commitments and Contingencies

12 Months Ended

Dec. 31, 2023

Commitments and Contingencies.

Commitments and Contingencies

19. Commitments and Contingencies

Environmental Matters

Due to the nature of our business, certain of our subsidiaries’ operations are subject to numerous existing and proposed laws and governmental regulations designed to protect human health and safety and the environment, particularly regarding plant wastes and emissions and solid waste disposal. Our consolidated environmental liabilities on an undiscounted basis were $19 million and $22 million as of December 31, 2023 and 2022, respectively, primarily within our Energy segment, which are included in accrued expenses and other liabilities in our consolidated balance sheets. We do not believe that environmental matters will have a material adverse impact on our consolidated results of operations and financial condition.

Energy

CVR Energy’s obligated-party subsidiaries are subject to the Renewable Fuel Standard (“RFS”) implemented by the EPA which requires refiners to either blend renewable fuels into their transportation fuels or purchase renewable fuel credits, known as RINs, in lieu of blending, in an amount equal to the renewable volume obligation (“RVO”) for the applicable compliance year. CVR Energy’s obligated-party subsidiaries are not able to blend the substantial majority of their transportation fuels and, unless their obligations are waived or exempted by the EPA, must either purchase RINs on the open market or obtain waiver credits for cellulosic biofuels in order to comply with the RFS. CVR Energy’s obligated-party subsidiaries also purchase RINs generated from its renewable diesel operations. One of CVR Energy’s obligated-party subsidiaries, Wynnewood Refining Company, LLC (“WRC”), qualifies as a “small refinery” defined under the RFS as a refinery with an average aggregate daily crude oil throughput for a calendar year no greater than 75,000 barrels, which enables WRC to seek small refinery exemptions (“SREs”) under the RFS should it be able to establish it suffered disproportionate economic hardship. WRC sought and received SREs for the 2017 and 2018 compliance years, which SREs were later denied by the EPA in June 2022 and April 2022, respectively (collectively, the “2022 Denials”), based on a new standard for evaluating SREs announced by the EPA in December 2021 and retroactively applied. The EPA’s June 2022 denial also denied WRC’s then pending SRE petitions for the 2019, 2020 and 2021 compliance periods based on the same new standard. In 2022, WRC joined certain other small refiners in bringing suit against the EPA in the United States Court of Appeals for the Fifth Circuit (the “Fifth Circuit”) challenging the 2022 Denials and received from the EPA a stay of enforcement of the RFS for the applicable compliance periods. WRC and certain other refineries also challenged the July 2023 denial by the EPA of additional SRE petitions based on the new standard, including WRC’s 2022 SRE petition. The Fifth Circuit granted WRC a stay of enforcement for the 2022 compliance period and held the case in abeyance pending resolution of lawsuits in the Fifth Circuit, the United States Court of Appeals for the Eleventh Circuit and the United States Court of Appeals for the District of Colombia Circuit (the “DC Circuit”) relating to the 2022 Denials (collectively, the “2022 Denials Cases”). In November 2023, the Fifth Circuit issued an opinion holding that the 2022 Denials were impermissibly retroactive and that the EPA’s interpretation of the SRE provisions of the RFS was contrary to law and arbitrary and capricious as applied to the Fifth Circuit petitioners’ SRE petitions. The Fifth Circuit vacated the EPA’s denials, including those for WRC for 2017 through 2021, and remanded those SRE petitions to EPA for further consideration consistent with the Fifth Circuit’s ruling. The EPA has not yet taken action on those SRE petitions since remand. While WRC’s stay relating to the 2022 compliance year remains in effect until resolution of the 2022 Denials Cases, its stays relating to the preceding compliance periods expired in January 2024. WRC’s other challenges against the EPA relating to the RFS remain pending, including: (a) WRC’s challenges to the EPA’s Final Rules issued in June 2022 and June 2023 establishing the 2020-2022 RVOs and 2023-2025 RVOs, respectively; and (b) WRC’s lawsuit against the EPA currently pending in the DC Circuit related to damages WRC incurred as a result of the EPA’s late grant of its 2018 SRE, which SRE was denied by the EPA in April 2022, which denial was vacated by the Fifth Circuit in November 2023 as noted above. CVR Energy cannot yet determine at this time the outcomes of these matters. However, while CVR Energy intends to prosecute these actions vigorously, if these matters are ultimately concluded in a manner adverse to CVR Energy, they could have a material adverse effect on our Energy business’ financial position, results of operations, or cash flows.

Our Energy segment recognized a benefit of approximately $114 million and an expense of approximately $435 million for the years ended December 31, 2023 and 2022, respectively, for CVR Energy’s obligated-party subsidiaries’ compliance with the RFS (based on the 2020, 2021, 2022 and 2023 annual RVO for the respective periods, excluding the impacts of any exemptions or waivers to which the obligated-party subsidiaries may be entitled). These recognized amounts are included in cost of goods sold in the consolidated statements of operations and represent costs to comply with the RFS obligation through purchasing of RINs not otherwise reduced by blending of ethanol, biodiesel, or renewable diesel. At each reporting period, to the extent RINs purchased or generated through blending are less than the RFS obligation (excluding the impact of exemptions or waivers to which CVR Energy’s obligated-party subsidiaries may be entitled), the remaining position is valued using RIN market prices at period end using each specific or closest vintage year. As of December 31, 2023 and December 31, 2022, CVR Energy’s obligated-party subsidiaries’ RFS position was $329 million and $692 million, respectively, and is included in accrued expenses and other liabilities in the condensed consolidated balance sheets.

Clean Air Act Matter - CVR Energy’s indirect wholly-owned subsidiary, Coffeyville Resource Refining & Marketing, LLC (“CRRM”) and certain of its affiliates settled claims brought in the United States District Court for the District of Kansas (“D. Kan”) by the United States, on behalf of the EPA, and the State of Kansas, on behalf of the Kansas Department of Health and Environment (“KDHE”) seeking both statutory and stipulated penalties primarily relating to the Coffeyville Refinery’s flares, heaters and related matters. The terms of the settlement are set forth in a consent decree that was entered by the D. Kan on January 10, 2024. The amount of stipulated penalties asserted by EPA and KDHE under a 2012 Consent Decree (the “Stipulated Claims”) was previously deposited by CRRM into a commercial escrow account which were legally restricted for use and included in Prepaid expenses and other current assets on our Consolidated Balance Sheets as of December 31, 2023; those escrowed funds were released in February 2024 and the settlement was paid. The settlement did not and is not expected in the future to have a material adverse impact on CVR Energy or the Company’s financial position, results of operations, or cash flows.

45Q Transaction

In January 2023, CVR Partners and certain of its subsidiaries entered into a joint venture and related agreements with unaffiliated third-party investors and others intended to qualify for certain tax credits available under Section 45Q of the Internal Revenue Code. Under the agreements entered into in connection with the 45Q Transactions, CVR Partners and certain of its subsidiaries are obligated to meet certain minimum quantities of carbon dioxide supply each year during the term of the agreement and could be subject to fees of up to $15 million per year, with an overall cap at $45 million, should it fail to perform.

Litigation

From time to time, we and our subsidiaries are involved in various lawsuits arising in the normal course of business. We do not believe that such normal routine litigation will have a material effect on our financial condition or results of operations.

Energy

Call Option Coverage Case – In January 2021, CVR Energy’s primary and excess insurers (the “Insurers") filed suit for declaratory judgment in the 434th Judicial District Court of Fort Bend County, Texas seeking determination that the Insurers owe no indemnity coverage under policies with coverage limits of $50 million for CVR Energy’s December 2022 settlement of the consolidated lawsuits (collectively, the “Call Option Lawsuits”) filed by purported former unitholders of CVR Refining on behalf of themselves and an alleged class of similarly situated unitholders against CVR Energy and certain of its affiliates (the “Call Defendants”) relating to CVR Energy’s exercise of the call option under the CVR Refining Amended and Restated Agreement of Limited Partnership assigned to it by CVR Refining’s general partner including the Stipulation, Compromise and Release (the “Settlement”), which Settlement was entered into in August 2022 and had no further impact on the Company’s financial position or results of operations beyond the $79 million recognized within Other (expense) income, net in the Consolidated Statements of Operations for the year ended December 31, 2022 to reflect the estimated probable loss. In November 2022, the court granted summary judgment in favor of the Insurers, which the Company has appealed, and which appeal remains pending and in its earliest stages. Also in January 2021, the Company filed suit against the Insurers in the Superior Court of the State of Delaware (the “Superior Court”) alleging breach of contract and breach of the implied covenant of good faith and fair dealing against their primary and excess insurers relating to their denial of coverage of the Call Defendants’ defense expenses and indemnity, as well as other conduct of the Insurers relating to the Call Option Lawsuits, which complaint was amended in January 2023 to seek recovery from the Insurers of all of the amounts paid in settlement of the Call Option Lawsuits.

While CVR Energy’s potential appeal of the Texas Court’s summary judgment rulings and its Delaware Court lawsuit are not yet concluded, CVR Energy does not expect the outcome of these lawsuits to have a material adverse impact on its financial position, results of operations, or cash flows.

Other Matters

Pension Obligations

Mr. Icahn, through certain affiliates, owns 100% of Icahn Enterprises GP and approximately 86% of our outstanding depositary units as of December 31, 2023. Applicable pension and tax laws make each member of a “controlled group” of entities, generally defined as entities in which there is at least an 80% common ownership interest, jointly and severally liable for certain pension plan obligations of any member of the controlled group. These pension obligations include ongoing contributions to fund the plan, as well as liability for any unfunded liabilities that may exist at the time the plan is terminated. In addition, the failure to pay these pension obligations when due may result in the creation of liens in favor of the pension plan or the Pension Benefit Guaranty Corporation (the “PBGC”) against the assets of each member of the controlled group.

As a result of the more than 80% ownership interest in us by Mr. Icahn’s affiliates, we and our subsidiaries are subject to the pension liabilities of entities in which Mr. Icahn has a direct or indirect ownership interest of at least 80%, which includes the liabilities of pension plans sponsored by Viskase and ACF Industries LLC (“ACF”), an affiliate of Mr. Icahn. All the minimum funding requirements of the Internal Revenue Code, as amended, and the Employee Retirement Income Security Act of 1974, as amended, for the Viskase and ACF plans have been met as of December 31, 2023. If the plans were voluntarily terminated, they would be underfunded by an aggregate of approximately $34 million as of December 31, 2023. These results are based on the most recent information provided by the plans’ actuaries. These liabilities could increase or decrease, depending on a number of factors, including future changes in benefits, investment returns, and the assumptions used to calculate the liability. As members of the controlled group, we would be liable for any failure of Viskase or ACF to make ongoing pension contributions or to pay the unfunded liabilities upon a termination of the Viskase or ACF pension plans. In addition, other entities now or in the future within the controlled group in which we are included may have pension plan obligations that are, or may become, underfunded and we would be liable for any failure of such entities to make ongoing pension contributions or to pay the unfunded liabilities upon termination of such plans.

The current underfunded status of the pension plans of Viskase and ACF requires them to notify the PBGC of certain “reportable events,” such as if we cease to be a member of the Viskase or ACF controlled group, or if we make certain extraordinary dividends or stock redemptions. The obligation to report could cause us to seek to delay or reconsider the occurrence of such reportable events.

Starfire Holding Corporation (“Starfire”), which is 99.6% owned by Mr. Icahn, has undertaken to indemnify us and our subsidiaries from losses resulting from any imposition of certain pension funding or termination liabilities that may be imposed on us and our subsidiaries or our assets as a result of being a member of the Icahn controlled group, including ACF. The Starfire indemnity provides, among other things, that so long as such contingent liabilities exist and could be imposed on us, Starfire will not make any distributions to its stockholders that would reduce its net worth to below $250 million. Nonetheless, Starfire may not be able to fund its indemnification obligations to us.

Other

Icahn Enterprises L.P. was contacted on May 3, 2023 by the U.S. Attorney’s office for the Southern District of New York and on June 21, 2023 by the staff of the Division of Enforcement of the U.S. Securities and Exchange Commission (the “SEC”), seeking production of information relating to the Company and certain of its affiliates’ corporate governance, capitalization, securities offerings, disclosure, dividends, valuation, marketing materials, due diligence and other materials. We are cooperating with these requests and investigations and are providing documents in response to these requests for information. In addition, two putative securities class action lawsuits have been filed against the Company in the U.S. District Court for the Southern District of Florida alleging violations of the federal securities laws, Okaro v. Icahn Enterprises L.P. et al., Case No. 23-21773 (S.D. Fl.), and Levine v. Icahn Enterprises L.P. et al., Case No. 23-22009 (S.D. Fl.). These lawsuits have been consolidated and the court appointed a lead plaintiff on November

20, 2023. A derivative complaint has also been filed in the U.S. District Court for the Southern District of Florida, naming the Company’s general partner, its directors, and certain current and former officers as defendants, and the Company as a nominal defendant, alleging breaches of fiduciary duties with respect to the Company’s disclosure, Patrick Pickney v. Icahn Enterprises G.P. Inc. Case No. 1:23-cv-22932-KMW (S.D. Fl.). In addition, an action to compel inspection of our books and records was filed on November 22, 2023 in the Court of Chancery of the State of Delaware, Bruno v. Icahn Enterprises, L.P. et al., Case No. 2023-1170-SEM.

We believe that we maintain a strong compliance program and, while no assurances can be made, and we are still evaluating these matters, we do not currently believe that these inquiries and litigations will have a material impact on our business, financial condition, results of operations or cash flows.

Unconditional Purchase Obligations

Unconditional purchase obligations are primarily within our Energy and Pharma segments. Our Energy segment’s unconditional purchase obligations relate to commitments for transportation of feedstock and product supply agreements related to CVR Energy’s biofuel blending obligation and various agreements for gas and gas transportation. Our Pharma segment’s unconditional purchase obligations relate to agreements to purchase goods or services from suppliers for the manufacture of its products. The minimum required payments for our Energy and Pharma segments’ unconditional purchase obligations are as follows:

Year	Energy		Pharma
	(in millions)
2024	$	73	$	15
2025		73		11
2026		67		11
2027		66		12
2028		66		12
Thereafter		147		12
	$	492	$	73