Kinder Morgan (KMI) Risk Analysis

Our assets and operations are subject to extensive and in some cases overlapping regulation and oversight by federal, state, and local authorities. Changes in the policy priorities of federal, state, and local authorities create a dynamic regulatory landscape-where, for example, federal priorities may ease while state and local requirements become more stringent-resulting in compliance complexity and potential cost increases. Future administrations, court decisions, or state-level initiatives could reverse or tighten standards or result in enhanced requirements, creating uncertainty and volatility in compliance obligations and costs. For example, with respect to our products pipelines, the FERC resets the ceiling level calculation formula every five years, and the five-year review is typically the subject of litigation between liquids pipelines, their customers, and industry groups. Changes in the index formula used to calculate ceiling levels would impact the revenues we receive from FERC-jurisdictional service. While policy shifts under the current U.S. presidential administration have generally emphasized support for domestic energy production and have reduced certain environmental regulatory burdens at the federal level, these changes introduce their own uncertainties. Deregulatory actions at the federal level, such as the EPA's rescission of its previous endangerment finding relating to GHGs announced on February 12, 2026, are likely to be subject to legal challenges. Also, as the U.S. federal government has taken some steps to relax regulatory requirements, some states have adopted new laws and regulations. Many states have adopted policies related to GHG emission reduction targets. These and other expansion of U.S. state laws and regulations with potentially divergent obligations could require us to incur additional expenditures to comply with disparate obligations related to GHG emission requirements, or other reporting or safety regulations. For example, the EPA finalized methane and volatile organic compound emissions standards in late 2023 and, although EPA priorities have shifted under the current U.S. presidential administration, several states continue to pursue aggressive climate and emissions-reduction programs, which could require us to comply with obligations that are more stringent than those imposed by the EPA. The State of California has enacted legislation requiring climate-related disclosures, and the California Air Resources Board (CARB) has begun implementation of such legislation, which requires that certain companies doing business in California submit reporting of GHG emissions. Other U.S. states have announced similar proposed regulations. These types of regulations may expose us to significant additional compliance costs. In addition, some customers and other third parties request disclosures from us related to their own reporting obligations. At this time, we cannot predict the costs of compliance with, or other potential adverse impacts resulting from, these or similar future rules that may be adopted. These and other initiatives of regulatory authorities may affect our assets and operations directly or indirectly, such as by preventing or delaying the exploration for and production of natural gas and liquids that we transport or expanding regulation of existing infrastructure or new sources that are not currently regulated. Moreover, political and legal challenges to existing rules, combined with evolving public expectations around environmental stewardship, add to the risk that new or reinstated regulations could materially impact our operations. Regulation affects almost every part of our business. In addition to environmental and pipeline safety matters, we are subject to regulations extending to such matters as (i) federal, state, local and foreign taxation; (ii) rates, operating terms, and conditions of service we may offer to our customers; (iii) the types of services and contracts we may offer to our customers; (iv) permitting, certification, and construction of new facilities; (v) the costs of raw materials, such as steel, which may be affected by tariffs (such as those discussed under "-Changes in U.S. trade policy and the impact of tariffs may have a material adverse effect on our business and results of operations.") or otherwise; (vi) the integrity, safety and security (including against cyber-attacks) of facilities and operations; (vii) the acquisition of other businesses; (viii) the acquisition, extension, disposition, or abandonment of services or facilities; (ix) reporting and information posting requirements; (x) the maintenance of accounts and records; and (xi) relationships with affiliated companies involved in various aspects of the natural gas and energy businesses. If we fail to comply with any applicable laws or regulations, and orders of such regulatory authorities, we could be subject to substantial penalties and fines and potential loss of government contracts. New or amended laws or regulations, or different interpretations of existing laws or regulations, including policy changes, applicable to our business could have a material adverse impact on our earnings, cash flow, financial condition, and results of operations. For more information, see Items 1 and 2. "Business and Properties-Narrative Description of Business-Industry Regulation."

Our operations are subject to extensive federal, state, and local laws, regulations, and potential liabilities arising under or relating to the protection or preservation of the environment, natural resources, and human health and safety. Such laws and regulations affect many aspects of our past, present, and future operations, and generally require us to obtain and comply with various environmental registrations, licenses, permits, inspections, and other approvals. It is possible that costs associated with complying with the aforementioned laws will change depending on the emphasis regulatory authorities are placing on protection of the environment. Liability under such laws and regulations may be incurred without regard to fault under CERCLA, the Resource Conservation and Recovery Act, the Federal Clean Water Act, the Oil Pollution Act, or analogous state laws, as a result of the presence or release of hydrocarbons or hazardous substances into or through the environment, and these laws may require response actions and remediation and may impose liability for natural resource and other damages. Private parties, including the owners of properties through which our pipelines pass, also may have the right to pursue legal actions to enforce compliance as well as to seek damages for non-compliance with such laws and regulations or for personal injury or property damage. Our insurance may not cover all environmental risks and costs and/or may not provide sufficient coverage in the event an environmental claim is made against us. Failure to comply with these laws and regulations, including required permits and other approvals, also may expose us to civil, criminal, and administrative fines, penalties, and/or interruptions in our operations that could harm our business, financial position, results of operations, and prospects. For example, if a leak, release, or spill of liquid petroleum products, chemicals, or hazardous substances occurs at or from our pipelines, shipping vessels or storage, or other facilities, we may experience significant operational disruptions, and we may have to pay a significant amount to clean up or otherwise respond to the leak, release or spill, pay government penalties, address natural resource damage, compensate for human exposure or property damage, install costly pollution control equipment, or undertake a combination of these and other measures. We own and/or operate numerous properties and equipment that have been used for many years in connection with our business activities and contain hydrocarbons or hazardous substances. While we believe we have utilized operating, handling, and disposal practices that were consistent with industry practices at the time, hydrocarbons or hazardous substances may have been released at or from properties and equipment owned, operated, or used by us or our predecessors, or at or from properties where our or our predecessors' wastes have been taken for disposal. In addition, many of these properties have been owned and/or operated by third parties whose management, handling, and disposal of hydrocarbons or hazardous substances were not under our control. These properties and any hazardous substances released and wastes disposed at or from them may be subject to U.S. laws such as CERCLA, which impose joint and several liability without regard to fault or the legality of the original conduct. Under such laws, we could be required to remove previously disposed wastes, remediate property contamination, or both, including contamination caused by prior owners or operators. Furthermore, it is possible that some wastes that are currently classified as non-hazardous, which could include wastes currently generated during our pipeline or liquids or bulk terminal operations or wastes from oil and gas facilities that are currently exempt as being exploration and production waste, may in the future be designated as hazardous wastes. Hazardous wastes are subject to more rigorous and costly handling and disposal requirements than non-hazardous wastes. Such changes in the regulations may result in additional capital expenditures or operating expenses for us. Environmental and health and safety laws and regulations are subject to change. The long-term trend in environmental regulation has been to place more restrictions and limitations on activities that may be perceived to affect the environment, wildlife, natural resources, and human health, including without limitation, the exploration, development, storage, and transportation of oil and gas. For example, the Federal Clean Air Act and other similar federal and state laws and regulations are subject to amendment, which could result in more stringent emission control requirements obligating us to make significant capital expenditures at our facilities. Several state and federal agencies have also increased their daily and maximum penalty amounts in recent years. There can be no assurance as to the amount or timing of future expenditures for environmental compliance or remediation, and actual future expenditures may be different from the amounts we currently anticipate. New or revised regulations that result in increased compliance costs or additional operating restrictions, particularly if those costs are not fully recoverable from our customers, as well as increased penalty amounts for inadvertent non-compliance, could have a material adverse effect on our business, financial position, results of operations, and prospects. For more information, see Items 1 and 2. "Business and Properties-Narrative Description of Business-Environmental Matters."

Our insurance program may not cover all operational risks and costs and may not provide sufficient coverage in the event of a claim. We do not maintain insurance coverage against all potential losses and could suffer losses for uninsurable or uninsured risks or in amounts in excess of existing insurance coverage. Losses in excess of our insurance coverage could have a material adverse effect on our business, financial condition, and results of operations. Changes in the insurance markets subsequent to certain hurricanes and other natural disasters have made it more difficult and more expensive to obtain certain types of coverage. The occurrence of an event that is not fully covered by insurance, or failure by one or more of our insurers to honor its coverage commitments for an insured event, could cause us to incur significant losses. Insurance companies may reduce or eliminate the insurance capacity they are willing to offer or may demand significantly higher premiums or deductibles to cover our assets. If significant changes in the number or financial solvency of insurance underwriters for the energy industry occur, we may be unable to obtain and maintain adequate insurance at a reasonable cost. The unavailability of adequate insurance coverage to cover events in which we suffer significant losses could have a material adverse effect on our business, financial condition, and results of operations.

The U.S. government has issued public warnings indicating that pipelines and other infrastructure assets might be specific targets of terrorist organizations or "cyber sabotage" events. Potential targets include our pipeline systems, terminals, processing plants, databases, or operating systems. Risk of these attacks may escalate during periods of heightened geopolitical tensions. The occurrence of an attack could cause a substantial decrease in revenues and cash flows, increased costs to respond or other financial loss, significant reporting requirements, damage to our reputation, increased regulation or litigation, or inaccurate information reported from our operations. In the event of such an incident, we may need to retain cybersecurity experts to assist us in stopping, diagnosing, and recovering from the attack. There is no assurance that adequate cyber sabotage and terrorism insurance will be available at rates we believe are reasonable in the near future. The potential for an attack may subject our operations to increased risks and costs, and, depending on their ultimate magnitude, have a material adverse effect on our business, results of operations, financial condition, and/or business reputation.

The rate of production from oil and natural gas properties declines as reserves are depleted. Without successful development activities, the reserves, revenues, and cash flows of the oil and gas producing assets within our CO2 business segment will decline. We may not be able to develop or acquire additional reserves at an acceptable cost or have necessary financing for these activities in the future. Additionally, if we do not realize production volumes greater than, or equal to, our hedged volumes, we may suffer financial losses not offset by physical transactions. Developing and operating oil and gas properties involves a high degree of business and financial risk that even a combination of experience, knowledge, and careful evaluation may not be able to overcome. Acquisition and development decisions related to oil and gas properties include subjective judgments and assumptions that, while they may be reasonable, are by their nature speculative. It is impossible to predict with certainty the production potential of a particular property or well. Furthermore, the successful completion of a well does not ensure a profitable return on the investment. A variety of geological, operational and market-related factors may substantially delay or prevent completion of any well or otherwise prevent a property or well from being profitable.