FORM 10-K
43
MDU RESOURCES G ROUP, INC.
Provisions for public hearings and public comments are usually included in land use permit application review procedures in the counties
where Knife River operates. After taking into account environmental, mine plan and reclamation information provided by the permittee as
well as comments from the public and other regulatory agencies, the local authority approves or denies the permit application. Denial is
rare but land use permits often include conditions that must be addressed by the permittee. Conditions may include property line setbacks,
reclamation requirements, environmental monitoring and reporting, operating hour restrictions, financial guarantees for reclamation, and
other requirements intended to protect the environment or address concerns submitted by the public or other regulatory agencies.
Knife River has been successful in obtaining mining and other land use permit approvals so that sufficient permitted reserves are available
to support its operations. For mining operations, this often requires considerable advanced planning to ensure sufficient time is available to
complete the permitting process before the newly permitted aggregate reserve is needed to support Knife River's operations.
Knife River's Gascoyne surface coal mine last produced coal in 1995 but continues to be subject to reclamation requirements of the
SMCRA, as well as the North Dakota Surface Mining Act. Portions of the Gascoyne Mine remain under reclamation bond until the 10-year
revegetation liability period has expired. A portion of the original permit has been released from bond and additional areas are currently in
the process of having the bond released. Knife River's intention is to request bond release as soon as it is deemed possible with all final
bond release applications being filed by 2013.
Knife River did not incur any material environmental expenditures in 2007 and, except as to what may be ultimately determined with regard
to the issue described below, Knife River does not expect to incur any material expenditures related to environmental compliance with
current laws and regulations through 2010.
In December 2000, MBI was named by the EPA as a Potentially Responsible Party in connection with the cleanup of a commercial property
site, acquired by MBI in 1999, and part of the Portland, Oregon, Harbor Superfund Site. For additional information, see Item 8 -- Note 20.
Item 1A. Risk Factors
The Company's business and financial results are subject to a number of risks and uncertainties, including those set forth below and
in other documents that it files with the SEC. The factors and the other matters discussed herein are important factors that could cause
actual results or outcomes for the Company to differ materially from those discussed in the forward-looking statements included elsewhere
in this document.
Economic Risks
The Company's natural gas and oil production and pipeline and energy services businesses are dependent on factors, including
commodity prices and commodity price basis differentials, which are subject to various external influences that cannot be controlled.
These factors include: fluctuations in natural gas and crude oil prices; fluctuations in commodity price basis differentials; availability of
economic supplies of natural gas; drilling successes in natural gas and oil operations; the timely receipt of necessary permits and approvals;
the ability to contract for or to secure necessary drilling rig and service contracts and to retain employees to drill for and develop reserves;
the ability to acquire natural gas and oil properties; and other risks incidental to the operations of natural gas and oil wells. Significant
changes in these factors could negatively affect the results of operations, financial condition and cash flows of the Company's natural gas
and oil production and pipeline and energy services businesses.
The construction, startup and operation of power generation facilities may involve unanticipated changes or delays that could negatively
impact the Company's business, its results of operations and cash flows.
The construction, startup and operation of power generation facilities involves many risks, including: delays; breakdown or failure of
equipment; competition; inability to obtain required governmental permits and approvals; inability to negotiate acceptable acquisition,
construction, fuel supply, off-take, transmission or other material agreements; changes in market price for power; cost increases; as well as
the risk of performance below expected levels of output or efficiency. Such unanticipated events could negatively impact the Company's
business, its results of operations and cash flows.
Economic volatility affects the Company's operations, as well as the demand for its products and services and, as a result, may have
a negative impact on the Company's future revenues and cash flows.
The global demand for natural resources, interest rates, governmental budget constraints and the ongoing threat of terrorism can create
volatility in the financial markets. A soft economy could negatively affect the level of public and private expenditures on projects and the
timing of these projects which, in turn, would negatively affect the demand for the Company's products and services.
The construction materials and contracting segment is experiencing a reduction in construction activity and product sales volumes in some
markets due to lower demand, which could negatively affect the Company's results of operations and cash flows.
