Legal Matters . Final Arbitration Award and Settlement Agreement . See Note (1) Organization  Going Concern  Final Arbitration Award and Settlement Agreement and "Part II, Item 1. Legal Proceedings for additional disclosures related to the Final Arbitration Award and the Settlement Agreement. Veritex Secured Loan Agreement Events of Default . See Note (1) Organization  Going Concern  Defaults under Secured Loan Agreements and Note (11) Long-Term Debt and Accrued Interest for disclosures related to defaults under Veritex secured loan agreements. Other Legal Matters . We are involved in lawsuits, claims, and proceedings incidental to the conduct of our business, including mechanics liens, contract-related disputes, administrative proceedings, and financial assurance (bonding) requirements with regulatory bodies. Management is in discussion with all concerned parties and does not believe that such matters will have a material adverse effect on our financial position, earnings, or cash flows. However, there can be no assurance that such discussions will result in a manageable outcome or that we will be able to meet financial assurance (bonding) requirements. If Veritex exercises its rights and remedies under the secured loan agreements or if the Settlement Agreement with GEL is terminated and GEL seeks to confirm and enforce the Final Arbitration Award, our business, financial condition, and results of operations will be materially adversely affected, and Blue Dolphin and its affiliates would likely be required to seek protection under bankruptcy laws. Amended and Restated Operating Agreement . See Note (9) Related-Party Transactions for additional disclosures related to the Amended and Restated Operating Agreement. Financing Agreements . See Note (11) Long-Term Debt and Accrued Interest and Note (12) Line of Credit Payable for additional disclosures related to financing agreements. Guarantees . LEH and Jonathan Carroll provided guarantees on certain Blue Dolphin-related long-term debt. The maximum amount of any guarantee is reduced as payments are made. See Note (11) Long-Term Debt and Accrued Interest for additional disclosures related to guarantees. Health, Safety and Environmental Matters . Our operations are subject to extensive federal, state, and local environmental, health, and safety regulations governing, among other things, the generation, storage, handling, use and transportation of petroleum products and hazardous substances; the emission and discharge of materials into the environment; waste management; characteristics and composition of jet fuel and other products; and the monitoring, reporting and control of air emissions. Our operations also require numerous permits and authorizations under various environmental, health, and safety laws and regulations. Failure to obtain and comply with these permits or environmental, health, or safety laws generally could result in fines, penalties or other sanctions, or a revocation of our permits. Nixon Facility Expansion . We have made and continue to make capital and efficiency improvements at the Nixon Facility. Therefore, we incurred and will continue to incur capital expenditures related to these improvements, which include, among other things, facility and land improvements and completion of a petroleum storage tank. Supplemental Pipeline Bonds . In a letter dated March 30, 2018, the Bureau of Ocean Energy Management (BOEM) ordered BDPL to provide additional supplemental bonds or acceptable financial assurance of approximately $4.8 million (the Separate Orders) within sixty (60) calendar days of receipt of the letter. The Separate Orders relate to five (5) existing pipeline rights-of-way. BOEM issued an Incident of Noncompliance (INC) for each Separate Order dated June 8, 2018 (the June 2018 INCs) and received by BDPL on June 11, 2018. BOEM asserts that the June 2018 INCs authorize BOEM to impose financial penalties on BDPL if it does not comply with the Separate Orders within twenty (20) days. BOEM asserts that potential penalties accrue for each day BDPL failed to comply after June 28, 2018. BDPL appealed the June 2018 INCs on August 8, 2018. The Interior Board of Land Appeals (the IBLA) granted five extension requests that extended BDPLs deadline for filing a Statement of Reasons with the IBLA until July 21, 2019. On July 21, 2019, BDPL filed an extension request with the IBLA to further extend the deadline. Since the IBLA did not act on BDPLs extension request, the Statement of Reasons was due on August 9, 2019. On August 9, 2019, BDPL filed its Statement of Reasons with the IBLA as required. BDPLs pending appeal of the June 2018 INCs does not relieve BDPL of its obligations to provide additional financial assurance in accordance with the Separate Orders, or of BOEMs authority to impose financial penalties. BDPL has been in discussions with BOEM to resolve the Separate Orders and the June 2018 INCs. There can be no assurance that BOEM will: (i) accept a proposal for a reduced amount of supplemental financial assurance, (ii) not require additional supplemental pipeline bonds related to BDPLs existing pipeline rights-of-way, and/or (iii) not impose penalties under the June 2018 INCs. As a result, we are unable to predict the outcome of the Separate Orders, the settlement discussions with BOEM or their ultimate impact, if any, on our business, financial condition or results of operations. Accordingly, we have not recorded a liability on our consolidated balance sheet as of June 30, 2019. As of June 30, 2019 and December 31, 2018, BDPL maintained approximately $0.9 million in credit and cash-backed pipeline rights-of-way bonds issued to the BOEM. If BDPL is required by BOEM to provide significant additional supplemental bonds or acceptable financial assurance or is assessed significant penalties under the June 2018 INCs, we will experience a significant and material adverse effect on our operations, liquidity, and financial condition. Idle Iron . The Bureau of Safety and Enviromental Enforcement ("BSEE") requires operators to decommission wells and platforms that have not been used in the past five (5) years for exploration and development operations or as infrastructure to support such operations. BDPLs Blue Dolphin Pipeline has been inactive since September 2012. Due to the length of inactivity, BSEE required BDPL to: (i) flush and fill the Blue Dolphin Pipeline, (ii) abandon-in-place a portion of the Blue Dolphin Pipelines 20 segment and certain smaller diameter connecting lateral lines that reside offshore in federal waters and (iii) remove from federal waters the GA-288C anchor platform. In April 2016, BDPL submitted decommissioning permit applications to BSEE for three (3) pipeline segments  Segments #13101, #9428, and #15635  and the GA-288C anchor platform. In June 2016, BDPL also submitted a decommissioning permit application to the U.S. Army Corps of Engineers ("USCOE") for abandonment of Segment #9428. The permit applications were granted by BSEE at varying dates between August 2016 and April 2017. Work must typically be completed within 120 days from the date of permit approval. The USCOE withdrew BDPLs decommissioning permit application in April 2018. In a letter dated December 19, 2018, BSEE issued to BDPL an INC for its failure to flush and fill Segment #13101 (the December 2018 INC) pursuant to the pipeline decommissioning approval letter issued in March 2017. BSEE asserts that the December 2018 INC authorizes BSEE to impose financial penalties on BDPL if it does not comply with the December 2018 INC within ten (10) days. As of the date of this Quarterly Report, flushing of the pipeline segment has not yet commenced and decommission work has not yet begun. Management anticipates performing certain abandonment operations during 2019, however, timing depends several factors, including resource availability and weather. BDPL has been in discussions with BSEE to resolve the December 2018 INC. There can be no assurance that BSEE will not impose penalties under the December 2018 INC. As a result, we are unable to predict BOEMs response or the ultimate impact, if any, on our business, financial condition or results of operations. Accordingly, we have not recorded a liability on our consolidated balance sheet as of June 30, 2019. As of June 30, 2019, BDPL maintained $2.6 million in asset retirement obligations related to abandonment of these assets. If BDPL is assessed significant penalties under the December 2018 INC, we will experience a significant and material adverse effect on our operations, liquidity, and financial condition.