Item 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

There have been no material changes in market risk from the information provided under Part II, Item 7A (Quantitative and Qualitative Disclosures about Market Risk) of CSX's most recent annual report on Form 10-K, except as provided below.

Changes in interest rates may impact the cost of future long-term debt issued by the Company, and as a result, represent interest rate risk to the Company. In an effort to manage this risk, CSX may use certain financial instruments such as interest rate forward contracts. The following information together with information included in Note 7, Debt and Credit Agreements, describes changes to those contracts since CSX's most recent annual report on Form 10-K and the related market risk to CSX.

In second quarter 2023, CSX settled a portion of its forward starting interest rate swaps equal to $113 million notional value and received a cash payment of $44 million. The gain associated with the settled portion of these cash flow hedges will continue to be classified in AOCI until the associated debt instrument is issued in the future. As of June 30, 2023, these cash flow hedges had an aggregate notional value of $227 million and an asset value of $86 million.

Changes in interest rates could impact the fair value of the Company's forward starting interest rate swaps. As of June 30, 2023, the potential change in fair value resulting from a hypothetical 10% change in interest rates would not be material.