New York – Global energy giants Chevron Corp and Exxon Mobil have asked U.S. regulators for exemptions to the nation’s biofuels policy.
The exemptions have historically been reserved for small companies in financial distress, according to sources familiar with the matter.
The requests will add fuel to a raging dispute between Big Oil and Big Corn over how the Trump administration should manage the U.S. Renewable Fuel Standard.
This is a 2005 law that requires oil refiners to mix biofuels such as corn-based ethanol into the nation’s fuel supply, or buy government-awarded credits from other energy firms who do the blending.
The U.S. Environmental Protection Agency (EPA) has already issued an unusually high 25 hardship waivers to small refineries in recent months, according to an agency source.
Such waivers drivie blending credit prices down and helping the oil industry reduce compliance costs.
But the agency won’t name the firms receiving the exemptions, citing a concern over disclosing private company information.
Both Chevron (CVX.N) and Exxon (XOM.N), among the world’s most profitable energy companies, have asked EPA for waivers for their smallest facilities.
Such facilities as Chevron’s 54,500 barrel-per-day refinery in Utah and the Exxon’s 60,000 bpd refinery in Montana, two sources briefed on the matter told Reuters on condition of anonymity.
The exemptions would free the plants from their obligation to hand in blending credits earned or purchased for 2017, which came due this year, the sources said.
The disclosure of the Chevron and Exxon applications, which have not been previously reported, follow a me report this month that the EPA has exempted three of ten refineries owned by Andeavor (ANDV.N), one of the biggest U.S. refining companies.
The waivers could save Andeavor 50 million doll or more in regulatory costs for the company’s 2016 obligations under the biofuels law.
Husky Energy – a Canadian oil giant backed by a :billionaire – will also be seeking an exemption, this one covering thd spokesman Mel Duval told Reuters, disclosing the waiver for the first time.
Duval said Husky inherited a 2017 exemption when it bought the 50,000 bpd Superior refinery from Calumet Specialty Products Partners (CLMT.O) for $435 million in November.
The waivers are intended for facilities producing less than 75,000 barrels per day (bpd) that can also prove compliance with the policy would cause them “disproportionate economic hardship.”
A spokesman for Chevron, Braden Reddall, declined to confirm or deny the application, but said waivers provide an edge.
“Several competitors have reportedly received exemptions from the RFS,” he said in a written statement to the media.
“If true, any refinery which has not been exempted from the RFS will be at a competitive disadvantage.”
Exxon spokesman Dan Carter declined to comment.
The exceptions and the EPA’s refusal to disclose them have infuriated the corn lobby, which argues the waivers hurt farmers by undermining demand for corn and should be used only sparingly for tiny facilities in dire straits.
“EPA is hiding behind poor excuses about proprietary business information to shield big oil companies from public scrutiny,” five Republican senators, including Chuck Grassley and Joni Ernst from Iowa, wrote in a joint statement Thursday.
“This looks like just another backdoor attempt by (EPA) Administrator (Scott) Pruitt to destroy the Renewable Fuel Standard and circumvent congressional intent.”
Bob Dinneen, head of the Renewable Fuels Association said there is nothing ‘small’ about Exxon and Chevron, both of which rank in the top 20 of the Fortune 100.
“For these two behemoth oil companies to claim economic hardship is downright offensive and insulting to the hard-working farm families and ethanol producers that depend on the RFS,” Dinneen said.
It’s unclear whether the EPA has approved the Exxon or Chevron application. EPA spokeswoman Liz Bowman declined to comment on which firms have applied for or received exemptions.
She said the agency considers any application to exempt a refinery of less than 75,000 bpd – regardless of the size of the company that owns it.
“EPA decisions on waivers are based on refinery-specific information,” she said in an email. “We continue to work through petitions received for 2017.”
Other big oil companies including Phillips 66 also own refineries small enough to be eligible for a waiver, as does CVR Energy (CVI.N) which is owned by billionaire investor and Trump ally Carl Icahn.
Officials for those companies did not respond to requests for comment on whether they are seeking exemptions.
Icahn’s efforts last year to overhaul the biofuels program – while acting as an adviser to Trump on regulatory issues – drew scrutiny from federal investigators after lawmakers said it raised ethical concerns.
Biofuels proponents including U.S. Department of Agriculture Secretary Sonny Perdue has criticized the use of RFS exemptions as “demand destruction” for corn-based ethanol.
Ethanol demand has been vital to farmers who are buffeted by low commodities prices and the threat of a global trade war.
The American Petroleum Institute, which represents big oil companies like Exxon and Chevron, has also opposed small refinery exemptions in the past, arguing for a level competitive playing field.