By Jarrett Renshaw and Chris Prentice
NEW YORK (Reuters) - The U.S. Environmental Protection Agency granted oil major Chevron Corp a 2017 hardship waiver from U.S. biofuel laws for its Utah refinery earlier this year, according to a source familiar with the company's operations.
Chevron, which reported a net income of $9.2 billion in 2017, becomes the largest known company to be awarded a hardship waiver from the Renewable Fuel Standard (RFS), which requires refiners to blend biofuels like ethanol into their fuel pool or buy compliance credits from competitors that do.
The waivers, which have grown significantly under the Trump administration, have angered corn-belt farmers who say it hurts demand for ethanol and other biofuels.
“When an oil company whose net profits surpass the total value of the Iowa corn crop claims it is experiencing ‘hardship,’ you know we’ve reached a new level of absurdity," said Geoff Cooper, CEO of the Renewable Fuels Association.
California-based Chevron declined to confirm whether it received a small refinery hardship waiver, but did say that seeking them can level the playing field.
"EPA has acknowledged that it has granted several small refinery exemptions from the RFS. Any Chevron refinery not exempted from the RFS would be at a disadvantage in the highly competitive markets where we operate," the company said in an emailed statement.
The EPA did not immediately respond to requests for comment.
Refineries with a capacity less than 75,000 barrels-per-day can receive waivers from the RFS if they prove compliance would cause them disproportionate hardship. Chevron's Salt Lake City, Utah, plant is 54,000 barrels-per-day.
The EPA, under President Donald Trump, expanded the waiver program, awarding 29 exemptions for the 2017 calendar year, up from 19 in 2016 and just seven in 2015, EPA data shows.
The EPA has attributed the program's expansion to a lawsuit brought by two oil refiners who challenged the EPA's denial of their waiver request. A federal judge ruled the EPA was using too narrow of a test to evaluate applications.
Biofuel backers say the expansion was politically driven by former EPA administrator Scott Pruitt, who sought ways to lower compliance costs for refiners. The Chevron approval was granted under Pruitt, the source said.
The surge in hardship waivers has pummeled the price for compliance credits some refiners must buy.
Reuters previously reported that Chevron, along with Exxon Mobil Corp, sought a hardship waiver from U.S. biofuel laws.
Exxon Mobil's application status was unclear.
(Reporting by Jarrett Renshaw and Chris Prentice; Editing by Leslie Adler and David Gregorio)