VALERO ENERGY CORP/TX (VLO) Risk Factors

Recent key developments

Concrete developments — dated events, named agreements and instruments, legal proceedings — that VALERO ENERGY CORP/TX surfaced in its latest filing.

• EPA proposed RFS Set II rules in June 2025 imposing increased RVOs for 2026 and 2027, particularly for biomass-based diesel.June 2025
• RFS Set II proposals include a 50% reduction in RINs for U.S. domestically produced renewable fuels made from foreign feedstocks and for imports of finished renewable fuel into the U.S.
• RFS Set II proposes reduced equivalency values for biomass-based diesel and renewable diesel produced through hydrogenation (used by DGD for renewable diesel and SAF), resulting in fewer RINs per gallon.
• RFS Set II proposes to partially waive cellulosic biofuel volumes for 2025.
• In 2025, the EPA issued decisions on hundreds of small refinery exemption (SRE) petitions, granting full or partial exemptions for a majority spanning RFS compliance years 2016-2024, subject to ongoing litigation.2025
• EPA outlined a process for refineries granted SREs to have their RINs un-retired and returned; RINs for compliance years 2023 and thereafter can be used by small refineries to update previous compliance filings, allowing up to approximately 20% per compliance year of a particular refinery's RINs to be carried forward.
• September 2025 EPA supplemental proposed rulemaking would reallocate to RFS obligated parties either 100% or 50% of SRE exempted volumes for 2023 and 2024, and projected 2025 volumes, increasing 2026-2027 RVO obligations.September 2025
• EPA intends to finalize RFS Set II rules in the first quarter of 2026, but may be delayed and subject to litigation, which could also delay 2025 RFS compliance deadlines.First quarter 2026
• For fuel produced on or after January 1, 2026, the OBBB restricts eligibility for the clean fuel production credit to fuels derived exclusively from feedstock produced or grown in the U.S., Mexico, or Canada; key guidance remains unfinalized.January 1, 2026
• June 2025 California LCFS amendment seeks to reduce the CI of California's transportation fuel pool by 30% by 2030 and 90% by 2045.June 2025
• California LCFS amendment imposes a cap on credits for biomass-based diesel from soybean, canola, or sunflower oil at 20% of total credits per producer or importer.
• California LCFS amendment updated the CI calculation model and introduced more onerous sustainability criteria for crop-based biofuels.
• Certain Canadian provinces imposed requirements under their low-carbon fuels programs that limit the amount of imported ethanol and renewable diesel that can be claimed.
• Effective January 1, 2025, the U.K. imposed additional feedstock and reporting requirements impacting SAF compared to Refuel EU requirements under the EU Renewable Energy Directive.January 1, 2025
• Named as a co-defendant in a state court lawsuit by an Oregon county seeking damages and abatement under tort theories including deceptive disclosures.
• Named as a co-defendant in a federal class-action lawsuit in California alleging antitrust and consumer protection claims related to costs of complying with the LCFS.
• New York and Vermont enacted cost recovery programs under which responsible parties including refiners and fossil fuel companies bear costs on a strict liability basis.
• In October 2023, California adopted climate-related disclosure obligations including GHG emissions, climate-related financial-risk reporting, and statements on GHG emissions reductions and carbon offsets, subject to ongoing litigation and potential delays.October 2023
• New York adopted GHG reporting requirements broader in scope than California's requiring detailed disclosures on the quantity and type of fuel and feedstock related to emissions.
• U.K. adopted and EU provisionally adopted disclosures under the Corporate Sustainability Reporting Directive (CSRD) and Corporate Sustainability Due Diligence Directive (CSDDD), which provides a private cause of action.
• California's Oil Refinery Cost Disclosure Act (SB 1322) requires refineries in California to report monthly on the volume and cost of crude oil bought, quantity and price of wholesale gasoline sold, and gross gasoline margin per barrel.
• In September 2025, the EPA proposed to effectively cease its Greenhouse Gas Reporting Program.September 2025
• May 2021 Colonial Pipeline cybersecurity incident impacted the company.May 2021
• U.S. Transportation Security Administration directive following the Colonial Pipeline incident.
• Recent changes in Mexico’s federal judiciary.
• Recent changes in Mexico’s hydrocarbon laws and regulations.
• Recent changes in Mexico’s procedures for challenging tax authority rulings.
• Mexico has implemented an informal, nationwide retail price cap on regular gasoline that could be expanded or become legally binding.
• Operations and marketing activities in Canada, the U.K., Ireland, Mexico, and Peru.
• Strategic actions to optimize asset portfolio include those described in Note 2 of Notes to Consolidated Financial Statements with respect to operations in California.
• Certain events have resulted in cancellation or restructuring of projects, with costs and charges related thereto.
• Recent changes in forecasted market conditions affected certain low-carbon projects in the Renewable Diesel segment.
• Certain refineries in Texas have recently experienced various water supply challenges that remain ongoing and have resulted in or are expected to result in additional capital expenditures and/or ongoing costs.
• DGD's foreign feedstock supplies have recently been impacted, and could continue to be impacted, by U.S. tariffs.
• U.S.-produced renewable diesel and SAF have recently been subject to duties in several foreign jurisdictions, while similar duties have not been broadly applied to imports into the U.S. of foreign renewable diesel and SAF.
• South Coast Air Quality Management District's Rule 1109.1 – Emissions of Oxides of Nitrogen from Petroleum Refineries and Related Operations.
• CARB's Control Measure for Ocean-Going Vessels At Berth Rule.
• CARB's Airborne Toxic Control Measure for Commercial Harbor Craft.
• California's Senate Bill No. 2 (SBx 1-2) and Assembly Bill No. 1 present considerable uncertainty and risks.
• Obligations under the U.S. Cyber Incident Reporting for Critical Infrastructure Act.
• The real-time market structure of the largest grid operator in Texas exposes many of our Texas refineries and operations to scarcity pricing during supply-demand imbalances.
• Certain employees at five U.S. refineries, Canada and U.K. refineries, and the Montreal terminal are covered by collective bargaining or similar agreements with unique and independent expiration dates.