What Valero Energy Corporation told the SEC could break it.

Valero recorded a $1.1 billion ($877M after-tax) asset impairment associated with its California operations in 2025, reflecting California's regulatory pressure on refining.

“However, our results were also impacted by the asset impairment loss of $1.1 billion ($877 million after taxes) associated with our operations in California, as described in Note 2 of Notes to Consolidated Financial Statements.”

EPA's June 2025 proposed RFS Set II rules would raise RVOs for 2026-2027 and halve the RINs generable for fuels made from foreign feedstocks or imports, with finalization, timing, and litigation all uncertain.

“Regarding the RFS, in June 2025, the EPA announced proposed rules (RFS Set II) that would, among other things, impose increased RVOs for 2026 and 2027, particularly with respect to biomass-based diesel, while also proposing to (i) reduce by 50 percent the number of RINs that may be generated for U.S. domestically produced renewable fuels made from foreign feedstocks, as well as for imports into the U.S.”

While crude/refined products are largely exempt, Valero's Renewable Diesel segment was subject to new 2025 U.S. tariffs on renewable feedstocks imported into the U.S., and OBBB now restricts clean fuel production credits to U.S./Mexico/Canada-origin feedstock from Jan 2026.

“Although energy commodities, including crude oil and refined petroleum products, are generally exempt from the recently effective U.S. tariffs, our Renewable Diesel segment was subject to new tariffs on renewable feedstocks imported into the U.S.”

Certain Valero refineries in Texas have experienced ongoing water-supply challenges that have driven, or are expected to drive, additional capital expenditures and ongoing costs, with risk of further challenges.

“Certain of our refineries in Texas have also recently experienced various water supply challenges that remain ongoing to various degrees and in certain instances have resulted in, or are expected to result in, additional capital expenditures and/or ongoing costs. We could experience additional water supply challenges in the future.”

Valero's Ethanol segment depends on corn, whose availability and price can be hurt by crop production reductions/delays from weather, government policy, fertilizer prices, and rail disruptions — events that have occurred periodically.

“Reductions or delays in crop production from these and other events could negatively impact the availability and price of corn for our Ethanol segment, and such events have occurred periodically.”