Wall Street Journal columnist Kimberley Strassel has been on the trail of the sole exemption from the mandate for refineries to purchase federal ethanol “credits” awarded this year. She’s identified the refinery:
The dispensation amounts to a significant financial favor to one lucky player, as I wrote in the Journal on Friday. Further reporting has revealed that the refinery is Alon USA Energy’s ALJ -0.49% Krotz Springs facility in Louisiana. There’s reason to wonder
why Krotz Springs alone got a deal.The EPA maintains a program that allows “small refineries”—those with an average capacity of less than 155,000 barrels of crude daily—to apply for a hardship exemption from the mandate. Krotz Springs was one of four refineries that applied for 2013. The other three—Hunt Refining in Alabama, Kern Oil & Refining in California and Placid Refining in Louisiana—are small, privately held concerns. The biggest, Placid, has a capacity of about 57,000 barrels a day, according to January statistics from the federal Energy Information Administration.
Krotz Springs has a capacity of 80,000 barrels, so it meets the definition. Then again, Krotz Springs is just one of Alon’s five refineries, which are located in Louisiana, Texas and California, and have a combined capacity of about 215,000 barrels. A New York Stock Exchange-listed company, Alon isn’t exactly a mom-and-pop outfit.
As it turns out Alon, alone among the companies that applied for exemptions, was able to hire professional lobbyists to work the halls of power:
Lobbying disclosure records show Alon paid $60,000 in the second quarter of 2013 to the Manatt, Phelps & Phillips firm. This was the same quarter when Alon filed for its exemption. The records show that Manatt lobbied in the House and in the Senate for Alon on the sole issue of “renewable fuel standards.” Alon didn’t report any appreciable lobbying expenses for the year preceding the quarter. The records also did not turn up similar lobbying efforts by other refineries applying for an exemption.
If you are going to have such mandates and you determine to grant exemptions from them, the exemptions should be based on objective criteria. Not on discretion.
The company with the deepest pockets will inevitably be able to pay more to get their exemptions. That’s one of the reasons that corporate power is becoming so centralized. Natural economies of scale have less to do with it than the political advantages that scale confers.
Under the circumstances discretion is just another word for corruption.
