U.S. biofuels sector blasts EPA settlement with bankrupt Philadelphia refinery

From Reuters - March 13, 2018

PHILADELPHIA (Reuters) - The U.S. Environmental Protection Agencys decision to grant a bankrupt Philadelphia refiner relief from biofuel laws drew criticism on Tuesday from the countrys biofuels sector and its allies, who said it sets a bad precedent.

The EPA and the Carlyle Group-backed Philadelphia Energy Solutions refinery agreed on Monday that the refiner will have to satisfy only roughly half of its $350 million in outstanding compliance obligations under the U.S. Renewable Fuel Standard (RFS). The RFS requires refiners to blend biofuels such as ethanol into their fuel or buy credits, known as RINs, from those that do.

Independent refiners, including some as large as Valero Energy Corp, have long complained about the RFS standards, saying it has boosted costs as the price of credits rose from just a few cents in 2012 to more than $1 at times in 2013 and 2016.

However, biofuels companies say the standards are critical to Midwest farmers and help produce cleaner, home-grown fuels like ethanol. Industry representatives complained about the EPA settlement, calling it a bailout for a mismanaged company.

I am very troubled at the precedent this sets and there are discussions underway whether the EPA has the legal standing to grant the relief. We are exploring our options, said Michael McAdams, head of the Advanced Biofuels Association.

President Donald Trump has called several White House meetings to change the program.

The EPA has signaled it is willing to exempt more small refineries, which would limit potential buyers for the credits.

Republican Senator Chuck Grassley, of Iowa, said the settlement raises a couple questions: How are the RIN obligations being treated compared to the other obligations of PES? Does this set an unfair precedent for other refiners that continue to act in good faith to comply with the law?

PES was given relief on about half of its outstanding obligations. The company, which lacks blending facilities, entered into bankruptcy owing 467 million credits from 2016 and 2017, with only 210 million credits in hand, the filing showed.


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