The ethanol industry is fighting a proposed settlement between the Environmental Protection Agency and a major East Coast refinery that would give the company a pass in complying with the nation’s ethanol mandate.
Monday night is the deadline for filing protests in bankruptcy court over the EPA and Justice Department’s settlement with Philadelphia Energy Solutions.
The Philadelphia refiner is the East Coast’s largest fuel producer, but it filed for bankruptcy protection in January, blaming the EPA’s Renewable Fuel Standard and the price of ethanol credits, or renewable identification numbers, for its financial woes.
It spent hundreds of millions of dollars buying RIN credits because it cannot blend ethanol.
The EPA settled with the refinery this month, saying that even though it did not have enough RINs to comply with the ethanol mandate, the agency would count the RINs the refiner did have to fulfill its obligation and let it off the hook.
The settlement has stoked the ire of the ethanol industry, which is protesting the settlement in formal filings in bankruptcy court in Delaware, where the EPA settlement is pending.
In comments to the Justice Department, the ethanol lobbying group Growth Energy argues that “the current EPA-PES settlement agreement would absolve the refinery of key obligations under the Renewable Fuel Standard.”
Growth Energy CEO Emily Skor said the proposed settlement, filed as part of the company’s bankruptcy proceeding, “sends the wrong message to industry stakeholders, implying that there are no consequences for violating the law.”
Skor argues that the large holding company that owns the refinery, the Washington-based Carlyle Group, “pulled hundreds of millions of dollars out of the company and failed to make the clean energy investments that have allowed other refiners to thrive.”
The group argues the EPA “should not reward the Carlyle Group” by allowing the Philadelphia refiner “to escape more than 70 percent of its obligations under the Clean Air Act.”
Skor suggested the settlement also reflects EPA’s pledge to end the process known as sue-and-settle, in which environmental groups use legal means to force environmental policy decisions.
She said Pruitt is doing something similar with the ethanol case. “If this sue-and-settle-style settlement is approved, it sends a terrible message to investors who have played by the rules,” Skor said. “With farm income at a 12-year low, rural America can’t afford another handout to refinery owners.”
The settlement action follows weeks of talks among President Trump, his advisers, lawmakers and the oil and ethanol industries to find a solution to helps refiners contend with the high price of RINs, while keeping the ethanol mandate intact so that Trump can keep a promise he made to corn farmers.
Industry lobbyists and those tracking the discussions anticipate Trump to be given a list of options on how to proceed in resolving the fight. Agriculture Secretary Sonny Perdue told reporters lat week that the president is not likely to adopt a RIN waiver that some GOP senators such as Ted Cruz, R-Texas, have urged him to adopt administratively through the EPA.
Perdue also said the president is leaning toward allowing Congress to address the issue through legislation. Members of the Republican leadership are developing legislation to overhaul the RFS.
