BIO Comments on Proposed Settlement Agreement Between EPA and Philadelphia Energy Solutions on RFS Obligations
BIO is greatly concerned by the Department of Justice's and Environmental Protection Agency's proposed Settlement Agreement to resolve a dispute about the PES Holdings' obligations under the Renewable Fuel Standard.
In the energy space, BIO represents over 75 companies leading the development of new technologies for producing conventional and advanced biofuels. Through the application of industrial biotechnology, BIO members are improving conventional biofuel processes, furthering advanced and cellulosic biofuel production technologies, and speeding development of new energy crops.
The RFS has been an economic driver for these companies. It has spurred investment, research and development, and commercialization of advanced and cellulosic biofuels. The RFS has enabled the advanced biofuels industry to make significant investments to meet the requirements of the RFS.
This Settlement Agreement undermines the goals of the RFS by allowing refiners like the Debtors to escape their RIN obligations under the law. By putting more RIN credits into the market place, obligated parties will opt to avoid liquid gallons of advanced and cellulosic biofuels in favor of cheap credits, jeopardizing investments and developments of new biofuel technologies and facilities. Moreover, the Debtors have made a spurious claim to the bankruptcy court that the RFS program materially caused their financial difficulties. The record to date shows that the Debtors shirked compliance with the RFS program while paying unwarranted dividends to shareholders.
BIO respectfully requests EPA and DOJ reconsider its Settlement Agreement with the Debtors and PESRM. As we noted, the obligations to obtain RINs and meet the RVOs are not responsible for the financial difficulties associated with this refinery. This asset has had a long history of financial difficulties that almost led it to close in 2012, which had nothing to do with the cost of RINs. Further, the Debtors should not be allowed to escape their obligations under the RFS because they chose to take on more debt, take out loans, and structure contracts that ensured private investors received hundreds of millions of dollars while PESRM went further into debt.
This Settlement Agreement has the potential to destabilize the RIN markets under the RFS, PESRM’s outstanding obligation of 329 million RINs will be excused and not made up by other refiners. This action will undermining the RIN markets, create uncertainty for investors in the advanced and cellulosic biofuels space, and jeopardize the long-term investments necessary for the development of these biofuels. It is critical the RIN structure under the RFS be allowed to function as the market intends as the value of these credits are critical as our companies make significant investments to create new agricultural supply chains, build infrastructure for liquid biofuels, and develop innovative new technologies. These credits have enabled our industry to create new jobs, contribute to rural prosperity, and diversify our nation’s energy supply. PESRM should not be rewarded for its disregard of its 2016 and 2017 RVOs, particularly in light of its cynical claim that others were reaping a windfall from selling RINs to obligated parties, when in fact PESRM was fully engaged in speculative RIN selling.
A proper settlement of PESRM’s RIN obligations will ensure stable implementation of the RFS in line with the statutory requirements can help drive the growth of the advanced and cellulosic biofuels industry.