Biofuels industry worries about impact of refinery deal with EPA

The biofuels industry was dismayed Tuesday by the Environmental Protection Agency's apparent reprieve to a Pennsylvania refinery over its obligations under the Renewable Fuel Standard.

The refinery, which has filed for federal bankruptcy protection, has been a key part of a dispute between agriculture groups and the oil and refinery industry over the law, which requires a certain amount of biofuels to be mixed into the nation's gasoline supply. Reuters reported Monday that EPA will allow Philadelphia Energy Solutions to satisfy only about half its $350 million in RFS compliance costs. The company would come under more scrutiny to meet its obligations going forward under the agreement, Reuters reported.

In a court filing, the agreement asked that a judge hold off on acting while the EPA seeks comment from the public. Biofuel groups are studying the proposal and its implications, and they aren't happy.

"We?re concerned that EPA is proposing to require that PES only satisfies a portion of its (Renewable Identification Numbers) obligations," said Emily Skor, chief executive of Growth Energy in an email. "We?re reviewing our options to ensure that it protects renewable fuels, the ag economy, and the environment."

"At first glance it strikes me as yet another government bailout for the politically connected owners, but it will take some time to digest and consider next steps," said Monte Shaw, executive director of the Iowa Renewable Fuels Association.

U.S. Sen. Chuck Grassley, R-Iowa, who has been a key player in pressing the White House to reject substantial changes to the RFS, issued a statement Tuesday, but only posed questions.

He asked whether the refinery's RFS obligations are being treated differently than its other debts. He added, "does this set an unfair precedent for other refiners that continue to act in good faith to comply with the law?"

Biofuels backers have worried that other refiners who have complained about the cost of complying with the law might follow suit if EPA were to yield to the refinery.

The Pennsylvania refinery pointed to the cost of Renewable Identification Numbers or RINs, when it filed for bankruptcy. For refineries that don't blend biofuels themselves, they must purchase sometimes high-cost RINs to comply with the law.

The Pennsylvania plant employs about 1,100 workers in a state that, like Iowa, is politically important.

Refinery workers, as well as their union, have implored the White House to help. But Midwest lawmakers and biofuels officials have sought to hold President Trump to his campaign promise to support the RFS, saying farm jobs depend on it.