Trump ally urges EPA to scale back mandates

Source: Marc Heller, E&E News reporter • Posted: Friday, January 26, 2018

Rep. Lou Barletta (R-Pa.), an ally of President Trump and candidate for Senate, urged U.S. EPA to scale back a biofuel mandate that oil refiner Philadelphia Energy Solutions Inc. blames for its bankruptcy.

In a letter to EPA Administrator Scott Pruitt, Barletta asked the agency to take swift measures to reduce the cost of renewable fuel credits, called renewable identification numbers, that refiners buy to show compliance with the renewable fuel standard.

In addition, he said, EPA should agree to reduce the company’s RFS obligations as part of its bankruptcy arrangements, under Chapter 11 of the federal bankruptcy code. The company has said it will keep operating its Philadelphia refinery while it rearranges its finances.

“There is no doubt that the RFS’s RIN requirement played a primary role in PES’s bankruptcy filing on Jan. 21, 2018,” Barletta wrote Tuesday, adding that the company spent about $218 million last year on renewable fuel credits — its biggest cost after crude oil.

Barletta, who’s seen as the likely candidate against Sen. Bob Casey (D-Pa.) this fall, said he has discussed the need for changes in the RFS in conversations with the president and his advisers.

“It is not sustainable to continue to force merchant refiners to purchase RINs on the secondary market, where prices are inflated and unpredictable,” Barletta wrote.

Pruitt has said he shares concern about the cost of RINs, but a solution has evaded Congress and the administration. A proposal by Sen. Ted Cruz (R-Texas) to set a cap on prices has fallen flat with ethanol advocates, including Sen. Chuck Grassley (R-Iowa).

Grassley in the past has said he shares concerns about high RIN prices, although he’s blamed a lack of market transparency and manipulation by traders (E&E News PM, Oct. 22, 2013).

The Renewable Fuels Association and other ethanol supporters say the government should lift seasonal restrictions on sales of the higher-ethanol blend E15, which they say would put more ethanol on the market and lower prices for the credits.

In addition, some industry analysts say the price spikes for RINs have eased, and that refiners have been able to pass along costs down the supply chain (Greenwire, Dec. 5, 2017).

Yesterday, a union representing plumbers and pipefitters joined the debate, telling Trump in a letter that the refinery’s woes prove a point the union made to Pruitt last year about the risks of high renewable fuel credit prices.

“There is no doubt that, if unaddressed, skyrocketing RIN costs will force more merchant refiners into bankruptcy, putting thousands of union jobs at risk,” wrote Mark McManus, general president of the United Association of Journeymen and Apprentices of the Plumbing and Pipefitting Industry of the United States and Canada.