WASHINGTON, D.C. — Growth Energy has filed comments with the Department of Justice outlining the biofuel industry’s objections to a proposed settlement between the Carlyle Group-owned Philadelphia Energy Solutions (PES) and the U.S. Environmental Protection Agency (EPA). Filed and drafted as part of the ongoing PES bankruptcy proceedings, the current EPA-PES settlement agreement would absolve the refinery of key obligations under the Renewable Fuel Standard (RFS).
“The proposed settlement sends the wrong message to industry stakeholders, implying that there are no consequences for violating the law,” said Growth Energy CEO Emily Skor. “The 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 EPA should not reward the Carlyle Group by allowing PES to escape more than 70 percent of its obligations under the Clean Air Act.
“If this sue-and-settle-style settlement is approved, it sends a terrible message to investors who have played by the rules. With farm income at a 12-year low, rural America can’t afford another handout to refinery owners.”
Growth Energy’s key objections, cited in its comments, include the following:
- The settlement unjustifiably allows PES and its parent companies to substantially avoid their environmental obligations, accepting retirement of 138 million Renewable Identification Number (RIN) credits for the 2016 and 2017 compliance periods and the first quarter of 2018 against a Renewable Volume Obligation (RVO) of 467 million RINs plus the obligation PES incurs in the first quarter of 2018, likely totaling well over 500 million RINs. That is a discount of more than 70 percent.
- The proposed settlement allows PES to carry 64.6 million RINs forward as a credit toward 2018 compliance. In addition to allowing noncompliance for 2016 and 2017, the proposed settlement gives PES a head start advantage for 2018 compliance, in front of competitors who have been complying with the law.
- The proposed settlement would resolve the RVO liability not only of the PES debtors, who have asserted that they lack the financial wherewithal to meet their obligations, but it would also give a free pass to non-debtor entities who are clearly liable for the RVO obligations including the debtors’ parent companies and joint venture partners. There is no justification for releasing entities such as PES’s parent the Carlyle Group L.P., which controls hundreds of billions of dollars in assets and clearly has the financial capacity to meet the compliance obligations.