Court approves PES bankruptcy settlement

By Erin Voegele | April 06, 2018

On April 4, the U.S. Bankruptcy Court for the District of Delaware approved the U.S. EPA’s proposed settlement with Philadelphia Energy Solutions that allows the bankrupt refiner to waive a significant portion of its renewable volume obligations (RVOs) under the Renewable Fuel Standard.

PES filed for Chapter 11 bankruptcy in January, blaming its financial struggles on RFS compliance costs, specifically the price of renewable identification numbers (RINs). Supporters of the U.S. biofuels industry argue that the refiner’s financial struggles are not due to its RFS compliance obligations, but rather mismanagement and bad business decisions. 

On March 12, the U.S. government proposed a settlement with PES that would waive approximately 75 percent of its RVOs from January 2016 through April 2018. A 10-day public comment period on the proposed settlement opened March 16. 

Under the settlement, PES is set to retire a total of 138 million currently held RINs in order to resolve its liability for RVOs prior to the effective date of its proposed plan of reorganization, retire 64.6 million RINs towards its post-bankruptcy 2018 RVO and agree to retire RINs on a semiannual basis for their post-effective date RVOs through 2022.

Documents filed with the court April 3 indicate the U.S. government received a total of 1,372 comments during the comment period, with approximately 1,345 in support of the proposed settlement and approximately 25 opposing it.

Representatives of the biofuels industry, including the National Biodiesel Board, are among those that opposed the settlement, stressing that it undermines the RFS and sets a bad precedent.

 

 
 
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