Delaware Gov. John Carney is calling on the U.S. Environmental Protection Agency to grant the Delaware City Refinery a waiver on renewable fuel requirements.
His letter comes amid fears other small refineries could follow the footsteps of Philadelphia Energy Solutions, the South Philadelphia crude-oil refinery that filed for bankruptcy last month.
The renewable fuel standard program, created in 2005 under President George W. Bush, requires refiners to blend biofuels such as ethanol into the U.S. fuel supply each year. If they’re not able to meet those requirements, the refineries must buy credits from those that are able to do so.
In its Chapter 11 bankruptcy filings, Philadelphia Energy Solutions blamed its financial problems on the costs of those credits, saying it could not afford to buy them this year.
EPA has the power to exempt certain small refineries from the renewable fuel standard program responsibilities if they can prove it would lead to “disproportionate economic hardship.”
In a recent letter, Carney asked EPA Administrator Scott Pruitt to reduce volumes to a level that will allow “Delaware refineries to avoid the severe economic harm that would be caused by compliance with the high costs of purchasing” the credits, known as RINs.
The governor said 560 full-time jobs and about 250 contractor positions would be in jeopardy if the refinery could no longer afford the credits. The refinery incurred more than $90 million in RIN costs last year, Carney said.
“The sharp and significant increases in costs to the refinery industry will directly lead to devastating job losses in Delaware and throughout a region,” Carney wrote. “A waiver is necessary to not only preserve the steady refinery industry jobs in Delaware, but to also maintain affordable, reliable fuel supplies for consumers and preserve refining capacity in the U.S.”
Leaders in Pennsylvania and Texas have also written to Pruitt expressing similar concerns.
However, the ethanol industry has argued that admitting so many waivers could be dangerous.
“An ill-conceived and unauthorized expansion of this exemption could destabilize the market for renewable fuels and undermine Congress’s goals for the [renewable fuel standard] program,” said Bob Dinneen, president and CEO of Renewable Fuels Association , in a letter to Pruitt.
“As EPA re-evaluates its position of what constitutes a ‘disproportionate economic hardship’ to a small refinery, we hope that EPA will remain true to its previous determination in the 2017 [renewable fuel standard] final rule that ‘obligated parties, including small entities, are generally recovering the cost of acquiring the credits … necessary for compliance with the standards through higher sales prices of the petroleum products they sell,” Dinneen’s letter continued. “The renewable fuels industry and obligated parties deserve greater clarity on the criteria EPA will apply to small refinery petitions going forward.”
The Delaware City Refinery also has come under fire over the years from community and environmental activists who say it fails to protect the surrounding region from pollution. Last year, the Delaware Audubon Society and the League of Women Voters failed to block a permit allowing the refinery to receive and store unblended ethanol and transfer it by barge from its Delaware City docking facility and other locations on the East Coast.
In March, the state fined the Delaware City Refining Company and owner PBF Energy $150,000 for violating an agreement not to ship crude oil to locations other than its Paulsboro, New Jersey, facility. A public hearing for the refinery’s appeal is scheduled for Feb. 27.