The Renewable Fuels Association (RFA) and the National Biodiesel Board (NBB) both submitted comments to the Department of Justice yesterday opposing the proposed bankruptcy settlement agreement with Philadelphia Energy Solutions (PES).

RFA commented that the proposed settlement agreement, which covers the refiner’s Renewable Volume Obligations (RVOs) for January 2016-April 2018, should be rejected “because the terms are patently unfair, unreasonable, and inconsistent with the purposes of the RFS program.”

“By allowing PES to retire only 138 million RINs for its pre-effective date obligation of more than 500 RINs, DOJ and EPA have effectively waived approximately three-quarters of PES’s RVOs for this period….Exacerbating its noncompliance, PES reportedly had been also selling roughly 40 million RINs in the fall of 2017, even as the March 2018 RVO compliance deadline approached. This is a classic case of a regulated entity being allowed to have its cake and sell it, too—while PES seeks to escape from its financial responsibilities under the RFS program, it embraces that same program for the limited purpose of profiting from it,” RFA added.

NBB similarly commented that the proposed settlement would harm the renewable fuels industry and undermine the intent of the RFS program by excusing more than 70 percent of the company’s compliance obligations for the two-year period.

“While PES continues to blame the RFS for their woes, the fact is, the bankruptcy is a mess of their own making. Poor management and a failure to respond to changes in the crude oil market is to blame,” said Kurt Kovarik, NBB’s vice president of federal affairs. “PES should not be rewarded for deliberately failing to comply with the decade-old Renewable Fuel Standard. Doing so is akin to rewarding a toddler in the midst of a temper tantrum. Instead, the government should hold PES to the same renewable volume obligation as all other refiners. Not doing so could severely hinder the RFS’s goals of enhancing energy security, protecting the environment, and building our nation’s rural economy.”

The U.S. Bankruptcy Court of Delaware has to approve PES’ proposed settlement agreement on April 4.