On Jan 21st 2018, Carlyle-backed Philadelphia Energy Solutions (PES), the largest refinery complex on the U.S. east coast at 335,000 barrels per day, filed for Chapter 11 bankruptcy, blaming Renewable Fuel Standard (RFS) compliance costs. In the week since the filing, the Washington Examiner reports several other small refiners have piled on, asking the Environmental Protection Agency to waive the Renewable Volume Obligations under the RFS.
The governors of Pennsylvania and Delaware weighed in as well, writing letters to the EPA requesting to have the refineries in their states receive hardship exemptions from RFS obligations “The whole reason we’re filing for Chapter 11 is that this is a massive expense,” said CEO Gregory Gatta in telephone interview with Bloomberg on Jan 22nd. He went on to state that in 2017, meeting the amended federal Renewable Fuel Standard (RFS2) regulatory burden cost Philadelphia Energy Solutions more than twice as much as payroll and about 1.5 times more than its average annual capital expenditures. Since 2012 the refinery has accrued $832 million in credits.