The bankruptcy of Philadelphia Energy Solutions, the biggest refinery on the East Coast, has become the latest flash point between proponents and opponents of a 13-year-old law mandating that fuels derived from corn and other crops be blended into the nation’s gasoline and diesel supply.
Politicians like Cruz from oil-producing states such as Texas view the plant-based fuel mandate as an unnecessary burden on refiners that destroys jobs. Meanwhile, Republicans from agricultural states — most notably, Sen. Charles E. Grassley of Iowa — regard the Renewable Fuel Standard (RFS) as essential to securing the nation’s energy independence and sustaining farming communities subject to wild swings in food prices.
Stuck in the middle is President Trump, who holds sway over any administrative action the Environmental Protection Agency takes on biofuel requirements and who would ultimately need to sign any legislation reforming the RFS. Both senators are appealing to Trump in the currency he understands best: jobs.
“This is about jobs … good union jobs, jobs that provide for your families and provide for your kids and provide for your grandkids,” Cruz told a packed gathering of refinery workers and managers at a town hall-style event in south Philadelphia on Wednesday.
Meanwhile, Grassley said this month: “Biofuels are responsible for thousands of jobs across the country. There’s no reason biofuels and other renewables can’t exist alongside conventional fuels.”
Trump will host meetings between key senators and Cabinet officials, including EPA chief Scott Pruitt and Agriculture Secretary Sonny Perdue, to discuss the RFS, according to refining industry sources. Bloomberg News first reported the planned White House meetings on Thursday evening.
The latest brouhaha over biofuels started in January when Philadelphia Energy Solutions pinned its bankruptcy in part on the high cost of meeting its obligations under RFS.
Having to meet blending requirements for corn-based ethanol and other biofuels created an “unpredictable, escalating and unintended compliance burden” costing the company $832 million between 2012 and 2017, the company told a bankruptcy court last month.
The claim has led to a flurry of clashing economic analyses, news releases and rallies from those on both sides of the ethanol debate.
Grassley’s office countered the Philadelphia refinery’s claim, arguing in a staff memorandum that the collapse in crude prices at the beginning of 2016 — along with new and more profitable pipeline routes for North Dakotan oil — choked the refinery’s profitability.
“Every independent study shows the PES bankruptcy was due to management decisions that did not work out, not the Renewable Fuel Standard,” Grassley said this week. “There’s no reason biofuels and other renewables can’t exist alongside conventional fuels.”
A different analysis from Reuters, trumpeted by Grassley’s office, pointed to another issue: hefty payouts Philadelphia Energy Solutions had to make to the Carlyle Group, a global equity firm, for an underused rail terminal meant to ship in crude oil for refining.
"If Sen. Cruz wants to make Philadelphia Energy Solutions the poster child for RFS reform, he’s chosen the wrong refinery,” said Bob Dinneen, head of the Renewable Fuels Association, the leading trade group for the U.S. ethanol industry.
“The fact of the matter is refineries have been doing pretty darn good over the past several years,” Dinneen added, even as biofuel volumes have been ratcheted up under the law.
The Fueling American Jobs Coalition, a group of independent refiners, countered that the “best judge of the primary drivers behind PES’ difficulties remains PES itself.”
“Attempts by corn-belt political staffers to ‘analyze’ the complex financial dynamics of the independent refining sector are cold comfort to those who show up at work every day to produce our country’s fuels,” the industry group added.
While Cruz took the pulpit this week, the Senate’s other member from the Lone Star State, Republican John Cornyn, began drafting legislation to reform RFS, according to a Cornyn aide.
Although the legislation is still being drafted, one source close to the refining industry said the bill probably would attempt to phase out RFS.
During the presidential campaign, Trump condemned Cruz for his ethanol stance in an attempt to appeal to primary voters in corn-growing Iowa. “I understand because Big Oil pays him a lot of money,” Trump told a crowd in late 2015. “He's got to be oil, right? The oil companies give him a lot of money.”
Trump’s pro-ethanol position earned him the support of Grassley, Iowa’s senior senator, who appeared at a Trump rally in January 2016, months before the rest of the GOP establishment embraced Trump as the presidential nominee.
Since taking office, though, Republicans from swing states with oil and gas reserves have pitched reforming the RFS to Trump.
“I’ve brought this issue to the White House,” Rep. Lou Barletta (R-Pa.), who is running against Democratic Sen. Robert P. Casey Jr. in November, told refinery workers on Wednesday. “They understand what it means to Pennsylvania. We’re going to work and we’re not going to stop working until we find the solutions so that one person doesn’t lose their job because we’ve lost common sense in Washington.”
The last showdown between refining and farming interests over ethanol ended with transportation fuel makers frustrated they were unable to upend the status quo. Last year, the EPA kept the mandate for conventional renewable fuels, such as corn-based ethanol, steady at 15 billion gallons for 2018.
Clearly, however, the battle is not over.
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— Department departures: Travis Fisher, a senior Energy Department adviser, is leaving the agency, Axios reports. Fisher oversaw the study that Energy Secretary Rick Perry requested ahead of his proposal to bolster struggling coal and nuclear plants.
— Call for island-hopping investigation: The Campaign Legal Center, a watchdog group, has asked the Federal Election Commission to probe Interior Secretary Ryan Zinke’s visit to a Virgin Islands fundraiser, Politico reports, and is also urging the department’s inspector general to investigate a “pattern of violations” of ethics regulations. “In his short time in office, Secretary Zinke’s boundary-pushing — and, apparently, boundary-crossing — conduct has set a poor ethical example for the department’s staff,” the watchdog wrote in a draft complaint.
— A low-key lead summit: EPA chief Scott Pruitt gathered top government officials last week for a meeting about how the federal government can combat lead poisoning, but many agency staffers have been kept in the dark about what the meeting entailed. And the department has announced little about the gathering after the fact. “Multiple EPA staffers who work on lead issues and officials from other agencies whose work is related to the health risks of the potent neurotoxin say they know little about last Thursday's meeting of the President's Task Force on Environmental Health Risks and Safety Risks to Children,” E&E News reports.
— “Something controversial:” George David Banks, who resigned as the White House’s senior energy adviser last week, told the New York Times he had a “controversial” opinion to share in an interview. “The Paris agreement is a good Republican agreement. It’s everything the Bush administration wanted,” he said, reiterating that Trump is “still thinking about” rejoining the accord. “I think he wants to keep the option alive.”
— Hurricane deaths, counted: Puerto Rico Gov. Ricardo Rosselló said Thursday he will launch a task force to officially review the number of deaths caused by Hurricane Maria, in partnership with George Washington University’s Milken Institute School of Public Health and the Centers for Disease Control and Prevention, per Bloomberg News. The move comes after Rosselló announced in December he would review the death toll, acknowledging the local government’s official count was probably underestimating the number of deaths.
— Monumental find: A set of Triassic-period fossils were discovered in an area of Utah’s Bears Ears National Monument that just lost its protected status, The Post’s Darryl Fears and Juliet Eilperin report. Rob Gay, a contractor at the Museums of Western Colorado, called it the “largest and most complete bone bed in the state of Utah, and one of, if not the largest, anywhere in the United States.” The discovery "underscores the fact that Utah is home to key paleontological deposits, and changes in national monuments there could effect the course of future scientific research."
— New maps show the massive fishing imprint: Humans are fishing at least 55 percent of oceans in the world, according to findings published in the journal Science on Thursday, offering a “powerful glimpse of the problem of overfishing on the hard-to-regulate high seas,” The Post’s Chris Mooney and Brady Dennis report. “That means we’re putting more pressure on fish populations,” Jackie Savitz, chief policy officer for the advocacy group Oceana, told The Post. “That means there’s more pressure on our oceans than we thought.” Savitz added that “unless we get policies in place to protect fishery sustainability, what we’re essentially doing is undermining our food security.”
— Man, it's a hot one: It’s hard to fully grasp the significance of the record-breaking February warmth across the East Coast, The Post’s Angela Fritz explains: “This heat wave is breaking more records than just those at ground level. The heat is also significant in the upper levels of the atmosphere. It may even be unprecedented in modern record-keeping, though things get tricky when we start talking about extremes above our heads, higher in the atmosphere… Here’s what we do know, though: Meteorologists (ourselves included) are stunned by the size and intensity of the high pressure over the Eastern part of the nation this week, which is inherently related to the warmth.”
— California’s other water woe: The state's Central Valley, an agricultural hub, has been dealing with toxic water for years. It’s too contaminated to drink, cook with or bathe in, BuzzFeed News reports, but no permanent solution is being implemented. “From town to town, residents are told their water may include cancer-causing arsenic and uranium, organ-damaging disinfectant by-products (DBPs), which also increase the risk of cancer, and nitrates, which cause serious health issues for infants,” BuzzFeed reports. “In total, over 300 water systems carry contaminated water into homes and schools ...The majority of the pollutants can be traced back to the factory farms that dominate the valley.”
— How climate change affects mammals’ mating: A warming planet means areas that used to turn bright and snowy in the winter stay brown, leaving animals that are white in the winter at a disadvantage. A new paper published in Science last week explores how mammal species will have to adjust by picking the right mates, Quartz reports, and survive by passing on the right genes: “So, if a white-furred snowshoe hare mates with another snowshoe hare that maintains its darker coat throughout the winter, their offspring won’t stick out like a sore thumb.”
— Tesla model 3 making moves: Tesla has begun notifying reservation holders that they can begin ordering the long-awaited electric sedan after a turbulent start with production, the Wall Street Journal reports. The company received about 500,000 reservations for the electric vehicle and said customers probably will receive their cars about a month after orders are placed.
— EVs on the way to your door: UPS announced it will work with truck maker Workhorse Group to build electric vans to be used for delivery. The electric vans could eventually replace the tens and thousands of vehicles currently in use delivering packages, per Reuters. The companies plan to launch the first electric vans in 2018, which will have a 100-mile range.
— How black lung came back: More than 400 coal miners visiting three different clinics in southwestern Virginia between 2013 and 2017 were identified as having complicated black lung disease, the New York Times reports. Here’s another startling statistic: Almost a quarter of the miners who were found to have complicated black lung disease have been on the job for less than 20 years. The massive cluster of the disease “adds to a growing body of evidence that a new black lung epidemic is emerging in central Appalachia, even as the Trump administration begins to review Obama-era coal dust limits,” the Times writes. While the chronic disease had declined following the 1969 Coal Act, it saw an upward trend again by 2000.
And here are some long reads for your weekend:
— "Ecoterrorism" rhetoric makes a comeback: In October, more than 80 lawmakers sent a letter to Attorney General Jeff Sessions inquiring whether the Justice Department could prosecute as terrorists protesters who sabotage pipelines. HuffPost reports the move was in part a response to protesters who were convicted after breaking into and temporarily halting the flow of oil via the Keystone Pipeline. “At a moment when the Trump administration is waging all-out war on environmentalism, macheting away regulations and gearing up for a massive pipeline construction spree, ‘ecoterrorism’ is re-emerging as a boogeyman in a way it hasn’t since right after 9/11.”
— A national park system is born in Patagonia: Months before the death of Douglas Tompkins, who founded the North Face and Esprit clothing companies, Tompkins Conservation proposed to the Chilean government that the group would donate more than a million acres of preserved territory if the government committed land and created a Patagonian national park network. President Michelle Bachelet’s administration ended up contributing 9 million acres, the New York Times details, and a vast national park system was born.
— Scott Pruitt before Scott Pruitt: Before Trump's controversial EPA chief, there was another administrator who was “famously hostile to the agency,” Mother Jones details in a profile of Anne Gorsuch, who led the agency under President Ronald Reagan. “A fierce politician — a newspaper in her native Colorado once wrote that she 'could kick a bear to death with her bare feet' — she resigned after she was held in contempt of Congress for refusing to turn over Superfund records suspected to reveal mismanagement.”
— “Too big to fine, too small to fight back:” After a two-year investigation, the Texas Observer’s Naveena Sivam reports on the discrepancy between how the state’s environmental agency goes after small gas station owners for record-keeping violations but lets off major refineries for illegal pollution. An analysis of enforcement activity from 2009 to 2017 found the state’s environmental agency collected $24 million from tank operators, mostly gas station owners, compared with the $30 million collected from refineries and industrial facilities.
- The House Natural Resources Subcommittee on Energy and Mineral Resources will hold an oversight hearing on LNG and geopolitical implications on Feb. 27.
— Witnessing a "shock breakout:" Self-taught astronomer Victor Buso spotted something no scientist had ever seen: A surge of light at the birth of a supernova. Read more from The Post's Sarah Kaplan.