Now Trump administration would like to see bankrupt Philadelphia refinery kept open

The bankrupt Philadelphia Energy Solutions oil-refinery complex, where fuels have been produced for 150 years, is not dead yet. Even the White House has become involved in efforts to maintain the site as a petroleum processing facility.

Industrial Realty Group, the spurned bidder for the company that shut down after a devastating June fire, has teamed up with former refinery chief executive Philip Rinaldi to try to upstage a bankruptcy court sale to rival Hilco Redevelopment. Hilco’s bid in a recent bankruptcy auction was $25 million less than IRG’s, but Hilco was selected as the winner, according to a court filing.

“We think we offer a superior solution from every single aspect that you can think of,” Rinaldi, whose company is called Philadelphia Energy Industries, said in an interview Tuesday. “We think it’s a better solution for the estate. It’s a better solution for Philadelphia. It’s a better solution for the region.”

Rinaldi and labor union leaders have pressed Peter Navarro, the assistant to the president for trade and manufacturing policy, to put the Trump administration’s weight behind a bid to keep the 335,000-barrel-per-day refinery operating. They argue that more than a thousand jobs and national security interests would be affected by the closure of the East Coast’s largest oil refinery and make the Northeast too dependent upon fuel imports.

“Look, these are great jobs for Philly," Navarro said in a phone interview Tuesday. "This is a way to advance the energy-policy agenda, the economic-policy agenda, and the national-security agenda. So we’d love to see that remain as a refinery.”

» READ MORE: ‘Their timeline is aggressive’: Hilco plans to clean up polluted South Philly refinery site, city says

It’s unclear what type of influence the White House could bring to bear on a bankruptcy process that is scheduled to be decided at a Feb. 6 confirmation hearing in Wilmington. But the union leaders suggested the administration might send a signal to the bidders, who will eventually require approval from the U.S. Environmental Protection Agency to either operate a refinery or to clean up the heavily contaminated site for a new occupant.

“The EPA would have to get involved -- it’s going to take millions upon millions of dollars to clean the place up,” said Jim Snell, business manager of Steamfitters Local 420 and one of four labor leaders who met Thursday with Navarro.

It was the second White House visit for the union entourage, which was led by John J. Dougherty, business manager of the Philadelphia Building and Construction Trades Council, who is also under indictment on federal corruption charges. The other union leaders who made the trip to Washington were Steven F. Pettit, business manager of Insulators Local 14, and John Bland, business manager of Boilermakers Union Local 13.

Snell said that President Donald Trump’s trade adviser was well-versed on the refinery’s status but made no promises.

Rinaldi said he met separately with Navarro over the refinery’s closure, and previously, when he was chief executive, he met with Trump to discuss federal ethanol mandates issues. But he has not discussed the refinery’s bankruptcy directly with the president. Rinaldi noted that it is not unusual for the White House to be involved in issues related to refineries and fuel markets -- the Obama White House’s support eight years ago was critical to securing investors for a previous rescue of the Philadelphia refinery .

The restoration of an oil refinery, though strongly advocated by business and labor interests, will raise objections from environmental and community activists who had rejoiced when Hilco was selected after a Jan. 17 closed-door auction. City officials said that Hilco does not intend to restart the refinery, and instead plans a multi-use development after the polluted property is restored.

“I hope that Hilco is the winner and works with unions, nearby neighbors and environmentalists on how best to use the property,” Joseph Otis Minott, executive director of the Clean Air Council, said in an e-mail Tuesday. “From an environmental health perspective a refinery does not belong at that site.”

The refinery was the city’s largest stationary source of air pollution, and the dramatic June 21 fire and explosion that launched multi-ton pieces of steel several thousand feet only reinforced fears that it is a dangerous facility to operate in an urban area.

PES, in its organization plan, said Hilco’s $240 million bid was chosen after the Jan. 17 auction, and it named Industrial Realty Group (IRG), of Santa Monica, Calif., as the backup bidder.

» READ MORE: Hilco’s $240 million bid for South Philly refinery wasn’t the highest offer, aggrieved creditors say

The committee of unsecured creditors last week recommended its members vote against the reorganization plan because IRG, the runner-up, actually offered $265 million, or $25 million more than Hilco. IRG 's bid left open the possibility of maintaining the property as a refinery, which appealed to the unsecured creditors, whose members include contractors and unionized employees.

In recent days, attorneys for the unsecured creditors have barraged Hilco, PES, and its investment bankers with subpoenas and deposition requests that explore Hilco’s selection over IRG, suggesting the committee plans to formally object to the reorganization plan by a Feb. 3 deadline.

Rinaldi, 73, retired from PES at the end of 2017, just months before the company declared bankruptcy for the first time. He has expressed a desire to return to the business to complete a turnaround that he began in 2012.

If IRG and Philadelphia Energy Industries are selected as the buyer -- and Rinaldi said he is “confident” his group will prevail -- Rinaldi said he intends to restart the parts of the complex that were undamaged after the June 21 explosion and fire. The fire destroyed one of the refinery’s two alkylation units, which produce a blending agent that makes high-octane fuel.

Rinaldi said that IRG plans to develop other unused parts of the 1,300-acre PES site.

Rinaldi’s firm had been a bidder on its own for PES, but was not among the finalists in the auction. He said that he and IRG had teamed up after Hilco was selected in the Jan. 17 auction.

A spokesperson for IRG did not respond to a request for comment Tuesday.

Snell, the business manager of the steamfitters, said the union leaders firmly support IRG and Rinaldi and a restoration of the refinery, which they say provide better-paying jobs than warehouses and distribution centers contemplated to replace the facility. "We feel strongly that they have what it takes to secure this site and get everybody back to work,” he said.

He also expressed scorn for elected officials who he said were eager to help the refinery in the past but now call for its closure as a public menace.

“These are the same politicians that come to people like myself, come to the building trade unions, begging for money to pay off campaign debt and whatnot,” he said. “But now when we want to talk to these politicians about helping our families, a lot of these politicians have buried their heads in the sand.”

“One thing I can guarantee: There are certain groups of politicians, and I won’t be answering the phone anymore when they call looking for campaign contributions, that’s for sure," said Snell.