On Tuesday, October 8, 2013, the American Petroleum Institute (API) filed a lawsuit with the U.S. Court of Appeals for the District of Columbia Circuit (D.C. Circuit Court) challenging the U.S. Environmental Protection Agency's (EPA) final rule setting the 2013 renewable volume obligations (RVO) under the federal Renewable Fuel Standard (RFS). While the petition for review lacks details about the lawsuit as such petitions are for notice purposes only, it is reported that API's main arguments against the rule will be that it was issued too late to be effective and that the 2013 cellulosic RVO set at six million gallons is higher than cellulosic gallons available on the market.
Under the RFS, EPA must issue the following year's RVOs by November 30. EPA did not release its final 2013 RFS rule setting all of this year's RVOs until August 6, 2013. Earlier this year, the D.C. Circuit Court directed EPA to set the cellulosic gallon requirement to levels of actual production expected based on company and other information. The court stated that EPA could not set the volumes at the maximum level of production possible to drive production.
API has been advocating for the full repeal of the RFS on legislative, regulatory, and legal levels. It also challenged EPA's 2011 and 2012 final RFS rules in court. In August 2013, API, along with the American Fuel & Petrochemical Manufacturers (AFPM), petitioned EPA to grant a partial waiver of the yet-to-be-proposed 2014 RFS RVOs.
Several biofuel trade groups have responded to this latest legal challenge. Growth Energy and the Renewable Fuels Association (RFA) denounced the lawsuit. In its press release, available online, RFA called it a "lawsuit in search of a problem."
On September 30, 2013, the U.S. Department of Agriculture (USDA) announced it had completed its second sale of sugar under the Food, Conservation and Energy Act of 2008 (the 2008 Farm Bill) Feedstock Flexibility Program (FFP). Reportedly, USDA purchased the sugar for $65.9 million and sold it immediately for $12.6 million, a $53.3 million loss. Currently, no information is available about the sale on USDA's website because the website is suspended during the government shutdown.
The 2008 Farm Bill, which expired on September 30, directs USDA to keep sugar prices at or above certain levels, and authorizes USDA either to acquire sugar through forfeiture of sugar loans made by the USDA's Commodity Credit Corporation or to buy sugar and sell it to bioenergy producers until prices raise to those levels. Domestic sugar prices have been falling this year.
USDA was criticized for its first sale of sugar as part of the FFP because in that instance USDA had purchased 7,118 short tons of refined beet sugar for $3.6 million and sold it to renewable fuel producer Front Range Energy for $900,000 (a loss of $2.7 million).
On October 7, 2013, House Committee on Energy and Commerce Ranking Member Henry Waxman (D-CA) sent a letter to American Chemistry Council (ACC) President Calvin Dooley asking him whether ACC is "abandoning its 2009 principles for reform of the Toxic Substances Control Act." The letter is available online.
In his letter, Representative Waxman tells Dooley that he has been hopeful that reform of the Toxic Substances Control Act (TSCA) would include many of the principles for reform released by ACC in 2009. He alleges that ACC appears to have abandoned six key reform principles and asks Dooley to clarify ACC's current position. In closing, Representative Waxman states that "t would be disappointing and a blow to the chances for successful TSCA reform if the ACC has abandoned its 2009 principles."
ACC has publicly supported S. 1009, the bi-partisan Chemical Safety Improvement Act (CSIA). Bergeson & Campbell, P.C. has issued a section-by-section in-depth analysis of CSIA, which is available online.
On Monday, October 7, 2013, the White House announced that Heather Zichal, Deputy Assistant to President Obama for Energy and Climate Change, will be leaving her post in the coming weeks. Zichal has been advising the President on these issues for the past five years and is considered a friend to the biofuels, renewable chemicals, and biobased products industries. For instance, she has been a strong proponent of maintaining the federal RFS and encouraging investment in biofuels. This year, Zichal helped lead the effort to roll out the President's comprehensive Climate Action Plan to reduce greenhouse gas emissions. There is no word on who will replace Zichal.
Butamax™ Advanced Biofuels LLC, a joint venture between BP PLC and DuPont, announced that it has broken ground on a plant to produce isobutanol, a renewable fuel that EPA has determined can qualify for credit under the federal RFS. Butamax is working to retrofit Highwater Ethanol LLC, an existing ethanol plant located in Lamberton, Minnesota.
The announcement is significant because Butamax has been in ongoing litigation with the other U.S. isobutanol producer, Gevo. Also, isobutanol may be one potential solution to the blend wall.
A copy of Butamax's press release on the groundbreaking is available online.
On October 2, 2013, Royal DSM announced that it has partnered with Minnesota-based PlastiComp, Inc. to develop biobased Long Fiber Thermoplastic (LFT) composite materials for the automotive and other markets. A copy of DSM's press release is available online.
On October 7, 2013, A*STAR's Institute of Chemical and Engineering Sciences (ICES) inked a Memorandum of Understanding with the Korea Institute of Industrial Technology (KITECH) to promote joint research and collaboration in the field of sustainable chemicals -- specifically in biomass-to-chemicals research. A copy of A*STAR's press release on the announcement is available online.
On October 1, 2013, U.S.-based INVISTA and UK-based industrial biotechnology company Ingenza Ltd. announced they are partnering on the development of new technologies to enable bio-derived processes for the production of industrial chemicals. A copy of INVISTA's press release is available online.
The U.S. government is shut down until the U.S. Senate and House of Representatives approve the same version of legislation to fund it and the President then signs it into law. House Republicans have been trying to tie funding the government with defunding certain parts of the Affordable Care Act (ACA), which went into effect on October 1. The Senate has rejected every funding bill sent to it by the House because each has contained provisions to marginalize the ACA. The Senate has also rejected a piecemeal approach to funding the government. This has created a very high stakes game of ping pong between the two chambers of Congress.
Aside from the impact on the entire economy, the government shutdown directly impacts all regulatory and legislative efforts affecting the biofuels and renewable chemicals industries, including work on the Toxic Substances Control Act (TSCA) and the Renewable Fuel Standard (RFS). It will almost certainly delay upcoming expected rulemakings, including the U.S. Environmental Protection Agency's (EPA) proposed rule setting the 2014 renewable volume obligations (RVO) under the RFS. It is reported that nearly 95 percent of EPA's staff has been furloughed during the shutdown, leaving only 17 employees working in EPA's Office of Air and Radiation and three working in the Office of Water.
The shutdown also postpones hearings and other legislative efforts impacting industry, including the hearing scheduled October 3, 2013, before the Senate Agriculture, Nutrition and Forestry Committee on "Advanced Biofuels: Creating Jobs and Lower Prices at the Pump."
All legislative and regulatory efforts on the federal RFS are at a standstill until the government re-opens. RFS legislative and regulatory efforts, however, were strong in the days before the government shutdown.
Last week, the Biotechnology Industry Organization (BIO) sent a letter to EPA Administrator Gina McCarthy urging EPA to deny the joint petition by the American Petroleum Institute and American Fuel & Petrochemical Manufacturers requesting EPA grant a partial waiver of the 2014 RVOs under the RFS. Petitioners had argued that waiving the RVOs for 2014 to 9.7 percent of the U.S. gasoline supply is necessary so their members may fulfill their volume obligations under the RFS without exceeding the 10 percent ethanol "blend wall."
In its letter, BIO argued that petitioners may not make the waiver request because the RVO requirements do not apply to them as trade associations and, in any case, the joint petition is premature since EPA has not even yet released its proposed 2014 RVOs. In addition, BIO argued that the projected harm by the petitioners due to the blend wall is the result of "ongoing dilatory tactics of the very parties seeking the waivers" and that there exist ample options for obligated parties to comply with the 2014 RVOs. The Renewable Fuels Association (RFA) sent a similar letter to EPA opposing the joint petition.
Also last week, the heads of six biofuel trade associations met with Republican staff of the House Energy and Commerce Committee about Committee Chair Fred Upton's (R-MI) efforts to reform the federal RFS law. The six associations represented were: BIO; the National Biodiesel Board; Growth Energy; RFA; the Advanced Ethanol Council; and the National Corn Growers Association. The associations were unified in their message to staff that the RFS should remain intact as-is, with no changes. The associations argue that the consistency and stability of the RFS law drives investment in biofuels, especially advanced and cellulosic biofuels, and it contains sufficient administrative flexibility to enable EPA to make appropriate adjustments to its implementation, including any necessary lowering of annual RVO requirements for obligated parties. It is reported that the biofuels groups were told not to expect any legislative proposal to be released before EPA issues its proposed rule to set the 2014 RVOs.
In addition, last week, 20 conservative leaning business groups sent a letter to Congress urging the repeal of the RFS. Also, Americans for Tax Reform, a conservative anti-tax group led by Grover Norquist, began a letter writing campaign to Congress advocating for RFS repeal.
Finally, biofuels supporter Senator Chuck Grassley (R-IA) sent a letter to EPA asking what measures EPA is taking to investigate claims of RFS Renewable Identification Number (RIN) market manipulation and speculation.
Not only did the U.S. government shut down at midnight on Monday, but so did the nine month extension of the 2008 Farm Bill. With no new five-year Farm Bill, the future is uncertain for rural energy programs supported by the U.S. Department of Agriculture (USDA), including the Biorefinery Assistance Program that promotes the development of biorefineries in the U.S.
As we have reported earlier this year, the U.S. Senate passed its version of the next five-year Farm Bill, including funding for farm, nutrition, and energy programs. Importantly, the Senate bill continues and provides mandatory funding for existing Farm Bill energy programs and extends eligibility to renewable chemicals. After failing to pass a combined bill, the U.S. House of Representatives passed a "farm-only" bill this summer and a nutrition-only bill cutting $40 billion in food stamps just last week. The House farm-only Farm Bill contains an energy title without mandatory funding that will instead be subject to annual appropriations, and it does not extend the energy programs to renewable chemicals.
There has been hope that though the differences are deep, the House and Senate will be able to pass a five-year Farm Bill by the end of the year when mandatory funds for commodity subsidies and food stamps expire. Whether this is true now largely depends on how quickly Congress re-opens the government and raises the debt ceiling to ensure the ability of the U.S. to meet its financial obligations.
On Monday, September 30, 2013, the U.S. Department of Energy (DOE) announced that it intends to award $100 million for cutting edge energy research in areas including biofuels as part of its Energy Frontier Research Centers (EFRC). In 2009, DOE granted five-year awards ranging from $2 million to $5 million per year to each of 46 EFRCs throughout the country. The current Funding Opportunity Announcement (FOA) is available online. Under the FOA, applicants must submit a letter of intent to apply by November 13, 2013, and applications are due by January 9, 2014. Existing and new EFRCs may apply.
The $100 million for this program is part of DOE's Fiscal Year 2014 funding request. Whether DOE is provided the funds is uncertain, especially given the government shutdown and standstill in Congress on passing a Fiscal Year 2014 budget.
On August 28, 2013, California's Office of Administrative Law (OAL) approved the California Department of Toxic Substances Control (DTSC) Safer Consumer Products Regulations (Regulations). The Regulations took effect on October 1, 2013.
The Regulations are the much anticipated regulatory implementation of California's Green Chemistry Initiative. DTSC's implementing regulations have gone through several iterations, including an initial draft released on June 23, 2010, a revised draft released on November 16, 2010, an "informal draft" released on October 31, 2011, proposed regulations released on July 27, 2012, revised proposed regulations released on January 29, 2013, another revised proposed regulations released on April, 10, 2013, and revisions proposed on August 23, 2013 (the 15-day comment period for these last comments was open until September 9, 2013, despite the issuance of final Regulations). Memoranda providing background information on past iterations are available online. The Regulations and Final Statement of Reasons are available online.
On September 26, 2013, cellulosic biofuels company KiOR, Inc. announced that it intends to build a second cellulosic biorefinery near its existing plant in Columbus, Mississippi. This second plant, or "Columbus II," is expected to cost $225 million and the Company intends to build it in 18 months after it raises sufficient capital. This announcement is significant, especially as it comes at a time when federal RFS opponents are strong and have waged a campaign to dismantle the law in part by arguing about the lack of development in the cellulosic biofuels space. KiOR's press release on Columbus II is available online.
California-based renewable chemical company Rennovia, Inc. announced on October 1, 2013, that it has "produced, and shipped to a prospective partner, samples of what it believes to be the world's first 100% bio-based nylon-6,6 polymer, under Rennovia's RENNLON brand, made from Rennovia's renewable monomers, RENNLON adipic acid (AA) and RENNLON hexamethylenediamine (HMD)." The Company estimates this production will cost 20-25 percent less than conventional AA and HMB, and will result in approximately 85 percent less greenhouse gas emissions. A copy of the Company's press release is available online.