This week, Senator Debbie Stabenow (D-MI) sent a letter to the Commodity Futures Trading Commission (CFTC) asking for an investigation into claims that speculators are manipulating the RIN market in which RIN credits are bought and sold to help obligated parties meet their annual renewable volume obligations (RVO) under the federal RFS. Senator Stabenow expressed concern with the lack of transparency in the RIN market.
Ethanol RIN prices have dramatically risen this year and there have been allegations that the increase has been the result of speculation.
The Federal Aviation Administration (FAA) has announced that it will provide $40 million for a Center of Excellence (COE) on sustainable aviation fuel and the environment. The funds will be distributed in $4 million increments each year for the next ten years. Washington State University and the Massachusetts Institute of Technology will be leading the effort, and several other universities will be involved. For a full list of participants and more information on the initiative, please see a copy of FAA's press release, which is available online.
This announcement illustrates the federal government's important role in and commitment to facilitating the ongoing development and commercialization of U.S. biofuels. This year, the FAA and the U.S. Department of Agriculture (USDA) renewed their joint agreement to promote the development of aviation biofuels. They are aiming for one billion gallons of commercial aviation capacity by 2018.
USDA is continuing its work to promote the U.S. biofuels industry, which USDA Secretary Tom Vilsack believes helps bolster the U.S. agriculture sector and rural economy. On September 12, 2013, USDA announced that it will provide a total of $15.5 million to 188 advanced biofuel producers under USDA's Advanced Biofuel Payment Program, which was created under the 2008 Farm Bill (P.L. 110-234, the "Food, Conservation and Energy Act of 2008"). It is reported that through that program to date, USDA has provided $211 million to 290 biofuel producers. This federal support is an important component to efforts of producers in the still nascent advanced biofuels industry to get up and running. USDA's press release on this announcement is available online.
The group of four Republican members of the House Energy and Commerce Committee tasked with examining proposals to reform the federal Renewable Fuel Standard (RFS) are reportedly still considering options for reform and compromise. This week, one of the members of the task force, Representative John Shimkus (R-IL), stated publicly that there may be avenues for compromise under the RFS' Renewable Identification Number (RIN) credit trading program. Other members of the task force include Representatives Lee Terry (R-NE), Cory Gardner (R-CO), and Steve Scalise (R-LA). The Biobased and Renewable Products Advocacy Group's (BRAG™) previous report on the task force is available online.
On September 18, 2013, the U.S. House Committee on Energy and Commerce held a hearing on "Regulation of Existing Chemicals and the Role of Pre-Emption under Sections 6 and 18 of the Toxic Substances Control Act." This was the third hearing in a series held by the Committee on the Toxic Substances Control Act (TSCA). It comes at a time when the Senate Committee on the Environment and Public Works (EPW) is also considering TSCA reform, including S. 1009, the "Chemical Security Improvement Act" (CSIA). Senate EPW Chair Barbara Boxer (D-CA) has indicated that preemption is an important issue and that she wishes to ensure that any TSCA reform protects state laws, including California's Proposition 65, the state's law regulating unsafe chemicals.
Bergeson & Campbell, P.C. (B&C®) has issued a detailed summary of the hearing, which is available online.
Improved utility of data, transparent supply chains, and transformative innovation were just some of the topics discussed by regulators, researchers, and industry at the 3rd Safer Consumer Products Summit: National Policy Outlook held in Washington, D.C. this week. Summit Chair Lynn L. Bergeson, Managing Partner, B&C, opened the main summit by noting the dramatic shift in environmental law from the regulation of discharges of chemical substances into the environment (and their subsequent cleanup) to a more proactive focus on the regulation of chemicals in products -- especially consumer products. She then walked the room through the current efforts at TSCA reform, most notably CSIA and gave her insider's analysis of what to expect from Capitol Hill regarding CSIA.
Keynote speaker Jim Jones, Assistant Administrator, Office of Chemical Safety and Pollution Prevention (OCSPP), highlighted the great strides the U.S. Environmental Protection Agency (EPA) has made in increasing access to data, especially with the debut last week of the ChemView searchable database and the positive impact programs such as Design for the Environment and the Green Chemistry Awards have in stimulating the safer chemical market.
In a luncheon keynote, sponsored by BRAG, the "father of green chemistry" Dr. Paul Anastas, Director of the Center for Green Chemistry and Green Engineering at Yale, exhorted the gathered companies, researchers, and non-governmental organizations (NGO) to set a goal of transformative innovation rather than incremental improvements: instead of just looking for safer dyes, develop fiber plants that grow in colors; rather than making a small improvement in paint and waterproofing formulations, mimic the action of waterproof plants to achieve the goal.
A panel discussion with safer product groups and brands, moderated by BRAG's Executive Director Kathleen M. Roberts, included spirited exchanges on the perceived value of "green" to consumers, the need for extreme transparency of ingredients throughout the supply chain, and the question of whether NGOs can engage in recognizing and encouraging good corporate actions in addition to their focus on thwarting the bad. Ms. Roberts made the point that BRAG is actively engaged in helping to level the regulatory playing field between petroleum-based products and their greener alternative biobased products.
On September 12, 2013, Representative Bill Pascrell (D-NJ) introduced H.R. 3084, the "Qualifying Renewable Chemical Production Tax Credit Act," to provide tax parity for the renewable chemical industry in the United States. Along with Representative Pascrell, the original co-sponsors of the bi-partisan bill are Representatives Steve Stockman (R-TX), Allyson Schwartz (D-PA), Linda Sanchez (D-CA), and Richard Neal (D-MA).
Essentially, the bill would extend the current production tax credit (PTC) for cellulosic biofuels to producers of renewable chemicals. It would provide a PTC of 15 cents per pound of eligible renewable content, but it caps the benefit at $500 million and a single producer may not receive more than $25 million in a tax year. A copy of the legislation is available online. Representative Pascrell has stated publicly that he hopes the legislation will help incentivize the U.S. production of renewable chemicals and help develop the industry here in the United States.
On September 18, 2013, the 9th Circuit Court of Appeals reversed a December 2011 district court ruling and held that California's Low Carbon Fuel Standard (LCFS) does not violate the Dormant Commerce Clause of the U.S. Constitution on its face. The district court had sided with groups from the oil and gas, ethanol, and trucking industries and found that the LCFS violated the Dormant Commerce Clause because the statute gave higher carbon intensity values to out-of-state, Midwest, ethanol, putting that fuel at a disadvantage in California. At the time of the 2011 decision, the district court had also issued a preliminary injunction preventing the California Air Resources Board (CARB) from enforcing the LCFS.
In its decision this week, the appeals court held that the LCFS does not violate the Dormant Commerce Clause on its face, and it remanded to the district court whether the statute violates the clause "in purpose or in practical effect." The appeals court also vacated the preliminary injunction.
It has been reported that the ethanol industry is looking at their legal options in light of the appeals court decision.
Specialty chemical company Elevance Renewable Sciences, Inc. announced this week the commercial availability of Inherent™ C18 Diacid, a mid-chain length, biobased diacid that will, as the company describes in its press release, enable "producers of polyamides and polyurethanes, lubricants and adhesives to significantly expand their portfolios with cost-competitive products that demonstrate performance not possible from products made with more common, shorter-chain diacids." A copy of the company's press release is available online.
On September 16, 2013, Cambridge, Massachusetts-based renewable chemicals company, Metabolix, announced the development of Mvera B5010, which is a compostable film grade resin to be used for global compostable bag and film markets. Mvera B5010 meets international industrial standards for compostability and will be featured during K 2013 in Düsseldorf, Germany, October 16-23, 2013. A copy of Metabolix's press release on the announcement is available online.
The U.S. Environmental Protection Agency (EPA) reportedly has completed its proposed rule setting the 2014 renewable volume obligations (RVO) for obligated parties under the federal Renewable Fuel Standard (RFS). The proposal is now being reviewed by the Office of Management and Budget before being published in the Federal Register, which will open the public comment period. By law, EPA is required to set the following year's RFS RVOs by November 30. The 2013 RVOs were not prepared in final until August of this year, which was likely due to EPA concerns about setting the volumes amidst legal, legislative, and regulatory challenges by obligated parties to the final 2011 and 2012 RVOs.
EPA included language in the final 2013 RFS rule indicating that it may reduce the overall RVOs in its upcoming 2014 RFS rulemaking. Just before EPA issued the 2013 final rule containing this language, leading trade groups representing the oil and gas industry, the American Petroleum Institute (API) and American Fuel & Petrochemical Manufacturers (AFPM), filed a joint waiver petition with EPA requesting that the Agency reduce the overall 2014 statutory RVOs to 9.7 percent of the U.S. transportation fuel supply due to what they argue are their blend wall concerns. The joint waiver petition is available online. This week, Valero Energy Corporation, the world's largest independent refiner, also sent in a petition requesting that EPA waive the 2014 RVOs. Valero cited the burdensome and high costs of Renewable Identification Numbers (RIN) needed for RFS compliance.
Several members of the biofuels industry have stated publicly that they believe there are several options that could, at least in part, address the impending so-called blend wall. The Renewable Fuels Association made this point in its letter to EPA urging the Agency to deny the waiver petition. RFA's letter is available online.
On September 6, 2013, EPA's Office of the Inspector General (IG) issued a report finding that the Agency does not meet the control standards for monitoring some of the new programs and activities designed to prevent and reduce instances of fraudulently generated RINs under the federal RFS. EPA's one-page report summary is available online and its 23-page full report is available online.
The EPA IG findings come at a vulnerable time for the RFS and its allies. Trade groups representing the oil and gas industry, among others, have called on EPA to modify the RFS in several ways, including to protect against RIN fraud. Those groups, as well as the National Biodiesel Board, worked with EPA to design a new plan to help protect against RIN fraud. EPA issued a proposed rule outlining the plan in February of this year. A copy of the proposed rule as published in the Federal Register is available online. The plan is expected to be completed soon.
The group of four House Energy and Commerce Committee Members tasked with examining ways to reform the federal RFS met this week for the first time since the August recess. The group was named by Committee Chair Fred Upton (R-MI) and includes Representatives John Shimkus (R-IL), Cory Gardner (R-CO), Lee Terry (R-NE), and Steve Scalise (R-LA).
Reportedly, the group is looking at potential proposals that could be released this fall. In general, the biofuels industry is working hard to advocate that the RFS is working as it was intended and the best course of action would be to leave the law in place as is to allow it to continue to drive investment in the industry. The next few weeks will be telling in terms of what, if any, proposals may be introduced or considered by the House of Representatives. There is no similar organized activity in the Senate. Senate Committee on the Environment and Public Works Chair Barbara Boxer (D-CA) has stated publicly, however, that she may hold a hearing on the RFS early this fall.
Congress returned from its August recess this week, and, as expected, the Republican leadership of the U.S. House of Representatives is looking toward passing legislation on the remaining nutrition portion of the Farm Bill, including $40 billion in cuts to food stamp programs over the next ten years. The bill could come up for a vote next week.
House Republican leaders, including House Committee on Agriculture Chair Frank Lucas (R-OK), have stated they do not wish to go ahead with a conference committee with the Senate to complete the next five-year Farm Bill until they pass the nutrition portion. In June, the House passed a "farm-only" Farm Bill, H.R. 2642, which left out funding for food stamps and other nutrition programs. A more comprehensive version of the Farm Bill containing $20 billion in cuts to nutrition programs was defeated in a previous vote mainly because several Democrats felt the cuts were too large, while several Republicans thought they did not go far enough.
Passage of a nutrition portion of the Farm Bill containing $40 billion in cuts may attract enough House Republicans to lead to a conference committee with the Senate to hammer out a final version of the next five-year Farm Bill, but it will not make those negotiations any faster or easier. In May, the Senate passed its version of the next Farm Bill, S. 954, the Agriculture Reform, Food and Jobs Act of 2013, which funds both farm programs and food stamps. S. 954 contains a strong energy title with nearly $900 million in mandatory funding and expanded eligibility for renewable chemicals. Senate Committee on Agriculture Chair Debbie Stabenow (D-MI), who is leading the Farm Bill effort in the Senate, has said that $40 billion in cuts is a "non-starter." In fact, she and other Democratic leaders in the Senate opposed the original $20 billion in cuts the House attempted to pass earlier this year. This disagreement will likely extend the Farm Bill conference committee negotiations beyond September 30, when the current version of the Farm Bill expires.
On Wednesday, September 11, 2013, the European Parliament voted 356-327 to cap conventional biofuels at six percent of the European Union's (EU) transportation fuel by 2020 due to food-versus-fuel concerns. It also voted to require that 2.5 percent of EU transportation fuel consist of advanced biofuels by 2020, and to target that fuel to contain a 7.5 percent ethanol blend. The legislation does not require that indirect land use change be taken into account until 2020. The proposal must now be approved by EU Member States.