By Kathleen M. Roberts
On May 9, 2017, Senator Elizabeth Warren (D-MA), along with seven additional Democratic Senators, sent a letter to the Securities and Exchange Commission (SEC), the U.S. Environmental Protection Agency (EPA), and the Commodities Futures Trading Commission (CFTC) requesting an investigation into the activities of Carl Icahn for potential insider trading, market manipulation, and other securities and commodities law violations in the renewable fuel credit market. The letter states that the actions of and the massive profit earned by Icahn raise questions related to conflict-of-interest rules that apply to government officials, and questions regarding insider trading and market manipulation of renewable fuel credits, known as Renewable Identification Numbers (RIN) -- which SEC, EPA, and CFTC have jurisdiction over. EPA oversees the issuance and trading of RINs. CFTC works with EPA to ensure integrity in the RIN market since it has broad authority to prevent insider trading and other market manipulation in commodities markets and futures markets. SEC has jurisdiction to investigate whether Icahn’s actions as a senior adviser to President Trump affected CVR Energy's stock value or the accuracy of the company's annual and quarterly financial reporting and disclosure.
The Senators maintained that RIN insider trading and market manipulation hurts all parties, including biofuel producers and refineries, and requested an investigation by the three agencies based on the publically available information detailed in the letter. The Senators also requested information on whether EPA Administrator Scott Pruitt and SEC Chairman Jay Clayton would recuse themselves from the investigation.
By Lauren M. Graham, Ph.D.
On May 5, 2017, Senator Ron Wyden (D-OR) introduced to the Senate Finance Committee legislation focused on reducing carbon pollution over the next decade by incentivizing clean energy and promoting new technologies in the private sector. The Clean Energy for America Act, which was co-sponsored by 21 Democratic Senators, provides a simplified set of long-term, performance-based energy tax incentives to promote clean energy production and storage. The legislation would create a technology-neutral incentive for the domestic production of renewable transportation fuels based on the lifecycle carbon emissions of the fuel. The lifecycle emissions would need to be 25 percent less than the U.S. nationwide average for the fuel to be eligible for a tax credit. Zero and net-negative emission fuels would be eligible for the maximum incentive of $1 per gallon. To assist in the transition, the proposed legislation would extend the current expiring clean energy provisions through December 31, 2018.
By Lauren M. Graham, Ph.D.
On April 26, 2017, a bipartisan bill was introduced in the U.S. Senate to reform the biodiesel tax credit and extend the new policy for three years. The American Renewable Fuel and Job Creation Act of 2017, which was sponsored by Senator Chuck Grassley (R-IA), Senator Maria Cantwell (D-WA), and 14 other senators, transfers the $1 gallon tax credit from the blenders to the producers of biofuels to ensure that it incentivizes domestic production. The bill also provides an additional $0.10 gallon credit for small biodiesel producers in the United States. According to a statement released by Grassely, the bill would incentivize domestic production, remove a system that allows foreign biodiesel producers to benefit from the tax credit, and would have little to no impact on the consumer.
By Lauren M. Graham, Ph.D.
On April 13, 2017, the U.S. Department of Commerce (DOC) announced that it was formally initiating antidumping (AD) and countervailing duty (CVD) investigations of biodiesel imports from Argentina and Indonesia. The decision follows a petition filed by the National Biodiesel Board Fair Trade Coalition, as reported in the Biobased and Renewable Products Advocacy Group (BRAG®) blog post “National Biodiesel Board Fair Trade Coalition Files Antidumping, Countervailing Duty Petition.” The National Biodiesel Board and U.S. biodiesel producers also provided testimony to the International Trade Commission (ITC) on April 13, 2017, explaining that Argentine and Indonesian companies are violating trade laws by flooding the U.S. market with dumped and subsidized biodiesel, and how those imports are injuring American manufacturers and workers.
The investigation covers biodiesel in pure form, mixtures containing at least 99 percent biodiesel by volume, and the biodiesel component of mixtures containing less than 99 percent biodiesel. ITC will issue its preliminary injury determinations by May 8, 2017. If ITC determines that imports of biodiesel from Argentina and/or Indonesia materially injure or threaten material injury to the domestic industry, the investigation will continue and DOC will announce its preliminary CVD and AD determinations in the summer of 2017.
On March 16, 2017, 23 Senators, including Senator Chuck Grassley (R-IA) and Senator Amy Klobuchar (D-MN), sent President Trump a bipartisan letter requesting that he maintain the point of obligation under the Renewable Fuel Standard (RFS) program. In the letter, the Senators remind Trump that the RFS program was adopted to provide stability for renewable fuel producers and that the U.S. Environmental Protection Agency (EPA) determined that, to meet this goal, the point of obligation should be placed on refiners and importers. Shifting the point of obligation downstream would create little incentive for refiners to produce the necessary blendstocks, which would make downstream entities unable to comply. The letter outlines the detrimental effects that changing the point of obligation would have on refiners, blenders, marketers and retailers, and states that the proposed changes are broadly opposed by the majority of the transportation fuel market. The Senators acknowledge Trump’s commitment to the RFS program and state that they look forward to working with Trump to ensure the RFS program continues to aid in job creation and economic growth across the country.
On March 2, 2017, Congressman Bob Goodlatte (R-VA) reintroduced the Renewable Fuel Standard (RFS) Reform Act, which aims to guide the debate and reform of the ethanol mandate. According to Goodlatte, the RFS program failed to lower prices at the pump and resulted in unintended and profound effects on consumers, energy producers, livestock producers, retailers, and the environment. The RFS Reform Act, which had 42 bipartisan cosponsors, would eliminate corn-based ethanol requirements, place a ten percent cap on the amount of ethanol that can be blended into conventional gasoline, require EPA to set cellulosic biofuels targets at levels produced by the industry, and decrease the total volume of renewable fuel content in gasoline sold or introduced into commerce from 2017 through 2022.
On March 7, 2017, the Governors’ Biofuels Coalition sent a letter to President Trump requesting the Administration’s support for changes to various federal policies to strengthen biofuels production and expand markets for ethanol and other biofuels. The letter, which was signed by Nebraska Governor Pete Ricketts and Iowa Governor Terry Branstad, specifically highlights the need for the Trump Administration to change the fuel volatility limitations placed on E15, to update corn ethanol’s lifecycle carbon emissions profile to reflect advances in ethanol production technology, and to update the 2014 motor vehicle emission simulator model to prohibit spurious comparisons of high- and low-ethanol emissions factors. The governors commended Trump on his support of the biofuels industry over the past year and stated that expanding biofuels production is one of the best ways to meet the nation’s energy needs.