On October 21, 2014, the Biobased and Renewable Products Advocacy Group (BRAG®) submitted petitions to the U.S. Environmental Protection Agency (EPA) requesting that biodiesel fuel manufacturers be granted the same Chemical Data Reporting (CDR) exemptions that petroleum-based diesel manufacturers already receive. BRAG made its petitions through two mechanisms allowed under Toxic Substances Control Act (TSCA) rules. BRAG's petitioning of EPA was reported in the Bloomberg BNA Daily Environment Report story "Biobased Diesel Companies Petition EPA For Rules Comparable To Traditional Diesel."
One petition, "Section 21 Petition for Section 8(a) Partial Exemption in Chemical Data Reporting for Biodiesel Products," was submitted to EPA Administrator Gina McCarthy requesting that EPA initiate a rulemaking to amend the TSCA Section 8 CDR partially exempted chemical list set forth in the EPA regulations at 40 C.F.R. Section 711.6(b)(1), referred to as the (b)(1) List. Specifically, BRAG petitioned EPA to add "biodiesel" as a chemical category for partial exemption for the same reasons as those given for petroleum chemicals already included, which occurred via a rulemaking process based on proposals submitted by the American Petroleum Institute (API). BRAG contends that biodiesel products should be treated similarly to the petroleum products included in the (b)(1) List due to the conditions of manufacture and the properties and uses of the substances.
The second petition, "Petition for Partial Exemption of Biodiesel Products," was submitted to the CDR Coordinator of EPA's Office of Chemical Safety and Pollution Prevention (OCSPP). In it, BRAG petitions to add "biodiesel" as a chemical category in the partially exempted chemical list at 40 C.F.R. Section 711.6(b)(2)(iv), referred to as the (b)(2) List. EPA has stated that CDR processing and use information for chemicals on the (b)(2) List is of "low current interest" and has established a petition process to enable stakeholders to add chemicals to the (b)(2) list.
BRAG believes biodiesel belongs on the (b)(1) List but because there is no formal petition process to amend the (b)(1) List, it decided to proceed with the "low current interest" petition process to amend the (b)(2) List as well.
Amending the CDR partial exemption list to include biodiesels is necessary to ensure equitable regulatory treatment of chemical substances of comparable release and exposure potential, and to avoid EPA providing regulatory relief to one subset of diesel products over another -- even though both meet the decision conditions identified by EPA in its final rulemaking to amend the (b)(1) List, especially in light of EPA's stated objectives and interest in sustainable technologies in general, and ongoing programs that engage biodiesel producers in particular.
Regarding the petitions, BRAG's Executive Director Kathleen M. Roberts stated: "We hope EPA recognizes that these petitions only seek to level the playing field for biodiesel and petroleum-derived diesel manufacturers. Under current regulation, biodiesel producers are required to spend significant amounts of time and money gathering and providing CDR information to EPA while petroleum-derived producers are not, for chemicals that are very similar, serve the same purpose, and are managed in equivalent ways."
On October 21, 2014, the Biobased and Renewable Products Advocacy Group (BRAG®) submitted two petitions to the U.S. Environmental Protection Agency (EPA) requesting that biodiesel fuel manufacturers be granted the same Chemical Data Reporting (CDR) exemptions that petroleum-based diesel manufacturers already receive.
The Bloomberg BNA Daily Environment Report covered the petitions in an October 22, 2014, feature story that stated "[t]he Biobased and Renewable Products Advocacy Group (BRAG) filed the petitions in an attempt to be exempted through either of two mechanisms allowed under Toxic Substances Control Act rules. Petroleum-derived diesel already is exempt from certain Chemical Data Reporting (CDR) rule requirements, BRAG wrote in both petitions. That means the EPA's current rule provides regulatory relief to petroleum-derived diesel but not to the biobased chemicals that are used in conjunction with or as replacements for the petroleum-based compounds, BRAG's petitions say. If the EPA rejects the petitions, biodiesel manufacturers will be subject to certain Chemical Data Reporting Rule requirements while manufacturers of the petroleum-derived versions of these fuels are not, Kathleen Roberts, BRAG's executive director, told Bloomberg BNA. That means biodiesel producers would have to spend a significant amount of time and money gathering information and providing it to the EPA, she said. The chemicals both types of manufacturers make are very similar, serve the same purpose and are managed in equivalent ways, BRAG's petitions said."
Copies of the two petitions submitted by BRAG are available on the BRAG website:
* Section 21 Petition for Section 8(a) Partial Exemption in Chemical Data Reporting for Biodiesel Products
* Petition for Partial Exemption of Biodiesel Products
On June 20, 2014, the National Biodiesel Board (NBB) filed a petition with the U.S. Court of Appeals for the District of Columbia Circuit requesting that the court rehear whether Monroe Energy (Monroe), a refining subsidiary of Delta Airlines, had standing to challenge EPA's final rule setting the 2013 Renewable Fuel Standard (RFS). BRAG reported on the court's recent denial of Monroe's challenge to that final rule. A copy of that report is available online.
As BRAG reported, the court held that EPA properly utilized its authority under the federal RFS to set the 2013 RFS volume requirements. The court disagreed with Monroe that EPA did not sufficiently consider factors in setting the final 2013 RFS rule, including the means of compliance for obligated parties. NBB wants the court to find that Monroe did not have standing to bring the challenge to the 2013 final RFS rule because the Company failed to show that a change to the rule would have changed the way that third parties acted with respect to their Renewable Identification Numbers. Reportedly, NBB would like the court to narrow the scope of groups that may bring challenges to the annual RFS rules set by EPA as part of the trade association's efforts to protect the RFS law.
On June 3, 2014, Renewable Energy Group, Inc. (REG) announced that its wholly-owned subsidiary, REG Synthetic Fuels, LLC, has closed its acquisition of substantially all of the assets of Syntroleum Corporation. The assets acquired from Syntroleum include a 50 percent ownership interest in Dynamic Fuels, LLC, which owns a 75 million gallon per year nameplate capacity renewable diesel biorefinery located in Geismar, Louisiana. REG has a separate pending agreement with Tyson Foods, Inc. to acquire the remaining interests in Dynamic Fuels. A copy of REG's announcement is available online.
On May 21, 2014, Iowa Governor Terry Branstad (R) signed into law Senate Bill 2344, legislation to help promote the biofuels industry in the State. A copy of the legislation is available online. It extends the biodiesel production tax credit that was scheduled to expire at the end of 2014, enhances Iowa's E-15 retailer tax credit, and adds biobutanol as a renewable fuel option. This law reinforces Iowa's ongoing support for the biofuels industry.
The U.S. Senate is expected to consider its version of tax extender legislation, S. 2260, the "Expiring Provisions Improvement Reform and Efficiency (EXPIRE) Act," as early as next week. On April 3, 2014, the Senate Finance Committee approved its version of the EXPIRE Act. The EXPIRE Act includes extensions through December 31, 2015 (and retroactive to January 1, 2014), of the following key biofuels incentives that have expired: the Alternative Fuel Refueling Property Credit; the Second Generation Biofuel Producer Tax Credit; the Special Depreciation Allowance for Second Generation Biofuel Plant Property; the Biodiesel and Renewable Diesel Fuels Credit; and the Alternative Fuel and Alternative Fuel Mixture Excise Tax Credit. A copy of the EXPIRE Act is available online. A summary of the bill is also available online.
API, AFPM, and ExxonMobil urged EPA and the Office of Management and Budget (OMB) to eliminate the ability of biodiesel producers to sever RINs from batches of fuels produced as part of an upcoming final rule establishing a quality assurance program for the fuels credit market.
The rule, as proposed, would establish qualifications for third-party auditors who would determine the validity of the RINs. It would also establish audit procedures for renewable fuel production facilities, including minimum frequency, site visits, review of records, and reporting requirements. The rule is open for comment now, and EPA is requesting feedback on whether renewable fuel producers should be allowed to separate and sell their own RINs. The groups emphasized that allowing biodiesel producers to separate and sell fuel credits creates opportunities for fraud in the RIN market.
Biodiesel producers are authorized to sever RINs from fuel batches and sell them as credits to comply with the annual RFS blending mandates. This generates two revenue streams -- one from fuel sales, and another from RIN credit sales. This anomaly resulted from a settlement between 30 refiners and other companies and EPA in April 2013, where $3.65 million was paid to EPA in penalties for purchase of fraudulent credits. The National Biodiesel Board and the Renewable Energy Group emphasized that "[t]he biodiesel marketplace is not as mature as other biofuel markets" and "often the value of the RIN provides biodiesel producers with [their] only opportunity to create a margin."
On April 8, 2014, House Committee on Ways and Means Chair Dave Camp (R-MI) held a hearing on the "Benefits of Permanent Tax Policy for America's Job Creators." The hearing focused on the expiring business tax provisions that are made permanent or extended under Camp's recently released discussion draft of the "Tax Reform Act of 2014" (TRA). Unlike his Senate counterpart -- Senate Committee on Finance Chair Ron Wyden (D-OR) -- Camp is not very supportive of passing a tax extender package to extend retroactively the approximately 50 incentives that expired at the end of 2013, including several for advanced biofuels development. In fact, the TRA would eliminate most clean energy incentives. The House Ways and Means Hearing Advisory is available online.
Last week, the Senate Finance Committee approved its version of tax extender legislation, the "Expiring Provisions Improvement Reform and Efficiency (EXPIRE) Act." The EXPIRE Act includes extensions through December 31, 2015 (and retroactive to January 1, 2014) of the following key biofuels incentives that have expired: the Alternative Fuel Refueling Property Credit; the Second Generation Biofuel Producer Tax Credit; the Special Depreciation Allowance for Second Generation Biofuel Plant Property; the Biodiesel and Renewable Diesel Fuels Credit; and the Alternative Fuel and Alternative Fuel Mixture Excise Tax Credit. A copy of the EXPIRE Act is available online. A summary of the bill is available online.
Whether a tax extenders package will pass this year depends on several factors. It is likely to be more difficult to pass in the House of Representatives than in the Senate.
On February 13, 2014, Senators Maria Cantwell (D-WA) and Chuck Grassley (R-IA) introduced S. 2021, a bill to extend and reform the $1 per-gallon biodiesel tax credit that expired on December 31, 2013. The bill would extend this credit for three years through 2017. It would provide a $1 per-gallon tax credit for the production of biodiesel, renewable diesel, and aviation jet fuel that complies with fuel standards and the Clean Air Act. The bill would modify the definition of biodiesel to encourage production from any biomass-based feedstock, or recycled oils and fats. It would increase the credit to $1.10 per-gallon for the first 15 million gallons of biodiesel produced by small producers with an annual production capacity of less than 60 million gallons. In addition, the bill would restrict the credit to fuel producers to ensure the credit goes to domestic biodiesel production and to prevent eligibility of fuel blenders that could potentially add a very small amount of biodiesel to petroleum diesel (a practice known as "splash and dash") to qualify.
This bill would likely be added to a larger tax extender package that new Senate Committee on Finance Chair Ron Wyden (D-OR) has said he is interested in moving through the Committee in the near future. It would be significant for the biodiesel industry, which produced .7 billion gallons more in 2013 when the biodiesel tax credit was available than in 2012 when Congress let the credit expire.
On January 22, 2014, there were reports of two explosions at the JNS Biodiesel LCC biodiesel plant in northern Mississippi. No one was injured. The plant is designed to use poultry fat as the feedstock to produce eight million gallons of biodiesel each year. The news comes as the biodiesel industry is advocating its potential production beyond EPA's proposed 2014 and 2015 requirements.