On November 8, 2013, Congressman Bruce Braley (D-IA) sent a letter to President Obama stating that he is "angered and frustrated" that EPA is considering reducing renewable volume obligations (RVO) as part of its current rulemaking process to set the 2014 RVOs under the federal RFS. He further urges President Obama and his Administration to reconsider such reductions and points out that reductions like those contained in a recently leaked draft of the 2014 RFS proposed rule would harm economies throughout the Midwest and would damage the country's biofuel infrastructure. The sentiments in the letter are similar to ones expressed recently by many representing the biofuels industry.
The oil industry generally has urged EPA to make the kind of reductions to the 2014 RVOs as contained in the leaked draft proposed rule.
On Thursday, November 7, 2013, the Department of Energy (DOE) and the National Renewable Energy Laboratory released the Alternative Fueling Station Locator App for iPhone or iPad that provides up-to-date information to potential consumers on the closest fueling stations that offer various alternative fuels, including biodiesel (B20), compressed and liquefied natural gas, and ethanol (E85), among others. More information, including a link to the App, may be found on DOE's website.
This new App is a significant new tool in the effort to increase the amount of renewable fuels developed, distributed, and used in the United States.
On November 7, 2013, cellulosic biofuels producer KiOR, Inc. (KiOR) released its third quarter results. The company reported that its Columbus facility began a run in September, and is now producing cellulosic biofuels steadily and at record rates. This is significant news in the biofuels industry, as KiOR is one of the leading companies expected to contribute to the cellulosic volume availability under the RFS in 2013. A copy of the company's press release may be found online.
On October 30, 2013, Representatives Bob Goodlatte (R-VA), Jim Costa (D-CA), Peter Welch (R-VT), and Steve Womack (R-AR) sent a letter signed by 169 Members of Congress to U.S. Environmental Protection Agency (EPA) Administrator Gina McCarthy urging EPA to use its authority to reduce the 2014 statutory renewable volume obligations (RVO) for all types of biofuels, including conventional corn starch ethanol under the federal Renewable Fuel Standard (RFS). A copy of the letter is available online.
The arguments made in the letter echo those put forth by the oil and gas industry and assert that the 2014 RVO reductions are needed to protect against corn price volatility and the E10 ethanol blend wall.
The letter comes at a crucial time in RFS advocacy. The oil and gas industry is leading the effort to repeal or weaken the RFS through regulatory, legal, and legislative channels, while the biofuels industry is fighting to maintain the policy, arguing that it is the fundamental driver of investment in the industry and that it provides EPA sufficient regulatory flexibility to make all necessary adjustments in its implementation. Further, the biofuels industry notes that no reductions in the conventional RVOs are needed as the RFS has minimal impact on corn prices and there are sufficient mechanisms for 2014 compliance. In addition, many in the biofuels industry argue that the concerns about the E10 blend wall are misplaced, as it exists because the oil and gas industry has refused to make or encourage the necessary investments to enable additional ethanol to be blended into the fuel supply.
A copy of Growth Energy's press release and the Renewable Fuels Association's (RFA) statement on the letter are available online and online.
On November 1, 2013, the Biotechnology Industry Organization (BIO), Growth Energy, and RFA filed a motion to intervene on behalf of EPA in the current lawsuit by Monroe Energy, the American Petroleum Institute (API), and the American Fuel and Petrochemical Manufacturers (AFPM) challenging EPA's final rule establishing the 2013 RVOs under the federal RFS. The filing was made in the U.S. Court of Appeals for the District of Columbia Circuit, where the case is pending. Copies of press releases issued by BIO, Growth Energy, and RFA are available online.
The Internal Revenue Service (IRS) has released an advice memorandum from the agency's Office of Chief Counsel determining that "y electing the § 6426(c) excise tax credit [biodiesel mixture credit] and/or the § 6427(e) excise tax payment instead of the § 40A income tax credit, a blender is not required by § 87 or by § 61 to include in its gross income the amount of the § 6426(c) excise tax credits and/or the § 6427(e) payments that it claims." A copy of the memorandum is available online.
On October 30, 2013, the Conference Committee selected to merge the House and Senate versions of the next five-year Farm Bill met to begin formal negotiations. This Farm Bill Conference Committee is comprised of 41 bi-partisan Members of the U.S. House and Senate.
Though Farm Bill Conference Committee negotiations are expected to be difficult, pressure is on Members of Congress to pass a final version of the next five-year bill by the end of this year. If it fails to do so, farm policy will be governed by an outdated supply-side permanent law from 1949. In that situation, milk prices would be expected to increase sharply, among other things. In addition, the old law includes nothing to cover or help promote renewable energy, including biofuels and renewable chemicals.
Earlier this year, the U.S. Senate passed its version of the next five-year Farm Bill, S. 954, 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. It includes $4 billion in cuts to nutrition programs. After failing to pass a combined bill, the U.S. House of Representatives passed a "farm-only" bill this summer and then a separate "nutrition-only" bill cutting $40 billion in food stamps. 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.
The biofuels and renewable chemicals industries continue efforts to gain support for an energy title that would support their development and include mandatory funding in the final version of the next Farm Bill.
As stakeholders eagerly await the impending official release of the U.S. Environmental Protection Agency's (EPA) proposed 2014 Renewable Fuel Standard (RFS) rule, strong advocacy from all sides continues on the issue in Washington. The Office of Management and Budget (OMB) has been reviewing the proposed rule since August 30, 2013. Recently, a draft of it was leaked (the leaked draft proposal). In the leaked draft proposal, for the first time, EPA would lower the RFS target volumes not only for cellulosic biofuels, but for conventional ethanol and advanced biofuels as well.
On October 23, 2014, biofuels advocates, including representatives from the Biotechnology Industry Organization (BIO), Advanced Ethanol Council (AEC), DuPont, Novozymes, and Abengoa, met with officials from OMB and the White House. Reportedly, they urged the Administration to reconsider the leaked draft proposal. They argued that the oil and gas industry's concerns about the blendwall -- the point at which no additional E10 may be blended into the fuel supply -- are unfounded and result not from the inability to blend greater amounts of ethanol into the fuel supply, but instead from the industry's refusal to do so. On October 29, 2013, BIO and AEC sent a letter signed by over 30 biofuels companies to President Obama again urging the Administration to reconsider the leaked draft proposal and stressing the importance of consistent RFS implementation to promoting investment in biofuels, including next generation biofuels.
This week, AAA and Sportsmen have come out in support of the oil and gas industry's position that EPA should lower the RFS volume requirements for ethanol to no more than 9.7 percent of the U.S. fuel supply. AAA echoes the industry's argument that such reduction is needed due to the E10 blend wall and concern that E15 could damage car engines. The Congressional Sportsmen's Foundation held a briefing this week during which it suggested that the ethanol volume requirements under the RFS have caused hunting and fishing areas to be converted to cropland, and have degraded water quality in the Mississippi River watershed, among other changes.
Citing concerns over livestock in their states, Senators Dianne Feinstein (D-CA) and Tom Coburn (R-OK) have announced plans to introduce legislation to eliminate the corn ethanol volume requirements under the federal RFS. The bill would leave the advanced biofuels requirements in place. Certain stakeholders in the biofuels industry have already come out against the bill. For instance, it is reported that Renewable Fuels Association President and CEO Bob Dinneen has stressed the importance of maintaining the conventional biofuel volume requirements to the continued development of the advanced biofuels industry. Dinneen argues that the growth of the conventional biofuels industry has built up the infrastructure necessary to support advanced biofuels.
On October 30, 2013, the U.S. Court of Appeals for the District of Columbia approved the request by Monroe Energy to expedite review of the current RFS litigation challenging EPA's final rule setting the 2013 renewable volume obligations under the federal RFS (the 2013 RFS rule). In October 2013, Monroe, the American Petroleum Institute (API), and the American Fuel and Petrochemical Manufacturers (AFPM) filed individual cases before the court challenging the 2013 RFS rule. These cases have been consolidated.
In response to Monroe's petition for expedited review, the court issued an order encouraging all parties to work together and propose a mutually agreed upon expedited schedule. The parties, including EPA, submitted a proposed expedited briefing schedule on October 24 and the court approved it on October 30. Under the schedule, all briefs will be submitted by the end of February 2014.
Also on October 24, 2013, the National Biodiesel Board (NBB) filed a petition with the court to intervene in the case on behalf of EPA. NBB asserts that its member companies would be harmed if the 2013 RFS rule were to be changed or weakened.