On February 11, 2014, Representative Dave Loebsack (D-IA) introduced H.R. 4051, the Renewable Fuel Utilization, Expansion, and Leadership (Re-FUEL) Act. The bill currently has no co-sponsors. The bill is designed to help fuel retailers with investments in renewable and alternative fuel infrastructure to provide consumers with the increased ability to choose alternative fuels at the pump. It would create a competitive grant program through the U.S. Department of Agriculture (USDA) to invest in renewable and alternative fuel infrastructure. Grants would be awarded to develop new or to retrofit existing infrastructure, including pumps for biofuels and hydrogen, tanks, piping, and electric vehicle chargers. Applicants would be required to provide a 30 percent non-federal match and the maximum grant to each entity per year would be $100,000. A copy of the bill is available online.
Representative Loebsack is a vocal supporter of the federal Renewable Fuel Standard (RFS) and has joined some of his colleagues to urge EPA to reconsider the Agency's current proposal to reduce the volumes of corn-starch ethanol and advanced biofuels under the law in 2014. Expanding the available distribution infrastructure as proposed in H.R. 4051 would help increase the availability and use of fuels with higher ethanol blends, including E85. This increased availability would help address the blend wall concerns cited as the driving factor for the proposed RFS volume reductions.
President Obama is expected to sign H.R. 2642, the Agriculture Act of 2014 (the new five-year Farm Bill), into law on Friday at Michigan State University in East Lansing, Michigan. He is scheduled to speak there about the importance of the legislation.
The Farm Bill is critically significant to the biofuels and renewable chemicals and products industries because the new Farm Bill continues and expands on the majority of the energy programs covered under the 2008 Farm Bill and provides $881 million in mandatory funding to carry them out. For instance, the new Farm Bill continues the Biobased Markets and Biorefinery Assistance programs, as well as the Biomass Crop Assistance Program, which helps encourage and facilitate the growth of purpose grown energy crops to be used for energy production. It modifies the existing Biorefinery Assistance Program to create the Biorefinery, Renewable Chemical and Biobased Product Manufacturing Assistance Program and extend funding eligibility to producers of renewable chemicals and biobased products. The mandatory funding under this program and expanded eligibility marks a big victory for the biofuels and renewable chemicals and products industries.
The U.S. House of Representatives approved H.R. 2642 by a bi-partisan vote of 251-166 on January 29, 2014. The Senate followed suit on February 4, 2014, by a bi-partisan vote of 68-32.
Monroe Energy, LLC (Monroe), a refinery and subsidiary of Delta Airlines, has filed another lawsuit challenging EPA's implementation of the federal Renewable Fuel Standard (RFS). In this latest suit, Monroe argues that blenders, not refiners and importers, of fuel should be deemed the obligated parties under the RFS. Monroe does not have blending capacity like some larger refiners.
Monroe asserts that the fact that EPA in its proposed rule to set the 2014 RFS renewable volume obligations (RVO) now proposes to consider the practical ability to blend the amounts of renewable fuels under the law warrants a reconsideration of the obligated parties defined under the final RFS rule issued in 2010. Because Monroe lacks blending capacity, the Company argues that it is forced to spend millions of dollars to comply with its requirements as an obligated party under the law.
On February 4, 2014, EPA filed a 113 page brief in the U.S. Court of Appeals for the District of Columbia. In its brief, EPA attempts to defend its final rule setting the 2013 RFS in the face of challenges to it by Monroe, the American Petroleum Institute, and American Fuel and Petrochemical Manufacturers. EPA argues that it was reasonable to maintain the total renewable and advanced biofuel levels under the RFS statute for 2013 because it determined that sufficient compliance options would be available to obligated parties to comply with the requirements that year. The court has not yet set a date for oral arguments.
On Monday, the 41 member bicameral Farm Bill Conference Committee announced that it had reached agreement on a compromise Farm Bill, the Agriculture Act of 2014. A copy of the legislation is available online. The Conference Committee was led by House Agriculture Committee Chair Frank Lucas (R-OK), Ranking Member Collin Peterson (D-MN), Senate Agriculture, Nutrition and Forestry Committee Chair Debbie Stabenow (D-MI), and Ranking Member Thad Cochran (R-MS). A copy of the Senate Agriculture Committee press release on the compromise legislation is available online.
The bill includes $881 million in mandatory funding for renewable energy programs over the next ten years, and extends eligibility to renewable chemicals for the first time. It continues the majority of the energy programs covered under the 2008 Farm Bill, including the Biobased Markets and Biorefinery Assistance Programs, and the Biomass Crop Assistance Program to help encourage and facilitate the growth of purpose grown energy crops to be used for energy production. The legislation will modify the existing Biorefinery Assistance Program to create the Biorefinery, Renewable Chemical and Biobased Product Manufacturing Assistance Program that would expand funding eligibility to producers of renewable chemicals and biobased products. This mandatory funding and expanded eligibility marks a big victory for the biofuels and renewable chemicals and products industries.
The House of Representatives passed this compromise Farm Bill on Wednesday, January 29, 2014. The Senate is expected to take it up for consideration and potentially vote on it as early as the end of this week. The President is expected to sign it.
On January 24, 2014, seven Democratic Members of Congress from Iowa, Minnesota, and Illinois sent a letter to President Obama requesting a meeting with the White House to discuss the proposed reductions to the 2014 RVOs. The same group of Congressmen met recently with EPA Administrator Gina McCarthy to urge EPA to reconsider the proposed reduction. In the January 24, 2014, letter, the Congressmen stress the potentially negative impact of the proposed reductions on the economies in the Midwest and the continued development of biofuels. A press release containing the text of the letter issued by one of the seven Members requesting the meeting, Representative Tim Walz (D-MN), is available online.
On January 28, 2014, 32 food industry groups sent a letter to the House Energy and Commerce Committee calling for Congress to act through the legislative process to reduce the annual RVOs under the RFS. The groups argue that the proposed reductions to the 2014 RVOs by EPA do not go far enough. They argue that Congress needs to act to avoid what they predict will be negative impacts on commodities and energy markets, as well as the environment and economy.
On January 16, 2014, the U.S. Department of Justice (DOJ) announced that it has indicted two individuals in biodiesel fraud schemes worth more than $37 million. A copy of DOJ's press release is available online. James Jariv and Nathan Stoliar have been charged with 57 counts of conspiracy, wire fraud, false statements made under the Clean Air Act, obstruction of justice, and conspiracy to engage in money laundering. In one scheme, the two allegedly generated more than $7 million in fraudulent renewable fuel credits under the federal Renewable Fuel Standard (RFS), which were then sold to obligated parties that needed them to meet their annual renewable volume obligations (RVO) under the RFS. In another, they allegedly failed to provide the U.S. government with $30 million in renewable fuel credits.
This case is significant because it is the fifth major biodiesel Renewable Identification Numbers (RIN) fraud case since 2011. It comes at a time when (1) EPA is working to prepare in final its proposed RFS Quality Assurance Plan to avoid cases of RIN fraud; (2) the biodiesel industry is advocating for increased biodiesel RVOs over what EPA has proposed for 2014 and 2015; and (3) the biofuels industry is fighting to sustain confidence in the RIN market and the statutory RFS RVOs in all renewable fuel categories. It could provide RFS opponents, including many in the refining sector, an additional argument in their quest to repeal the RFS.
On January 23, 2014, EPA issued letters to the American Petroleum Institute (API) and the American Fuel and Petrochemical Manufacturers (AFPM) partially answering their October 2013 petitions for consideration of the final rulemaking, "Regulation of Fuels and Fuel Additives: 2013 Renewable Fuel Standards; Final Rule," published in the Federal Register on August 15, 2013. In its letters, EPA explains that it is granting the petitions by AFPM and API for reconsideration of the 2013 cellulosic biofuel standard under the RFS. EPA explained that it came to this decision in light of KiOR, Inc.'s downgraded production projections for 2013. KiOR has been the largest U.S. producer of cellulosic biofuels, and EPA largely depended on the availability of the Company's projected volumes to help ensure obligated parties under the RFS could meet their 2013 cellulosic biofuel requirements.
While welcomed by API and AFPM, this announcement comes at a time when the biofuels industry -- and the cellulosic biofuels industry in particular -- is under increasing attack by API, AFPM, and other stakeholders in the refining, agriculture, and food sectors. Several leaders within the biofuels industry had urged EPA not to grant the petitions by AFPM and API for reconsideration of the 2013 cellulosic biofuel standards under the RFS.
It is reported that Research and Development non-profit Battelle, headquartered in Columbus, Ohio, has a pilot project in which an 18-wheel tractor trailer would be used to convert biomass onsite using a catalytic pyrolysis into oil that could be used to produce renewable chemicals or biofuels. This model could be used throughout the country to help facilitate the conversion of myriad types of biomass into oils for renewable chemicals and biofuels production in a cost effective manner. It would eliminate the cost of transporting massive amounts of biomass to production facilities and reduce the need for much more expensive commercial production facilities.