Bergeson & Campbell, P.C. (B&C®) is a Washington, D.C., law firm providing biobased and renewable chemical product stakeholders unparalleled experience, judgment, and excellence in bringing innovative products to market.

By  Lynn L. Bergeson 

EPA has posted a Compliance Advisory entitled “Applicability of the Toxic Substances Control Act to Chemicals made from Petroleum and Renewable Sources Used as Fuels and Fuel Additives and Distillates.” The Compliance Advisory states that EPA is reaffirming that chemical substances used as fuels, fuel additives, and distillates made from either petroleum or renewable sources are subject to TSCA. Anyone who plans to manufacture (including import) a chemical made from petroleum or renewable sources must comply with the statutory and regulatory new chemical requirements under TSCA Section 5. According to the Compliance Advisory, EPA has received stakeholder inquiries “as to whether fuel and fuel additives made from renewable sources (such as renewable naphtha) are subject to the TSCA new chemicals requirements under section 5.” EPA states that it is issuing the Compliance Advisory “to affirm that fuel and fuel additives either made from petroleum or renewable sources are subject to TSCA and have been subject to its requirements since 1976.”

According to the Compliance Advisory, there are about 142 “naphthas” and 178 “distillates” (that compositionally can qualify as naphthas) currently on the TSCA Inventory, and they are considered Unknown, Variable composition, Complex, or Biological (UVCB) substances. Any substance that is not on the TSCA Inventory is a new chemical under TSCA Section 5(a)(1)(A). Prior to manufacture (including import) of a new chemical for commercial use, a premanufacture notice (PMN) must be filed with EPA under TSCA Section 5. The Compliance Advisory includes several questions and answers (Q&A), including:

Can you manufacture or import a chemical substance made from a renewable source if it is not listed on the TSCA Inventory?

No. Anyone who intends to manufacture (including import) a new chemical substance that is subject to TSCA for a non-exempt commercial purpose is required to submit a PMN at least 90 days prior to the manufacture of the chemical. Manufacturers (importers) are in violation of TSCA if they fail to comply or are late in complying with TSCA notice requirements. If you are required to submit a PMN, failure to do so is a violation of TSCA Section 15 and you may be subject to penalties. PMN submissions must include all available data, pursuant to 40 CFR 720.45 and 720.50. TSCA requires EPA to review the notice and make a determination; and, if appropriate, regulate the proposed activity.

EPA’s “compliance advisory” is disappointing. It signals this EPA is disinclined to promote renewable petroleum cuts and essentially (and emphatically) reaffirms what we believe to be EPA’s inflexible and unimaginative stance on “source” being determinative in petroleum cut UVCBs. This position, as we have noted in a variety of regulatory contexts, is a substantial disincentive to commercializing renewable petroleum cuts. EPA’s view is especially problematic when a refinery might wish to use a combination of petroleum and renewable feedstocks to make a single naphtha (or other distillate) cut.

For example, to avail itself of the equivalence determination, a company would have to submit a PMN for the renewable equivalent of a petroleum cut, sign the almost certain resultant consent order (EPA will undoubtedly identify aquatic toxicity concerns and may also identify health concerns), commence manufacture, file a Notice of Commencement of Manufacture or Import (NOC), and then request an equivalency determination. If EPA denies the equivalency determination, any downstream processor or user will have to either segregate the renewable products from the petroleum products so that the downstream entity can maintain records of compliance with the consent order or treat both the renewable and petroleum products as being subject to the order. Neither option is commercially feasible or sustainable.

This sequence of events illustrates why commercial entities are disinclined to avail themselves of renewable sources in the distillate space. EPA’s compliance advisory is an unexpected and, to many, unwanted parting gift from the Trump Administration. The Biden Administration may wish to revisit the wisdom and prudence of this inflexible, antiquated, and inequitable view.


 

By Lauren M. Graham, Ph.D.

On August 14, 2017, Flint Hills Resources, a member of the Biobased and Renewable Products Advocacy Group (BRAG®), announced that construction is underway to install a new, bolt-on technology, known as Maximized Stillage Co-Products™ (MSC), at its ethanol plant in Fairmont, Nebraska.  The MSC technology will be used to convert a portion of the distiller grains, a coproduct of ethanol manufacturing, to a high protein animal and fish feed ingredient, known as NexPro™.  NexPro will be a combination of corn gluten (protein) and spent yeast with close to 50 percent protein and an improved amino acid profile, compared to traditional corn gluten meal.
 
The $50 million project, which involves the addition of a new building and two protein dryers, is expected to last 12 months.  The patented MSC technology was developed by Fluid Quip Process Technologies (FQPT) exclusively for dry mill ethanol plants to separate protein from the solids leftover after ethanol distillation.  Once isolated, the protein is dried into a high-quality meal.


 

By Lauren M. Graham, Ph.D.

On May 31, 2017, Deinove, a biotech company focused on producing high-value compounds from rare bacteria, announced the beginning of the second phase of a project with Flint Hills Resources to develop a nutritional supplement for animal feed.  Flint Hills Resources is a member of BRAG and a leading refining, petrochemicals, and biofuels company in the United States. 

During the first phase of the project, which began in November 2015, several bacterial strains were selected from Deinove’s library to produce target compounds.  The second phase will involve:​

  • Producing the additives in sufficient quantities to test their beneficial effects on the target animal species and analyze the results obtained;
  • Optimizing the fermentation parameters; and
  • Defining the technical and economic conditions for the development of the production process.

Depending on the results of efficacy tests, one or two strains may be selected for the industrialization step. 


 

On September 13, 2016, Biobased and Renewable Products Advocacy Group (BRAG®) member Flint Hills Resources, along with Benefuel® Inc., announced the startup of the Duonix Beatrice biodiesel plant, and the first successful commercial-scale application of Benefuel's innovative ENSEL technology. ENSEL technology is capable of converting a range of lower cost feedstocks such as recycled cooking oil and distillers corn oil into high-quality biodiesel. Once fully operational, the Duonix Beatrice plant will produce approximately 50 million gallons of biodiesel annually. The plant has already made commercial sales of product that meets or exceeds ASTM specifications for biodiesel.

The ENSEL technology uses a solid catalyst that combines esterification of high free fatty acid feedstocks and transesterification of triglycerides into a single step, which eliminates waste, improves process efficiency, and expands feedstock options. The product is further enhanced by an upgraded, backend distillation process that removes additional impurities which, when used on high free fatty acid feedstocks such as distillers corn oil, produces a higher quality biodiesel with superior cold weather performance. In addition to producing 50 million gallons of biodiesel, Duonix Beatrice is expected to produce a variety of coproducts such as glycerin, which can be used as a food additive and as a compound found in a number of medical, pharmaceutical and personal care products.


 

Winery waste is composed of the skins, pulp, stalks, and seeds that are left over after grapes have been pressed. This waste cannot be used for animal feed or composted, so it typically ends up as toxic landfill. Researchers at Swinburne University of Technology have been investigating how to break down the grape waste and Ph.D. student Avinash Karpe has discovered four fungi, that when combined with a heat activated pre-treatment, successfully broke down grape waste biomass. This process resulted in the production of alcohols, acids, and simple sugars which could have industrial and medicinal uses. "We have demonstrated this technique in the laboratory, but this process can be scaled up to an industrial scale," stated Chair of Swinburne's Department of Chemistry and Biotechology, Professor Enzo Palombo. More information is available online.


 

On December 18, 2013, President Obama announced that he will nominate Senator Max Baucus (D-MT) to be the next Ambassador to China. The nomination is expected to pass quickly and without much opposition. Senator Baucus serves as the Chair of the Senate Committee on Finance, the tax writing Committee. When he leaves the Senate, current Senate Committee on Energy and Natural Resources Chair Ron Wyden (D-OR) is expected to assume the chairmanship.


These moves will impact the fate of incentives for the biofuels and renewable chemicals and products industries, including whether and when the Senate considers a tax extenders package, or tax reform, among other tax policies impacting the industry.
 


 

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.