Brief Filed in Case Over EPA Limits on Higher Blends

Cindy Zimmerman

An alliance of ethanol, agriculture and clean fuel organizations led by the Urban Air Initiative is challenging the EPA over regulatory barriers to higher blends of ethanol they say are illegal. An opening brief in the case was filed this week in the D.C. Circuit Court of Appeals and oral arguments are expected this fall.

Specifically, the brief argues that EPA’s interpretation of the “substantially similar” provision of the Clean Air Act is obsolete and that EPA’s ruling last year permitting year-round sales of E15 should include the sale of fuel blends containing more than 15% ethanol, consistent with prior guidance allowing retailers to sell E20 and E30 under the Clean Air Act.

Today automakers use test fuels with 10% and 15% ethanol to certify most vehicles. The brief argues that since ethanol is now used in the certification of motor vehicles, the sub-sim law no longer limits the addition of ethanol to gasoline. Therefore, the court should reject EPA’s limit on the sale of gasoline with more than 15% ethanol. In the alternative, the brief argues that EPA’s only rationale for limiting the rule to E15 was refuted by the scientific evidence submitted during the notice-and-comment period, science that EPA simply chose to illegally ignore. As a remedy, the brief asks the Court to order EPA to allow ethanol to compete for greater market share against harmful petroleum-based fuel additives, but without disturbing the rule allowing the year-round sale of E15.

Co-petitioners in the case include National Farmers Union, South Dakota Farmers Union, Farmers Union Enterprises, Jackson Express, Jump Start, Clean Fuels Development Coalition, Big River Resources LLC, Fagen Inc., Glacial Lakes Energy LLC, and Little Sioux Corn Processors.

EPA, Ethanol, Ethanol News, NFU, Urban Air Initiative

USDA Report Calls for Increased Ethanol Output

Cindy Zimmerman

The May World Agricultural Supply and Demand Estimate out from USDA this week is forecasting record high production and domestic use, greater exports, and larger ending stocks for corn.

The corn crop is projected at a record 16.0 billion bushels, up from last year on increased area and a return to trend yield. The yield projection of 178.5 bushels per acre is based on a weather-adjusted trend assuming normal planting progress and summer growing season weather, estimated using the 1988-2019 time period. Despite beginning stocks that are down slightly from a year ago, total corn supplies are forecast record high at 18.1 billion bushels. Total U.S. corn use in 2020/21 is forecast to rise relative to a year ago with increases for domestic use and exports. Food, seed, and industrial (FSI) use is projected to rise 245 million bushels to 6.6 billion.

Corn used for ethanol is projected to increase from the 2019/20 COVID-19 reduced levels, based on expectations of a rebound in U.S. motor gasoline consumption. Corn feed and residual use is projected higher mostly reflecting a larger crop and lower expected prices.

The report also says corn exports are forecast to rise 375 million bushels to 2,150 million, driven by growth in world corn trade. With total U.S. corn supply rising more than use, 2020/21 U.S. ending stocks are up 1.2 billion bushels from last year and if realized would be the highest since 1987/88. Stocks relative to use at 22.4 percent would be the highest since 1992/93.

corn, Ethanol, Ethanol News, USDA

House Includes Aid for Biofuels in Relief Act

Cindy Zimmerman

Help for struggling ethanol producers is included in the new COVID-19 legislative relief package, thanks to the efforts of Democratic Reps. Cindy Axne (IA-01), Cheri Bustos (IL-17), Abby Finkenauer (IA-01), and Angie Craig (MN-02).

The Renewable Fuel Reimbursement Program included in the Health and Economic Recovery Omnibus Emergency Solutions Act (HEROES Act) would authorize USDA to provide assistance of 45 cents per gallon of qualifying ethanol produced from January 1 through May 1, 2020. Producers forced offline for one or more calendar months during this time would qualify for the same credit, based on half the volume produced during the corresponding month or months in 2019.

Renewable Fuels Association President and CEO Geoff Cooper says the aid represents a potential lifeline for the 350,000 men and women whose jobs depend on a healthy and vibrant ethanol industry. “This program would lend a crucial helping hand and ensure that ethanol producers are able to participate in the economic recovery from COVID-19,” said Cooper, who notes that roughly half of the industry’s capacity offline today. “When an ethanol plant shuts down or reduces production, it destabilizes the entire rural economy. Jobs are lost, farm commodity demand and prices plummet, supplies of vital co-products like distillers grains and captured CO2 evaporate, and the nation’s drivers are denied lower-cost, cleaner-burning fuel options at the pump.”

“This is the first time Congress has introduced a stimulus bill that would provide aid directly to biofuel producers and for that we are extremely appreciative,” said American Coalition for Ethanol (ACE) CEO Brian Jennings. “It’s important that securing aid for the biofuel sector continues to be a bipartisan goal. This is one important step in the process but until a bill is signed into law by the President that contains direct aid, we need to stay in constant contact with Members of Congress.”

Senators are expected to consider similar legislation.

ACE, Ethanol, Ethanol News, RFA

Electric Cooperatives Urge Relief for Rural America

Cindy Zimmerman

Over 30 rural electric cooperatives serving members across the Upper Midwest have signed on to a letter urging members of Congress to provide economic relief for rural America. The letter was addressed to members of Congress from Minnesota, South Dakota, North Dakota, Iowa and Nebraska.

Specifically, the letter calls for Congress to support additional stimulus package relief for food and ethanol processing plants, and the farmers and ranchers who serve them, most of whom are also electric cooperative members. The electric cooperatives represented on the letter combined serve over 3 million consumers across the region.

“We are respectfully requesting much-needed economic relief for rural America, which continues to suffer from the impacts of the coronavirus pandemic,” the letter said. “Rural electric cooperatives were created to provide electricity to farms and rural communities and have continued to expand this essential service as rural America has grown and prospered. Our member-owners have invested in not only the electric infrastructure through their cooperative to serve these areas, but also in helping to develop the rural economy in which they live. These investments have allowed for diversification into biofuels, food processing, and other business development opportunities.”

The letter was driven by Basin and East River Electric Power Cooperatives who provide power to 30 U.S. ethanol plants. East River is a founding member of the American Coalition for Ethanol (ACE).

Estimates show as much as half of U.S. ethanol production has been idled due to efforts to slow spread of COVID-19. In addition, the pandemic has forced several food processing facilities to either idle or shut down. These events have left producers of several agricultural commodities without a market for their product, forcing some to euthanize animals or destroy their products. The pandemic has compounded the impacts of low commodity prices and extreme weather events that had already created a struggling farm and rural economy.

ACE, Ethanol, Ethanol News

Ag and Biofuel Groups Ask Congress for COVID-19 Relief

Cindy Zimmerman

America’s top biofuel and farm advocates are calling on Congress to ensure the next round of COVID-19 relief includes U.S. ethanol and biodiesel production.

A joint letter to House Speaker Nancy Pelosi and Senate Majority Leader Mitch McConnell was signed by the Renewable Fuels Association, Growth Energy, the National Biodiesel Board, the American Farm Bureau Federation, the National Corn Growers Association, the American Soybean Association, the National Farmers Union, the National Oilseed Processors Association, the National Renderers Association, the National Sorghum Producers, and Fuels America.

“The situation we face is dire,” wrote biofuel and farm advocates. “More than 130 biofuel plants have already partially or fully shut down as motor fuel demand plunged to 50-year lows. America’s biofuel plants purchase annually more than one-third of U.S. corn and U.S. soybean oil, and the loss of those markets has depressed farm income and will continue to push corn and soybean prices down dramatically. The damage has rippled across the entire agricultural supply chain.”

The letter notes that the U.S. Department of Agriculture (USDA) excluded the biofuel sector from initial aid under CARES Act, despite urgent letters of support to Secretary Sonny Perdue from broad, bipartisan coalitions in the House and Senate.

Read the letter here.

AFBF, ASA, Biodiesel, biofuels, corn, Ethanol, Ethanol News, NBB, NCGA, RFA

Senators Urge President Trump to Uphold RFS

Cindy Zimmerman

A bipartisan group of 24 U.S. senators sent a letter to President Trump this week that strongly urges him to uphold the Renewable Fuel Standard and reject oil industry efforts to waive renewable fuel blending obligations.

The effort was led by Sens. Joni Ernst (R-IA), Tina Smith (D-MN), Chuck Grassley (R-IA), and Debbie Stabenow (D-MI). They expressed their concerns in response to the oil industry efforts to waive renewable fuel blending obligations.

“Waiving the RFS would cause further harm to the U.S. economy, especially our most vulnerable rural communities. It would also exacerbate the effects experienced by the biofuel sector as a result of COVID-19, causing far-reaching detrimental impacts on employment, farmers, food security, fuel prices, and the environment. The resiliency of America’s renewable fuel industry has already suffered as a result of the EPA’s drastic expansion of the small refinery waiver program in recent years.”

“We join these leaders in asking the administration to stand up for the Renewable Fuel Standard, which has promoted energy diversity, strengthened the heartland’s economy, reduced emissions, and lowered consumer fuel costs for a decade and a half,” said Renewable Fuels Association (RFA) President and CEO Geoff Cooper. “Now is not the time to abandon this vital policy, especially when so many jobs are on the line in the midst of an unprecedented economic crisis. We are truly grateful that these senators understand that.”

Cooper noted that, as of Wednesday, roughly half of the ethanol industry’s production capacity remained offline, and nearly three-quarters of the nation’s ethanol plants were fully idled or had greatly reduced output rates.

“Ethanol plant closures don’t just affect our nation’s fuel supply; they also affect the supply of other critical products made by the industry, such as high-protein feed for livestock and poultry producers and captured carbon dioxide, which is an important product for food and beverage processing and other industries. Shutting down, or even slowing down, our diverse product line has significant ripple effects throughout the entire U.S. economy.”

Ethanol, Ethanol News, RFA

Commerce Maintains Duties on Argentine Biodiesel

Cindy Zimmerman

The U.S. Department of Commerce announced today a final determination in its “changed circumstances review” of antidumping duty (AD) and countervailing duty (CVD) orders on imports of Argentine biodiesel. As a result, the rates on biodiesel imports from Argentina will remain at their current levels.

National Biodiesel Board (NBB) is pleased with the decision.

Kurt Kovarik, NBB’s VP of Federal Affairs, said, “NBB’s Fair Trade Coalition fought hard for this outcome, and we certainly appreciate Secretary Wilbur Ross and the Trump administration for supporting U.S. biodiesel producers at a critical moment. We are grateful for their consistent willingness to listen to the U.S. biodiesel industry. The Department of Commerce took the time necessary to fully evaluate the status of Argentina’s export tax regime and make the right decision.

“Also critical to this outcome is the support and leadership of Senators Chuck Grassley and Maria Cantwell along with Representative Darren LaHood. We greatly appreciate their steadfast support for the U.S. biodiesel industry and America’s soybean farmers. U.S. biodiesel producers appreciate their help in amplifying the industry’s push for fair trade conditions.”

It was determined back in January 2018 that U.S. biodiesel producers were harmed by unfair trade practices and Commerce finalized antidumping and countervailing duty rates on Argentine biodiesel imports, ranging from 132.72% to 157.86%. In July 2019, Commerce issued a preliminary decision on Argentina’s request for a “changed circumstances” review that would have virtually eliminated CVD rates for Argentina’s biodiesel producers, while maintaining AD rates.

Today’s final determination maintains both AD and CVD rates and will be published in the Federal Register at a later date.

Biodiesel, NBB

Ethanol Production Gains a Little

Cindy Zimmerman

Ethanol plants showed signs of new life last week, as production increased 11.4% from the previous week, according to EIA data analyzed by the Renewable Fuels Association for the week ending May 1.

However, production remains tempered due to COVID-19 disruptions, coming in 42.3% below the same week in 2019. The four-week average ethanol production rate declined 3.1% to 567,000 b/d, equivalent to an annualized rate of 8.69 billion gallons.

Ethanol stocks thinned by 2.8% to 25.6 million barrels, diminishing across all PADDs. However, reserves remain 14.0% higher than year-ago volumes.

The volume of gasoline supplied to the U.S. market, a measure of implied demand, leapt 13.7% to 6.664 million b/d (102.16 bg annualized) yet was 32.5% lower than a year ago.

Refiner/blender net inputs of ethanol lifted modestly, up 2.1% to 595,000 b/d, equivalent to 9.12 bg annualized and 35.3% below the year-earlier level. Over the last four weeks, implied gasoline demand rebounded by 31.6% while refiner and blender net inputs of ethanol recovered by 18.5% – a differential mostly attributable to last week’s surge in gasoline volume.

Ethanol, Ethanol News, RFA

Biofuels Industry Welcomes USDA Infrastructure Funds

Cindy Zimmerman

The U.S. Department of Agriculture is making up to $100 million in competitive grants available to help expand the availability and sale of renewable fuels.

The Higher Blends Infrastructure Incentive Program (HBIIP) consist of up to $100 million in funding for competitive grants or sales incentives to eligible entities for activities designed to expand the sales and use of ethanol and biodiesel fuels. Funds will be made directly available to assist transportation fueling and biodiesel distribution facilities with converting to higher ethanol and biodiesel blends by sharing the costs related to and/or offering sales incentives for the installation of fuel pumps, related equipment, and infrastructure.

“Once the pandemic is over and fuel markets are showing signs of recovery, expanding infrastructure via the Higher Blends Infrastructure Incentive Program will be important to the long-term future of the ethanol industry and rural America. We thank the USDA for its efforts to support the future of renewable fuels,” said Renewable Fuels Association (RFA) President and CEO Geoff Cooper.

The American Coalition for Ethanol (ACE) is focusing its market development efforts, including the fuel-marketer-focused website flexfuelforward.com, on ensuring fuel marketers know about the funding and receive any assistance they need to participate. ACE Senior Vice President and Market Development Director Ron Lamberty said, “ACE is gratified to see many policies we recommended to USDA to make the program more accessible to single store and small chain operators were included in the final program. In particular, we appreciate the Targeted Assistance Goal (TAG) which makes approximately 40 percent of funds available specifically for applicants owning 10 fueling stations/locations or fewer.”

The National Biodiesel Board (NBB) also welcomed the news. “The Higher Blends Infrastructure Incentive Program will help the industry expand consumers’ access to cleaner, better transportation and heating fuels in the future,” said Kurt Kovarik, NBB’s VP of Federal Affairs.

Of the $100 million USDA is making available, $14 million will be available to support infrastructure for biodiesel blends above 5%. The grants will match up to 50% of eligible costs or $5 million, whichever is lower. USDA anticipates making approximately 150 awards and providing assistance to 1,500 locations with the available funds.

ACE, Biodiesel, biofuels, Bioheat, Ethanol, Ethanol News, RFA, USDA

Coalition Opposes API Petition on 2020 RFS Obligations

Cindy Zimmerman

A coalition of ethanol and farm groups sent a letter to the Environmental Protection Agency on Friday opposing the American Petroleum Institute’s (API) recent petition requesting reconsideration of the 2020 Renewable Fuel Standard (RFS) final rule.

API claims reconsideration of the 2020 RFS rule is necessary in light of the coalition’s recent Tenth Circuit court victory that overturned small refinery exemptions illegally granted by EPA. The successful Tenth Circuit court challenge was brought against EPA by the Renewable Fuels Association, National Corn Growers Association, National Farmers Union, and American Coalition for Ethanol.

Specifically, API argues that the 2020 RFS rule should be revised to eliminate measures that prospectively “reallocate” RFS blending obligations expected to be lost to refinery waivers. API claims reallocation of expected waivers is no longer needed because the Tenth Circuit decision should significantly curtail the number of waivers granted. However, EPA has not yet confirmed that it will implement the tenets of the Tenth Circuit court decision nationwide, meaning reconsideration of the 2020 RFS rule would be woefully premature.

“There is no basis for revisiting or modifying EPA’s current approach until EPA acknowledges that the central tenets of the Tenth Circuit’s decision are appropriately applied throughout the country,” the groups wrote.

In fact, the 2020 RFS volumes should not be adjusted downward to remove reallocated volumes even after EPA applies the Tenth Circuit court decision nationally, according to the coalition’s letter.

“As noted by the Court, EPA’s recent abuse of its small refinery exemption authority has significantly harmed the U.S. ethanol industry. Indeed, nationally, more than four billion gallons of 2016-2018 renewable fuel volume requirements were lost due to EPA’s illegally issued small refinery waivers. Applying the Tenth Circuit decision nationally while leaving the 2020 RFS rule intact would begin to restore a small amount of the renewable fuel volume requirements lost to past small refinery exemptions; still, doing so would come nowhere near fully redressing the demand destruction wrought by the exemptions.”

Read the letter.

ACE, Ethanol, Ethanol News, NCGA, NFU, RFA