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ASA Fights for Biodiesel

Soybean farmers are worried that the Obama Administration will abandon its support for increasing biodiesel use when the Environmental Protection Agency releases its final rule for the 2014 Renewable Fuel Standard (RFS) soon. Yet they'll continue to press the White House to keep its past support for the industry, the president of the American Soybean Association, Iowa farmer Ray Gaesser, told Friday.

"A month ago we were thinking and hearing that they were going to increase the RFS for biodiesel. But from what I've seen and heard lately, there is concern that they'll keep it flat," Gaesser said.

When the EPA released its proposed RFS last November, it froze the mandate for biodiesel at 1.28 billion gallons. But the industry produced much more last year, nearly 1.8 billion gallons, from a variety of sources: soybean and canola oil, animal fats, and used restaurant grease.

While the effect of the biodiesel industry on soybeans isn't nearly as great as ethanol is for corn, it's still significant, adding between 25¢ to $1 a bushel to the crop's market value, according to various estimates by economists.

"It's worth more than $1 billion to soybean farmers - per year," Gaesser said.

His group and the National Biodiesel Board were among 117 companies and industry affiliates from 41 states that sent the president a letter earlier this week, urging him not to "slash our industry's production from lat year's record and jeopardize its future."

"We are extremely concerned that you could be retreating on your previously unwavering support for biodiesel in a way that would have severe consequences for the industry’s future," said the letter dated May 29.

"Specifically, we want to state as clearly as we can that a decision to finalize a biodiesel volume of 1.28 billion gallons, as initially proposed by the EPA in November, would result in a sharp drop in production that would cause layoffs and plant closures, while sending a devastating signal that the Administration has thrown in the towel on its support for biodiesel," the letter said.

The companies and other organizations signing the letter represent thousands of employees in states across the country, from California to Minnesota to Rhode Island. They specifically referenced legislation introduced by then-Senator Obama in 2006 ("The American Fuels Act") that called for an ambitious standard of 2 billion gallons of alternative diesel fuels by 2015.

After nearly meeting that goal last year, biodiesel production declined in the first quarter of this year, according to the Transportation Department's Energy Information Agency. That's due in part to uncertainty over the RFS as well as the expiration of a $1-a-gallon tax credit at the end of this year. Congress is expected to renew that credit for as much as two years, retroactively to the start of 2014, but the so-call tax extenders legislation is stalled in the U.S. Senate.

Last week a Washington-based watchdog group, Citizens for Responsibility and Ethics in Washington (CREW) asked Environmental Protection Agency (EPA) Inspector General Arthur Elkins to investigate whether the Carlyle Group and Delta Airlines improperly influenced the EPA’s proposed Renewable Fuel Standards (RFS).

"The proposed standards actually lower renewable fuel amounts that must be blended into transportation fuel supplies. Carlyle and Delta lobbied heavily for this reduction and would benefit financially from the change," CREW said when they made the request.

Carlyle — a well-connected investment firm based in Washington, D.C., — and airline giant Delta both acquired oil refineries in or near Philadelphia in 2012. Both refineries faced increased operating costs by early 2013 due to rising costs of credits used by refineries that fail to blend adequate amounts of ethanol to achieve RFS compliance. As Reuters reported, Carlyle and Delta responded by pressing lawmakers, White House officials, and regulators to weaken the RFS.

Meanwhile, ASA president Gaesser asks farmers to urge public officials to support a fuel that's good for the environment and the rural economy.

"Just keep talking to your congressman, the USDA, and EPA and give those good reasons about why they should increase the standard for biodiesel," he said. At the American Soybean Association, "we have, and we will continue to," he added.

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