Biofuel feedstock reimbursement act introduced in US Senate

By Ron Kotrba | May 20, 2020

Bipartisan legislation was introduced May 19 in the U.S. Senate by Sens. Chuck Grassley, R-Iowa, and Amy Klobuchar, D-Minnesota, which would provide assistance to biofuel producers adversely impacted by the coronavirus pandemic and the economic fallout from the health crisis.

The legislation, titled the “Renewable Fuel Feedstock Reimbursement Act of 2020,” would require USDA to reimburse biofuel producers for their feedstock purchases made Jan. 1 through March 31 through the Commodity Credit Corporation.

“The biofuels industry works directly with our farmers,” Grassley said. “And the current disruptions from the pandemic have created ripple effects, including steep declines in corn and soybean prices. We need to continue to support those farmers who feed and fuel our country and the world. This bill will help ensure biofuel producers survive this economic downturn and also ensure corn and soybean farmers have a place to sell their products.”

“At a time when many farmers and rural communities are feeling disproportionate impacts from the coronavirus pandemic, it’s important we work to keep our renewable fuel industry strong,” Klobuchar said. “Renewable fuel processing plants employ thousands of people in rural areas, purchase billions of bushels of commodities from farmers, and provide stability in our agricultural supply chain. This legislation will ensure farmers and workers receive our support during these tough times.” 

As the coronavirus pandemic spread, gasoline use in the U.S. plummeted to 50-year lows around the country, according to the National Biodiesel Board. “From March 8 to April 4, the total miles driven dropped by 58 percent,” the organization stated. “This rapid decrease in consumption has led more than 130 biofuel plants to partially or fully shut down. Forty percent of Iowa ethanol production remains offline still today.”

Kurt Kovarik, vice president of federal affairs at NBB, said, “We are grateful to Sens. Grassley and Klobuchar for supporting the biodiesel industry and U.S. farmers as they deal with the economic fallout of the coronavirus emergency. The biodiesel and renewable diesel industry provides a valuable market for recycled cooking oils, surplus animal fats and vegetable oils, such as soybean oil. Biodiesel production supports 13 percent of the value of each bushel of U.S. soybeans. Maintaining a strong biodiesel industry is vital to keeping America’s critical agricultural infrastructure healthy.”

“Grassley’s bill would provide much-needed relief for biofuels producers in the face of COVID-19 demand destruction,” said Monte Shaw, executive director of the Iowa Renewable Fuels Association. “The pandemic hit Iowa’s biofuels industry hard and around 40 percent of the state’s ethanol production capacity remains offline. Without economic help many plants may lack the necessary resources to purchase corn and resume production, even as more Americans head back to work and demand begins its long, slow climb back to normal levels. We thank Sen. Chuck Grassley for leading the effort to help renewable fuel producers during this difficult time. IRFA encourages Congress to act swiftly to provide producers with this vital relief.”

Emily Skor, CEO of Growth Energy, said, “Urgent, bipartisan calls to protect America’s biofuel sector continue to resonate across Capitol Hill, and we’re grateful to Sens. Grassley and Klobuchar for outlining a solution that would deliver immediate relief for biofuel workers, our farm partners, and thousands of rural communities. After the devastation created by COVID-19, it’s vital that Congress and the U.S. Department of Agriculture ensure that biofuel plants stand ready to restore production and reopen markets for America’s farmers. Unless Washington acts, we’ll be trying to rebuild the rural economy with one arm tied behind our back.” 

The U.S. ethanol industry is facing its worst economic crisis in history, according to Geoff Cooper, president and CEO of the Renewable Fuels Association. “The legislation introduced by Sens. Grassley and Klobuchar would lend a vital helping hand and assist renewable fuel producers as they attempt to get back on their feet,” Cooper said. “We thank Sen. Grassley for his tireless support and dedication, and we look forward to the inclusion and expeditious passage of this emergency relief provision for the ethanol industry in the next COVID-19 stimulus package.”

Brian Jennings, CEO of the American Coalition for Ethanol, stressed that direct relief is needed for biofuel producers.  “ACE thanks Senators Grassley and Klobuchar for recognizing the importance of providing economic assistance to ethanol producers who have taken a direct hit from the sudden and severe drop in fuel demand as a result of COVID-19,” he said. “We need direct assistance to help the U.S. biofuel industry survive this catastrophic downturn, and their legislation would do that.”

The NBB noted that Grassley initially pushed for this proposal as an amendment in the CARES Act to match the proposed funding for the Strategic Petroleum Reserve. “When assistance for the oil industry was not included in the package, neither was the Grassley biofuel amendment,” the NBB stated. “However, there have since been purchases for the Strategic Petroleum Reserve through administrative action. Grassley and Klobuchar continued to hear from their constituents and members of the biofuel industry and introduced this as separate legislation.”