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California's Biodiesel Industry Trade Association  


April 2017    

In This Issue

In celebration of Earth Day, we begin with a few links to make you smile. First, our old biodiesel friend Disneyland is again in the news. " An artist meets a farmer who met a banker" is another inspiring story about art,  sustainable agriculture, and biodiesel.

This month, a ruling in the POET I v CARB case came down much quicker and with a more positive result than expected. We include an article on the case by Joshua T. Bledsoe and Max Friedman of Latham & Watkins LLP. In addition, we add here that it is our understanding that the court's ruling freezes the compliance requirement for diesel at 2017 levels, but that biodiesel can be used for compliance on the same basis as other LCFS fuels.
We are very happy to bring news of the Green California Summit Leadership Award received by Mayor Rey Leon, who is also a member of the Air Resources Board's Environmental Justice Advisory Committee, for his work with biodiesel. There are also  several timely updates on national issues and federal policy,  congratulations for Oregon on a successful first year for their Clean Fuels Standard, and exciting updates on biodiesel producers in the Industry section. 

You won't get the complete California biodiesel picture without reading the substantive blurbs in the Policy section below. This month's updates include California's Cap and Trade program; UST issues; and SB 1, which raises taxes on all fuels. SB 1 increases diesel excise tax by 20 cents a gallon to 36 cents and increases diesel sales tax to 5.75 percent (from its current 1.75%).

California Fights Back Against Federal Actions: " This is How States Will Fight Trump's Energy Order," is a must-read LA Times article

Back Issues of this newsletter are available in the Archives on our Members Only webpage. 
( Latham & Watkins LLP)
California Court Rules Against Air Resources Board over LCFS but Preserves 2017 Status Quo 
April 13, 2017 

In two  recent   posts , we discussed how California's Low Carbon Fuel Standard ( LCFS ) had been thrown into a state of potential upheaval by two interrelated legal challenges commonly known as POET I and POET II, including a recent oral argument before the California Court of Appeal for the Fifth Appellate District (Court of Appeal) in POET I. That proceeding aimed to determine whether a lower court correctly dismissed a writ of peremptory mandate (the Writ) requiring the California Air Resources Board (ARB) to remedy violations of the California Environmental Quality Act (CEQA) that occurred during promulgation of the original LCFS regulation. ARB re-adopted the revised LCFS regulations in September 2015, but POET, LLC (POET), a South Dakota-based ethanol producer, contended that these revisions failed to properly discharge ARB's responsibilities under the Writ.
Court Rules Against ARB over NOx Analysis

In its published April 10, 2017 opinion in POET I, the Court of Appeal largely agreed with POET, reversing the lower court's dismissal of the Writ and holding that ARB had failed to comply with CEQA's requirement that it analyze the degree to which nitrogen oxide (NOx) emissions from biodiesel fuels had been and would be impacted by the implementation of the LCFS rules. The Court found that ARB's failure to properly define the scope of the project caused ARB to use an improper baseline against which NOx emissions could be measured. As a result, the Court concluded that ARB's analysis of NOx emissions from biodiesel fuel was deficient under CEQA, and the environmental analysis was inadequate as an informational document disclosing the entirety of the project's impacts.

The Court of Appeal therefore directed the lower court to deny ARB's request for dismissal of the Writ and to "[s]et aside its 2015 approval of the parts of the final [CEQA] Environmental Analysis addressing NOx emissions from biodiesel." The Court further directed ARB to conduct a year-by-year analysis of whether the project as a whole - .e., the implementation of the LCFS rules - is likely to have caused an increase in NOx emissions, with respect to both the program's past operations and its future impacts. This entails establishing a baseline for NOx emissions, and the Court directed ARB to use the conditions as they existed at the time the environmental analysis for the original LCFS regulations commenced (and in no event to use a year later than 2010 for the baseline). ARB must also determine whether any increase in NOx emissions that it identifies has had or is likely to have a significant impact on the environment, or whether impacts are cumulatively considerable, and must address mitigation measures or alternatives, if appropriate.
Silver Linings for ARB

While POET succeeded in forcing ARB to conduct further CEQA analysis, this opinion was far from a total loss for ARB. Indeed, given the Court of Appeal's previously expressed skepticism as to ARB's CEQA procedures with respect to NOx emissions from biodiesel, this opinion represents something of a "best-case scenario" for ARB under the circumstances. Indeed, the Court of Appeal agreed with ARB that it was possible to segregate provisions relating to conventional diesel fuel and its substitutes from the rest of the LCFS, allowing the other provisions to continue according to the re-adopted schedule. Further, the Court decided not to throw out or strike text from the diesel and biodiesel fuel provisions of the LCFS, or even return them to their 2013 levels, as POET had suggested at trial. Instead, the Court of Appeal froze the carbon intensity (CI) targets for diesel and biodiesel fuel provisions at 2017 levels until ARB has completed its corrective action by conducting its baseline analysis and until the trial court has approved this analysis and discharged the Writ. This holding has important implications not only for participants in the LCFS program, but for CEQA practitioners, as well.

The freeze at 2017 levels is far from optimal for ARB, because it will prevent the CI targets from diesel and biodiesel regulations from ratcheting down in 2018, as the CI targets applicable to other fuel types (e.g., gasoline) will continue to decrease. Nevertheless, at trial, ARB suggested that it could conduct its analysis in about nine months. If true, ARB could be in a position to return to trial court and again request discharge of the Writ in early 2018 (although further challenge from POET appears likely based on the history here).
The Court of Appeal also preserved the 2015 Alternative Diesel Fuels (ADF) regulations, which essentially were adopted to counteract the effects of NOx emissions from increased use of biodiesel. To the extent that ARB is required to mitigate NOx emissions under CEQA, these ADF regulations, which take effect in 2018, may go a long way to doing so. Likewise, the Court made clear that ARB "need not suspend its consideration or approval of additional fuel pathways for diesel fuel and its substitutes." This will give ARB some discretion in how it considers alternatives and potential mitigation.

While the Court's opinion gave ARB the opportunity to correct the procedural deficiencies with respect to its re-adoption of the LCFS rules with only minimal impact to the overall LCFS implementation scheme, the Court of Appeal also indicated that its patience with ARB had come to an end. The Court repeatedly asserted that ARB had not acted in good faith (a rare finding in our experience) in its NOx emissions analysis, and that the leniency of its remedy resulted from its desire that "the relief granted . . . should serve the public interest by protecting the environment and providing information to the public and decision makers," rather than "punish agency bad faith." If, after ARB completes its revised NOx emissions analysis, the trial court were to find that ARB had still not met its statutory burden and done so expeditiously and in good faith, the Court of Appeal ordered the trial court to immediately vacate all LCFS provisions relating to diesel fuel and its substitutes (not just biodiesel), to suspend operation and enforcement of those provisions, and perhaps to consider imposing further sanctions on ARB. In short, this appears to be ARB's last chance to comply.
Implications for ARB and LCFS Practitioners

Still, for those engaged in the LCFS markets, the Court of Appeal's opinion must come as something of a relief. At least for the time being, this opinion ensures that the LCFS markets will continue to function essentially unchanged, though it remains to be seen how the LCFS credit prices will react to the result of this case. Likewise, this opinion results in no immediate impact for regulated parties submitting quarterly LCFS reports in 2017 or for the annual LCFS reports to be submitted online by April 30th, 2017 via the  LCFS Reporting Tool . Indeed, even the 2017 annual report to be submitted by April 30th, 2018 would be unaffected by this ruling, though subsequent reports would be impacted if CI targets remain frozen at 2017 levels next year.
But with the 2020 deadline imposed by Executive Order S-1-07 for ARB to fulfill its mandate to reduce CI of gasoline and diesel by 10% from 2010 levels fast approaching, ARB still faces difficult choices. ARB had already been forced to back-load the ratcheting down of CI targets, placing a heavy burden on the 2018-2020 period, due to the years when targets were frozen at 2013 levels as a result of an earlier ruling in this case. As a result of the most recent opinion, ARB will either have to further steepen the compliance curve in 2019 and 2020, or else miss its statutory CI-reduction target in 2020.

Adding further complexity to this situation is the fact that these issues will be revisited when POET's parallel challenge to the re-adopted LCFS regulations, POET II, comes before the Fresno County Superior Court on July 26th, 2017. Many of the same issues will be before the POET II court, which is why the court delayed oral argument until after POET I had been resolved by the Court of Appeal. While it is likely that the POET II court will simply borrow the rulings of the Court of Appeal in POET I, and many of the POET II issues may be precluded by res judicata, there remains a real possibility that the POET II court could upend certain other portions of the LCFS regulations. This added uncertainty will not be resolved for months-or even longer if the POET II court's ruling is appealed.
Finally, a comment in the Court of Appeal's opinion raises the possibility that the entire LCFS regulatory scheme could become subject to extreme political pressure and perhaps further legal challenge. The POET I court stated that "the public is entitled to know that ARB and [its governing] Board were willing to accept the risk of higher levels of NOx emissions, with the attendant increase in smog and human health impacts, in exchange for lower overall emissions of greenhouse gases to combat global warming." Although the court did not address the potential implications of this comment, a finding that ARB had accepted higher NOx emissions in the name of improved overall greenhouse gas emissions could subject the entire LCFS regulatory regime to pressure from groups arguing it violates AB 32, the state's overarching climate change mitigation statute. AB 32 mandates that "[p]rior to the inclusion of any market-based compliance mechanism in the regulations, to the extent feasible and in furtherance of achieving the statewide greenhouse gas emissions limit, the state board shall . . . [d]esign any market-based compliance mechanism to prevent any increase in the emissions of toxic air contaminants or criteria air pollutants." Cal. Health & Safety Code ยง 38570(b). LCFS is a "market-based compliance mechanism," and NOx is a "criteria air pollutant," so a finding that NOx levels have increased as a result of LCFS could lead environmental justice and other groups to argue that LCFS had not complied with this statutory requirement to the maximum extent feasible. Further legal challenges could even argue that the entire LCFS program is invalid under AB 32. For this reason, not only will ARB need to ensure that it rigorously adheres to CEQA procedures in conducting its NOx analysis, the results of that analysis will have potentially critical implications for the LCFS program, as well.

Editor's Note: This article was republished with permission from the authors.

 City of Huron Mayor Rey Leon Receives  Green California Summit Leadership Award
Mayor of 'Poorest City in Golden State' Recognized  For Innovation in Clean Energy

Russ Teall and Ray Leon
Russ Teall of Biodico Zero Net Energy Farms and Mayor Rey Leon receiving the Green Leadership award.

Fresno County, Calif. - April 26, 2017 - Rey Leon, mayor of the City of Huron in the San Joaquin Valley, has received a Green California Summit Leadership Award for his work helping open the first liquid biofuels production facility in the world that is entirely energy self-sufficient.
The project is directed by renewable energy company Biodico's Zero Net Energy Farms, or "ZNEF," which is funded in part by the California Energy Commission to develop an energy solution for farmers and farmworkers that helps reduce greenhouse gas emissions. The award recognizes outstanding environmental achievements by California government, and Leon serves on the technical advisory committee for ZNEF.
"My hometown of Huron is considered the poorest city in the Golden State of California, and my dream is to help integrate clean energy and innovative sustainable systems to improve the quality of life for my community," Mayor Leon said. "Working with ZNEF helps us bridge the gap with places like Silicon Valley and empower our residents to participate in training programs and attain employment in the green economy."
"I am honored to represent leaders like Mayor Rey Leon.  Rey is a great advocate for his community and has always been a leader that thinks outside of the box and looks for every opportunity to improve his community," said Assemblymember Dr. Joaquin Arambula (D-Fresno) whose district includes the City of Huron.  "Receiving the Green California Summit Leadership Award is testament to his innovative leadership and the residents of Huron will benefit for years to come."
In a bi-partisan showing of support, Senator Anthony Cannella (R-Fresno), who also represents the City of Huron in the California Senate, issued a Senate Certificate of Recognition, which says in part, "On behalf of the California State Senate, I would like to honor you for being a recipient of the Green California Summit Leadership award by the Green California Summit. It is an exceptional honor and one for which you deserve to be  most proud. You are to be commended for your outstanding personal and professional achievements. Thank you for striving to make the City of Huron the greenest farm worker city in the country."
"Mayor Leon's knowledge and expertise have been a tremendous asset in helping develop the ZNEF project, signifying the goals we have in common with the City of Huron, including job creation and generating fully sustainable clean energy for the region," said Russ Teall, president and founder of Biodico.  "We look forward to continuing our work with Mayor Leon and congratulate him on this well-deserved honor."
Leon is also president and founder of Valley LEAP , and a member of the Air Resources Board Environmental Justice Advisory Committee ( EJAC ) in California, a state that now requires 35% of all funding for its "cap-and-trade" carbon emissions program to be spent in and around disadvantaged communities.

U.S. Biodiesel Industry Testifies to ITC on Illegal Trading at Hearing
Hearing highlights damage done to American biodiesel by flood of imports

April 13, 2017

WASHINGTON, D.C. - Today the U.S. Commerce Department announced that it is formally initiating antidumping and countervailing duty investigations of biodiesel imports from Argentina and Indonesia. This decision follows a petition that was filed with the U.S. Department of Commerce and the U.S. International Trade Commission on behalf of the National Biodiesel Board Fair Trade Coalition, which is made up of the National Biodiesel Board and U.S. biodiesel producers. 

"Initiation of these investigations validates the allegations in our petition, and we look forward to working with the U.S. government agencies during the course of the next year to enforce America's trade laws," said Anne Steckel, NBB Vice President of Federal Affairs in response to this announcement.

Today the National Biodiesel Board and US biodiesel producers also provided testimony to the International Trade Commission, explaining that Argentine and Indonesian companies are violating trade laws by flooding the U.S. market with dumped and subsidized biodiesel, and how those imports are injuring American manufacturers and workers.

"Make no mistake, 2016 should have been a banner year for U.S. biodiesel producers with demand growth, stable feedstock prices, and regulatory certainty that should have led to profitability and reinvestment in their businesses, but unfortunately that didn't happen," said Steckel. "Instead, dumped and subsidized biodiesel from Argentina and Indonesia entered the United States in record volumes, capturing greater market share at the expense of U.S. producers. The loss of market share has left the domestic industry with substantial unused capacity and the artificially low prices these imports are sold at leave American biodiesel unable to get a fair return for their product."

Because of illegal trade activities, biodiesel imports from Argentina and Indonesia surged by 464 percent from 2014 to 2016. That growth has taken 18.3 percentage points of market share from U.S. manufacturers.

"Negative margins within our industry due to low-priced imports have had a major impact on our company, with a disproportionately greater impact on smaller producers," said Robert Morton, co-founder of Newport Biodiesel, a small biodiesel producer from Rhode Island. "We have halted several plant modification projects as a result of reduced working capital, even for modest projects. Because of this, Newport Biodiesel is being limited in its ability to be a productive US green energy company in what is otherwise a growing market."

The adverse impact of dumped and subsidized imports is not limited to America's small biodiesel producers.

"When we see biodiesel from Argentina selling at a discount to the market price of soyoil, the main input into biodiesel, we know we are facing dumped pricing," said Paul Soanes, CEO and President of Renewable Biofuels (RBF). "The United States is a key market for these exporters, and without a remedy, these unfairly traded imports are likely to continue unabated. That is a further threat to our business."

A ccording to the Commerce Department's notice of initiation, there is evidence that dumping margins could be as high as 26.54 percent for Argentina and 28.11 percent for Indonesia. Commerce's notice of initiation also undertakes to investigate subsidies based on numerous government programs in those countries.

Today's staff conference is an important step in the administrative process. The Commission is expected to make its preliminary decision and vote on May 5, 2017. Following that, the next key step will be when the U.S. Department of Commerce announces its preliminary determinations regarding the estimated rates of subsidization and dumping -- expected on or about August 22, 2017 and October 20, 2017, respectively.

National Biodiesel Board Applauds New Biodiesel Tax Credit Bill
Grassley-Cantwell bill would modify the biodiesel tax credit to a production credit

April 26, 2017

WASHINGTON, D.C. - Today the National Biodiesel Board applauded the introduction of a bipartisan biodiesel tax credit bill that would convert the blender's credit for biodiesel to a $1-per-gallon production credit for fuels produced in the United States for three years. The bill provides an additional 10-cent-per-gallon credit for small U.S. biodiesel producers.

"Well-crafted and efficient tax incentives can be powerful policy mechanisms to achieve the nation's energy objectives and to create jobs. But subsidizing foreign manufacturing and hurting U.S. workers were not Congress' intent. We applaud the senators' bill to close this loophole by reforming the credit as a domestic production credit," said Anne Steckel, vice president of federal affairs at the National Biodiesel Board. "Updating this tax credit is necessary to create a level playing field for U.S. biodiesel producers-and it has the added benefit of saving millions of taxpayer dollars."

This bipartisan bill seeks to reinstate the biodiesel and small producers tax credits that expired at the end of 2016, but with a change to who is eligible for the credit. Previously, the tax credit was open to blenders of biodiesel, but this legislation would provide tax credits to 

U.S. producers instead of blenders. Doing so prevents subsidization of foreign manufacturers.
Taxpayer dollars and U.S. energy policy should be-and typically are-aimed at incentivizing domestic production, not foreign production. The current structure of the biodiesel tax incentive as a blender's credit increasingly allows foreign producers to access the credit if their fuel is blended in the United States. Importantly, this reform would not block imported biodiesel from entering the U.S. market; in fact, significant imports would likely continue coming to the U.S. and receiving incentives under the Renewable Fuel Standard and California's Low Carbon Fuel Standard.

U.S. biodiesel producers just need a level playing field to compete with foreign production. For example, since 2009, the European Union has levied duties on U.S. biodiesel that effectively block U.S. biodiesel from entering the European market. Additionally, Argentinian biodiesel that receives significant incentives under that country's Differential Export Tax regime is increasingly being shipped to the U.S. market where it also can qualify for the U.S. tax incentive. Without this reform, U.S. tax policy is increasingly creating competitive disparities in which U.S. companies are losing U.S. jobs and market share to subsidized foreign production in Europe, Argentina and other nations. Because of this flood of imports, the National Biodiesel Board also had to file an antidumping and countervailing duty petition against Argentina and Indonesia for violating trade laws and for harming U.S. workers and manufacturers.

Changing the structure of the tax credit also would save taxpayers millions of dollars. Biodiesel imports to the U.S. have grown sharply in recent years, largely as a result of the tax credit. In 2015 alone, the U.S. Treasury spent more than $600 million on tax credits for imported biodiesel and renewable diesel. Importantly, this fuel often had already received subsidies in its country of origin (Argentina, Indonesia and the European Union, for example). According to the Joint Committee on Taxation, reforming the tax incentive would save U.S. taxpayers $90 million as imports are reduced and domestic production grows.

Since being implemented in 2005, the biodiesel tax incentive has played a key role in stimulating growth in the U.S. biodiesel industry, helping it become the first EPA-designated advanced biofuel to reach commercial-scale production nationwide. By helping biodiesel compete on a more level playing field with petroleum, the $1-per-gallon tax credit creates jobs, strengthens U.S. energy security, reduces harmful and costly emissions, diversifies the fuels market and ultimately lowers costs to the consumer. There is a clear correlation between the tax incentive and increased U.S. biodiesel production, which has grown from nearly 100 million gallons in 2005 when the tax incentive was first implemented to almost 1.8 billion gallons in 2016.

The American Renewable Fuel and Job Creation Act of 2017 was introduced by U.S. Senators Chuck Grassley (R-Iowa) and Maria Cantwell (D-Wash.), with 14 other original sponsors, including Pat Roberts (R-Kan.), Heidi Heitkamp (D-N.D.), John Thune (R-S.D.), Sheldon Whitehouse (D-R.I.), Martin Heinrich (D-N.M.), Joni Ernst (R-Neb.), Joe Donnelly (D-Ind.), Roy Blunt (R-Mo.), Mazie Hirono (D-Hawaii), Al Franken (D-Minn.), Patty Murray (D-Wash.), Amy Klobuchar (D-Minn.), Tom Udall (D-N.M.) and Jeanne Shaheen (D-N.H.). 

(Oregon Environmental Council)
Oregon's Clean Fuels Standard: 1st Year Successes

Posted April 13, 2017

Transportation is a leading source of Oregon's greenhouse gas emissions - cars, trucks & buses are responsible for nearly 40% of our state's climate pollution. So when it comes to taking responsibility for our part in contributing to climate change, changes to transportation is, naturally, where we can make a big difference.

That's why the Clean Fuels Standard is so critical. There are three ways to reduce transportation climate pollution: cleaner cars, cleaner fuels, and fewer vehicle miles traveled (walking, biking and using transit more). We need all three for a stable climate and healthy communities.


At OEC we've worked tirelessly to pass (2009) and reauthorize Oregon's Clean Fuels Standard (2015) against intense oil industry opposition. Because of our dedication to making clean fuels work, Oregonians now have more choices at the pump, while alternative fuel producers are able to thrive.

The standard ranks fuels according to their life-cycle climate impact and rewards the lowest carbon fuels the most. This creates a built-in incentive for continuous innovation and improvement. Examples of some of the lowest carbon fuels (see graphic below) include biogas produced from waste streams or electricity generated from renewable energy.


One year in, the Clean Fuels Standard is working. In its first three quarters, clean fuels has displaced more than 589,000 tons of climate pollution - that's30% more than required by the program. Over the life of the program, it will reduce 8.4 million metric tons of climate pollution, the equivalent of taking 1.8 million cars off the road. Oil importers are complying with the law, while DEQ has already certified over 350 different low-carbon fuel options that are eligible in the program.

Businesses all across the state, from Coburg to Sherwood, Klamath Falls to Boardman, and Portland to Medford are signed up and using cleaner fuels. You can check out the success stories at  cleanfuelswork.com .


One of our favorite success stories comes from Portland-headquartered SeQuential, a producer of ultra low-carbon biodiesel made from recycled waste grease. From adding employees to their office in Portland, their retail station in Eugene, processing plant in Salem and truck drivers in White City, the Clean Fuels Standard has allowed SeQuential to grow their business footprint in Oregon by 150 employees. SeQuential recently released a video series explaining how the Clean Fuels Standard is helping their work.  Check it out here.

Before Clean Fuels, Oregonians sent more than $6 billion out of state each year through importing gas and diesel. Now more of these dollars are staying local to support jobs and our economy.

The value to Oregonians from the clean fuels standard:
  • immediate and measurable emissions reductions (cleaner air)
  • accountability of oil companies if they try to import dirtier petroleum fuels (like tar sands)
  • more clean fuel choices
All of this for the equivalent of a fraction of a cent per gallon at the gas pump.

As the world oil market looks poised for serious volatility thanks to meddling from Russia and OPEC, locally-made clean fuels will have more stable prices as well as less pollution, giving businesses and consumers greater protection from oil price spikes.

Oregon's leadership on clean fuels shows not only how our state can lead on climate - demonstrating a real commitment to lower emissions from our largest sources - but also illustrates how the actions we take motivate broader change. Clean fuels standards are working so well here and in California and British Columbia, that Canada is now taking their policy nationwide.

It's been an amazing first year, and we can't wait to see what comes next.
Farmers Could Lead the Way on Climate Action.  Here's How  
Farmers can profit economically and politically by addressing climate change

By Matthew Russell, Drake University

(THE CONVERSATION) President Trump, congressional Republicans and most American farmers share common positions on climate change: They question the science showing human activity is altering the global climate and are skeptical of using public policy to reduce greenhouse gas pollution .

But farmers are in a unique position to tackle climate change. We have the political power, economic incentive and policy tools to do so. What we don't yet have is the political will.
As a fifth-generation Iowa farmer and the resilient agriculture coordinator at the Drake University Agricultural Law Center, I deal with both the challenges and opportunities of climate change. I also see a need for the agriculture community to make tough choices about its policy priorities in the face of dramatic political shifts in Washington.

Pundits, agriculture groups and President Trump have identified farmers as a key demographic in the Republican victory. How we leverage this influence remains to be seen. Trade and immigration policy and the president's fiscal 2018 budget proposal are already creating disagreements between farmers and the Trump administration. We will need to be strategic in using our political power to shape agriculture policy.

My research and farming experience convince me that even in today's unpromising political conditions, agriculture can play an important role in addressing climate change. American farmers can become global leaders in producing what the world needs as much as abundant food: a stable climate.

Farmers wrestle with climate change

Prior to 2009, thousands of farmers across the United States participated in two large-scale projects designed to maintain or increase carbon storage on farmlands: the National Farmers Union Carbon Credit Program and the Iowa Farm Bureau AgraGate program. These programs paid farmers for limiting the number of acres they tilled and for maintaining or establishing grasslands. Payments came through the Chicago Climate Exchange (CCX), a voluntary market in which businesses could buy and sell carbon credits.

But after Barack Obama became president in 2009, farmers overwhelmingly joined the opposition to climate change action. As agriculture journalist Chris Clayton documents in his 2015 book "The Elephant in the Cornfield," farmers viewed Obama's climate strategy - especially the push for cap-and-trade legislation in 2009-2010 - as regulatory overreach by a Democratic Congress and president.

For example, after the Environmental Protection Agency briefly mentioned livestock in a 2008 report on regulating greenhouse gases under the Clean Air Act, farmers and agriculture trade groups erupted in outrage at the prospect of a "cow tax" on methane releases from both ends of the animal. When Congress failed to enact the cap-and-trade bill in 2010, the CCX went out of business.

The election of President Trump and Republican majorities in both houses of Congress eliminates the regulatory "bogeyman" that many farmers organized to reject in 2009. In our opposition, farmers rejected an opportunity to be paid for providing environmental services. Forgoing new sources of income might have made economic sense during the historic commodity boom between 2009 and 2013, but it no longer does.

Recently the farm economy has soured. After several years of historic profitability, 2017 looks to be the fourth straight year of declining income. American farmers face forecasts of stagnant to declining revenues.

Farmers may now be willing to consider new ways of generating income by adopting environmentally friendly practices, such as planting cover crops, extending crop rotations or eliminating tillage. Many farmers are already using these practices on a small scale. To combat climate change, we need to apply them on nearly all of our acres. And we need to develop new environmentally friendly practices.

Farmers are motivated by economic incentives to implement environmental practices. As an example, they recently enrolled nearly 400,000 acres in the USDA Conservation Reserve Program CP-42 which pays farmers to take land out of production and establish habitat for pollinators. Ironically, today we may need to embrace a source of revenue that just eight years ago seemed to many like regulatory overreach.

Opportunities under the Paris Agreement

The world came together in December 2015 to complete the Paris Agreement, which signals a major advance in global commitments to address climate change. All participating countries commit to lowering their greenhouse gas emissions. A number of American businesses have started to support putting a price on carbon.

Agriculture was noticeably absent from global climate discussions, but farmers could profit from policies that monetize carbon and create new markets for carbon emission allowances. At the Paris conference, the French government introduced the 4 per 1000 Initiative, which challenges farmers to increase the carbon in their soils. Other national governments, universities and agricultural organizations have joined this effort to advance agriculture that captures and stores carbon.

Now American farmers face a choice. Do we want to explore ways of providing environmental services to fight climate change? Or will we sit back and allow farmers in other parts of the world to develop these agricultural solutions? California is already showing the way by inviting farmers to participate in public-private efforts to address climate change.

Leveraging the 2018 Farm Bill

The Trump administration rejects policy efforts to protect the climate and indicates the United States may pull out of the Paris Agreement. Therefore, farmers will need to flex our political muscle to support climate solutions. Fortunately, we have powerful policy tools at our disposal.
Agriculture organizations and lawmakers are developing the 2018 farm bill, which will guide U.S. agriculture policy for several years, likely through 2022. Forward-thinking farmers can use this legislation to develop programs to pay for climate-friendly environmental services without radically changing the way we farm. Relatively small innovations can deliver payments for environmental services, which initially would be supported by American taxpayers but later could be funded by carbon markets.

For example, conservation programs currently target soil erosion. Policymakers would need to add rewards for reducing emissions and sequestering carbon. As a starting point, the next farm bill can identify practices that produce these outcomes and incorporate them into existing programs. The bill could also develop new programs to accelerate farmer innovation.
Farmers have a history of working together. Federal programs supporting ethanol and biodiesel production and wind turbines on farmlands all came about because farmers advanced public policies to support these products before clear market demand existed. In the same way, we can use the farm bill to increase farm income by monetizing the public benefits of climate services.

How farmers can lead

When the CCX collapsed in 2010, farm groups had already lost money trying to develop a program before there was enough public support to sustain it. We learned that it requires both government action and business leadership to successfully reward farmers for environmental services.

By advancing payments for climate services in the next farm bill, we can make our farms more resilient and align American agriculture with global business interests. If history is a good predictor of our future, no one is going 


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New Leaf Biofuel Plans to Double Biodiesel Production Capacity
By  Ron Kotrba | March 08, 2017

San Diego-based biodiesel producer New Leaf Biofuel has received a notice of proposed award from the California Energy Commission's Alternative and Renewable Fuel and Vehicle Technology Program, which will help fund an expansion project to double production capacity on-site from 6 MMgy to 12 MMgy. The grant, provided under the "Community-Scale and Commercial-Scale Advanced Biofuels Production Facilities" solicitation, is for nearly $3.8 million and will require matched funding from the company for an additional $4.5 million.

"We're ready to hit the ground running, as we've been anxiously awaiting this award," Jennifer Case, president of New Leaf Biofuel, told Biodiesel Magazine. Case said the grant agreement has to be signed before it becomes official, and the company is working on getting the necessary paperwork together before the April CEC board meeting, during which she expects all parties to sign the agreement so work can begin on the expansion project.

Case said upon signing of the grant agreement, New Leaf Biofuel plans to secure permits from the local authorities and construction could begin as early as mid-summer.

The project seeks to double capacity without expanding the footprint of the plant through conversion of batch to continuous processing using Tennessee-based Lutros LLC technology. Case said to grow production with its current batch system would require additional space the plant doesn't have.

"Our small footprint is our challenge," she said. "To go bigger using our technology, we would need bigger processing equipment, a bigger vacuum pump, bigger cooling tower-bigger, bigger, bigger. But we can't get bigger, so we're going to move to continuous processing and make everything smaller. Instead of reacting 4,000 to 5,000 gallon batches at a time, we'll have a continuous flow reactor through which the feedstock will be reacted in a much smaller receptacle. Going to continuous flow processing reduces the size of all our utilities and tanks. And our big batch reactors will no longer be used as reactors, but instead as surge and storage tanks. We'll probably be oversized for what we're doing, and getting more flowing in and out of our plant will be our next challenge."

Case said this is the most massive project New Leaf Biofuel has ever taken on since its inception. "We started in 2006 with hopes of getting to 500,000 gallons a year," she said. 

"Then we went to 1 MMgy, and 1.5 MMgy, and then 2 MMgy. After that we expanded to where we are today. Expanding to 12 MMgy is a number that 2006 Jennifer would never have dreamt of. I feel like we're still the small plant on the block."

Once the expansion project is complete, anticipated for fall 2018 with commissioning and startup expected by end of year, Case said the company will hire another entire shift of production workers for the newly expanded facility.

"We're entrepreneurs but also environmentalists," she said. "In California, that's a cool thing to do. It's respected. And we're happy to make more of this great fuel and hire more people from the community."

New Leaf produces BQ-9000 biodiesel from used cooking oil collected from San Diego area restaurants. 


California Ethanol Mill to Build Novel Biodiesel Refinery On-site

By Ron Kotrba | April 05, 2017

A California ethanol plant is being awarded a grant from the state energy commission to help build a biodiesel production facility on-site. Calgren Renewable Fuels, an ethanol refinery in Pixley, California-the heart of dairy country-already features a recently constructed anaerobic digester that powers the facility's 57 MMgy of ethanol production, and now the integrated biorefinery plans to diversify even further by adding a unique biodiesel technology to its renewable energy repertoire.

Calgren Renewable Fuels received a notice of proposed award for $3.6 million from the California Energy Commission's Alternative and Renewable Fuel and Vehicle Technology Program. The award would require $4.9 million in match funding. The funds will be used to construct a supercritical biodiesel plant on-site engineered and built by Jatrodiesel Inc., similar to the first commercial Super plant Jatrodiesel installed at the Patriot Renewable Fuels ethanol plant in Annawan, Illinois, now owned by Cenex Harvest States.

"We've been talking with Jatrodiesel for a long time and following their progress," said Lyle Schlyer, president of Calgren Renewable Fuels. "Jatrodiesel constructed its first Super plant at the former Patriot ethanol plant, and my sense is they thought they would be able to use that as more of a showcase. We're certainly willing to let them use our facility in that way."

On-site preliminary engineering has been underway for some time, Schlyer said. "We've had a heck of a start," he said, adding that Calgren Renewable Fuels has hired a project manager and procurement of equipment will begin in the next few weeks. "Some of the items have long lead times, especially the reaction vessels and specialized pumps."

Jatrodiesel describes its Super technology as a single-stage process that eliminates esterification and transesterification, and puts no limit on free fatty acid (FFA) levels in feedstock. According to the company, the process cuts the cost of traditional biodiesel refining by 25 to 28 percent, in part by eliminating the need for conventional catalysts. Feedstock is mixed with methanol and is introduced into the Super column, which operates in a supercritical environment. High temperatures and pressures are maintained in a continuous process and conversion occurs in minutes with minimal yield loss. Water content also has no effect on the process. The mixture coming from the Super column is then sent through separation to isolate biodiesel from glycerin, and the excess methanol is recovered. The biodiesel is then either water- or dry-washed to remove excess glycerin.

The facility will be able to produce more than 5 MMgy of biodiesel from high-FFA feedstock, including distillers corn oil produced on-site from Calgren Renewable Fuels' ethanol process, along with brown grease, acid oils and other low-cost feedstock transported from off-site. "A lot of biodiesel producers don't want high-FFA feedstock, but for us, we'd prefer it," Schlyer said. "We're pretty excited about the prospects."

The grant is being awarded to Calgren Renewable Fuels through its special-purpose entity, SJV Biodiesel LLC. "We use special-purpose entities to help differentiate our various operations, which currently include ethanol production, biogas production and energy production via cogeneration," Schlyer told Biodiesel Magazine. "SJV stands for San Joaquin Valley, which is where we are located."

Schlyer said he anticipates startup of the new Super biodiesel plant in Pixley, California, by the end of the year.  


Biodiesel Supplier Targray Named Finalist for PwC V2R Innovator of the Year Award

Posted   April 26, 2017

Targray, a market-leading supplier to the international Solar, Energy Storage, and Biofuels industries, has been named a finalist for the PwC Vision to Reality (V2R) Innovator of the Year Award, in the BUILDER category. The nomination highlights Targray's unique turnkey biodiesel solution, designed to enable fuel retailers and transport fleets to become more profitable, competitive and cost-efficient while helping to create a sustainable economy for future generations.

Vision to Reality (V2R) Innovator of the Year Award is PwC Canada's annual program aimed at recognizing and celebrating the most innovative organizations in the nation. "The applications we received this year represent a real cross-section of Canadian organizations and the very best innovators." said Tahir Ayub, Managing Partner, Markets and Industries, PwC Canada. "Each finalist demonstrates in their own unique way how innovation can accelerate an organization to the top of its game."

Since first launching its biodiesel solution in 2012, Targray has grown to become one of the North American clean fuel industry's largest biofuel suppliers, with a dedicated rail fleet linking its supply terminals in California, Florida, Illinois, Ohio, and Louisiana to fuel retailers and fleets throughout the US and Canada.

T o find out more about Targray's nomination for the Vision to Reality Innovator of the Year Award, please click  here .

Targray is an international commodity supplier that develops commercial solutions for four major industries:  Energy Storage Photovoltaics Biofuels , and  Optical Media . The company's comprehensive market-driven portfolio of energy materials & solutions is built to deliver exceptional value to its customers in over 50 countries.

Since being incorporated in 1989 in Montreal, Canada, Targray has grown to become one of the renewable energy industry's most important material suppliers, with office locations throughout the world and 400 million USD in annual sales. Learn more by visiting  www.targray.com.  

PwC Canada is a member of the PwC network of firms with more than 195,000 people in 157 countries. Its 6,500 partners and staff in offices across the country are committed to delivering quality in assurance, tax, consulting and deals services. Find out more by visiting us at  www.pwc.com/ca .



The public ARB board meeting on the Final Proposed Scoping Plan will be held on June 22nd and 23rd. CBA has been coordinating with NBB to monitor and address issues of concern to our industry in the plan. The main Scoping Plan page is here:  https://arb.ca.gov/cc/scopingplan/scopingplan.htm.

Per the article above on Mayor Rey Leon, CBA is reaching out to members of ARB's AB 32 Environmental Justice Advisory Committee (EJAC). Find EJAC meeting details on their webpage here:  www.arb.ca.gov/cc/ejac/meetings/meetings.htm
The CBA-led Biofuels Coalition, working to secure in-state biofuels incentive funding from Cap and Trade auction proceeds, has met with the Governor's staff and budget chairs in both houses already this year. Legislative Budget Subcommittees have begun their review of the Governor's 2017-2018 Budget Proposal. It includes $2.2 billion in Cap and Trade Funds, if the program is extended with a 2/3 vote. No action is likely to be taken by the Budget Subcommittees until after the Governor issues his May Budget Revise. 

The Cap and Trade program just survived a Chamber of Commerce lawsuit, though the ruling will likely be appealed to the California Supreme Court. The Governor is pushing the legislature for a  two-thirds vote to secure  ARB's legal authority and to extend the program  beyond 2020. 
ARB Joint Funding Plan for Low Carbon Transportation and  AQIP
CBA monitors the public workshop on the Fiscal Year (FY) 2017-18 Funding Plan for Low Carbon Transportation investments and the Air Quality Improvement Program (AQIP). ARB is postponing the workshop originally scheduled for April 6,  2017. In a recent ARB workshop, staff proposed $20 million be used to promote in-state biofuels production.  For more info:  https://www.arb.ca.gov/aqip/ .

The ADF regulation, which became effective January 1, 2016, includes reporting and recordkeeping requirements applicable to entities in the biodiesel industry. Biodiesel producers, importers and blenders must submit quarterly reports.  Biodiesel producers, importers and blenders are required to report and keep records concerning biodiesel production, sales, and blending. Biodiesel distributors and retailers are only required to keep records. 
Find the current FAQ and Reporting Forms at: http://www.arb.ca.gov/fuels/adf/adfdocs.htm. 

T he presentation for the ARB May 23rd, 2016 public workshop, which has detailed and very helpful diagrams, is posted here: http://www.arb.ca.gov/fuels/diesel/altdiesel/meetings/meetings.htm. 

NOTE: Most in-state biodiesel fuel businesses are required to register under the Air Resources Board's Motor Vehicle Fuel Distributor program (MVDP). See the article on our Members Only page.


Verification Rulemaking

The next ARB public working meeting on Biodiesel and Renewable Diesel will be held Monday, May 15th, 9:00 A.M. - 12:00 P.M at the CalEPA building in Sacramento. The discussion will include: (1) changes to the pathway carbon intensity application   and evaluation process, (2) improvements to reporting and credit  generation processes, and (3) the integration of third-party verification requirements under LCFS. Discussion papers and other materials for review will be posted at  http://www.arb.ca.gov/fuels/lcfs/lcfs_meetings/lcfs_meetings.htm .

NBB and CBA submitted joint comments in response to the first Biodiesel / Renewable Diesel public working meeting, which was held on February 10th in  Sacramento.  A product of the highest level of expertise in the field, the letter offers detailed technical feedback on ARB's  current Tier 1 and Tier 2 CA GREET models, the proposed  simplified CI application data summary form, and other questions agency staff is seeking feedback on. View presentations and  Stakeholder Feedback for that meeting here: 

Credit Activity
ARB publishes monthly LCFS credit transfer activity reports on the second Tuesday of every month:  https://www.arb.ca.gov/fuels/lcfs/credit/lrtmonthlycreditreports.htm .

Staff also publishes weekly LCFS credit transfer activity reports on the Tuesday of every week:  https://www.arb.ca.gov/fuels/lcfs/credit/lrtweeklycreditreports.htm .


The CEC voted this month to approve the 2017-2018 Investment Plan Update for the  ARFVTP.  Also, the CEC sent a notice that, if approved in the proposed state budget, CEC ARFVTP grant funding will be cut. This is due to that fact that the agency is now r equired to cover program support costs from motor vehicle fees, not funds that have been paid from utilities. As a result, $2.8 million less will be available for 2017-2018, with all categories experiencing the same pro rata reduction . Biofuel Production and Supply will be reduced from $20 million to $19.4 million . CBA works toward the goal of securing more funding for our industry.  View details here:  http://www.energy.ca.gov/altfuels/2016-ALT-02/documents/.


The State Water Resources Control Board is in the beginning stages of a rulemaking, which they plan to implement on January 1, 2018, to reflect and comply with the US EPA's 2015 UST regulation. Water Board staff held two workshops in Sacramento and LA this month and are seeking feedback on the proposed regulation. Meeting handouts with draft legal language are being made available on their website under Hot Topics.

Also, this month CalEPA has sent a notification of an increase in UST surcharge. CBA has submitted comments supporting those of CIOMA calling for the State Water Resources Control Board to provide detailed information about why an increase is needed, specifically what shortfall in the budget contributed to this need, and a detailed description of how the newly generated funds will be spent. The letter expresses concern about the increased burden of even slight increases to affected small, often family-owned fuel businesses who operate with small margins and already suffer from the high cost of doing business in California.


SB 1, the Governor's $52-billion tax-and-fee fuel tax bill to repair California's roads and put more dollars toward transit and safety, secured the two-thirds majority votes needed in each house to pass this month. At $5 billion-a-year, the 10-year program will increase vehicle registration fees, add an annual fee on electric vehicles, and raise taxes on all fuels. SB 1 increases diesel excise tax by 20 cents a gallon to 36 cents and increases diesel sales tax to 5.75 percent (from its current 1.75%). CBA met with the author to request exemptions for biodiesel without success. 
Under the new law, the state is prohibited from requiring pollution controls that would compel truckers to upgrade their trucks within the first 13 years on the road or before they reach 800,000 miles travelled.

For questions on federal policy issue, please contact the Washington office of the National Biodiesel Board (NBB) at  202-737-8801 .

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Reach Out to Your Members of Congress!
Please join this effort by sending a message to your representatives in Congress online ! You can do it in less than 30 seconds, but adding details about your work in the industry lets your representatives know why our industry is critical to your state!

Trump's Executive Actions 
According to the NBB, the March 28th executive order President Donald Trump does not specifically address the Renewable Fuel Standard, however, it does rescind the " President's Climate Action Plan" from 2013, which referenced the Obama Administration's support for the RFS.  It also withdrew certain documents related to the " Social Cost of Carbon" issued by the Interagency Working Group on Social Cost of Greenhouse Gases formed by the Obama Administration . These documents had provided guidance on how to consider the cost/benefits of agency action with respect to greenhouse gas emission reductions and climate change. Consistent with the Executive Order, EPA has already issued notices of its intent to review certain of EPA's regulations, including the Clean Power Plan and regulations addressing methane emissions from oil and gas operations. These notices were published in the Federal Register at 82 Fed. Reg. 16,329, 16,330 and 16,331.

Renewable Fuel Standard: Renewable Volume Obligations (RVOs) 
NBB has been meeting with administration officials on the 2018 RVOs and the 2019 Biomass-based Diesel volume, including with Special Assistant to the President for Domestic Energy and Environmental Policy, Mike Catanzaro. 

On April 24th,  the NBB argued regarding RFS for 2014-16 before the U.S. Court of Appeals for the District of Columbia Circuit, challenging the US EPA's interpretation and use of its waiver authority under the RFS statute. 

Thank you for your engagement and support of CBA and for your time and effort on behalf of our industry. I look forward to continuing to work with you.

Celia DuBose
Executive Director
California Biodiesel Alliance (CBA)