The American Soybean Association (ASA) provided comments today in Washington, D.C. at the U.S. Environmental Protection Agency (EPA) Public Hearing on the EPA’s Proposed Rule for the expanded Renewable Fuel Standard (RFS-2). ASA sees numerous flaws in the approach EPA is using for indirect land use changes in its proposed rule.

"ASA has tremendous concerns with the EPA’s Notice of Proposed Rulemaking for implementation of RFS-2," said ASA Vice President Ray Gaesser, a soybean producer from Corning, Iowa. "The primary area of concern and disagreement has emerged over the international indirect land use assumptions that EPA has proposed to use in conducting their updated lifecycle greenhouse gas (GHG) analysis."

In the proposed rule, soy biodiesel land use factors were focused largely on deforestation in Brazil. If that is the basis, then past and recent trends in Brazilian soy planted area should be a telling data point. Brazilian soy area increased most significantly in years prior to the existence of U.S. biodiesel production (1998-2004). In the periods from 2004-2008, when U.S. biodiesel production increased from 25 million gallons to 700 million gallons, Brazilian soy area has actually decreased.

"Land use change has been occurring long before any significant U.S. biofuel production began and is likely to continue regardless of U.S. biofuels policy," Gaesser said. "Clearly soy biodiesel is not driving land use change and any land use change that is occurring cannot be solely attributed to U.S. biofuels."

"Our assessment of the EPA Proposed Rule on RFS-2 implementation is that it is significantly flawed, and it does unnecessary harm to the competitive position of the U.S. soy biodiesel industry," Gaesser said.

The biodiesel industry is creating valuable green jobs and making a positive contribution to the economy. In 2008 alone, the U.S. biodiesel industry supported over 51,000 jobs, added over $4 billion to the nation’s Gross Domestic Product (GDP) and generated over $866 million in tax revenue for federal, state and local governments.

Despite the many benefits it provides, the U.S. biodiesel industry is facing severe economic hardship today. The difficulty accessing operating capital as a result of the current credit crisis, the volatility in commodity markets, reduced demand, and inability to compete in the European marketplace are making it difficult for producers to sell their fuel. In addition, uncertainty over federal policy, such as the extension of the biodiesel tax credit, and implementation of the RFS-2 is undermining investor confidence in the industry.

ASA’s complete testimony is available here.