In a letter to the Environmental Protection Agency (EPA) sent earlier this week, the American Soybean Association (ASA) expressed concerns regarding the Argentine biodiesel industry seeking access to the United States Renewable Fuels Standard (RFS), and the potential of displacing U.S. soy biodiesel.

EPA is currently considering an application submitted by CARBIO, the trade association representing Argentine biodiesel producers, to establish eligibility of Argentine biodiesel for the RFS.  With 1.3 billion gallons of biodiesel production capacity and subsidies that promote exports, Argentine biodiesel could have a large impact on the U.S. biodiesel market.

As indicated in the letter, a significant issue with the Argentine application is their plan to comply with the renewable biomass eligibility requirements.  The renewable biomass requirements of the RFS statute and regulations require entities to demonstrate that their biofuel feedstock was derived from land that was in agricultural production prior to December 2007.  In their proposal, CARBIO is asking EPA to approve an “Alternative Renewable Biomass Tracking Requirement” which would serve to replace the stringent feedstock recordkeeping requirements of the RFS and allow Argentine biodiesel to qualify for the RFS.

ASA believes that the far reaching impacts of this issue require an exhaustive review by EPA that includes a public comment period and input from the various stakeholders as well as other government agencies, such as the U.S. Department of Agriculture, and the Office of the U.S. Trade Representative.

EPA must be made aware of the fact that Argentine biodiesel is being heavily subsidized into world markets, and the European Union already has imposed anti-dumping duties on Argentine biodiesel imports due to the significant subsidies that Argentine biodiesel receives as the result of Argentina's differential export tax system (DET).

ASA also believes consideration of the CARBIO application should be done well in advance of the year in which any Argentine biodiesel would qualify for the RFS program, since the volumes of Argentine biodiesel would need to be factored into EPA’s calculation of the Required Volume Obligation (RVO) for Biomass-based diesel for that year.  Clearly, with EPA’s proposed rule to limit the biomass-based diesel program to 1.28 billion gallons in 2014 and 2015, the potential for significant volumes of Argentine biodiesel to flood the U.S. market in 2014 and 2015 has not been contemplated by EPA.

In addition to the letter and efforts with EPA, ASA leaders raised the issue at a meeting with USTR in early March.  Additional meetings are planned with EPA, USTR, and USDA in coordination with other soybean and biodiesel industry stakeholders.  We wanted to make you aware of this issue and will keep you updated on any developments.