Senator Marshall Leads Letter Fighting For Farmers with Biofuel Tax Credit

Washington, D.C. - U.S. Senator Roger Marshall, M.D. led a bipartisan letter calling for the U.S. Treasury Department to restrict the eligibility of the 45Z Tax Credit to renewable fuels made only from domestically-sourced feedstocks, like Kansas soybean oil and corn oil.

This tax credit will become effective on January 1 has the unintended consequence of incentivizing foreign used cooking oil over homegrown soybean and corn oil. Even worse, our federal government fails to verify the legitimacy of used cooking oil imports and much of it is believed to be fraudulent.

Since August 2023, used cooking oil imports from China and other countries have averaged over half a billion pounds per month. As a result, there has been downward pressure on the price of American soybeans, corn, and its derivatives. This drop in soybean prices corresponds to a loss in production value to American farmers of at least $5.4 billion and even more when you calculate corn losses.

This letter was co-led with Senator Sherrod Brown (D-OH) also signed by Senators Jerry Moran (R-KS), Eric Schmitt (R-MO), Mike Braun (R-IN), Todd Young (R-IN), Dick Durbin (D-IL), Tammy Duckworth (D-IL), Deb Fischer (R-NE), Pete Ricketts (R-NE), Tammy Baldwin (D-WI), Debbie Stabenow (D-MI), Joni Ernst (R-IA), Tina Smith (D-MN), Gary Peters (D-MI) and Amy Klobuchar (D-MN).

In meetings with the airline industry, we have heard firsthand their interest in using sustainable aviation fuels (SAF), and ethanol-based SAF is the most efficient and available option. But our own government regulators won't allow U.S. ethanol to be used, leaving the market open only to foreign ethanol. We are thankful for Senator Marshall for leading this bipartisan letter that brings this issue to the forefront, and for Senator Moran signing the letter as well," said Kansas Corn Growers Association President J.D. Hanna, Silver Lake.

"The Kansas Soybean Association thanks Sen. Roger Marshall and Sen. Jerry Moran for continuing their strong support of US agriculture. The biodiesel and renewable diesel industry has been a critical market driver for soybean profitability over the last decade-plus and it is being threatened without quick action. A diverse, domestic feedstock supply is a strength of the US biodiesel industry, and we would hate to see that advantage go away because of a technical change in how we administer renewable fuel policy. Prioritizing domestic feedstock sources in the 45Z should be an easy decision." said Kaleb Little, CEO, Kansas Soybean Association.

"Without this fix, the 45Z credit will incentivize the continued use of foreign feedstocks over U.S. feedstocks produced by American farmers. NOPA members have made commitments to expand U.S. crush capacity by 30% with $6 billion in investments to process domestic row crops into biofuels in line with state and federal renewable fuel and tax provisions, however current market conditions are beginning to call into question the viability of future investments. We firmly support free trade and open markets but cannot stand by and let foreign feedstocks benefit to the detriment of U.S. crushers, U.S. farmers and U.S. taxpayers alike. Thank you to the leadership of this bipartisan group of Senators for not only standing up for domestic fuels and domestic feedstocks, but the viability of this critically important domestic industry," said NOPA President and CEO Kailee Tkacz Buller.

"Growing imports of foreign feedstock such as used cooking oil and animal fats to produce biofuels are a serious concern for U.S. soybean farmers. This new supply of feedstock directly impacts soybean oil prices and is contributing to declining margins for farmers and fuel producers. If record imports continue, foreign feedstocks could displace the oil from nearly 990,000 soybean acres in Iowa and create significant market uncertainty for the rapidly expanding soybean crush industry across Iowa and the greater Midwest. We urge the Treasury Department to ensure domestic feedstocks are prioritized in U.S. biofuels tax policy to increase domestic energy security and improve rural outcomes," said Suzanne Shirbroun, President of the Iowa Soybean Association (ISA).

Highlights from the letter include:

"It is critical to American energy independence and rural prosperity that the Department of the Treasury (Treasury) issue proposed and subsequently final guidance for the Clean Fuel Production Credit (45Z) in advance of its January 1, 2025, statutory deadline. Finalizing this rule in a timely manner will provide farmers, renewable fuel producers, end-users, and other biofuels stakeholders with the certainty and clarity they need to invest and make planting decisions. As Treasury works to craft 45Z guidance, we urge you to restrict the eligibility to renewable fuels made from feedstocks sourced domestically," the Senators wrote.

"While the use of foreign feedstocks can play an important role in producing domestically manufactured ethanol and biodiesel, the rule must make it clear that the tax credit may only apply to biofuels produced from domestic feedstocks. This would be keeping with the two-fold intent of Congress in creating 45Z: 1) support domestic biofuels manufacturing, and 2) utilize domestic feedstocks to lead the way in lowering the carbon intensity of American transportation fuels. This approach marks a deliberate change from the previous Blenders Tax Credit, and it is important that Treasury's guidance capture this nuance and accurately reflect Congressional intent," the Senators added.

"If more is not done to support the production and utilization of domestic feedstocks, the U.S. will see its renewable fuels industry shift focus from domestically oriented feedstocks towards imports. Allowing U.S. tax credits to fund the importation and use of foreign feedstocks to produce biofuels would put U.S. agriculture at the back of the line, while foreign agricultural producers are subsidized by U.S. taxpayers," the Senators continued

'We urge you to issue proposed and subsequently final guidance for 45Z in advance of January 1, 2025. Such a rule should include language that only allows for the distribution of federal tax dollars to renewable fuel made with domestic feedstocks as Congress intended," the Senators concluded.

You may click HERE to read Senator Marshall's full letter.

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