Dear Chairman Fuchs and members of the Board:
Growth Energy is the nation’s largest association of biofuel producers, representing 97 U.S. plants that each year produce more than 9.5 billion gallons of homegrown, renewable fuel; 131 businesses associated with the production process; and tens of thousands of biofuel supporters around the country. The United States is home to 210 biorefineries across 27 states that have the capacity to produce more than 18 billion gallons of ethanol. Today, ethanol makes up more than 10 percent of our nation’s fuel supply, and we’re poised to do much more with the expanded use of higher ethanol blends like E15, a fifteen percent ethanol fuel blend, and the role ethanol can play in new and innovative applications like marine, aviation, and industry markets. Ethanol is an American success story, driving significant economic growth and investment while supporting more than 300,000 jobs nationwide and contributing to a strong rural economy. Our industry is poised to help the administration achieve its energy dominance goals by providing low-cost, innovative, and American-made fuel as we remain committed to helping our country diversify its energy portfolio and provide consumers with better and more affordable choices at the fuel pump.
To deliver low-cost fuel to American drivers, our industry is dependent on timely and efficient rail service, with nearly 70 percent of our production moved by rail. In fact, ethanol represents the largest hazmat commodity shipped by rail, with an annual average of more than 400,000 carloads from 2019 through 2023 and a fleet of nearly 37,000 cars at the end of 2024. Additionally, our industry ships more than 200,000 cars per year of dried distillers grains (DDGS) and more than 10,000 cars of corn oil. Rail service is vital to move ethanol and related coproducts from our biorefineries, located primarily in the Midwest, to American motorists across the country.
Unfortunately, today, there is little to no recourse for our members and other shippers if a railroad fails to meet its obligations. Rail rates have continued to increase, and service continues to be inconsistent. A report for the Rail Customer Coalition showed that from 2004 to 2019, rail rates increased by 43%, while during the same period rail costs increased only 8%.
Even beyond increasing rail rates, all disputes about service are heavily tilted in favor of the railroads. If our plants do not meet the railroads’ needs in a timely manner, a railroad can and will assess demurrage fees. Conversely, if power or labor from the railroad are delayed, our plants do not have the same ability to assess fees or receive any sort of discount or other remedy. When demurrage and accessorial fees are imposed, there is almost always a presumption that our industry is guilty until proven innocent, regardless of circumstances. The burden of proof and the requirement to dispute falls on our plants to show that they were not at fault, and they are required to request railroad permission to rescind such charges. Similarly, rail rate cases take years to adjudicate at considerable cost, with the burden placed on shippers proving that rail rates are unreasonable and that no other competitive options exist.
As such, we strongly support the Surface Transportation Board’s (STB) proposed rule to eliminate regulatory restrictions that limit options for freight rail shippers. This important commonsense action will help to promote competition in the marketplace and, importantly, help to deliver more efficient rail transportation of ethanol and its coproducts. Efficient rail transportation helps our industry remain competitive both here and abroad and maintains strong demand for America’s farmers and rural communities. Actions such as these are critically important for our two billion gallons of ethanol and projected three billion bushels of corn to be exported this year.
Specifically, this proposal eliminates 49 C.F.R. part 1144 which effectively removes the anticompetitive conduct requirement which has been an insurmountable barrier to competitive rail access remedies such as reciprocal switching and through routes. We agree with the STB’s conclusions that part 1144 “…created, in practice, an unnecessarily high barrier to statutory relief…” and has become obsolete. With repeal of part 1144, the Board could prescribe routes, through rates, and reciprocal switching agreements on a case-by-case basis. Doing so will provide greater access to case-by-case solutions that will improve service and rates for rail shippers including ethanol producers and marketers.
Thank you in advance for your consideration and please contact us if you have any questions.