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Biodiesel subsidy rule irks company

Published on July 17, 2010 3:01AM

Last changed on August 14, 2010 7:19AM

Biofuel producer fights citizen-owned restriction on funds


Capital Press

French agriculture giant Louis Dreyfus claims to be the victim of discrimination by USDA, which refuses to disburse renewable fuel payments to foreign-owned companies.

The Paris-based company has filed a legal complaint claiming the agency violated the U.S. Constitution and federal laws by discriminating against foreign-owned producers.

As part of the 2008 Farm Bill, Congress approved an Advanced Biofuel Statute that requires USDA to dispense $300 million to producers of renewable fuel other than traditional corn ethanol.

Last year, the agency announced funding would only be available to companies that are majority-owned by citizens and permanent residents of the U.S. or its territories.

Louis Dreyfus tried to obtain funding for its biodiesel plant in Claypool, Ind., in August 2009 but its application was rejected by USDA due to the citizenship requirement.

The USDA admitted the requirement wasn't mandated by law, but said "it is consistent with the agency's other programs," according to a proposed rule. Capital Press could not reach the agency for further comment.

Louis Dreyfus claims the language of the Farm Bill prohibits the agency from withholding funds based on the foreign ownership of renewable fuel producers.

"The Advanced Biofuels Statute neither imposes a U.S. citizenship requirement nor authorizes USDA to create one on its own," the complaint said. "Indeed, the purpose of the statute was to expand, not contract, the class of producers who would be eligible for payments under the program."

The company also claims USDA violated administrative law and unconstitutionally deprived foreign-owned producers of their rights.

There is no rational reason to exclude Louis Dreyfus' facility from the renewable fuel program, since the plant uses soybeans grown in the U.S. to produce oil for biodiesel, the complaint said.

The plant is capable of generating more than 88 million gallons of biodiesel a year and employs about 100 people, the complaint said. Louis Dreyfus invested $165 million in building the facility, which was completed in 2007.

"Inclusion of the Claypool facility in the Advanced Biofuels Program is consistent with, and significantly advances, the congressional purpose of supporting and ensuring an expanded production of advanced biofuels in the United States," the complaint said.

Louis Dreyfus has asked a federal judge in Washington, D.C., to declare the citizenship requirement invalid.

The company also seeks an injunction that would either stop USDA from disbursing funds under the program or force the agency to set aside money for Louis Dreyfus, pending the lawsuit's outcome.


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