Terminals open in midst of pending legislation

By Luke Geiver | February 09, 2010
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Blending terminals continue to open as ethanol demand increases. In December, Blendstar LLC, a Houston-based developer and operator of biofuels terminals, opened a facility in Collins, Miss., and U.S. Development Group LLC opened an ethanol terminal in Rialto, Calif., to meet an anticipated increase of in-state ethanol demand. The new blending stations arrive amid pending rail legislation.

Sen. John Thune, R-S.D., along with Sen. Byron Dorgan, D-N.D. announced their support of the Surface Transportation Board Reauthorization Act of 2008, S.2889. According to Thune, the legislation would offer assistance to small shippers by streamlining the complaint process. A new arbitration system would be created for small rate complaints, an aspect Thune says would be valuable to grain elevators and farmer-owned ethanol plants that lack the time or expertise to challenge a railroad rate under the existing rate case procedures.

In addition, the legislation would require a better policy balance between the interests of the railroads and their shippers, reinstate the STB's ability to initiate investigations on its own initiative, and undertake a study of rail practices, including switching, demurrage, and other accessorial charges, including fuel surcharges.

"For too long, the policies of the Surface Transportation Board, which was created to protect rail customers, have made it hard for captive shippers to get fair rail rates," Dorgan said. "This bill isn't perfect, but it will at long last make strides toward increasing rail competition." Nearly 70 percent of all ethanol will travel via rail during the path to the marketplace according to a 2009 Renewable Fuel Association report.
With the legislation pending, Blendstar's plant in Miss., keeps moving forward with operations. "We began loading ethanol and biodiesel at the facility on Dec. 29," Matt Griswold, president of Blendstar noted. "We have some minor construction (paint and landscaping) remaining but the facility is fully functional." Green Plains Renewable Energy Inc., majority owner of Blendstar, hopes to continue expansion at the Collins terminal. GPRE President and CEO Todd Becker said, "Blendstar is focused on providing solutions for underserved markets that want an efficient way to blend and distribute biofuels into the nation's fuel supply."

Distribution and location represent important aspects of the new terminal. "This terminal is ideally located to meet our customers' needs," Griswold said. "As the federal regulatory requirements for biofuels increase and pipeline operators add biofuels to their product lines, we believe locations like Collins will provide the most cost-effective channels for both local and regional distribution."

Although the proposed STB Act of 2008 is still pending, Griswold said they would support any legislation that results in more reliable and affordable rail shipments because, as the country relies more heavily on biofuel for its fuel supply, it is critical that all business related to the transportation of biofuels have the ability to effectively and efficiently ship and receive their products. For the positives of the rail legislation, he added, "I am hopeful that this legislation will help us move closer to this goal."