U.S. railroads, including Warren Buffett’s BNSF, are joining a corporate brawl over ethanol mandates that pits American corn farmers and fuel distributors against independent oil refiners like billionaire Carl Icahn.
The American Association of Railroads (AAR), which represents the interests of BNSF, Union Pacific Corp., CSX Corp., Norfolk Southern Corp. and others, is pushing back against calls by Icahn’s CVR Energy Inc. and Valero Energy Corp. for changes to the Renewable Fuel Standard, the law that requires escalating amounts of biofuel to be mixed with petroleum.
At issue is who’s responsible for showing compliance with the program. Adherence is tracked by paper credits that have become more expensive in recent years. Refiners argue that the costs are exorbitant and that the Environmental Protection Agency, the regulator that has jurisdiction over the mandate, should move the onus from them to lower down the supply chain, closer to consumers.
That would put companies such as BNSF, the carrier owned by Buffett’s Berkshire Hathaway Inc., and Union Pacific, the largest publicly traded U.S. railroad, on the hook for showing compliance with the credits, AAR said in an e-mailed statement Monday. It would also increase fuel prices, the lobbying group said.
Consumer Impact
“American consumers will ultimately absorb the impact,” said Kristin Clarkson, an AAR spokeswoman.
The lobby “is speaking on behalf of BNSF and the other railroads who are members,” Michael Trevino, a BNSF spokesman said in an e-mail.
Susan Terpay, a spokeswoman for Norfolk Southern, also said AAR’s efforts are in support of the railroad industry. Spokesmen for CSX and Union Pacific didn’t return messages left for comment. Icahn, who owns an 82 percent stake in CVR, declined to comment.
“Moving the point of obligation helps small retailers,” Valero said in an e-mailed statement Tuesday. The impact on fuel retailers would be “positive,” by creating a “level playing field” between smaller and larger companies, Valero said.
Petroleum refiners are required to blend renewable fuels like ethanol into U.S. gasoline as part of a 2007 energy law passed under President George W. Bush that sought to slow the pace of oil consumption and its carbon footprint. Each gallon is tracked by a unique, 38-digit Renewable Identification Number.