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Lawmakers question access to biofuels

Sens. Chuck Grassley (R-Iowa) and Amy Klobuchar (D-Minn.) are calling on the Justice Department and Federal Trade Commission (FTC) to investigate possible anticompetitive practices by oil companies that limit consumer access to renewable fuels.

In a letter to Attorney General Eric Holder and FTC Chairwoman Edith Ramirez, Klobuchar, chair of the Judiciary Committee’s Antitrust Subcommittee, and Grass¬≠¬≠ley, ranking member of the Judiciary Committee, urged the administration to take action to address recent reports indicating that oil companies may be undermining efforts to distribute renewable fuels, including higher ethanol gasoline blends, that help boost the nation’s energy security and lower the price of gas for consumers.

Undermining demand?

"Faced with growing competition from new sources of fuel promoted by the RFS (Renewable Fuel Standard), the oil industry has publicly stated their goal of repealing the RFS. At the same time, we have heard reports that oil companies are taking steps to undermine efforts to distribute renewable fuels that could help to meet the RFS requirement," the senators said.

"We have heard allegations that the oil industry is mandating retailers to carry and sell premium gasoline, thereby blocking the use of the current retail infrastructure to sell renewable fuels. Station owners who wish to sell renewable fuel would bear the cost and logistical burden of having to install additional infrastructure to do so. In one case, an oil company is alleged to be using its franchise agreements to preclude franchisees from offering higher level ethanol blends to their customers."

By forcing a franchisee to carry premium gasoline as a condition of carrying regular gas, the oil company may be using its economic power over its franchisee to affect a tying arrangement in violation of the Sherman Act, the letter said.

This conduct may also violate the Gasohol Competition Act of 1980, which prohibits discrimination or unreasonable limits against the sale of biofuels.

"The promise of renewable fuels is rapidly becoming a reality and introducing much needed competition to the transportation fuels sector," the members said. "Given the implication these alleged activities, if true, could have on competition in the marketplace, we urge you to investigate them and consider whether any action is necessary.