Re: This is what the NBB sent me when I asked about production requirements.... - Biodiesel Production - General Biodiesel - BioDieselNow

I asked the following questions,

Hello,

I have several questions concerning becoming a mini-producer of Bio diesel. I am finding it difficult to find the answers in Layman's terms. Maybe you could provide some light on the subject.

1. I plan on producing several thousand gallons of Bio per month and selling it to a few of my local connections in Southern Florida.

2. Is there a certain grade of Bio diesel that I need to produce? ASTM standards?

3. I heard that I need Epa certification and Tier 1 testing. What does this cost and what's involved? How long does this take to achieve?

Thank you very much for the information in advance.

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And the response,

Thanks for writing. As the national trade association for the US biodiesel industry, our expertise is not in the production side of the industry. Production technology, plant development, business planning, feasibility studies are issues best serviced by the private sector. NBB works primarily in the areas of biodiesel education and market development, and we strive to break down barriers while creating demand for US biodiesel. For business consulting advice, technology providers, and other business-to-business services you can find some excellent resources on the All Things Biodiesel (ATB) section of the NBB web site at www.allthingsbiodiesel.com. For information about aa biodiesel technology course at the University of Idaho, see www.uidaho.edu/bioenergy/. Issues that need to be addressed when looking at producing biodiesel for commercial sale in the US include: Registration with EPA as a biodiesel fuel producer: In the US, EPA governs fuel and fuel additive registration and anyone selling biodiesel must first be registered with them. The contact is Mr. Jim Caldwell and his number is (202) 343-9303. See http://www.epa.gov/oms/renewablefuels/420b07019.pdf for more information. In most cases, each fuel supplier must first be registered in the state in which the fuel is being sold and suppliers must be properly licensed, bonded, and insured. Contacting your local Department of Revenue is a good starting point. Incorporated fuel quality assurance procedures to guarantee the fuel meets ASTM D6751 specifications. The full specification is available through ASTM at www.astm.org. Along with the ASTM standard for biodiesel, the industry also has in place a quality assurance program called BQ-9000. The program is a unique combination of the ASTM standard for biodiesel, ASTM D 6751, and a quality systems program that includes storage, sampling, testing, blending, shipping, distribution, and fuel management practices. There are two classes of accreditation in the BQ-9000 program. For more information, see http://www.bq-9000.org. Fuel quality is of the utmost concern and importance to the biodiesel industry. Compliance with IRS Federal Fuel Excise Tax Regulations and any applicable state taxes. Contact the IRS at (800) 829-3676 and your local State Motor Fuels Taxes Division for more information. Feedstock sourcing/supply. Times are tough right now with feedstock prices at all-time highs and paper-thin profit margins. The companies most likely to succeed include those with solid business plans, the ability to produce a quality product, and those with a firm commitment of feedstock. Issuance of all applicable state permits for construction of the facility, building, operating, wastewater, spill containment, storm water pollution prevention, air quality permits, storage, state fire marshal, selling of product, etc. The actual number of permits required depend on the size and design of the biodiesel plant and other issues such as local requirements and methods associated with production processes. There may be as many as 20-30 permits involved in getting the plant operational. Given the number of permits, complexity of the forms, requirements that can vary from state to state, and level of technical information required, you might consider working with a consultant familiar with environmental permitting in your state and an area economic development director. Adherence to local zoning laws with regard to storing hazardous chemicals, air quality emissions, and/or construction of a facility. Contact your local state Department of Environmental Quality. IRS and state blender's permitting/registration requirements. We encourage you to contact the excise tax division of your state department of revenue for more specific information on any requirements they may have. All producers and blenders need to register with the IRS under Form 637. Producers of biodiesel, if planned for on-road use, should also contact EPA regarding registration as a refiner, per the ULSD rules. Final regulations implementing the national Renewable Fuel Standard have been completed and the program started September 1, 2007. Biodiesel is included as an eligible renewable fuel for purposes of compliance by obligated parties. As such, biodiesel producers have certain compliance requirements including registration/reporting/documenting. Understanding and meeting the compliance requirements of the RFS Program will be extremely important. EPA has developed a website specific to the Renewable Fuel Standard Program containing the final regulations, as well as Q&A documents to assist in meeting your compliance requirements. The following link will take you directly to this section of the EPA website http://www.epa.gov/otaq/renewablefuels/. Insurance Issues. Do I warrant my biodiesel to the extent that will pay for any and all damages attributable to bad biodiesel? For more information, refer to 40 Code of Federal Regulations (CFR) Part 79 regarding requirement of registration. Sections 211(b) and 211 (e) of the Clean Air Act require producers of fuels and fuel additives to be registered with EPA. Those provisions require that in order to register a fuel with EPA, that it must complete Tier I and Tier 2 health effects testing requirements. The provisions also allow individuals to form a consortium in order to complete the testing requirements as a group. NBB completed the testing at a cost of $2.2 million dollars. Prospective registrants can join as members of the NBB, for which access to health effects data is provided free to its members, as long as the member remains in good standing. There are many benefits to joining NBB besides obtaining EPA Health Effects Access. For more information about membership, see our website at www.biodiesel.org under "About NBB" “NBB Membership.” For a map of current biodiesel production facilities, see http://www.biodiesel.org/pdf_files/fuelfactsheets/Producers%20Map%20-%20existing.pdf and for a map of plants under construction or expansion, see http://www.biodiesel.org/pdf_files/fuelfactsheets/Producers%20Map%20-%20Construction.pdf.

For possible grants to help with plant development, we normally suggest trying: USDA Rural Development, USDA Conservation Security, US EPA West Coast Initiative, USDA Value Added Producer Grants under the Rural Business Cooperative Program, USDA NRI Grant Program, US EPA, your local Regional Biomass Energy Program, Clean Cities, and your local Energy Program, Department of Commerce, Department of Agriculture, and Department of Economic Development. If located in a state with a soybean association or board, you might contact them as well. To check on state incentives or programs, a good place to go is to the state's legislature home page and search laws, bills or statutes related to biodiesel. For information about federal programs that positively impact the biodiesel industry, please visit our website at http://www.nbb.org/news/taxincentive.

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Isnt there a more simple process involved? I thought I read about $2500 for testing through the nbb membership and so forth? Can anyone chime in here? I feel like they are responding as if I was going to be producing millions of gallons per yr.

You're asking a difficult question, given the complexity of what you want to do. For the best answers, I recommend the ISU / Idaho Biodiesel course. For this small outlay of cash and time you'll learn what you want to know. They also sell a few books which may help answer some of your questions.

I don't think you'll find your answers here, as most of the folks that participate at BDNow are researchers or are involved in small-scale, non-commercial production.

Aside, I'd say I've seen at least 100 folks come through here in the last year asking the same questions as you. Most figure out how legally and technically complicated it is to selling Biodiesel and disappear. Lots of folks come in thinking this is a great get-rich-quick scheme. Given the plethora of plant closures, that doesn't appear to be the case. This isn't meant to dissuade you, just to temper the situation with a little realism.