The U.S. ethanol industry is highly dependent upon a myriad of federal and state legislation and regulation and any changes in legislation or regulation could materially and adversely affect our results of operations and financial position. for REX AMERICAN RESOURCES Corp (RSC)

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RSC » Topics » The U.S. ethanol industry is highly dependent upon a myriad of federal and state legislation and regulation and any changes in legislation or regulation could materially and adversely affect our results of operations and financial position.

These excerpts taken from the RSC 10-K filed Apr 16, 2009.

The U.S. ethanol industry is highly dependent upon a myriad of federal and state legislation and regulation and any changes in legislation or regulation could materially and adversely affect our results of operations and financial position.

The elimination or significant reduction of the blenders’ credit could have a material adverse effect on the results of our ethanol investments. The cost of production of ethanol is made significantly more competitive with regular gasoline by federal tax incentives. The federal excise tax incentive program currently allows gasoline distributors who blend ethanol with gasoline to receive a federal excise tax rate reduction for each blended gallon they sell. If the fuel is blended with 10% ethanol, the refiner/marketer paid $0.051 per gallon less tax in 2008, which equates to an incentive of $0.51 per gallon of ethanol (effective January 1, 2009, it was reduced to $0.45 per gallon.). The $0.45 per gallon incentive for ethanol is scheduled to expire in 2010. The blenders’ credit could be eliminated or reduced at any time through an act of Congress and may not be renewed in 2010 or may be renewed on different terms. In addition, the blenders’ credit, as well as other federal and state programs benefiting ethanol (such as tariffs), generally are subject to U.S. government obligations under international trade agreements, including those under the World Trade Organization Agreement on Subsidies and Countervailing Measures, and might be the subject of challenges thereunder, in whole or in part.

Ethanol can be imported into the U.S. duty-free from some countries, which may undermine the ethanol industry in the U.S. Imported ethanol is generally subject to a $0.54 per gallon tariff that was designed to offset the $0.45 per gallon ethanol incentive that is available under the federal excise tax incentive program for refineries that blend ethanol in their fuel. A special exemption from the tariff exists for ethanol imported from 24 countries in Central America and the Caribbean Islands, which is limited to a total of 7% of U.S. production per year. Imports from the exempted countries may increase as a result of new plants under development. Since production costs for ethanol in these countries are estimated to be significantly less than what they are in the U.S., the duty-free import of ethanol through the countries exempted from the tariff may negatively affect the demand for domestic ethanol and the price at which our ethanol plants sell ethanol. Any changes in the tariff or exemption from the tariff could have a material adverse effect on the results of our ethanol investments. In addition, the North America Free Trade Agreement, or NAFTA, which entered into force on January 1, 1994, allows Canada and Mexico to export ethanol to the United States duty-free.

The effect of the renewable fuel standard (“RFS”) program in the Energy Independence and Security Act signed into law on December 19, 2007 (the “2007 Act”) is uncertain. The mandated minimum level of use of renewable fuels in the RFS under the 2007 Act increased to 9 billion gallons per year in 2008 (from 5.4 billion gallons under the RFS enacted in 2005), further increasing to 36 billion gallons per year in 2022. The 2007 Act also requires the increased use of “advanced” biofuels, which are alternative biofuels produced without using corn starch such as cellulosic ethanol and biomass-based diesel, with 21 billion gallons of the mandated 36 billion gallons of renewable fuel required to come from advanced biofuels by 2022. Required RFS volumes for both general and advanced renewable fuels in years to follow 2022 will be determined by a governmental administrator, in coordination with the U.S. Department of Energy and U.S. Department of Agriculture. Increased competition from other types of biofuels could have a material adverse effect on the results of our ethanol investments.

The RFS program and the 2007 Act also include provisions allowing “credits” to be granted to fuel producers who blend in their fuel more than the required percentage of renewable fuels in a given year. These credits may be used in subsequent years to satisfy RFS production percentage and volume standards and may be traded to other parties. The accumulation of excess credits could further reduce the impact of the RFS mandate schedule and result in a lower ethanol price or could result in greater fluctuations in demand for ethanol from year to year, both of which could have a material adverse effect on the results of our ethanol investments.

Waivers of the RFS minimum levels of renewable fuels included in gasoline could have a material adverse effect on the results of our ethanol investments. Under the RFS as passed as part of the Energy Policy Act of 2005, the U.S. Environmental Protection Agency, in consultation with the Secretary of Agriculture and the Secretary of Energy, may waive the renewable fuels mandate with respect to one or more states if the Administrator of the U.S. Environmental Protection Agency, or EPA, determines upon the petition of one or more states that implementing the requirements would severely harm the economy or the environment of a state, a region or the U.S., or that there is inadequate supply to meet the requirement. In addition, the 2007 Act allows any other person subject to the requirements of the RFS or the EPA Administrator to file a petition for such a waiver. Any waiver of the RFS with respect to one or more states could adversely offset demand for ethanol and could have a material adverse effect on the results of our ethanol investments.

Various studies have criticized the efficiency of ethanol, in general, and corn-based ethanol in particular, which could lead to the reduction or repeal of incentives and tariffs that promote the use and domestic production of ethanol or otherwise negatively impact public perception and acceptance of ethanol as an alternative fuel.

Although many trade groups, academics and governmental agencies have supported ethanol as a fuel additive that promotes a cleaner environment, others have criticized ethanol production as consuming considerably more energy and emitting more greenhouse gases than other biofuels and as potentially depleting water resources. Other studies have suggested that corn-based ethanol is less efficient than ethanol produced from switchgrass or wheat grain and that it negatively impacts consumers by causing prices for dairy, meat and other foodstuffs from livestock that consume corn to increase. If these views gain acceptance, support for existing measures promoting use and domestic production of corn-based ethanol could decline, leading to reduction or repeal of these measures. These views could also negatively impact public perception of the ethanol industry and acceptance of ethanol as an alternative fuel.

The U.S. ethanol industry is highly dependent
upon a myriad of federal and state legislation and regulation and any changes
in legislation or regulation could materially and adversely affect our results
of operations and financial position.

The elimination or
significant reduction of the blenders’ credit could have a material adverse
effect on the results of our ethanol investments.
The cost of production of ethanol is made significantly more competitive with
regular gasoline by federal tax incentives. The federal excise tax incentive
program currently allows gasoline distributors who blend ethanol with gasoline
to receive a federal excise tax rate reduction for each blended gallon they
sell. If the fuel is blended with 10% ethanol, the refiner/marketer paid $0.051
per gallon less tax in 2008, which equates to an incentive of $0.51 per gallon
of ethanol (effective January 1, 2009, it was reduced to $0.45 per gallon.).
The $0.45 per gallon incentive for ethanol is scheduled to expire in 2010. The
blenders’ credit could be eliminated or reduced at any time through an act of
Congress and may not be renewed in 2010 or may be renewed on different terms.
In addition, the blenders’ credit, as well as other federal and state programs
benefiting ethanol (such as tariffs), generally are subject to U.S. government
obligations under international trade agreements, including those under the
World Trade Organization Agreement on Subsidies and Countervailing Measures,
and might be the subject of challenges thereunder, in whole or in part.

Ethanol can be
imported into the U.S. duty-free from some countries, which may undermine the
ethanol industry in the U.S. Imported ethanol is
generally subject to a $0.54 per gallon tariff that was designed to offset the
$0.45 per gallon ethanol incentive that is available under the federal excise
tax incentive program for refineries that blend ethanol in their fuel. A
special exemption from the tariff exists for ethanol imported from 24 countries
in Central America and the Caribbean Islands, which is limited to a total of 7%
of U.S. production per year. Imports from the exempted countries may increase
as a result of new plants under development. Since production costs for ethanol
in these countries are estimated to be significantly less than what they are in
the U.S., the duty-free import of ethanol through the countries exempted from
the tariff may negatively affect the demand for domestic ethanol and the price
at which our ethanol plants sell ethanol. Any changes in the tariff or
exemption from the tariff could have a material adverse effect on the results
of our ethanol investments. In addition, the North America Free Trade
Agreement, or NAFTA, which entered into force on January 1, 1994, allows Canada
and Mexico to export ethanol to the United States duty-free.

The effect of the
renewable fuel standard (“RFS”) program in the Energy Independence and Security
Act signed into law on December 19, 2007 (the “2007 Act”) is uncertain.
The mandated minimum level of use of renewable fuels in the RFS under the 2007
Act increased to 9 billion gallons per year in 2008 (from 5.4 billion gallons
under the RFS enacted in 2005), further increasing to 36 billion gallons per
year in 2022. The 2007 Act also requires the increased use of “advanced”
biofuels, which are alternative biofuels produced without using corn starch
such as cellulosic ethanol and biomass-based diesel, with 21 billion gallons of
the mandated 36 billion gallons of renewable fuel required to come from
advanced biofuels by 2022. Required RFS volumes for both general and advanced
renewable fuels in years to follow 2022 will be determined by a governmental
administrator, in coordination with the U.S. Department of Energy and U.S.
Department of Agriculture. Increased competition from other types of biofuels
could have a material adverse effect on the results of our ethanol investments.

The RFS program and the 2007 Act also include provisions allowing
“credits” to be granted to fuel producers who blend in their fuel more than the
required percentage of renewable fuels in a given year. These credits may be
used in subsequent years to satisfy RFS production percentage and volume
standards and may be traded to other parties. The accumulation of excess
credits could further reduce the impact of the RFS mandate schedule and result
in a lower ethanol price or could result in greater fluctuations in demand for
ethanol from year to year, both of which could have a material adverse effect
on the results of our ethanol investments.

Waivers of the RFS minimum levels of
renewable fuels included in gasoline could have a material adverse effect on
the results of our ethanol investments. Under the RFS as passed as part of the
Energy Policy Act of 2005, the U.S. Environmental Protection Agency, in
consultation with the Secretary of Agriculture and the Secretary of Energy, may
waive the renewable fuels mandate with respect to one or more states if the
Administrator of the U.S. Environmental Protection Agency, or EPA, determines
upon the petition of one or more states that implementing the requirements
would severely harm the economy or the environment of a state, a region or the
U.S., or that there is inadequate supply to meet the requirement. In addition,
the 2007 Act allows any other person subject to the requirements of the RFS or
the EPA Administrator to file a petition for such a waiver. Any waiver of the
RFS with respect to one or more states could adversely offset demand for
ethanol and could have a material adverse effect on the results of our ethanol
investments.

Various studies have criticized the efficiency of
ethanol, in general, and corn-based ethanol in particular, which could lead to
the reduction or repeal of incentives and tariffs that promote the use and
domestic production of ethanol or otherwise negatively impact public perception
and acceptance of ethanol as an alternative fuel.

Although many trade groups, academics and governmental agencies have
supported ethanol as a fuel additive that promotes a cleaner environment,
others have criticized ethanol production as consuming considerably more energy
and emitting more greenhouse gases than other biofuels and as potentially
depleting water resources. Other studies have suggested that corn-based ethanol
is less efficient than ethanol produced from switchgrass or wheat grain and
that it negatively impacts consumers by causing prices for dairy, meat and
other foodstuffs from livestock that consume corn to increase. If these views
gain acceptance, support for existing measures promoting use and domestic
production of corn-based ethanol could decline, leading to reduction or repeal
of these measures. These views could also negatively impact public perception
of the ethanol industry and acceptance of ethanol as an alternative fuel.

These excerpts taken from the RSC 10-K filed Apr 14, 2008.

The elimination or significant reduction in the blenders’ credit could have a material adverse effect on the results of our ethanol investments. The cost of production of ethanol is made significantly more competitive with regular gasoline by federal tax incentives. The federal excise tax incentive program currently allows gasoline distributors who blend ethanol with gasoline to receive a federal excise tax rate reduction for each blended gallon they sell. If the fuel is blended with 10% ethanol, the refiner/marketer pays $0.051 per gallon less tax, which equates to an incentive of $0.51 per gallon of ethanol. The $0.51 per gallon incentive for ethanol is scheduled to be reduced to $0.46 per gallon in 2009 and to expire in 2010. The blenders’ credits could be eliminated or reduced at any time through an act of Congress and may not be renewed in 2010 or may be renewed on different terms. In addition, the blenders’ credits, as well as other federal and state programs benefiting ethanol (such as tariffs), generally are subject to U.S. government obligations under international trade agreements, including those under the World Trade Organization Agreement on Subsidies and Countervailing Measures, and might be the subject of challenges thereunder, in whole or in part.

Ethanol can be imported into the U.S. duty-free from some countries, which may undermine the ethanol industry in the U.S. Imported ethanol is generally subject to a $0.54 per gallon tariff that was designed to offset the $0.51 per gallon ethanol incentive that is available under the federal excise tax incentive program for refineries that blend ethanol in their fuel. A special exemption from the tariff exists for ethanol imported from 24 countries in Central America and the Caribbean Islands, which is limited to a total of 7% of U.S. production per year. Imports from the exempted countries may increase as a result of new plants under development. Since production costs for ethanol in these countries are estimated to be significantly less than what they are in the U.S., the duty-free import of ethanol through the countries exempted from the tariff may negatively affect the demand for domestic ethanol and the price at which our ethanol plants sell ethanol. Although the $0.54 per gallon tariff has been extended through December 31, 2008, bills were previously introduced in both the U.S. House of Representatives and U.S. Senate to repeal the tariff. We do not know the extent to which the volume of imports would increase or the effect on U.S. prices for ethanol if the tariff is not renewed beyond its current expiration. Any changes in the tariff or exemption from the tariff could have a material adverse effect on the results of our ethanol investments. In addition, the North America Free Trade Agreement, or NAFTA, which entered into force on January 1, 1994, allows Canada and Mexico to export ethanol to the United States duty-free or at a reduced rate. Canada is exempt from duty under the current NAFTA guidelines, while Mexico’s duty rate is $0.10 per gallon.

The U.S. ethanol industry is highly dependent
upon a myriad of federal and state legislation and regulation and any changes
in legislation or regulation could materially and adversely affect our results
of operations and financial position.

The elimination or
significant reduction in the blenders’ credit could have a material adverse
effect on the results of our ethanol investments.
The cost of production of ethanol is made significantly more competitive with
regular gasoline by federal tax incentives. The federal excise tax incentive
program currently allows gasoline distributors who blend ethanol with gasoline
to receive a federal excise tax rate reduction for each blended gallon they
sell. If the fuel is blended with 10% ethanol, the refiner/marketer pays $0.051
per gallon less tax, which equates to an incentive of $0.51 per gallon of
ethanol. The $0.51 per gallon incentive for ethanol is scheduled to be reduced
to $0.46 per gallon in 2009 and to expire in 2010. The blenders’ credits could
be eliminated or reduced at any time through an act of Congress and may not be
renewed in 2010 or may be renewed on different terms. In addition, the
blenders’ credits, as well as other federal and state programs benefiting
ethanol (such as tariffs), generally are subject to U.S. government obligations
under international trade agreements, including those under the World Trade
Organization Agreement on Subsidies and Countervailing Measures, and might be
the subject of challenges thereunder, in whole or in part.

Ethanol can be
imported into the U.S. duty-free from some countries, which may undermine the
ethanol industry in the U.S. Imported ethanol is
generally subject to a $0.54 per gallon tariff that was designed to offset the
$0.51 per gallon ethanol incentive that is available under the federal excise
tax incentive program for refineries that blend ethanol in their fuel. A
special exemption from the tariff exists for ethanol imported from 24 countries
in Central America and the Caribbean Islands, which is limited to a total of 7%
of U.S. production per year. Imports from the exempted countries may increase
as a result of new plants under development. Since production costs for ethanol
in these countries are estimated to be significantly less than what they are in
the U.S., the duty-free import of ethanol through the countries exempted from
the tariff may negatively affect the demand for domestic ethanol and the price
at which our ethanol plants sell ethanol. Although the $0.54 per gallon tariff
has been extended through December 31, 2008, bills were previously introduced
in both the U.S. House of Representatives and U.S. Senate to repeal the tariff.
We do not know the extent to which the volume of imports would increase or the
effect on U.S. prices for ethanol if the tariff is not renewed beyond its
current expiration. Any changes in the tariff or exemption from the tariff
could have a material adverse effect on the results of our ethanol investments.
In addition, the North America Free Trade Agreement, or NAFTA, which entered
into force on January 1, 1994, allows Canada and Mexico to export ethanol to
the United States duty-free or at a reduced rate. Canada is exempt from duty
under the current NAFTA guidelines, while Mexico’s duty rate is $0.10 per
gallon.

The RFS
program and the 2007 Act also include provisions allowing “credits” to be
granted to fuel producers who blend in their fuel more than the required
percentage of renewable fuels in a given year. These credits may be used in
subsequent years to satisfy RFS production percentage and volume standards and
may be traded to other parties. The accumulation of excess credits could
further reduce the impact of the RFS mandate schedule and result in a lower
ethanol price or could result in greater fluctuations in demand for ethanol
from year to year, both of which could have a material adverse effect on the
results of our ethanol investments.

Waivers of the RFS
minimum levels of renewable fuels included in gasoline could have a material
adverse effect on the results of our ethanol investments.
Under the RFS as passed as part of the Energy Policy Act of 2005, the U.S.
Environmental Protection Agency, in consultation with the Secretary of
Agriculture and the Secretary of Energy, may waive the renewable fuels mandate
with respect to one or more states if the Administrator of the U.S.
Environmental Protection Agency, or EPA, determines upon the petition of one or
more states that implementing the requirements would severely harm the economy
or the environment of a state, a region or the U.S., or that there is
inadequate supply to meet the requirement. In addition, the 2007 Act allows any
other person subject to the requirements of the RFS or the EPA Administrator to
file a petition for such a waiver. Any waiver of the RFS with respect to one or
more states could adversely offset demand for ethanol and could have a material
adverse effect on the results of our ethanol investments.

Various studies have criticized the
efficiency of ethanol, in general, and corn-based ethanol in particular, which
could lead to the reduction or repeal of incentives and tariffs that promote
the use and domestic production of ethanol or otherwise negatively impact
public perception and acceptance of ethanol as an alternative fuel.

Although many
trade groups, academics and governmental agencies have supported ethanol as a
fuel additive that promotes a cleaner environment, others have criticized
ethanol production as consuming considerably more energy and emitting more greenhouse
gases than other biofuels and as potentially depleting water resources. Other
studies have suggested that corn-based ethanol is less efficient than ethanol
produced from switchgrass or wheat grain and that it negatively impacts
consumers by causing prices for dairy, meat and other foodstuffs from livestock
that consume corn to increase. If these views gain acceptance, support for
existing measures promoting use and domestic production of corn-based ethanol
could decline, leading to reduction or repeal of these measures. These views
could also negatively impact public perception of the ethanol industry and
acceptance of ethanol as an alternative fuel.

This excerpt taken from the RSC 10-K filed Apr 16, 2007.

with regular gasoline by federal tax incentives. Before January 1, 2005, the federal excise tax incentive program allowed gasoline distributors who blended ethanol with gasoline to receive a federal excise tax rate reduction for each blended gallon they sold. If the fuel was blended with 10% ethanol, the refiner/marketer paid $0.054 per gallon less tax, which equated to an incentive of $0.54 per gallon of ethanol. The $0.54 per gallon incentive for ethanol was reduced to $0.51 per gallon in 2005 and is scheduled to expire (unless extended) in 2010. The blenders’ credits may not be renewed in 2010 or may be renewed on different terms. In addition, the blenders’ credits, as well as other federal and state programs benefiting ethanol (such as tariffs), generally are subject to U.S. government obligations under international trade agreements, including those under the World Trade Organization Agreement on Subsidies and Countervailing Measures, and might be the subject of challenges thereunder, in whole or in part. The elimination or significant reduction in the blenders’ credit or other programs benefiting ethanol may have a material adverse effect on the results of our ethanol investments.

Ethanol can be imported into the U.S. duty-free from some countries which may undermine the ethanol industry in the U.S. Imported ethanol is generally subject to a $0.54 per gallon tariff that was designed to offset the $0.51 per gallon ethanol incentive available under the federal excise tax incentive program for refineries that blend ethanol in their fuel. A special exemption from the tariff exists for the ethanol imported from 24 countries in Central America and the Caribbean Islands, which is limited to a total of 7% of U.S. production per year. Imports from the exempted countries may increase as a result of new plants under development. Since production costs for ethanol in these countries are estimated to be significantly less than what they are in the U.S., the duty-free import of ethanol through the countries exempted from the tariff may negatively affect the demand for domestic ethanol and the price at which our ethanol plants sell their ethanol. In May 2006, bills were introduced in both the U.S. House of Representatives and U.S. Senate to repeal the $0.54 per gallon tariff. We do not know the extent to which the volume of imports would increase or the effect on U.S. prices for ethanol if this proposed legislation is enacted or if the tariff is not renewed beyond its current expiration in December 2008. Any changes in the tariff or exemption from the tariff could have a material adverse effect on the results of our ethanol investments. In addition, the North American Free Trade Agreement, or NAFTA, which entered into force on January 1, 1994, allows Canada and Mexico to export ethanol to the United States duty-free or at a reduced rate. Canada is exempt from duty under the current NAFTA guidelines, while Mexico’s duty rate is $0.10 per gallon.

The effect of the RFS in the Energy Policy Act is uncertain. The use of fuel oxygenates, including ethanol, was mandated through regulation, and much of the forecasted growth in demand for ethanol was expected to result from additional mandated use of oxygenates. Most of this growth was projected to occur in the next few years as the remaining markets switch from MTBE to ethanol. The Energy Policy Act, however, eliminated the mandated use of oxygenates and established minimum annual nationwide levels of renewable fuels to be included in gasoline. The annual requirement grows to 7.5 billion gallons by 2012. Because biodiesel and other renewable fuels in addition to ethanol are counted toward the minimum usage requirements of the renewable fuel standard or RFS, the elimination of the oxygenate requirement for reformulated gasoline may result in a decline in ethanol consumption, which in turn could have a material adverse effect on the results of our ethanol investments. The legislation also included provisions for trading of credits for use of renewable fuels and authorized potential reductions in the RFS minimum by action of a governmental administrator. As the rules for implementation of the RFS and the energy bill are under development, the impact of legislation is still uncertain.

Waivers of the RFS minimum levels of renewable fuels included in gasoline could have a material adverse affect on the results of our ethanol investments. Under the Energy Policy Act, the U.S. Department of Energy, in consultation with the Secretary of Agriculture and the Secretary of Energy, may waive the renewable fuels mandate with respect to one or more states if the Administrator of the U.S. Environmental Protection Agency, or U.S. EPA, determines that implementing the requirements would severely harm the economy or the environment of a state, a region or the U.S., or that there is inadequate supply to meet the requirement. Any waiver of the RFS with respect to one or more states would adversely offset demand for ethanol and could have a material adverse effect on the results of our ethanol investments.

EXCERPTS ON THIS PAGE:

10-K (2 sections)	Apr 16, 2009

10-K (2 sections)	Apr 14, 2008

10-K	Apr 16, 2007

Rex American Resources Corp. (REX)

RSC » Topics » The U.S. ethanol industry is highly dependent upon a myriad of federal and state legislation and regulation and any changes in legislation or regulation could materially and adversely affect our results of operations and financial position.

EXCERPTS ON THIS PAGE:

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