EPA Proposes Year-Round Sales of E15 and Limits to RINs Trading

On Tuesday, the EPA proposed regulatory changes to allow gasoline blended with up to 15 percent ethanol (E15) to take advantage of the 1-psi Reid Vapor Pressure (RVP) waiver for the summer months that has historically been applied only to E10.

The proposed rule is important to petroleum marketers because it would allow the year-round sale of E15 blended gasoline. Currently, E15 may only be sold during the winter driving season. The proposed rule would change all that by extending the existing one-pound waiver allowed exclusively for E10 to E15 blends. If this happens, E15 will meet summertime RVP standards and can be sold year-round, underground storage tank and vehicle compatibility concerns notwithstanding.

Extending the one-pound RVP waiver to E15 through the rulemaking process is controversial because the statutory language of the Clean Air Act specifically limits the waiver to E10 blends. Consequently, opponents of E15 argue that any such change can only be made by Congress through the legislative process, specifically by amending the Clean Air Act. Despite this hurdle, the Trump Administration is directing the EPA to make the change through the proposed rulemaking. In the meantime, E15 opponents will likely sue to prevent the rule from taking effect. While PMAA supports all forms of motor fuels, serious compatibility issues with UST systems and vehicles must be resolved before E15 can be safely sold year-round.

On Tuesday, EPA also proposed changes in the trading and holding of biofuel credits, called renewable identification numbers (RINs), in an effort to stabilize the RIN market by limiting speculation.

Proposed reforms to RIN markets include: prohibiting certain parties from being able to purchase separated RINs; requiring public disclosure when RIN holdings exceed specified thresholds; limiting the length of time a non-obligated party can hold RINs; and increasing the compliance frequency of the program from once annually to quarterly.

EPA will hold a public hearing on the proposals on March 29th in Michigan.

For more information on the proposed rulemaking, please click here.

PMAA Counsel is reviewing the proposal and will provide a deeper dive soon. PMAA will also submit comments to EPA prior to the April 29th deadline.

Tax Extenders including Biodiesel Blender's Credit and OSLT Still in Limbo

While Congress has yet to renew the tax extenders package which includes both the biodiesel blenders tax credit and the oil spill liability tax (OSLT), there were some positive developments this week after the House Ways and Means Committee held a hearing on the subject. Ranking Member Kevin Brady (R-TX) said that he is developing a draft tax extenders package in an effort to shift the debate on the batch of temporary tax breaks.

This announcement comes two weeks after Senate Finance Committee Chairman Chuck Grassley (R-IA) introduced legislation that would retroactively extend most of the provisions through 2019 including the $1 per gallon biodiesel tax credit that expired at the end of 2017. Additionally, the OSLT would be extended through 2019 and the good news for petroleum marketers is that it would not be applied retroactively. For instance, if the bill is signed into law in March, then the OSLT would be effective the first day of the first month following passage, which would be April 1, 2019. The prospects of passage depend on whether Congress can find a legislative vehicle to attach the tax extenders bill.

Last month, PMAA, NEFI and several other groups sent a letter to House and Senate leadership in support of a 2018 retroactive renewal of the $1 per gallon biodiesel blender’s tax credit, which expired on December 31, 2017. Further, the letter urges Congress to include a multi-year extension of the credit. Click here to view the letter. To urge your representatives to support the biodiesel blender’s tax credit, click here.

Additionally, PMAA and other groups sent a letter to Congressional tax writing committees to oppose the retroactive renewal of the Oil Spill Liability Tax (OSLT) and to renew only on a prospective basis after the date of enactment. Applying an excise tax to 2019 transactions that have already been processed and the associated products sold multiple times would create significant transactional concerns and potential legal implications within the entire fuel supply chain. Click here to view the OSLT letter.

PMAA : E-15 AND TAX EXTENDERS

`PMAA : E-15 AND TAX EXTENDERS`