On Wednesday afternoon, the EPA released a proposed rulemaking to implement the federal Renewable Fuel Standard (RFS). Congress adopted the RFS in 2005 and expanded it in 2007. The program requires oil companies to blend increasing volumes of renewable fuels with gasoline and diesel, culminating with 36 billion gallons in 2022. The EPA's proposed rule assigns 2018 renewable volume obligations (RVOs) for ethanol and cellulosic biofuel and biomass-biodiesel mandates for 2019. The proposed volumetric blending mandates call for:

PMAA continues to oppose volumetric ethanol blending mandates for gasoline that would require the introduction of gasoline with a 15 percent ethanol content (E15) until all practical and legal compatibility issues with UST systems are settled. Most USTs in service nationwide are not compatible with gasoline blends exceeding 10 percent ethanol content (E10). Currently, it is illegal under EPA regulations and state fire laws to put E15 into existing UST systems designed for maximum E10 service. The cost to convert existing UST systems is beyond the reach of most petroleum marketers. PMAA believes the most effective way to solve the compatibility issue is to cap the maximum amount of ethanol blended into gasoline at 9.7 percent. The proposed 2018 blending mandate for ethanol requires a 10.3 percent blend. However, blenders have thus far been able to keep ethanol content below 10 percent through the purchase of RIN credits. The EPA also noted that the use of E0 in 2016 was higher than the EPA had assumed in setting the 2016 standards.

The proposed rule also seeks input on possible manipulation of the RINs market and ways to improve the program to ensure credit trading stability. The EPA stopped short of proposing any change that would move obligated party status from refiners to blenders. PMAA is currently neutral of the issue of moving the point of obligation under the RFS and is instead focused on pursuing an ethanol blend cap to hold content at 9.7 percent.

EPA also said that it was interested in stakeholder comments on biodiesel imports and noted the U.S. Commerce Department's antidumping and countervailing duty investigation aimed at biodiesel imports from Argentina and Indonesia. The investigation is in response to a complaint filed by the domestic biodiesel industry which argues that subsidized biodiesel from Argentina and Indonesia have forced U.S. producers out of their home market.

PMAA will submit written comments supporting volumetric requirements for biodiesel but call for the agency to use their general waiver authority to reduce the ethanol mandate to a level below E10. PMAA will continue to emphasize the dire economic and fuel supply consequences of moving beyond E10 blends without resolution of the UST compatibility issue.

Please Submit Your Comments By Monday, July 10, At Midnight

On January 23, the Food and Drug Administration published a proposed rule that calls for a new tobacco product standard on smokeless tobacco. If this proposal is finalized it could ban almost all American smokeless tobacco products, including most dip products.

The proposed rule would establish a maximum level for a specific TSNA - known as N-nitrosonornicotine (NNN) of 1 part per million (ppm). NNN is naturally occurring in tobacco and can be formed during growing, curing, manufacturing, and even while the product sits in its package at wholesale or on the retail shelf. Weather is a significant factor in the formation of NNN in dark tobacco and no one can control the weather. The FDA's proposed standard is unreasonable, technically unachievable, would create significant economic harm and needs to be stopped.

This week, PMAA sent a letter to the FDA opposing the proposed rule because it would negatively affect retailers of smokeless tobacco products. PMAA encourages all members to submit comments to the FDA today. Let the agency know that smokeless tobacco products are an important part of your sales and if the agency does not withdraw its proposed product standard on smokeless tobacco, it will hurt your business and your employees. The deadline for submitting comments is Monday, July 10, at midnight. Click here to send your comments.

BAT Is Likely Dead

The House Ways and Means Tax Policy Subcommittee will hold a hearing next Thursday to discuss tax reform and its implications on small businesses. Small business owners are expected to testify about how Congress should fix the current tax code to help small businesses and their employees.

One tax provision that Congress has brought up in tax reform discussions is a border adjustment tax (BAT). Specifically, the BAT would end deductibility for any costs or expenses associated with imported goods. For example, refiners who rely heavily on imported crude oil, or wholesalers who import product, could be faced with higher taxes requiring prices to be raised on those products, which would then lead to an overall increase in motor and heating fuel prices. However, the plan would allow companies to exclude revenues they received on exports, meaning only revenue derived from inside the U.S. would be subject to income tax. Given the overwhelming opposition to BAT from thousands of businesses nationwide, it is highly unlikely Congress would have the votes to approve a BAT. In fact, a senior Trump Administration official working on tax reform recently said that the BAT would not be included in a final tax reform package.