U.S. Legislative Issues

 

Biodiesel Tax Credit Structure Unchanged by Aviation Bill

On April 19, 2016, the Senate passed legislation to reauthorize the Federal Aviation Administration through Sept. 30, 2017. As expected, the Senate-passed legislation did not include an amendment authored by Sen. Chuck Grassley (R-IA) to restructure the $1 per gallon biodiesel and renewable diesel tax credit from a blender to a producer credit.

Many trade groups remain at odds over altering the structure of the credit. The Advanced Biofuels Association (ABFA) has aligned itself with several petroleum marketing groups in taking a stance against restructuring, while the National Biodiesel Board (NBB) favors moving to a producer credit. "This is a common-sense reform that will not only simplify the tax code for biodiesel but will also save taxpayer dollars by changing the structure of the tax credit so that it supports only domestic production," said Anne Steckel, Vice President of Federal Affairs for NBB.

Conversely, ABFA President, Michael McAdams, argues that, "the current blenders’ credit for biofuels creates a competitive market for biodiesel and renewable diesel, which benefits the American consumer. Continuing and extending the original policy allows truckers and consumers to share in the value, it encourages consumer acceptance, and it benefits blenders and those who provide the feedstocks that make these cleaner, better fuels."



On April 23, 2016, the Federal Motor Carrier Safety Administration (FMCSA) issued a notice seeking public comments on the implementation of a Beyond Compliance program that would recognize and reward motor carriers for early safety technology adoption or other voluntary compliance initiatives that currently exceed regulatory requirements. Under the proposal, a new CSA Beyond Compliance Behavior Analysis Safety Improvement Category, or BASIC, would appear in a carrier’s CSA profile as a way of publicly acknowledging and distinguishing those companies from other companies. FMCSA stated in its notice, however, that the Beyond Compliance program would not result in regulatory relief.

Per the Fixing America’s Surface Transportation (FAST) Act, FMCSA is required to implement the program no later than June 2017.



On April 20, 2016, Rep. Randy Weber (R-TX) introduced H.R. 5004, the Stop Animal Fat Tax Credits Act, legislation that would eliminate tax credits for biofuels produced with animal fats. The American Cleaning Institute (ACI), which represents producers of oleochemicals, such as fatty acids and alcohols made from seed oils and animal fats that are historically used in soaps and detergents, represent the largest proponent of the legislation. ACI argues that the existing biofuel subsidy distorts the domestic market for animal fats by diverting the raw material away from use in the manufacturing of cleaning products to the production of biodiesel.

The oil industry and several large food manufacturers maintain that the subsidy provides opportunities for greater use of vegetable oils and animal fats in the renewable fuels sector while increasing energy security.


In efforts to reduce congestion, the U.S. Department of Transportation’s Federal Highway Administration (FHWA) has issued a proposed rulemaking that would require states to evaluate and report "more effectively and consistently" on travel time reliability, delay hours, peak-hour congestion, freight movement and on-road greenhouse gas emissions. If finalized, it would be the first-ever requirement for all state and local transportation officials to tally and report their carbon pollution.

"The Department is taking a major step to improve accountability and address the costly congestion problem that is plaguing our nation every day," said DOT Secretary Anthony Foxx.

Issued on April 22, 2016, the proposed rule fulfills a requirement of the Moving Ahead for Progress in the 21st Century (MAP-21), Act, legislation passed in 2012 that sought to create new ways to measure the success of transportation projects. Carbon pollution would join other metrics proposed by FHWA, like congestion, freight movement improvement, pavement condition, and fatalities and injuries.

"This is a down payment on the administration’s 21st Century Clean Transportation Plan, a budget proposal to reduce traffic and carbon intensity of the transportation sector," says FHWA Administrator Gregory Nadeau.



On April 21, 2016, Volkswagen announced it had agreed to fix or buy back nearly 500,000 diesel cars in the U.S. that used sophisticated software to evade U.S. emission rules. The models with the cheating software in the U.S. include Volkswagen, Audi and Porsche cars with 2-liter or 3-liter diesel engines from the model years 2008-15.

Owners will have the option either to get their cars fixed so they are compliant with clean air laws, or sell them back to the company. People who have leased vehicles will be able to cancel their contracts without penalty. A solution for about 100,000 cars with 3-liter diesel engines, including Audi and Porsche models, has not yet been announced. Financial details weren't revealed about the plan, which both U.S. officials and Volkswagen are calling an "agreement in principle."

Nearly 600,000 Volkswagen manufactured vehicles sold in the U.S. have "defeat devices" that circumvent emission control systems during driving conditions and activate the controls only during emissions tests, the government says. Volkswagen is still negotiating the size of the fines it will pay to the U.S. government for violations of clean air laws, as well as how much additional compensation it will provide to owners. The judge presiding over the case says Volkswagen has until June 21, 2016 to settle these questions with U.S. officials and with lawyers representing vehicle owners.