U.S. Legislative News

Upcoming Biofuels Quotas

Finalized biofuel blending quotas for 2019 are expected to come in the next few days. In the past, the Environmental Protection Agency (EPA) has used its waiver authority to reduce the required biofuel volume requirements based on the biofuel industry’s ability to meet the volume amounts specified in the original Renewable Fuel Standard (RFS) for the upcoming year.

The American Petroleum Institute has directly asked the EPA to not go past the 10 percent ethanol blend wall in the national gasoline supply in their quota calculations for 2019 and 2020. There have been several calls for the EPA to undertake a comprehensive review and reform the RFS program, with the Trump administration signaling that there could be a “reset” of biofuel targets for 2020 through 2022 that would likely align with targets that advocates from the oil industry view as more realistic.

The long-range changes to the volumetric targets for biofuels under the RFS are also expected to coincide with a separate proposal to allow for the sale of 15 percent ethanol fuel (E15) during the summer months. This proposal on E15 is anticipated to be finalized in May. Any action on the fuel standards is prone to create a volatile discourse in Washington, D.C., and around the country, given that these policies have the potential to impact a myriad of differing interests.

EPA’S "Cleaner Trucks" Initiative

On November 13 the EPA launched the Cleaner Trucks Initiative, a program with the stated goal of decreasing nitrogen oxide (NOx) emissions produced from heavy-duty trucking. Acting Administrator Andrew Wheeler noted that while there have been significant strides made in reducing emissions, heavy-duty trucks will be one of the largest sources of NOx emissions in the future. The current NOx standard was set in 2001, and the EPA intends to publish a proposed rule revision in early 2020.

Trucking industry groups have applauded this move by the EPA to create an updated federal standard, which would preclude manufacturers from complying with differing state-by-state NOx requirements. Environmental groups have also expressed support for a federal NOx emissions reduction program. All involved groups have expressed a strong desire for the EPA to seriously engage with stakeholders during the rulemaking process.

Impending Relief From RCRA Rules For Takata Airbag Disposals

The EPA announced that auto dealerships, collision shops, and salvage yards will soon be exempted from the Resource Conservation and Recovery Act's hazardous waste management regulations on the disposal of defective Takata airbag inflators. Entities replacing the recalled airbag inflators were not subject to these requirements when they were able to send the inflators to Takata. However, Takata declared bankruptcy in February making this method of disposal no longer viable. Entities handling the disposal of defective airbag inflators have had to adhere to the stringent hazardous waste disposal rules, which they may not be equipped or qualified to meet. The EPA’s forthcoming rule will streamline the system by enabling entities to send the defective inflators directly to specialized waste disposal facilities without meeting the strict rules.

With continued cases of fatalities resulting from Takata airbag explosions, and several DOT studies demonstrating the increased risk of inflator failure linked to the age of the device, agencies have recognized the pressing need to speed up the rate of device disposals. At this time, EPA has just released a pre-publication version of the rule, which will be open for a 60-day comment period once published in the Federal Register.

Battle For the Electric Vehicle Tax Credit

The tax credit for up to $7,500 for the purchase of fully electric or plug-in electric hybrid vehicles has become a major point of contention on Capitol Hill. There are competing legislative proposals to either terminate the credit or lift the 200,000-vehicle cap altogether. The EV tax credit was created with the intention to foster the adoption of electric vehicles by consumers and support the growing electric vehicle industry. Those opposed to the tax credit claim that the tax incentives primarily benefit wealthy individuals and support an industry that no longer needs nurturing. Supporters of the tax credit have said that the tax credit is a critical component to maintain competitiveness in the electric vehicle arena, considering the rapid development of the EV industry in China. This debate comes at a time when more manufacturers are approaching the vehicle cap on the EV tax credit, with the automaker Tesla already exceeding the 200,000-vehicle limit, and GM has reported that it will exceed the vehicle limit by the end of the year.

The tax credit is just one of the many developments set to play a role in shaping the EV market. Volkswagen recently announced a procure enough batteries to power 15 million electric vehicles by 2020, building on the commitments by many automakers to increase their EV line offerings. While the rapid advancement of EV technology and setting electric vehicle targets around the world represents a positive development for emissions reduction, some believe that demand for electric vehicles is approaching a level that is unsustainable for current levels of cobalt production. This could represent a major hurdle for the industry, given that cobalt is a major component in the lithium-ion batteries used in electric vehicles.

Tariff Trouble For European Autos

Informal talks have continued between the U.S. and European Union about potential tariffs on foreign car imports. The Trump administration has made threats to impose tariffs on foreign autos in the past and has instructed the Commerce Department to determine if imports would threaten national security. While the administration has not yet acted, the European Trade Commissioner, Cecilia Malmstrom, has come out strongly on the subject with a promise of retaliatory tariffs for any tariffs imposed by the U.S.

Recently, there have been reports that the administration is planning to meet with the CEOs of BMW AG, Daimler AG, and Volkswagen AG at the White House for private deliberations in the coming weeks. Any discussions between the administration and the three top German automakers would likely focus on the subject of auto tariffs and be heavily coordinated with EU trade officials.