Trump Administration Revokes California’s Clean Air Act Waiver
On September 19th, EPA and the National Highway Traffic Administration (NHTSA) issued a final rule revoking California’s Clean Air Act waiver that allows the state to set more stringent limits on vehicle emissions than federal standards. The rule does not affect California’s ability to set and enforce more stringent regulations to combat smog.
In announcing the rule, which President Trump previewed by tweet a day earlier, EPA Administrator Andrew Wheeler and Secretary of Transportation Elaine Chao said Congress intended for California to use its Clean Air Act waivers to combat smog as a result of the state’s unique geography. “It makes sense that Congress carved out waiver authority for California to address its unique local problems,” Administrator Wheeler said. “It does not make sense to try to use that authority to address national and global issues like greenhouse gas emissions.”
The rule, entitled the “One National Program Rule,” finalizes a portion of the Safer, Affordable, Fuel-Efficient (SAFE) Vehicles Rule that was first proposed in August 2018. According to the agencies, the rule makes clear that federal law “preempts state and local tailpipe greenhouse gas (GHG) emissions standards as well as zero emission vehicle (ZEV) mandates.” Specifically, EPA and NHTSA made the following determinations:
- “Pursuant to Congress’s mandate in the Energy Policy and Conservation Act, only the federal government may set fuel economy standards, and state and local governments may not establish their own separate fuel economy standards. This includes state laws that substantially affect fuel economy standards (such as tailpipe GHG emissions standards and ZEV mandates).”
- “In addition, EPA is withdrawing the 2013 Clean Air Act waiver that authorized California to pursue its own tailpipe greenhouse gas emission standard (fuel economy standard) and ZEV mandate. As a result, these two programs are also prohibited by the Clean Air Act.”
“Moving forward, California must continue to enforce its programs to address smog and other forms of traditional air pollution caused by motor vehicles. The state must redouble its efforts to address the worst air quality in the United States and finally achieve compliance with EPA’s National Ambient Air Quality Standards, where for decades it has failed to address serious, severe, and extreme non-compliance status in several areas within the state,” said EPA.
Following the President’s tweet stating his intention to revoke the waiver, California governor Gavin Newsom and state attorney general Xavier Becerra vowed to immediately challenge the rule in court and Representative Doris Matsui (D-CA) said she is “exploring all options, including legislation” to block the rule.
Thirteen other states and the District of Columbia, which account for 36 percent of U.S. automobile sales, have said they would follow California’s standards. Today’s action returns those states to the federal standards. If California is successful in challenging the rule, automakers could face dual standards—one for California and the states that follow it and another for the rest of the country.
EPA is expected to issue a second final rule later this year to roll back the Obama Administration’s 2015 CAFE standards.
President Trump Continues to Weigh Biofuels Deal
On September 19th, President Trump met with a group of Senators representing oil states in his ongoing effort to forge a deal that will satisfy both refining and biofuels interests. At the meeting, the Senators asked President Trump to not increase annual biofuel blending requirements, as he had said he would do, or “make any other policy changes that would hurt consumers.” The Senators also asked President Trump to put a cap on the cost of Renewable Identification Numbers (RINs) and proposed allowing EPA to sell its own waiver credits if RIN prices “skyrocket in the wake of these changes.”
In a letter to the president sent in advance of the meeting, the Senators said increasing biofuel quotas or offsetting refinery waivers would put non-exempt refiners on the hook for fulfilling the waived gallons, leading to “more imports of foreign biodiesel, steeper trade deficits, higher compliance costs for domestic refiners and fewer jobs in our states.” The letter was signed by Senator Ted Cruz (R-TX) and Pat Toomey (R-PA) and six other oil state Senators.
Earlier in the week, President Trump tentatively agreed to a plan that would allegedly increase U.S. 2020 required volume obligations for biofuel blending under the Renewable Fuel Standard (RFS). Reportedly, the plan calls for the Administration to make up three years’ worth of waived biofuel gallons resulting from EPA’s small refinery waivers. In addition, the number of waived gallons would be limited to the average from the previous three years. If the deal becomes final, EPA would begin reallocating the waived gallons over multiple years, starting in 2020.
Testifying before the House Science Committee yesterday, however, EPA Administrator Andrew Wheeler pushed back against allegations that the biofuels industry has been hurt by the small refinery waivers, calling the plan into doubt. Administrator Wheeler asserted that U.S. ethanol demand has not been hurt by the waivers stating, “In fact, we’ve seen an uptick in ethanol over the last two years…So far this year the industry has produced more ethanol than they did at this point last year,” he said.
Senator Charles Grassley (R-IA), who has spearheaded the effort to increase ethanol use under the RFS and earlier this year persuaded President Trump to allow the year-round sale of E15, expressed confidence that the Administration would not back out of the deal—although he cautioned that his approval would be determined based on the details “in writing” proposed by EPA. Following Administrator Wheeler’s statements, Senator Grassley took to Twitter saying “EPA needs to follow the law of 15B gallons” and that farmers were “counting on” President Trump.
President Trump has been seeking a biofuels deal to assuage farmers hurt by the trade war with China and angered by EPA’s August decision to grant 31 small refinery waivers. EPA has until November 2019 to issue its 2020 RFS blending requirements.
EPA Issues Atlanta Area RVP Final Rule
After publishing its prepublication version on Thursday, EPA issued its final rule relaxing federal Reid Vapor Pressure (RVP) gasoline volatility standards for the greater Atlanta metropolitan area. The rule approves a request from Georgia to relax the RVP standard from June 1 to September 15th each year for Cherokee, Clayton Cobb, Coweta, DeKalb, Douglas, Fayette, Forsyth, Fulton, Gwinnett, Henry, Paulding, and Rockville counties (the Atlanta RVP area).
Specifically, EPA “approv[ed] amendments to allow the gasoline RVP for the Atlanta RVP area to change from 7.8 pounds per square inch (psi) to 9.0 psi.” The rule is effective on October 20, 2019.
SIGMA is pleased that EPA positively responded to its comments on the proposed rule by establishing the effective date of the final rule after completion of the summer driving season.
Bipartisan Bill to Ban Flavored Tobacco Products, Increase Cigarette and E-Cigarette Taxes Introduced
On September 19th, Representatives Pete King (R-NY) and Tom Suozzi (D-NY) introduced the “Quell Underage Inhaling of Toxic Substances Act” or QUITS Act.
According to a press release announcing the legislation, the bill would:
- Ban flavored e-cigarettes and other flavored tobacco products
- Increase the federal tax on cigarettes from $1 per pack to $3 per pack
- Create a tax on e-cigarette products equivalent to $3 per pack
- Increase annual funding for the Centers for Disease Control and Prevention (CDC)’s Office on Smoking and Health from $210 million to $500 million
Representative Suozzi said he introduced the bill to “discourage people from smoking and vaping and get toxic tobacco products out of the hands of young people.” “It is imperative that Congress explore means to end this epidemic and ensure the well-being of our youth,” Representative King said.
As of this printing, the bill number and text were not yet available.
Congress to Extend Government Funding into November
This week, Congress reached an agreement to extend funding for the federal government until November 21st. Absent such an agreement, the government would shut down when current spending authority expires on September 30th. The agreement is designed to give Congress additional time to negotiate the details of the $1.3 trillion spending package for fiscal year 2020, which continues to be complicated by Democrats’ objections to inclusion of funding for President Trump’s border wall. The House approved the agreement yesterday by a vote of 301-123 and the Senate is expected to vote on it next week.
The agreement does not contain language to prevent $7.6 billion in rescission of highway contract authority that is scheduled to go into effect on July 1, 2020 that is required by a provision in the last highway bill. It does, however, contain a provision to waive the so-called “Rostenkowski rule,” which mandates a reduction in highway funding when the amount of unfunded transit authorizations exceed projected Highway Trust Fund receipts for the next four years. That rule would have been triggered on October 1st, resulting in a 12 percent reduction in highway spending.
House Democrats Considering Green Energy Tax Package
The House Ways and Means Committee is planning to begin work on a clean energy tax package. Reportedly, the package could include extensions and/or expansions of a number of credits, including the one for electric vehicles (EVs). The EV tax credit extension could follow the lines of a bill introduced earlier this year by Representative Dan Kildee (D-MI), which would extend the existing EV tax credit to benefit manufacturers who have hit the credit’s threshold of vehicles produced. It is also likely that the package will include extensions and expansions of incentives for other industries such as solar, wind, and energy storage. Negotiations, however, are still underway on the package.
It is possible that the clean energy package could become part of the broader negotiation between Democrats and Republicans over tax extenders, including the biofuel blenders’ credit.
It’s Not Too Late to Register for the SIGMA Annual Conference!
It’s not too late to register for the SIGMA Annual Conference November 4-6 in Austin, Texas!
SIGMA’s Annual Conference is the largest gathering of SIGMA members throughout the year. CEO’s, presidents, and knowledge leaders in the fuel marketing sphere attend this unparalleled forum for in-depth education, networking and innovative business strategy reviews.
Make Plans Now to Join SIGMA in Vail for the 2020 Executive Leadership Conference
It is not too early to make plans to join SIGMA in Vail February 2-4 for the 2020 Executive Leadership Conference! Morning workshop education allows a deep dive into the topic with afternoons free for networking on the slopes.
REASONS TO ATTEND:
EDUCATION. In depth education sessions on topics relevant to your business' success.
MARKETER CONTACTS. Meet some of the savviest marketers in the business!
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NETWORKING. Share best practices through face-to-face conversations.
VAIL. One of the largest ski resorts in the world and an extraordinary winter destination.
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