EPA Announces National RVP Waiver, Other Steps to Protect Gasoline Supply
This afternoon, EPA announced a national RVP waiver and several other steps it is taking to protect the nation’s gasoline supply in response to the COVID-19 pandemic.
EPA stated it “intends to provide additional flexibility to the marketplace to transition from winter-grade, high volatility gasoline to summer-grade low vapor pressure gasoline. Due to the steep fall-off in gasoline demand as a result of the COVID-19 pandemic, gasoline storage capacity is limited and more time is needed to transition the distribution system in order to come into compliance for the summer driving season. EPA will temporarily waive the summer low volatility requirements and blending limitations for gasoline.”
“Without a waiver of the summer gasoline requirements, parties upstream of retailers and wholesale purchasers would be required to stop selling the winter gasoline sitting in their storage tanks on May 1, 2020, which would prevent them from loading summer gasoline into the storage tanks, resulting in a shortage of gasoline. By waiving the low volatility and blending limitations through May 20, 2020, EPA will ensure a steady supply of gasoline. EPA will continue to monitor the adequacy of gasoline supplies and, should conditions warrant, may modify or extend this waiver at a later date,” EPA said.
Additionally, stated that it does not intend” to unilaterally revisit or rescind any previously granted small refinery exemptions issued for prior compliance years.” According to EPA’s statement, given the current pandemic situation, “investigating and initiating enforcement actions against small refineries that were previously subject to an exemption is a low priority for the agency.” EPA said it plans to develop an appropriate implementation and enforcement response to the Tenth Circuit Court of Appeals’ decision that invalidated three small refinery exemptions once appeals have been resolved (see related story below) and the court’s mandate has been issued.
Finally, EPA said in a forthcoming action it will extend the RFS compliance date for small refineries to provide them with additional flexibility.
Congress Passes Third Stimulus Bill to Counter Coronavirus Pandemic
Early in the morning on March 26th, the Senate passed the Coronavirus Aid, Relief, and Economic Security (CARES) Act, the third piece of legislation in response to the coronavirus disease 2019 (COVID-19) outbreak. The House passed it earlier today and President Trump has said he will sign it.
Major pieces of the bill include:
- $1200 per adult and $500 per child for those making $75,000 or less (the amounts then step down and people making more than $99,000 or $198,000 per couple will not receive any payments).
- $350 billion for a small business loan guarantee program. Businesses with less than 500 employees are eligible. The loans can be forgiven in some circumstances if they are used for expenses like payroll and employee benefits.
- $454 billion for loan guarantee programs for businesses with more than 500 employees. Importantly, this language instructs the Treasury Department to create a special program for businesses with between 500 and 10,000 employees though it does not specify how much of the money should go to those businesses. There are restrictions on the use of the money in the program including prohibitions on using the funds for stock buybacks, dividend payments and increasing executive compensation.
- Delay of up to two years on payroll taxes. Half of those 2020 taxes would be due by the end of 2021 and the other half by the end of 2022.
- Carryback of net operating losses for up to five years.
- Expanded unemployment insurance.
It is also worth noting that the final bill did not include price gouging provisions.
A more detailed summary providing background on the bill and its loan programs provided by SIGMA counsel Steptoe & Johnson is HERE.
DOL Issues Guidance on Employer Leave Requirements in Families First Coronavirus Response Act
On March 24th, the Department of Labor’s (DOL’s) Wage and Hour Division (WHD) issued its first round of guidance to provide information about the new paid sick leave and expanded family and medical leave provisions in the Families First Coronavirus Response Act, which become effective on April 1st. These new requirements only apply to companies with fewer than 500 employees.
The guidance is broken into three parts: a Fact Sheet for Employees, a Fact Sheet for Employers, and a Q&A document and is intended to address critical questions. According to DOL, such questions include “how an employer must count the number of their employees to determine coverage; how small businesses can obtain and exemption; how to count hours for part-time employees; and how to calculate the wages employees are entitled to under this law.”
On March 26th, DOL issued additional guidance that includes two new posters, one for federal workers and one for all other employees, that will fulfill notice requirements for employers obligated to inform employees about their rights under this new law. It also includes questions and answers about posting requirements, and a Field Assistance Bulletin describing WHD’s 30-day non-enforcement policy. The new guidance addresses issues such as whether employers may post required notice electronically, whether employers must provide notice of this law to recently laid-off individuals, and when enforcement of the new rules will begin.
Additional resources from the Wage and Hour Division on issues employers and employees face when responding to COVID-19 and its effects on wages and hours worked under the Fair Labor Standards Act and protected leave under the Family and Medical Leave Act is available HERE.
Federal Reserve Offers Direct Assistance to U.S Companies
On March 23rd, the Federal Reserve (Fed) announced new programs to directly finance U.S. companies. The Fed’s action to directly finance corporate and small business lending runs contrary to its philosophy that its role is to support financial markets and leave direct lending to elected officials. The Fed’s traditional tool of lowering interest rates to stimulate demand–which it has done—is less effective in the current crisis because consumers are under “Safer at Home” orders and businesses are limiting the way in which employees work.
According to the Fed, it is offering the following actions:
- “Support for critical market functioning. The Federal Open Market Committee (FOMC) will purchase Treasury securities and agency mortgage-backed securities in the amounts needed to support smooth market functioning and effective transmission of monetary policy to broader financial conditions and the economy. The FOMC had previously announced it would purchase at least $500 billion of Treasury securities and at least $200 billion of mortgage-backed securities. In addition, the FOMC will include purchases of agency commercial mortgage-backed securities in its agency mortgage-backed security purchases.
- Supporting the flow of credit to employers, consumers, and businesses by establishing new programs that, taken together, will provide up to $300 billion in new financing. The Department of the Treasury, using the Exchange Stabilization Fund (ESF), will provide $30 billion in equity to these facilities.
- Establishment of two facilities to support credit to large employers – the Primary Market Corporate Credit Facility (PMCCF) for new bond and loan issuance and the Secondary Market Corporate Credit Facility (SMCCF) to provide liquidity for outstanding corporate bonds.
- Establishment of a third facility, the Term Asset-Backed Securities Loan Facility (TALF), to support the flow of credit to consumers and businesses. The TALF will enable the issuance of asset-backed securities (ABS) backed by student loans, auto loans, credit card loans, loans guaranteed by the Small Business Administration (SBA), and certain other assets.
- Facilitating the flow of credit to municipalities by expanding the Money Market Mutual Fund Liquidity Facility (MMLF) to include a wider range of securities, including municipal variable rate demand notes (VRDNs) and bank certificates of deposit.
- Facilitating the flow of credit to municipalities by expanding the Commercial Paper Funding Facility (CPFF) to include high-quality, tax-exempt commercial paper as eligible securities. In addition, the pricing of the facility has been reduced.”
In addition to the steps above, the agency said it expects to announce soon the establishment of a “Main Street Business Lending Program to support lending to eligible small-and-medium sized businesses, complementing efforts by the [Small Business Administration] SBA.”
SIGMA counsel Steptoe & Johnson has prepared a chart summarizing these new programs that is available HERE.
FMCSA Issues CDL, CLP, and CMV Waiver
On March 24th, the Federal Motor Carrier Safety Administration (FMCSA) issued waivers from certain regulations related to interstate and intrastate commercial driver’s license (CDL), commercial learner’s permit (CLP) holders, and other drivers operating commercial motor vehicles (CMVs) in response to President Trump’s declaration of a national emergency in response to COVID-19.
“Given the national emergency, there is a public need for immediate transportation of essential supplies, equipment, and persons, which requires an adequate and sustained supply of CDL holders, CLP holders, and drivers operating CMVs (non-CDL drivers),” FMCSA stated in its waiver.
Specifically, the waiver does the following:
- Extends until June 30, 2020 the maximum period of CDL validity by waiving 49 CFR 383.73(b)(9) and 383.73(d)(6) for CDLs due for renewal on or after March 1, 2020.
- Extends until June 30, 2020 the maximum period of CLP validity by waiving 49 CFR 383.73(a)(2)(iii) and 383.25(c) for CLPs that are due for renewal on or after March 1, 2020, without requiring the CLP holders to retake the general and endorsement knowledge tests.
- Waives the requirement under 49 CFR 383.25(e) that CLP holders wait 14 days to take the CDL skills test.
- Waives the requirement under 49 CFR 391.45 that CDL holders, CLP holders, and non-CDL drivers have a medical examination and certification, provided that they have proof of a valid medical certification that was issued for a period of 90 days or longer and that expired on or after March 1, 2020.
- Waives the requirement under 49 CFR 383.71(h)(3) that, in order to maintain the medical certification status of “certified,” CDL or CLP holders provide the State Driver Licensing Agency with an original or copy of a subsequently issued medical examiner’s certificate, provided that they have proof of a valid medical certification that expired on or after March 1, 2020.
EPA Does Not Appeal RFS Small Refiner Waiver Ruling
EPA allowed the deadline for it to appeal the ruling by the Tenth Circuit Court of Appeals that invalidated waivers EPA had granted to three refiners exempting them from blending requirements under the Renewable Fuel Standard (RFS) program. The decision was appealed by the three refiners.
EPA had until March 24th to appeal the court’s decision after it requested a two-week extension of the original deadline. The Tenth Circuit ruled in January that EPA did not have the authority to grant small refinery exemptions to the three refiners because the law only allows the agency to continuously grant exemptions to small refiners. Refiners who did not seek exemptions for every year since the RFS program was enacted are ineligible to receive new waivers, the Court held. The agency had first indicated it would apply the decision nationwide, dramatically limiting the number of small refinery exemptions it would grant. EPA requested the extension after pressure from refiners and oil state lawmakers to appeal the decision.
EPA has not commented on its decision not to appeal, which is a win for the biofuels industry, but has said it is considering a number of other measures to ease the financial burden on refiners, including capping or placing other restrictions on renewable identification numbers (RINs). It is also possible that some refineries may retroactively apply for RFS waivers for years in which they did not obtain them in an effort to qualify for “extensions” under the Court’s ruling.
DOE Withdraws Notice to Purchase Additional Barrels for SPR
On March 26th, the Department of Energy (DOE) withdrew its notice to purchase additional gallons to fill the Strategic Petroleum Reserve (SPR) after funding for the purchase was dropped from the Coronavirus Aid, Relief, and Economic Security (CARES) Act. DOE had initially planned to purchase crude oil to “top up” the SPR following a request from President Trump. According to DOE, the initial 77-million-barrel purchase would have targeted small and mid-size producers that have been particularly hard hit by the dramatic drop in the price of oil.
The SPR, which is the nation’s emergency stockpile of crude oil, was established following the Arab oil embargo in the 1970s. It has been tapped in response to emergencies including Hurricane Katrina. The SPR has a capacity of 713.5 million barrels stored in underground salt caverns along the Gulf Coast. It currently holds 635 million barrels.
It is still possible that DOE will shift funds within its budget to fund the purchase. Congressional appropriators have historically approved such internal budget transfers. If funding becomes available, DOE said, it will reissue the solicitation for purchase.
New ASTM Spill Bucket and Sump Testing Standard Not EPA Compliant
EPA has stated that ASTM’s recently published new standard for spill bucket and sump testing does not meet federal UST testing requirements. According to EPA, the 2015 underground storage tank (UST) regulation requires spill prevention and sump testing be done using a liquid, pressure, or vacuum test. The ASTM E3225-20 is visually based, and while a thorough visual check can always be beneficial, these procedures do not meet the statutory requirements.
EPA stated, “If owners and operators follow this standard and do not perform the correct testing requirements, they will be in violation of the regulatory requirements, and subject to appropriate enforcement.”
To address this matter, EPA has added two new questions and answers to OUST’s web-based UST Technical Compendium about the 2015 UST Regulation (click on “Spill buckets, under dispenser containment sumps, containment sumps” for more information).
DTN Fuel Market Risk Webinar
On April 2nd, DTN is hosting a webinar on Unchartered Waters, Fuel Market Risks & Variables presented by Dominick Chirichella, DTN Director of Market Insights. The dual pressures of the Saudi Arabia-Russia price war and COVID-19 have shocked the energy sector like nothing we have seen before. Fuel marketers are scrambling to respond. The webinar will explain the dynamics of the market, what we can expect, and what you can do to reduce negative impact to your business.
Topics of discussion will include:
• How big will the supply glut get?
• Will fiscal policy and government stimulus affect demand?
• What should you consider when buying fuel right now?
• Where are the risks?
DTN will also answer participants’ questions.
Click Here to Register
Federated Insurance has prepared COVID-19 Pandemic Resources to Assist Employers
Federated Insurance is committed to helping our clients navigate the newly announced mandates affecting business owners as a result of the spread of COVID-19. In collaboration with Enquiron®, Federated has prepared three valuable documents designed to help provide information to organizations facing challenging employment issues during these uncertain times: an Employer COVID-19 FAQs document; an overview of the Families First Coronavirus Response Act; and Important Rules for Employers to Know in the Wake of COVID-19.
Additional pandemic resources from Federated are available Here