• PMAA Weekly Review - July 27, 2018

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    July 27, 2018 WR-18-29
    Results from NCWM Annual Meeting
    Last week, the National Conference on Weights and Measures (NCWM) held its annual meeting
    in Tulsa, Oklahoma. On the agenda were items regarding ethanol flex fuel labeling, tightening
    the acceptable UST water tolerance level, requiring a dispenser number on a receipt, and
    skimming issues.
    Ethanol Flex Fuel Labeling
    There were two proposed revisions to Handbook 130 relating to ethanol flex fuel (E10 plus
    blends) labeling at the dispenser. These revisions require E15 dispensers to comply with both
    the Federal Trade Commission (FTC) labeling requirements for ethanol flex fuels and the EPA
    labeling requirements for E15. This is a requirement that PMAA championed in past meetings
    to eliminate confusion on the labeling requirements for E15 and minimize the potential for
    violations of the Clean Air Act and possible fines. These revisions were moved to a voting item
    by the Laws and Regulation Committee during the NCWM interim meeting in January and
    approved by the voting members at the annual meeting last week. In addition to EPA labeling
    requirements, PMAA continues to work to address the lack of specific requirements for the
    terms used to describe E15 as well as other higher ethanol blends. This is an issue that PMAA
    will continue to pursue as part of several other proposed changes that are being considered by
    the Fuels and Lubricants Subcommittee.
    UST Water Tolerance Level
    A proposal aimed at reducing the water tolerance level in USTs from 1 inch to 1⁄4 inch was
    withdrawn by the submitter. The proposed changes would have required a water tolerance
    level of 1⁄4 inch for any gasoline containing ethanol.
    Dispenser Number on a Receipt
    A proposal to require an alpha or numeric dispenser designation to either be printed or hand
    written on a receipt was approved by the Conference.
    Skimming Devices
    Skimming continues to be addressed by the Specifications and Tolerance Committee. This item
    has been designated as an Assigned Item for development by the Committee. A Skimmer Task
    Group is working on this issue; however, no specific proposals have been put forward. There
    was substantial discussion relative to this item. PMAA will continue to follow this issue.

    One additional item voted on and approved by the Committee were changes to Chapter G,
    Uniform Engine Fuels and Automotive Lubricants Regulation, of Handbook 130 to address
    inconsistencies, update information to be consistent with federal laws and regulations, ASTM
    and other consensus-based standards, and remove obsolete provisions. PMAA expressed
    concerns that while ethanol flex fuels are defined as blends of ethanol and hydrocarbons,
    revisions to the fuel specifications might make it difficult to discern when a gasoline is a flex
    fuel since the ASTM standards referenced only apply to ethanol flex fuels greater than 16
    percent ethanol. This is an issue that PMAA will continue to pursue as part of several other
    proposed changes that are being considered by the Fuels and Lubricants Committee.
    Trump Administration to Release Proposal Rolling Back Obama-era Fuel Efficiency Rules
    The Department of Transportation (DOT) and the EPA are expected to release a proposal soon
    that would roll back stringent fuel economy and emissions standards for automobiles that were
    enacted during the Obama Administration. The EPA’s proposal, called the "Safer and Affordable
    Fuel Efficient (SAFE) Vehicles Rule," argues that less efficient cars are safer for drivers and
    passengers. The proposal will recommend freezing vehicle emissions requirements at 2020
    levels through 2026. Regulators have said this proposal could increase U.S. fuel consumption by
    about 500,000 barrels of oil per day.
    In April, the EPA announced that it would not be renewing Obama-era Corporate Average Fuel
    Economy (CAFE) standards for cars and light trucks when the program is scheduled to end in
    2025. The Obama Administration initially set 50 miles per gallon (mpg) as an across the board
    fleet-wide target by 2025. However, the target is unlikely to be met because the EPA
    announced that there will be a reduction in CAFE standards already in place for 2022 through
    2025. The Trump Administration says the new rules will cut the prices of new vehicles and could
    lead to a total of one million additional new vehicle sales through 2029 versus if the Obama
    rules remained in place.
    Additionally, the Trump Administration is expected to propose revoking California's ability to
    set state vehicle emissions rules and mandate electric vehicles in the next few days. The
    proposal comes two months after California and 17 other states filed a lawsuit against the EPA
    in the U.S. Court of Appeals for the District of Columbia Circuit over the EPA’s push to ease fuel
    efficiency standards. In the lawsuit, the states declared that the EPA acted “arbitrarily and
    capriciously” in its consideration of lowering fuel efficiency standards. Joining California in the
    lawsuit were Connecticut, Delaware, Illinois, Iowa, Maine, Maryland, Minnesota, New Jersey,
    New York, Oregon, Rhode Island, Vermont, Washington, Massachusetts, Pennsylvania and
    Virginia, as well as the District of Columbia.
    Last week, California’s top air-quality official, Mary Nichols, met with EPA’s new Acting
    Administrator, Andrew Wheeler. The meeting was the first between the two regulators who
    disagree over the Trump Administration’s plan to roll back automobile efficiency regulations.

    House Subcommittee Holds Hearing on RINs
    On Wednesday, the House Energy and Commerce Subcommittee on Environment held a
    hearing to examine the use of Renewable Identification Number’s (RINs) as part of the RFS
    program. The witnesses included: Sandra Dunphy - Director, Energy Compliance Services,
    Weaver and Tidwell, L.L.P; Dr. Gabriel E. Lade - Assistant Professor of Economics, Iowa State
    University; Corey Lavinsky - Director of Global Biofuels, S&P Global Platts Analytics; Paul Niznik -
    Senior Consultant, Argus Media Incorporated; and Brent Yacobucci - Energy and Minerals
    Manager, Congressional Research Service.
    In his opening statement, Subcommittee Chairman John Shimkus (R-IL) stated that the hearing
    was “intended to promote greater understanding of how RINs fit into the overall Renewable
    Fuel Standard. In order to chart a legislative path forward, it is critical that the subcommittee
    first gather the facts and comprehend the various complexities of the RFS program.” Full
    Committee Chairman Greg Walden (R-OR) added that it was his “desire to move legislation that
    will pave the future of transportation fuels in the United States, and in order for this to happen
    it is important that we understand what RINs are and how they fit into the Renewable Fuel
    Standard – a program that in 2017, spurred the production of 15.8 billion gallons of ethanol and
    1.6 billion gallons of biodiesel in the United States.”
    In his testimony, Mr. Yacobucci spoke about the confusion and uncertainty surrounding the
    RINs market, stating that “whether you’re talking about refiners or biofuel producers, all the
    participants in the market have raised issues, in one form or another, about uncertainty.” When
    asked by Chairman Walden how well she thought the EPA was overseeing the RIN market and
    implementation, Ms. Dunphy stated that “the EPA does a pretty good job administering the
    regulations as they were written, but the RIN market oversight is missing. There’s really not any
    oversight of the trading activity of RINs.” Lastly, when asked by Subcommittee Chairman
    Shimkus if anyone believes there is a RIN market transparency issue, Mr. Niznik responded,
    “We track RINs transactions from real market participants reporting from actual trades, so
    that’s how we gather data on pricing. And still even at that level we can’t have the
    understanding of the full volumes of the marketplace at any one given time that would be able
    to elucidate any issues on market manipulation.” There was a consensus by most witnesses in
    the hearing that there are many flaws in relation to the RINs market and that Congress must
    pass legislation to fix the problems. The most significant problems that exist in the current RINs
    market are volatility due to commodity prices, uncertainty, and fraud.
    In other biofuels news, EPA Acting Administrator Andrew Wheeler said this week that he will
    continue to work for changes in biofuel mandates that were sought by former EPA
    Administrator Scott Pruitt, including policies such as counting ethanol exports toward annual
    biofuel quotas.

    Trump Says His Administration is Close to Allowing E15 Sales Year Round
    President Trump indicated this week that his Administration is close to granting E15 the green
    light to be sold during the summer months. Earlier this year, reports surfaced that President
    Trump agreed to allow the sale of E15 year-round in exchange for allowing biofuel exports to
    qualify for RINs generation. The ethanol industry immediately pushed back against any effort
    to cap RIN values and/or allow ethanol exports to qualify for RINs generation since any
    reduction in RINs will likely hurt E15 sales. In other words, for E15 to become a viable “new
    fuel” in the marketplace, the ethanol industry needs the 15- billion-gallon ethanol mandate to
    stay intact which maintains RIN values.
    RIN values have dropped significantly in recent months as the Trump Administration has
    granted many small refinery exemptions saving them millions of dollars in compliance costs.
    Carbon Tax Bill Formally Introduced
    This week, Rep. Carlos Curbelo (R-FL) formally introduced the “Market Choice Act,” (H.R. 6463)
    which would replace the federal motor fuels tax with a $23 per ton economy-wide carbon tax
    on emissions from oil refineries, gas processing plants and coal mines beginning in 2020. The
    bill would direct 70 percent of revenues to the Highway Trust Fund and includes a border
    adjustment tax (BAT) meaning fees could be assessed on imported products from countries
    without a carbon tax and outlines various points of taxation, among other provisions, that
    would have far reaching economic impacts across numerous sectors.
    Along with other groups, the Americans for Tax Reform (ATR) have already come out strongly
    against the bill. ATR President Grover Norquist stated that the bill would give unfettered power
    to the EPA chief to impose carbon taxes. Furthermore “the bill makes a long list of industries
    subject to the carbon tax, and then lets the EPA boss add to that list at will.” Then, “...it
    encourages states to impose carbon taxes on top of the federal carbon tax. Americans will end
    up paying federal and state carbon taxes.”
    PMAA has serious concerns with the legislation because the cost will not be readily visible to
    the public and it would likely put the EPA in charge of who pays into the Highway Trust Fund.
    Infrastructure Draft Bill Released by Outgoing House Transportation Chairman
    This week, outgoing House Transportation and Infrastructure Committee Chairman Bill Shuster
    (R-PA) released draft legislation which calls for phasing in a 15-cent gasoline and 20-cent diesel
    tax increase over three years to ensure that the Highway Trust Fund (HTF) stays solvent over
    the next decade. After three years, the taxes would be indexed to inflation. The draft bill
    would begin taxing infrastructure users that can currently avoid taxation such as a 10 percent
    user fee on electric batteries and adult bicycle tires. It would also eliminate full and partial fuel
    tax exemptions for public transit and intercity buses.

    The draft legislation would also create a voluntary pilot program to test the feasibility of a
    vehicle miles traveled (VMT) to replace the federal motor fuels excise tax. Ways to track
    mileage would possibly include: phone apps, in-car diagnostic systems, etc. By having a VMT
    and/or the provision included in the draft bill that would tax electric vehicles (EVs), the
    legislation is a conversion starter to ensure that all highway users pay their fair share.
    Currently, EVs are exempted from paying any type of highway tax.
    Shuster's draft also would codify the White House's "one federal decision" vision for
    infrastructure projects, which would streamline the approval process for transportation within
    a two-year period. So many transportation projects have come to a halt due to labor intensive
    environmental analyses which takes years to complete.
    Finally, the draft legislation does not include language that would commercialize rest areas or
    allow existing highways to be tolled. Keep in mind that the Trump Administration called for
    ending the federal prohibition on tolling existing highways and commercializing rest areas.
    LNG Exports to Non-Free Trade Agreement Countries to be Allowed
    A final Department of Energy (DOE) rule easing approvals for exporting "small volumes" of
    liquefied natural gas (LNG) to countries lacking free trade agreements with the U.S. has been
    issued and will go into effect on August 24, 2018. The rule will provide for faster approval of
    applications for small-scale exports of natural gas, including LNG, from U.S. export facilities.
    Prior to this rule, for applications to export natural gas to non-free trade agreement countries,
    DOE had to conduct a public interest review before authorizing such exports. This final rule
    provides that DOE, upon receipt of any complete application to export natural gas to non-free
    trade agreement countries, will grant the application provided that the application: proposes to
    export no more than 51.75 billion cubic feet per year of natural gas, and the proposed export
    qualifies for a categorical exclusion under DOE’s National Environmental Policy Act (NEPA)
    regulations.
    Sorghum Oil Approved to Qualify for RINS Credits
    On Tuesday, EPA’s Acting Administrator, Andrew Wheeler, signed a final rule approving a
    variety of pathways for renewable fuel derived from sorghum, including biodiesel.
    The newly approved pathways include biodiesel, heating oil, jet fuel, and liquified petroleum
    gas produced from sorghum oil, a by-product of ethanol produced from using grain sorghum as
    a primary feedstock. These pathways meet the greenhouse gas emissions reductions
    requirements to qualify to generate credits or Renewable Identification Numbers (RINs) for
    biomass-based diesel and advanced biofuels under the RFS program.

    “Today’s approval sets the stage for more homegrown fuels under the Renewable Fuel
    Standard and adds diversity to our mix of biofuels in the U.S.,” said EPA Acting Administrator
    Andrew Wheeler. “This is a win for American sorghum farmers and biofuel producers alike.”
    “USDA welcomes this decision by EPA that biofuel made from sorghum oil qualifies for
    advanced biofuel and biomass-based diesel designation under the RFS,” U.S. Secretary of

    Agriculture Sonny Perdue said. “This decision recognizes the environmental benefits of home-
    grown renewable energy and will create new markets for agricultural commodities.”

    The move will add 21 million Renewable Identification Numbers (RINS) to the program, all of
    which can be used to comply with the advanced biofuel mandate.
    Join PMAA and NACS in Las Vegas October 6-10
    Book your hotel reservations for the NACS Show, October 7-10, 2018! The official housing
    agency for the 2018 NACS Show has 30 hotels offering discounted rates exclusively for NACS
    guests. The secure online housing web site is available 24/7, and offers real-time availability
    with full hotel descriptions, amenity listings, distances from each hotel to the Las Vegas
    Convention Center, maps, and other information to help make your decision easier. Also,
    reservation acknowledgements are emailed to you within seconds of confirming the
    reservation.
    The 400,000 square feet expo is where you will discover thousands of the latest products and
    services that c-stores sell and use every day. The expo is segmented into six categories: Fuel
    Equipment & Services, Food Equipment & Foodservice Programs, Candy/Snacks, Facility
    Development & Store Operations, Merchandise and Technology. Each area of the expo gives
    you a one-of-a-kind, hands-on experience that can’t be matched anywhere else.
    Acting as a launch pad for the future, the Cool New Products Preview Room is just what its
    name implies. It’s loaded with new innovations, products, services and other growth
    opportunities. The preview room is segmented into seven areas to help you easily locate new
    products: Green (eco-friendly), Health & Wellness, New Design, New Flavors, New to the
    Industry, New Services and New Technology. Here, you can capture product details and access
    exhibitor contact information, as well as print your custom “shopping list” for a visit to the main
    expo.
    In addition to online registration and housing, the NACS Show website features the latest
    information about exhibitors, housing, speakers, educational sessions and networking events.
    Please note that the NACS Show registration is separate from the PMAA Meeting Registration.
    The Petroleum Marketers Association of America (PMAA) has held its Fall Meeting as part of
    the NACS Show since 1995. PMAA’s Fall Meeting this year will be held on October 6-7 at the
    Encore Las Vegas. You can find weblinks to PMAA’s Fall Meeting at the NACS Show here or you

    can go directly here for our event website for all details including registration with secure event
    payment processing through Cvent.
    PMAA Platinum Partner Spotlight Featuring: Meridian Associates, Inc.
    What Your Employees Aren’t Telling You
    by Betsi Bixby
    Let me start out by telling you that I just returned from a strategic planning session with a client
    last week. And it absolutely hit me over the head how much that company’s employees knew
    but weren’t sharing. So please allow me to give you the essence of that recent experience and
    then translate my experience into some useful steps for you.
    As part of the planning process with this client, I asked them to gather up a mixed team of both
    management level and first line, customer level employees. The company was primarily in
    wholesale fuels and lubes, so the mix included drivers. As I engaged the team in the various
    pieces of the planning process, the tankwagon driver mentioned how long it was taking to load
    at two of the company’s bulk plant locations. The corporate headquarters staff seemed to
    realize and acknowledge there was a problem, but the thought was that overhauling two old
    bulk plants was more of a capital project than anyone wanted at this time. The comments went
    noticed but not acted on.
    To read all about Betsi’s ways you can tap into the knowledge and experience of your front line,
    click here. To learn more about PMAA’s Corporate Platinum Partner, Meridian Associates,
    please visit or contact them at 800.728.9005.
    Federated’s Risk Management Corner:
    Good Reasons to Have a Drug- and Alcohol-Free Workplace Program
    In its simplest form, managed care describes a variety of techniques that, when properly
    deployed, can help support an effective risk-management program. These strategies can be
    most effective when they concentrate on both injury- prevention and post injury
    techniques.
    Please click here to read more about the dangers of heat in its entirety.
    For additional information or to discuss further, please contact your Federated regional
    representative or PMAA’s National Account Executive Jerry Leemkuil at 800.533.0472.
    Federated is a PMAA Corporate Platinum Partner.
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