The Honorable Orrin Hatch The Honorable Ron Wyden
The Honorable Orrin Hatch Chairman Committee on Finance 219 Dirksen Senate Office Building Washington, D.C. 20510
The Honorable Ron Wyden Ranking Member Committee on Finance 219 Dirksen Senate Office Building Washington, D.C. 20510 November 14, 2017
Dear Chairman Hatch and Ranking Member Wyden, As it has done for the last several years, the Society of Independent Gasoline Marketers of America (“SIGMA”)1 writes to express its support for the biodiesel blenders’ tax credit. That $1.00 per gallon credit was given to blenders of biodiesel to help incentivize the use of biofuels in the nation’s transportation fuel stock and displace traditional petroleum-based fuel. While SIGMA is cognizant that the credit cannot remain on the books in perpetuity, the tax credit has encouraged the blending of biodiesel, while ensuring that biodiesel blends are more price-competitive for consumers. For that reason, SIGMA urges the Finance Committee to extend and responsibly phase out the biodiesel blenders’ tax credit as it considers tax reform legislation. In addition, SIGMA calls on the Committee to oppose any efforts to restructure the credit as a producers’ credit. Certain Members of Congress have been pushing to change the credit to a producers’ credit, a move that SIGMA vehemently opposes. It is our view that such a change would be so damaging as to make no credit at all a better option than a producers’ credit. From 2005 to 2016, the biodiesel blenders’ tax credit was enormously successful in increasing the domestic use of biofuels, reducing dependence on foreign oil, increasing U.S. energy independence and security, and achieving improvements in air quality. Most important, however, the credit ultimately lowered fuel prices for American consumers. The expiration of the credit in 2016 has left biodiesel blenders and retailers in the lurch this year as they wait to see if the credit will be extended. Representatives Diane Black (R-TN) and Ron Kind (D-WI) have introduced a bill, the Biodiesel, Renewable Diesel, and Alternative Fuels Extension Act (H.R. 3264), which would retroactively extend the credit for 2017 and ultimately phase it out over a five-year period. SIGMA supports this bill, as its responsible phase-down schedule has been used successfully by other credits in the renewable energy sphere, providing businesses the certainty they need to make accurate business decisions as the credit winds down. Critically, this bill would also keep the credit as a blenders’ credit and not shift the credit to producers of biodiesel. 1
SIGMA represents a diverse membership of approximately 260 independent chain retailers and marketers of motor fuel.
Shifting to a producers’ credit would essentially place a $1.00 per gallon tax on imported biodiesel, reducing blenders’ affordable access to biodiesel and increasing the prices that blenders’ must pay—which are passed directly on to consumers. A producers’ credit would also incentivize the exporting of domestically-produced biodiesel, as producers would not be required to sell their product solely in the U.S. This would again reduce the amount of biofuel available to blend domestically and raise prices for consumers. As an organization made up of approximately 260 independent chain retailers and marketers of motor fuel, SIGMA has a nuanced understanding of the demands of the retail fuels market, which is one of the most competitive markets in the world. Due to tight margins and significant competition, increases in the prices that retailers must pay to procure fuel will inevitably be passed along to consumers, resulting in Americans paying more at the pump. To support competition in the fuels market and to protect American consumers, SIGMA urges you to: (1) support extending and responsibly phasing out the biodiesel blenders’ tax credit, and (2) oppose altering the credit to a producers’ credit. As the Committee considers tax reform, it is vital that the credit be treated in such a way that provides certainty for blenders and that does not provide producers with undue leverage vis-à-vis the fuels market.
Respectfully,
R. Timothy Columbus Counsel to SIGMA
cc: Members of the Committee
The Honorable Ron Wyden Ranking Member Committee on Finance 219 Dirksen Senate Office Building Washington, D.C. 20510 November 14, 2017
Dear Chairman Hatch and Ranking Member Wyden, As it has done for the last several years, the Society of Independent Gasoline Marketers of America (“SIGMA”)1 writes to express its support for the biodiesel blenders’ tax credit. That $1.00 per gallon credit was given to blenders of biodiesel to help incentivize the use of biofuels in the nation’s transportation fuel stock and displace traditional petroleum-based fuel. While SIGMA is cognizant that the credit cannot remain on the books in perpetuity, the tax credit has encouraged the blending of biodiesel, while ensuring that biodiesel blends are more price-competitive for consumers. For that reason, SIGMA urges the Finance Committee to extend and responsibly phase out the biodiesel blenders’ tax credit as it considers tax reform legislation. In addition, SIGMA calls on the Committee to oppose any efforts to restructure the credit as a producers’ credit. Certain Members of Congress have been pushing to change the credit to a producers’ credit, a move that SIGMA vehemently opposes. It is our view that such a change would be so damaging as to make no credit at all a better option than a producers’ credit. From 2005 to 2016, the biodiesel blenders’ tax credit was enormously successful in increasing the domestic use of biofuels, reducing dependence on foreign oil, increasing U.S. energy independence and security, and achieving improvements in air quality. Most important, however, the credit ultimately lowered fuel prices for American consumers. The expiration of the credit in 2016 has left biodiesel blenders and retailers in the lurch this year as they wait to see if the credit will be extended. Representatives Diane Black (R-TN) and Ron Kind (D-WI) have introduced a bill, the Biodiesel, Renewable Diesel, and Alternative Fuels Extension Act (H.R. 3264), which would retroactively extend the credit for 2017 and ultimately phase it out over a five-year period. SIGMA supports this bill, as its responsible phase-down schedule has been used successfully by other credits in the renewable energy sphere, providing businesses the certainty they need to make accurate business decisions as the credit winds down. Critically, this bill would also keep the credit as a blenders’ credit and not shift the credit to producers of biodiesel. 1
SIGMA represents a diverse membership of approximately 260 independent chain retailers and marketers of motor fuel.
Shifting to a producers’ credit would essentially place a $1.00 per gallon tax on imported biodiesel, reducing blenders’ affordable access to biodiesel and increasing the prices that blenders’ must pay—which are passed directly on to consumers. A producers’ credit would also incentivize the exporting of domestically-produced biodiesel, as producers would not be required to sell their product solely in the U.S. This would again reduce the amount of biofuel available to blend domestically and raise prices for consumers. As an organization made up of approximately 260 independent chain retailers and marketers of motor fuel, SIGMA has a nuanced understanding of the demands of the retail fuels market, which is one of the most competitive markets in the world. Due to tight margins and significant competition, increases in the prices that retailers must pay to procure fuel will inevitably be passed along to consumers, resulting in Americans paying more at the pump. To support competition in the fuels market and to protect American consumers, SIGMA urges you to: (1) support extending and responsibly phasing out the biodiesel blenders’ tax credit, and (2) oppose altering the credit to a producers’ credit. As the Committee considers tax reform, it is vital that the credit be treated in such a way that provides certainty for blenders and that does not provide producers with undue leverage vis-à-vis the fuels market.
Respectfully,
R. Timothy Columbus Counsel to SIGMA
cc: Members of the Committee
