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State Biodiesel Fuel Businesses
Must Register under Motor Vehicle Fuel Distributor Program (MVDP)
During ARB's Alternative Diesel Fuel Regulation (ADF) workshop on May 23rd, CBA learned of a requirement that affects our industry by requiring registration for many biodiesel fuel businesses under the Air Resources Board's (ARB) Motor Vehicle Fuel Distributor program (MVDP).
The regulation defines a "motor vehicle fuels distributor" as: "any person who (1) refines, blends, or otherwise produces motor vehicle fuel, or (2) with an ownership interest in the fuel, transports or causes the transport of motor vehicle fuel at any point between a production or import facility and a retail outlet, or sells, offers for sale, or supplies motor vehicle fuel to motor vehicle fuel retailers." This requirement includes providing the physical location of all records pertaining to the production, purchase and delivery of motor vehicle fuel.
ARB staff has clarified that biofuel producers should register as a refiner and a distributor under the program.
To expedite the process, ARB is requesting that the registration form be emailed to Amanda Ciccarelli (email@example.com). They also are asking that the registration form sent to the following address rather than the P.O. box address printed at the bottom of the form:
California Air Resources Board
Attn: Amanda Ciccarelli
8340 Ferguson Ave
Sacramento, CA 95828
Please contact Amanda Ciccarelli with any questions at (916) 229-0523.
California's Biodiesel Industry
California currently has 8 biodiesel production plants, with 2 plants under construction, and major expansion underway at several of the state's largest plants. In 2015, instate production reached 32 million gallons, and we hope to see significantly increased volumes in 2016.
CA Biofuels Cap & Trade Initiative Gains Momentum
The California Biofuels Cap & Trade Initiative, a proposal to allocate $210 million from Cap and Trade auction proceeds to low carbon biofuels, has built an impressive list of supporters since this exciting coalition effort was initiated by CBA in early 2014. These efforts led by CBA lobbyist, Louie Brown, have increased the proposed state investment in biofuels to $60-$65 million--$40 million to support the instate production of biofuels, in addition to the $20-$25 million the Governor is proposing for the CEC.
The California Biofuels Cap & Trade Initiative coalition came together to make the case that low carbon fuels are available now and must be aggressively scaled up if Governor Brown's goal of reducing petroleum use in the state by 50 percent by 2030 is to be met.
An important element of the proposal includes not just concern about reaching the climate change goals of AB 32, but also that biofuel production and infrastructure should be encouraged in disadvantaged communities as put forth in SB 535. That law calls for stimulating employment and economic improvement in those communities as defined by CalEnviroScreen.
The funds would be split equally among three biofuel types (diesel alternatives, gasoline alternatives, and biogas/syngas) based upon stimulating (1) California-based biofuel production; (2) the low carbon intensity of biofuels, and (3) the benefits to disadvantaged California communities.
For further details and to add your organization's name as a signatory to the Biofuels Initiative, contact Russ Teall at firstname.lastname@example.org.
AB 1032 Goes Into Effect Jan 1st 2016
Tax Refunds Now Available for Dyed Blended Biodiesel
CBA was the proud sponsor of AB 1032, which passed the state legislature and was signed into law by Governor Brown this year and will be Implemented January 1st 2016. This very important new law corrects a long-standing tax problem affecting our industry, and we look forward to increased biodiesel sales now that this obstacle has been removed.
"Our industry estimates that the problem has been effectively preventing biodiesel from being blended into 15-30% of the diesel volume depending on how much dyed diesel that terminal is handling," said Harry Simpson, President of Crimson Renewable Energy and CBA board member. "The problem has affected every terminal and refinery rack in the state that is blending, or contemplating blending, biodiesel," he added.
Below is the text of a Special Notice, dated November 2015, from the California State Board of Equalization:
"Refund of Diesel Fuel Tax Paid Available to Suppliers of Dyed Blended Biodiesel Removed from the Rack"
"Effective January 1, 2016, licensed diesel fuel suppliers may claim a refund or credit for the excise tax they paid on the biodiesel portion of dyed blended biodiesel fuel removed from a terminal rack by the same supplier. Suppliers must be able to show that they paid the excise tax on the biodiesel fuel portion of the blended biodiesel. For more information on the legislation creating the change to allow a refund of the diesel fuel tax, download Assembly Bill 1032 (Stats. 2015, Ch. 481) at www.leginfo.ca.gov/bilinfo.html
Current Diesel Fuel Tax Law does not provide for reimbursement of the excise tax-paid portion of the biodiesel fuel removed from the rack as dyed blended biodiesel. Therefore, suppliers who blend tax-paid biodiesel fuel with ex-tax diesel fuel that is removed as a dyed blended biodiesel, are unable to recover the excise tax from the customer and unable to seek reimbursement for the tax from the Board of Equalization.
Effective January 1, 2016, Revenue and Taxation Code section 60501(b) will allow a supplier to claim a refund or credit for the excise tax that was paid on the biodiesel portion of dyed blended biodiesel fuel. Suppliers may file a claim for refund using BOE-101, Claim for Refund or Credit.
How to Claim a Credit on Your Supplier Return
Instead of filing a refund claim, licensed diesel fuel suppliers may claim a credit on BOE-501-DD, Supplier of Diesel Fuel Tax Return, for tax-paid biodiesel blended with diesel fuel and removed as dyed blended biodiesel fuel. Suppliers may claim a credit only to the extent of the excise tax-paid biodiesel portion of the dyed blended biodiesel removed. For further information, see BOE-810-FTE, Instructions for Preparing Motor Fuels Schedules, or our Diesel Fuel Tax program webpage FAQs.
If you have any questions regarding dyed biodiesel fuel blends, you may contact the BOE through our website at www.boe.ca.gov/info/email.html. You can also call our Customer Service Center at 1-800-400-7115 (TTY:711). Customer service representatives are available to assist you weekdays from 8:00 a.m. to 5:00 p.m., (Pacific time), except state holidays."
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REGULATORY AND POLICY ISSUE UPDATES
CALIFORNIA AIR RESOURCES BOARD (ARB)
CAP & TRADE AUCTION PROCEEDS ALLOCATED THROUGH THE STATE'S GGRF
Evidencing progress in the Biofuels Initiative coalition's efforts, on May 24th, state Assembly and Senate subcommittees approved the proposed funding for biofuels in the Green House Gas Reduction Fund (GGRF) with $40m slated to go to ARB's Low Carbon Fuels Incentive Program and $20 - $25m to the California Energy Commission's Alternative and Renewable Fuel and Vehicle Technology Program (ARFVTP). The two versions will now go to a conference committee for reconciling. We continue our efforts in the legislature in support of maximum funding levels.
CALIFORNIA AIR RESOURCES BOARD (ARB)
VERY LOW CARBON FUELS INVESTMENTS
The FY2016-17 Funding Plan, which was released on May 20th, is on the agenda for the June 23rd board meeting of the ARB in Sacramento, which is open to the public. CBA will be testifying and submitting comments at that time. The budget includes $40 million for a "Very Low Carbon Intensity Fuel Incentive," which is part of what CBA has been promoting in our Biofuel Initiative efforts. Details can be found beginning on page 77 (and by entering "very low" into the "Find" function) of the Proposed FY 2016-17 Funding Plan, Including Appendices (PDF - 5.3MB) which can be downloaded at: http://www.arb.ca.gov/msprog/aqip/fundplan/fundplan.htm.
CALIFORNIA AIR RESOURCES BOARD (ARB)
ALTERNATIVE DIESEL FUEL REGULATION (ADF)
At the ARB workshop on May 23rd to discuss reporting requirements for the ADF regulation, CBA learned about a register requirement under the MVDP (see article above). ARB staff gave examples to clarify several issues of importance to blenders and distributors under the regulation, which are included in the new FAQ. Among other clarifications is that regarding whether a person in the state can still purchase and sell B100 or B99, the new FAQ states: "Yes, purchase and sale of biodiesel blendstocks higher than B20 is allowed. However, those sales may not be retail sales for end use in engines, unless the selling entity has a valid Executive Order as part of the 3 stage phase in process."
The ADF regulation became effective January 1, 2016, and includes reporting and recordkeeping requirements applicable to entities in the biodiesel industry. The first quarter reports must be submitted by June 30, 2016. Biodiesel producers, importers and blenders are required to report and keep records concerning biodiesel production, sales, and blending. Biodiesel distributors and retailers are only required to keep records.
A few slight changes have been made to the ARB quarterly reporting form, which producers, importers and blenders must submit by June 30th (for the first quarter of 2016). If you have used the original form that was posted on March 2, 2016, it may be submitted for this reporting period.
Find the new FAQ and Reporting Forms at:
CALIFORNIA AIR RESOURCES BOARD (ARB)
LOW CARBON FUEL STANDARD (LCFS)
We encourage attendance at ARB's June 2nd workshop. ARB staff has posted the presentations and preliminary draft regulation order for this workshop to discuss proposed amendments to
clarify and enhance regulatory requirements, as well as preliminary draft regulatory language for a proposed mandatory verification program. The status of pathway application processing and unique identifiers for LCFS credits will also be presented. Find presentations and the preliminary draft regulation order here:
CALIFORNIA ENERGY COMMISSION (CEC)
ALTERNATIVE AND RENEWABLE FUEL AND VEHICLE TECHNOLOGY PROGRAM (ARFVTP)
The 2016-2017 Investment Plan Update for the Alternative and Renewable Fuel and Vehicle Technology Program - Commission Final Report adopted some of CBA's recent public comments but we continue to press the agency for more frequent solicitations and that some funding should be committed to biodiesel storage and blending infrastructure, which is a primary bottleneck in the California biodiesel blending market today. Details at:
An additional $20-$25 million in the Governor's budget proposal for 2016-2017 in biofuel program grants under the CEC's ARFVTP will be the subject of a special workshop, if approved.
CDFA'S DIVISION OF MEASUREMENT STANDARDS (DMS)
CBA attended DMS's May pre-rulemaking meeting, which provided stakeholders an opportunity to comment on a proposed regulation to amend the California Code to refine, clarify, and make consistent the specifications, standards, advertising, labeling and method of sale requirements for fuels, lubricants, and automotive products with changes and revisions made by AB 808. We will bring more details on the proposed regulation as they develop.
STATE WATER RESOURCES CONTROL BOARD: UNDERGROUND STORAGE TANK ISSUES
SB 1402 (Pavley): SB 1402 by Senator Pavley, which would have outlined the process for spending in-state biofuels incentive funding, was held by the Senate Appropriations Committee last week. Both the Assembly and Senate held policy bills related to Greenhouse Gas Reduction Funding (GGRF). There's a possibility that some of the language from SB 1402 could be amended into a GGRF spending bill later this session.
(Ridley-Thomas): CBA is supporting and
engaging on this bill to require that investor-owed electric utilities provide a discount rate program to the state's producers of biofuels, hydrogen, and natural gas similar to that offered for electric vehicles.
AB 1103 (Dodd): CBA is reviewing AB 1103 based on concerns that it prohibits anyone but waste haulers 'duly authorized' by the local jurisdiction from collecting, removing or transporting solid waste. The state CDFA's Inedible Kitchen Grease (IKG) program has its own set of regulations that the bill won't affected, but it will affect those who pick up hard materials, like bones and scraps. We are reviewing recent amendments and will made a decision about the bill after determining if it is in the best interest of our industry.
Please contact the Washington office of the National Biodiesel Board (NBB) at 202-737-8801 for questions on federal policy issues. Click on the NBB Fueling Action logo for information.
Action Alert on Biodiesel Producer's Tax Credit
Please contact your member of the House! The NBB is organizing the national mobilization to get cosponsors for the tax legislation recently introduced by House Representatives Kristi Noem, R-S.D., and Bill Pascrell, D-N.J. The bill would extend the biodiesel tax incentive through 2019 and change it from a blenders credit to a domestic production credit. CBA is working to get our California representatives to cosponsor the bill as part of this effort to demonstrate to House leaders that it has strong bipartisan support across the country and should be passed.
Please contact your U.S. Representative and ask them to support the Noem/Pascrell legislation, HR 5240, by signing on as a cosponsor. Your personal stories about the importance of an extension to your local business or organization and also the benefits of reforming the bill as a domestic producer's credit are most compelling. You can visit the House website here to do a zip-code search to find your representative or call the House switchboard at 202-225-3121.
More information, including a more detailed backgrounder on the benefits of a producer's credit, visit the NBB's Fueling Action website.
RENEWABLE FUEL STANDARD (RFS) UPDATE
EPA Releases Renewable Fuel Volumes Proposal: Stay tuned for an advocacy alert on the new RFS proposal. NBB will be launching a RFS letter campaign to submit comments to the EPA as soon as the rule is formally posted to the Federal Register.
The EPA proposal, released last Wednesday, calls for increasing the Biomass-based Diesel volume from 2 billion gallons in 2017 to 2.1 billion gallons in 2018. Additionally, it calls for increasing the overall Advanced Biofuel volume from 3.61 billion gallons in 2016 to 4 billion gallons in 2017, well below the statutorily required volume of 9 billion gallons. Under EPA's proposal, conventional biofuels would make up 14.8 billion gallons of renewable fuel volumes (as opposed to 15 billion gallons) for a total of 18.8 billion gallons, reduced from the statutorily required 24 billion gallons for 2017.
While the proposal includes limited growth for the Biomass-based Diesel category and the potential for additional biodiesel growth under the overall Advanced Biofuel category, it is clearly not all we had hoped for. NBB had requested a 2018 biodiesel standard of at least 2.5 billion gallons, with additional growth in the overall Advanced Biofuel category for 2017.
During the public comment period, we have an opportunity as an industry to collectively work to improve the volumes before they are finalized later this year. As with past RFS proposals, we will need to generate vocal and aggressive outreach to the Administration, and we will be calling on all biodiesel stakeholders to be engaged on this issue in the coming weeks.
EPA Makes Revisions to QAP Under the RFS
On April 22, 2016, EPA published a revision to 40 C.F.R. s. 80.1453, the product transfer document (PTD) requirements under the Renewable Fuel Standard (RFS) regulations, at 78 Fed. Reg. 23,641. The revision was proposed as part of a package of amendments to the Tier 3 Motor Vehicle Emission and Fuel Standards. It was intended to clarify that the RFS PTD requirements did not apply to sales to downstream end users. However, the proposal included some concerning language that referred to transfer of "custody" of fuel that we believed broadened the PTD requirements, which apply to transfer of "ownership" of renewable fuel. NBB submitted comments asking EPA to correct this issue in the final rule, and EPA removed this language. The final rule then excludes the requirement to provide a PTD when ownership of fuel is transferred "when such fuel is dispensed into motor vehicles or nonroad vehicles, engines, or equipment." The final rule also deleted a reference to section 80.1433 in the RFS PTD regulation, which does not exist in the regulations. That provision had related to a proposal on how to treat non-conforming downstream uses of renewable fuel.