Quick Links to Articles for February 12, 2021

Study Shows that Lawmakers May Be Underestimating the Costs of Electrification of Vehicle Transportation

Democrats Unlikely to Approve Major Climate Legislation 

House Democrats Release Energy Tax Incentives Proposal 

IRS Issues Hefty Fines for Failure to Display Nontaxable Use Dispenser Labels

Federated Insurance: Risk Management Corner 

EMA Winter Journal Online Now

EMA Member Services Spotlight Featuring: UniFirst through National Purchasing Partners 

Recently, the House and Senate passed budget resolutions, which will allow Democrats to leverage the budget reconciliation process to pass priority legislation, in this case a COVID-relief package, without Republican support. President Biden and the White House voiced preference to move a bipartisan agreement package under “regular order,” but maintained that reconciliation remains on the table. Last week, President Biden met with ten Republican Senators to discuss their $600 billion relief proposal. The White House will continue pursuing parallel strategies of negotiations with Senate Republicans and continuing the budget reconciliation process as necessary.

This week, various House Committees began an approximate two-week process of holding markups to advance reconciliation measures and approve their portion of the Democratic $1.9 trillion COVID relief proposal. On Wednesday, the House Transportation and Infrastructure Committee finalized their $96 billion portion on a largely party-line vote, with only three Republicans joining Democrats. Republicans offered 60 amendments, including one to showcase the importance of the Keystone XL pipeline, but all amendments were opposed. Upon each committee advancing their budgets by February 16, the House Budget Committee will incorporate all bills into a large package, which will receive a House floor vote the week of February 22. The legislation will then be delivered to the Senate for approval. Democrats are working under an expedited timeline to finish the reconciliation process before unemployment benefits expire in mid-March.

Minimum wage remains a Democratic priority but faces challenges in the Senate where Senator Joe Manchin (D-WV) opposes an increase to $15/hour. Sen. Manchin said inclusion of a wage increase would cause him to vote against the overall COVID package, thus preventing Democrats from meeting the 50-vote threshold under reconciliation. Further, the wage increase may not meet certain Senate rules that require reconciliations provisions to be “budgetary in nature.” The White House has publicly supported an increase to $15/hour, and the House Education and Labor Committee’s approved portion of the budget reconciliation process included this increase. 

While Congressional attention remains COVID relief, Congressional leaders acknowledged the necessity of funding for America’s infrastructure. Apart from President Biden’s broad infrastructure package priority, Congress must extend surface transportation reauthorization and the Water Resources Development Act (WRDA) before the programs expire September 30, 2021. To this end, Senate Environment and Public Works Committee Chairman Tom Carper (D-DE) said he plans to pass two major infrastructure bills out of his Committee by June, which many agree will target surface transportation reauthorization and extension of WRDA. Chairman Carper plans to hold an initial surface transportation hearing in February and will simultaneously be soliciting priorities from Committee members.

A newly released study by the National Bureau of Economic Research (NBER) entitled “Low Energy: Estimating Electric Vehicle Electricity Use” reveals that, in California, drivers of electric vehicles (EVs) drive less than half that of drivers of gasoline powered cars. While this is significant regarding the trust that consumers have with EVs and range anxiety, it is also significant that the study considered data that goes back to 2014-2017. The analysis was based on a sample of residential meters in the Pacific Gas & Electric service area, based on drivers of at home chargers of EVs, and factoring in estimated out-of-home charging.

It is important to determine why the usage is at half the amount because it is possible that the full costs of electrification are being taken into account. The study points to several possibilities which include:

• EVs may be complementing gas-powered cars instead of replacing them.

• EV buyers to date do not represent the "broader vehicle-owning population."

• A combo of too few public charging stations, "range anxiety" and other aspects of EV ownership.

For more information, click here. 

As Senate Majority Leader Chuck Schumer (D-NY) vowed to make climate legislation one of the chamber’s top priorities and make the entire economy carbon neutral by 2050, seven Democrats joined all Senate Republicans in voting to block a fracking ban in last week’s budget resolution “vote-a-rama.” Additionally, Senator Joe Manchin (D-WV) and Jon Tester (D-MT) voted with all Senate Republicans in backing the Keystone XL pipeline and the Senate also was split on a carbon tax by a 50 – 50 party line vote. The votes illustrate the political obstacles democrats face to move a potential clean energy standard this Congress. Kevin Book, managing director of research firm ClearView Energy Partners, said for democrats to pass a comprehensive climate bill including a carbon tax, “would probably need at least two to four more seats” from states that aren’t producing a bevy of coal, oil or gas.”

House Democrats released their energy tax incentives proposal known as the Growing Renewable Energy and Efficiency Now Act (GREEN Act, H.R. 7330) which is similar to the energy tax provisions included in the Democrats’ infrastructure legislation. The bill includes tax credit extensions and expansions for wind, solar, biodiesel, carbon dioxide capture and storage, and energy efficiency measures for homes and businesses. The GREEN Act would also raise limits on the electric vehicle tax credit as well as charging infrastructure. Click herefor a full summary. Furthermore, Rep. Lloyd Doggett (D-TX), a senior Member of the House Ways and Means Committee, introduced legislation to incentivize EV infrastructure expansion by modifying the alternative fuel refueling property credit (30C). The Electric Vehicle CHARGE Act was already approved by the House in the Moving Forward Act (H.R. 2) last year. This bill:

• Extends the tax credit for installing electric vehicle charging infrastructure for five years. The alternative fuel vehicle refueling property credit (§30C) provides a 30% tax credit for costs incurred by businesses or municipalities up to a $30,000 maximum credit per location. For drivers installing a charger at home, the maximum credit is $1,000, reflecting the lower cost of the level 1 or 2 chargers commonly used in homes. This credit is set to expire in 2021.

• Expands the credit for publicly accessible electric vehicle charging stations. For charging stations that hit the cap because they cost more than $100,000 – common for publicly available DC fast chargers – this legislation would eliminate the cap and provide a 20% credit for costs in excess of $100,000. This would incentivize technological innovation and building more fast-chargers. To qualify for this expanded credit, the infrastructure must:

  • Be intended for general public use and either accept credit cards as a form of payment or not charge a fee, or

  • Be intended for exclusive use by government or commercial vehicle fleets

• Provides certainty by providing the credit for property placed in service through 2026.

Additionally, Senator Bernie Sanders (I-VT), and Representatives Earl Blumenauer (D-OR) and Alexandria Ocasio-Cortez (D-NY) recently introduced legislation that would require President Biden to declare a national climate emergency under the National Emergencies Act of 1976. The National Climate Emergency Act would also require the president to deliver a report within one year of enactment that details actions taken in response to the national emergency, including investments in large-scale mitigation and resiliency projects and to enable a "racially and socially just transition" to a clean energy economy. The bill is unlikely to become law given the slim democratic majorities in the House and Senate.

EMA continues to hear from energy marketers who have received hefty fines for failure to display IRS nontaxable use warning labels on dispensers. The IRS requires all dyed diesel and dyed kerosene dispensers to have a specific label indicating that the fuel is for nontaxable use only. Dispensers supplying undyed, untaxed kerosene sold from a blocked pump must also display an IRS nontaxable use warning label. 

The labeling requirement has been in place for diesel dyed diesel dispensers since 1993 and for dyed and clear kerosene dispensers since 1998. IRS field agents continue to enforce the dispenser label requirement in all regions of the country. Under IRS regulations, marketers who fail to post the required labels are presumed to know the fuel will not be used for a nontaxable use and responsible for paying the 24.4 cpg federal excise tax on the fuel (the back-up tax). In addition, the IRS will assess a penalty of $10 per gallon for every gallon of nontaxable fuel in the storage tank connected to the dispenser at the time of the violation. 

The following IRS labels must be posted on any retail dispenser or other delivery facility (skid tank, consumer dispensers at bulk plants or card locks) where dyed diesel fuel and/or dyed kerosene are dispensed for use by a purchaser/consumer: 

“DYED DIESEL FUEL, NONTAXABLE USE ONLY, PENALTY FOR TAXABLE USE”

or

“DYED KEROSENE, NONTAXABLE USE ONLY, PENALTY FOR TAXABLE USE.”

In addition, the following label must be posted on all blocked pumps that sell clear, untaxed kerosene:

"UNDYED UNTAXED KEROSENE, NONTAXABLE USE ONLY.”

The labels must be affixed to the dispenser in a conspicuous place within easy sight of the person dispensing the fuel either on the face of the dispenser (on both sides) or on the side of the dispenser just above the nozzle housing. The IRS issues violations for any IRS required label that is missing, faded, ripped or obscured in any from the consumers view. Marketers should frequently inspect dyed diesel fuel, dyed kerosene and clear untaxed kerosene dispensers to ensure the IRS label is properly placed and legible. Labels can be ordered online from most petroleum and c-store supply vendors.

EMA Staff Contact: Mark S. Morgan, Regulatory Counsel mmorgan@emamerica.org.

In recent years, insurance claim amounts have risen sharply, fueled by an increasing tendency for juries to award plaintiffs massive sums when a business is the defendant. This phenomenon is known as “social inflation.” Social inflation is spurred by growing public distrust and negative sentiment toward businesses. These emotions, combined with a jury’s desire to secure perceived justice and compensation for plaintiffs it feels are wrongly injured, is resulting in higher punitive damages being the norm. This is particularly true when the litigation centers on a company driver involved in a vehicle crash.

To read about Federated’s recommended ways to help reduce the chances that your business will experience a catastrophic verdict, please read their monthly article here. 

For additional information or to discuss further, please contact your Federated regional representative or EMA’s National Account Executive Jon Medo at 800.533.0472. Federated is a EMA Corporate Platinum Partner.

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