Tennessee Lawmakers Pass Biofuels Bill After Compromise
By George Orwel
DTN Ethanol Center
June 16, 2009
NEW YORK (DTN) — The Tennessee legislature passed legislation that compels refiners and other fuel suppliers in the state to make available to wholesalers unblended gasoline and gasoline blending stock so they can blend it themselves with ethanol.
The legislation was passed by Tennessee’s House of Representatives on June 9 and the state senate on June 12. The legislation awaits the signature of Gov. Phil Bredesen to become law, said Lee Harrell, a legislative aide for Speaker Pro Tempore of the Senate Jamie Woodson.
The bill also forces refiners and suppliers to make available to wholesalers diesel that is suitable for blending with biodiesel.
The passage of the bill came after Tennessee state lawmakers last month worked out a compromise between Valero Energy Corp and Tennessee fuel wholesalers over the bill.
Valero had threatened to shut down its 195,000 bpd refinery in Memphis if lawmakers advanced the bill into law. The refinery employs about 310 people, according the company’s Web site, and so a shutdown of the plant would mean job losses.
Valero appealed to Bredesen to intervene, arguing the proposal to require the refinery to allow “our wholesale customers to blend ethanol into gasoline made at the refinery” would require capital expenditures of between $130 million and $150 million.
“Coupled with the current economic downturn, this makes no economic sense for the refinery, and the expenditure would cause Valero to seriously consider closing the plant,” company spokesman Bill Day told DTN at the time.
Day added that in order to make gasoline on demand for wholesalers to do their own blending, the Memphis refinery would need to have separate storage and pipeline systems for ethanol-blended fuels and conventional unblended fuels.
Soon after, Tennessee House Speaker Kent Williams brought together representatives from both Valero and the wholesalers to work out a compromise. Both sides reached a deal that allowed the bill to proceed into law.
Emily LeRoy, a spokeswoman for Tennessee Fuel and Convenience Store Association, which represents wholesalers, told DTN that the compromise offered Valero some leeway, but the refiner would still have to provide unblended gasoline and diesel to wholesalers.
The version of the bill passed by the state’s congress, a copy of which was made available to DTN, protects refiners and suppliers from any liability in lawsuits arising from downstream blending.
That’s what Valero got out of the compromise, LeRoy said Tuesday.
The legislation also provides a fine of $5,000 per day for noncompliance, and gives the state commissioner of agriculture the authority to inspect refinery premises to ensure compliance. Refiners are also required to keep business records and to make them available to inspectors charged with enforcing the law.
Showing posts with label Tennessee. Show all posts
Showing posts with label Tennessee. Show all posts
Friday, July 3, 2009
Fuel Feud Brewing
Battle Over Who Can Blend Ethanol Might Impact Consumers at the Pump
By Ken Whitehouse
www.nashvillepost.com
April 20, 2009
Legislation winding its way through the Tennessee General Assembly could have a big impact on you at the gas pump.
The bill (SB 1931/HB 1517) requires all oil refiners to make unblended products available to distributors or retailers who wish to blend their own ethanol fuel. What could be the basis of the fight? One side says it is about competition and the other says it’s about product integrity.
But the real reason could be that there is a federal tax credit that is now 51 cents for every gallon of ethanol that is blended with gasoline.
State Sen. Jamie Woodson (R-Knoxville) is one of the main sponsors of the bill, which she says will create competition in the marketplace. Woodson said she was made aware of the issue by the Tennessee Fuel and Convenience Store Association.
“Instead of eight companies doing the blending,” Woodson said, “there could literally be 20 different companies. That competition is good for consumers and prevents Tennessee farmers from being shut out of the process of ethanol production.”
Mike Williams, a former state representative now representing the Tennessee Petroleum Council, says the legislation is completely out of bounds.
“We strongly oppose this unneeded and unnecessary legislation,” Williams said. “Among the many problems we have with the bill is that it is in violation of the Lanham Act.”
The Lanham Act defines the statutory and common law boundaries to trademarks and service marks.
Williams warned that consumers would feel the impact if the legislation passes, noting that, “prices are set by supply and demand and rarely do you raise costs to a company that are not passed along and impact the consumer.”
There is a lawsuit that both sides of this debate will be watching closely. The National Petroleum Institute and the National Petrochemical and Refiners Association have filed suit against the state of North Carolina, where legislators enacted similar legislation into law last year.
They contend that the North Carolina statute conflicts with at least three federal laws, stating in their lawsuit that it is “contrary to the federal renewable fuel program” that “expressly leaves to refiners the choice of whether and how to blend gasoline with ethanol.”
Their lawsuit also contends that the North Carolina law is “contrary to federal trademark law because it forces refiners to cede control over the manufacturing of their trademarked products to distributors and retailers” and that it “removes a valid basis – product adulteration – for terminating or non-renewing a franchise agreement.”
Asked about how the North Carolina case might impact her bill, Woodson said “This legislation will meet all judicial tests.”
By Ken Whitehouse
www.nashvillepost.com
April 20, 2009
Legislation winding its way through the Tennessee General Assembly could have a big impact on you at the gas pump.
The bill (SB 1931/HB 1517) requires all oil refiners to make unblended products available to distributors or retailers who wish to blend their own ethanol fuel. What could be the basis of the fight? One side says it is about competition and the other says it’s about product integrity.
But the real reason could be that there is a federal tax credit that is now 51 cents for every gallon of ethanol that is blended with gasoline.
State Sen. Jamie Woodson (R-Knoxville) is one of the main sponsors of the bill, which she says will create competition in the marketplace. Woodson said she was made aware of the issue by the Tennessee Fuel and Convenience Store Association.
“Instead of eight companies doing the blending,” Woodson said, “there could literally be 20 different companies. That competition is good for consumers and prevents Tennessee farmers from being shut out of the process of ethanol production.”
Mike Williams, a former state representative now representing the Tennessee Petroleum Council, says the legislation is completely out of bounds.
“We strongly oppose this unneeded and unnecessary legislation,” Williams said. “Among the many problems we have with the bill is that it is in violation of the Lanham Act.”
The Lanham Act defines the statutory and common law boundaries to trademarks and service marks.
Williams warned that consumers would feel the impact if the legislation passes, noting that, “prices are set by supply and demand and rarely do you raise costs to a company that are not passed along and impact the consumer.”
There is a lawsuit that both sides of this debate will be watching closely. The National Petroleum Institute and the National Petrochemical and Refiners Association have filed suit against the state of North Carolina, where legislators enacted similar legislation into law last year.
They contend that the North Carolina statute conflicts with at least three federal laws, stating in their lawsuit that it is “contrary to the federal renewable fuel program” that “expressly leaves to refiners the choice of whether and how to blend gasoline with ethanol.”
Their lawsuit also contends that the North Carolina law is “contrary to federal trademark law because it forces refiners to cede control over the manufacturing of their trademarked products to distributors and retailers” and that it “removes a valid basis – product adulteration – for terminating or non-renewing a franchise agreement.”
Asked about how the North Carolina case might impact her bill, Woodson said “This legislation will meet all judicial tests.”
Petroleum Marketers, Refiners Battle Over Ethanol in Southeast
Petroleum Marketers, Refiners Battle Over Ethanol in Southeast
By Ryan C. Christiansen
Ethanol Producer Magazine
July, 2009
Petroleum marketers in the southeastern U.S. are supporting efforts to force oil refiners to supply them with unblended gasoline so that the marketers can choose to blend ethanol into the gasoline themselves.
According to petroleum marketing groups, their inability to obtain unblended gasoline from refiners is a growing problem. “It’s being clamped down,” said Sherri Cabrera, vice president of the Petroleum Marketers Association of America, a federation of 47 state and regional trade associations representing approximately 8,000 independent petroleum marketers nationwide. “We’re seeing just more and more refiners offering [unblended gasoline] less and less.”
The issue so far appears to be most prevalent in the southeastern U.S., where North Carolina, South Carolina, Tennessee and Georgia have all either pursued legislation or passed laws to address the issue.
In South Carolina, legislators passed a law in June 2008 which required oil refiners to supply marketers with unblended gasoline. The law was bundled with provisions for sales tax exemptions for energy efficient products and for a sales tax holiday for firearms. The American Petroleum Institute and BP Products North America Inc. sued, claiming the law violated the “one subject” provision in the state constitution which states that “every act or resolution having the force of law shall relate to but one subject, and that shall be expressed in the title.” The state’s Supreme Court agreed. In May 2009, the court repealed the law.
Meanwhile, legislators in Tennessee pursued similar legislation this spring. Petroleum refiner and marketer Valero Energy Corp. reacted by threatening to shut down its Memphis, Tenn., refinery, claiming the company would need to spend up to $150 million over two years for new equipment to comply with the proposed law.
In North Carolina, the National Petrochemical & Refiners Association, a lobbying group of which Valero is a also a member, sued the state for passing a law that requires refiners to sell unblended gasoline to marketers, allowing marketers to be “blenders of record” and obtain federal tax credits for blending ethanol into gasoline. The NPRA said North Carolina’s law “conflicts with federal law by preventing entities with a federal obligation to blend renewable fuels from doing so, and by requiring them to sell unblended fuel to entities that are not obliged by federal or state law to use renewable fuels.”
Cabrera said petroleum marketers have a lot invested in tanks and infrastructure for blending ethanol with gasoline. “Refiners have tried to lock their business partners—petroleum marketers—out of the option to do that,” she said. “So some states have come in to say to refiners, ‘we’re going to make you do the right thing and work with your marketer business partners.’”
The ethanol industry is supportive of petroleum marketers and their efforts to secure ethanol blending opportunities. “In the history of ethanol, there have always been a number of petroleum marketers that want to do their own splash blending,” said Greg Krissek, board member of industry group Growth Energy. “Where this is an issue for petroleum marketers, we would be supportive of them wanting to have the clear, unblended streams.”
Krissek said the ethanol industry can be a partner in the effort to ensure marketers continue to have ethanol blending opportunities. “In a number of states, you have plants that have good relationships with the petroleum marketing organizations,” he said, “and this is an area where we can probably work together.”
By Ryan C. Christiansen
Ethanol Producer Magazine
July, 2009
Petroleum marketers in the southeastern U.S. are supporting efforts to force oil refiners to supply them with unblended gasoline so that the marketers can choose to blend ethanol into the gasoline themselves.
According to petroleum marketing groups, their inability to obtain unblended gasoline from refiners is a growing problem. “It’s being clamped down,” said Sherri Cabrera, vice president of the Petroleum Marketers Association of America, a federation of 47 state and regional trade associations representing approximately 8,000 independent petroleum marketers nationwide. “We’re seeing just more and more refiners offering [unblended gasoline] less and less.”
The issue so far appears to be most prevalent in the southeastern U.S., where North Carolina, South Carolina, Tennessee and Georgia have all either pursued legislation or passed laws to address the issue.
In South Carolina, legislators passed a law in June 2008 which required oil refiners to supply marketers with unblended gasoline. The law was bundled with provisions for sales tax exemptions for energy efficient products and for a sales tax holiday for firearms. The American Petroleum Institute and BP Products North America Inc. sued, claiming the law violated the “one subject” provision in the state constitution which states that “every act or resolution having the force of law shall relate to but one subject, and that shall be expressed in the title.” The state’s Supreme Court agreed. In May 2009, the court repealed the law.
Meanwhile, legislators in Tennessee pursued similar legislation this spring. Petroleum refiner and marketer Valero Energy Corp. reacted by threatening to shut down its Memphis, Tenn., refinery, claiming the company would need to spend up to $150 million over two years for new equipment to comply with the proposed law.
In North Carolina, the National Petrochemical & Refiners Association, a lobbying group of which Valero is a also a member, sued the state for passing a law that requires refiners to sell unblended gasoline to marketers, allowing marketers to be “blenders of record” and obtain federal tax credits for blending ethanol into gasoline. The NPRA said North Carolina’s law “conflicts with federal law by preventing entities with a federal obligation to blend renewable fuels from doing so, and by requiring them to sell unblended fuel to entities that are not obliged by federal or state law to use renewable fuels.”
Cabrera said petroleum marketers have a lot invested in tanks and infrastructure for blending ethanol with gasoline. “Refiners have tried to lock their business partners—petroleum marketers—out of the option to do that,” she said. “So some states have come in to say to refiners, ‘we’re going to make you do the right thing and work with your marketer business partners.’”
The ethanol industry is supportive of petroleum marketers and their efforts to secure ethanol blending opportunities. “In the history of ethanol, there have always been a number of petroleum marketers that want to do their own splash blending,” said Greg Krissek, board member of industry group Growth Energy. “Where this is an issue for petroleum marketers, we would be supportive of them wanting to have the clear, unblended streams.”
Krissek said the ethanol industry can be a partner in the effort to ensure marketers continue to have ethanol blending opportunities. “In a number of states, you have plants that have good relationships with the petroleum marketing organizations,” he said, “and this is an area where we can probably work together.”
Subscribe to:
Posts (Atom)
Posts
