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November 29, 2016 | Vol. 66, No. 23

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In This Issue

Dear PEI Member:

On Nov. 23, the U.S. Environmental Protection Agency (EPA) released its 2017 volume requirements for advanced biofuel and other renewable fuels, including ethanol. This most recent update of the Renewable Fuel Standard (RFS) marks a big step forward in the agency’s mission under the Energy Independence and Security Act of 2007 to “increase the production of clean renewable fuels.”

The volume requirements contained in the new 131-page rule are at record levels, exceeding both the 2016 requirements and the numbers proposed by EPA earlier this year:

  2016 2017 2017
  Final Proposed Final
Advanced Biofuel 3.61 4.00 4.28
Ethanol 14.50 14.80 15.00
* All figures in billions of gallons

The 2017 requirements, which EPA dubs “reasonably attainable and appropriate,” raise ethanol to 10.7 percent of the nation’s fuel supply—as compared to 10.1 percent in 2016. EPA expects most of the increase to come from E15 and E85, thanks to the growing availability of these higher blends and more favorable retail pricing.

E15 and E85 Availability
EPA forecasts that the number of retail fueling facilities selling E15 will more than quadruple in 2017—from 400 to 1,650 locations. The number of stations selling E85 is expected to rise from 3,200 to 4,300.

The primary reason for the growth in station counts is the extensive system of public and private grants retailers can tap to help offset the costs of upgrading their fueling system infrastructure. At the top of the grant list are the $210 million U.S. Department of Agriculture (USDA) Biofuels Infrastructure Partnership (BIP) and the Prime the Pump program funded by the ethanol industry.

EPA Finalizes 2017 Renewable Fuel Standard

Proposed Overtime Rule Halted

Colorado Tests New Road Tax System

PEI Member Updates Requested



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Attractive Retail Prices
As E15 becomes more widely available, EPA expects the blend’s 5- to 10-cent per gallon price advantage over E10 will prove increasingly attractive to consumers.

EPA’s pricing analysis on E85 is a little more complicated. From 2012 to 2016, E85 has been 16 to 20 percent less expensive per gallon than E10. However, the 21 million motorists who own flex fuel vehicles have so far had little financial incentive to make the switch from E10 because E85’s energy content is 22 percent less than that of E10. In 2017, EPA expects increased retailer competition to push the price differential to an unprecedented 22 percent, making E85 just as efficient as E10 and much more appealing at the pump.

Looking Ahead
Though not factored into its official RFS calculations, EPA also mentioned another proposed rulemaking that could push the use of ethanol even higher than the 2017 requirement: the Renewables Enhancement and Growth Support (REGS) Rule. Released for public comment on Nov. 16, the REGS Rule would classify ethanol blends from E16 to E83 as flex fuels not subject to all gasoline quality standards. According to EPA, this rule could lower the cost and increase the production of these blends, thereby further contributing to the growth of ethanol. A public hearing on the REGS Rule will be held Dec. 6 in Chicago (see Nov. 14, 2016 TL), and the public comment period is open until Jan. 17, 2017.

Outlook for the Industry
Even if EPA’s estimates prove accurate, the number of stations selling E15 and/or E85 in 2017 will represent a small fraction of the 150,000+ U.S. retail fueling locations. As a result, we do not expect the 2017 RFS to dramatically impact members’ workload. However, two areas of opportunity deserve mention: 

  • New Construction. In recent months, several major marketers have announced plans to move more deeply into E15. The new RFS ethanol requirements, the BIP program and Prime the Pump grants will accelerate that trend, especially when it comes to new store construction. With most new underground storage tanks (USTs) warranted for ethanol blends up to E100 and many new dispensers warranted up to E15, the additional costs to make new stations fully E15-ready are relatively minor in most cases. So, construction-oriented distributors should expect an increasing percentage of their new builds to be designed to store, meter and dispense E15.
  • Blender Pumps. If EPA is right that favorable 2017 pricing will make E85 more appealing to consumers who own flex fuel vehicles, blender pumps will become a viable option for marketers seeking to better serve those customers — especially at locations with limited tank capacities.

Some commentators have speculated that the incoming Congress may attempt to roll back the new volume requirements. Under the Congressional Review Act (CRA), any such attempt would have to occur within the first 60 days of the new legislative session. However, President-elect Trump spoke often during the campaign of his support for the RFS (see Nov. 14, 2016 TL). So he almost certainly would be unlikely to approve any attempted rollback.

On Nov. 22, a federal district court in Texas issued a nationwide injunction halting a new U.S. Department of Labor (DOL) regulation which would have classified employees earning less than $47,476 as exempt workers entitled to overtime protection. The regulation was set to take effect Dec. 1. The federal lawsuit was brought by 21 state attorneys general and a broad collection of business groups. Following issuance of the injunction, a DOL spokesman said the department is now “considering all of [its] legal options.”

Effective Nov. 12, the Pennsylvania Department of Environmental Protection (DEP) suspended enforcement of its Stage II vapor recovery requirements for new and replacement gasoline dispensers at 1,600 existing gasoline dispensing facilities (GDFs) in 12 counties in the southeastern part of the state. The DEP based its action on a recently-completed analysis that suggests the environmental benefits of Stage II vapor recovery systems in the state will approach zero sometime in 2018. The department’s action supplements its 2012 decision to suspend enforcement of Stage II requirements for new GDFs put into service after July 31, 2012.

In December, the Colorado Department of Transportation (CDOT) will begin testing a tax based on vehicle miles traveled as a possible alternative to the state’s longstanding 22-cent per gallon gasoline tax. In the pilot program, 100 volunteers will track and report their miles by sending CDOT their odometer readings each month or using a CDOT-supplied device that will automatically track the mileage for them. CDOT then will calculate each driver’s tax based on a rate of 1.2 cents per mile. No money will be exchanged in the pilot program. Rather, CDOT will use the results to gauge how a future miles-traveled tax would work in practice. In fiscal year 2015, Colorado’s gasoline tax generated revenues of $475.7 million, up only slightly from the $446.7 million generated in 2014 and down from the $480.2 million collected in 2007.

All PEI members are encouraged to update the company information you currently have on file with PEI because two critical association deadlines are just around the corner.

Compilation of data for the 2017 PEI Directory begins in December. Each member’s Directory listing includes contact information, personnel, product lines and a short, descriptive paragraph. Your company’s Official Representative to PEI is responsible for making necessary edits or additions to your company’s listing. If you’re unsure who your Official Representative is, refer to PEI’s online directory, and look for the underlined name. Members will receive more details on the 2017 PEI Directory production process soon.

The exhibit booth application process for the 2017 NACS Show also will kick off soon. As a part of that process, NACS will send booth selection information to the Official Representatives of PEI manufacturer members and other exhibitors unless the company has designated a different exhibit contact. To ensure prompt receipt of the booth selection procedures, make any changes to your Official Representative’s name or contact information by Dec. 2, 2016. For more details contact Bob Young at byoung@pei.org or (918) 236-3966.

On Nov. 17, California’s attorney general and BP reached a settlement related to BP’s alleged failure to inspect and maintain underground storage tanks (USTs) at approximately 780 retail gasoline stations in the state. Under the terms of the settlement, which must be approved by the Alameda County Superior Court, BP will pay $14 million in civil penalties. In agreeing to the settlement, BP, which today owns or operates only 73 retail fueling facilities in California, does not admit any liability or wrongdoing. The California attorney general reached similar settlements with Chevron in 2011 ($24.5 million) and Phillips 66 and ConocoPhilllips in 2015 ($11.5 million). 

Texas environmental testing firm.
FDR & CP Services, LLC, 2503 Tabor Road, Bryan, Texas 77803, has applied for service and construction division membership. Mike Leggett is operations manager for the firm, which was established in 1992. The company provides environmental testing and compliance. Sponsored for PEI membership by Lydia L. Cowie, WhiteTuckr, Houston, Texas.


  • Katharine Adamson, Aloha Petroleum Inc., Honolulu, HI (O&E)
  • Devin Seals, Circle K Inc., Efland, NC (O&E)
  • Alejandro Balcarcel, Global Tech, Guatemala City, Guatemala (O&E)
  • Rene Castaneda, Global Tech,  Guatemala City, Guatemala (O&E)


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© 2016
Petroleum Equipment Institute
P. O. Box 2380
Tulsa, OK 74101-2380

The TulsaLetter (ISSN 0193-9467) is published two or three times each month by the Petroleum Equipment Institute. Richard C. Long, Editor. Opinions expressed are the opinions of the Editor. Basic circulation confined to PEI members.