Penn. bill would establish new biodiesel fee

By Erin Voegele | September 20, 2010
Posted Oct. 13, 2010

Legislation currently pending in Pennsylvania could negatively impact the state's biodiesel industry. On Oct. 6, the Pennsylvania House of Representatives adopted an amendment, SB 901, which seeks to impose a new fuel tax on businesses that sell biodiesel fuel by amending the state's Biofuel Development and In-State Production Incentive Act of 2008.

According to John Kulik, executive vice president of the Pennsylvania Petroleum Marketers and Convenience Store Association, the amendment would levy a new fee, or tax, on companies that sell biodiesel within the state. Under the amendment, each convenience store, service station, truck stop or other retail location selling biodiesel would be required to pay a new $100 fee in addition to existing local, state and federal fees and taxes.

According to information released by PPMCSA, some of its members have also expressed concern over a $5,000 blender fee contained in the proposal. The association notes that the new fee could severely impact its members' ability to import regular diesel and blend biodiesel from surrounding states, which could have a significant impact on fuel distribution patterns and the price of fuel.

The amended legislation establishes a total of four of these registration fees:

- $5,000 for each biodiesel manufacturing facility within the state
- $5,000 for each location within the state where biodiesel is blended
- $100 for a person, other than a person that operates at a biodiesel production or blending facility, that sells, offers sale or otherwise transfers biodiesel or a biodiesel blend within the state, whether or not the that person operates a location within Pennsylvania where such activities are conducted
- $100 for each location, in excess of one, within Pennsylvania where a registered person sells, offers for sale or otherwise transfers title of biodiesel or a biodiesel blend

"This tax, which is imposed on distributors and retailers who are required by the state to sell this kind of fuel, adds more costs to handling the fuel," Kulik said. "While some might argue that $100 does not seem like much, for businesses that have multiple locations, the tax can accumulate to thousands or tens of thousands of dollars. It's a tax that they and their customers will be forced to pay."

Under the amendment, the fees would be used to support the state Department of Agriculture's enforcement of the on-road B2 mandate that took effect in May. According to the newly amended legislation posted to the Pennsylvania Legislature's website, the B2 mandate for on-road fuel use was scheduled to take effect one year after in-state production of biodiesel reached 40 MMgy. The mandate has been scheduled to step up to B5 one year after in-state production reaches 100 MMgy; B10 one year after in-state production reaches 200 MMgy; and B20 one year after in-state production reaches 400 MMgy.

PPMCSA has been working to push alternative bipartisan legislation through the state legislature. The bill, titled "The PA Clean Heat Initiative," is designed to streamline the petroleum distribution system. "The House chose to ignore this far-reaching proposal, which would have balanced operating cost savings and enforcement costs, and passed the tax increase instead," Kulik said. "We're disappointed that such an important amendment was rammed through the House as the legislative session is winding down. Our association will oppose passage of Senate Bill 901 in its current form in the event the House takes up the measure on final passage."
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