U.S. Senator Rand Paul to Introduce Fuel Choice and Deregulation Legislation

The Fuel Choice and Deregulation Act of 2015

Improving the environment and reducing emissions is a task best suited for American innovation, market competition, and consumer choice. When government does act, it should remove barriers to competition, not erect new ones. The Fuel Choice and Deregulation Act removes federal barriers to competition and innovation in America’s transportation fuel market. Competition and consumer choice will reduce our dependence on foreign oil, lower emissions, and help balance the scale to make alternative fuels an economically viable option in America.

Bill Summary:

  1. The Fuel Choice and Deregulation Act removes overly burdensome EPA certifications on aftermarket vehicle conversions.
  • Fleet turnover rates for American light-duty vehicles have varied widely over the years. Removing EPA regulations that unnecessarily increase the cost of aftermarket vehicle conversions will allow for accelerated market penetration of vehicles that are capable of running on alternative fuels and increase incentives for investments in refueling infrastructure. The Fuel Choice and Deregulation Act removes the EPA certification requirements, while ensuring the conversion does not degrade emission performance.
  1. The Fuel Choice and Deregulation Act reforms Corporate Average Fuel Economy (CAFE) requirements by permanently extending the credit for auto manufacturers of alternative fuel vehicles and providing a new bonus credit of compliance for automakers with at least half of their fleet comprised of alternative fuel capable vehicles.
  • Congress enacted the Corporate Average Fuel Economy standard to reduce American dependence on foreign oil. The CAFE standards have been a prominent part of this Administration’s strategy for reducing emissions. The current standard is 54.5 miles per gallon by 2025. Instead of using CAFE standards to force automakers to produce expensive vehicles that consumers do not want to buy, this bill reduces the regulatory burden of CAFE obligations on automakers by providing a bonus credit to alternative fuel automakers and deeming them in compliance with greenhouse gas emissions standards promulgated under the Clean Air Act.

III. The Fuel Choice and Deregulation Act requires liquefied natural gas (LNG) to be taxed based on its energy content rather than volume.

  • The federal highway excise tax on both diesel and LNG is 24.3 cents per gallon. However, because LNG has a lower energy content per gallon than diesel fuel (it takes about 1.7 gallons of LNG to travel the same distance on only one gallon of diesel) LNG is being taxed at 170 percent the rate of diesel on an energy equivalent basis. Reforming the LNG tax removes this federal barrier to competition that artificially raises the cost of LNG.
  1. The Fuel Choice and Deregulation Act reforms EPA’s Reid Vapor Pressure (RVP) requirements by allowing higher blend levels of ethanol to exceed the current 9.0 psi standard and prevents EPA from regulating biomass fuel.
  • RVP is a measure of how quickly fuel evaporates into the atmosphere. EPA regulates RVP in conjunction with ozone emissions in the summer months. Congress directed EPA to issue a “one pound waiver” for ethanol blends of 10 percent, allowing E10 to be sold at 10.0 psi. The bill extends this waiver to higher blend levels of ethanol, including E15.

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