Fuel Retailers Caution USDA Against Improper Application of Climate Agriculture Regulations
ALEXANDRIA, VA. — NATSO, representing America’s travel centers and truck stops, and SIGMA: America’s Leading Fuel Marketers on Wednesday submitted comments in response to a proposed Agriculture Department (USDA) regulation that would establish metrics for quantifying emissions associated with production of biofuel feedstock crops.
and SIGMA in a letter to USDA cautioned against applying the interim rulemaking — which was issued in January by the Biden Administration — to credits for aviation fuel under the Inflation Reduction Act’s ‘Section 45Z’ Clean Fuel Production Credit.
“The ‘45Z Credit’ has already, and will continue to necessitate, the development of extraordinarily complex implementing regulations by the Treasury Department, EPA, Department of Energy, and USDA,” the associations said in the letter. “The burdensome nature of the 45Z Credit will only be further compounded by the introduction of convoluted climate regulations to liquid fuel agricultural feedstocks.”
The Associations noted that, according to statute, conservation and land management practices under the ‘45Z Credit’ may be used only to enhance the stringency of modeling requirements for aviation fuels.
“Congress has not authorized ‘climate smart’ agriculture practices to be used to allow aviation fuels produced with agricultural feedstocks to become eligible for costly tax credits if, in the absence of those practices, such fuels would otherwise be ineligible,” the associations wrote.
Deviation from those statutory parameters, and SIGMA warned, will disrupt motor fuels markets and result in higher prices at the pump for consumers.
“Retail fuel markets—particularly in the Midwest—are facing extraordinary inflationary pressures right now, and the transition to this ‘45Z Credit’ is only exacerbating those challenges,” said David Fialkov, Executive Vice President of Government Affairs for and SIGMA, which represent the retail fuel industry. “As USDA and EPA begin considering blending mandates under the RFS for 2026 and beyond, it is important that everyone is clear-eyed about the additional inflationary pressures that overly aggressive mandates will impose. I just don’t know how much pain we should be asking consumers to absorb at this time given the direction that the tax conversation seems to be moving.”
The Inflation Reduction Act, which was signed into law by President Biden after passing Congress on a purely partisan basis, created the new ‘Section 45Z’ credit for biofuel production.
Biodiesel and renewable diesel have historically been the most widely used biofuels in commercial trucking and remain the most viable option for reducing carbon emissions from the nation’s trucking, home heating oil, and rail industries in the near term. and SIGMA continue to urge Congress to extend the recently expired, bipartisan Biodiesel Tax Credit, which directly lowers the cost of diesel fuel for truck drivers and by extension of all goods transported by truck.
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