Pub 2 2020-2021 Issue 3

DELIVERING EQUIPMENT SOLUTIONS • Reach Forklifts • Boom Lifts • Light Towers • Welders • Generators • Carry Deck Cranes • Industrial Tool & Much More! RENTALS I SALES I SERVICE 5050 West 150 South, SLC, UT 84104 801.596.2300 I Serving Utah, Wyoming, Idaho, & Nevada EQUIPMENT (currently at marginal) if the state can prove that the area would have met the National Ambient Air Quality Standard and the influence of pollution emanating from international sources. It would also provide the DAQ with more flexibility to pursue targeted strategies more likely to improve air quality, rather than focusing on the limited, strict, and so far unsuccessful controls required by a State Implementation Plan (SIP). You can find the package that the DAQ submit ted to the EPA at the end of May at ht tps:// DAQ-2021-005764.pdf UPA submitted extensive technical comments on that draf t package, including what additional data points would support a technically robust 179B demonstration. We are also appreciative of a joint letter of support for the demonstration from state leadership, including the Governor, Lieutenant Governor, Senate President, and Speaker of the House to EPA Region 8 Acting Regional Administrator Deb Thomas. This joint letter also addressed the issue of ozone levels, stating, in part: “… average ozone levels have remained virtually unchanged. Therefore, we strongly encourage your support of a data-driven decision not to continue pursuing policy and regulatory decisions based on the very rigid and limited controls that would be required under a State Implementation Plan (SIP) under a Moderate classification, which have shown little indication of actually reducing ozone over the last decade and a half.” You may have also heard about skyrocketing ethanol costs and growing Renewable Fuel Standard (RFS) challenges. The RFS is a government mandate requiring biofuels, such as corn ethanol and biodiesel, be blended into the gasoline and diesel sold in the United States. Federal law requires refineries turn in renewable identification numbers (RINs) to the EPA. For ethanol, RINs are like a receipt proving the ethanol was purchased and blended into gasoline. Most refineries are not able to blend ethanol, so they buy RINs second-hand on the open market. RINs come with a price and there are only so many of them. As the federally set quotas go well beyond consumer demand, the RFS mandates have become more unrealistic, creating significant problems for American refineries paying for the RFS. Ethanol RIN prices have skyrocketed 1800% since January 2020. To put into today’s perspective, this is comparable to a gallon of milk increasing in price to $64. Many refiners are spending more on compliance costs for the RFS than most other expenses, including payroll and electricity, even resulting in some facilities having to shut down. Throw into the mix disputes and changing legal interpretations of the so-called small refinery exemption (which all five Salt Lake facilities are classified), and the situation gets even more challenging. Expect to hear more about the RFS, its impact on gasoline prices, and hopefully some structural changes ahead. Legislative Over this summer and fall, UPA will be closely engaging on several legislative issues addressed through the interim committee meetings. A complete list of watch and action items has been developed with our legislative commit tee. One highlight includes engaging with the Natural Resources, Agriculture and Environment Commit tee on the impact of the federal administration’s executive orders and policies regarding the climate crisis and federal leasing review. We also anticipate the opportunity to brief the Public Utilities, Energy and Technology Commit tee on intentional emissions on the Wasatch Front and the importance of the 179B demonstration (see the Downstream section for details) to continued economic growth and achieving real air quality improvements. Another key issue will be working with stakeholders and briefing the Political Subdivisions Commit tee on SB129 Real Property Recording Amendments. We are also thankful to Representative Watkins for her commitment to HB0444 Sales and Use Tax Refund Modifications. This bill was numbered during the 2021 legislative session and will progress through the interim, preparing for a run in the upcoming 2022 session. This bill would provide the upstream sector with similar tax treatment as already enjoyed by the mining and manufacturing industries, including our downstream sector, and remove the double taxation currently in place. Rather than entirely exempting sales tax, the bill would refund only the state portion of sales tax, allowing local municipalities to continue to receive the much-needed sales tax revenue that supports local infrastructure, public safety and government services. This is a win-win for producers and the local community. 1 Docket No. 2020-033, Cause No. RO&G-2020-02 ... at the time of this writing, the Baker Hughes rig count shows Utah has nine drill rigs, with eight of those rigs active in the Uintah Basin. (That is currently more than the entire state of Wyoming, weighing in with four rigs). 15 UP DATE