Alternative Fuel Mixture Credit

Floor Speech

The tax title in this bill contains an important clarification to the alternative fuel mixture tax credit under section 6426(e). This credit is intended to promote the use of nontraditional fuels, such as compressed natural gas and biomass-based fuels, for transportation and other purposes. Unfortunately, some in the oil industry have sought to turn this credit on its head by claiming the credit for ordinary gasoline based on the amount of butane mixed in. Ranking Member Wyden, is it correct that every gallon of gasoline produced in the United States includes some amount of butane?

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Mr. GRASSLEY. I can assure the Senator that it was never Congress's intent for gasoline to qualify for this tax credit. I was chairman of the Senate Finance Committee when the alternative fuel mixture credit was enacted in 2005 as part of a surface transportation bill. During that time, there was great interest in reducing our dependence on foreign oil and traditional fuels. The alternative fuel mixture credit was added to reduce that dependence, not to provide a handout to large oil and gas companies. The fact is, if anyone had thought oil companies could qualify for this crediw they already engaged in, the credit would never have been enacted. Not only would I have objected on policy grounds, but the Joint Committee on Taxation's revenue score associated with the provision would have been so large that its passage wouldn't have been feasible. What is more, if we had intended for butane mixed with gasoline to qualify when the credit was enacted in 2005, I don't understand why industry waited more than 10 years to start claiming the credit for doing what they have been doing for more than a century, as you point out.

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Mr. GRASSLEY. I do agree. The IRS got the law correct when it issued Revenue Ruling 2018-2, and our clarification makes clear that it is our intent for the IRS interpretation of the law to be controlling for all claims. This is the basis of the ``no inference'' language in the bill that states: ``Nothing contained in this subsection or the amendments made by this subsection shall be construed to create any inference as to a change in law or guidance in effect prior to enactment of this subsection.''

I thank the ranking member for engaging in this colloquy to discuss this important issue and the clarification included in the pending appropriations bill.

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