The Trump Effect on Federal Policies

NEFI experts discuss what changes they anticipate from the new administration

On January 15, 2025, just days before President Trump took his oath of office for the second time, NEFI offered members, partners, and industry stakeholders with a glimpse of what might be, during its Federal Policy Update Webinar. The webinar was divided into three parts: General Regulatory Update from Regulatory Counsel Rick Schweitzer, 119th Congress Preview from President & CEO Jim Collura, and Renewable Fuels Policy Agenda from Senior Policy Advisor Anne Steckel.

We are providing a review of the webinar, and note – again – that this was presented before Trump took office. By the time this issue reaches you, many of the items described herein may have come to pass, others fallen by the wayside, and most will have been modified or remain pending.

Please further note that the information that follows is for informational purposes and does not constitute legal, tax, or financial advice; and remember that as a non-partisan organization, NEFI does not endorse any of the following issues, unless explicitly stated.

Regulatory Updates

Schweitzer began with a review of the California Air Resources Board (CARB) waivers (enacted or requested) to the Clean Air Act. Schweitzer reminded participants that the Clean Air Act allows CARB to adopt more stringent standards than the national policy only if granted such a waiver, and that once waived, other states may choose to adopt California’s rules. Therefore, these waivers
affect not only California but a large portion of the country’s populace, which then leads manufacturers to produce vehicles to California standards instead of EPA standards.

Advanced Clean Trucks Rule
The CARB Advanced Clean Trucks (ACT) rule was granted a waiver in 2023 and went into effect last year. ACT requires that manufacturers sell an increasing percentage of sales of zero emission vehicles (ZEVs) or near-zero emission vehicles each year, with a cap-and-trade system.

Since then, ten states have opted to follow CARB regulations if waivers (with individual adjustments to timing and some specifications) were authorized: Colorado, Maryland, Massachusetts, New Jersey, New Mexico, New York, Oregon, Rhode Island, Vermont, and Washington. Furthermore, the four major U.S. truck manufacturers and their trade association agreed to adopt the ACT requirements, even if they are struck down by the courts and in states that do not adopt them.

The Nebraska Attorney General, Nebraska Renewable Fuels Association and Energy Marketers of America have filed suit in state court claiming the agreement among manufacturers violates state antitrust law and will reduce inventory and raise prices for internal combustion vehicles (ICE) in states that have not adopted the ACT rules.

The Trump Effect: The Trump Administration has threatened to rescind the CARB waiver – in this case and in general – but this would require a change in the Clean Air Act’s rulemaking or Congressional action. Any official acts would probably be held in abeyance of judicial review.

Advanced Clean Fleets Rule
The CARB Clean Fleets Rule would have required truck and bus fleet purchasers and operators to replace ICE vehicles for ZEVs by 2045. The waiver was still under consideration in early January.

The Trump Effect: CARB rescinded its request for the Advanced Clean Fleets Rule. There is no requirement for operators to purchase ZEVs, even though the ACT still requires manufacturers to sell them.

Omnibus NOx Waiver
The EPA granted this waiver on December 17, 2024, which would impose NOx emission standards and test procedures to 2024 and subsequent on-road heavy-duty vehicles and engines.

The Trump Effect: As with the ACT, the Trump Administration is looking for ways to rescind these waivers. This will most likely require the EPA to go through another notice and comment rulemaking to withdraw the waiver.

EPA GHG Phase 3 Rule
EPA issued final national greenhouse gas (CO2, methane and N2O) pollution standards for heavy-duty vocational vehicles and tractors, for model years 2027 through 2032. These new standards are purportedly technology-neutral and performance-based, allowing each manufacturer to choose what set of emissions control technologies is best suited for them and the needs of their customers; however, the requirements are such as to be reachable only through electric or hydrogen powered vehicles.

The rule was challenged by 17 states and various fuel and transportation interests in 8 lawsuits which were eventually consolidated in the federal court of appeals in Washington, D.C. The cases
argue that the EPA has exceeded its authority under the major question doctrine, imposing a rule that would cost manufacturers over $50 billion, reduce diesel and gasoline consumption by 135 billion gallons, and increase electricity consumption by 2,300 terawatt-hours (TWh) through 2025.

The Trump Effect: Again, the Trump administration team is determining what can be revised or rescinded via executive order, notice and comment rulemakings, or the Congressional Review Act. This will likely be left in the courts for the moment.

Other Regulatory Issues
There are many other regulations that will be affected by the new administration’s stated goal of removing onerous regulations and supporting business growth.

The Trump Effect:
Department of Transportation: Probably no waiver of preemption of California meal and rest break for truck drivers (still pending at FMCSA).

OSHA: Proposed rule on protecting workers from heat illness and injury will be withdrawn or substantially revised—e.g., no requirement for paid breaks to avoid heat.

Federal Trade Commission: Ban on non-compete agreements for former employers will either be permanently enjoined in court or withdrawn by Trump Administration commissioners.

Department of Labor: Overtime exemption threshold for Executive, Administrative and Professional Employees will be withdrawn if not enjoined in court.

119th Congress Preview

Collura opened his portion of the webinar with a review of the balance of power in the new Congress. Republicans hold a 53-47 majority in the Senate, including the independents who caucus with the Democrats. Republicans retain control of the House of Representatives with what will likely be a 220-215 majority once vacancies from Trump appointments are filled. This means House Republicans must remain united to pass anything with a straight majority. A loss of four members would be enough to kill any bill needing a simple majority.

This includes their plan to pass President Trump’s agenda through what is known as “budget reconciliation.” This process requires a simple majority in both houses and helps avoid a filibuster (60-vote threshold) in the Senate, but any polices therein are limited to federal spending, revenues, the deficit, or the national debt limit. Budget Reconciliation was used to pass the American Care Act (ACA or Obamacare) in 2010, the 2017 Trump Tax Cuts, and the Inflation Reduction Act of 2022.

Trump Effect: The administration and Congress are looking to recover up to $5.7 trillion over 10 years via the Budget Reconciliation process, by including instructions to:

• Repeal, phase-out, or modify energy and climate tax credits under the IRA
• Rescind energy and climate funding under the IRA and infrastructure bill
• Cut welfare programs such as
• Medicaid, SNAP/food stamps, and TANF
• “Reimagine” the Affordable Care Act, aka Obamacare

Collura reminded webinar participants that Trump’s list of initiatives had an estimated cost of $10 trillion of which the budget reconciliation would offset a little more than half; and that the Republicans’ four month timeline to have it passed by Easter is extremely aggressive and may be unattainable. Late summer or fall 2025 is more realistic.

The Energy Choice Act
The Energy Choice Act, introduced last Congress by U.S. Rep. Nick Langworthy (R, NY-23), would prohibit state and local governments from enacting any law or regulation to ban, or that has the effect of banning, any heating fuel. It received support from 25 other members of Congress, and was endorsed by NEFI; Plumbing Heating, Cooling Contractors (PHCC), National Propane Gas Association (NPGA); American Public Gas Association (APGA), Clean Fuels America Alliance (CFAA), and many other industry associations and stakeholders.

Langworthy is now a member of the House Energy & Commerce Committee. NEFI has requested that the Congressman reintroduce this bill, noting that combining the Energy Choice Act with the proposed GOP Energy Policy and Conservation Act reforms would prevent all federal and state heating fuel bans.

The Trump Effect: President Trump has made energy choice a priority, and with the support of the Congress, it is likely that the bill will be reintroduced in the near future.

Other Issues of Interest
We anticipate that Trump will repeal a vast majority of President Biden’s climate and environmental executive orders and suspend rulemakings. Prior to the inauguration, the Trump transition team provided a list of more than 100 actions that were to be signed after he takes office.

The biggest issue facing our industry, Collura noted, was Trump’s threat to impose a 25 percent tariff on all imports from Canada, including energy products. This would include propane, liquid gas, crude, and petroleum products, and increase consumer energy costs across the board.

The Trump Effect: Collura’s list of anticipated administration actions on “Issues of Interest” included:

• Trump repeal of Biden executive orders and suspension of rulemakings
• Use Congressional Review Act to repeal Biden-era Regulations
• Proposed 25 percent tariff on Canadian imports (including energy products)
• Comprehensive energy permitting reform
• Funding for the Low-Income Home Energy Assistance Program (LIHEAP)
• NORA Reauthorization in the Farm Bill
• Surface transportation reauthorization
• Nonimmigrant visa program to support the trades (Essential Workers for Economic Advancement Act)

Biofuels Policy Updates

NEFI Policy Advisor Anne Steckel concluded the presentation with NEFI’s Biofuels Policy Updates. She cautioned listeners that while it might feel as if everything is moving very fast, the reality is that it would soon slow down. The actions that the administration is looking to take, from repealing the IRA to implementing new policies to fulfilling many of the executive orders, will take a lot of time as they move through the legislative process.

Clean Fuel Production Credit (45Z) and Biodiesel Tax Credit (40A)
The Clean Fuel Production Tax Credit, known as 45Z, was included in the Inflation Reduction Act to replace the Biodiesel Blenders Tax Credit (40A). Under 45Z, the tax credit would be given to energy producers of fuels “suitable for use” as a transportation fuel, with the value of the credit based on the fuel’s carbon intensity. The new credit was set to go into effect January 1, 2025, but preliminary or “interim” guidance was not released until January 10, 2025. This delay led to great uncertainty in the market.

According to Steckel, many questions remain about how the credit will be implemented. Steckel anticipated that the GREET model update would be released later in the day. It was, as expected, and specified that only domestically sourced feedstocks, Canadian canola, and tallow (from anywhere) could be calculated, and the credit values for each feedstock based on its perceived reduction of GHG. As a comparison, the Biodiesel Blenders Tax Credit offered a straight one-dollar per gallon credit.

NEFI has been working to get an extension of 40A. “Producers have not been producing and buyers haven’t been buying,” Steckel said, without a clear path on the available credits. This extension had gained a lot of momentum in light of the delays in the launch of the producers’ credit.

The Trump Effect: At the moment, the 45Z Production Credit has not been finalized. The January 10 release included an intent “to propose regulations” and request public comments. The new administration has stated its desire to nullify the IRA or parts of it.

The extension of the blender’s credit could be included in a Reconciliation Package, but questions remain. Congress will be looking at the cost score for the credit – and comparing it to the score for 45Z. However, Steckel emphasized that there were still many issues with 45Z, and in Congress, it was easier to “change the date” on an existing program than it was to create and fine-tune a new, complex tax law like 45Z. She also noted the exceptional support that the extension bill had received from NEFI’s “champions” in Congress as well as the backing of major industry stakeholders. NEFI is working to be part of the conversations moving forward, if there is an opportunity because of all the continued uncertainty around 45Z.

Renewable Fuels Standard (RFS)
Steckel informed the webinar participants that NEFI was talking with EPA and industry stakeholders, looking at what might happen for “set 2.0” for 2026 and beyond. NEFI is encouraging EPA to be ambitious with future volumes to accommodate a growing variety of renewable fuel options including Sustainable Aviation Fuel (SAF). Biodiesel will provide competition to on-road transportation fuels, as well as other fuels.

HBIIP Grants from USDA
The HBIIP grants provided funding for biofuels infrastructure, and many NEFI members have received grants under the program. We have heard additional funding may be requested through the Farm Bill, which is long overdue. NEFI supports this effort.

The Trump Effect: Steckel did not go into detail on the administration’s position on the RFS and HBIIP Grants, but said that NEFI will continue to advocate for renewable heating fuels, particularly given state and regional industry commitments and the billions of dollars of private investments that have been made in our industry over the last two decades.

The analysis provided during the webinar was delivered before President Trump took office. We anticipate that many of the questions and uncertainties listed above will have been answered by the time this magazine is delivered to you. One thing is certain, The Trump Effect will be felt throughout our industry and businesses.

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