Wisconsin Lawmakers Seek Fix for Fuel Excise Tax Predicament

I write to bring your immediate attention to an issue of great importance to my home state of Wisconsin.

The West Shore Pipeline runs from Milwaukee to Green Bay and has supplied northeastern Wisconsin with gas and diesel fuel for more than five decades. In light of pipeline integrity concerns, this segment of the pipeline has been shut down and service has been indefinitely suspended since March of 2016.

As an alternative, U.S. Venture, Inc. is currently transporting the fuel delivered to Milwaukee terminals via pipeline by truck to terminals in Green Bay. From there, fuel reaches gas stations and other end uses by truck.

I am aware of a federal tax issue that has become problematic and threatens the viability of the system implemented by U.S. Venture. Current federal tax law requires the payment of federal excise tax at origin terminals, which means that U.S. Venture pays excise tax on fuel when trucks leave the Milwaukee terminal to supply the Green Bay terminal and again when fuel leaves by truck from the Green Bay terminal to users. When fuel is supplied by pipeline, federal excise tax is only paid when fuel leaves the terminal by truck for end users.

It is crucial that this system remain a viable and affordable alternative to avoid any potential gasoline and fuel shortage in northeastern Wisconsin and ensure businesses are able to continue usual operations. I urge you to work within existing law to relieve the tax disincentive working against U.S. Venture while the West Shore Pipeline remains out of service.

Thank you for your attention to this matter.

Tammy Baldwin

I am writing to direct your attention to an issue of great importance to the District I represent in the U.S. House of Representatives.

Northeast Wisconsin has relied on the West Shore Pipeline as its primary petroleum supplier for nearly 55 years. Unfortunately, the pipeline segment connecting the terminals in Milwaukee and Green Bay closed indefinitely in March 2016 following a thorough integrity inspection. This closure prompted Governor Scott Walker to declare a state of emergency on May 6, 2016 to help alleviate petroleum shortages in Northeast Wisconsin.

In an effort to help keep fuel costs down and prevent fuel shortages, U.S. Venture, Inc. has emerged with an alternative to the pipeline while it remains closed. U.S. Venture is currently transporting fuel from Milwaukee terminals to Green Bay terminals via truck and rail cars. The fuel is then delivered by truck from the Green Bay terminals to local gas stations, ports, and other fuel users.

While U.S. Venture is providing a vital alternative to the pipeline, the company is facing a major federal taxation issue that is challenging the viability of this emergency work-around. Current federal tax law is requiring U.S. Venture to pay excise taxes both upon departure of the origin terminal in Milwaukee, and again when trucks depart the terminal in Green Bay to fuel users. This double taxation does not occur when fuel is supplied by pipeline between the terminals. Instead, federal excise taxes are only collected when fuel leaves the end terminal by truck to be delivered to the end users.

We must do everything we can to support Wisconsin's efforts to keep fuel costs down, prevent shortages, and allow businesses to continue their operations while the West Shore Pipeline is closed. This is an incredibly challenging and unique situation facing our region, and the policies in place only exacerbate the risk of harm to my constituents. I strongly encourage you to address this double-tax disincentive working against U.S. Venture and ultimately the people of Northeast Wisconsin during this emergency situation.

I look forward to your full review and consideration of this ongoing matter and would appreciate an update as you proceed. Should you have any questions, your staff can contact my Chief of Staff, McKay Daniels, at 202-225-5665 or McKay.Daniels@mail.house.gov.

Mike Gallagher

I write to bring your attention to a federal tax issue related to the off-line West Shore Pipeline and ongoing efforts by U.S. Venture, Inc., a fuel supplier in Wisconsin, to avoid potential fuel shortages.

For over half a century, Wisconsin's West Shore Pipeline has been the main artery for fuel delivery from Milwaukee to Green Bay. Last spring, inspections led to its indefinite shutdown due to integrity concerns. The pipeline's ongoing closure has led to the issuance of three separate gubernatorial energy emergency declarations. In order to meet supply challenges, U.S. Venture has taken action to transfer fuel via railroad tank cars and over the road in tanker trucks. Each day, dozens of trucks and tank cars make the 100-mile trip. The process has been successful in preventing a fuel shortage, but a tax issue threatens the continued viability of this arrangement.

As I understand it, fuel supplied via a pipeline is taxed when it leaves its destination terminal to be delivered to gas stations and fuel depots. However, with the pipeline down, the fuel in question is taxed once when loaded up for transport in Milwaukee, and a second time when it leaves the Green Bay terminal on its way to end users. These circumstances and the corresponding transportation costs present challenges during this emergency and create disincentives for the current working solution to continue.

I appreciate your attention on this matter, and respectfully request you take appropriate steps to help rectify the situation.

Sincerely,