Butane Alternative Fuel Mixture Credit Cases; Another District Court Determines Butane is a Taxable Fuel

Mar 27, 2020

Following the District Court for the Southern District of Texas in Vitol Inc. v. United States of America, (No. 4:18-cv-2275), the District Court for the Eastern District of Wisconsin in U.S. Venture, Inc. v. United States of America (Nos. 18-C-1757 & 19-C-595) has issued a decision stating that butane is not an alternative fuel, but rather is a taxable fuel. Like in the prior decision, this means that blends of butane and gasoline would not be eligible for the alternative fuel mixture credit. This is the second decision regarding the status of butane in any of the pending cases.

In this case, Plaintiff U.S. Venture, Inc. filed a Motion for Partial Summary Judgment seeking a ruling on whether the term “liquefied petroleum gas” in 26 U.S.C. § 6426 includes butane. Much like Vitol, the plaintiff in this case argued that the term “liquefied petroleum gas” included butane; in support of this the plaintiff relied on dictionary definitions and various state regulations that reached such a conclusion. The plaintiff further argued that a fuel could be both an alternative fuel and a taxable fuel. The United States filed its own Motion for Summary Judgment countering that butane is clearly a taxable fuel; the Court granted this motion.

In denying U.S. Ventures’ motion, the Court concluded that butane is not both a taxable fuel and an alternative fuel and given the entire statutory scheme is could not be concluded that Congress intended for a mixture of butane and gasoline to receive the alternative fuel mixture credit. An argument that butane should be treated similarly to renewable fuel – a taxable biofuel-based diesel that is both eligible for the renewable diesel mixture credit and subject to federal excise tax – was rejected on the basis that Congress specifically allowed for renewable diesel to be eligible for the credit but did not do the same for butane with the alternative fuel mixture credit.

This is the second decision in short order where the Courts have agreed with the United States and denied a summary judgment claim on the question of whether butane is a taxable or alternative fuel (or both). Like Vitol in the Southern District of Texas, the plaintiff in this case has the option to appeal the decision and there are still other cases pending.


Oscar L. Garza & Associates, P.C. is a Houston-based boutique law firm specializing in transactional tax and trade matters surrounding all aspects of the oil and petroleum industry.  With over 20 years of experience counseling clients operating in all aspects of the oil and petroleum sector our lawyers have an in-depth knowledge of the industry, enabling us to provide quality service and creative solutions to our clients.  Please visit our website at www.olgarza.com.  For more information please contact:

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