June 11, 2001

SENATE DEMOCRATS TAKE REINS; WHAT IT MEANS

Last week, once the tax bill was sent to the President, Sen. Jeffords (I-VT) made official his move to leave the Republican caucus and to vote with Democrats in organizing the Senate. For the first time in history, control of the Senate changed hands in mid-Congress. The change will have many effects far more than just who is "Majority Leader" versus "Minority Leader". It involves changes in committee chairmanships, committee staffs, and even some committee members;' switching offices; and control of the flow of legislation both in committee and on the floor. There is a lot of turmoil in the Senate as all of this shakes out.

COMMITTEE CHAIRMEN

Chairmanships of all committee have changed. Those of greatest interest to marketers are:

Appropriations: Sen. Byrd (D-WV) replaces Sen. Stevens (R-AK) as chairman. Because of his seniority and legislative skills, Byrd had already played a major role in the committee's decisions, so expect little real change.

Commerce Science and Transportation Sen. Hollings (DSC) replaces Sen. McCain (R-AZ) as chairman. We expect to see an even greater consumer orientation in legislation coming out of this committee.

Energy and Natural Resources Sen. Bingaman (D-NM) replaces Sen. Murkowski (R-AK), bringing major changes (see story below). We have good relations with Bingaman; his energy policy bill, introduced before he became committee chairman, includes a study of boutique fuels.

Environment and Public Works: Sen. Jeffords (I-VT) has replaced Sen. Smith (R-NH). Because of regional concerns, there will be little change on the issue of MTBE and some other fuel issues; however, overall Jeffords is considered far more "pro-environment" than Smith.

Finance: Sen. Baucus (D-MT) replaces Sen. Grassley (R-IA). We have good relations with Sen. Baucus - in fact, he is author of a bill to repeal the Special Occupational Tax (SOT) on retailers of alcoholic beverages. Grassley's "demotion" is seen as a setback for ethanol interests, although Sen. Daschle's (D-SD) "promotion" to Majority leader surely offsets it.

Indian Affairs: Sen. Inouye (D-HI) took over as chairman from Sen. Campbell (R-CO). Both are strong supporters of tribal interests. However, there is a twist: Inouye would like to see native Hawaiians receive recognition equivalent to Indian tribes, and may see the issue of ongoing excise tax evasion as an obstacle to achieving that goal.

COMMITTEE MEMBERSHIPS

There will not be wholesale changes to committee memberships. However, all committees had equal numbers of Democrats and Republicans for the first part of this year; they will now all have a 1-member Democratic majority. Exactly how this will be achieved is not finalized, but is under discussion. Committees on which Jeffords serves already have a 2-vote Democratic majority (minus 1 Republican, plus 1 Democrat) as a result of his switch. It is most likely that those committees will shed one Democrat, and all others will add one Democrat, meaning that no Republicans will gain or lose committee seats.

ENERGY POLICY

Sen. Bingaman has made it clear that he will move at a slower pace than Murkowski had planned on a comprehensive energy policy bill. However, he does want to move quickly on two energy issues: legislation to expand low-income energy assistance programs, and a cap on wholesale electricity prices if the Federal Energy Regulatory Commission (FERC) or the White House fail to take action.

Separately, Democrats are moving to investigate what role, if any, the energy industry has played in price increases. At the request of Sen. Levin (D-MI), the General Accounting Office (GAO) is investigating whether increasing concentration in the oil industry has had any impact. Now Sen. Lieberman (D-CT), the new chairman of the Government Affairs Committee, has announced an expanded investigation of whether oil companies withheld Product from the market in anticipation of prices rising.

BOUTIQUE FUELS

Rep. Tauzin (R-LA), chairman of the House Energy and Commerce Committee, says he wants to move legislation dealing with boutique fuels. He has put together a package of proposals to increase supply by standardizing the rules for cleaner fuels. One option would have several national clean fuels from which states and localities could choose. Another pushes a regional fuel concept, with one or two "clean fuels" available as options within each region.

Another matter being discussed in this regard is the possibility of easing the phase-in for summertime VOC control periods. Right now, there is a real incentive for the draw-down of supply in storage at all levels just before the May 1 deadline for switch over to summertime gasoline nobody wants to be in the position of selling the more expensive gasoline any earlier than necessary. If a way could be found to make the transition more gradual, it could ease some of the spot shortages that have developed around May 1 in recent years, or at least that is the theory.

NEW HAMPSHIRE RFG PETITION

New Hampshire filed a formal petition with EPA on May 30 to opt out of the RFG program. Under rules adopted several years ago, no opt-outs are allowed until Jan. 1 2004. The reason for that restriction was to give refiners some degree of certainty there would be a market for RFG if they chose to produce it. However, NH argues that they need to leave the program because of MTBE contamination issues, and asks EPA to waive or repeal the no-opt-out rule.

NEW YORK MTBE BAN

Gov. Pataki (R-NY) issued a future ban on MTBE last year, and the Oxygenated Fuels Assn. (OFA) sued in federal court in New York. On June 1, the court rejected OFA's request for summary judgment. Ethanol and New York state interests have been trumpeting this as a major victory, but there may be less than meets the eye. Summary judgment is seldom granted; all this means is that the case will go to trial with a decision in 6 months to a year.

GAS PRICE REFUNDS?

Here's an amusing anecdote from SIGMA member Mark Jacobson: A lady came into one of our stores and asked a cashier whether, if she saved her receipts for gas, could she bring them in when the price goes down and get a refund for the difference? She was serious! She said that Wal-Mart does that on their store merchandise, and thought we should do it on gasoline!

GAS TAX DEDUCTIBILITY

Rep. Manzullo (R-IL) introduced H.R. 2025 on May 25, to allow individuals to deduct federal, state, and local taxes paid on motor fuel. The deduction, including both sales and excise taxes, would be available to taxpayers regardless of whether they itemize deductions. The bill is not seen as having much chance of passage, at least at the moment.

RSPA REGISTRATION

We have been asked by RSPA to remind carriers, shippers, and offerors of hazardous materials (including gasoline and diesel fuel) that you must again register with RSPA by July 1 and pay your annual registration fee. The fee remains $300 for small businesses and $2 000 for all others despite a proposal by RSPA late last year to reduce the fees. RSPA now says it will not act on the fee-reduction proposal until later this year.

SIGMA NOTES

The summer "SIGMA Masters" program July 8-13 at the University of Virginia with George Overstreet is a definite "go", but housing will be at the nearby Boars Head Inn rather than on-campus. We have been receiving calls from people who think that registration is closed. That is not correct. There are still slots available in the class. at a slightly-higher "late rate." Go to the SIGMA website, www.sigma.org, for updated information.

SIGMA extends a big "thank you" for the invitation to exhibit at the CFN Network 2001 Conference in Hilton Head last week. We particularly appreciate the help of Hazel Fischer and Bonnie Addario for making this opportunity possible.

Two new members have joined SIGMA this month. Bi-Rite Oil of North Vernon, Indiana is a new Regular Member. Navaio Refining Company of Artesia, New Mexico is a new Fuel Supplier Associate Member. Join us in enthusiastically welcoming these new members and in extending thanks to those who sponsored them: Rick Calhoun, Ron Hagmeyer, Bob Phillips, John Seymour, and Martin Williams. Thanks!

Do YOU know someone who should belong to SIGMA? Please pass their name along to Marilyn Selvitelle at the SIGMA office. Call 703-709-7000, or e-mail her at mselvitelle@sigma.org With all the consolidation in the industry, we need to keep adding new members just to stay even and to continue our ability to represent marketer interests in Washington.