September 10, 2001

SENATE BEGINS TO MOVE ON ENERGY LEGISLATION

Congress is now back in session, and the Senate is preparing to move on energy policy legislation. It now appears that the Senate will take much the same technical approach as the House - with several committees considering separate pieces of the energy package, and then having all the bills rolled into a single bill for consideration on the Senate floor - but the substance coming out of the Senate will substantially differ from the House version.

The Senate Energy and Natural Resources Committee will continue with markup of it's piece of the pie this Thursday, with focus on electricity. The "chairman's mark" (the working version or starting point of the bill, before amendments, that the committee takes up) does not contain any provisions on the Arctic National Wildlife Refuge (ANWR). Sen. Bingaman (D-NM), the chairman, had included a "boutique fuels" study in an earlier draft of his bill, and also a reference to increasing refining capacity. We believe both are still in the "chairman's mark". Like other parts of the Senate package, it appears the bill coming out of the Energy committee will focus more on conservation and less on production than the House version.

The Senate Commerce Committee has jurisdiction over Corporate Average Fuel Economy (CAFE) standards, and is likely to report out a bill on that topic which can be rolled into the energy bill on the Senate floor.

Sen. Baucus (D-MT), Senate Finance Committee chairman, said last week that his committee will still work on a package of energy-related tax breaks, despite the shrinking Federal deficit, but that it will probably be "significantly lower" than the $33.5 billion passed by the House a month ago.

The fourth piece of the energy package will come out of the Senate Environment and Public Works Committee. It was rumored that the committee would begin markup of S. 950 this week, but we now believe it will be the following week. In its earlier forms, this bill by Sen. Smith (R-NH) and Sen. Reid (D-NV) contained an ethanol mandate as a proposed compromise, but because the ethanol industry didn't accept the compromise (didn't think it was a large enough mandate), that provision has now been dropped entirely from the bill. SIGMA still has mixed feelings about the bill, because it contains some good provisions but also some we don't like. It allows states to opt out of the oxygenate mandate, bans MTBE in motor fuel within 4 years, and contains an "anti-backsliding" provision to ensure that motor fuel doesn't become more polluting because of those changes. But it also would allow any area, including "non-classified" areas, to opt into the RFG program, which we fear could aggravate the boutique fuels problem, and would repeal the 1 psi ethanol waiver for conventional gasoline. SIGMA's Board of Directors is meeting this week, and will be determining our position on this bill and other pending legislation.

TRIBAL TAX EVASION

SIGMA and our partners in the CASETE coalition continue to work on developing support in Congress for our legislation dealing with tribal evasion of motor fuel and tobacco taxes. We still need your help! Please write to all Congressmen with whom you might have influence (as a constituent, contributor, friend, or even as an employer in their District). Ask them to co-sponsor H.R. 2726, and urge then to strongly support the bill. A sample letter can be found on our website at www.sigma.org. Click on "government affairs" in the left column, and then click on CASETE. Please move ahead with this as quickly as possible! Thanks.

CHEVRON/TEXACO MERGER

It was confirmed last week that the FTC approved a consent decree to allow the merger of Chevron and Texaco to move forward. A key provision is the spin-off of Texaco's downstream US assets, presumably to Shell and Saudi Refining; or placing them in a trust prior to the merger for sale within 8 months. The use of the Texaco brand name will be licensed to Equilon and Motiva on an exclusive basis through June 2003, and on a non-exclusive basis until June 2006, subject to conditions. Also, ChevronTexaco will divest Texaco's interest in the Discovery Pipeline System within 6 months, and will divest a portion of its U.S. general aviation fuel business.

MTBE SUIT DISMISSED

Last Tuesday, a federal judge ruled against the MTBE industry in a lawsuit they had brought, trying to block the state of California from banning MTBE. The judge ruled against the Oxygenated Fuels Association (OFA) in three major respects. First, he ruled that California has broad authority under the Clean Air Act to regulate fuels and additives because the state had regulated automobile emissions before Congress entered the field (this is something that might not apply to other states). Second, he ruled against OFA's claim that California couldn't use its powers under the Clean Air Act for the MTBE ban because the ban was for clean water reasons, not for clean air reasons. The judge pointed out that California has the general power to adopt regulations to protect the "lives, limbs, health, and quiet of all persons." The final argument by OFA - that the MTBE ban was prohibited by the interstate commerce clause of the Constitution - was also rejected.

This still doesn't resolve the problem of the oxygenate mandate for federal RFG, which applies to substantial parts of California and which may mandate the use of ethanol in the state once MTBE is banned the end of next year.

ANNUAL MEETING IN SEATTLE

Your complete packet of registration materials on the Annual Meeting in Seattle reached you during August, perhaps while you were on vacation. Dig it out of your pile of mail and act on it right away! In particular, note that the cutoff deadline for hotel reservations is less than a month away - October 5. Hotel cancellation only requires a 24-hour notice for a full refund. If you think you MIGHT come, it would behoove you to make a reservation now.

EPA DOUBLE-STANDARD?

EPA is reported to be getting ready to back off from its long-standing policy that Federal agencies should be held to the same standards as the private sector. Such a move would be in direct violation of printed campaign materials from the Bush campaign last year promising to "direct active federal facilities to comply with all environmental protection laws and hold them accountable." SIGMA is very concerned about this possible double-standard, and will raise our concern in our scheduled meeting with the EPA Deputy Administrator this Friday.

IRS ON THE INTERNET

Businesses and individuals can now pay all federal taxes through a secure Web site, it was announced last Thursday. Business payments can be scheduled up to 120 days in advance, can be cancelled, and payment history can be looked up for the past 120 days. For more information on how to enrol and get a secure password, visit www.eftps.gov or call 800-555-4477 or 800-945-8400.

NEW MEMBERS

SIGMA welcomed two new Regular Members effective September 1: Quick Chek Food Stores of Whitehouse Station, NJ, and Handee Marts, Inc. of Gibsonia, PA. This makes a total of 10 new members in the past 3 months. Welcome! Thanks to these new member sponsors: Fred Perino, Richard Guttman, and Jeff Kramer.