October 15, 2001

SIGMA MEMBER & LOBBYISTS MEET WITH EPA AND CEQ

On Friday afternoon, SIGMA member Brandon Barnholt, President and CEO of Clark Retail Enterprises, came to Washington for a series of meetings with governmental officials, along with lobbyists for SIGMA and NACS. Meetings were scheduled with the Council on Environmental Quality (CEQ), an agency in the Executive Office of the President, and with the Environmental Protection Agency (EPA).

At the meeting with CEQ, the central issue we raised was boutique fuels. We were told that the administration understands boutique fuels are a thorny issue, with a scientific side and a political side. We were thanked for our input on the matter, and encouraged to let our views be known to EPA.

At EPA, we met with Jeff Holmstead, Asst. Administrator for Air and Radiation, and with Margo Oge, Director of the Office of Mobile Sources. Again our topic was boutique fuels, as well as other issues. In addition to expressing our views, we learned that EPA is likely to soon issue its boutique fuels study report, with two main points. First will be a proposal for some changes in the transition rules from winter to summer Reformulated Gasoline (RFG). The change will be some form of ramp-down to summertime RFG at the terminal level, rather than the precipitous "cliff" approach in current rules whereby all gasoline must fully meet summer-time standards on "day one" of the regulatory period. The second point deals with oxygenated fuels, and there EPA's report will most likely "punt" -- listing the advantages and disadvantages and various options, but not making a specific recommendation.

Also during the meetings with EPA, we were told that the agency is moving forward with the Federal Advisory Committee process for the diesel sulfur rule, and that EPA is fully aware of the need for a marketer representative on that Advisory Committee.

Finally, we also learned that EPA has started working on a proposed rule dealing with the technical issues involved with the diesel sulfur rule B issues of nozzle sizes, mis-fueling protections, and marketer liability issues. EPA promised to work with SIGMA and others not only during the comment period but earlier, during the development of the proposal itself.  
                                               

PORTS TO TESTIFY THURSDAY

SIGMA Legislative Committee Chairman Mike Ports will testify this Thursday on behalf of SIGMA and NACS. He appears before the House Energy and Commerce Subcommittee on Oversight and Investigations at a hearing entitled "Issues Concerning the Use of MTBE in Reformulated Gasoline: An Update". Other panel members will include a refiner representative, representatives of the ethanol and MTBE industries, the Dept. of Energy, and the General Ac-counting Office (GAO). GAO will report on its tank study released last May which said that tank enforcement was inconsistent among states, and that government-owned tanks are a significant part of the problem -- points SIGMA has been making for years. We will repeat that point in our testimony, and urge that funds be made available to the states for enforcement and remediation. Our main points will be more central: repeal the oxygenate mandate and do not replace it with a new (renewable) mandate; and if MTBE is to be phased out, do it in an orderly fashion. 

API RESPONDS TO SIGMA

We previously reported on a letter sent by SIGMA's top two elected officers to API and to NPRA. Those letters suggested that refiners had made public statements on and around Sept. 11 which had sought to blame marketers, and particularly independent marketers, for price volatility. API President Red Cavaney responded to that letter on Sept. 27, and we have been asked to pass on the gist of his comments. Among his points: "neither API nor its members blamed any particular group of marketers for 'price gouging'" and both API and its members merely "urged all retailers to act responsibly in pricing decisions." He also states that "many of our member companies held wholesale prices at pre-attack levels." He disagrees that there was any attempt "to shift the blame for price volatility from the refinery industry to marketers." His final point, welcomed by SIGMA, is that "API and its members stand ready to work with SIGMA in addressing future issues."        

                 

MC/VISA ANTITRUST RULING

Last week, a federal judge issued a ruling in the antitrust case against MasterCard and Visa. The decision is a 154-page opinion which SIGMA's attorneys are analyzing; we will have more complete understanding of the decision by next week. Initially, we do know that the judge ruled in favor of the government on one count, but against it on another. He ruled that the joint governing board, whether or not it is a violation of antitrust laws, nevertheless did NOT lead to a reduction in competition. He also ruled that the exclusionary rule -- prohibiting participating banks from issuing any competing cards -- is a violation.                        

NERVES ON CAPITOL HILL

FBI warnings of possible new terrorist attacks nationwide have hit Congress particularly hard, with strict new security measures for truck traffic within a 40-block area surrounding the Capitol building. Concerns and nervousness are reportedly affecting the conduct of business, as people's minds are elsewhere. Incidentally, a photograph of a stopped truck in Saturday's Washington Post accompanying the story of the crack-down on trucks near the Capitol was of a gasoline tanker truck operated by SIGMA member Quarles Petroleum.    

PELOSI NEW #2 HOUSE DEMOCRAT

Nancy Pelosi (D-CA) won the tightly contested race to become Democratic Whip, the second-ranking House Democratic leader behind Minority Leader Gephardt (D-MO). She replaces David Bonior (D-MI), who resigned to run for Governor. Pelosi is viewed as more liberal than Steny Hoyer (D-MD), her competitor for the position, although ideology was not an issue in the race. She won by a vote of 118 to 95 in a secret ballot, and now becomes the highest-ranking woman in the history of Congress.   

USTFIELDS DEADLINE MOVED

EPA has extended the deadline for applications for funds under its pilot USTfields program from October 22 to November 19. This is a program to fund cleanups of industrial sites which include old leaks or abandoned underground storage tanks. It is similar to the "brownfields" program for abandoned sites under Superfund, which deal with non-petroleum contamination. The most likely grant applicants would be local governments or redevelopment authorities. SIGMA members, however, may know of abandoned gas stations in urban areas which, if cleaned up and redeveloped, could benefit the member. Call such properties to the attention of your local government, and tell them about the USTfields pro-gram. For more detailed information, contact SIGMA attorney Jeff Leiter at 202-342-8490.  

ENERGY POLICY SHENANIGANS

At the request of Sen. Majority Leader Daschle (D-SD), Senate Energy Committee Chairman Bingaman (D-NM) has dropped all attempts to act on energy policy legislation this year. The reason: opposition to any provision allowing for oil exploration in the Arctic National Wildlife Refuge (ANWR). It had become obvious that two Democrats, Landrieu (D-LA) and Akaka (D-HI), would join with committee Republicans to support such a provision. If the bill came to the floor with an ANWR provision, it would be difficult for Democrats to remove it, because it is harder to adopt an amendment than to defeat one. So Daschle's strategy now appears to be to try to bring his own version of energy legislation to the floor, without going through the committee process. Republicans are outraged over this ploy, and are planning to fight back. Sen. Craig (R-ID) and others may introduce their own energy bill, with an ANWR provision, and try to attach it to other legislation moving through the Senate. SIGMA's interest in the energy bill centers around a couple of provisions in the similar bill passed by the House. We will be working to incorporate a boutique fuels study into any Senate energy bill, and will also be pushing our proposal for tax incentives for small refineries to meet environmental upgrade requirements. It is clear the Craig bill won't have any tax component, and it is unclear if the Senate Finance Committee will act on such a bill. If it does, that bill would most likely end up as an amendment to either the Craig or Daschle proposal on the Senate floor. All in all, a very confusing situation. 

MISCELLANEOUS NOTES

Shell and Texaco have announced they have reached agreement on the sale of Texaco downstream assets to Shell as part of the Chevron merger. Equilon will be owned 100% by Shell and will be integrated into Shell Oil Co. Motiva will be owned 50/50 by Shell and Saudi Refining and will have a separate Board of Directors. Shell and Motiva have rights to the Texaco brand only for a short time -- until June 2004 on an exclusive basis, and until June 2006 on a non-exclusive basis . . . Several new parties have been added as interveners in the lawsuit filed by California against the EPA over an oxygenate waiver. The Renewable Fuels Assn. and the National Corn Growers Assn. have been added on EPA's side; Chevron, the Western States Petroleum Assn., and the South Coast Air Quality Management District have been added on the side of the State of California . . . The courts have ruled in favor of Unocal requiring accounting by a group of 5 refiners for infringement of the Unocal patent for RFG. Specific amounts owed Unocal were not included in the order, but are expected in the next few weeks.