November 5, 2001

ENERGY OVERSIGHT HEARING FINALLY HELD; SIGMA TESTIFIES

Last Thursday, the twice-delayed hearing by the Oversight and Investigations Subcommittee of the House Energy and Commerce Committee was finally held. Delays had been due to the temporary closures of Congressional office buildings due to the anthrax threat.

SIGMA First Vice President and Legislative Chairman Mike Ports testified at the hearing, on behalf of both SIGMA and NACS. The key points of his testimony: little has changed with respect to MTBE since we last testified before the same committee in 1999. Congress still has not repealed the federal RFG oxygenate mandate, which is leading to states creating additional boutique fuels, while California faces a supply crisis if it bans MTBE as planned. Manufacturers of MTBE and ethanol and their supporters are still at a legislative stalemate, and EPA and the states still have not effectively enforced the 1998 UST upgrade mandate (thus allowing MTBE to continue to contaminate soil and groundwater).

We repeated our positions on those various issues, but took the opportunity to note that – of all those issues – the one which is not controversial, and which Congress could act on independently of resolving the other disputes – is the tank issue. We urged the committee to take up legislation to enact recommendations by the General Accounting Office (GAO) which would remove restrictions on the use of LUST Trust Fund monies, authorize their use for UST enforcement, authorize an additional $200 million from the fund for state use in addressing high-priority releases, and authorizing EPA to establish a national UST database to track upgraded and closed tanks.

Ports appeared on the second panel of the hearing, together with representatives of API, Oxygenated Fuels Assn., Renewable Fuels Assn., American Lung Assn. (ALA), PA Dept. of Environmental Protection, and a private homeowner from Bucks County, Pennsylvania, whose well had been contaminated with MTBE by a gasoline spill. The testimony of all was pretty much predictable. The PA DEP representative did agree with us that tanks are a very important point. ALA said that MTBE should be banned, the oxygenate standard should be repealed, while gasoline should be kept to high standards – i.e., our position.

The first panel consisted of federal governmental officials.

• Jeffrey Holmstead of the EPA noted that his agency is undertaking a Toxic Substances Control Act (TSCA) proceeding to ban the use of MTBE. He urged Congress to repeal the oxygenate mandate (we agree) and to enact a renewable fuels mandate (we disagree).

• A representative of the Dept. of Energy worried about the effect an MTBE ban would have on supply.

• The General Accounting Office (GAO) talked extensively about its study of underground tanks which substantiated what marketer groups including SIGMA have been saying since 1998.

• A spokesman for the United States Geological Survey noted that, compared to other contaminants, MTBE is really a small problem. USGS has tested thousands of wells nationwide and found few with MTBE contamination, and only one with MTBE exceeding the EPA advisory level.

Several key Congressmen were present at the hearing and indicated support for our position in one way or another. Rep. Greenwood (R-PA), chairman of this subcommittee, has already introduced legislation to phase out the use of MTBE (to pre-1990 levels) and allow states to opt out of the oxygenate mandate for RFG. Rep. Gillmor (R-OH, who chairs the Subcommittee on Environment and Hazardous Materials which has jurisdiction over groundwater issues, stated that he agreed with Ports’ testimony. Rep. Barton (R-TX), who chairs the Energy and Air Quality Subcommittee with jurisdiction over the Clean Air Act, is generally viewed as a close friend of MTBE interests but also expressed support for our position on tanks.

A question asked at the hearing produced no clear answer. Why do states with the worst record on enforcing tank regulations also tend to be those who are banning MTBE?

Over the next few weeks, we will be working with key Congressmen and their staffs to map out a plan of action for legislation early next year.

ADJOURNMENT OF CONGRESS?

At one time, we expected Congress to have adjourned by mid-October. More recently, we have been expecting adjournment before Thanksgiving. Now Sen. Majority Leader Daschle is suggesting that Congress may have to come back after Thanksgiving to wrap up its business for the year. Senate Republicans have threatened that, if that were to occur, they will attempt to attach energy legislation to every non-appropriations bill working its way through the Senate.

EPA “OVERFILING”

Businesses have been going to court, challenging EPA’s practice of filing complaints against them for environmental violations when a state agency, acting under authority of EPA to enforce federal rules, has already reached a settlement with them on the same charges. This practice of “overfiling”, or “double jeopardy”, was ruled illegal by the Eighth Circuit Court of Appeals in 1999. However, a lower court judge in the Tenth Circuit has ruled that EPA may pursue such cases. That case is now being appealed to the Tenth Circuit, and nine state attorneys general are urging that it be upheld. If it is, it will set up a situation where the law is different in different parts of the country – making it ripe for review by the Supreme Court.


SIGMA BOARD NOMINEE

In addition to those nominees reported in earlier editions of SIGMA Weekly Report, we would like to welcome one additional nominee to the Board of Directors for a 3-year term:

James Kent Roberts
President
Save-X, USA, Inc.
Roanoke, VA

This completes the full slate of nominees for officers and directors for the coming term. 

MISCELLANEOUS NOTES

The Internal Revenue Service (IRS) told a CPA tax conference on Oct. 31 that it is seriously considering increasing the number of small businesses permitted to use the cash method of accounting (rather than the accrual method). Current rules generally allow those with gross receipts under $1 million to use the cash method. While IRS won’t say what their proposed new limit will be, many are pushing to have it set at up to $5 million . . . New recordkeeping rules for OSHA on-the-job injuries and illnesses go into effect on Jan. 1, 2002, and a new “simplified” form will be required. Copies of the forms and instructions will be mailed in December to employers affected by the rule; you can get a copy of them now by going to the OSHA website at www.osha.gov. . . . The House and Senate are far apart on a number of important bills. In recent days, the House has returned to highly-partisan votes on major bills, while the Senate continues to work in an exceptionally bipartisan manner. For example, the economic stimulus package passed by the House on a 216 to 214 vote, with only 3 Democrats voting for it and seven Republicans voting against. Similarly, a proposal to require airport security personnel to be federal employees was defeated on an almost-party-line vote in the House, whereas a bill with that provision passed the Senate by 100 to 0. We do not know what specific impact this will have on issues of particular concern to marketers, but it can’t be good.

SIGMA IN SEATTLE

The SIGMA Annual Meeting begins this coming weekend in Seattle, with an expected attendance in the range of 450 marketers, suppliers, and guests. We have an excellent program in store, and it’s not too late to make a last-minute decision to attend! Staff will be heading out on Wednesday and Thursday, but there will be someone in the office throughout this time period to answer your questions and even help you with registration. Hope to see you at the convention!