November 19, 2001

ENERGY BILL, ECONOMIC STIMULUS ACTION POSTPONED

Congress completed action on an airport security bill before recessing for Thanksgiving week. They will return to work on Tuesday, Nov. 27, with an expectation that they will then remain in session until about December 14. During that time, they face a full plate of actions needed.

Thus far, Congress is finished with only 7 of the 13 annual appropriations bills needed to fund the government through the current fiscal year, which began on Oct. 1. The remaining agencies are running on temporary spending authority called "continuing resolutions". Some of the remaining six bills may be acted on separately, but many of them may end up rolled into some kind of "omnibus" bill at the end of the session. The opportunities for political chicanery are greatest in such end-of-session roll-up bills, where an individual Senator or Congressman can use leverage to force inclusion of a single pet issue as the price for voting for the overall bill.

Economic stimulus is likely to be a part of that year-end omnibus package. The Senate is working on the issue, which has already passed the House in a very different form from what is likely to emerge from the Senate. Senate Democrats last week lost a procedural effort to bring to the floor the Senate Finance Committee’s bill, so the ball is now in Majority Leader Daschle’s (D-SD) court. He must try to work out with Senate Republicans, and even perhaps with the House, some kind of a compromise proposal that has a chance of being adopted by both bodies.

Meanwhile, Sen. Murkowski (R-AK) and other Republican Senators are pushing for action on an energy bill, and have promised to try to attach the House Energy Bill to any economic stimulus package that moves in the Senate. It may not be procedurally possible for them to do so; Senate rules prohibit attaching tax provisions to bills that have not been through the Senate Finance Committee. One of the House Energy Bill’s provisions is a series of tax incentives for small refineries to meet environmental upgrade requirements, a provision SIGMA supports. It is possible that Murkowski might try to attach the House Energy Bill minus those tax provisions. But the bottom line for the Republicans is that they want from Daschle a "date certain" by which the Senate will take up energy legislation.

RFG TRANSITION ISSUES

As reported previously, EPA will soon be proposing changes in the winter-to-summer transition rules for Reformulated Gasoline (RFG). At a meeting SIGMA attended with NPRA last week, we learned that proposal is currently being reviewed by the Office of Management and Budget (OMB), and is expected to be released as a formal "proposed rule" within a matter of hours or days. EPA indicated it was aware of the need for speed in order to give refiners adequate lead time for the 2002 summer season, suggesting that the rule needed to be finalized and in place by Feb. 1. That would indeed be a fast track.

SIGMA’s Legislative Committee debated the proposals for almost an hour in Seattle last weekend, but did not reach a conclusion on what SIGMA’s position should be. If you have opinions or comments on the subject, please e-mail SIGMA attorney Greg Scott at gscott@colliershannon.com (or call 202-342-8646). Do so right away!

BOUTIQUE FUELS WHITE PAPER

EPA has published in the Federal Register a notice announcing publication of its White Paper on possible changes in rules that would minimize boutique fuels. (We have previously reported on that White Paper, which only outlines a variety of options without suggesting which one was preferable.) The notice asks for comments back to EPA by December 31 of this year. At the NPRA meeting we attended, EPA was questioned on the timing of that deadline for comments, considering the Thanksgiving and Christmas holidays. EPA hinted it might be willing to extend the deadline until the end of January. It was clear from the discussions that the EPA representatives in attendance were uncomfortable with the renewable fuels mandate included in the White Paper. There were also questions about the idea of continuing to give states authority to mandate fuels, as well as some issues over the idea of a 2% wholesale variance and whether that could also apply at retail.

LOADING/UNLOADING RULE

The Dept. of Transportation (DOT) plans to again extend the comment period on its proposed rule for loading and unloading hazardous materials (HAZMAT). The rule is long in the making – DOT first issued an Advance Notice of Proposed Rulemaking back in July 1996, and issued the Proposed Rule in June of this year. The rule has always been contentious, but the problems have been compounded by post-9/11 security concerns. The trucking industry has asked that the rule be withdrawn and looked at again, with an eye to closing possible gaps in security such as during storage. The biggest issue is "who is in charge" and overlapping jurisdiction between DOT & EPA.

FINANCIAL PRIVACY

SIGMA’s attorneys have prepared a detailed legal memo outlining the applicability of the Gramm-Leach-Bliley Act on marketers. That memo is available on the SIGMA website, www.sigma.org – it is the top item under "News and Views" on the first page of the website. The law requires safeguards for the security of financial information plus notice and/or approval from customers before financial information about them can be shared with others. After reading the memo, call our attorneys for further explanation. Any analysis of specific circumstances as the law may apply to your company would be "billable hours" – and probably a good investment! – but general questions will be answered as a SIGMA member service.

STAGE II VAPOR RECOVERY

PEI has just concluded a study of state plans for Stage II Vapor Recovery equipment in light of CARB changes to certification requirements and decertification of existing Stage II equipment. Of 28 states plus DC where Stage II is used, only CA will definitely fully implement the new CARB standards. Four states (DE, GA, MA, NH) will formally reject the new standards or have already done so. Five states (FL, IL, NY, PA, WI) will continue to allow decertified equipment to be used, but will not formally change their rules. Eleven states (AZ, CT, IN, MD, NJ, OH, OR, TN, TX, VT, VA) are still studying and have yet to decide. KY and RI will permit equipment certified under either the old or new standards. NV and MO will adopt parts of the new CARB standards. LA, ME, WA & DC didn’t provide reliable responses.

CONOCO/PHILLIPS

As with all proposed mergers, SIGMA will review this one for possible anti-competitive concerns. Any marketer having a concern in a specific market is encouraged to call attorney Tim Columbus in confidence at 202-342-8555.

IRS TAX NOTICES

The IRS has published several recent notices which may be applicable to some SIGMA members:

* In a rule to be effective 1/1/03, the IRS proposes to require that FICA and FUTA taxes be withheld at the time stock is purchased pursuant to the exercise of an Incentive Stock Option (ISO) or Employee Stock Purchase Plan (ESPP) option, based on the difference between the purchase price and fair market value at the time. However, IRS will not require income taxes to be withheld at the time such stocks are sold, even if the sale is a disqualifying disposition. IRS also says that, until this rule becomes effective, FICA and FUTA taxes (as well as income taxes) need not be withheld from such transactions.

* IRS’s chief counsel has told industry representatives that rules adopted last winter do not preclude employers from delivering 2001 Forms W-2 via e-mail. Note that employees who do not consent to receiving the notices electronically must still be given a paper copy; however, employee non-consent does not prevent making the forms available electronically as well, so long as security provisions of the regulations are observed.

* In three separate notices, IRS has expanded and extended relief for those affected by the 9/11 tragedies. Notice 2001-74 extends depreciation relief to affected businesses for whom Sept. 11 falls in their fourth quarter (the same relief already applied to those for whom Sept. 11 falls in their third quarter). Notice 2001-71 extends tax filing deadlines to Dec. 15 for partners, shareholders, or beneficiaries of certain passthrough entities (entities which were affected by the 9/11 terrorist attacks) who mistakenly assumed that their own deadlines had been extended due to misinterpretations of earlier notices extending deadlines for the passthrough entity. Finally, Notice 2001-68 further extends deadlines for certain entities affected by the 9/11 attacks. Extended deadlines falling between Dec. 1, 2001 and Jan. 31, 2002 are further extended to Feb. 15, 2002 for taxpayers whose records, computers, or other essential supporting services were lost or damaged, or essential personnel were injured or killed, on 9/11.

MC/VISA LAWSUIT

SIGMA’s Legislative Committee recommended, and the Board approved, a recommendation that SIGMA consider joining the merchant class action lawsuit against MasterCard and Visa, by creating a sub-class of petroleum marketers. Final decision will be made by the Board after further study of the issues.