December 3, 2001

CONGRESS IN HOME STRETCH; HOME RUNS UNLIKELY

Congress came back into session last week, following the Thanksgiving holiday. Originally scheduled to adjourn back in October, leaders are now aiming to complete their work for the year by December 15th or 16th. They still must complete action on 5 of the 13 annual appropriations bills. Action on an economic stimulus package is also likely. Senate Majority Leader Daschle (D-SD) was directed by the Democratic caucus on Thursday night to find a way to move forward on it. Whether these six bills will all be acted on separately is unclear. It is more likely they several of them will be rolled into a single end-of-session “super-bill” that will contain compromises across totally-unrelated issues.

The stimulus part of the picture is particularly interesting to Washington observers. Usually, both the House and Senate pass a bill, and then a conference committee works out the differences. So far, the House (where “majority rules”) has passed a Republican bill. But in the Senate, where it takes 60 votes to do anything and the Democrats have only 51 votes, Republicans have blocked passage of a Democratic bill. Democrats say they’re willing to compromise, but don’t want to compromise twice – once with Senate Republicans, and then later with House Republicans. Thus, efforts are underway to work out procedures to iron out one overall compromise involving Democrats and Republicans from both the House and the Senate – in essence, a “conference committee” even before a bill has passed the Senate.

Another complicating factor for the stimulus package: new forecasts from the Office of Management and Budget (as well as other sources) indicate that the federal government will run a deficit not only for 2002, but for at least the next 4 years. Just last spring, there was talk of budget surpluses of $5 trillion over the next decade, with serious debate over how quickly to pay down the national debt. That discussion was apparently somewhat premature.

Complicating the year-end picture are several other issues which groups of Senators want considered. A ban on human cloning is one of those. Of more direct interest to marketers is energy policy legislation, which Republican Senators want considered now. They plan to try to add the House-passed energy bill to a Railroad Retirement bill currently before the Senate, with a cloture vote scheduled today (Monday, Dec. 3). The Democrats are about ready to introduce their version of energy legislation, probably also today. It is being drafted by Sen. Bingaman (D-NM), chairman of the applicable committee, but will be introduced by Sen. Daschle. It may include ethanol provisions. It may also include a provision related to “driveability index”. (Automakers have been pushing for a reduction in aromatics in gasoline as a way to improve performance of engines. Our concern is for reduced supply; something would have to replace the volume of product that refiners would have to take out.)

Daschle, only half-jokingly, has told Republicans that he will be glad to keep the Senate in session between Christmas and New Years Day in order to find time to debate energy legislation this year. Our lobbyists opinion: final action on energy legislation won’t be taken until late January or early February of next year.

WINTER-TO-SUMMER RFG

EPA has issued its proposed winter-to-summer reformulated gasoline (RFG) transition rule, but has not yet published it in the Federal Register. The publication date will be the “trigger” for a series of deadlines for comment and action. The proposal is very close to what was in the “white paper” published back in late October, adding a terminal receipt deadline of April 15 each year for wintertime gasoline, in addition to some flexibility in other areas. This is on a “fast track” for adoption in time for next year’s transition season. A 30-day comment period is planned, with no hearings. However, if a hearing is requested, it will take place 20 days after publication in the Federal Register, and the comment period will run 30 days beyond that.

SIGMA has not yet adopted a position on this proposal. It is likely we will have a conference call of the Legislative Committee within the next few days to provide guidance to the Board of Directors and to counsel.

On a related topic, comments on EPA’s white paper on boutique fuels options are due by Jan. 2, 2002.

MERGERS IN THE NEWS . . .

The Wall Street Journal reports that newly-merged ChevronTexaco expects to save $1.8 billion a year as a result of the merger, with much of the additional savings in refining and marketing. The company plans to concentrate on “fewer and more focused” petroleum products.

The Journal also reported that, if the Phillips-Conoco merger goes forward with no divestitures required, the top six oil companies will control (either directly or indirectly through branding arrangements) 55% of all stations in the country. Just eight years ago, in 1993, the top six companies controlled only 30% of stations.

Finally, as reported in SIGMA Weekly Report two weeks ago, marketers who have any concerns about the impact of the Phillips-Conoco merger should contact SIGMA attorney Tim Columbus in confidence at tcolumbus@colliershannon.com, or at 202-342-8555. As with all such mergers, SIGMA will be reviewing this one for antitrust concerns both on a global basis and a more-localized one. We rely on our members for information on concerns of a local or regional nature. As they say at all weddings, “speak now or forever hold your peace.”

OSHA RECORDKEEPING

The Occupational Safety and Health Administration (OSHA) has a new recordkeeping rule which goes into effect 1/1/02, and which affects marketers. OSHA reached a settlement with the National Assn. of Manufacturers (NAM), which had filed for review of the rule. As a result of the settlement, the rule will go into effect as scheduled, but OSHA will not issue citations for the first 120 days for employers who are trying in good faith to follow the rule and who agree to correct their records after-the-fact. OSHA is also required to issue a Compliance Directive with several minor changes in the rule.

The rule is strict in its definition of a work-related injury or illness. If there is a discernable causal factor at work which contributes to an injury or illness, or aggravates a pre-existing injury or illness, it is reportable. It doesn’t matter whether it was 100%, 75%, 49%, or 1% attributable to the workplace. The settlement provides for some relaxation of the rule for minor musculoskeletal discomfort. OSHA will also make clear that employers cannot be held liable for employees’ failure to follow work restrictions; language saying employers should ensure that employees follow work restrictions is purely advisory. Also under the settlement, it is clarified that it is up to the employer to determine whether an injury or illness has occurred and, if so, whether it is recordable. The rule is clear that an employee’s report of an injury or illness does not establish the fact that one has occurred. For more information, go to OSHA’s website by clicking here.

MISCELLANEOUS

OSHA has developed a matrix to help employers assess and respond to possible workplace exposures to anthrax from mail-handling operations. Access the matrix on the OSHA Web site by clicking here. The Pennsylvania House has passed two bills of interest. One would ban MTBE in gasoline as of 1/1/04. The other would triple the maximum payment available from the state tank trust fund for cleanups . . .United Refining Company has become the third refinery to receive hardship relief from the gasoline sulfur rule, which takes effect in 2004. Earlier, relief had been granted to National Cooperative Refinery Association and to Wyoming Refining Co. . . . We believe that plans by Rep. Lewis (R-CA) to introduce legislation to commercialize interstate highway rest areas has successfully been bottled up, at least for this year . . . The federal tax on cigarettes increases by 5 cents a pack on Jan. 1, 2002, with a floor stocks tax for retailers and wholesalers. There is a $500 credit against the tax; if tax owed is less than the credit, a tax return is not required.