December 17, 2001

UNDERGROUND TANK LEGISLATION TO BE INTRODUCED THIS WEEK

Sen. Lincoln Chafee (R-RI) plans to introduce an underground storage tank bill this week. He is under pressure to do so after a Rhode Island newspaper misquoted him as saying he had already introduced such a bill, when in fact all he had said was that he supported such legislation.

SIGMA’s First Vice President, Art DeBlois, was in Washington last Tuesday and met with Chafee’s staff on the subject. In that meeting, as well as in earlier meetings involving SIGMA lobbyists, we have learned the basics of his proposed legislation. It will focus primarily on addressing the inconsistencies and inadequacies in the existing UST program that were pointed out by the General Accounting Office in a report last spring. The bill will probably include:

* SIGMA-supported language on allowing federal LUST Trust Fund money to be used by the states for a broader range of activities, including for enforcement. There is still some question as to whether use of federal LUST funds to “back up” state trust funds would be limited to tank owners who would otherwise be “financially distressed.” SIGMA is urging that no such limitation be placed on the funds. We believe that such a provision would delay cleanups and raise unnecessary issues over potential reimbursement.
* A requirement that all tanks be inspected at least once every two years, with EPA incentives to help states accomplish this goal. The language in the bill will make it clear that it applies to all tanks, including those owned or operated by Federal, state and local governments as well as by Native American tribes.
* Direction to EPA to develop, within 18 months of enactment, a set of guidelines for operator training for USTs. EPA would be told to work with the regulated community in developing this guidelines, and to keep in mind existing training programs used by tank owners which are working.
* “Mitigation of damages” for those found in violation of tank rules, based on their history of abiding by tank rules and having implemented a training program for employees.
* A requirement that EPA, working with other federal agencies, develop a program to do something to bring federal tanks into compliance within one year. There would be a similar 1-year deadline for developing a plan of action on tribally-owned tanks, with progress reports due to Congress every two years.

The motivation for the movement on tank legislation is two significant releases in Rhode Island recently, one by a retail tank and the other owned by a public works agency. Chafee hopes to have at least one Democratic co-sponsor before he introduces his bill, so it will be bipartisan.

RFG TRANSITION RULE

Last week, the Executive Committee agreed on SIGMA’s position on the proposed changes in winter-to-summer RFG transition as proposed by EPA. In our written comments, due by Jan. 2, we will take no position on the new 4/15 terminal receipt date for summertime RFG, because we think it will have little impact. We will, however, urge that it apply only to RFG and not Conventional Gasoline. We will urge EPA to keep the May 1 and June 1 deadlines in current rules, but support the 2% variance in the first batch of summer RFG at wholesale and urge it be extended to retail as well. We urge EPA to finalize the rule by 2/1/02, so everyone will know the rules in advance. Finally, we will urge EPA to not claim that they have “solved all the problems”.

MONEY ORDERS

Marketers who sell or redeem traveler’s checks or money orders, or who have check-cashing businesses, should review the detailed legal memo from our attorneys available on our website, by clicking here. Or look under “News and Views” for memo on “FinCEN” regulations. On a separate matter, we have been informed that the “non-compete” portions of contracts with some of the major money-order issuers have been greatly strengthened. Marketers who are up for renewal should pay close attention to these provisions and make sure you understand them. If you have questions, contact SIGMA attorney Greg Scott – 202-342-8555 or GScott@CollierShannon.com.

TERRORISM INSURANCE

Insurance losses as a result of the Sept. 11 terrorist attacks may run as high as $70 billion, an amount triple or quadruple any previous natural or man-made disaster. While the insurance industry says it has the funds to cover those losses, the picture isn’t so clear going forward. Terrorist attacks were previously considered so unlikely that coverage was typically included in insurance policies with no additional charge. Now we know such attacks are not a “remote possibility”; however, actuarially, the insurance industry has no way to assess the risk and price coverage. Many domestic and foreign reinsurers have already announced they will stop covering terrorist attacks when insurance contracts come up for renewal on Jan. 1. In the absence of reinsurance, many regulated insurance companies may be forced to withdraw from markets, exclude terrorism coverage, or charge premiums that in essence make commercial insurance coverage unaffordable and largely unavailable.

Congress has been called on to address this problem, and the House has already acted. H.R. 3210, the “Terrorism Risk Protection Act”, passed by a vote of 227 to 193 on Nov. 29, largely along party lines. In a nutshell, it would set up a government “backstop” for future terrorism losses, in the form of government loans to insurance companies when and if a major loss occurs. Those loans would then be paid off by surcharges to policyholders; the surcharges could be spread out over a period of many years.

Gasoline marketers will be affected by this issue, one way or another. If the Senate does not complete action on this (and work out differences with the House) before the end of this year, insurance policy renewals coming shortly after Jan. 1, 2002, could be adversely affected either in price or availability. If and when Congress does act, if it follows anything along the lines of the House bill, marketers may see insurance policy provisions which allow the insurance company to retroactively assess supplemental premiums to cover terrorism losses.

CONGRESS STILL MEETING

Congress, which normally completes its work and leaves town sometime in October or (rarely) early November, is still in session a week before Christmas. Action has been completed on most of the 13 Appropriations bills, so a huge session-end “omni-bill” is unlikely. However, economic stimulus is still very much up in the air. Both Democrats and Republicans claim they want a bill, and both blame the other for partisanship that is blocking passage. Energy legislation will wait until early in the next session. Whatever Congress does, it is likely to do so based on deals worked out behind-the-scenes in the next few days. There will be a day or two of formal sessions this week, and then Congress will adjourn to come back in late January.

MOBILE REFUELING

SIGMA’s model mobile refueling regulations, drafted a couple of years ago, are now posted on our website, in the section labeled “News and Views”. Marketers interested in this business arrangement are asked to review the model regulations and direct any questions or comments to the chairman of our Mobile Refueling Subcommittee, Scott Thomlison of Gateway Tankers, at sthomlison@gatewaytankers.com or 314-822-1681. Thanks for your involvement!

YEAR-END CONSIDERATIONS

At year-end, many businesses look at their financial picture and make decisions to either accelerate or delay income or expenses between the current year and next year based on a number of factors, including tax considerations. If you are in a position where accelerating expenses into 2001 makes sense, consider these possibilities:

* Prepay all or part of your SIGMA dues that will be coming due during 2002. Contact Marilyn Selvitelle at 703-709-7000 (or mselvitelle@sigma.org) if you need an invoice.
* Pre-register yourself and/or your employees for 2002 SIGMA meetings. Registration forms are available for the Winter Management Conference in Steamboat Springs in January, the Spring Convention in San Antonio in April, and the Annual Meeting in November in Chicago. By registering early, you’ll also save money on the registration fees – and we have a “no-risk” cancellation policy! Contact Kelly Hoff at 703-709-7000 (or Khoff@sigma.org) for forms, or click here to download forms directly.

MISCELLANEOUS ITEMS

Sen. Hollings (D-SC) has introduced a bill to clarify some of the hazmat transport provisions of the antiterrorist bill which passed Congress earlier this year. The bill fills in details on background checks for hazmat endorsements for commercial drivers licenses . . . The EPA’s Inspector General has issued a report calling into question a widely-used enforcement tool, “supplemental environmental projects.” This is an arrangement whereby, as part of a settlement agreement, a business agrees to undertake projects which have environmental benefit but which are not required by law. The report suggests that many of the projects were already planned by the violators, meaning the environmental benefit was minimal . . . House Majority Leader Armey (R-TX) has announced he will retire from that position next year, and Rep. DeLay (R-TX) is running unopposed to succeed him. The race to succeed DeLay as Majority Whip is heating up, with Reps. LaHood (R-IL) and Blunt (R-MO) already in the race and Rep. Watts (R-OK) considering it.