January 7, 2002

EPA MAY BE RETHINKING RFG TRANSITION PROPOSAL

EPA may not be moving forward as quickly or as smoothly as they had expected with the proposal for changes to the winter-to-summer Reformulated Gasoline (RFG) rules. The reason: unexpected industry objections are leading them to re-think some of the proposals. You may recall that SIGMA did not support the proposal for an April 15 terminal receipt deadline for summertime RFG, as we reported two weeks ago. Refiners are suggesting that if EPA is unable to finalize a new rule by February 1, then any changes should be postponed to the 2003 summer season.

Refiners (and SIGMA) are concerned that changes later than Feb. 1 would lead to even worse disruptions, as refiners wouldn’t have time to plan adequately for the transition.

"SMILEY FACES" ILLEGAL!

The Dept. of Transportation has announced that it is now enforcing a rule that prohibits motor carriers from placing "extraneous information" on placards and in placard holders reserved for hazardous materials information. The reason: so that "in case of a crash, the incident management folks will be able to tell what is in the tanker without being confused by a nonessential marking such as "drive safely" or a smiling face". The rule has been in effect since last Oct. 1, but DOT says it is now being enforced. Penalties range from $250 to $27,500 per violation, plus possible additional enforcement action.

FINCEN RULES & TRAINING

The rules for registering and reporting "suspicious activity" are now in effect for sellers of money orders, those running check-cashing businesses, and other "financial services" businesses. We are separately faxing a document designed for you to reproduce and distribute to your employees involved in such sales, to help them understand their responsibilities. It can be modified to add your company’s identification, if you wish. This may soon also be downloaded from the SIGMA website.

CONGRESS IN RECESS

Congress is in recess until January 23, and probably won’t do a lot of work that first week. The first order of business for the Senate will be the economic stimulus package and energy legislation. Majority Leader Daschle (D-SD) says he will try to pass them by March 1, but that seems doubtful.

DIESEL SULFUR "FACA"

EPA is putting together an advisory committee on ultra-low-sulfur diesel, under the Federal Advisory Committee Act (FACA). This FACA will be looking at the diesel sulfur rule from two major perspectives. First will be feasibility issues for both fuel and engines: how feasible is it to make, store, and transport diesel with a maximum of 15 parts per million (ppm) sulfur; will the engines really be there to need such low sulfur fuel; and what will be the impact on existing engines, among other questions. In addition, the FACA will look at implementation issues such as timing, variances, etc. EPA has said informally that they plan to have a "marketer" seat on the FACA, but they want the marketing community to work together to come up with a consensus candidate rather than each group nominating one. SIGMA will be working with PMAA, NATSO, NACS, and perhaps PTSA to find someone who can represent all the divergent interests of marketers in this important undertaking.

OMB TO REVIEW RULES

The Office of Management and Budget (OMB), a White-House-level agency, has issued a list of 23 federal regulations that it considers "high priority" for review and possible repeal or scale-back based on cost-benefit analysis. Included are eight EPA regulations. One of those, the "new source review" regulations which impact on the ability of refineries to upgrade or expand, is already under review by EPA and the Dept. of Justice; EPA says that review should be completed in January.

TOBACCO FLOOR STOCKS TAX

You should have taken a cigarette inventory on Jan. 1. Federal cigarette taxes went up by 5 cents per pack as of that date, and there is a "floor stocks" tax on any tax-paid cigarettes still in the distribution system. The tax return must be filed by April 1, 2002. There is a $500 exemption per company, which is the equivalent of the tax on 10,000 packs of cigarettes.

VALERO-UDS MERGER FINAL

Valero’s merger with Ultramar Diamond Shamrock has been finalized, with the blessing of the FTC. The combined company has a year to sell Ultramar’s Golden Eagle refinery, bulk supply contracts, and 70 Ultramar retail sites in Northern California to a buyer approved by the FTC.

MASTERCARD/VISA LAWSUIT

SIGMA will be debating whether to join in the class action lawsuit against MasterCard and Visa over merchant fees and tie-ins. Discussion will be at the Legislative Committee meeting in Denver during our Winter Leadership Meeting (the new name for "Winter Committee Meetings") which takes place Jan. 17-18, 2002. All members are welcome.

SIGMA DISCOUNT TO NATSO

NATSO, representing America's travel plazas and truckstops, is extending its membership registration rate to all SIGMA members for The NATSO Show 2002, February 14-15, Opryland Hotel in Nashville, Tennessee. A special advance full registration fee of $359 is available through January 14, 2002, with reduced registration fees for additional attendees from the same company. For complete information on the NATSO Show 2002, or to register online, visit their web site http://www.natsoshow.org or call NATSO's fax-on-demand line at (800) 477-9457 for a faxed registration form. For more information, call NATSO toll-free at (888) 275-6287.

STATE ACTIONS

New Hampshire formally requested to opt out of the RFG program on Dec. 11, but EPA officials suggest that it is unlikely the state will be successful.

Pennsylvania has new legislation, signed into law Dec. 13, that increases by 50% the allowable payment from the state tank trust fund for cleanup of a leak or spill.

MISCELLANEOUS

The Petroleum Equipment Institute (PEI) has announced creation of an Operations and Engineering Division, aimed at individuals employed by any company that owns and/or operates a facility which stores, transports, meters, and/or dispenses petroleum products or other industrial liquids. For details, contact Bob Young at PEI, byoung@pei.org. . . . remember that new OSHA recordkeeping rules took effect on Jan. 1. Copies of the new forms, training materials, fact sheets, and other assistance are available on OSHA’s website at www.osha.gov . . . API has reminded motorists of safe handling of fuel issues during vehicle refueling. Copies of the guidelines are available at www.api.org/consumer.