February 18, 2002

RFG WINTER-TO-SUMMER RULES FINALIZED

On Monday, Feb. 11, EPA signed a final rule for winter-to-summer transition of RFG, and made it available on Wednesday, Feb. 13. However, as of Friday, Feb. 15, it had not yet been published in the Federal Register.

Except for the slight delay in getting the rule finalized (SIGMA had urged "no changes after February 1"), the news is good news. In general, EPA listened to the comments by SIGMA and others, and didn't try to come up with its own "better idea". Key points:

* There is no April 15 deadline for terminal receipt of summertime RFG. SIGMA and many refiners had opposed the proposal to create such a deadline.

* The May 1 deadline for terminals to supply only summertime RFG remains in place. Some refiners had suggested moving or deleting that deadline. But based on SIGMA comments about the burden this would place on retailers to meet their June 1 deadline for turning tanks to summer gasoline, EPA did not make the change. In essence, for marketers, the new rule is "status quo".

* Blendstock accounting rules have been deleted. The were there to prevent "gaming" by refiners who (it had been feared) might try to count finished gasoline as a blendstock to get around baseline rules. In fact, all they had accomplished was to limit flexibility in the system.

* There are several updated test methods for sulfur, aromatics, etc., which are important for anyone who produces or certifies gasoline as RFG (refiners, blenders, importers). Note that there are no changes to the tests for oxygenates or RVP.

Separate from the RFG transition rules, EPA also announced an "enforcement discretion" in a letter dated Feb. 6. Because the tests for VOCs are somewhat imprecise, EPA has long allowed a 2% variance from the standard B except on the first turn of the tanks, when RFG has been required to meet the VOC standard every time it is tested. The new "enforcement discretion" will allow the 2% variance on first turn of the tank at the terminal (as had been proposed) and also at retail (as had been urged by SIGMA in our comments).

All in all, the resulting rules are very much along the lines of what SIGMA urged in our comments B what one might call a "victory"!

Access the rules by clicking here. <
ENERGY TAX BILL MOVES

Last Wednesday, the Senate Finance Committee approved the tax provisions for the pending energy debate, with $14.5 billion in tax breaks over the next decade. Included in the bill: small refiner tax provisions for diesel sulfur upgrades, which had been pushed by SIGMA and NPRA and which are in the House bill as well.

Among other provisions, the bill will repeal the mandatory dye injection rule for terminals under the kerosene tax-or-dye program (i.e., that terminals offering taxed kerosene or diesel had to also offer untaxed). SIGMA supported that change, provided there was no change to the underlying tax-or-dye program. And by a 14 to 5 vote, the committee approved an amendment by Sen. Lincoln (D-AR) for a tax credit for bio-diesel used as a motor fuel. The credit is 4 times the ethanol credit, and exceeds the Federal excise tax on diesel. SIGMA has as yet taken no position on this proposal.

CALL TO ACTION ON ETHANOL

Senators Daschle (D-SD) and Bingaman (D-NM) have posted a substitute energy bill, which was to be brought up last Friday. Congress is in recess this week, so real action won=t begin until next week. There is little change from the bill as introduced in December. It includes a 5 billion gallon per year renewable fuel (ethanol) mandate, allows RFG opt-in for "marginal" attainment areas, bans MTBE within 4 years, and allows states to opt out of the oxygenate mandate. There are widespread reports that several API members have agreed to the ethanol mandate and will instead lobby on other issues. SIGMA and NPRA are still opposed, and urge members to send letters to Senators in all states where you operate. A sample letter was distributed to all members. Phone calls, fax or e-mail are best; regular mail is being irradiated and is significantly delayed. Click here, or go to www.sigma.org and click on "Your Link to Capitol Hill", for fax and e-mail information for Senators. Do it today!

STRATEGIC BUSINESS ALLIANCE

Last week, we announced that SIGMA is forming strategic business alliances with key vendors and suppliers who can offer our members high quality services at discounted pricing exclusive to SIGMA. The first such program was announced at that time B a money order program through Transaction Tracking Technologies Inc. (3T).

We are pleased to announce a second Strategic Business Alliance this week. This is a program with Caliber Consulting to provide management consulting services in the area of improving operational process efficiency through more effective use of technology and personnel. This program is at exclusive association discount pricing for SIGMA members. Ken Gunn is well known in the industry as a speaker. He and his company provide these services through two programs, "PetroStrategies Assessment" or a "PetroStrategies Snapshot" to assist individual companies in de-bottlenecking their systems from better utilization of existing technology and personnel, or identifying new technology that should be acquired. Several SIGMA members have already utilized his services; this program offers those same services at a significant discount.

For contact information on either company, contact the SIGMA office at 703-709-7000.