April 22, 2002

SENATE ACTS ON ENERGY AMENDMENTS; FINAL VOTE THIS WEEK?

Last week, the Senate broke one logjam on the energy bill by voting on an amendment to allow for oil drilling in the Arctic National Wildlife Refuge (ANWR). Shortly after the Senate defeated the ANWR amendment by a vote of 46 to 54, Majority Leader Daschle (D-SD) started the process to move for cloture on the overall bill sometime this week.

There are still several issues to be resolved by the Senate this week, including two which SIGMA cares about very much: tax provisions which include incentives for small refineries to make the upgrades needed for producing ultra-low-sulfur diesel, and one or more amendments to reduce or eliminate the proposed ethanol mandate. Presumably, these will be acted on this week, before the cloture vote.

ANWR DRILLING DEFEATED:

Republicans needed 60 votes to include in the bill a provision to allow for oil drilling in ANWR. They knew in advance they would not reach 60, but had hoped to at least reach 51, so they could argue in conference committee with the House (which has an ANWR drilling provision in their version of the bill) that the Senate should accept the House provision. They fell well short of that goal, as 8 Republicans joined with all but 5 Democrats in opposing the proposal.

MORE OPPOSITION TO ETHANOL MANDATE:

Although it may turn out to be "too little too late", SIGMA picked up some important allies in our battle against the Renewable Fuel Standard (the ethanol mandate) contained in the Senate Energy Bill. On Monday, the Wall Street Journal editorialized against the mandate, and on Tuesday the Washington Post did likewise. It’s not very often that those two publications are in agreement on anything! SIGMA and NACS sent a joint letter to all Senators with copies of the two editorials, urging a vote in opposition to the mandate.

THE VOTE ON "CLOTURE":

Sen. Daschle is now ready to bring the energy bill to a vote by the Senate, and will attempt to force that by invoking a "cloture" vote on Tuesday, which means cutting off further debate. It will take 60 votes to do that, and it is unclear if he will have the votes necessary. Many Republicans may be inclined to vote against it, because of the lack of an ANWR provision. Some key Democrats might also vote against cloture if the bill still contains the ethanol mandate (a concern to many Republicans as well). If the cloture vote fails, it is possible that Sen. Daschle will withdraw the energy bill from further consideration – making the whole exercise of the past few months in the Senate an exercise in futility. (If the bill continues to contain the ethanol mandate, SIGMA might prefer the whole energy bill to die.) If cloture is invoked, it is most likely the overall bill will then pass. But it is very unclear what compromises might then come out of a conference committee with the House, which has passed a very different energy bill. Again, the bill could die in that process as well.

CORRECTION:

In our last Weekly Report, we stated that SIGMA had supported the Feinstein Amendment to weaken the ethanol mandate. That was untrue. While we strongly oppose the proposed ethanol mandate (the "Renewable Fuel Standard"), we did not support that specific amendment. The general gist of the story remains correct – that the vote was a test of the strength of the pro-ethanol forces in the Senate, and that those who voted for it are generally on our side on the larger issue. Nevertheless, we apologize for the factual error.

UNDERGROUND TANKS

A hearing on Sen. Chafee’s UST bill had been tentatively scheduled for this week, but has been pushed back due to other committee business. SIGMA continues to work on both the Senate and House sides to generate support for hearings and legislation similar to the Chafee bill.

INTERSTATE REST AREAS

The American Assn. of State Highway & Transportation Officials (AASHTO) is once again reported to be poised to push for commercialization of Interstate Highway rest areas. The effort will probably be in association with reauthorization of the highway program.

GAS WITH MTBE "DEFECTIVE"

A jury in San Francisco ruled last week that gasoline with MTBE is a "defective product", and that refiners knew that when they put it on the market but withheld the information from the public. The case involved MTBE contamination of wells in the area of Lake Tahoe. Most companies that had been sued had already settled out of court, for a total of $33 million. This case involved Shell Oil, Lyondell Chemical (formerly Atlantic Richfield Chemical) and Tosco. All three were found guilty in the product liability case. In addition, Shell and Lyondell were judged to have acted with malice when they withheld information about the chemical. Damages have not yet been set in the case. Many other cases are pending against oil companies for MTBE contamination in other jurisdictions.

TRIBAL TAXES

The latest battle over collection of state motor fuel taxes by Indian tribes involves the Winnebago tribe from Nebraska and their failure to collect Kansas taxes for fuel it distributed to three other tribes in Kansas. Kansas issued an arrest warrant for the leader of the tribe, but reportedly has backed off from that draconian measure. Nevertheless, the situation makes clear the continuing need for federal legislation to address the issue of tribal tax evasion. SIGMA and our coalition partners in CASETE continue to work on this issue behind the scenes. Our efforts were necessarily interrupted by the events of last September, but the issue has not been dropped.

TRUCK DRIVER LICENSES

Last Thursday, the Senate Commerce Committee approved by voice vote changes to the laws governing drivers with commercial drivers licenses with Hazmat endorsements. That includes drivers of gasoline transport trucks. In the wake of Sept. 11, Congress last year adopted the "USA Patriot Act" which included requirements for criminal background checks for the Hazmat endorsement, among other provisions. This new legislation contains "technical amendments" to the earlier legislation, including clarification of the definition of hazardous materials. Several trucking groups either oppose the legislation, or want changes to it.

Although this is not yet law, the changes it contains seem likely to become law. We’ll be distributing a detailed memo in the next couple of weeks to help you prepare.

CAR DRIVER LICENSES

On another front, Sen. Durbin (D-IL) last week held a hearing on national standards for states in issuing general driver’s licenses. At the hearing, he outlined proposed legislation which designed to end the kind of lax rules which allowed several of the 9/11 highjackers to obtain official licenses, which then served as i.d. Rep. Moran (D-VA) is drafting legislation on the same topic for consideration in the House.

SIGMA and other marketer groups are working to include in any nationally-mandated driver’s license rules a provision that they be machine-readable and contain age information that will help you enforce laws against sales of age-restricted products.

SUPERFUND TAX

Sen. Torricelli (D-NJ) was said to be planning to introduce legislation in the Senate to re-impose the Superfund tax, perhaps as an amendment to the energy bill. The tax, which expired in 1995, would be reimposed by similar legislation introduced in the House in March by Rep. Pallone (D-NJ). Sen. Daschle (D-SD) said last week that reimposing the tax is "necessary". Since 1995, Republicans have blocked reimposition of the tax unless it was coupled with reform of the overall Superfund program. That is still the position of the Administration, but there are hints it will re-evaluate its position next year, as current funds begin to run out.

SIGMA MEETINGS

Some 500 members and guest will be in San Antonio this weekend for the SIGMA Spring Convention. Hope to see you there! And don’t forget the next SIGMA event – the SIGMA Masters program with Matrix Capital in Baltimore, Maryland, June 5-7. This will be an intense and intimate study into the topic of "Positioning Your Business for Growth & Succession: Getting Smart Enough, Early Enough".

LEGISLATIVE COMMITTEE

SIGMA’s Legislative Committee meets this Friday morning during our convention in San Antonio. A substantial part of the meeting will be devoted to a debate over possible legislation to address price inversions and/or below-cost selling. (You should have received a packet of reading material as "homework" on this subject – please read it before the meeting!) But that isn’t the only issue of concern. In addition to our normal plate of legislative issues, we’ll be discussing the recent call by at least one refiner for import fees, and recent developments in tobacco "sting" operations by states and localities. The committee meeting is open to all – be sure to attend it!