May 20, 2002

ENERGY BILL CONFERENCE COMMITTEE DELAYED

Republican leaders of the House of Representatives have delayed the appointment of House conferees for the big Energy Bill until after the Memorial Day recess. The reason appears to be strategic, according to published sources. By delaying the start of the conference committee, there will be less time for negotiations to get “bogged down”, and thus there may be increased chances of actually getting a bill passed.

The plan appears to be for the conferees to be named in June, and the month of July will be used to sort out what the issues of contention are. During the August recess, staffs from both sides will begin the negotiation process, with members finalizing any “deals” during September – just before the elections, and at a time when the pressure to act quickly (in order to get home to campaign) will be greatest.

Such a strategy appears to weaken the chances of some of the controversial provision in the House bill, such as drilling for oil in the Alaska National Wildlife Refuge (ANWR). But that may not be a serious problem for the House leadership, which (together with the Administration) now appear to care more about passing something called an “Energy Bill” than they care about the specific provisions of that bill. That in turn may strengthen the hand of Sen. Daschle (D-SD), who appears to care very deeply about including an ethanol mandate in any energy bill.

A few months ago, it looked like both sides might be more interested in creating a campaign issue than in actually passing legislation. That perception has changed; both sides appear to want to actually pass a bill. But the big question – what will that bill say? – remains to be resolved.

HAZMAT SECURITY RULES

The Dept. of Transportation (through its RSPA agency) is proposing changes in rules for those who ship hazardous materials, including gasoline and diesel fuel. The rules are broadly based to include “offerors” of hazmat for shipping – i.e., those who “cause” hazmat to be shipped. Thus, many marketers could be covered, even if they do none of their own trucking. The rules are in response to post-9/11 concerns.

Key parts of the rules would 1) require an actual copy of the motor carrier’s RSPA registration certificate onboard each motor vehicle, not merely some paper containing the registration number; 2) require that shipping papers include the actual street address of both the source and destination(s) of each shipment of hazmat; 3) require most petroleum marketers to have a security plan in place; and 4) require that all “hazmat employees” be trained in a variety of hazmat handling issues.

The proposed rules are on a “fast track”, with a June 3 deadline for comments. Click here for a detailed memo on this subject. After reviewing the proposal, if you have any concerns, please contact SIGMA attorney Greg Scott at gscott@colliershannon.com.

TAX-OR-DYE PROPOSED RULES

The IRS has issued a notice of proposed rulemaking for changes to the rules regarding kerosene and diesel tax-or-dye liability. The focus is on expanding the pool of those who can be held responsible for tax cheating through blending untaxed fuel with taxed fuel. In simple terms, under current rules, only the owner of the fuel at the time of the blending can be held liable. Under the revision, the party which caused the blending to take place could be held responsible (under “joint and several” liability) even if not holding title to the fuel at the time.

IRS is asking for comments by August 14. SIGMA will be examining the proposal and will be involved in the process. Although we do not yet have a position on the specific proposal, we have long been in support of enforcement mechanisms for motor fuel tax laws that effectively prevent or deter tax cheating and thus ensure that all marketers are operating on a level playing field.

MTBE HEARING THIS WEEK

The House Subcommittee on the Environment and Hazardous Materials, chaired by Rep. Gillmor (R-OH), has scheduled a hearing this Tuesday on the issue of MTBE contamination of groundwater supplies. There will be no industry representatives testifying at this hearing. The witness list includes representatives of EPA’s Office of Water, the U.S. Geological Survey, the General Accounting Office, and possibly others from state and/or local government. SIGMA testified at an earlier hearing on the same topic, so we did not ask to speak at this one. We are hopeful that this hearing will further help to lay the groundwork for moving forward on UST legislation.

PETROLEUM EXCLUSION

There is increasing talk on Capitol Hill about re-imposing the Superfund tax, and with it some danger that the petroleum exclusion from Superfund could be eliminated. The tax expired in 1995, and Republicans have refused to re-impose it until the overall Superfund program is reformed. The fund had a balance of $3.8 billion in 1996; it will have dropped to $427 million by the end of this fiscal year, and perhaps as low as $28 million by 9/30/03 if the tax is not re-imposed. The petroleum exclusion does not exempt petroleum from the superfund tax, but only from regulation (since petroleum contamination is regulated under RCRA). Without the petroleum exclusion, every leaking underground tank site would become a Superfund site.

Right now, Democratic lawmakers from New Jersey are leading the charge both on re-imposing the tax and on eliminating the petroleum exclusion. Rep. Pallone (D-NJ) has introduced H.R.4060 to re-impose the tax, and Sen. Torricelli (D-NJ) is expected to introduce similar legislation in the Senate soon. Both Pallone and Sen. Corzine (D-NJ) have reportedly made statements relating to deleting the petroleum exclusion. SIGMA will be active on this issue, particularly on maintaining the petroleum exclusion.

MONEY ORDERS HELP SALES $

Money orders attract new traffic into stores. Customers who purchase money orders also buy gasoline and retail items. The Profile of the U.S. Money Order Sector reports that these “rub-off” revenues average from $2 to $7 per money order sold.

3T’s Total Solution is the leading in-house money order system, and as a SIGMA member, you’re entitled to an important discount. Call toll-free: (877) 343-9900. Or email: sales@3tsolutions.com.

HAZMAT LOADING/UNLOADING

The Dept. of Transportation has delayed until at least mid-2003 its planned action on regulations for loading and unloading hazardous materials. This relates indirectly to the story above regarding hazmat security rules, in this respect: DOT and RSPA have been vague about the definition of an “offeror”. Without a clear definition, marketers who don’t do their own transportation have to guess as to whether or not to register, and face negative consequences for guessing wrong either way. For example, would c-store employees be “hazmat employees” for unloading purposes if they have limited responsibilities in “receiving” deliveries of product, thereby requiring the same training as the truck driver?

When DOT issued a proposal on the loading/unloading issue, SIGMA and others submitted comments asking for a clarification of the definition. It now appears that RSPA didn’t like the comments it got, and is pulling back the proposed regulations until it can find a way around the comments.

LOW-SULFUR DIESEL

The first meeting of the Independent Review Panel on “clean diesel” will be this Thursday, May. 23. The panel of “outsiders” is required under the law to advise EPA on issues related to implementing the ultra-low-sulfur rule. Alan Wright of Pilot Oil Corp. is serving on the panel, representing SIGMA and other marketer groups. Thus far, we have little indication of what the agenda for the first meeting will focus on.

MISCELLANEOUS TIDBITS

Kentucky has joined the list of states banning MTBE, effective in 2006 . . . California’s environmental chief now says that, even though MTBE is a serious problem, the one-year delay in its phase-out announced by Gov. Davis (D) is justified . . . The Federal Motor Carrier Safety Administration has adopted new rules toughening the safety requirements for “new entrant” motor carriers. The rule can be viewed after searching by clicking here.

SUMMER LEADERSHIP MEETING

Click here for a sign-up form for the SIGMA Summer Leadership Meeting in Washington. This mini-conference replaces and builds upon what we used to call our “Summer Committee Meetings.” This time, we’ll have as an added attraction a “plant tour” and program on hydrogen fueling – a technology which would allow your cardlock or c-store to become a fueling station for hydrogen-powered fuel cell vehicles. Don’t miss this industry “first”!