June 17, 2002

ENERGY BILL TO FOREFRONT AS HOUSE CONFEREES NAMED HOUSE CONFEREES

Last week, the House of Representatives named its members of the Conference Committee to work out differences with the Senate over the pending Energy Bill. A total of 44 House conferees were named, but only 14 of them will be involved in negotiations over the entire bill. The overall conferees are:

Tauzin (R-LA) DeLay (R-TX)

Bilirakis (R-FL) Dingell (D-MI)

Barton (R-TX) Waxman (D-CA)

Upton (R-MI) Markey (D-MA)

Stearns (R-FL) Boucher (D-VA)

Gillmor (R-OH) Gordon (D-TN)

Burr (R-NC) Rush (D-IL)

Those 14 are the only House conferees who will deal with the issues of the proposed ethanol mandate, and the proposed ban on MTBE. They, plus 3 additional conferees from the Ways and Means Committee, will be involved with the sections of the bill which contain the small refiner tax credits for low-sulfur diesel which we support:

Thomas (R-CA) Rangel (D-NY)

McCrery (R-LA)

The remaining 27 conferees will be dealing with sections of the bill which motor fuel marketers have less interest in:

Combest (R-TX) Stenholm (D-TX)

Lucas (R-OK) Stump (R-AZ)

Weldon (R-PA) Skelton (D-MO)

Nussle (R-IA) Moore (D-KS)

Gutknecht (R-MN) McKeon (R-CA)

Norwood (R-GA) Miller (D-CA)

Oxley (R-OH) LaFalce (D-NY)

Roukema (R-NJ) Sensenbrenner (R-WI)

Smith (R-TX) Conyers (D-MI)

Hansen (R-UT) Rahall (D-WV)

Cubin (R-WY) Boehlert (R-NY)

Bartlett (R-MD) Hall (D-TX)

Young (R-AK) Oberstar (D-MN)

Petri (R-WI)

Finally, an additional 3 conferees will substitute for some of the special-section conferees on some very specific issues:

Costello (D-IL) DeFazio (D-OR)

Woolsey (D-CA)

SENATE CONFEREES

Senate conferees were named earlier, and include:

Murkowski (R-AK) Bingaman (D-NM)

Domenici (R-NM) Hollings (D-SC)

Grassley (R-IA) Baucus (D-MT)

Nickles (R-OK) Kerry (D-MA)

Lott (R-MS) Rockefeller (D-WV)

Craig (R-ID) Breaux (D-LA)

Campbell (R-CO) Reid (D-NV)

Thomas (R-WY) Lieberman (D-CT)

Jeffords (I-VT)

SIGMA’S POSITION

SIGMA continues to oppose the so-called “Renewable Fuels Standard” (RFS), which would mandate a 5 billion gallon per-year market for ethanol and/or biodiesel. It is in the Senate version of the Energy Bill, but not the House version. We will be working with the conferees to make our opposition known. Our goal is to get the provision removed entirely; if we are unsuccessful at that, our efforts will be directed to making the proposal less onerous. Last week, several groups joined in our opposition to the RFS – including the Environmental Defense Fund (an environmental group) and two agencies in the Bush Administration – the FTC and the Council of Economic Advisors. The latter two groups say the RFS will increase consumer costs and may create supply problems.

THE PROSPECTS

It is hard to tell what the prospects are for the RFS. The conferees represent a pretty broad cross-section of Congress. However, NY and CA are very under-represented; they are the two states which have been working hardest to defeat the RFS. On the other hand, the “oil patch” of TX, LA, & OK is over-represented, and representatives from those states have historically opposed ethanol mandates. The Midwest “corn belt” appears to be neither under nor over represented.

REQUEST FOR ASSISTANCE

SIGMA will be calling on individual members to help us in our contacts with conferees over the next few weeks. If you have a personal contact with any of the House or Senate members named above – especially if it is a contact SIGMA does not know about – please call Dana Wood at 202-342-8608.

"NEW SOURCE REVIEW”

EPA announced last week that it would change the “New Source Review” program for determining when normal maintenance and minor upgrades of facilities are sufficient to trigger requirements for retrofitting facilities with anti-pollution devices. The rules apply mainly to facilities such as electricity generating plants and petroleum refineries. Two key changes strongly supported by industry are:

A clarification, based on an industry-specific dollar amount, of a level below which repairs and maintenance would not trigger more stringent environmental standards.

Something called “Plantwide Applicability Limits,” which would mean changes could be made (without applying for permits) as long as the total emissions from the facility did not exceed allowed limits.

The proposal has widespread industry support, but is opposed by environmental groups (who vow a court battle) and their allies in Congress, mostly Democrats.

OFF-ROAD DIESEL

There were two developments last week which indicate that tough regulation is coming for off-road diesel fuel and the motors that burn it. EPA said it will move forward with an off-road diesel sulfur rule in 2003, and will work with the Office of Management and Budget (OMB) to develop the rule. Meanwhile, two organizations representing state and local air pollution control officials held a joint news conference urging EPA to adopt tough emission standards for heavy-duty off-road engines – which likely would be regulation of both the engines and the fuel.

SIGMA has historically stayed out of non-highway distillate issues, as the major portion of that issue has to do with heating oil. However, the issue now has the potential to impact on supply of on-road and other distillates – possibly also creating storage and shipping problems as the distillate market is further fractured. For that reason, the topic will be on the agenda for our Legislative Committee meeting in July, to consider if we should become involved.

VISA/MASTERCARD LAWSUIT

The class-action lawsuit by retailers against MasterCard and Visa will be allowed to move forward. The Supreme Court last week declined to hear an appeal by the defendants to reject the “class.” At issue is their “accept all cards” policy, which requires merchants to accept their debit cards (at substantially higher fees than other debit cards) in order to accept their credit cards. Retailers who accept the cards are automatically part of the “class;” damages could exceed $47 billion.

ERGONOMICS GUIDELINES

The Occupational Safety & Health Administration (OSHA) last week announced it will develop voluntary, industry-specific guidelines on ergonomics for the grocery store industry. It is not clear whether that includes convenience stores, which are in the same SIC Code. Although the fact that these are voluntary guidelines is good news, marketers should still pay close attention. Under the General Duty Clause of the OSHA Act, employers who fail to correct recognized hazards can be cited and fined even if there is not a mandatory standard covering that particular hazard. OSHA’s announcement is available at www.osha.gov. If you have questions regarding specific ergonomics matters, please call SIGMA attorney Christina Parascandola at 202-342-8824 or e-mail cparascandola@colliershannon.com.

SUPERFUND TAXES

Senators Chafee (R-RI) and Boxer (D-CA) last week introduced S. 2596, entitled the “Toxic Cleanup Polluter Pays Renewal Act.” The bill would reinstate the Superfund taxes, which expired several years ago. Superfund will run out of money in 2004 if the taxes are not re-imposed. SIGMA does not have a formal position, but industry groups say the taxes should not be re-imposed unless Superfund is reformed at the same time. Among Superfund taxes is a tax on petroleum, which historically was passed through by most refiners as a separately-stated charge on product invoices.

GASOLINE SULFUR TESTING

EPA has published a “Direct Final Rule” containing amendments to the gasoline sulfur rules. Most of the changes appear to be technical in nature, correcting typos and making minor changes in the credits and trading program and in the testing of butane. It appears to affect refiners primarily, but SIGMA will take a closer look to be sure there are no issues affecting marketers. The new rule will soon be available online at www.epa.gov/otaq (look under “fuels”).

“CREATING WEALTH . . .”

The “SIGMA Masters” program on Growth and Succession in Baltimore was a great success, highly-rated by attendees. We now turn our attention to the program on “Creating Wealth in Motor Fuel Marketing” coming up in mid July in Charlottesville, VA, and featuring George Overstreet. The timing is great to combine the trip with the SIGMA Summer Leadership Meeting in DC, plus some family vacation time!