July 15, 2002

SIGMA CONTINUES TO BATTLE PROPOSED ETHANOL MANDATE

SIGMA members and our lobbyists continue the “full court press” to get the Conference Committee to delete from the pending Energy Bill the proposed ethanol mandate contained in the Senate version of that legislation. That proposal, officially called a “Renewable Fuels Standard” or RFS, would mandate the annual use of 5 billion gallons of ethanol or similar products in motor fuels – roughly three times the current production capacity of the ethanol industry.

On Tuesday of this week, a briefing for western Congressmen and their staffs will be held, at the call of Rep. Jim Hansen (R-UT), Chairman of the House Resources Committee, to educate them on the problems an ethanol mandate would cause for their constituents and to “rally the troops” among those who are already aware of the issue. SIGMA Board member Rick Crawford will attend and make a brief presentation at that session, representing both SIGMA and NACS. Other speakers will include some refiners and environmentalists who oppose the mandate. This meeting is part of an ongoing effort to form regional coalitions to oppose the mandate. Previous sessions have been held for California, New York, and northeastern representatives.

SIGMA’s Summer Leadership Meeting in Washington this week will also provide an opportunity for direct member contacts with legislators. Defeat of the RFS is the top priority in the packets of materials being prepared for each SIGMA member who has appointments on Capitol Hill. And there will be other opportunities to communicate with Members of Congress during the meeting as well – for example, some 15 Representatives have accepted an invitation to a SIGMAPAC reception on Tuesday evening of the meeting.

NEW RULE ON HAZMAT PAPERS

The Dept. of Transportation issued a final rule last Thursday, effective August 7, requiring shippers and carriers to keep copies of shipping papers for Hazmat shipments for at least 375 days after a shipment begins. That’s one year and 10 days, with the extra 10 days being an attempt to be consistent with the law which requires records be kept for a year after the shipment ends.

This new rule will apply to motor fuel shipments, and thus applies to any SIGMA member who takes title to product at or above the terminal level and arranges shipping in his own or someone else’s trucks (i.e., to everyone who has to register as a Hazmat shipper or offeror.) However, the effect of the rule may be minimal or even nil. Marketers in RFG areas are already required to keep product transfer documents (i.e., shipping papers) for five years. The rule’s impact appears to be limited to those in conventional gasoline areas who are not already saving the shipping papers for other reasons.

LOW-SULFUR DIESEL

SIGMA met last week with members of Rep. Dingell’s (D-MI) staff on the topic of ultra-low sulfur diesel. Dingell had gone on record saying that diesel desulfurization needs to go even farther and faster than planned in EPA’s program for 15 ppm sulfur. The reason for Dingell’s concern? Two requirements for SUVs and other light-duty “trucks” are causing problems for auto manufacturers located in his Detroit district. To meet CAFE standards, Detroit wants to switch many such vehicles from gasoline to diesel engines. However, the can’t do that and still meet “Tier II” emissions standards for light-duty vehicles which kick in two years from now – at least not with 15 ppm sulfur diesel. They think they need 4 or 5 ppm sulfur.

SIGMA explained to staff our concern: availability of supply, and EPA’s currently-mandated phase-in. In essence, we said we had no problem with ZERO ppm sulfur – if we could be guaranteed there would be adequate supply at competitive prices. Of course nobody could guarantee that; in fact, most observers expect supply problems and/or price spikes even with the current plan for 15 ppm sulfur.

ANTI-MONEY LAUNDERING

New rules take effect in less than two weeks (July 24!) for marketers who sell money orders or offer certain other financial services. The rules, adopted by the Dept. of Treasury under the Financial Crimes Enforcement Network (FinCEN) and mandated by last year’s USA PATRIOT Act, are designed to help ensure that these services are not being used to aid in money laundering.

SIGMA’s attorneys have prepared a compliance guide that can be adopted by members as a means of coming into compliance with the rules by July 24, 2002. Download a copy of that document, complete with attachments, by clicking here.

You can find additional documentation about the law and the rules on our website's home page.

TANK ENFORCEMENT MEETING

SIGMA has been invited by EPA to attend a meeting which will focus on a “new” system for environmental enforcement, compliments of the Commonwealth of Massachusetts. The meeting is this Thursday in Washington, and is sponsored by ASTSWMO, the organization of Territorial and State Water Management Officials. The topic of discussion is “Environmental Results Program” (ERP), developed by Massachusetts’ environmental department and so far applied only to three specific industries: dry cleaners, printers, and photo processors. This program is to look at the possibility of expanding it to the underground tank regulatory program, on a state-by-state basis.

The key to the program appears to be a requirement that each business have its top executives self-certify that they are in compliance with all environmental laws and regulations. Facilities that are not in compliance must file a “Return to Compliance” plan, which describes the corrective actions that the facility will take and a schedule to achieve full compliance. Stated benefits to industry are a reduction in the number of and cost of permits required from the state, and compliance-assistance materials provided for all facilities covered under the program.

While SIGMA is pleased that EPA reached out to us to be included in this program, we do have concerns that this could turn into yet another “gotcha” kind of enforcement – where the agency goes after paperwork violations of self-reporting businesses in order to “look good” with high compliance numbers, but totally ignores the real problem: the scofflaws, who make no effort to self-report at all. We are trying to keep an open mind as we go into the meeting, though.

DOT SECURITY REGS

The Dept. of Transportation received 252 comments about its proposed security regulations for Hazmat shippers. About a fourth of the comments were from petroleum and heating oil marketers, with the main objection being the requirement that shipping papers for hazardous materials include both the source and destination of each cargo. SIGMA was among the groups filing comments raising this objection, pointing out that it is impractical in the real world of petroleum marketing, where the destination of a shipment can easily change en route, and that it would add little to additional security.

FINAL SPCC REGULATIONS

SIGMA joined with PMAA in a meeting with EPA’s Small Business Ombudsman’s office regarding the pending SPCC rule, which is expected to be released at any time. We were seeking assistance in urging EPA to clarify parts of the final revisions to the rule, and to help members understand and comply with the regulation. SPCC is the program requiring “Spill Prevention, Containment, and Control” measures at bulk plants, terminals, and (in some cases) retail outlets, where catastrophic spills are possible.

MISCELLANEOUS TIDBITS

Matrix Capital Markets Group announced last Wednesday that it has been retained by the Bankruptcy Court Trustee to manage the asset sale of Fas Mart Convenience Stores of Richmond, VA, a 169-unit chain. For more information, contact Spencer Cavalier at 410-752-3833 . . . According to Dow Jones News Service, IRS has included the issue of canopy depreciation in a list of its “top seven” frequently disputed tax issues that it pledges to resolve. In 1995, the Tax Court ruled in favor of 5-year depreciation, but IRS agents are consistently rejecting that ruling and instead insisting on 15-year depreciation . . . PEI has released a “Recommended Procedure for Testing Electrical Continuity of Fuel-Dispensing Hanging Hardware,” in large part in response to problems discovered during studies of refueling flash fires. To order the document, RP400-02, fax PEI at 918-491-9895 to request an order form, or order online at www.pei.org/catalog . . . Marketers who accept MasterCard and Visa have an opportunity to either join or stay out of a class action lawsuit against those two credit card companies beginning on Sept. 9 of this year, and running until Nov. 14. At issue are those companies’ “honor all cards” requirements, particularly in regard to their debit card products – which have charged a substantially higher fee than other debit networks . . . If you’re coming to DC for the Summer Leadership Meeting, note that the reception and group dinner on Tuesday are moved to Solé Restaurant. See you there?