July 22, 2002

SIGMA LEGISLATIVE COMMITTEE MEETS WITH NPRA COMMITTEE

at the just-concluded SIGMA Summer Leadership Meeting in Washington, one of the highlights – and the best-attended individual session – was the joint meeting of our Legislative Committee with the comparable committee of the National Petrochemical and Refiners Assn. (NPRA).

Several issues were discussed where the two groups committed to closer cooperation:

• Both SIGMA and NPRA understand that the effort to defeat the ethanol mandate in the pending Energy Bill is an uphill battle, but neither group is ready to abandon the effort.

• SIGMA and NPRA should work together in approaching the Federal Trade Commission (FTC) about their newly-instituted price watching program. The two groups want to encourage the FTC to look at how boutique fuels are affecting supply and prices, and particularly price spikes.

• As EPA prepares to propose a rule for reduced sulfur in off-road diesel, both SIGMA and NPRA will be developing positions on the issue, including how such a rule should interface with existing low-sulfur rules for on-road diesel as well as with heating oil and jet fuel (see story below). NPRA will contact the Association of Oil Pipelines to see if a study they have underway addressing shipping contamination issues can be completed in time for the information to be useful in the development of the proposal.

After the departure of the NPRA members, SIGMA’s Legislative Committee took up a number of other issues – including most of those discussed elsewhere in this Weekly Report.

Other highlights of the Summer Leadership Meeting included a plant tour and program on hydrogen fueling of fuel cell vehicles, a post-dusk cruise on the Potomac River, and a SIGMAPAC reception on Capitol Hill attended by 16 Congressmen and Senators: Reps. Adderholt (R-AL), Coble (R-NC), English (R-PA), Gillmor (R-OH), Hobson (R-OH), Tim Johnson (R-IL), Manzullo (R-IL), Matsui (D-CA), Pickering (R-MS), Platts (R-PA), Ryan (R-WI), Shimkus (R-IL), Shuster (R-PA), Thurman (D-FL), and Wicker (R-MS), and Sen. Inhofe (R-OK). You should have been there!

NEW SPCC RULE FINALIZED

On Wednesday, EPA published in the Federal Register its revised final rules under the SPCC program (Spill Prevention, Control, and Countermeasures). The final rule is mostly clarification, and is mostly good news (compared to the original rule). The good news: while the rule applies to facilities with more than 42,000 gallons of underground storage or 1,320 gallons of aboveground storage of petroleum products, underground tanks subject to the federal UST regulations do not count and are not covered. Thus, virtually all retail sites are exempted. The bad news: the rules still require secondary containment for covered sites. That means many bulk plants are covered, and will be required to have in place dikes, berms, and/or other barriers to contain a catastrophic spill or tank failure. Those covered have six months to bring their SPCC plans into compliance with the new rules, and up to a year to actually implement the plans. Again, while this is not a new requirement, the fear is that with the new rule, there will be new attention to enforcing the rules. SIGMA will have a detailed memo available on our website sometime next week. For a complete copy of the published rules, go to the Federal Register website by clicking here. Click on 2002 Federal Register, click “Final Rules and Regulations”, click “On” and enter the date 07/17/2002, and then enter “SPCC” in the Search Terms. The first document it will bring up, available either in HTML or PDF format, will be the full regulations.

HEIDI PRANGE TO LEAVE

SIGMA’s Director of Meetings, Heidi Prange, has announced her resignation from SIGMA effective this Friday, July 26. She will be taking on meeting planning duties for another association in August. Her many friends in SIGMA, made over her 8-year tenure here, wish her the best!

ENVIRONMENTAL RESULTS PROGRAM

SIGMA attended last Thursday’s meeting hosted by EPA and by ATSWMO, the state and territorial water management officials’ organization regarding the “Environmental Results Program.” The purpose of the meeting was to report on the “positive success” of the program in Massachusetts with several industries, with the thought of rolling it out to other industries and other states. Marketers in Tennessee, Rhode Island, and Delaware should be aware those states are looking at it for underground storage tank (UST) programs. The program has both good points and bad points, as SIGMA’s representative pointed out at the meeting. On the positive side, the concept in general is good. It takes a multi-media approach (air, water, and ground all combined), it provides for one-stop permitting and compliance, it gives the regulated community a compliance manual in plain English, it allows for self-certification, and it allows regulators to focus their attention on non-certified players. On the other hand, there are some serious negatives and potential pitfalls in the actual implementation. The self-certification required is “under penalty of perjury” and requires certification about future compliance – something that is difficult to guarantee. The certification is supposed to be made by an officer of the company – something that may be applicable in a typical printing company, but not for most tank owners who don’t have an officer located at the facility. Finally, most of the benefits to industry are from the “one-stop” provision; when the program is limited to “tank owners” or “Stage II Equipment” rather than to the entire “gasoline fueling facility”, it loses most of its value to marketers and all that is left are the negatives. In MA, for example, the program has been partially implemented for Stage II regulations, and marketers are suing the state and proposing legislative changes. There, the certification requirement is called the “designated felon” requirement. SIGMA is involved in the process, though, and will work with EPA and with the states as appropriate to ensure that the favorable aspects of the concept outweigh the negatives.

VISA/MASTERCARD

At least some of the papers in the VISA/MasterCard class action lawsuit will be unsealed in August. Once that happens, SIGMA’s attorneys will make recommendations as to whether marketers should accept being part of the class (“default” if you do nothing) or should opt out. The decision to opt out of the class will be available until November.

FDA AND TOBACCO

A Senate markup of Kennedy-DeWine legislation to give FDA authority to regulate tobacco scheduled for this week was postponed. If the bill does get brought up, it probably will pass committee but not pass the full Senate.

OFF-ROAD DIESEL

As mentioned earlier, EPA plans to propose a rule requiring a major reduction in the sulfur content of off-road engine diesel sometime in the first quarter of 2003. This comes on the heels of a rule reducing on-road diesel sulfur to 15 parts per million (ppm). Not expected to be covered by the rule is any reduction in sulfur in jet fuel (they’re afraid to risk possible engine failures) or heating oil (no jurisdiction). There are serious questions for marketers about which direction we would want EPA to go on this. Going with a distinctly different standard for off-road diesel, giving us three distinct middle distillates (4 or more during a transition period) could cause major storage and logistics problems. On the other hand, bringing off-road down to the same level of sulfur as on-road would create supply problems and also logistics problems in shipping related to contamination. SIGMA has no position as yet, because it isn’t yet clear that either alternative is a slam-dunk preference. We will discuss the matter further at the Chicago convention in November.

TRIBAL TAXES

SIGMA continues to push for legislation to address motor fuel and tobacco excise tax evasion by some tribal interests. We and our allies now have 8 co-sponsors of HR 2726, and expect more to sign on as a result of visits by SIGMA members last week. We are focusing on members of the House Resources Committee, and hope to get favorable action by that committee before adjournment this fall. Beyond our efforts on that bill, we are having some impact in stopping the problem from spreading, by involving ourselves in proposals to extend tribal recognition to 7 tribes in Virginia or to give native Hawaiians tribal rights.

MINIMUM WAGE & SOT

Democrats are expected to make a run for a minimum wage increase this fall. Sen. Kennedy’s (D-MA) proposal calls for a $2 increase over 24 months. The Republican alternative calls for $1 over 18 months, plus a series of tax concessions to affected businesses including repeal of the Special Occupational Tax (SOT) of $250 per beer and wine retail license. SOT repeal is also part of some other proposed bills, and enjoys broad support in Congress – but apparently won’t be enacted except as part of a broader package.

NTSB & FUEL DELIVERIES

SIGMA and our allies are having little luck in our attempt to get the National Transportation Safety Board to remove the “store clerk” from the loop in its delivery supervision rules.