July 29, 2002

SIGMA MARKETERS WIN VICTORY AS TANK BILL PASSES COMMITTEE

Last Thursday, the Senate Environment and Public Works Committee unanimously approved, by voice vote, a bill SIGMA has been working on for months. SIGMA and our principal ally on this issue, NACS, worked closely with the committee over the past few weeks to make key amendments to the original bill. An “amendment in the nature of a substitute” to S.1850 was presented by the chief sponsor, Sen. Chafee (R-RI), and with some further modifications was adopted. The first major tank bill in over a decade, it would:

Require EPA to send at least 80% of all appropriations from the LUST Trust Fund to the states.

Allow the states and EPA to use LUST Trust Fund money for enforcement of the 1998 tank standards.

Require states to physically inspect all regulated tanks at least once every two years.

Require localities, states, the Federal government, and Indian tribes to file a report within two years listing all tanks that are not in compliance with the 1998 standards. (Once such lists are made public, pressure on agencies to come into compliance could come both by public embarrassment in the news media and by citizen lawsuits from environmentalists or others.)

Direct EPA to develop a training template for use by the states; marketers and other tank owners would then be required to comply with the state training programs.

Specifically authorize (but not require) “red tag” programs by the states, and requires EPA to offer guidance to states that want to implement such programs. Such programs generally make it illegal to deliver product into a tank that has been marked by the tank regulatory agency as non-compliant with tank rules.)

Greatly increase the authorization for appropriations from the LUST Trust Fund for each of the next five years. In addition to$150 million per year for the basic tank program (the Bush request for Fiscal Year 03 is only $73 million), it would authorize up to $125 million annually for MTBE cleanup programs, and other funds for the training, inspection, and red-tag programs mentioned above. In all, authorization would increase to $330 million per year from the fund, which now has a balance of nearly $2 billion and is currently adding $97 million per year in taxes and $113 million per year in interest.

Waive federal “sovereign immunity” for government-owned tanks, allowing states to enforce the rules against them. This was a separate amendment to the substitute bill, proposed by Sen. Wyden (D-OR) and approved with one dissenting vote, from Sen. Smith (R-NH).

SIGMA had four goals in tank legislation, and we believe the final version of the bill as it passed committee contains significant improvements on three of them: more money from the LUST Trust Fund to the states, allowing LUST Trust Fund money to be used for enforcement of the 1998 tank rules, and stepped-up enforcement against public-owned tanks. We did not achieve our fourth goal – allowing LUST Trust Fund money to be used for reimbursement of cleanups.

Committee staff will draft the committee’s report on the bill over the August recess, with debate and action by the full Senate expected in September. SIGMA expresses our thanks to the three primary backers of this legislation who pushed it through committee: Sens. Chafee (R-RI), Jeffords (I-VT), and Boxer (D-CA).

ENERGY BILL

House and Senate conferees met last week and announced they had reached agreement on 57 non-controversial provisions. Rep. Tauzin (R-LA) and Sen. Bingaman (D-NM) say they hope to finish work on the bill by the end of September, and have meetings of the full conference scheduled for Sept. 16 and 23. Issues of greatest importance to marketers – especially the possible Renewable Fuels Standard (ethanol mandate) remain to be resolved.

LAME-DUCK SESSION?

The House recessed at the end of last week, and the Senate goes out the end of this week. Both come back after Labor Day, with only about a month left until time to go home and campaign for the November elections. Some “sages” are predicting that Congress will not finish the Appropriations process until a lame-duck session after the elections. The energy bill could also be pushed back to such a session.

LOW-SULFUR DIESEL

SIGMA was among a group of “downstream” associations who met with EPA representatives in Ann Arbor, MI, last Tuesday. The purpose of the meeting was to discuss downstream implementation issues for the coming ultra-low-sulfur diesel – issues such as contamination (including the possible need for truck transport segregation), mis-fueling, retailer liability, flow rates, nozzle sizes, etc. Alan Wright of Pilot Oil, who is representing SIGMA and other marketer groups in the low-sulfur diesel “FACA” dealing more with upstream issues attended this meeting, in addition to representatives of SIGMA, NATSO, NACS, the American Trucking Associations (ATA), and the Association of Oil Pipelines.

Although no agreements were reached, participants feel it was a good first meeting. It was clear that EPA wants to work with us to resolve those kinds of issues in advance. Both sides left with assignments for information-gathering, in preparation for another meeting or conference call in about a month.

Separately, the FACA meets here in Washington this Tuesday and Wednesday, and Alan Wright will again be representing SIGMA and other marketer groups. The format of that meeting apparently will be presentations giving reactions to EPA’s “study” which was reported at their last meeting – a study which essentially said everything was hunky-dory and moving forward on schedule. SIGMA is not so sure that is the case.

FUELS & FUEL ADDITIVES

In the mid-1990's, SIGMA worked with EPA on the Fuels and Fuel Additives Registration Program. It basically applies to refiners and importers of gasoline and diesel, with the exception of oxygenates. Although most SIGMA members are exempt from registration under the program, a sizeable number are covered. If you are covered – and have had to register under this program – there is a recent development.

It appears that many companies have not been diligent in filing the quarterly and annual reports required under this program. EPA has noticed, and is trying to bring everyone up-to-date. They are calling registered entities and offering an “amnesty” period of a couple of months during which old reports may be filed without penalty. If you fall into this category – even if you haven’t yet received the call from EPA – please call SIGMA attorney Greg Scott at 202-342-8646 and he can provide you with some helpful information.

SENATE: “NO” TO RSPA

On Thursday, the Senate Appropriations Committee approved 2003 funding for the federal highway program as part of the overall transportation appropriations bill. Among other items of note, he bill appropriates $8.6 billion more for highway construction than the Bush Administration had requested. The committee also handed a victory to petroleum transporters as part of its action.

First some background. The Dept. of Transportation’s RSPA requires those who offer or transport hazardous materials (including gasoline and diesel fuel) in commerce to register and pay an annual fee – a fee that was greatly increased three years ago. The higher fees are generating more money than RSPA is authorized by Congress to collect. RSPA had initially filed a plan to reduce those fees, but has stalled on action – apparently hoping Congress would authorize the higher collection amount. In fact, a lawsuit was recently filed to force RSPA to move forward with reducing the fee level to bring total collections within the range allowed by law.

Having said all that . . . the Senate appropriations bill does not authorize the increased collections levels that RSPA wanted. If this decision holds, RSPA will surely be forced to reduce the annual fee you pay – and perhaps issue a refund for past overpayments.

LEGAL MEMOS AVAILABLE

We have just posted on elsewhere on our website two detailed memos from our attorneys giving legal interpretations of recent rulings. Click here for an explanation of the June ruling by the U.S. Supreme Court on expanding an exemption from the Americans with Disabilities Act. Click here for a summary of the new SPCC rule (Spill Prevention, Containment, and Countermeasures), which does not apply to most retail outlets but will apply to bulk storage plants and terminals, among other marketer facilities. These memos can help you stay in compliance with laws and regulations!

TERRORISM PREVENTION

S.1602 was approved by Senate Committee last week, calling for all facilities with certain chemicals and substances to file plans with EPA detailing how terror attacks will be prevented. As drafted, the bill would cover gas stations. Although EPA would be allowed to exempt facilities where the threat level is low, SIGMA will be working to put into the bill a specific “threshold level” below which such plans would not be required. Other upstream industry groups are opposing the bill overall, suggesting that EPA is not the right agency.