September 2, 2002

PHILLIPS MERGER WITH CONOCO APPROVED, WITH DIVESTITURES

On Friday, the Federal Trade Commission announced a proposed consent order that would allow the Phillips and Conoco merger to move forward, subject to their agreement to sell certain assets and provide other “relief”. Phillips and Conoco immediately accepted the terms and consummated the merger, forming a new company, ConocoPhillips.

The major concessions required by the FTC that impact on SIGMA members are in the Eastern Colorado and Northern Utah markets, where significant divestitures of refineries and marketing assets are required. This includes the Woods Cross refinery in Utah and all related marketing assets; the existing Conoco refinery in Commerce City, CO (Denver); and existing Phillips marketing assets in Eastern Colorado (everything east of the Continental Divide).

Also affecting motor fuel marketers are terminal divestitures required in Spokane, WA (Phillips terminal must be sold) and in Wichita, KS (Phillips terminal must sign an agreement with another company offering throughputting and an option to buy 50% undivided interest).

Most other divestitures required by the FTC deal with the too-strong positions the combined company would otherwise have in certain natural gas and propane markets.

For more information, go to the FTC website at www.ftc.gov. Documents there include a news release, the Agreement Containing Consent Orders, the Decision and Order itself, the Order to Hold Separate and Maintain Assets, a copy of the Complaint which formed the basis for the required actions, and an Analysis of Proposed Consent Order to Aid Public Comment.

HAZMAT TRANSPORT SECURITY

The U.S. Dept. of Transportation, through two of its agencies, is looking for public comment on the need for beefed-up security for transporters of hazardous materials, including gasoline and diesel fuel. DOT is considering such ideas as requiring armed escorts, vehicle tracking and monitoring systems, emergency warning systems, remote shut-offs for vehicles in transit, etc. SIGMA plans to make comments, and is seeking member input on these various possibilities. To share your views and reactions, e-mail Greg Scott. Please respond by September 15! Thanks. 

SPCC CLARIFICATION COMING

We have received word from EPA that a clarification will be coming out next week dealing with the changes to the Spill Prevention, Containment, and Countermeasures (SPCC) rule revisions that were issued earlier this summer. The issues, while technical, can have broad implications. For example, the rules require that a secondary containment area be empty at all times. How is this interpreted in areas where ice and snow can build up in the wintertime?

On a related matter, we are in contact with the National Air Transport Assn. which has concerns about how SPCC rules might affect airplane refueling and fuel trucks – concerns that may be shared by other SIGMA mobile refuelers.    

SECURITY CONCERNS

As the anniversary of 9/11 approaches, SIGMA will participate in a conference call this Tuesday on security for the Oil and Natural Gas Sectors, with the FBI and National Infrastructure Protection Center.    

CONGRESS TO RETURN

Congress comes back into session this week, after having been out of town for most of August. They have a full plate of required actions in the next month to 6 weeks, including:

• Action on most of the appropriations bills to fund the Federal Government for the Fiscal Year 2003 (FY03), which begins October 1, 2002.

• The huge Energy Bill, which may include an ethanol mandate and other provisions seriously impacting on motor fuel marketers.

• The possibility of war with Iraq. Although there are those in the Bush Administration making the case that the President already has authority for a pre-emptive strike against Iraq, leaders in both parties in Congress are increasingly insisting that such action should be first “sold” to Congress and the American people.

SIGMA is gearing up for major efforts through the fall on the lobbying front. Both the energy bill and war with Iraq will seriously affect SIGMA members, and we want to be sure your voices are heard in the decision-making processes. 

SOUTH CAROLINA UST PROGRAM

Last week, the state of South Carolina received approval for its current Underground Storage Tank (UST) regulatory program. States which have such approval are allowed to be the primary enforcer not only of their own rules, but also primary enforcer of the federal rules, with respect to most USTs within their borders.