September 9, 2002

SEPTEMBER 11 – ONE YEAR LATER

As we deal with the changes in our lives resulting from the 9/11 terrorist attacks, let us not forget about the individuals who were most directly impacted. In commemorating the first anniversary of those attacks, we ask you to particularly remember the employees and affiliates of New York Mercantile Exchange (NYMEX), an Associate Member of SIGMA, and other SIGMA members and friends who lost loved ones.

Americans are creative people. This sometimes shows up in the way we commemorate loss of life. Just think of the mementos left at “The Wall” of the Vietnam Memorial in Washington, or the AIDS Quilt. One commemoration of 9/11 is a massive collection of photos taken by ordinary citizens (mostly of New York) before, during, and after the attacks. To learn more about it, and see some of the very moving photos, at www.HereIsNewYork.org.   

SIGMA OPPOSES ETHANOL MANDATE; SUGGESTS CHANGES

SIGMA continues to strongly oppose the proposed RFS (Renewable Fuel Standard, or ethanol mandate) that may emerge from the pending Energy Bill conference committee. We’ve reached the point where it is no longer enough to simply oppose the overall mandate; we are also going after specific provisions of the legislation passed by the Senate.

Last week, we sent a joint letter with NACS to Rep. Tauzin (R-LA), chairman of the House Energy and Commerce Committee and chairman of the conference committee, suggesting 12 improvements to the proposed bill short of killing the ethanol mandate entirely:

1) Delay the implementation date of the RFS by one year (until 2005), and reduce the amount of increase in mandated renewable fuel use to 5% of current consumption rather than the proposed 20% annual increases.

2) Have the Federal Government manage the credit trading system, so that no refiner can manipulate the price of those credits to disadvantage a competitor.

3) Eliminate the proposal that would require at least 35% of the mandated ethanol use be during the summer months. This is merely a provision to shift costs of summertime ethanol storage away from producers, and instead impose costs on refiners to make summertime ethanol blendstocks.

4) Expand the proposed ethanol “safe harbor” from liability for marketers to include MTBE liability as well, on the grounds that marketers don’t have control over which additives are used in the gasoline they buy under contract.

5) Delete the provision in the energy bill which would allow additional areas to opt into the RFG program, even if they do not have pollution problems that would justify it.

6) Delete a provision which would allow local areas to disallow the 1 p.s.i. federal waiver for ethanol-blended fuel.

7) Expand a proposed study of ethanol availability to include a market concentration study of the ethanol and petroleum.

8) Make the temporary exemption of small refineries from the RFS into a permanent exemption.

9) Conduct every year, not just the year of initial implementation of the RFS, a study of potential adverse consumer impacts and allow potential adjustments to the program each year.

10) Complete the required study of boutique fuels contained in both the Senate and House bills prior to, rather than two years after, implementation of the RFS, and strengthen the statement that Congress expects something to be done to rationalize the number of boutique fuels.

11) Substantially strengthen the provisions in both bills related to USTs, maybe by incorporating Sen. Chafee’s (R-RI) tank legislation into the energy bill.

12) Eliminat

e the trade barriers to imported ethanol, to ensure adequate supplies of renewable fuels at competitive prices.

A recent Wall Street Journal article calls the current energy bill an “expensive and bureaucratic monstrosity” with the ethanol mandate one of its “lowlights.” If all our changes were adopted, would we be in favor of passage of the Energy Bill? That is still open to question. But it would certainly make the bill more palatable to marketers and consumers. Congressional leaders have made action on an energy bill a high priority, although there are still many issues to be resolved and time is short. Once agreements are reached, floor action will move quickly.   

DIESEL DEVELOPMENTS

EPA has released a 10-year study which purports to link diesel exhaust exposure to lung cancer and other respiratory ailments. But EPA itself admits that the evidence “is less than that needed to conclude” that it is a known human carcinogen. And as API pointed out, today’s diesel is already 80% cleaner than a decade ago and will be a further 90% cleaner once new standards for fuels and engines take effect in a few years. The point: EPA’s study is about possible past problems with diesel exhaust, not with current diesel fuel. On a related note, SIGMA met last week with NPRA and others to set up the outlines for the diesel sulfur workshop scheduled for November on fuel issues from refinery to consumer tanks. We are also in discussions about how to deal with the final report from the diesel FACA (advisory to EPA on diesel sulfur fuel and engine issues), which has its final meeting Sept. 24 & 25. SIGMA will be working with others to be sure our concerns about implementation issues are included.   

NFPA30 AND 30A REVISIONS

The National Fire Protection Assn. (NFPA) is in the process of revising the two major codes which affect our industry – NFPA30 (flammable and combustible liquids code) and NFPA30A (motor fuel dispensing facilities). The two committees considered some 202 proposals over the past three years and accepted a majority of them, according to the Petroleum Equipment Institute (PEI). Among others, they include such issues as:

• Requiring tank vents within or attached to a canopy to extend at least 5 feet above the highest point of the canopy.

• Setting out minimum distances from property lines, buildings, and building openings for dispensers and for fully-extended nozzles.

• Changing requirements for aboveground storage tank locations, for breakaway devices on hoses, for fire extinguishers, and for vents on small tanks at farms and remote sites.

• Suggesting a warning sign in the fuel dispensing area saying “Static electricity buildup could cause fire or explosion. Do not get back into your vehicle while refueling. Re-entry could cause static electricity discharge.”

The NFPA codes process will lead to adoption of any changes in May of 2003.  SIGMA will be reviewing the proposed changes carefully and will comment on any we find to be problematic. Meanwhile, if you would like to review them for yourself, a downloadable copy (PDF format) can be accessed through the PEI website at www.pei.org/FRD.   

CANOPY DEPRECIATION

In response to an IRS request, we will be surveying our members regarding canopy issues this week. Please give this survey your priority attention when it arrives!   

CHEMICAL & HAZMAT SECURITY

We are still trying to determine whether the version of the Chemical Security bill which passed Senate Committee in July actually exempts most retail outlets. We know that was the intent; we just don’t yet know if it is reality. We understand that Sen. Corzine (D-NJ) may attempt to add this bill to the Homeland Security Act now before the Senate. Meanwhile, Rep. Tauzin has written to EPA challenging that agency’s plan to require chemical safety evaluations in relation to terrorism security. Tauzin questions whether EPA has statutory authority for such a requirement. DOT is also getting into the act, announcing last week the beginning of a test of the effectiveness of various security technologies and procedures for safeguarding hazardous materials being transported by trucks. That test will be a 2-year study using 100 trucks. 

STATES WANT TO KEEP POWER

State governments are asking Congress to “stay out” of their business. The Council of State Govts. told Congress it opposes federal standards for drivers licenses (standards might help marketers enforce age-restrictions on products). And the Natl. Conf. of State Legis. has written to EPA asking that its New Source Review rules not preempt state rules.   

SIGMA CONVENTION ITEMS

At the request of the SIGMA Marketer Operations Committee, some of you will receive a request for participation in a panel at our Annual Meeting in Chicago on telecommunications infrastructure in your business. Please respond promptly to Bruce Bates, so he can put together this excellent program.

We received a news release this week from CFN announcing a new interface that will allow acceptance of the T-Chek card. It reminded us: there are many new developments for fleet fuelers, and the SIGMA convention offers an extensive set of programs on that subject.

END NOTES

At the request of PMAA, Sen. Landrieu (D-LA) has asked the GAO to expand its study of the effect of oil company mergers to also include a study of the impact of hypermarkets on motor fuel marketing . . . A federal appeals court has upheld the right of a EPA to “overfile” a complaint where the state had already settled its case with a private party . . . And congratulations to Glenn Tilton of ChevronTexaco, a past SIGMA convention speaker and magazine profile subject, who is the new CEO of the parent company of United Airlines!