September 16, 2002

ENERGY CONFEREES MEET; “DEADLINE” OF 9/30 TO FINISH WORK

The House/Senate Conference Committee working on the huge Energy Bill met last Thursday for most of the day. They came away with agreements on most of the lesser “Tier 2" issues, as well as a couple of the “Tier 1" issues – pipeline safety and nuclear energy. Although none of “our” issues were resolved, the general direction of the conference has significance.

Rep. Tauzin (R-LA), chairman of the conference, has informally set a deadline of Sept. 30 for the committee to complete its work and report out a compromise bill. That is a bit of a tall order, given the many contentious issues remaining. The next meeting of the conferees will be this Thursday, Sept. 19. At that meeting, they will take up CAFE standards (automobile fuel economy) and electricity issues. Tauzin appears to be holding the most contentious issues until last – the Senate ethanol mandate and the House provision for drilling in the Alaska National Wildlife Refuge (ANWR). Because ethanol is vital to Sen. Majority Leader Daschle (D-SD), this strategy by Tauzin appears to maximize his ability to wring concessions from the Senate, both on the ethanol issue itself and on a range of other issues as well.

speaking of ethanol, Reps. Dan Miller (R-FL) and Jim Davis (R-FL) have reportedly written to the rest of the Florida delegation, urging them to oppose the ethanol mandate in the energy bill.

Our prognosis for this legislation?

• There is an “outside chance” that there will be no energy bill passed this year – i.e., that the conferees will be unable to reach agreement, or that the conference report will be rejected by either the House or the Senate.

• If there is an energy bill, it will almost certainly contain some form of an ethanol (or “renewable fuels”) mandate.

• Even with no overall energy bill, there could be a stand-alone ethanol bill that would pass both House and Senate.

• Thus, under any of the scenarios, what has now become critically important is the precise nature of any ethanol mandate. At this point, SIGMA is working vigorously to minimize the damage to marketers, consumers, and the economy from such a mandate by seeking amendments to the proposal. Click here to again look at our proposed amendments.  

DIESEL: EPA WORKSHOP

Begin planning now to attend an EPA workshop on low sulfur diesel implementation issues (including many below-the-rack issues), in Houston in mid-November. We don’t yet have the precise dates, but it will be a 2-day conference. Remember the roll-out of RFG? This will be a similar approach. SIGMA is working with NPRA to put the workshop together. It will involve EPA addressing questions raised by the industry in areas such as supply, liability, equipment requirements, and test methods. Participants will give EPA input during the session, and EPA will try to clear up issues on the spot. There will be questions submitted in advance, questions asked at the workshop, and (most likely) a series of question-and-answer documents that will be published as a result, which will serve as guidance to enforcers. Another note: at a planning session last Thursday, we learned that there is likely to be a lot more “downgraded” 500 ppm diesel than planned; as little as 36% of 15 ppm diesel might still be “pure” at pipeline terminus, with the rest downgraded to 500 ppm! 

ELECTION RESULTS

Last Tuesday was primary election day in several states. A couple of results are of particular interest to SIGMA members.

Dave Rogers of Warren Rogers Associates, a long-time SIGMA supporter and participant, won the Republican nomination for Congress in Rhode Island. He will face Patrick Kennedy (D-RI) in November. Congratulations, Dave!

Sen. Bob Smith (R-NH) was defeated in his primary by Rep. Sununu. Smith is ranking Republican (and former chairman) of the Environment & Public Works Committee, and has worked well with us over the years. SIGMAPAC had given to his campaign, which should be interpreted as pro-Smith, not anti-Sununu. We also have good relations with Sununu. Based on seniority, the new ranking Republican (or chairman perhaps) of the EPW committee next year will be Sen. Inhofe (R-OK), who has also be a friend on many issues. 

APPROPRIATIONS BILLS

The federal government’s fiscal year ends Sept. 30. To continue operating on and after Oct. 1, Congress must pass appropriations bills or other funding authorization (such as a temporary “continuing resolution”). Normally this is done in 13 separate appropriations bills. To date, not one of those 13 bills has been enacted into law. Although the rancor isn’t as great as back in 1996 when there was a government shutdown, the progress in passing appropriations bills is actually behind what it was then.

We are not predicting another government shutdown. But what does seem likely at this point is two-fold. First, it is likely that Congress will not wrap up all its work prior to recessing for the November elections, and will have to come back for a “lame-duck” session. That could be quite interesting, particularly if control of either the House or Senate changes hands in the election – meaning a “last-gasp” opportunity for the party which lost power. Secondly, it dramatically increases the opportunities for individual Senators and, to a lesser degree, House members to impose their will on specific “pet” provisions. For example, Sen. Edwards (D-NC) is even now threatening to put a rider on an appropriations bill to block EPA from implementing its revisions to the “New Source Review” regulations. (Those regulations aren’t even yet finalized; they’re still at OMB for review.) The later the action on that appropriations bill, the stronger his hand will be in forcing such a rider.

In other words, there is room for a lot of chicanery in Congress over the next 3 or 4 weeks – prior to recess for the elections – and again during a lame duck session. Expect much of it to be rolled together into one gigantic “fur ball” that Congress will “cough up” at the end of the session! 

MINIMUM WAGE

Once again, there is talk of combining a proposal to increase the minimum wage with a package of tax cuts for small businesses. This time, Senate Democrats are considering a possible $1.50 hike in the minimum over a 16-month period, as an amendment to the pension security bill. If they package it with tax cuts, it is likely that one of those cuts might be repeal of the Special Occupational Tax (SOT) of $250 per retailer of wine or beer.  

ZERO EMISSION VEHICLES

California, the leader in the effort to require zero-emission vehicles, is reported to be backing off a little. In general, only battery-powered cars would meet the strict standard of zero emissions. The Los Angeles Times says that the state’s Air Resources Board (CARB) may revise the mandate rather than repealing it, including hybrids and ultra-clean internal-combustion engines as qualifying vehicles.