October 7, 2002

CONFLICTING REPORTS ON ENERGY BILL; SOME SAY IT’S DEAD

Congress may or may not come to agreement on an energy bill and enact it prior to election day, which is only 4 weeks from tomorrow. Negotiations in conference committee continue, but are becoming quite bitter. Some observers say they have rarely seen such personal animosity as is now showing up between the conferees.

Last Tuesday’s scheduled meeting of the conference committee was abruptly cancelled, although meetings were held on Wednesday and Thursday. Staff members were to have worked over the weekend, with another meeting of the conferees tomorrow (Tuesday, Oct. 8). At that time, electricity is supposed to be taken up.

Some observers think that, if agreement can be reached on electricity, the other components of an agreement will quickly fall into place. Others aren’t so sure. The House has just rejected a Senate proposal on Global Climate Change. The Senate is rejecting House proposals that include any drilling for oil in ANWR – the Alaska National Wildlife Refuge. There are also serious problems still to be worked out in the fuels area, with both the proposed ethanol mandate and MTBE issues remaining problematic.

Politically, the Dept. of Energy and Republicans on the House Energy and Commerce Committee are intent on getting a bill – as one put it, “we’ll get a bill, or we’ll die trying.” Democrats are desperate to get attention turned away from Homeland Security and Iraq, and would welcome the opportunity to take up an energy bill instead – as long as it has substantial provisions favored by their core constituencies. Will these two forces be enough to pass legislation? It’s anybody’s guess.

From the perspective of SIGMA marketers, it might be just as well if this bill dies under its own weight. While there are some provisions we would like, there are many more under consideration that pose serious concerns. Among proposals that might be included in the bill which marketers would find undesirable are:

• An ethanol mandate, posing as a “Renewable Fuel Standard,” which would mandate a tripling of the market share of ethanol and biodiesel over the next decade, with little regard for cost or other economic factors.

• MTBE provisions that may or may not include an outright ban on MTBE in gasoline (SIGMA favors an orderly phase-out of the use of MTBE).

• A proposal on MTBE liability, currently reported to be under consideration by the House leadership, that would give protection to MTBE producers and the refiners who blend MTBE, but would not offer liability protection to those downstream (retailers, wholesalers, and bulk plant operators).

• Tank and LUST Trust Fund provisions that are moving away from what we had hoped for. Some of the latest proposals being floated, as “compromises” between ethanol and MTBE interests, would raid the LUST Trust Fund for non-tank-related MTBE cleanups, and at the same time would fail to address changes in the tank-related uses of the LUST fund we have been urging for years.

The next couple of weeks will be decisive on this bill.      

WILL THEY EVER GO HOME?

Normally by this time in an election year, Congress has adjourned and gone home to campaign. Not this year. They missed their initial target for adjournment of Oct.4; they will likely fail to adjourn by this Friday, Oct. 11, and may not even break until Oct. 18. Some are hinting they might not adjourn at all prior to the election, coming back for a couple of days each week for votes. Whatever the case, it is extremely likely there will be some sort of a lame duck session of this Congress, meeting after the election and before the new Congress is seated in January. This will be necessary for appropriations bills, if nothing else. Other legislation – such as the energy bill – might be acted on during such a lame duck session, but that is questionable. If control of the House or Senate changes hands in the election, the losing party might see a benefit in taking action in the old Congress rather than leaving the issues to a new Congress. But the winning party would have the same information and would presumably prefer to wait until they were in power to act. Bottom line? Any contentious legislation from this Congress will need to happen in the next couple of weeks.   

EPA DROPS CHEMICAL SECURITY

EPA, which had proposed to regulate chemical security in terms of terrorism prevention and protection, has dropped the idea. Many, including SIGMA, had questioned whether EPA had the authority under law to impose such regulations. In the end, government lawyers in other agencies outside of EPA and Homeland Security won the argument and the administration concluded that the regulatory approach should be abandoned. There is still pending legislation in Congress which would extend to EPA the authority it would need to issue regulations. SIGMA marketers’ interest in this issue comes from the fact that some regulated chemicals are components of gasoline, which could trigger requirements for gas stations, bulk plants, terminals, and transport trucks. 

TRIBAL TAX ISSUES

Last week, SIGMA joined with NACS in sending a letter to the California Board of Equalization related to taxation of transactions between Indian tribes and non-Indian purchasers. SIGMA generally does not get involved in state issues, except when those issues could be trend-setting. This was such a case. At issue is whether or not Indian tribes should be generally exempted from taxes on sales of tangible property to non-Indians, by broad regulation. A “discussion paper” explored the issue, and concluded that no change was required to state regulations. However, in the course of the discussion, issues were raised that could be used to justify the opposite conclusion (specifically, the “reservation-based value” of tangible personal property). SIGMA’s position is that, in fairness to all, exemptions to taxation should be drawn as narrowly as possible within what is required by treaty or federal law.

On a separate issue, Sen. Allen (R-VA) has introduced S.2694, the Senate version of legislation which would recognize six Indian tribes in Virginia. SIGMA and NACS will be sending a joint letter this week to Sens. Inouye (D-HI) and Campbell (R-CO) requesting an opportunity to testify at any hearings called to consider that bill. We will urge that the recognition of additional tribes not be granted until the problem of tribal non-collection of legitimate state taxes is addressed and resolved.  

TANK LEGISLATION

Separately from the tank issues under consideration as part of the energy bill, SIGMA is working to try to get the Senate to act on S.1850, Sen. Chafee’s (R-RI) bill that would expand the uses of the LUST Trust Fund, increase appropriations from the fund, and address problems of tank-related MTBE cleanups. If we can get the Senate to act, it might put some pressure on the House to move comprehensive tank legislation during the lame-duck session.