November 18, 2002

ENERGY BILL APPEARS DEAD AS LAME-DUCK SESSION LIMPS ON

The massive Energy Bill, worked on by Congress for most of the past two years, appears to be dead. It has been “declared dead” by both Senate and House members, and no work is proceeding on it. However, until this Congress officially adjourns sine die, there is always an outside chance it will “come back to life.”

A week ago Friday, Rep. Tauzin (R-LA), chairman of the conference committee working on the energy bill, submitted a stripped-down version of energy legislation to Senate conferees. Tauzin’s bill dealt with only those issues on which there is no controversy – a pipeline safety provision and extension of the Nuclear Safety Act. On Wednesday, even this limited bill was rejected by Senators – Democrats and Republicans alike.

Contributing to the demise of the energy bill was the renewable fuel lobby, which insisted it must have its ethanol mandate or there should be no bill at all. SIGMA had also urged legislators to pull the plug on this bill, and come back to address energy issues next year.

On other fronts, Congress did seem to reach agreement on Homeland Security legislation. A compromise version passed the House last week, and is expected to pass the Senate this week.

Likewise, both the House and Senate have now passed terrorism insurance legislation that would provide coverage for truly catastrophic claims, ultimately funded by the industry itself. Although few SIGMA marketers would be directly affected by this legislation, all may get a minor benefit – to the extent the bill gives the insurance industry reassurance, it may ultimately lead to greater availability of business insurances and perhaps more-competitive fees.

This all means that the lame-duck Congressional session is winding down, and that there may not be a second lame-duck session in December, as had been expected. Last Wednesday, both the House and Senate passed a Continuing Resolution to keep the government funded through January 11. (The new Congress will convene on January 7, and will have to quickly address funding issues.) On Friday morning, the House recessed – subject to the call of the chair. The Senate will meet this week and then is expected to adjourn after taking care of a few agreed-upon items. Once Congress adjourns, all pending bills are officially dead – until new bills are introduced in the new Congress. 

THE NEW CONGRESS

The new Congress is already in the process of organizing itself, and the cliff-hanger elections are being decided. Sen. Tim Johnson (D-SD) ended up squeaking by for reelection, which leaves only one Senate seat still in doubt – Landrieu (D-LA) faces a runoff election on Dec. 7. Depending on that race, the Senate will be either 51-49 or 52-48 Republican – counting Jeffords (I-VT) with the Democrats, with whom he votes on organizational issues. Contrary to our report last week, Sen. McConnell (R-KY) will be Majority Whip – not Sen. Craig (R-ID).

On the House side, Dennis Hastert (R-IL) will continue as Speaker. Tom DeLay (R-TX) will replace retiring Dick Armey (R-TX) as Majority Leader. And Nancy Pelosi (D-CA) replaces Dick Gephardt (D-MO) as Minority Leader – the first woman to lead either party in either branch of Congress.  

NON-ATTAINMENT AREAS

EPA reached agreement last week with the American Lung Association in a lawsuit which had been brought to force EPA to designate ozone non-attainment areas under the new standards. The agreement calls for EPA to make such designations by April 15, 2004. As background, EPA officially proposed in Dec. 1996 to change the ozone standard from 0.12 parts per million to 0.08. That proposal was eventually finalized, challenged in court, and upheld. It was SIGMA’s fear that the new standard would incorporate many additional areas as “non-attainment”, triggering new requirements for Stage II vapor recovery, RFG, and other control measures. So far we have no data to tell us what areas will be affected. However, environmentalists claim there may be 291 counties in 38 states which are in non-attainment of the new standards. That would be a significant increase, and bodes badly for marketers.  

EXCISE TAX EVASION

Senators Baucus (D-MT) and Grassley (R-IA) have introduced S. 3154, a bill dealing with excise tax evasion. The bill itself is of little importance – it will automatically die as soon as Congress adjourns. Instead, it should be read as a sign that excise tax evasion will be on Congress’s agenda next year. With the end of government surpluses, government officials are looking at a lot of ways to increase revenues without an actual tax increase. Better enforcement of laws is one of them, and some think that excise taxes are a prime area to work in. Another item being considered: hiring private firms to collect tax debts. Watch for these issues over the coming months. 

SIGMA ADOPTS POSITIONS

Based on recommendations made at the open Legislative Committee Meeting at our convention in Chicago Nov. 9, SIGMA’s Board of Directors has adopted two new positions on legislative issues:

• SIGMA will support the API-NPRA proposal dealing with off-road diesel sulfur levels. Specifically, the proposal calls for a standard of 500 parts per million (ppm) by 2006, and 15 ppm by 2010. This is a “counter-offer” to EPA’s suggestion of 15 ppm by 2008. SIGMA believes it would serve the cause of supply by limiting the number of different fuels on the market, coordinating in time with the phase-in of on-road low-sulfur diesel.

• SIGMA will support the extension of tax refunds to taxpayers who blend ethanol in amounts greater than 10%. Currently, such blenders are only eligible for tax credits, which means they are lost for blenders with no tax liability. This position would not endorse any change in the rate of the tax incentives for ethanol, but would make E-85 blending more attractive to companies that are unlikely to have tax liabilities sufficient to offset the tax credits.

In addition to those two positions, SIGMA’s Legislative Committee recommended, and the Board agreed, that we will be more actively involved on tobacco issues next year, and that we will also get involved in the climate change debate.  

OTHER SIGMA NEWS

In other news from the convention you may have missed if you weren’t there:

• Those in attendance noted it was one of the most intense meetings in memory, with educational sessions jam-packed and lots of business going on in the hallways.

• The final registration count for the meeting was 528 – up significantly from last year’s total of 442. This represents almost a 20% increase in attendance.

• Congratulations to the officers of SIGMA, who were re-elected to one-year terms, and to our four new Directors, serving 3-year terms: Mark Hansen of Venture Fuels, Al Howerton of QuikTrip, Jack Pester of Pester Marketing Co., and Matt Thornton of Thornton Oil Corp.

• Congratulations also to Tom Love, who received SIGMA’s Distinguished Marketer Award at the Sunday closing luncheon in Chicago.