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November 24, 2003
ENERGY BILL PASSES HOUSE, STALLS IN SENATE
Since our last report, the Conference Committee working on the huge Energy Bill has acted to approve it (with some amendments) and it has won approval in the House of Representatives by a wide margin. However, it is tied up in the Senate, where Republican leaders have been unable to break a mostly-Democratic filibuster. Another vote on cloture (to break the filibuster) is planned for tomorrow (Tuesday), but there are no indications as yet that anyone is planning to change their vote. If cloture fails on Tuesday, Senate action on the bill may either be postponed until January, or more likely they may come back the first week of December. Now for the details . . .
CORRECTIONS FROM LAST WEEK
Our report last week on the Conference Committee agreement contained three factual errors. First, on the subject of blending of compliant RFG fuels (also known as “co-mingling”), retail gas stations will be allowed two blending period of ten days each during each summertime control period, not of seven days each as we had reported. Second, states will not have the option to drop the 1 psi waiver for ethanol blended fuels, contrary to our report. Finally, the requirement that EPA delete its northern tier RVP standard applies only to RFG, and does not apply to northern/southern conventional gasoline standards.
PROVISIONS WE DIDN’T REPORT
One item of interest to motor fuel marketers we failed to report is in the bill: an increase in tax credits for alternative fuels (up to $150,000 per site, an increase from $100,000) and expansion of that credit to include hydrogen fueling.
AMENDMENTS TO CONFERENCE REPORT
Senate conferees attempted to amend the conference report during meetings on Tuesday. They considered 24 amendments and adopted 7, with most votes pretty much along party lines. Of the 7 they adopted, however, only two were agreed to by House conferees, and neither of those deal with motor fuel issues. Among amendments considered but not included in the final bill: striking MTBE liability relief, a provision advancing the date when ethanol tax subsidies would come from the general fund rather than the Highway Trust Fund, and one giving the FTC expanded authority to investigate and take “corrective action” in the wake of spikes in gasoline prices.
MTBE LIABILITY AS THE STICKING POINT
Although not the only issue those filibustering the bill object to, the provision exempting MTBE from “defective product” liability claims seems to be the one issue that could change enough votes to gain passage. However, House supporters of the bill are adamantly opposed to dropping that provision from the bill, so supporters are looking for other ways of winning the two additional Senate votes needed.
THE VOTES
On the House side, the final vote on passage was 246 to 180. Republicans voted 200 to 25 in favor of the bill, with Democrats voting 46 to 154 against it (155 if you count the Independent who votes with the Democrats). Nine Congressmen missed the vote. Republicans opposed were mostly from the Northeast. In the Senate, the vote on cloture was 57 to 40, with 3 not voting. Sen. Frist (R-TN) voted “no” for technical reasons (to be able to ask for reconsideration), so the real split was 58 to 39. However, it takes 60 votes to invoke cloture. This vote showed the same regional breakdowns as the House vote: Republicans “breaking ranks” with their leadership and voting “no” were northeastern Senators Chafee (RI), Collins (ME), Gregg (NH), Snowe (ME), and Sununu (NH), plus McCain (AZ). Democrats voting with the Republicans in favor of cloture (and for the bill) were farm-state Sens. Dorgan & Conrad (ND), Daschle & Johnson (SD), Lincoln & Pryor (AR), Harkin (IA), Nelson (NE), and Dayton (MN); oil-state Sens. Breaux & Landrieu (LA); plus Baucus (MT) and Miller (GA). Not voting were 3 Democrats: Edwards (NC), Hollings (SC), and Kerry (MA).
OTHER TACTICAL OPTIONS
There is a possibility that the Senate leadership might try to tack the Energy Bill onto the final omnibus spending package Congress needs to pass before adjourning. Medicare reform could also be part of the mix.
MTBE LAWSUITS
Santa Monica announced a settlement with 3 oil companies (Shell, ChevronTexaco, and ExxonMobil) worth $92.5 million in their lawsuit over MTBE contamination. The settlement was announced Friday. Meanwhile, New Hampshire says it will continue to pursue its defective product liability case over MTBE, despite the provision in the energy bill which bars such suits retroactively to a date prior to NH’s filing.
OTHER CONGRESSIONAL ACTION
Besides energy, Congress is trying to complete action on Medicare reform and on spending authority for much of the Federal government for the fiscal year that began Oct. 1. The mood is becoming increasingly rancorous and partisan, with a ploy used by House Republicans on Medicare reform that kept a vote open for 3 hours longer than normal while they persuaded a few of their members to switch their votes, then quickly closing the vote before any Democrats could switch the other way. It is unclear whether Congress will complete action on spending bills, although the Senate has now agreed to EPA’s spending levels for the year. Action on a long-term highway funding bill continues at the committee level, but action by the full House or Senate won’t take place until early next year.
8-HOUR OZONE STANDARD
SIGMA’s attorneys have prepared a detailed memo outlining how EPA proposes to implement the 8-hour ozone standard and make the transition from the current 1-hour standard. That memo is available in pdf format by clicking here. How this is done will be important to marketers in terms of strategies your state/metro area will be required to implement, ranging from fuel standards to vapor recovery systems. Although EPA has not yet designated non-attainment areas under the new standard, it is expected that there will be significantly more such areas than there are under the old standard.
OFF-ROAD DIESEL
SIGMA participated in a meeting on Nov. 10 with EPA about their proposed off-road diesel rule. Key points included EPA’s desire to find a way to distinguish heating oil from the rest of the off-road diesel pool; we take no position on this, as long as there are no tax evasion opportunities involved. We said we support the industry position in favor of a “designate and track” system rather than baselines for dealing with the phase-in part of the off-road diesel rule. We took no position on when EPA should move locomotive and marine diesel to the 15 ppm standard.
BOTTLE BILL INTRODUCED
Sen. Jeffords (I-VT) has introduced a national bottle bill that would set an 80% recycling target for beverage companies and require them to develop a system to attain that goal. It would also apply a 10-cent mandatory refundable deposit to cans, plastic, and glass bottles used as beverage packaging. Currently, ten states have deposit laws, with Michigan being the only one with a 10-cent deposit; in that state, recycling has reached 95%. Jeffords introduced similar legislation in April 2002, and it went nowhere.
IN THE STATES . . .
Ohio has passed a bill increasing the penalties for gasoline drive-offs, and prohibits localities from regulating the use of prepayment for gasoline . . . EPA has found a low compliance rate in Idaho with underground tank regulations. Inspectors found 141 violations and a compliance rate of only 34% . . . and Los Gatos, California, home of a solar panel installation company Akeena Solar, has banned that company from installing solar panels on its own office rooftop, basically ruling them an eyesore.
SIGMA Weekly Report November 24, 2003 © Copyright SIGMA
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