Downstream Impact and Reauthorization of the Oil Spill Liability Tax
PMAA has continued to receive numerous inquiries on how the expiration of the Oil Spill Liability Tax (OSLT) on December 31, 2017 will impact petroleum marketers.
Origin: The OSLT was created in the aftermath of the Exxon Valdez spill in Prince William Sound Alaska. The 9 cents per barrel OSLT tax is imposed on crude oil at the refinery gate. Proceeds from the OLST go into a trust fund used by the Coast Guard to pay for clean-up after accidents like the Deepwater Horizon oil spill. Currently, there is 5.8 billion in the OSLT trust fund. The OSLT has no relation to the federal $.001 per gallon Leaking Underground Storage Tank (LUST) trust fund. The LUST tax has not expired and is collected at the terminal rack on all motor fuel and heating oil.
Liability for the OSLT: Refiners are the only party liable for the OSLT. The OSLT is not imposed, remitted or refunded downstream. There are no OSLT floor stock taxes or OSLT tax exempt parties downstream.
Downstream Impact: The OSLT has no real impact on downstream marketers other than as a cost passed through on finished product. The OSLT is paid by the refiner upstream. That should be the end of the story, but some terminals break out the OSLT as a separate line item on bills of lading and invoices. This practice causes confusion downstream because the tax is paid by refiners on crude oil at the refinery gate. The OSLT is not imposed, remitted or refunded downstream. There are no OSLT floor stock taxes or OSLT tax exempt parties downstream. However, breaking out the OSLT as a separate line item gives it a perception of importance downstream. The only impact of the OSLT on petroleum marketers below the terminal rack is a miniscule increase in the rack cost of finished motor fuel and heating oil. Terminal operators break out the OSLT on invoices, not because downstream marketers need to know, but for their own accounting purposes and no other reason. There is no OSLT notice requirement for downstream parties. Some downstream marketers who break out the OSLT on invoices to their end user customers may need to adjust their accounting practices, but there is no need to account for the OSLT downstream of the terminal rack in the first place.
Expiration of the OSLT: The OSLT expired on December 31, 2017. This means that refiners are no longer required to pay 9 cents per barrel OSLT on crude oil at the refinery gate. This results in a miniscule price adjustment in the cost of the fuel or not, depending on whether the cost savings is passed downstream. Many terminals are notifying customers that they are making no cost adjustment because they expect the OSLT will be reauthorized retroactively by Congress sometime in late January 2018. Some terminals are passing the cost savings down while others don’t break out the OSLT to begin with and have nothing to report.
Reauthorization of the OSLT: A one-year OSLT reauthorization (effective January 1, 2018) is included in the tax extenders package that the Senate Finance Committee introduced late last year. It is likely that Congress will pass the tax extenders bill later this month as part of the federal government spending bill.
PMAA will keep members informed about any new developments relating to the OSLT. For further information or questions, please contact Mark S. Morgan, PMAA Regulatory Counsel at mmorgan@pmaa.org.
Trump Administration Proposes Massive Expansion of Offshore Oil Drilling
Yesterday, the Trump administration released a proposal that would allow oil and gas drilling off the Atlantic and Pacific coasts. Interior Secretary Ryan Zinke said nearly all the nation’s outer continental shelf is being considered for drilling, including areas off the coasts of Florida, California, Maine and Alaska. It would be the first time in decades that oil drilling would be allowed off the waters of California, where drilling has been off limits since 1969. The Department of Interior (DOI) is expecting to have 47 lease sales between 2019 and 2024, including 19 off the coast of Alaska and 12 in the Gulf of Mexico. Seven other areas offered for lease for new drilling would be in the waters off California. Under the proposal, only one of 26 planning areas in the Atlantic Ocean, Pacific Ocean, Gulf of Mexico and the Arctic Ocean would be off limits to oil and gas exploration. That area, known as the North Aleutian Basin, was protected under an Executive Order by President George Bush.
Under the Obama Administration, oil drilling was blocked on more than 90 percent of the outer continental shelf. Secretary Zinke argued that those restrictions on drilling had cost the United States billions of dollars in lost revenue and the new proposal would make nearly 90 percent of those waters available for leasing. In April, President Trump signed an Executive Order requiring the DOI to reconsider President Obama’s five-year offshore drilling plan to block new lease sales in many areas of the Atlantic and Arctic.
The proposal comes less than one month after Congress passed a comprehensive tax bill that includes a provision to open the Arctic National Wildlife Refuge (ANWR) to oil and gas drilling and directs the Energy Department to sell as much as seven million barrels of crude oil from the Strategic Petroleum Reserve.
Retailers Who Accept SNAP Must Comply with Stocking Requirement this Month
Beginning January 17, 2018, the USDA Food and Nutrition Service (FNS) will begin implementing the stocking provision of the final rule, “Enhancing Retailer Standards in the Supplemental Nutrition Assistance Program (SNAP),” for all stores. Authorized stores that don’t meet these requirements will be withdrawn from SNAP, and applicant stores that don’t meet the requirements will be denied authorization. Please click here for a one-page summary of the requirements and here for a webinar. Meanwhile, the updated definition of "accessory food" also will go into effect on January 17, 2018. Accessory foods are not considered staple foods and may not be counted towards a retailer's stocking requirements such as crackers, soda, potato chips, etc. Click here for more information on accessory foods.
As previously reported, the FNS began implementing the restaurant (hot foods) provision of the final rule for all stores on October 16, 2017. The final retailer standards rule was published on December 15, 2016. While there were improvements from what was originally proposed, the final rule still presents challenges and additional costs for retailers to participate in the program, especially for small business convenience store owners.
December 2017 PMAA Small Business Committee (SBC) PAC Contributions
PAC Co-Chairs Brad Bell and Tim Keigher are grateful for the PMAA Small Business Committee (SBC) PAC contributions from the following individuals during the December 1-31, 2017 time frame:
Arizona: William Champlin, David Lueth, Warren Lueth, Gabriel McLure
California: Bhagdeep Dhaliwal, Erin Graziosi, David Sahagun
Connecticut: Samuel Gault, Matthew Mitchell, Michael Sanzo, David Sousa
Kansas: Alison Bridges, Dennis McAnany, Scott Zaremba
Louisiana: Glenn Pumpelly
Maryland: Ellen Benitez, C. Howard Phelps Jr., Richard Phelps III, J. Blacklock Wills Jr.
Michigan: Nancy Beckwith, Ron Bewersdorff, Patrick Campbell, Robert Cleary, John Foster, Mark Griffin, James Linton, Scott Miller, Jeff Naser, Jim Safiedine, Dave Wakeland
Montana: Dan Alexander, Dirk Cooper, Dallas Herron, James Kenneally, William Nooney, Gregory Taylor, Kary Tonjum
NEFI: John Bowman
New Jersey: Lawrence Ray, Michael Ray
New Mexico: Cyndee Biggers
North Carolina: William Brewer III, Davis Clark, Amy Dean, Lewis Efird, Daniel Erwin, Wendy Fisher, Gary Harris, John Hendley, Hannah Holt, Harold Kennedy, Frank McNeill Jr., Michael Royster, Audrey Shearin, Kenneth Smith, John Strickland, Ricky Thomas, Bobby Williams
Oregon: Sam Byrnes, Mark Gram, Kenneth Poole, Ralph Poole, Ronald Tyree, Lance Woodbury
Tennessee: Bill Beach, Wes Carruthers, Steven Isaacs, Steve Mozeley, Brian Parnell, William Parsons, John Small, John Yeager
Virginia: Mike O’Connor
December 2017 Contributors to PMAA MDF
PMAA’s Marketer Defense Fund wants to thank the following individuals for their contributions during the December 1- 31 timeframe:
Colorado: Randy McFarland
Indiana: Indiana Petroleum Marketers and Convenience Store Association
Kansas: Dennis McAnany
Mississippi: Haley Brewer
Montana: Dallas Herron
North Carolina: James Barnwell Jr.
South Dakota: Duane Harms
Tennessee: John P. Small Jr.
Corporate donations are acceptable. MDF funds have been used for various studies, litigation and disaster relief dedicated to strengthening our lobbying efforts on Capitol Hill. Click here to donate to the PMAA MDF.
Reserve Your Rooms Now for PMAA’s Washington Conference 2018
PMAA’s annual Washington Conference and Day on the Hill will be held in our Nation’s Capital of Washington, DC from May 16-18. Our industry continues to have dozens of important legislative and regulatory issues to discuss and the Day on the Hill continues to be the primary focus of this conference.
The meeting will begin with an Opening Session / Issues Briefing and Region meetings in the afternoon of May 16. Our welcome reception, including our fun and popular PAC silent auction fundraiser, concludes the day! On the morning of May 17, marketers will head to Capitol Hill for visits with their Congressional delegations after a buffet breakfast and issues briefing for those who were not able to attend the opening session. It is not too early to make your Congressional appointments. There will be a hospitality suite and luncheon on the Hill. On the evening of May 17, we will honor our 2018 PMAA Chair Mark McBride. Our conference will conclude after the PMAA Board of Directors meet on May 18 following a buffet breakfast and committee meetings.
You can find all available details for Washington Conference and Day on the Hill here. We will post on our website and announce in this Weekly Review when our Cvent website is ready and registration is open.
Please make your plans now to attend this important and productive forum to meet with your members of Congress and network with other marketers from across the country! See you in DC in the spring!
Oil Heat Institute of Rhode Island Endorses Federated Insurance
The Oil Heat Institute of Rhode Island recently endorsed Federated Insurance Companies for Property & Liability Insurance, Workers Compensation, and Financial Protection Services. According to Executive Director Roberta Fagan “The Oil Heat Institute is excited to announce this partnership with Federated Insurance. The Oil Heat Institute feels very strongly about the partnership which shares a commitment to the growth and profitability of the heating oil industry while providing excellent customer service at a very competitive rate.”
“Federated is proud to support the great work of the Oil Heat Institute through our direct marketing team, our commitment to trade associations, and our specialized insurance products and risk management services,” said Chris Wall, Federated First Vice-President and Director of Marketing Services & Support.
PMAA’s Marketer Defense Fund Names Top 2017 Association Contributors
PMAA would like to take this opportunity to acknowledge the Top Four Associations for their achievement to their state’s contributions to our 2017 Marketer Defense Fund (MDF):
- New England Fuel Institute (NEFI) who raised $8,250 (Honorable Mention in 2016, #1 in 2015 and 2014)
- North Carolina Petroleum & Convenience Marketers (NCPCM) who raised $5,480 (#1 in 2016, Honorable Mention in 2014, #3 in 2013)
- Tennessee Fuel & Convenience Store Association (TFCA) who raised $4,999 (Honorable Mention in 2015 and 2016)
- Indiana Petroleum Marketers and Convenience Store Association (IPCA) who raised $4,336 (#1 in 2016 and 2013, #2 in 2012)
This national program does not set annual state goals like PMAA’s Small Business Committee Political Action Committee (SBC PAC.) Unlike PAC funds, the MDF Program does not make donations to candidates. Therefore, corporate donations are accepted, and the monies raised for this special fund have been used for numerous studies, litigation and disaster relief dedicated to strengthening our lobbying efforts on Capitol Hill.
PMAA values every donation we receive and will continue to appreciate any additional support. You can donate online to the PMAA MDF at the top of our website at www.pmaa.org. Click on the link Donate to PMAA’s Marketer Defense Fund (MDF) to contribute and to find out more about this program. Please contact Susan Isard at 703-351-8000 with any additional questions.
PMAA Member Services Spotlight Featuring: LaborChex
LaborClear Monitoring
LaborClear is a monthly monitoring service which will alert you of an employee or volunteers arrest within the United States. Once an employee is hired, or volunteer is on-boarded, most organizations no longer look into that individuals’ background. Now, employers and volunteer organizations have a way to continually monitor employees after their hire.
LaborClear is an instant computerized search of a massive database of over 500 million records. National criminal databases, which are also referred to as multi-jurisdictional databases, can be a key part of the background screening process, helping to catch applicants as well as current employees by using a wider pool of information than is readily available for standard criminal history searches.
To read the more about LaborClear in its entirety, please view here. Please note that the general information provided is not a substitute for legal advice. Please consult with your legal counsel regarding these topics and other general employment questions.
LaborChex, a PMAA Vendor who has been serving clients nationwide since 1991, provides a program of background checks for PMAA members. For more information and to discuss your needs, please email PMAA’s Account Consultant Ricky Rayborn or call him directly at 601.832.2174 or visit. |
