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Saving Petroleum Marketers Nationwide Over $200 Million

8/1/2016

PMAA Weekly Review - July 29, 2016 - This week, the National Conference on Weights and Measures (NCWM) held its annual meeting in Denver, Colorado. On the agenda again included a 10 micron diesel filter mandate and an item to repeal 85 octane as an acceptable motor fuel in certain states. Also, a new item on the agenda was a requirement to tighten the acceptable UST diesel fuel water tolerance level from 1 inch to 1/4th inch.

Background on 10 Micron Filter Mandate
Since the 10 micron filter mandate was defeated last summer, it was returned to the committee of jurisdiction for consideration. However, this time, adjustments were made that now exempts most Northern states during the winter months from using a 10 micron diesel filter given PMAA's filter plugging concerns. While this is an improvement to the item, it still fell short at addressing the issue of diesel fuel cleanliness. PMAA continues to argue that diesel fuel can be contaminated from many parts of the supply chain starting with the refinery, through a pipeline, in terminal storage tanks, in barges and ships in a retail storage tank. Solving this problem requires a comprehensive examination of the entire supply chain and it was unfortunate that much of the blame has fallen on petroleum marketers -- the final step in the supply chain -- without recognizing that upstream measures beyond retailers' control contribute to diesel cleanliness issues. PMAA argued that this should be a total industry effort and should not just fall on the petroleum marketer.

The first place to start would be updating diesel fuel cleanliness standards at ASTM. According to the Coordinating Research Council (CRC) report, "the current bottoms, sediment and water (BS&W test D2709) is archaic compared to the updated Canadian standards that have a lower BS&W tolerance level. In Canada, 10 micron filters are widely used because its diesel fuel standard is better. PMAA believes diesel fuel cleanliness standards need to be updated because imposing a retail mandate before an upstream effort that provides higher specifications for the refiners as well as filtering along the entire distribution channel (per the CRC report recommendations) is not reasonable, nor fair. Ultimately, the product needs to be treated or refined in a manner that it will not re-particulate."

NCWM heard PMAA's arguments, and ultimately, voted against a 10 micron filter mandate. This saves petroleum marketers over $200 million by reducing filter changes and hiring outside contractors to do the work.

UST Water Tolerance Level
The new item on the agenda regarding the water tolerance level in USTs was kept informational meaning that it will remain on the agenda into 2017. PMAA is in the process of collecting additional information on this issue and urged the L&R Committee to keep it informational.

85 Octane Update
PMAA also opposed an item to repeal 85 octane. Several states allow the use of 85 octane and repealing it would ultimately harm petroleum marketers and consumers by restricting supply which would lead to higher prices at the pump. There has been limited evidence presented regarding harm to engines or complaints from consumers regarding engine damage - or any other problems - due to 85 octane gasoline. Furthermore, there is simply not enough information to determine whether the overall environmental impact of an 87 octane standard will be positive or negative. Fortunately, NCWM voted to withdraw the item, however, the real fight is at ASTM where there is a ballot initiative to repeal 85 octane.

PMAA would like to thank PMAA Chairman Mike Bailey, former PMAA Chairmen Matt Bjornson and Sam Bell, Kansas Association Executive Tom Palace, South Dakota Association Executive Dawna Leitzke, Petroleum Marketers and Convenience Stores of Iowa Legal Affairs specialist John Maynes, Colorado/Wyoming Association Executive Grier Bailey and Brian Kernke (Loves Travel Stops) for attending the NCWM meeting. They were instrumental in providing critical testimony on opposing the 10 micron filter mandate.