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Dear PEI Member:

The financial responsibility and installer certification grant guidelines finally have been published by the Environmental Protection Agency (EPA). A portion of The Energy Policy Act of 2005 requires the states to take additional measures to protect groundwater from contamination by leaking underground storage tanks through either the use of financial responsibility for manufacturers and installers of underground tank systems or secondary containment. The guidelines describe the minimum requirements states must meet in order to comply with the law and receive federal money. Now that these guidelines are available, states will soon decide which of the two options they want to incorporate into their regulations. The full text of the federal guidance document is available at www.pei.org/frd.

Who must have coverage? The state implements the financial responsibility guidelines by requiring manufacturers and installers of underground storage systems regulated under 40 CFR 280.12 to show evidence of financial responsibility. On the manufacturer side, only manufacturers of underground storage tanks and piping are included. There is a possibility that "piping" can be defined narrowly and not include flexible piping, unions and nipples, but the federal guidance is not clear on this point. What is clear is that the manufacturer requirement does not include makers of “underground ancillary equipment or containment systems.” We take that to mean that, under the federal grant guidelines, manufacturers of such items like automatic tank gauges, dispenser and tank top sumps, vents and spill buckets do not have to provide evidence of financial responsibility.  Note that states can be more restrictive than the federal guidelines and include all this equipment.

Financial responsibility is also required of companies that install part or all of an underground storage tank system. As we read it, the federal guidance does not exempt installers of underground ancillary equipment or containment systems from the federal financial responsibility requirements. 

Scope of coverage. States must require a minimum of $1 million per occurrence and $2 million annual aggregate for manufacturers to cover the cost of corrective action of a release from a regulated storage tank or piping, as appropriate, caused by improper manufacturing. The states must also require a minimum of $1 million per occurrence and $2 million annual aggregate for installers to cover the cost of corrective action of a release from a regulated storage system due to improper installation. The limits do not include legal defense costs.

Length of coverage. States must require manufacturers of tanks and piping to maintain financial responsibility coverage for 30 years after installation, or until the tank is permanently closed, whichever comes first. Installers of underground tank systems must maintain financial responsibility coverage for 10 years after installation, or until the tank is permanently closed, whichever comes first. Installers that are also tank owners are not required to maintain financial responsibility for the tanks they own and install.

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Notification and recordkeeping. The federal EPA recognized that an extensive system of recordkeeping and notification among installers, manufacturers, insurers, tank owners and state agencies must be established if this option is elected by the states. At a minimum, states requiring tank manufacturer/installer financial responsibility must “reasonably address” the following questions:

• To whom and when must the evidence of financial responsibility be provided?

• How and where must manufacturers and installers maintain evidence of financial responsibility?

• If an underground storage tank system is permanently closed, who needs to notify the manufacturer and installer?

• If the manufacturer or installer declares bankruptcy or ceases operation for any other reason, whom should they notify and when?

What happens next? Now the states finally have some guidance from the federal EPA on the two options they must consider: secondary containment or financial responsibility for installers and manufacturers. We still believe about 42 states will go the secondary containment route. Two states, Missouri and Kansas, seem committed to financial responsibility. That leaves approximately six states that are taking a hard look at their options and will be making a decision soon. If you manufacture, install or repair UST equipment, here are some thoughts going forward with regard to those states considering financial responsibility:

• Don’t take anything for granted. Some states may be more stringent than the federal guidance and may include your company even if you believe you are not included under the federal guidance. Missouri, for example, will require financial responsibility for underground and aboveground tank installers and manufacturers.

• Now that the financial responsibility requirements are available, some state petroleum marketer groups have asked their state UST agencies to revisit their preliminary decision to go with secondary containment. You might want to confirm you know which option your state(s) will require.

• Check with your insurance carrier to make certain you can be covered to the required limits of liability. The process of finding a carrier at a price you can afford may be time consuming. Getting started early may save you money and aggravation in the end.

Lessons from Missouri. Missouri seems to be ahead of every other state in developing financial responsibility regulations for manufacturers and installers. Officials there held a telephone conference meeting January 17 to present their thoughts on their potential regulations and field questions from interested parties. An audio recording of the 66-minute seminar is available by clicking here. The calls we received after the Missouri meeting gave us some indication about what to expect after a state passes a financial responsibility statute. From the feedback we received, we anticipate:

• A few, very small installers will not be able to obtain/afford UST insurance and will leave the industry.

• Not all manufacturers will opt to continue to do business in Missouri. One manufacturer has indicated they are seriously considering not selling tanks in the state.

• There are many manufacturers of metallic fittings like nipples and unions that may be part of the regulated piping system that have no idea they will soon be required to show evidence of financial responsibility in Missouri. Some are based outside the United States. Chances are they will not pay the premiums to obtain the insurance, leaving the industry with significantly fewer suppliers of metallic fittings.

• Some states are hungry for information about the financial responsibility option. Regulators from Louisiana and Mississippi participated on the conference call.

ZCL COMPOSITES TO ACQUIRE XERXES
ZCL Composites Inc., Edmonton, Alberta, has entered into a share purchase agreement with the shareholders of XAHC, Inc., the sole shareholder of Xerxes Corporation, Minneapolis, Minnesota, to acquire all of the issued and outstanding stock of XAHC. The aggregate purchase price is $40.8 million, subject to closing adjustments. Manufacturing will continue at the four facilities currently operated by Xerxes: Hagerstown, MD; Anaheim, CA; Tipton, IA; and Seguin, TX. The acquisition is expected to close on or about February 28.

WEIGHTS AND MEASURES TO VOTE ON TEMPERATURE COMPENSATION
Delegates to the National Conference on Weights and Measures (NCWM) Interim Conference held last week in Jacksonville voted to allow the temperature compensation issue to go forward as a voting item at its NCWM Annual Conference in July. With minor editorial revisions, the item below is what the Conference will be voting on this summer. Note that it has permissive (not mandatory) language for temperature compensation and extends to all devices handling refined petroleum products. 

Amend the Method of Sale Regulation in Handbook 130 by adding the following:

2.XX. Refined Petroleum Products

2.XX.A. Where not in conflict with other statutes or regulations, refined petroleum products delivered through any meter may be sold with the volume adjusted to compensate for temperature. When petroleum products are sold temperature-compensated:

(a) All sales shall be in terms of liters or U.S. gallons at 15 °C (60 °F);

(b) The temperature compensation shall be accomplished through automatic means;

(c) The primary indicating elements, recording elements, and all recorded representations (receipts, invoices, bills of lading, etc.) shall be clearly and conspicuously marked to show that the volume delivered has been adjusted to the volume at 15 °C (60 °F);

(d) All sales by the same person or company for the same metering application within the same state shall be sold temperature compensated in 12-month increments. For example, a person or company may not choose to operate some meters at one location within a state with automatic temperature compensators and others without. Nor may a person or company choose to engage the automatic temperature compensator on a device only during certain times of the year.

Note: As defined in Handbook 130 Engine Fuels, Petroleum Products, and Automotive Lubricants Inspection Law, refined petroleum products are products obtained from distilling and processing of petroleum (crude oil), unfinished oils, recycled oils, natural gas liquids, refinery blend stocks, and other miscellaneous hydrocarbon compounds.

PEI SERVICE & CONSTRUCTION MANAGERS CONFERENCE, APRIL 26-28, 2007, IN ST. LOUIS
If you are responsible for your firm’s service or construction department, consider attending PEI’s Service & Construction Managers Conference, April 26-28, 2007, at the Adam’s Mark Hotel in St. Louis, Missouri.

The two-day conference will offer a combination of general session and roundtable discussion topics specifically geared to the needs of both the service manager and construction manager.  The conference will include presentations by Mark Mayberry on three topics of interest to both groups:

• The Change Revolution
• Equipping Your Team With the Right Skills
• Service With Shazam!

Those attending the meeting will also have an opportunity to discuss issues with other managers from across the nation in a roundtable format. Roundtable topics for both service and construction managers include:

• GPS
• Safety
• Training
• Customer Service
• Hiring and Retaining Good Employees
• Remaining Competitive

Roundtable topics for service managers include:

• Service Dispatching
• Changing the Customer Perception of a Service Technician
• The Ideal Service Vehicle
• Measuring the Service Department/Technician Incentives
• New Technology for Service: From Paper to Wireless

Topics for construction managers include:

• Estimating
• Change Orders
• Recordkeeping/Reporting
• Contracts with Customers and Subcontractors
• New Technology Techniques and/or Equipment

Registration for PEI members up to March 30, 2007, is $275 ($535 for nonmembers).  The fee beginning March 31 goes up to $325 for members and $635 for nonmembers.  The fees include all conference materials, three general sessions, four roundtable discussions, three meals, and two receptions.

Register at PEI’s web site at www.pei.org/events/conference.htm.  Printed programs and registration materials will be mailed within the next few weeks.

The conference will be held at the Adam’s Mark Hotel in downtown St. Louis, Missouri.  Conference registration does not include sleeping room accommodations.  Those attending the conference who wish to stay at the Adam’s Mark can make reservations by clicking here or by calling 1-888-409-2326.  Mention that you are attending the PEI Service and Construction Managers Conference to receive the PEI rate of $115 per night.  Reservations must be made prior to March 27, 2007, to receive the special rate.

PEI members sponsoring the conference are Central Illinois Mfg., Morrison Bros. Co.,  PMP Corporation, RDM Industrial Electronics, R.S. Electronic Controls, Riverside Steel, Inc., and Universal Valve Co.       

PEI members responsible for planning the conference are Blake Bammer, Guardian Fueling Technologies, Jacksonville, FL; Jack Carmitcheal, Double Check Company, Inc., Kansas City, MO; Steve Fletcher, Northwest Pump & Equipment Company, Portland OR; Bill Giles, Oscar W. Larson Company, Clarkston, MI; John C. Keller, Petroleum Solutions, Inc., San Antonio, TX; Joe McKuskie, SolvOne, Sacramento, CA; Mickey Meyer, M & M Service Station Equipment, Silver Grove, KY; and Ryan Riley, Service Station Systems, Inc., San Jose, CA. 

BRIEFLY NOTED
Tesoro Corp., San Antonio, Texas, announced yesterday that it will purchase 250 Southern California Shell-branded retail stations from Shell Oil Products US. The deal also includes Shell's Wilmington, California. refinery and terminal. Tesoro also announced that its board has agreed to purchase 140 USA Petroleum retail sites and a terminal in New Mexico.
Rennie Petroleum Co., Richmond, Virginia, has filed for Chapter 11 bankruptcy reorganization. The company has 24 retail locations.
The National Ethanol Vehicle Coalition reports there are currently 1,112 E85 stations operating across the United States.
US gasoline consumption rose a modest 0.8 percent in 2006, and the blending of fuel ethanol met the entire increase in demand, according to statistics compiled by the American Petroleum Institute. Ethanol use in gasoline rose nearly 35 percent to an estimated 5.4 billion gallons in 2006. More than 40 percent of all gasoline consumed in the United States now includes ethanol.

PEI SERVICE RATES SURVEY
PEI distributor and affiliate division members in the United States were sent a link to the annual Service Rates Survey via email on January 24. If your company provides or offers service, we encourage you to complete the survey. Your participation allows us to compile accurate and representative data. The survey will be available through March 1, at which time we will compile the results. Results will be reported by geographic area. Responses to the survey are handled in strict confidence. Your company will not be identified in the survey results. To complete the survey now, click here.

BEWARE OF EQUIPMENT BUYING SCAM
A purported "pump and equipment" company in Singapore is ordering equipment (Fill-Rite and Gasboy meters are their typical items) and using a credit card to pay for them. The credit card they are using is valid but is not authorized by the card holder. Although the credit card transaction is processed and approved, the card holder will dispute the charges and the receiver of the shipment will have the equipment.

MEMBERSHIP APPLICATIONS
Texas distributor. Excell Environmental, Inc., 3413 West Slaughter Lane, Austin, Texas 78748, has applied for distributor division membership. Rick Rollins is president of the firm, which was established in 1993. The company installs, services, tests and removes fueling systems and represents Bennett, BravoInc, EmcoWheatn, Environ, Flex-Ing, FPPMeters, FuelMaster, PetroClear, PwrInteg and Xerxes. Nominated for PEI membership by Fred Monroe, Monroe, Arlington, TX. 
Manhole cover supplier. Forecourt Solutions Ltd., Newton Ground, Petherton Road, North Newton, Taunton, Somerset, United Kingdom TA7 0BD, has applied for affiliate division membership. Nicholas M. Hugh is managing director for the firm, which was established in 2006. The company provides global distribution of composite manhole covers for the petroleum industry. Nominated for PEI membership by Ven Cote, ZCL, Edmonton, AB.
Florida service and maintenance company. Tiger Enterprises Inc., 10130 Northlake Boulevard, Suite 214-132, West Palm Beach, Florida 33412, has applied for affiliate division membership. David Tiger is president of the company, which was established in 2004. Tiger Enterprises services and maintains point-of-sale and dispensing equipment at retail and commercial facilities. Nominated for PEI membership by Ken Neeley, ESCO, Tampa, FL.

Admitted to PEI

• Brenda Torano Diaz, Sol Puerto Rico Limited, San Juan, PR (O&E)

©2006
Petroleum Equipment Institute
P. O. Box 2380
Tulsa, OK 74101-2380

The TulsaLetter (ISSN 0193-9467) is published two or three times each month by the Petroleum Equipment Institute. Robert N. Renkes, Executive Vice President, Editor. Opinions expressed are the opinions of the Editor. Basic circulation confined to PEI members.