NEON: NEFI Energy Online News

60 MINUTES HIGHLIGHTS DEREGULATION OF WALL STREET
"60 Minutes" has begun a series of in-depth reporting on the deregulation of Wall Street investment banks and the large role it has played in the recent market collapse. The exposés also focus on the Commodities Futures Modernization Act of 2000 (CFMA) the massive piece of legislation that was "snuck into law" in 2000 and deregulated swaps and derivatives (and, as members will recall, created the infamous "Enron Loophole," among other things). Among those interviewed is Professor Michael Greenberger of the University of Maryland School of Law, who was a CFTC official during the Clinton administration and was a staunch opponent of the CFMA. Professor Greenberger has sat alongside NEFI at several Congressional hearings and was keynote speaker at NEFI's 2006 VISIONS Conference in Providence, Rhode Island. You will find links to the videos below. According to sources, 60 Minutes is working on another piece that will focus on the role that deregulation of Wall Street has played in the energy commodities markets. We will report once we have additional information.

60 Minutes Video Part 1 (Air date Oct. 5, 2008) "Wall Street Shadow Market"

60 Minutes Video Part 2 (Air date Oct. 26, 2008) "Credit Default Swaps"

NEFI CONTACT: Jim Collura, VP for Public Policy (jimcollura@nefi.com)

Congress is in recess until after the November 4th election, at which time they may hold a special session to address the economic crisis. If not, they will remain adjourned until January 3rd.

DON'T FORGET TO VOTE ON TUESDAY, NOV. 4TH!
National Election Day is Tuesday, November 4th. Don’t forget to vote in what is probably one of the most pivotal elections in U.S. history. The NEFI Legislative & Regulatory Action Center has election resources available at the action center website. Google Maps also offers a convenient "Polling Place Finder" that will show the location of your home and your polling place on Election Day, as well as provide directions. We will update members on the outcome of the election in a future issue of NEON.

Senator Olympia Snowe (R-ME) Featured in November Oil & Energy Magazine

Senator Jack Reed (D-RI) Featured in October Oil & Energy Magazine

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Contact: Mark Morgan, NEFI Regulatory Counsel (mark@nefi.com)

CFTC AND FTC LOCKED IN OVERSIGHT TURF WAR ON ENERGY FUTURES TRADING
In an emerging bureaucratic war that is sure to affect petroleum markets, the Commodity Futures Trading Commission (CFTC) has filed comments blasting the Federal Trade Commissions (FTC) efforts to extend FTC authority over the energy futures market. The rulemaking is important to petroleum marketers because it will not only ultimately affect wholesale pricing but also shift much of the emphasis of fraud and manipulation investigations conducted by the FTC from the retail pump to the terminal rack and above. The FTC proposed the new rulemaking as a result of the Energy Independence and Security Act of 2007 that requires the agency to establish parameters for determining fraud and manipulation in the wholesale exchange of crude oil and petroleum products. Congress enacted the law to address high gasoline and diesel fuel prices during the summer of 2007 that infuriated consumers.

The CFTC filed comments on the proposed rule that strongly urged the FTC to exclude trading activities in futures and options on regulated exchanges from the rulemaking. The CFTC argued that authority over regulated exchanges was the sole responsibility of the CFTC and that FTC jurisdiction over these activities would "impair the CFTC's ability to effectively oversee futures activity in these critically important markets." In the past, however, the CFTC has been reluctant to investigate energy futures markets for manipulation of crude prices. Specifically, the FTC’s proposed rule would prohibit the purchase or sale of crude oil, gasoline, or petroleum distillates at wholesale by using any device, scheme, or artifice to defraud; any untrue statement of a material fact or omitting to state a material fact; or by engaging in any act, practice, or course of business that operates or would operate as a fraud or deceit upon any person. The proposed rule would cover misleading announcements by refineries, pipelines, and even indirect participants such as investment banks and include false reporting to publishers of oil price indexes. PMAA submitted comments supporting the proposed rule and urged the FTC to adopt a definition of “wholesale” that covers activities from the refinery to the terminal rack. The FTC said a final rule would be published by the end of 2008.

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FTC DELAYS NEW "RED FLAG" IDENTITY THEFT RULE ENFORCEMENT FOR SIX MONTHS
The Federal Trade Commission (FTC) has announced it will delay enforcement of its controversial new identity theft protection rule for six months. The regulation, commonly referred to as the "Red Flag" rule, was to go into effect on November 1, 2008 but will now be delayed until May 1, 2009. The Red Flag rule is important to petroleum marketers who extend credit, particularly heating oil dealers. The Red Flag rule applies to any business that extends credit to consumers and keeps sensitive personal information on file. The Red Flag rule was developed pursuant to the Fair and Accurate Credit Transaction act (FACT) of 2003. Under the rule, financial institutions, and creditors with covered accounts must have identity theft prevention programs to identify protect and respond to patterns, practices or specific activities that could indicate identity theft. "Creditors" under the rule include any party that defers payment for goods or services. This would likely include heating oil dealers that extend credit to residential purchasers through weekly or monthly payment plans.

However, merely accepting credit cards as a form of payment does not make an entity a "creditor" under the rule. Despite FTC outreach efforts designed to explain the requirements to the many different types of entities that must comply, the agency miscalculated the extent of the rule's reach to small businesses that sometimes act as "creditors" by virtue of maintaining customer payment programs. NEFI Regulatory Counsel Mark S. Morgan, Esq., has contacted the FTC about the rule’s jurisdiction over credit transactions conducted by petroleum markets, saying it was ambiguous at best and that the agency did a poor job in outreach efforts that left many small businesses scrambling to meet the November 1 deadline. Many other retail and wholesale groups also expressed surprise over the rule's reach. The FTC delay in enforcement will enable these businesses sufficient time to establish and implement appropriate identity theft prevention programs. Mark Morgan is developing a Red Flag Compliance Kit that will assist petroleum marketers who must comply with the FTC requirements by May 1, 2009.

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TSA REMINDS DRIVERS OF TWIC IDENTITY CARD REQUIREMENTS FOR DESIGNATED PORTS

The Transportation Security Administration (TSA) issued a reminder this week of the agency's new Transportation Worker Identification Credential (TWIC) card compliance deadlines. TWIC is a biometric security credential that will soon be required for all personnel, including truck drivers, in order to gain unescorted access to secure areas of ports around the country. The TSA is implementing the TWIC program, which was first established in 2003, in stages to avoid delays in application processing that plagued the DOT's security background check program for HAZMAT drivers. The TWIC rule requires drivers to undergo the identical security background checks for TWIC IDs as required under the HAZMAT program. Unfortunately, the two background checks are not interchangeable; therefore drivers must undergo the process a second time, though at a slightly reduced rate. Individuals meeting TWIC eligibility requirements will be issued a tamper-resistant credential containing the worker's biometric (fingerprint template), allowing for a positive link between the card and the driver. Compliance dates for possessing TWIC cards are set by the Coast Guard's Captain of the Port (COTP) and consequently vary according to region. The chart above indicates current TWIC deadlines set by the Coast Guard for identified ports. Additional reports will be added with a 90-day lead time.

To obtain additional TWIC information and identify TWIC application centers nationwide go to www.tsa.gov/twic.

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CONTACT NEFI FOR YOUR COPY OF THE SMALL BUSINESS LOANS GUIDANCE DOCUMENT
The Legislative & Regulatory Action Center has provided a guidance document for fuel dealers who wish to apply for SBA 7(a) loans in order to obtain additional capital to meet the increased cost of product; to make infrastructure improvements; to expand or diversify your business; or for other reasons. This document details various types of loans available and their acceptable uses. NEFI members can obtain a copy at www.nefiactioncenter.com under the "Federal Regulations" page (log-in required). If you need any assistance, contact Dave Huffman at (617) 923-5022 or dave@nefi.com.

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Heating Fuels

CITIZENS ENERGY OILHEAT DEALER AGREEMENT – NEFI has reviewed a near-final draft copy of the new dealer agreement for the Citizens Energy Oilheat program, which begins January 5th. Applications will be accepted until February 28th and dealers will have until April 30th to complete deliveries in the program. The dealer agreement remains generally unchanged from previous years, except that the agreement now specifies that all heating oil blends, including kerosene and Bioheat^®, are eligible; requires that dealer and customer arrange delivery date; and requires that all requests for payment be submitted by May 31st, 2009.
OFFICIALS AND INDUSTRY GROUPS TO DISCUSS LOW SULFUR HEATING OIL – Industry groups and stakeholders, including NEFI, are working with the Northeast States Coalition for Air Use Management (NESCAUM) to arrange a meeting on Low Sulfur Heating Oil and the home heating market, sometime before the end of the year. We will report more in a future issue.
RUSSIA AND IRAN TO FORM "NATURAL GAS OPEC" – According to the Christian Science Monitor, Russia and Iran are forming a "natural gas cartel" modeled after OPEC and pressing other big natural gas exporting nations to join.

Motor Fuels

GULF OIL BRINGS ALTERNATIVE FUELS TO NEW ENGLAND – Gulf has recently announced the opening of the "first of many" alternative fueling stations in New England.
OVER 1,800 ETHANOL STATIONS NATION-WIDE – The National Ethanol Vehicle Coalition has reported that there are now 1,802 private and public refueling stations across the U.S. The number of facilities has grown 28 percent since October 2007.

Commodities Markets

NEFI AND PMAA CALL FOR MEETING WITH FEDS – In a letter last week, NEFI and PMAA joined to call for a meeting with the federal Commodity Futures Trading Commission (CFTC), on proposed futures market reforms and pending legislation, as well as recent market developments and the plunging of energy prices. NEFI and PMAA share a seat on the CFTC's Energy Markets Advisory Committee (or EMAC).
CFTC ALLOWS OTC ETHANOL CONTRACTS – The Commodity Futures Trading Commission will allow the Chicago Mercantile Exchange (CME) to clear over-the-counter ethanol contracts.
ACTING CFTC CHAIR WANTS DERIVATIVES REGULATED – Acting chair of the CFTC Walt Lukken wants greater transparency and oversight of over-the-counter derivatives. Yes, this is the same Walt Lukken who only a year ago said no additional regulation was needed.
SEC HEAD WANTS MERGER OF SEC, CFTC – Securities and Exchange Commission head Chris Cox has said that he supports merging his agency with the futures watch-dog the CFTC, after vehemently opposing the idea in years past. NEFI has cautioned in the past that merging the two groups might favor Wall Street if the CFTC's "principles-based" regulatory regime were to be applied to the SEC regulated community. This proposal is likely to be deliberated in Congressional hearings next year.

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SPCC WEBINAR SCHEDULED FOR NOV. 5TH- The NEFI Legislative & Regulatory Action Center will run an "updated" SPCC compliance on November 5, 2008 @ 2PM EST. The material will cover the 2002 amendments for EPA Spill Prevention, Control and Countermeasure site plan and implementation, compliance deadline July 1, 2009. The webinar will also cover additional SPCC revisions planned for finalization this week. If you are interested in joining the webinar, contact Dave Huffman at dave@nefi.com or call 617-923-5022. Online registration is available at www.nefiactioncenter.com or download registration forms here.

FRIDAY, OCT. 31ST AT 10AM WILL BE THE CUT OFF REGISTRATIONS. NOTE: IF THE FINAL RULE CHANGES ARE NOT PUBLISHED BEFORE MONDAY, NOVEMBER 3RD, THE WEBINAR MAY BE POSTPONED UNTIL IT IS RELEASED. BUT DON'T WAIT, SIGN UP TODAY!
NEFI BOARD MEETING IN CONNECTICUT - Special thanks to the Independent Connecticut Petroleum Marketers' Association (www.icpa.org) for hosting NEFI's board of directors meeting at their Cromwell, Conn., headquarters on Thursday, October 23rd. The meeting was well attended and productive. An Executive Committee was held prior to the Board Meeting, and both were led by Chairman of the Board Chris Keyser (Owner Services, Proctor, VT).