Skip to main content

Breathing Easy in the West

A wide variety of issues are top-of-mind for retailers out West, as the crude oil supply increases in California, a new model of pseudoephedrine regulation gets passed in Arizona and Internet cigarette buying comes under scrutiny in Montana.

Valero Energy Corp. has reached an agreement with the attorney general in California over Valero's $2.8 billion acquisition of the storage and shipping assets owned by Kaneb Services LLC and Kaneb Pipe Line Partners LP, which are a single gas terminal business represented by two separate public companies, based in Richardson, Texas.

The acquisition would have placed Valero in a position to control a "significant" amount of northern California's petroleum supply, a potential violation of the nation's antitrust laws.

Under the terms of the agreement, Valero is required to construct storage tanks with a 950,000-barrel capacity by no later than three years after Valero sells Kaneb's terminals in Richmond, Calif., and Martinez, Calif., or by June 2011. "This will benefit motorists," said Attorney General Bill Lockyer, "by stabilizing the market and providing a buffer against shortages and price hikes."

The California Independent Marketers Association (CIOMA) helped move the agreement along by weighing in against the original terms of the merger and commenting on it to the FTC and the attorney general. "We're in favor of the agreement because it will free up a million barrels for use by third parties," said CIOMA government relations director Jay McKeeman, "which will allow for greater competition in the marketplace and help assure a diverse petroleum market.

"What's more," added McKeeman, "the acquisition as originally planned would have harmed consumers by giving Valero too much control over the distribution of ethanol. The settlement assures that independents will have continued access to the state fuels market, while allowing Valero to upgrade facilities in need of improvement.”

In another California development, John Handley, government relations director of the California Independent Grocers Association (CIGA), made his sentiments known on the state's proposed healthcare plan.

"There's a danger that California workers will be lose a great deal of their health coverage,” he said, “if the health care bill making its way through the state legislature becomes law."

He was commenting on the bill (SB 840), sponsored by Democratic state senator Sheila Kuehl, which calls for a single-payer system similar to the one in Canada. Kuehl's proposal has already been overwhelmingly approved by the Senate and is waiting for committee assignment in the Assembly.

"This bill takes choice away from workers," observed Handley, "because it requires them to move their existing health coverage to the new system; they have no say in the matter. We object to it for other reasons too: It's a one-size-fits-all plan, which means it fits no one; it diverts all local, state and federal funds to this one plan; it prevents other plans from duplicating any of its coverage; and it presents California citizens will with a real prospect of higher taxes to pay for it."

California has a two-year legislative session, which ends in October 2006. Chances are that the bill's fate will be decided before then.

The good news out of Arizona in this follow-up report is that the efforts of the Arizona Food Marketing Alliance (AFMA) and its president, Richard Jennings, have borne legislative fruit in the form of a pseudoephedrine law more suited to the reality of Arizona than Oklahoma.

"Thanks to state senator Barbara Leff 's sponsorship of our new pseudoephedrine law, SB1473, " said Jennings, "we were able to fight off one modeled after Oklahoma's. Our problem with meth comes across the border, something the Oklahoma model doesn't take into account. We hated to fight the attorney general on this, but we did and won, and now Arizona shoppers and retailers can rest easy.

"The new law targets the criminals who abuse the use of pseudoephedrine, rather than the retailer or the ordinary customer," said Jennings. "Retailers will not have to stock pseudoephedrine products behind a pharmacy counter or log everyone who buys them. And it imposes severe penalties on criminals who abuse the law, such as no bail and a jail sentence up to 16 years.

"There will be a 9-gram limit to purchases of products with pseudoephedrine in Arizona," said Jennings, "and single-ingredient products will have to be locked up or stored behind a counter, but not a pharmacy counter."

This last is especially important to Jennings, since it robs those in remote areas with no pharmacies of the ability to buy over-the-counter medicines.

"We got a good law out of this," observed Jennings. "Our work paid off."

In Montana, retailers are concerned about the effect of sales of the state's new tobacco law. Ronna Alexander, state executive of the Montana Petroleum and C-store Association, didn't really believe that many people would give up smoking when the new law went into effect in January, raising cigarette taxes from 60 cents a pack to $1.70.

“But tax revenues dropped 25 percent, and that could be attributed to alternative sales purchases, many of which would be illegal, with Internet sales being highest percentage,” said Alexander. “That was the only logical explanation, so we fought for and won a bill that requires Internet sellers of tobacco products to obtain a license, report revenues and pay taxes.”

The new law goes into effect Oct. 1, 2005, and the Departments of Justice and Revenues have been charged with enforcing the requirements.

This ad will auto-close in 10 seconds