Texas Food and Fuel Association Quarterly-July/August/September 2013

Q U A R T E R L Y July August September 2013

2013 LEGISLATIVE REPORT Guide to Key Legislation Impacting Your Business

CSA PROGRAM | PG 18

COMMON CARRIER LIABILITY | PG 21

DIESEL ENGINES | PG 23

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Q U A R T E R L Y July August September 2013

2013 LEGISLATIVE REPORT

Q U A R T E R L Y

Guide to Key Legislation Impacting Your Business

CSA PROGRAM | PG 18

COMMON CARRIER LIABILITY | PG 21

DIESEL ENGINES | PG 23

July August September 2013 Texas Food & Fuel Association Quarterly is published for: Texas Food & Fuel Association 401 West 15th Street, Suite 510 Austin, TX 78701 Phone: 512-476-9547 Fax: 512-477-4239 www.txfoodandfuel.org

Departments

TEXAS FOOD & FUEL ASSOCIATION STAFF Chris Newton, President

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Calendar of Events

Rick Bolner, CPA, Vice President of Accounting

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Welcome New Members

Doug DuBois, Jr., Director of Member Services & Governmental Affairs

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Index of Advertisers

Scott B. Fisher, Vice President of Policy & Public Affairs Dana Fuller, CEM, Expo Manager

6

Texas Food & Fuel Association Board of Directors

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Chairman’s Message

By Eddie Bates

Features 12

2013 Legislative Report: Guide to Key Legislation Impacting Your Business

By Texas Food & Fuel Association Staff

Published by:

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Naylor, LLC 5950 N.W. 1st Place Gainesville, FL 32607 Phone: 800-369-6220 Fax: 352-331-3525 www.naylor.com

Many Fleet Managers See Flaws Within the CSA Program Scoring System

By Gary Wien, NAFA Fleet Management Association

21

Risk Management – Common Carrier Liability

By Federated Mutual Insurance Company

Publisher: Drew Jasinski

23

Meeting the Needs of Today’s Diesel Engines Is Your Fuel Up to Snuff?

By Robert E. Tatnall, P.E., Fuel Right

Annette Hicks, CMP, Director of Meetings & Expositions Kris Wallace, Assistant Director of Accounting & Assistant Expo Manager

Editor: Shani Calvo Marketing: Kaydee Currie Project Manager: Heather McMillen Sales Director: Jeffrey Connelly Advertising Sales: Cherie Dubay, Shaun Greyling, Jason Hughes, Bill Lovett, Warren Marcoux, Shannon O’Brien, Leron Owens, Beth Palmer, Jason Ruppert, Eric Singer, Paul Walley, Marcus Weston, Jamie Williams, Matthew Yates

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18

21

Layout & Design: Deb Churchill Basso, Print 2.0H! Cover Graphic: Doug DuBois Jr. ©2013 Naylor, LLC. All rights reserved.

The contents of this publication may not be reproduced by any means, in whole or in part, without the prior written consent of the publisher.

PUBLISHED AUGUST 2013/TPM-Q0313/8807

July August September 2013

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Texas Food & Fuel Association

2013-14 Board of Directors OFFICERS

DISTRICT DIRECTORS

Eddie Bates, Beaumont Chairman Gary Johnson, Odessa Vice Chairman Rick Golman, Dallas Secretary Madalyne Lange, Sherman Treasurer Jim Kolkhorst, Navasota Immediate Past Chairman Chris Newton, Austin President

Clay Wallace, Hereford District I Matthew Kendrick, Lubbock District II Steve Fryar, Brownwood District III Dean Howerton, Midland District IV Michael Burniston, Kerrville District V Aaron Nilsson, Daingerfield District VI Kyle Kirby, Ft. Worth District VII Mike Kitrell, Plano District VIII Justin Reeves, Longview District IX Matt Judson, Corsicana District X Don Broach, Bryan District XI Ed Morgan, Nacogdoches District XII Doug Staton, Austin District XIII

REGIONAL DIRECTORS Dan Baker, San Angelo Region A Lance Davis, Bonham Region B Cary Rabb, Round Rock Region C Brian Williams, San Antonio Region D

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Imad Sarkis, Beaumont District XIV To Be Announced District XV Sean Nooner, Hondo District XVI Carlton LaBeff, Victoria District XVII Jake Marsico, Dickinson District XVIII

DIRECTORS AT LARGE — MARKETERS Sultan Poonawala, Dallas John Prickette, Sulphur Springs Michael Reynolds, Mt. Pleasant Jeff Scarbrough, Clovis, NM Wes Scott, Houston Mark Wright, Houston

DIRECTORS AT LARGE – SUPPLIERS Therese Baer, Austin Buster Cage, Whitney Beau Harris, Arlington Russ Hamilton, Boyd Michael Lawshe, Fort Worth Bryan Noonen, San Antonio

PAST CHAIRMEN SERVING ON THE BOARD Rodney Fischer** Gary Garrison** Andy Olmstead ** Tom Masters** Terry Maxey** Randy Parrott* Carl Ray Polk, Jr.* Allen Smith** Brooks Smith** John Weitzel ** * serves on Executive Committee ** serves on Board Board Term: July 1, 2013-June 30, 2014

View this issue and past issues of The Quarterly at www.naylornetwork.com/tffa/ 6/20/13 12:26 PM

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Chairman’s

Message

By Eddie Bates

Measuring Our Energy in BTUs

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After considering the different BTUs provided by our members, I think BTU really stands for “Better Think United.”

noted author, speaker and pastor of our time, John Maxwell, once said, “If we’re growing . . . we are always going to be out of our comfort zone.” For over 64 years, the members of the Texas Food & Fuel Association have demonstrated their willingness to get out of their comfort zones and grow. These businesses’ creativity, flexibility and dynamism are reflected in our trade association. Like you, I’m proud to be a member of a growing organization. We’re sometimes out of our comfort zone, but we’re building a structure to serve those who follow us as members of this Association.

We may sell different products and utilize different business models, but what binds us together is energy.

Petroleum marketers can measure their energy value in the British Thermal Unit (“BTU”) of the fuels and lubricants utilized by our customers to propel their vehicles and maintain their machinery.

Similarly, grocery stores, convenience stores and grocery distributors all provide customers with food energy or caloric BTUs. Think about the hundreds of thousands of food products and beverages these members deliver to Texans throughout the state.

There is a lot of food energy moving from our grocery distributor members through the doors of all of these retail establishments.

After considering the different BTUs provided by our members, I think BTU really stands for “Better Think United.” We are all out of our comfort zone

and we’re all growing to provide energy for our customers.

The industries and businesses represented by the Texas Food & Fuel Association are impacted each year by new regulations and laws that impact our bottom lines. We all strive to deliver products that benefit our customers in a manner that highlights our customer service and knowledge of the industry.

However, despite great products and customer service, the economy is still not firing on all cylinders out there. To account for the economic climate, changing customer needs and increased competition, we need to incorporate “creative survivability” into our businesses and trade association.

The Texas Food & Fuel Association is working overtime to not only be an added value partner for your business, but to launch new initiatives that reflect its members’ commitment to “creative survivability.” The Association has just launched a new website, which includes a virtual convenience store with links to regulatory resources. Meetings and education sessions are being continually reviewed and improved to not only enhance their content and deliverables but to also ensure they provide a quality opportunity for all participants to network and share their own tales of “creative survivability.”

Thank you if you are already active with the Texas Food & Fuel Association. If you’re not, get involved today. We need your BTU energy!

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Members Working with Members Thank you for supporting the advertisers and members who make this publication possible. Their involvement with the association allows us to have a strong front on legislative issues that affect all involved in the industry and related fields. Their support of this magazine allows Texas Food & Fuel Association to continue to inform its members about updates in the industry and how Texas Food & Fuel Association is directly involved in making a difference. Texas Food & Fuel Association encourages all of its members to consider working with companies who actively support the industry through their involvement with the association.

July August September 2013

9

Calendar

of Events

2013

jan

feb

Indicates an association event

mar apr

may

jun

jul

aug sept

oct

Fall Conference & Board Meeting

nov

dec

1-3

October 1-3 Omni Westside, Houston, TX

PAC Golf Tournament

2

October 2 Meadowbrook Farms Golf Club, Katy, Texas

NACS Show

12-15

October 12-15 Atlanta, GA

Outlook Leadership Conference

9-12

November 9-12 Fairmont Princess, Scottsdale, AZ

2014 2014 Southwest Fuel & Convenience Expo

13-15

May 13-15, 2014 Gaylord Texan Resort, Grapevine, TX

2015 6-8

2015 Southwest Fuel & Convenience Expo May 6-8, 2015 Omni Fort Worth Hotel & Convention Center, Fort Worth, TX

W e l c o m e New Members INDEPENDENT OPERATOR MEMBERS Producers Cooperative Elevator Floydada, TX Bryan Schrader 806-983-2821 bschrader@amaonline.com www.pcefloydada.com

A local cooperative with a fuel division and small C-Store.

Traders Village, LTD Grand Prairie, TX Christopher Kenney 972-647-2331 chris@tradersvillage.com www.tradersvillage.com

Jackson Lewis LLP Austin, TX Glennie Green 512-362-7100 glennie.green@ jacksonlewis.com www.jacksonlewis.com

A National Employment Law Firm Exclusively Representing Management in Workplace Law.

REFINER-SUPPLIER MEMBER CHS, Inc. Inver Grove Heights, MN Melvin Lamb 800-852-8188 melvin.lamb@chsinc.com www.chsincinc.com

Refiner and Marketer of Petroleum Products

Dan Martinez & Associates LP Sugar Land, TX Dan Martinez 281-494-7394 dmartinez@danmartinez.com www.danmartinez.com

The Largest Year Round Flea Market in the USA.

Sales & Use Tax Consultants

SUPPLIER MEMBERS Allen Maxwell & Silver Englewood Cliffs, NJ Hal Ernest Jr. 201-871-0044 hale@amscollections.com www.amscollections.com

Leading National & International Provider of Commercial Debt Collection, Account Management, Industry Credit Group Services & Educational Workshops.

Franklin Fueling Systems Madison, WI Andrew Knapp 608-838-5685 knapp@franklinfueling.com www.franklinfueling.com

Franklin Fueling Systems is comprised of the industry’s most extensive lines of fueling product solutions.

Gann Service Co. Lufkin, TX Fred Gann 936-824-3344 fredgann@gannservice.com

Energy Pills and Shots, Lighters, Novelty Candies, Ceramic items, Candles, Novelty Toys & Gifts, Souvenirs (State & College), Caps, Gloves, Sunglasses and Cell Phone Accessories.

July August September 2013

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02/03/13 4:04 AM

2013 Legislative Report Guide to Key Legislation Impacting Your Business

A

s part of its commitment to its members and the industry, Texas Food & Fuel Association plays an active part in lobbying for the best interests of the petroleum marketer and convenience store industries. Below are some updates on bills that have seen activity at the capitol and the results, if applicable.

To follow these bills and see up-to-date changes, visit www.txfoodandfuel.org.

Legislation Impacting Retail & Wholesale Operations FRANCHISE TAX - HB 500 What Does the Bill Do? • Reduces tax rates by 2.5%. Retailers and Wholesalers – Reduced from 0.5% 0.4875%.

• Permits auto repair shops and other businesses to be considered a “retailer.” Retailers and wholesalers pay tax rate of 0.5%. All other businesses pay 1% rate.

• Minimum deduction of $1,000,000 for all businesses.

• Motor carriers may exclude amount of flow-through funds derived from taxes and fees from total revenue.

Why Should I Care?

• Since its adoption in 2006, the new franchise, or “margins,” tax has been subject to a lot of criticism because of its complexity and failure to take into account a businesses’ actual profits. HB 500’s tax reductions and new exemptions may prolong the tax’s life-span.

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What Do I Need to Do? • New tax rate and $1million deduction apply to returns due in May 2014.

• Discuss with your CPA or state tax professional. The association will update membership as the Comptroller of Public Accounts adopts administrative rules to implement HB 500.

MEASUREMENT OF FUEL HB 1494 What Does the Bill Do? • Provides that for the retail sale of motor fuel, a liquid gallon contains 231 cubic inches without adjustment based on the temperature of the liquid.

Why Should I Care?

• Consumer groups and plaintiffs’ attorneys brought a class action lawsuit alleging that retailers’ failure to utilize temperature correction in the retail sale of fuels was deceptive. Although the lawsuit was unsuccessful, several companies entered into settlement agreements agreeing to

incorporate temperature correction for retail sales under certain circumstances. Plaintiff’s attorneys may file additional lawsuits.

• Retailers must ensure each gallon of fuel is equivalent to 231 cubic inches without adjustment for the fuel’s temperature.

What Do I Need to Do? • HB 1494 takes effect September 1, 2013.

• Do not purchase or install equipment at retail to adjust the measurement of fuel based upon its temperature.

PETROLEUM STORAGE TANKS - HB 7 What Does the Bill Do? • Requires the Texas Commission on Environmental Quality (TCEQ) to prepare an annual report regarding the status of corrective action activities at sites contaminated by releases from petroleum storage tanks (PSTs).

View this issue and past issues of The Quarterly at www.naylornetwork.com/tffa/

• Requires TCEQ to prepare an annual report regarding leaking PST sites reported by December 22, 1998. The report will include the number of sites remaining, the number being remediated and projected costs.

• Establishes a 9/1/2021 deadline to complete remediation of sites reported to TCEQ by 12/22/98.

Why Should I Care?

• Distributors of motor fuel pay a fee upon each delivery of fuel from a terminal into a cargo tank. The fee is used to fund the TCEQ’s PST program. The fee level is driven by the costs of administering the state’s PST program, including the remediation of sites reported to the agency by 12/22/98.

• TCEQ and some legislators have argued that the fee should be kept at higher levels to provide the agency with a funding cushion to respond to unforeseen contingencies. This thought process has led to a large, un-appropriated fund balance.

• Association staff and allies in the Legislature have worked to decrease the fee and ensure a realistic picture of TCEQ’s remediation of sites the agency is still financially responsible for.

What Do I Need to Do? • If you have sites that were reported to TCEQ under 12/22/98 deadline, TCEQ is responsible for the remediation. Visit with TCEQ staff or contractor to learn of plans for closing site.

• Visit with your state representative or state senator regarding the need to keep the PST fee low and ensure the un-appropriated balance of the fund is not used for purposes unrelated to PSTs.

REPEAL OF MOTOR FUEL/ SALES TAX SPEED-UP - SB 559 What Does the Bill Do? • Eliminates provision requiring taxpayers who collect motor fuel tax, sales tax, and alcoholic beverage taxes to remit taxes one month early. Under the original law, taxpayers would have been required to remit taxes on August 30 for sales in August rather than September.

July August September 2013

Why Should I Care?

• The “speed up” would have required members to pre-pay taxes for sales they may not have collected the taxes for.

What Do I Need to Do? • Nothing. Traditional tax remittance periods remain the same.

OPTIONAL BIODIESEL TAX EXEMPTION - HB 3086 What Does the Bill Do? • Under current law, if a biodiesel product is blended with taxable diesel fuel, the portion of the mixture that is not petroleum diesel is not subject to motor fuel tax. This tax exemption is required to be passed along until the product is purchased by the ultimate end-user. All parties within the distribution chain must follow the labeling requirements required by the Comptroller’s office.

• HB 3086 allows the biodiesel tax exemption to be optional, meaning, the supplier of the fuel may elect to treat the entire gallon as taxable diesel fuel. This negates the need to follow the Comptroller’s rules on labeling of invoices and receipts.

Why Should I Care?

• The use of biodiesel to meet federal Renewable Fuel Standards has resulted in various blending rates from suppliers and the terminals they operate from.

This has caused numerous headaches as these blending rates have changed from supplier to supplier. In addition, the current system could have long term liability tied to a motor fuel tax audit if the auditor finds discrepancies between supplier invoices for the blended amount and the amount shown on the marketer’s paperwork.

What Do I Need to Do? • Contact your fuel suppliers to determine whether are planning to continue to pass the exemption on or if they are going to begin charging the full 20 cent per gallon state motor fuel tax on your diesel purchases.

TEXAS EMISSIONS REDUCTION PROGRAM (TERP) - SB 1727 What Does the Bill Do? • The Texas Emission Reduction Program is a grant program to fund clean fuel infrastructure projects like government fleets, private fleets, construction and heavy equipment, port and rail engine replacement, heavy drayage vehicles, etc.

• SB 1727 tightens the procedures, processes and funding of the program. In addition, the bill language adds natural gas vehicles to the program.

Why Should I Care?

• The program may provide funding for marketers or their customers to utilize alternative fuels. In addition, funds may be available for fueling infrastructure for compressed natural gas fueling stations.

What Do I Need to Do? • The effective date of the legislation is September 1, 2013. SB 1727 will require rulemaking to be fully implemented. Staff will update the membership regarding the rulemaking process.

COLLECTION OF TAX FOR COMPRESSED NATURAL GAS (CNG) & LIQUEFIED NATURAL GAS (LNG) - HB 2148 What Does the Bill Do? • The bill will change the method of taxation for CNG and LNG used for highway purposes from a decal system to a per gallon equivalent to be paid by retailers. The bill sets up the recordkeeping, reporting, and basis of taxation of natural gas used as a motor fuel.

Why Should I Care?

• Marketers interested in offering alternative fuels and the expansion of the TERP program for natural gas fleets will be impacted by the bill. HB 2148 has no effect on other motor fuel taxes.

What Do I Need to Do? • The bill will become effective September 1, 2013 and will require a rulemaking by the Comptroller’s office. Staff will provide updates regarding the rulemaking process.

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A&A Pump Company San Antonio, TX 210-226-1191

Petroleum Solutions, Inc. Grand Prairie, TX 972-314-2400

D&H /United Pump Supply Amarillo, TX 806-373-4251

A-1 Pump Inc. Bryan, TX 979-778-2418

Petroleum Solutions, Inc. Houston, TX 281-449-4027

D&H /United Pump Supply El Paso, TX 915-859-8150

B&J Equipment Ltd. Longview, TX 903-757-4765

Petroleum Solutions, Inc. McAllen, TX 956-686-9582

D&H /United Pump Supply Lubbock, TX 806-762-2428

B&J Equipment DFW Ltd. Dallas, TX (Parts & Servicing) 214-631-4664

Petroleum Solutions, Inc. San Antonio, TX 210-661-2489

D&H /United Pump Supply Midland/Odessa, TX 432-563-1132

Petroleum Solutions, Inc. Victoria, TX 361-573-7449

D&H /United Pump Supply Arlington, TX 70011 817-530-1917

Petroleum Solutions, Inc. Temple, TX 254-770-0440

D&H /United Pump Supply Schertz, TX 78154 210-651-3882

Petroleum Solutions Beaumont, TX 409-842-0007

D&H/United Pump Supply Texarkana, TX 817-530-1917

Petroleum Solutions, Inc. Abilene, TX 325-676-2371 Petroleum Solutions, Inc. Austin, TX 512-278-1000 Petroleum Solutions, Inc. Corpus Christi, TX 361-882-3077

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Legislation Impacting Fuel Wholesale Operations ELECTRONIC FUNDS TRANSFERS / BAD DEBT CLAIMS FOR MOTOR FUEL TAXES SB 821

REVOCATION OF DYED DIESEL END USER NUMBER FOR FAILURE TO PAY FUEL DISTRIBUTOR - SB 603 What Does the Bill Do?

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TOKEN TRAILER REGISTRATION - HB 511 What Does the Bill Do? • Directs the Texas Department of Motor Vehicles to issue a license plate without an expiration date and does not require a receipt to be kept with the trailer as long as the registration is renewed.

Why Should I Care?

• Companies will no longer have the burden of keeping up with license plate paperwork for their trailers. This will allow the registration and renewal to be on-line and not require a paper receipt be kept with the equipment or face a penalty when it cannot be located.

July August September 2013

• Requires the Comptroller’s office to revoke a customer’s Dyed Diesel End-User number for purchases of tax-free dyed diesel fuel if a court enters a final judgment against an end-user for non-payment of dyed diesel fuel purchases.

Why Should I Care?

• This is another “tool” to help members try to collect on debts for fuel sales to commercial end-users. The end-user has often been able to simply move to the next distributor after not paying for the fuel ordered from the first.

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What Does the Bill Do? • Updates the Penal Code and Tax Codes to ensure electronic funds transfers are treated the same as checks.

Why Should I Care?

• SB 821 permits fuel distributors to claim a bad debt tax credit based upon either nonpayment by check or non-payment by electronic funds transfer.

• Payment without sufficient funds can now be treated as a “hot check” by prosecutors regardless of whether the attempted payment was by check or electronic funds transfer.

• SB 821 updates the law permitting the criminal prosecution of consignees for failure to pay their distributors with current Tax Code provisions.

What Do I Need to Do? • Contact your local district attorney’s office to discuss the referral of cases involving nonpayment via electronic funds transfers. To ensure the case is treated as a criminal rather than civil matter, insist the transaction include certain elements. Examples may include the timing of the demand for payment and delivery of services. Each DA’s office has a certain degree of discretion in how they handle these matters. Be sure and discuss this new law with your DA’s office.

• Alert your customers that your company intends to refer cases for non-payment via electronic funds transfers for criminal prosecution.

What Do I Need to Do? • HB 511’s effective date is September 1, 2013 and isn’t expected to require any extensive rulemaking.

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09/02/13 5:46 AM

SB 603 will prohibit access to tax-free fuel until purchasers have satisfied their financial obligations to their fuel distributors.

What Do I Need to Do? • SB 603 will require a rulemaking by the Comptroller’s office to implement. Staff will prepare a Regulatory Alert for distribution to members following the completion of the rulemaking process.

• Verify the status of your customers’ dyed diesel end user numbers and other licenses using the Comptroller’s website (www.window.state.tx.us/taxinfo/fuels/add_del_lists. html).

OVERWEIGHT PERMITTING FEES AND PENALTIES - HB 2741 What Does the Bill Do? • HB2741 tightens enforcement regarding the issuance of overweight permits and increases penalties for overweight violations.

Why Should I Care?

• HB 2741increases penalties for overweight violations. Current law included a provision holding shippers who utilize common carriers responsible for overweight violations. The association amended the law to provide that a carrier acting as both a shipper and carrier may only be held liable as a carrier and not both.

• The bill also increased penalties for overweight violations up to a maximum of $500.00 for axle weight violations.

What Do I Need to Do? • The bill will become effective September 1, 2013. It is not known at this time whether a rulemaking will be required or undertaken

by TxDOT. We will update you as more information is available.

• Ensure your common carrier is aware of the new laws regarding overweight violations.

• Ensure your own transport vehicles operate within weight limits.

Legislation Impacting Retail Operations SALES TAX FOR SNACK ITEMS – SB 1151 What Does the Bill Do? • Clarifies the distinction between foods sold for immediate consumption which have always been taxable and foods sold for later consumption which have always been non-taxable.

• Changes the basis for when a food product is considered taxable. Rather than use the format of the store, the term “snack items” is defined.

• “Snack items” are defined as X Snack bars or trail mix X Nuts, unless candy coated (which are always taxable as candy) X Popcorn X Chips, crackers or pretzels.

Why Should I Care?

• If these items are sold in a package indicating that the serving size is equivalent to one serving or, the package is less than 2.5 ounces, the snack item is subject to sales tax.

What Do I Need to Do? • SB 1151 becomes effective September 1, 2013.

NEW TOBACCO FEES - HB 3536 What Does the Bill Do? • Imposes a fee on the sale of tobacco products manufactured by tobacco companies that did not participate in Texas’ 1998 agreement with major tobacco companies to settle healthrelated claims brought by the state.

• Fee is 2.75 cents per cigarette / 2.75 cents per 0.09 ounces of non-settling manufacturer cigarette tobacco product through December 31, 2013.

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• On January 1, 2014 the fee will increase 3% or the increase in the Consumer Price Index, whichever is greater.

• Fee is collected by tobacco distributors.

Distributors receive 3% stamping allowance.

Why Should I Care?

• New fee will increase costs of some tobacco products.

What Do I Need to Do? • Discuss the new fee with your company’s tobacco distributor to ensure you are collecting the correct fees.

• New fee goes into effect September 1.

ENFORCEMENT OF CREDIT CARD SURCHARGING VIOLATIONS - HB 2548 What Does the Bill Do? • Transfers the authority to enforce violations of Texas’ prohibition on credit card / debit card surcharging from the Texas Finance Commission to the Office of Consumer Credit Commissioner.

Why Should I Care?

• Current law prohibits merchants from placing a surcharge on the sale of goods purchased with a debit or credit card.

• The Office of Consumer Credit Commission may heighten enforcement / public awareness of the surcharge prohibition.

What Do I Need to Do? • Do not impose a surcharge for debit or credit card purchases. Merchants may discount the price of items for cash purchases.

• Effective date – September 1, 2013

PROHIBIT SURCHARGING FOR DEBIT CARD TRANSACTION HB 3068 What Does the Bill Do? • Extends surcharge prohibition to debit cards as well as credit cards.

Why Should I Care?

• Merchants are prohibited by statute from collecting a surcharge for purchases made with a debit or credit card.

• Merchants are allowed to discount the price of items for cash purchases.

What Do I Need to Do? • Do not impose a surcharge for debit or credit card purchases. Merchants may discount the price of items for cash purchases.

• Effective date – September 1, 2013

READING AND STORING ELECTRONIC DATA FROM DRIVER’S LICENSE - HB 346 What Does the Bill Do? • Amends current law relating to the accessing and use of electronically readable personal identification information obtained from driver’s licenses or personal identification certificates.

Why Should I Care?

• The bill protects businesses from fraud by allowing them to scan and store electronically readable information embedded in a driver’s license.

• HB 346 also allows business to provide this information to check services or fraud prevention services companies as part of a transaction initiated by the license holder.

View this issue and past issues of The Quarterly at www.naylornetwork.com/tffa/

What Do I Need to Do? • If you work with a check recovery service or fraud prevention service, make arrangements to implement this new provision after the effective date.

• Effective date – September 1, 2013

CONTINUATION OF THE TEXAS LOTTERY COMMISSION - HB 2197 What Does the Bill Do? • The bill is a result of the review of the Sunset Advisory Commission and recommendation to continue the operation of the Lottery Commission for another 12 years.

• It increases the size of the commission from three members to five and requires the commission to approve all major contracts.

• A 10-member legislative review committee is established to study the process and impacts of eliminating the state lottery.

Why Should I Care?

• By enacting the Sunset Advisory Commission recommendations, the Lottery Commission will improve performance and efficiencies for the benefit of the Foundation School Fund.

What Do I Need to Do? • The Texas Lottery will continue at least until the next sunset review.

• Effective date – September 1, 2013

REGULATE SALE OF BULK PLASTIC MERCHANDISE CONTAINERS - SB 875 What Does the Bill Do? • Deters the theft of plastic bulk merchandise containers used by beverage and grocery distribution companies, by regulating the purchase of such containers.

• Requires anyone in the business of recycling, shredding or destroying plastic bulk merchandise containers to verify the identity of the seller by means of a photo ID and maintain records of all purchases made.

Why Should I Care?

• Theft of these containers is a growing problem for suppliers, increasing their cost of doing business, which can eventually impact the cost of the products they supply.

What Do I Need to Do? • Effective date – September 1, 2013

STREAMLINING THE TABC APPLICATION PROCESS SB 1035 What Does the Bill Do? • Amends the application process for beer and wine licenses by directing applications to be filed with the Texas Alcoholic Beverage Commission (TABC), rather than with the County Judge of the county in which the retail location resides.

• Increases the consistency in the issuance of licenses and permits by TABC. Why Should I Care?

• The impact of the legislation will be to speed up the issuance of beer and wine licenses.

What Do I Need to Do? • Applications should be filed with the local office of the Texas Alcoholic Beverage Commission.

• If there are protests associated with the issuance of the license, the County Judge has jurisdiction to conduct a hearing on the application and charge a $25 hearing fee.

• Effective date – September 1, 2013 ■

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RISK MANAGEMENT

Many Fleet Managers See

Flaws Within The CSA Program Scoring System

By Gary Wien Communications Manager, NAFA Fleet Management Association AT THE END OF 2010, the U.S. Department of Transportation’s Federal Motor Carrier Safety Administration (FMCSA) launched the Compliance Safety Accountability (CSA) program to help improve commercial truck and bus safety. The centerpiece of the CSA program is the Safety Measurement System (SMS) which analyzes inspections and crash data from all safety-based violations to determine a commercial motor carrier’s onroad performance.

SMS replaced SafeStat. Improvements were needed in SafeStat’s method of grouping safety problems together to identify carriers for a one-sizefits-all compliance review. The goal of the SMS program is to focus on the behaviors known to cause crashes. It does this through the use of seven safety improvement categories called BASICs which examine a carrier’s on-road performance and potential crash risk. The he BASICs include unsafe driving, fatigued driving (hours-of-service), driver fitness, controlled substances/alcohol, vehicle maintenance, cargo-related, and nd crash indicator.

If a carrier lists and is approved to transport hazardous materials then an additional “hazardous materials” category is used and nd replaces most of the “cargo” category. Under the previous system, m, carrier performance was only assessed in four broad categories. The belief is that by looking at a carrier’s safety violations in each of the seven BASICS categories, the carrier, FMCSA, and state law enforcement will be better equipped to identify carriers with patterns tterns of high-risk behaviors and apply interventions that provide carriers with the information necessary to change unsafe practices. es. Once the threshold has been exceeded the following activitiess occur: 1) A notice letter is sent to the carrier advising that continued ntinued violations exceeding the threshold of one or more BASIC’s IC’s may result in furth actions by the DOT and 2) All carrierss with any BASIC’s scores above a threshold appear on a nationwide intervention report. This will trigger enhanced roadside inspections and the potential level of inspection whenever a vehicle is stopped.

If a carrier does not exceed the threshold of any BASIC’s category, their vehicle is less likely to receive a roadside inspection and also may lessen the “level” of any inspections.

Additional differences are the SMS attempts to identify safety problems to determine who

18

to investigate and where to focus the investigation, while SafeStat simply identified carriers for a compliance review. SMS emphasizes on-road safety performance, using all safety-based inspection violations, while SafeStat worked with roadside inspections, using only out-of-service and moving violations. SMS is used to propose adverse safety fitness determination based on carriers’ current on-road safety performance; SafeStat had no impact on safety rating. With SMS, violations are weighted based on relationship to crash risk, but violations were not weighted with SafeStat. In addition, SMS assesses carriers and drivers, while SafeStat only assessed carriers.

Since the inception of SMS, several fleet managers have expressed their concerns to NAFA over the issue of counting no-fault crashes. The current policy is to have all crashes – whether the truck driver is at fault or not – count against the fleet in scores derived from the CSA

View this issue and past issues of The Quarterly at www.naylornetwork.com/tffa/

1)

Know and follow safety rules and regulations. For great commercial motor vehicle (CMV) safe driving tips, check out www.fmcsa.dot.gov/about/outreach/ education/driverTips/index.htm

2)

3)

Keep copies of inspection reports.

4)

Learn about employers’ safety records.

You can view carrier safety records online at http://ai.fmcsa.dot.gov

Become knowledgeable about the Behavior Analysis and Safety Improvement Categories (BASICs) and how FMCSA assesses safety under CSA. You can review the Safety Measurement System (SMS) methodology document at http://csa.fmcsa.dot.gov/ Documents/SMSMethodology.pdf

What can drivers do to comply with CSA? measurement system. In November 2012, NAFA surveyed 142 fleet managers with trucks greater than 10,000 GVWR in their fleet to get their opinions on the SMS program and the way the program counts crashes.

Nearly half of the survey respondents believe the CSA will be somewhat effective in helping to make the roads safer by reducing the number of truck crashes. Meanwhile, 19.2 percent said they believed the CSA program would either be somewhat ineffective or very ineffective at producing positive results. Twenty-eight percent felt the new system would provide no change at all. Only five percent said they believed the new system would be very effective at achieving its goals; however, 71.2 percent said they believed the CSA would help improve the overall quality of drivers – including 6.7 percent who said the program would substantially improve the overall quality.

The question of whether or not crash involvement by commercial vehicles is an accurate measure of a fleet’s future crash risk gets to the heart of the matter. Survey respondents largely (60 percent) said it was not an accurate predictor for various reasons. Three out of four respondents agreed that crash involvement could be considered a consequence of the environment in which the fleet operates, such as in an urban versus rural area. While some believed historical data is a good predictor of future performance, many disagreed, believing that crash involvement was just one of many important factors to consider.

July August September 2013

One who disagreed with the program’s scoring said, “They simply report whether or not a vehicle in your fleet was involved in a crash and not the cause. A fleet can have a wonderful driver training program and practice defensive driving, but still can be involved in a crash without fault.”

Another pointed out that, “The information is only as good as the crash investigation. If you cannot accurately identify the cause then it is impossible to address the training needed to help operators avoid it. Moreover, at this point, the operation would be wasting money and resources and making it more difficult to focus the needed efforts or validate them to leadership.”

Some of the additional factors that fleet managers said needed consideration included whether or not the crash was preventable or non-preventable; whether or not the organization is actively providing driver education and terminating poor drivers; and taking into account of amount of miles driven and number of crashes as compared to the number of vehicles. The issue of crash involvement and no-fault crashes was also brought up by many respondents.

Many respondents thought the measurement of no-fault crashes hurts the validity of the program and needs to be corrected. “There is no difference between an ‘at fault crash’ and a ‘no fault crash’ in how they measure/calculate the data,” said one respondent. “So, anyone who has had a string of bad luck ‘no-fault crashes’ would be measured the same as someone who is out there hitting everything down the road.”

5)

Visit the CSA website at http://csa.fmcsa.dot.gov and subscribe to the RSS feed or email list to stay up to date on CSA news and information.

“Our running records indicate that our drivers are typically not the responsible party/contributing factor in our collisions,” said another respondent.

“If you are sitting in traffic and get hit by an inattentive driver, why should you be scored negatively for it? If someone cuts you off, or the driver next to you does something stupid, and a crash is involved, how could you avoid it? Totally unfair,” said another.

Although the system of measuring crashes regardless of whether or not drivers were at fault may have its flaws, over one-third said the CSA program should continue to measure all crashes.

Some respondents said they believed that there were lessons to be learned from each crash that could help with crash prevention in the future.

“Each situation needs to be reviewed to determine if the crash was avoidable,” said one respondent.

“Fault lies with the vehicle operator, regardless of who assesses fault and when,” said another.

“Whereas a driver may not have caused a crash, a driver may have ‘joined a crash in progress’ due to inattentiveness or inexperience in handling the truck” stated one respondent. “Also, poor judgment may have resulted in a driver taking a truck into a situation with a high likelihood of a crash (i.e. black ice, heavy fog, etc.) This is a situation where a driver may not have caused a crash, but allowed the truck to be in a situation where crashes are common due to conditions.”

NAFA Member J.J. Keig, CAFM, Fleet Manager for NCH EchoServices (and a member

19

CSA Scoring of NAFA’s Safety Advisory Council) said he believes that crash involvement is a significant indicator that can help paint a picture of a carrier when used with other information. “Most of my 30 plus years in fleet management have included trucks and trailers in excess of 10,000 lbs GVWR and therefore ‘regulated’ – meaning, a Commercial Motor Vehicle (CMV). My current fleet also includes Hazmat cargo, which creates additional compliance opportunities. As with other measurable data, ‘all facets’ must be considered to help understand the true profile of a fleet, not just one or two such as crashes; however, I do agree that the ‘criteria’ used to define a crash are very unique and can easily be misunderstood and misinterpreted. It is critical that the user of the data fully understand the caveats that may be associated with the data and the entire process of information gathering and the basic criteria.”

The issue of being blamed for not-at-fault crashes is very worrisome to many fleet managers.

Not only is it difficult for them to fathom how they could have avoided crashes which weren’t their drivers’ fault, but they wonder about the potential negative perception it could lead to for their company.

“If one of our drivers is at fault, by all means it should be on our record,” said a respondent.

“As an innocent victim, however, we should not be penalized. Someone needs to explain to me how being hit by someone else is indicative of our processes and policies, and shows we are unsafe.”

“If a fleet is not following the rules and regulations and is ruled at fault through inspection or crash investigation, then I think that is fair to

post,” said another respondent. “But posting all crashes regardless of fault can give the public a false negative perception of the operation of the fleet.”

“It could potentially reflect negatively on the company when there was nothing the company or driver could have done to prevent the not-at-fault crash,” added another.

However, it is important to understand that the information presented by the SMS does not associate blame with the “crash indicator”. The criteria of a DOT crash is: (A) Was there a fatality?

(B) Bodily injury to a person who, as a result of the injury, immediately receives medical treatment away from the scene of the accident; or (C) did one or more vehicles need to be towed from the scene. SMS does not assign or consider fault and does not use any value of damage. Therefore, if no one was killed, no one received medical attention immediately after the crash, and no vehicles needed to be towed away – nothing happened.

According to an independent study of the CSA program released by the University of Michigan Transportation Research Institute (UMTRI) on August 31, 2011, the program is accomplishing its goals. The results of the study confirm that the CSA model enables FMCSA and its State Partners to reach commercial motor carriers earlier to correct safety problems and ensure compliance with safety regulations in order to reduce crashes, injuries, and fatalities related to commercial motor vehicles.

The study showed that the SMS was better at identifying motor carriers for safety interventions than the previous SafeStat system; the new program was reaching more carriers than before;

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and showed that CSA interventions are more effective in improving motor carriers’ safety behavior while utilizing enforcement resources more efficiently. The study also identified some areas that require improvement, such as the idea that SMS’s BASICs are significantly related to underlying motor carrier safety. Although the Cargo-Related and Driver Fitness BASICs show a weaker relationship to crash risk. The amount of lag time in measurable safety performance improvement after CSA investigations, and for carriers with the most serious safety problems, their improvement rates were similar to those of the control group.

Despite these flaws and the concerns of fleet managers who operate Commercial Motor Vehicles, the majority expressed positive feelings toward the program as a whole. The common phrase used was, “It’s a good program, but it still has room for improvement.” In fact, more than 60 percent of the respondents said they have provided education and/or training to their drivers regarding the CSA program. Of these, seven out of ten reported accessing the CSA website to check on their fleet’s score.

One area that several respondents wished would be improved was the method of lumping all trucks together when comparing a 10,000 GVWR rated truck to an 80,000 GVWR truck. “They are different in so many ways and should not be in the same class of requirements,” explained one respondent.

With the SMS program in place for over a year now, one of the biggest concerns has to be that a significant portion of fleet managers are still unsure of whether or not their fleet is covered by the program. Fifty-five percent of the respondents said their fleet was covered by the CSA program while one-fourth weren’t sure whether or not their fleet was covered. Likewise, over half of the respondents said they were somewhat knowledgeable about the program, but more than 20 percent admitted they didn’t know much about the program at all.

All in all, the goal of the CSA program is a good one. The program reflects a growing need to monitor and prevent future crashes before they occur. Be sure to keep NAFA and the D.O.T. informed on how the system is working for your fleet. The system may be far from perfect, but it was designed with the ability to transform itself and feedback from fleet managers is vital to its growth. ■ This article was originally published in FLEETSolutions magazine, the official publication of NAFA Fleet Management Association, www.NAFA.org.

View this issue and 8:35 past PM issues of The Quarterly at www.naylornetwork.com/tffa/ 7/23/13

Risk Management Common Carrier Liability

By Federated Mutual Insurance Company

T

here is a growing trend in the petroleum industry to hire common carriers to pick up fuel at terminals and then deliver it to the marketer’s bulk storage facilities or directly to convenience stores or other customers. Although hiring a common carrier may help you control operating costs, be aware that common carrier’s actions while during loading, transporting and unloading your property can create a liability exposure for your business.

For example: A common carrier was hauling fuel for a client and drove into another vehicle. Several of the occupants of the vehicle were severely injured, some fatally. It was subsequently established that the driver of the transport was intoxicated at the time of the accident.

In this case, the common carrier’s insurance policy limit was less than the costs resulting from damage to property and bodily injuries. Arguing the common carrier was acting as the agent of the petroleum marketer, the plaintiff’s attorney was successful in recovering additional damages from the marketer. While the award was covered by the marketer’s insurance policy, the experience ultimately affected the cost of insurance in subsequent years.

The information in this publication is intended to provide general information and recommendations for risk prevention.

It should not be considered legal advice regarding your unique needs. Qualified counsel should be sought regarding questions to your circumstances.

There are actions you can take to help control the risks associated in doing business with a common carrier: • Exercise due diligence in selecting a common carrier. The Federal Motor Carrier Safety Administration (FMCSA) issues safety ratings for common carriers. Before hiring a common carrier, you should review the company profile and safety rating of the company in the FMCSA Safety and Fitness Electronic Record System (SAFER). SAFER is accessible via the FMCSA website at no cost. Be advised, in some cases a rating may not be provided due to the size of the carrier and/or the availability of sufficient data to issue a rating.

July August September 2013

A less than satisfactory rating should always prompt additional inquiry.

• Obtain proof of insurance (e.g., a certificate of insurance) from the common carrier. The common carrier’s auto liability policy limit must meet the minimum requirements of the U.S. Department of Transportation (49 CFR Part 387) for transporters of hazardous materials, which are: • $1,000,000 for transporters of gasoline and distillate fuels (e.g., diesel fuel, fuel oil, or kerosene) • $5,000,000 for transporters of propane Again, the above are minimum requirements. You may wish to require higher limits to help limit your business’s potential exposure to financial responsibility.

• Have the common carrier name your business as an “additional insured” on their insurance policy. If the common carrier is involved in an accident while transporting your property, the common carrier’s insurance company will help defend your business. If the common carrier or your business is found liable in court, the common carrier’s insurer will also pay damages up to the policy limits.

• Have a written contract with the common carrier. A contract can help you limit your business’s liability for accidents by establishing who is responsible for costs resulting from fuel spills or other incidents while your property is under the care, custody, and control of a common carrier.

• Always have legal counsel review contracts with common carriers. This can help verify the contract does not contain provisions holding your business liable for the operations or negligent actions of the common carrier.

Every business decision involves risk. Implementing the suggestions above can help you control the costs of doing business, and help reduce your exposure to financial responsibility for accidents that could jeopardize your ability to remain in business. ■ The information in this publication is intended to provide general information and recommendations for risk prevention. It should not be considered legal advice regarding your unique needs. Qualified counsel should be sought regarding questions to your circumstances.

21

Dear Texas Food & Fuel Association Member: The Texas Food & Fuel Association Board of Directors has recommended Federated Insurance for a number of insurance and financial protection products: Property & Liability – Federated’s excellent coverage and commitment to risk management support are a powerful combination. In addition, you have the potential for a dividend if loss experience in our recommended program is warranted.

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Meeting the Needs of Today’s

Diesel Engines Is Your Fuel Up to Snuff?

By Robert E. Tatnall, P.E., Fuel Right

Y

ou probably have read some scary things about ultra-low-sulfur diesel (ULSD) and how it can damage or destroy your diesel engine. You may have read that it is causing severe corrosion problems for steel and iron tanks and pumps, about how it is unstable and requires stabilizers if you plan to store it longer than six months, or about how it holds twice as much water as did the older low-sulfur diesel fuel. You have been sold a bill of goods on most of these concerns, and, with all that hype you may have missed what is really important about buying, storing and using ULSD in today’s diesel systems.

Corrosion Complaints First, about the corrosion problem. It is true that the API and a number of other organizations collaborated on a small study by Battelle Memorial Institute to try to better understand what is going on. The Battelle report blamed the corrosion problem on microbes and water in the fuel, and proposed that the result was acetic acid. While there may be truth to this, those of us who study corrosion for a living suggest you might want to put this problem in perspective. Corrosion has been going on in diesel systems for generations – and it is indeed caused by water and microbes in the fuel. The serious corrosion, though, has been happening in the bottom of fuel tanks, and it is localized or pitting corrosion that leads to leaking tanks, spills, and the need for tank replacement. Most people ignore this until the tank leaks – because the corrosion is inside the tank bottom where we cannot see it until failure occurs. The “new” corrosion is a big deal because it occurs in the

July August September 2013

vapor spaces – including the fill pipe where we can see its ugly mottled orange deposits. To the best of my knowledge, no one has actually had a tank or an engine fail because of this vapor space corrosion.

Mostly it has been a nuisance because, when it happens on cast iron pumps and other dispenser hardware, it forms a granular rust that shows up as “coffee grounds” in strainers and filters. Nonetheless, it is a problem and we are still waiting for an easy answer. The use of biocides has been proposed – but we are still waiting for confirmation that such treatments actually stop this problem.

While biocides have worked well for some things in fuel systems, they traditionally have struggled to control problems of microbes buried in biofilms such as those observed by

Battelle. What we do know, though, is that filming amine treatments can stop corrosion in tanks and other metal surfaces wetted by the fuel. The original Battelle report sent to the funding organizations (not the re-edited report published by those organizations) also reported that a filming amine tank treatment had greatly reduced the general level of contamination in one tank included in the study – contamination that they blamed for the corrosion problem.

Are filming amines the ultimate answer? Time will tell.

Is ULSD Unstable?

How about this stability thing? Companies that sell stabilizer additives have been saying that ULSD really needs anti-oxidants. Is ULSD really that unstable?

23

In fact, our testing has shown quite the opposite. Having tested hundreds of diesel fuel samples from around the United States and dating back to 1996, we find that the reduced low-sulfur diesel of past years – and today’s ULSD, are almost always rock solid stable. We study arriving fuel samples as well as those stored for up to 16 years for signs of storage instability and thermal instability. High-sulfur heating oil, new or old, is quite often unstable. The diesel fuels we have tested, however, are almost always exceptionally stable. Our conclusion - antioxidant additives should be reserved for

heating oil and are not a good use of treatment dollars for diesel fuels. Besides oxidation, there is another type of instability that we read about - and that is a thermal instability caused by the formation of acid peroxides in ULSD that has been stored for more than a year. While our stored samples are not yet showing such instability, we think that some fuels may be prone to this while others aren’t. In any case, the proposed cure for such instability is the use of alkaline amines to neutralize the acidity that forms. We are also reminded that filming amines tend to be alkaline amines.

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Solubility of Water in ULSD

Finally, the issue of water. The solubility of water in ULSD is actually less than for the higher sulfur fuels, not more. Dissolved water, though, is not the problem. Water that is suspended in the fuel as an emulsion or a haze can cause rusting of tanks, pumps and engines. Water sitting in the bottom of a tank can cause microbes to flourish, leading to sludge and all sorts of related problems. Water that is suspended in the fuel can, in time, drop to the bottom and become a water layer. Water layers in the bottom can be picked up into the fuel and become suspended. These changes can happen with temperature changes.

Suspension of water is usually caused by surfactants in the fuel.

These surfactants may be added as additives (detergents you thought were going to clean your injectors, maybe?) or they can be manufactured naturally by microbes growing in the fuel system. Do you see a pattern developing here?

There is one class of surfactants, however, that has surprisingly beneficial properties: filming amines. Certain filming amines, while supporting the suspension of some water in the fuel as a slight haze, also render that water noncorrosive to tanks, engines, injectors – all of the iron and steel components in the diesel system.

That suspended haze is treated with amine corrosion inhibitors and is so microscopic in size that it passes through the diesel engine without causing corrosion, steam 6:22 PM over-pressuring of injectors, or other potentially harmful effects. All that we see is that the water slowly disappears from the system.

What you probably now see is that the right blend of filming amines may be all that you need to operate a clean, sound and dependable diesel system. For more information, including comparative test results for a filming amine treatment as compared with other types of diesel fuel additives, visit www.fuelright.com.

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TOMIC’s policy is the tank pollution solution for over 1200 Tank Owner Members

800.336.1338 • www.tankowners.com