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    Regional Report: Midwest Update

    North Dakota faces tank cleanups, while South Dakota could see a cut in highway funds. Meanwhile, Ohio defeats mandatory paid-leave proposal and double taxation legislation is battled out in Michigan.

    NEW YORK -- One of the jokes in the environmental industry, according to Pat Coyne of Environmental Data Resources Inc., located in Milford, Conn., goes like this:

    "What percentage of steel tanks leak?"
    "100 percent!"

    But it’s no joke when you have to pay for the cleanup.

    While it is rare when a petroleum marketer has to foot the entire bill, since most marketers are protected by insurance. In North Dakota, the insurance takes the form of the Petroleum Tank Release Compensation Fund, established in 1989. Right now, two cleanups are going on in North Dakota and each costs almost $1 million.

    That’s one reason why Mike Rud, president of the North Dakota Petroleum Marketers Association (NDPMA), began an initiative to make the Fund permanent—it’s scheduled to expire in 2011.

    "The fund has to be renewed each time it expires, which is cumbersome, costly and actually unnecessary, since the federal Environmental Protection Agency (EPA) mandates every tank owner in the country must have coverage," Rud said. "So it’s only logical we make the fund a permanent part of our infrastructure."

    Tank owners who pay an annual registration fee of $50 for each underground storage tank (UST), and each above ground tank (AST) finance the fund, which then reimburses each owner for 90 percent of "necessary and reasonable" costs between $5,000 and $155,000 for cleanups caused by petroleum release, and, above that, 100 percent of costs up to $1 million. However, tank owners are not liable for more than $20,000 out-of-pocket costs for any one release.

    SOUTH DAKOTA
    Roads are the bloodstreams of states with sparse populations and rural topographies such as South Dakota. A cut in funds for the maintenance and construction of highways would therefore be a severe blow to citizens and small businesses.

    Yet South Dakota is facing a road-building crisis in the coming year. The federal trust fund for highways is projected to be $5.3 billion short in 2009, which could result in a cut of $130 million for South Dakota.

    The state’s fuel taxes of 22 cents per gasoline and diesel fuel gallon and 20 cents on ethanol blends, which are not expected to fill the gap because people are driving less—so much so, that in September, revenues from state fuel taxes dropped 38 percent.

    According to the South Dakota’s motor vehicle director, it may be time to look at alternate ways of raising money—perhaps basing license fees on vehicle weights and/or the number of miles driven. Or, as suggested by a congressman, issuing state bonds to borrow money for highway construction.

    Looking attentively at developments on the issue is the South Dakota Retailers Association (SDRA), which will represent the interests of its members when the legislature meets Jan. 13, to take up the matter.

    MICHIGAN
    The Michigan Business Tax replaced the Single Business Tax at the end of 2007, in an effort to create a less complex tax scheme similar to tax systems in other states. It’s intended to be revenue neutral, with increased taxes on non-Michigan-based businesses selling in Michigan, and tax credits available for investments or activities only in Michigan. But fuel retailers see it as burdening.

    "We will push, and push hard, to amend the Michigan Business Tax," said Mark Griffin, president of the Michigan Petroleum Association/Michigan Association of Convenience Stores. "Petroleum marketers are double-taxed by this new law, so our goal is to make it more equitable for our members by having motor fuel taxes and sales taxes excluded from the amount applied to the business tax. It’s only fair. We’re not against the law as a whole; we recognize that the Single Business Tax needed updating, but this double taxation puts an extra burden on our business community, so we’re working to get an amendment passed by December that will correct the situation."

    OHIO
    The Ohio business community recently dodged a bullet when a recent proposal by the Service Employees International Union (SEIU) was removed from the November ballot.

    The proposal, the "Healthy Families Act," was organized labors’ latest attempt to chip away at the right of business owners to set their own personnel policies. Among other things, the proposal would have required Ohio employers to provide each full-time employee with a minimum of seven paid sick days, and proportionately for part-time employees. Proponents would argue differently, but opponents argue that nothing about this proposal would improve the failing health of Ohio’s economy or its employees.

    According to a recent study by the National Federation of Independent Businesses (NFIB), the financial impact on Ohio businesses as a result of a mandatory paid sick leave policy would equate to 75,000 lost jobs, $1.12 billion in costs to employers and $9.4 billion in lost sales. "Promoting an anti-business climate and forcing the loss of more jobs in this state is not the way to turn around Ohio’s economy," said Tom Jackson, president and CEO of the Ohio Grocers Association.

    After the Ohio business community launched a statewide campaign against the ballot proposal, Governor Ted Strickland publicly opposed the initiative, resulting in its removal from the ballot.

    "We are well aware of an effort afoot in Congress to enact a federal paid sick leave policy," said Kelly Barr, director of government relations for the Ohio Grocers Association. "We must communicate our message to members of Congress to try and stop this assault on our businesses."

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