19 6 7 8 9 10 3 "(i) Section 7431(a) of title 10, United States Code, the Naval Petroleum Reserve Leasing Act,' at the beginning "(j) Section 7431(b) and (c) of title 10, United the' and inserting 'The' . "(k) Section 7433(b) of title 10, United States Code, is amended to read as follows: 11 12 '(b) Except as provided in the Naval Petroleum 13 14 States from lands in the naval petroleum reserves shall be covered into the Treasury.'." I am writing to convey my government's view that two provisions of S. 341, the "National Energy Security Act of 1991", and one provision of the Gas Policy Reform bill (S. 662), would violate the obligation of the United States under our Free Trade Agreement not to discriminate against Canadian products. Section 7001 of S. 341 would require oil importers, but not domestic producers, to supply petroleum products free of charge to the Strategic Petroleum Reserve. Section 14111(d) would restrict the uranium to be used for overfeed to U.S. uranium. Section 1024 of the Gas Policy Reform bill would require that the competitive impact of natural gas imports on U.S. producers be taken into account in the regulatory approval of those imports. In each case, Canadian products would face discriminatory treatment in a manner contrary to the Free Trade Agreement obligations of the United States. In our view there is no national security justification for measures which discriminate against imports from Canada. I would urge that the Committee reject any proposal which would damage our mutually beneficial and expanding trade in energy products. Yours sincerely, Аниму D.H. Burney On behalf of the Society of Independent Gasoline Marketers of America ("SIGMA"), this statement is submitted in response to the Senate Committee on Energy and Natural Resources' solicitation of comments regarding Title VII of S. 341, the National Energy Security Act of 1991. SIGMA is a national trade association comprised of over three hundred independent gasoline marketers and private brand chain retailers of motor fuels. SIGMA's members market refined petroleum products in all 50 states, and their sales account for approximately 15 to 20 percent of the U.S. retail market for motor gasoline. Independent marketers and chain retailers neither produce nor refine crude oil and are entirely dependent upon third parties for their sources of supply. The ability of marketers and retailers to price competitively depends upon the availability of gasoline priced at a level that permits them to make their operating efficiencies relevant at the retail level. Access to foreign petroleum products is necessary to ensure that products are available to marketers at competitive wholesale prices. The so-called Strategic Petroleum Reserve ("SPR") "import set-aside" proposal contained within Title VII of S. 341 is functionally no different than an oil import tax. Taxes on imported oil impede competition at the retail level of the gasoline market and create a disincentive for domestic refiners to deal on a competitive basis with their marketer and retailer competitors. In addition, oil import taxes are economically inefficient and may violate U.S. international obligations. Moreover, the set-aside proposal itself is of questionable constitutionality. For these and other reasons, any proposal that would create a price differential between imported and domestic crude oil and petroleum products, such as the oil import set-aside, should be rejected in favor of a more efficient funding alternative. II. DESCRIPTION OF THE U.S. INDEPENDENT GASOLINE MARKETER Independent gasoline marketers, such as SIGMA members, have been recognized as being among the world's most efficient retailers of motor fuels. These companies historically have been the most innovative and price-competitive segment of the retail motor fuels market. Independent marketers compete directly with one another as well as with the downstream marketing and retailing operations of refiners. Indeed, the impact of independent marketers on price competition in the marketplace in general has been extremely beneficial. See Marathon Oil Co. v. Mobil Corp., 669 F.2d 378, 382 (6th Cir. 1981). Because of greater efficiencies and superior systems of cost controls, independent marketers ́have played a critical role in inducing price competition in the domestic market for gasoline. In addition, independent marketers supply most of the refined products in many of the geographic areas abandoned by major refiners. Thus, consumers benefit from independent marketers both in terms of price and product availability. Independent marketers must rely upon the pro-competitive effects generated by relatively unrestricted access to finished gasoline and gasoline blendstocks of foreign |