April 4, 2014 | Vol. 64, No. 6

respond | preferences | login | unsubscribe

In This Issue

Dear PEI Member:

Last month, congressional leaders in Washington continued to focus on the safety of the U.S. payments system in the aftermath of the massive retailer breaches at Target, Neiman Marcus and others. The House Committee on Financial Services held its session March 5, while the House Committee on Science, Space and Technology hearing was March 6. The message coming out of those hearings was that the adoption of EMV cards (Europay, MasterCard and Visa) is one of many steps that need to be taken to secure the U.S. payments system. 

The EMV system, which uses smart chip technology, features payment instruments (cards, mobile phones, etc.) with embedded microprocessor chips that store and protect cardholder data. Under the EMV standard, a cardholder’s confidential data is more secure than on the current magnetic stripe card because EMV supports dynamic authentication that is verified at the point of sale (POS) terminal.

The EMV system has been long in coming to the United States. For our industry, the timetable for shifting of liability has not changed for several years:

  • Merchants that decline to use EMV-compatible POS technology for in-store transactions by October 1, 2015, will be liable for any in-store fraudulent transactions.

  • Fuel marketers that are not using EMV-ready equipment at their dispensers by October 1, 2017, will assume liability for fraudulent transactions on the fuel island.

Probably the biggest issue for implementing EMV in the United States is the time and cost that would be required for full implementation. How much time would it take to replace 15 million POS devices (more than 1 million in our industry), 360,000 automated teller machines, and over 1 billion credit and debit cards? Gray Taylor, executive director for the Petroleum Convenience Alliance for Technology Standards (PCATS), believes the petroleum marketing industry “would be on the hook for around $4 billion to upgrade pump terminals and POS,” according to the February 19 issue of Oil Express

We don’t claim to have a crystal ball to know when all of this will come together in the United States, but we feel confident in saying that as a result of the high profile and the size of the most recent breaches, the adoption of EMV has gained momentum. Here are some other conclusions we have reached after talking to petroleum marketers and PEI members over the last 30 days.

EMV Gains Momentum

Debit Card Swipe Fees

RP700 to be Revised

2014 PEI Directory


In This Issue


PEI and Industry News »


Respond to this Newsletter

by e-mail to the editor, Robert Renkes at rrenkes@pei.org

or join the discussion in the Petroleum Equipment Forum

to unsubscribe or change preferences see below.

return to top of page

  • The urgency for EMV is not just about liability deadlines but also about potential fraud. Since Europe and Canada have moved to EMV, criminals will be attracted to move to the weakest link in the industrialized world, which is the United States. 

  • In the past, the payment networks have either extended or completely abandoned their own timelines. That likely will not be the case this time around. As recently as January 8, MasterCard reiterated its resolve to “keep our 2015 liability shift dates.” Congressional attention to the retailer breaches and the impending liability shift has become a catalyst for EMV adoption. It is likely that EMV implementation in the United States will now be on the fast track.  

  • EMV will be helpful but it is not the silver bullet. Experts agree that EMV would not have prevented the Target breach because the malware that attacked Target was looking for account information inside POS devices’ memories, where data is unencrypted. This information would have been compromised regardless of whether or not it came from EMV cards because it was not taken directly from the cards themselves.

  • The unresolved questions springing from litigation surrounding the Durbin amendment to the Dodd-Frank Act, which capped debit card interchange rates and mandated debit routing options, may begin to disappear as the result of a March 21 appeals court decision (see next article).  

  • It is clear now that information is an extremely valuable commercial asset. As such, ensuring its security merits significant investment and planning. Information security breaches are now seemingly common business risks.

  • The petroleum marketing industry is not being forced to accept EMV. Over the next three years, petroleum marketers need to decide whether to process cards using EMV technology or to accept financial liability for fraud losses. The question seems to boil down to this: Is the money and time it takes to shift to EMV worth the company’s financial security and commercial reputation in this highly competitive marketplace? We think most will conclude that it is.

A three-member panel of the U.S. Court of Appeals for the District of Columbia Circuit upheld the Federal Reserve’s (Fed) controversial rules for debit card “swipe fees” on March 21, disappointing the petroleum marketing industry and other retail merchants that accept debit cards.

Swipe fees, also known as interchange fees, are set by Visa, MasterCard and other bank networks. Before Congress intervened in 2010, the fees paid by retailers were about 44 cents per transaction. Hoping that lower fees would result in lower prices for consumers, lawmakers called for a cap in passing the 2010 Dodd-Frank law. They directed the Fed to set a limit that would cover the costs to banks to provide the cards, ignoring any expenses that were not tied to specific debit transactions. The Fed decided network processing fees, costs to monitor transactions for fraud and other expenses were relevant, even though they were not specifically mentioned in the law, and incorporated them into a 21 cents per transaction cap in 2011.

A U.S. district court in July 2013 agreed with a group of retailers (NACS v. Board of Governors of the Federal Reserve System) that the costs went beyond what was allowed under the law and overturned the Fed’s rule. The three-member panel of the U.S. Appeals Court sided with the Fed March 21, saying the law’s “ambiguity” gave regulators leeway to set a higher cap fee. The appeals panel did direct the Fed to better explain the way it treated  banks’ costs for  monitoring transactions for potential fraud.    

The panel also sided with the Fed on a rule related to networks that process debit transactions. The Fed proposed to require activation of two unaffiliated networks on each debit card regardless of method of authentication. Retailers argued the Fed did not do enough to promote competition among those networks, as Dodd-Frank required. The panel did not agree with the retailers, opining that the “Board’s rule seems to comply perfectly with Congress’s command.”

The retailers could appeal to the full appellate court or directly to the U.S. Supreme Court.

The PEI Vehicle-Maintenance Fluids Equipment Committee is soliciting comments to revise PEI’s Recommended Practices for the Design and Maintenance of Fluid-Distribution Systems at Vehicle Maintenance Facilities (PEI/RP700-09).

The recommended practices apply to stationary, centralized fluid-distribution systems for vehicle-related new and used fluids such as motor oil, gear oil, transmission fluid, hydraulic fluid, grease, antifreeze and windshield washer fluid. The equipment covered includes supply containers (e.g., tanks, totes, drums, kegs, pails), piping and tubing, pumps, compressors, hose, reels, control handles and other equipment typically used to construct the systems.

If you have suggestions or recommendations for improving PEI/RP700-09, submit them online at www.pei.org/rp700. Instructions for completing the form are provided on the website.

Those interested in lube systems are encouraged to submit comments. All comments must be received at PEI by Friday, May 16, 2014, to be considered. If you have questions or need further information, contact Bob Young at byoung@pei.org or 918-236-3966. 

The 2014 PEI Directory is out the door. Member companies receive one print copy of the PEI Directory as part of their membership. Additional print copies can be purchased by PEI members for $40 each ($120 for nonmembers). Click here to order online or contact Teresa Jonkman at tjonkman@pei.org or 918-236-3969.

The PEI Directory contains a roster of all members, lines carried, products manufactured and a description of their operations. Also included are important details about PEI committees and member services. The Directory is also available online. Members and their customers can access, search and download the Directory on their computer, smartphone or tablet 24/7/365. Click here to view the digital edition.

Guardian Fueling Technologies
, Jacksonville, Florida, has promoted David McMichael to corporate director of services. McMichael will oversee the day-to-day service operation of the company. Roger Henson, formerly of Thornton’s Inc., was named branch manager of Guardian’s Orlando office.
Steve Przesmitzki has left the U.S. Department of Energy (DOE) for a position with Aramco Services, Novi, Michigan. He will work in a new Research and Development Center dedicated to transportation fuels research. Formerly with the National Renewable Energy Lab and most recently in the DOE Vehicle Technologies Office, Steve represented DOE well at PEI events and was always available to answer our questions. Kevin Stork has taken over Steve’s responsibilities in DOE’s Fuel and Lubricants Program. Kevin has a long history in the program as the team lead.       

James Lynn Weir
, Blue Ridge, Georgia, died December 8, 2013, due to complications of lung cancer. He was 76. He began his career in 1960 as a construction engineer for Exxon. He joined Lucas Ford Associates in 1970 and served as a manufacturer’s representative with the firm until his retirement in 1997. He is survived by his daughter, Lisa, and his brother, Paul.   

New Jersey CNG consulting firm
. Corban Energy Group, 418 Falmouth Avenue, Elmwood Park, New Jersey 07407, has applied for affiliate division membership. Daniel Chung is president of the firm, which was established in 2012. Corban Energy Group creates and develops customized CNG solutions for individual fleet operations. Sponsored for PEI membership by Keith Griesinger, FuelForce, Princeton, NJ. www.corbanenergygroup.com 
Arizona construction contractor. KEAR Civil Corporation, 22041 North 23rd Avenue, Phoenix, Arizona 85027, has applied for service and construction division membership. Mike Fossett is president of the firm, which was established in 2001. The company specializes in aviation fueling and general petroleum construction and maintenance contracts. Sponsored for PEI membership by Gregg Miller, NWPump, Portland, OR.  www.kearcorp.com
Australia service and construction firm
. G-Tech Holdings Pty. Ltd., P. O. Box 1101, Hamilton, Queensland, Australia 4007, has applied for service and construction division membership. Grant McPherson is managing director for the firm, which was established in 1998. The company is a service and construction contractor. Sponsored for PEI membership by Russell Dupuy, EnvironMon, Carrum Downs, Victoria, Australia. www.g-tech.net.au
Illinois island and coating company. Rugid Guard, LLC, 287 Southwoods Center, Columbia, Illinois 62236, has applied for service and construction division membership. Kevin Kammermayer is owner of the company, which was established in 2010. The company provides an alternative to island and curbing replacement with a high tear strength industrial coating. Sponsored for PEI membership by Chris Piatchek, PiSquare, St. Louis, MO. www.rugidguardusa.com
Indiana petroleum service contractor. Tri-State Service & Maintenance Inc., P. O. Box 281, Cannelton, Indiana 47520, has applied for service and construction division membership. Jeremie H. Joyal is vice president of the firm, which was established in 2001. The company provides petroleum service to customers in southern Indiana, central Kentucky and parts of Tennessee. Sponsored for PEI membership by Joey D. Batchelor, GuardTech, Jacksonville, FL.    
Massachusetts contractor
. Dixon, Inc., 361 West Main Street, Northborough, Massachusetts 01532, has applied for service and construction division membership. Philip Dixon is project manager for the firm, which was established in 2002. The company installs tank, lines, dispensers and related equipment. Sponsored for PEI membership by John Nolan, JWKennedy, East Providence, RI. www.dixon-inc.com
Missouri fuel and tank cleaning company. reNUEL Fuel, LLC, 2711 Warwick Trafficway A, Kansas City, Missouri 64108, has applied for service and construction division membership. Bryce Wittenborn is CEO of the firm, which was established in 2010. reNUEL Fuel is a complete fuel quality management company that specializes in fuel and tank cleaning, lab analysis and compliance regulation. Sponsored for PEI membership by David Engelken, TankMgmt, Topeka, KS. www.renuelfuel.com    
New York equipment installation firm. Bolla Pump & Tank, 809 Stewart Avenue, Garden City, New York 11530, has applied for service and construction division membership. Christopher Honor is president of the company which was founded in 2012. The company specializes in the installation of underground storage tanks, dispensers and associated equipment. Sponsored for PEI membership by James Taylor, WaltersSup, Lindenhurst, NY.
Texas installation and service company. Coastal Tank & Testing, 1717 Strawn Road, Houston, Texas 77039, has applied for service and construction division membership. Dana Alexander is operations manager for the firm, which was established in 2011. The company installs and services equipment at petroleum dispensing facilities. Sponsored for PEI membership by Mark Barron, PtrSolutns, McAllen, TX. www.coastaltanktesting.com  


  • Oil Trades Supply Corporation, Bellerose, NY (dis)
  • Macnaught USA, Tampa, FL (mfr)
  • HandyTube, Camden, DE (mfr)
  • Riverland Community College, Austin, MN (aff)
  • Professional Dispatch Services, Kingwood, TX (aff)
  • Yongjia Sanjiang Petroleum Machinery Factory, Wenzhou, Zhejiang, China (aff)
  • UST Inspection Services, Inc., Cohasset, MA (S&C)
  • Davis Petroleum Services, Inc., Charlottesville, VA (S&C)
  • Jamie Beyore, Shell Canada Products, Burlington, Ontario, Canada (O&E)
  • Donald Brown, Schneider National Inc., Edwardsville, IL (O&E)


Manage Your Subscription

This newsletter is a member benefit of the Petroleum Equipment Institute intended for %full_individual_name%. To unsubscribe by email click here or manage all your newsletter subscriptions online at www.pei.org/membersonly.

Do not reply to this message.
This newsletter is sent from an unattended mailbox.
To respond to this newsletter use these options.

PEI® and the PEI mark are registered trademarks
of the Petroleum Equipment Institute.
Copyright © 2013 All rights reserved.

return to top of page

© 2014
Petroleum Equipment Institute
P. O. Box 2380
Tulsa, OK 74101-2380

The TulsaLetter (ISSN 0193-9467) is published two or three times each month by the Petroleum Equipment Institute. Robert N. Renkes, Executive Vice President, Editor. Opinions expressed are the opinions of the Editor. Basic circulation confined to PEI members.