Petroleum marketing group sues Wyoming school district over natural gas sales

2012-12-09T11:00:00Z 2013-04-05T18:38:03Z Petroleum marketing group sues Wyoming school district over natural gas salesBy ADAM VOGE Star-Tribune energy reporter Casper Star-Tribune Online
December 09, 2012 11:00 am  • 

A group representing petroleum retailers and wholesalers is suing a school district in western Wyoming and the state transportation department over the district’s recent foray into selling compressed natural gas as vehicle fuel, claiming it’s competing with private business.

The Colorado Wyoming Petroleum Marketers Association filed the complaint against Sublette County School District 1 in Pinedale and the Wyoming Department of Transportation in late November. The association cited the department’s decisions to license the district to sell compressed natural gas — a cleaner and cheaper alternative to gasoline — to the public. The district already has a compressed natural gas fuel depot and uses the fuel in its buses.

“It’s really quite simple,” said Mark Larson, executive director of the association, which represents the interests of petroleum retailers and wholesalers. “The Wyoming Petroleum Marketers Association does not believe our own tax dollars should be used against us to compete against us.”

Vern McAdams, the district’s business and finance manager, said last week that he was sympathetic toward Larson’s point of view, but didn’t fully believe in it.

“I know managers here who were looking at” installing compressed natural gas pumps, he said. “Two years have gone by and they haven’t done a thing. I really question how much competition we’re giving them.”

The school obtained a retail fuel sales license from WYDOT earlier this year. Construction on a single compressed natural gas pump wrapped up in September. The school at first used the pump to fuel only school buses outfitted to burn CNG but opened the site as a retail operation in October.

McAdams said last week that the facility was built with state money that needed to be allocated or committed by a certain date. He added that although the district now pays about half its previous fuel costs, it will also receive less reimbursement funding from the state to offset transportation costs. The district opened retail sales in order to offset operational costs.

“We’re not saving ourselves any money,” McAdams said. “We might save ourselves money only to get less money from state.”

The case could interest more than just the plaintiffs and defendants. The school district has been touted as a success story by many supporters of the alternative fuel at recent meetings. The industry has yet to take off in the state, though, halted by a chicken-and-egg lack of widespread infrastructure and relatively few and still-expensive natural gas-powered vehicles.

But the state has taken steps to help the industry. The Legislature’s Joint Minerals, Business and Economic Development Committee in October put its stamp of support on two compressed natural gas — or CNG — bills aimed at stimulating the Wyoming market.

One bill sets forth a plan to incrementally replace gasoline-burning state vehicles with ones fueled by CNG. The other alters a program to allow business owners to use loan funds to install CNG infrastructure with no interest payments for two years. Both bills are expected to be discussed in the next legislative session beginning in January.

The suit could chill discussions about partnerships between private firms and public entities to provide a fueling infrastructure for CNG vehicles. Such discussions often accompany discussions of how to make the industry take hold in Wyoming.

Larson said that allowing a public entity like a school to use government money to fund a facility and then make a profit will discourage potential competitors from entering the market.

“They could have substandardly low prices,” he said. “Nobody would ever be able to compete against them.”

The association also named WYDOT in the suit, because the state agency awarded the school a license to sell CNG. Tom Loftin, a support services administrator for the agency, said Friday he wasn’t sure why the agency was named.

“It’s primarily between the school district” and the association, he said, declining to comment further on the suit.

Loftin said the agency reviews statute in processing all license applications. It didn’t find anything that led agency officials to believe the school couldn’t sell retail CNG, which McAdams said currently goes for about $1.50 per gallon equivalent.

Interpretation of state law could play a key role in determining the outcome of the case.

Larson said he thinks the school and agency believe that because they’re not prohibited from selling CNG to the public, it must be allowable. But Larson believes that authority to do so needs to be created by statute. He added that if the school is allowed to continue retail sales, the same interpretation of the law would allow it to expand operations and install a convenience store.

McAdams said he has no intention of doing such a thing, but is looking for a private partner to lease the single CNG pump.

“I don’t want to get into that business,” he said. “If this was going to be a real moneymaker, somebody would already be doing it. I don’t see this as a big moneymaker.”

None of the parties involved knew when the first hearing might take place.

In the meantime, the school continues to move forward with CNG. The district is looking to outfit maintenance vehicles with CNG technology.

“The fact that we’re going to make this capital investment, we’re like, ‘OK, what else can we do with this?’” McAdams said.

Reach energy reporter Adam Voge at 307-266-0561, or at adam.voge@trib.com. Read his blog at http://trib.com/news/opinion/blogs/boom or follow him on Twitter @vogeCST.

Copyright 2015 Casper Star-Tribune Online. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

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