Area oil refineries are getting a whiff of what the greenhouse gas reduction law Gov. Arnold Schwarzenegger signed last year will mean for them. Last week, he signed an order that will require the refineries to produce fuel with lower carbon content.


The order directs the Secretary for Environmental Protection to start the process to establish the specifications of the new fuel, one of the first "action items" of AB 32, the greenhouse gas reduction law. The state Air Resources Board then will craft a regulation for a low-carbon fuel standard no later than June, to be implemented by the end of 2008.


Refineries would have until 2020 to reduce the average carbon content in vehicle fuels by at least 10 percent. But the order backs a market-based approach to controlling carbon content, essentially setting the 10 percent reduction goal and letting refiners and other fuel suppliers figure out how to meet it.


"It's laudable for the Governor to approach it this way, rather than the old command-control approach or picking specific winners and losers," said Joe Sparano, president of the Western States Petroleum Association, who added it's too soon to know whether fuel costs will rise.


"One way to meet this would be by increasing the ethanol content in gasoline. If the state allows the ethanol content to increase to 10 percent from the current 5.7 percent, and if the ethanol could be produced locally, then the governor's goal might be able to be met without a huge impact on pricing," he said. "But if gasoline supplies stay tight and if the ethanol isn't being produced locally, then that might be a totally different structure for pricing."


The aim, Schwarzenegger said, is to induce oil companies to turn to other fuels, including methanol and biofuels, thereby giving a boost to the alternative fuels industry.


In signing the order, Schwarzenegger proclaimed it would "set in motion to free ourselves from oil and from OPEC Our cars have been running on dirty fuel for too long. Our country has been dependent on foreign oil for too long."


Travel Reimbursements

Saying existing piecemeal regulations are confusing and inadequate, California's Division of Labor Standards Enforcement has proposed the first-ever comprehensive regulation regarding travel reimbursement expenses for employees.


State law currently requires employers "indemnify" employees for expenditures incurred while on the job. But just exactly how and at what level is not specified.


The most frequently incurred expense is mileage. But the law doesn't set a level for reimbursement. Most employers choose the mileage reimbursement rate established each year by the U.S. Internal Revenue Service. But some employers choose a lower level of reimbursement or decide to throw in a preset mileage allowance as part of an overall compensation package.


"Right now, there's quite a bit of confusion among some of our employer clients about just what they should pay in mileage reimbursements, because there is no law saying you must pay 'x' amount," said Jim Kuns, senior staff consultant with L.A.-based Employers Group, a human resources consulting firm.


The proposed regulation would set the IRS rate as the standard reimbursement rate for work-related vehicle travel. If the employer believes the actual cost to the employee is less than that rate, the employer has the burden of proving this to the state. The same applies to an employee who believes that the IRS rate is not adequate to cover his or her vehicle costs.


"This regulation takes what has generally been accepted practice and puts it down in regulation form that's readily understandable by employers," Kuns said.


Employers must also keep records of the number of miles driven for work purposes by employees in their personal vehicles. The employer in turn may require the employee to submit mileage forms. Those records must then be made available for state inspectors upon request.


The regulation also requires employers to reimburse employees for any meals and parking fees while traveling locally. For more extended trips, the employer has a choice: reimbursing the costs of lodging, car rentals, meals and incidental expenses directly, or using the IRS per-diem rate for that destination.


The proposed regulation is scheduled to be considered at a hearing at Department of Industrial Relations headquarters in San Francisco on Feb. 7. For more information, log onto the department's website at dir.ca.gov.


Bankruptcy Expense

It now costs more to file certain types of bankruptcy cases. The federal Judicial Conference approved the fee hikes last year, one year after Congress passed a sweeping overhaul of the nation's bankruptcy laws. The increases took effect on Jan. 1.


The most noticeable change is that it will now cost filers $200 to appeal a decision from Bankruptcy Court to the Court of Appeals; previously, there was no fee.


Staff reporter Howard Fine can be reached at (323) 549-5225, ext. 227, or at hfine@labusinessjournal.com .

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