109 HR 3836 IH: Fuel Supply Improvement Act of 2005 U.S. House of Representatives 2005-09-20 text/xml EN Pursuant to Title 17 Section 105 of the United States Code, this file is not subject to copyright protection and is in the public domain.

I 109th CONGRESS 1st Session H. R. 3836 IN THE HOUSE OF REPRESENTATIVES September 20, 2005 Mr. Shadegg (for himself, Mr. Barrett of South Carolina, Mr. Bishop of Utah, Mrs. Blackburn, Mr. Brown of South Carolina, Mr. Cantor, Mr. Chabot, Mr. Chocola, Mr. Doolittle, Mr. Feeney, Mr. Flake, Ms. Foxx, Mr. Franks of Arizona, Mr. Garrett of New Jersey, Mr. Gingrey, Mr. Gohmert, Mr. Goode, Ms. Hart, Mr. Hensarling, Mr. Istook, Mr. Sam Johnson of Texas, Mr. Kennedy of Minnesota, Mr. Kirk, Mr. McHenry, Mrs. Musgrave, Mr. Pence, Mr. Pitts, Mr. Sensenbrenner, Mr. Sullivan, Mr. Wamp, Mr. Westmoreland, Mr. Wicker, and Mr. Wilson of South Carolina) introduced the following bill; which was referred to the Committee on Energy and Commerce, and in addition to the Committees on Resources, and Transportation and Infrastructure, for a period to be subsequently determined by the Speaker, in each case for consideration of such provisions as fall within the jurisdiction of the committee concerned A BILL To expedite the construction of new refining capacity in the United States.

1.

Short title

This Act may be cited as the Fuel Supply Improvement Act of 2005.

2.

Findings

The Congress makes the following findings: (1) Hurricane Katrina, which struck the Gulf Coast and New Orleans, Louisiana, on August 29, 2005, substantially disrupted petroleum production, refining, and pipeline systems in the region, impacting energy prices and supply nationwide. (2)In the immediate aftermath of Katrina, United States refining capacity was reduced by more than 2,000,000 barrels per day. While some capacity was restored within several days, 4 refineries with a total capacity of 879,000 barrels per day, roughly 5 percent of pre-Katrina capacity, remain offline. These refineries sustained major damage and will not reopen for an extended period of time. (3)Within a week of the hurricane’s landfall, the national average retail price for motor vehicle gasoline rose by 46 cents to $3.069 per gallon. Prices of other refined fuels also rose quickly in response to the hurricane. (4)Before Katrina, United States refining capacity was already significantly strained, with industry average utilization rates of 95 percent of capacity or higher. (5)No new refinery has been constructed in the United States since 1976. There are 148 operating refineries in the United States, down from 324 in 1981. Total capacity at operating refineries is 17,000,000 barrels per day, while total United States demand averages nearly 21,000,000 barrels per day. This growing gap is met by an increasing amount of imports of refined products from foreign sources. (6)A growing reliance on foreign sources of refined petroleum products impairs our national security interests. (7)It serves the national interest to increase refinery capacity for gasoline, heating oil, diesel fuel, and jet fuel wherever located within the United States, to bring more supply to the markets for use by the American people. Production and use of refined petroleum products has a significant impact on interstate commerce. (8)Refiners are subject to significant environmental and other regulations and face several new Clean Air Act requirements over the next decade. New Clean Air Act requirements may benefit the environment but will also require substantial capital investment and additional government permits. (9)More regulatory certainty for refinery owners is needed to stimulate investment in increased refinery capacity. Required procedures for regulatory approvals need to be streamlined to ensure that increased refinery capacity can be developed and operated in a safe, timely, and cost-effective manner.

3.

Expedited Federal permitting

(a)

In general

Except as provided in subsection (b), an application for a permit under a law described in subsection (c) to construct or expand a petroleum refining facility in the United States shall be approved not later than 90 days after a complete application is received. If such permit is not approved within 90 days, the Secretary of Energy, in consultation with the Office of Regulatory Assistance, shall issue the permit. The Secretary of Energy shall coordinate Federal implementation of this subsection. (b)

Presidential determination

A permit shall not be approved under subsection (a) if the President determines that the benefits to the United States of increased refinery capacity that would be provided by the proposed construction or expansion are outweighed by the costs of approving the permit. A decision by the President to not make a determination under this subsection shall not be subject to judicial review. (c)

Covered laws

This section applies only to permits under the Clean Air Act, the Federal Water Pollution Control Act, the Safe Drinking Water Act, the Comprehensive Environmental Response, Compensation, and Liability Act of 1980, the Solid Waste Disposal Act, the Toxic Substances Control Act, the National Historic Preservation Act, and the National Environmental Policy Act of 1969. (d)

Applicability

This section shall apply to any refinery repair or reconstruction at an existing refinery undertaken in the area affected by Hurricane Katrina and undertaken as a result of Hurricane Katrina. This section shall not apply during a period with respect to which the Secretary of Energy has certified to Congress in writing that United States domestic petroleum refining capacity is sufficient to serve the needs of the United States, accounting for the possibility of natural disasters, terrorist attacks, fires, routine maintenance, the effects of unique fuel blends, or other potential events.

4.

Litigation

(a)

Direct legal representation

At the request of the applicant, the Secretary of Energy shall provide direct legal representation for a person who has filed an application described in section 3(a) for any lawsuit brought against such person or the Federal Government under such a law with respect to the permit approval procedure or construction or expansion of the facility to which the application relates, if the Secretary believes the lawsuit lacks merit, is brought solely to delay the completion of the facility, or will have the effect of delaying the completion of the facility in a period when United States domestic refining capacity is insufficient. (b)

Attorneys’ fees

Any party in an action with respect to the approval of an application described in section 3(a), or the construction or expansion of the facility to which the application relates, shall be awarded attorneys’ fees in proportion to the amount of the original claim that is awarded or denied by the court.

5.

Office of Regulatory Assistance

The Secretary of Energy shall establish an office whose sole purpose is to assist applicants in developing permit applications, planning, and otherwise pursuing the construction or expansion of a petroleum refining facility in the United States. This assistance shall include— (1)serving as an advocate for the applicant to the permitting agencies; (2)ensuring that permitting agencies are responsive to applicants; (3)ensuring that permits are issued by statutory deadlines; and (4)consulting with the Secretary of Energy to offer advice relating to issuing a permit for an agency that has not met deadlines contained in section 3(a).

6.

Standby support for certain petroleum refining facility delays

(a)

Contract Authority

(1)

In general

The Secretary of Energy may enter into contracts under this section with sponsors of 6 new petroleum refining facilities, each with an output of at least 150,000 barrels per day, in accordance with paragraph (2). The Secretary shall give preference to new refineries that will increase the geographic diversity of existing United States domestic refining capacity. (2)

Requirement for contracts

(A)

Definition of loan cost

In this paragraph, the term loan cost has the meaning given the term cost of a loan guarantee under section 502(5)(C) of the Federal Credit Reform Act of 1990 (2 U.S.C. 661a(5)(C)). (B)

Establishment of accounts

There is established in the Department of Energy 2 separate accounts, which shall be known as the— (i)Refinery Standby Support Program Account; and (ii)Refinery Standby Support Grant Account. (C)

Requirement

The Secretary shall not enter into a contract under this section unless the Secretary deposits— (i)in the Refinery Standby Support Program Account established under subparagraph (B), funds appropriated to the Secretary in advance of the contract or a combination of appropriated funds and loan guarantee fees that are in an amount sufficient to cover the loan costs described in subsection (c)(5)(A); and (ii)in the Refinery Standby Support Grant Account established under subparagraph (B), funds appropriated to the Secretary in advance of the contract, paid to the Secretary by the sponsor of the petroleum refining facility, or a combination of appropriations and payments that are in an amount sufficient cover the costs described in subsection (c)(5)(B). (b)

Covered Delays

(1)

Inclusions

Under each contract authorized by this section, the Secretary shall pay the costs specified in subsection (c), using funds appropriated or collected for the covered costs, if full operation of the petroleum refining facility is delayed by— (A)the failure of the appropriate Federal agency to comply with schedules for review and approval of inspections, tests, analyses, and acceptance criteria; or (B)litigation that delays the commencement of full operations of the petroleum refining facility. (2)

Exclusions

The Secretary may not enter into any contract under this section that would obligate the Secretary to pay any costs resulting from— (A)the failure of the sponsor to take any action required by law or regulation; (B)events within the control of the sponsor; or (C)normal business risks. (c)

Covered Costs

(1)

In general

Subject to paragraphs (2), (3), and (4), the costs that shall be paid by the Secretary pursuant to a contract entered into under this section are the costs that result from a delay covered by the contract. (2)

Initial 2 facilities

In the case of the first 2 facilities on which construction is commenced, the Secretary shall pay— (A)100 percent of the covered costs of delay; but (B)not more than $500,000,000 per contract. (3)

Subsequent 4 facilities

In the case of the next 4 facilities on which construction is commenced, the Secretary shall pay— (A)50 percent of the covered costs of delay that occur after the initial 180-day period of covered delay; but (B)not more than $250,000,000 per contract. (4)

Conditions on payment of certain covered costs

(A)

In general

The obligation of the Secretary to pay the covered costs described in subparagraph (B) of paragraph (5) is subject to the Secretary receiving from appropriations or payments from other non-Federal sources amounts sufficient to pay the covered costs. (B)

Non-federal sources

The Secretary may receive and accept payments from any non-Federal source, which shall be made available without further appropriation for the payment of the covered costs. (5)

Types of covered costs

Subject to paragraphs (2), (3), and (4), the contract entered into under this section for a petroleum refining facility shall include as covered costs those costs that result from a delay during construction and in gaining approval for full operation, including— (A)principal or interest on any debt obligation of a petroleum refining facility owned by a non-Federal entity; and (B)the incremental difference between— (i)the fair market price of refined petroleum products purchased to meet the contractual supply agreements that would have been met by the petroleum refining facility but for the delay; and (ii)the contractual price of refined petroleum products from the petroleum refining facility subject to the delay. (d)

Requirements

Any contract between a sponsor and the Secretary covering a petroleum refining facility under this section shall require the sponsor to use due diligence to shorten, and to end, the delay covered by the contract. (e)

Reports

For each petroleum refining facility that is covered by a contract under this section, the Secretary shall submit to Congress quarterly reports summarizing the status of regulatory and other actions associated with the petroleum refining facility. (f)

Regulations

(1)

In general

Subject to paragraphs (2) and (3), the Secretary shall issue such regulations as are necessary to carry out this section. (2)

Interim final rulemaking

Not later than 270 days after the date of enactment of this Act, the Secretary shall issue for public comment an interim final rule regulating contracts authorized by this section. (3)

Notice of final rulemaking

Not later than 1 year after the date of enactment of this Act, the Secretary shall issue a notice of final rulemaking regulating the contracts. (g)

Authorization of Appropriations

There are authorized to be appropriated such sums as are necessary to carry out this section.

7.

New source review under the Clean Air Act

Part A of title I of the Clean Air Act (42 U.S.C. 7401 and following) is amended by adding the following new section at the end thereof:

132

New source review

In promulgating regulations respecting new source review under this Act, the Administrator shall include in such regulations provisions providing that routine maintenance and repair shall not constitute a modification of an existing source requiring compliance with new source review requirements. Such provisions shall provide that equipment replacement shall be considered routine maintenance and repair if it meets each of the following requirements: (1) It does not increase actual emissions of any air pollutant by more than 5 percent. (2)It does not increase actual emissions of any air pollutant by more than 40 tons per year.Notwithstanding any other provision of this Act, no State may include in any State implementation plan any provisions regarding new source review that are more stringent than those contained in the regulations of the Administrator under this section.

.

8.

Discounted sales of royalty-in-kind oil to qualified small refineries

(a)

Requirement

The Secretary of the Interior shall issue and begin implementing regulations by not later than 60 days after the date of the enactment of this Act, under which the Secretary shall charge a discounted price in any sale to a qualified small refinery of crude oil obtained by the United States as royalty-in-kind. (b)

Amount of discount

The regulations shall provide that the amount of any discount applied pursuant to this section in any sale of crude oil to a qualified small refinery— (1)shall reflect the actual costs of transporting such oil from the point of origin to the qualified small refinery; and (2)shall not exceed $4.50 per barrel of oil sold. (c)

Termination of discount

This section and any regulations issued under this section shall not apply on and after any date on which the Secretary of Energy determines that United States domestic refining capacity is sufficient. (d)

Qualified small refinery

In this section the term qualified small refinery means a refinery of a small business refiner (as that term is defined in section 45H(c)(1) of the Internal Revenue Code of 1986) that demonstrates to the Secretary of the Interior that it had unused crude oil processing capacity in 2004.

9.

Constitutional authority

The Constitutional authority on which this Act rests is the power of Congress to regulate Commerce among the several States as enumerated in Article I, Section 8, Clause 3 of the United States Constitution.