[Congressional Record Volume 147, Number 96 (Wednesday, July 11, 2001)]
[House]
[Page H3930]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




SMALL BUSINESS REFINERS' COMPLIANCE WITH THE HIGHWAY DIESEL FUEL SULFUR 
                          CONTROL REQUIREMENTS

  The SPEAKER pro tempore. Under a previous order of the House, the 
gentleman from California (Mr. Horn) is recognized for 5 minutes.
  Mr. HORN. Mr. Speaker, at the beginning of this year, on January 18, 
2001, the Environmental Protection Agency, EPA, implemented heavy-duty 
engine and vehicle standards and highway diesel fuel sulfur control 
requirements.
  I strongly supported the final rule by the EPA as a necessary tool to 
reduce pollution. Under this new regulation, oil refiners must meet 
rigorous new standards to reduce the sulfur content of the highway 
diesel fuel from its current level of 500 parts per million to 15 parts 
per million by June, 2006. The diesel rule goes a long way in reducing 
the amount of pollution in our air.
  Small business refineries produce a full slate of petroleum products, 
including everything from gasoline to diesel to jet fuel to asphalt, 
lube oil, and specialty petroleum products.
  Today, among the 124 refineries operating in the United States, 
approximately 25 percent are small independent refineries. These small 
business refineries contribute to the Nation's energy supply by 
manufacturing specific products such as grade 80 aviation fuel, JP4 jet 
fuel, and off-road diesel fuel.
  In order for oil refineries to comply with the new rule, the 
Environmental Protection Agency estimated capital costs at an average 
of $14 million per refinery. This is a relatively small cost for major 
multinational oil companies, but for smaller refineries this is a very 
high capital cost that is virtually impossible to undertake without 
substantial assistance.
  Small business refiners presented information in support of this 
position to EPA during the rule-making process. In fact, EPA said that 
small business refiners would likely experience a significant and 
disproportionate financial hardship in reaching the objectives of the 
diesel fuel sulfur rule.
  There is currently no provision that helps small business refiners 
meet the objectives of the rule. That is why I am introducing a tax 
incentive proposal that would provide the specific targeted assistance 
that small refiners need to achieve better air quality and provide 
complete compliance with EPA's rule.
  A qualified small business refiner, defined as refiners with fewer 
than 1,500 employees and less than a total capacity of 155,000 barrels 
a day, will be eligible to receive Federal assistance of up to 35 
percent of the costs necessary, through tax credits, to comply with the 
highway diesel fuel sulfur control requirements of the EPA.
  Without such a provision, many small business refiners will be unable 
to comply with the EPA rule and could be forced out of the market. 
Individually, each small refiner represents a small share of the 
national petroleum marketplace. Cumulatively, however, the impact is 
substantial. Small business refiners produce about 4 percent of the 
Nation's diesel fuel, and in some regions, provide over half.
  Small business refiners also fill a critical national security 
function. For example, in 1998 and in 1999, small business refiners 
provided almost 20 percent of the jet fuel used by the U.S. military 
bases. Small business refiners' pricing competition pressures the 
larger integrated companies to lower prices for the consuming public. 
Without that competitive pressure, consumers will certainly pay higher 
prices for the same products.
  Over the past decade, approximately 25 United States refineries have 
shut down. Without assistance in complying with the EPA rule, we may 
lose another 25 percent of U.S. refineries.
  This legislation is critical, not because small business refiners do 
not want to comply with the EPA rule due to differences in 
environmental policy, but because it will help keep small business 
refiners as an integral part of the industry and on the way to cleaner 
production and full compliance with all environmental regulations.




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