[Congressional Record Volume 151, Number 123 (Wednesday, September 28, 2005)]
[Senate]
[Pages S10597-S10599]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

      By Mr. HATCH:
  S. 1781. A bill to amend the Internal Revenue Code of 1986 to allow 
full expensing for the cost of qualified refinery property in the year 
in which the property is placed in service, and to classify petroleum 
refining property as 5-year property for purposes of depreciation; to 
the Committee on Finance.
  Mr. HATCH. Mr. President, just this past May, I stood at a gas 
station in Salt Lake City and announced the introduction of S. 1039, 
the Gas Price Reduction Through Increased Refining Capacity Act of 
2005.
  By standing near a gas pump charging $2.25 per gallon, I thought I 
was making a strong statement about the high price of gas and the need 
for greater refining capacity in our country.
  That was only a few months ago, but hurricanes Katrina and Rita have 
since exposed the vulnerability of our Nation's refining 
infrastructure, and the gas prices in May now seem like the good old 
days.
  I am pleased that the energy bill signed by President Bush this 
summer included the principal concept of S. 1039--that of providing a 
strong tax incentive to expand refinery capacity by allowing the cost 
to be written off immediately. Unfortunately, because of budget 
restrictions, my legislation had to be cut.
  I have long been concerned that our shrinking number of refineries 
and their proximity to our Nation's coasts pose an unacceptable risk to 
our economic and strategic security. I thought cutting S. 1039 was a 
mistake at the time, and now I am hoping Congress will remedy that 
mistake.
  Today, I rise to reintroduce those portions of my refining capacity 
legislation that were left out of the energy bill and call upon my 
colleagues to help me finish what was begun with my original bill.
  My new legislation, the Refinery Investment Tax Assistance Act, would 
enhance the incentives made in the energy bill by increasing the short-
term incentive to add new and expanded refining facilities and by 
removing the obstacle of long tax depreciation schedules that 
refineries face.
  For those refiners able to commit to installing new refining 
equipment before 2008 and to have that added capacity built by 2012, my 
original bill would have allowed a complete write-off for investments 
in new refining equipment in the first year. As passed by Congress, 
though, this provision was cut for budgetary reasons to allow for 
expensing of only 50 percent of the costs in the first year. The 
legislation I am introducing today would enhance that to allow for the 
full 100 percent expensing in the first year. Now, more than ever, we 
need to use every possible means to increase the security of our fuel 
supply.
  This bill would also restore another very important provision of S. 
1039 that was dropped out of the energy bill as a cost savings. This 
provision would help to remove some of the disparity the refining 
industry faces in our current tax system. Most manufacturers in our 
country are able to depreciate the cost of their new equipment over 
five years. Refineries, on the other hand, are strapped with a full 10-
year depreciation period. This unfair treatment of our refining 
industry acts as a long-term obstacle to new investment in increased 
capacity. The current 10-year depreciation schedule for refiners is 
unwarranted, and it is past time that we level the playing field on 
depreciation for this critically important sector of our energy 
industry.
  On September 6, in the aftermath of Katrina, Mr. Bob Slaughter of the 
National Petrochemical & Refiners Association testified before the 
Senate Energy and Natural Resources Committee. He said that an 
important solution to our energy crisis would be to ``[e]xpand the 
refining tax incentive provision in the Energy Act. Reduce the 
depreciation period for refining investments from 10 to seven or five 
years in order to remove a current disincentive for refining 
investment. Allow expensing under the current language to take place as 
the investment is made rather than when the equipment is actually 
placed in service. Or the percentage expensed could be increased as per 
the original legislation introduced by Senator Hatch.''
  I think it is important to recognize that, over time, this 
legislation will not cost the U.S. Treasury one dime. It would allow 
refineries to change the timing of the depreciation of their equipment, 
but not the amount. And, we should keep in mind that when this

[[Page S10599]]

bill leads to more refineries and increased capacity, we will have also 
increased the tax base.
  I want to throw my full support behind the proposals recently 
announced by House Energy and Commerce Chairman Barton and House 
Resource Committee Chairman Pombo, which would take other approaches to 
increase the number of refineries in our Nation. From both a national 
security and an energy security perspective, I especially endorse a 
proposal by Chairman Pombo to locate more refineries on public lands 
near oil resource deposits. Such a move will make our Nation more 
secure from attacks from terrorists and from Mother Nature. I 
understand that Senate Energy and Natural Resource Committee Chairman 
Pete Domenici is promoting similar proposals on the Senate side. And I 
applaud these men for their leadership.
  We have learned that when it comes to our Nation's energy security, 
refining is where we are the most vulnerable. It is not the time for 
half measures, but bold immediate action to establish a secure and 
independent refining program in this country. I hope my colleagues will 
join me in my efforts to achieve this goal. I ask unanimous consent 
that the text of the bill be printed in the Record.
  There being no objection, the bill was ordered to be printed in the 
Record, as follows:

                                S. 1781

       Be it enacted by the Senate and House of Representatives of 
     the United States of America in Congress assembled,

     SECTION 1. SHORT TITLE.

       This Act may be cited as the ``Refinery Investment Tax 
     Assistance Act of 2005''.

     SEC. 2. FULL EXPENSING FOR QUALIFIED REFINERY PROPERTY.

       (a) In General.--Subsection (a) of section 179C of the 
     Internal Revenue Code of 1986, as added by section 1323 of 
     the Energy Policy Act of 2005, is amended by striking ``50 
     percent of''.
       (b) Effective Date.--The amendment made by subsection (a) 
     shall take effect as if included in section 1323 of the 
     Energy Policy Act of 2005.

     SEC. 3. PETROLEUM REFINING PROPERTY TREATED AS 5-YEAR 
                   PROPERTY.

       (a) In General.--Subparagraph (B) of section 168(e)(3) of 
     the Internal Revenue Code of 1986 (relating to 5-year 
     property) is amended by striking ``and'' at the end of clause 
     (v), by striking the period at the end of clause (vi) and 
     inserting ``, and'', and by adding at the end the following 
     new clause:
       ``(vii) any petroleum refining property.''.
       (b) Petroleum Refining Property.--Section 168(i) of such 
     Code is amended by adding at the end the following new 
     paragraph:
       ``(18) Petroleum refining property.--
       ``(A) In general.--The term `petroleum refining property' 
     means any asset for petroleum refining, including assets used 
     for the distillation, fractionation, and catalytic cracking 
     of crude petroleum into gasoline and its other components.
       ``(B) Asset must meet environmental laws.--Such term shall 
     not include any property which does not meet all applicable 
     environmental laws in effect on the date such property was 
     placed in service. For purposes of the preceding sentence, a 
     waiver under the Clean Air Act shall not be taken into 
     account in determining whether the applicable environmental 
     laws have been met.
       ``(C) Special rule for mergers and acquisitions.--Such term 
     shall not include any property with respect to which a 
     deduction was taken under subsection (e)(3)(B) by any other 
     taxpayer in any preceding year.''.
       (c) Effective Date.--
       (1) In general.--The amendments made by this section shall 
     apply to property placed in service after the date of the 
     enactment of this Act.
       (2) Exception.--The amendments made by this section shall 
     not apply to any property with respect to which the taxpayer 
     has entered into a binding contract for the construction 
     thereof on or before the date of the enactment of this Act.
                                 ______