[Congressional Record Volume 153, Number 94 (Tuesday, June 12, 2007)]
[Senate]
[Pages S7547-S7548]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

      By Mr. HATCH:
  S. 1591. 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, today I rise to reintroduce my legislation, 
the Refinery Investment Tax Assistance Act, aimed at increasing 
refining capacity in this Nation. No one doubts that U.S. consumers and 
businesses will face another long hot summer of too high gas prices. 
There is general consensus among experts that a major bottleneck in 
U.S. refining capacity is a big part of the reason prices are so high. 
My bill will help resolve that problem.
  As my colleagues know, the Government does not explore for, extract, 
transport, or refine oil in this country. Our Nation relies wholly on 
private industry to feed a very large domestic energy appetite. 
Unfortunately, the Government often stands in the way of industry in 
these activities. While many refiners would like to expand their 
capacity to refine oil, they face extraordinary costs from bureaucratic 
regulations that limit the available funding for such expansion. 
Because of this and other unfriendly economic factors, not a single new 
refinery has been built in the United States since 1976. In fact, we 
have lost nearly 200 refineries over that time period and now we badly 
need that refining capacity.
  I authored a key provision of the Energy Policy Act of 2005, which is 
currently providing some incentives for new refining capacity. However, 
due to budgetary constraints, the tax incentives in my proposal were 
cut in half during the conference between the House and the Senate. I 
am confident that if we had known 2 years ago just how much of a 
bottleneck the refinery shortage would present in today's market, the 
full measure of my incentive would have been enacted.
  The Refinery Investment Tax Assistance Act would restore those 
provisions I originally introduced, but which were later removed for 
budget reasons. First, it would increase the short-term incentive for 
the industry to build new refineries or to expand existing ones. As 
with the 2005 bill, S. 1591 would provide immediate expensing of 100 
percent of the cost of new or expanded refineries in certain 
circumstances. As I said earlier, cost constraints forced us to limit 
this incentive in 2005 to 50 percent of expensing for refiners that 
were able to commit to installing new refining equipment before 2008. 
Under this bill, any added capacity would have to be placed in service 
by 2012 in order to qualify to write off the full cost of the expanded 
capacity in the first year.
  The second part of S. 1591 would address the 10-year depreciation 
schedule for refining assets under our current tax law. This 10-year 
schedule is longer than the write-off period for much of the equipment 
used in other manufacturing industries, including the petrochemical 
industry. My bill would eliminate this disparity by shortening the 
depreciation schedule for refining assets from 10 years to 5. This 
unfair and unwarranted treatment of our refining industry acts as a 
long-term obstacle to new investment in increased capacity. I call on 
my colleagues to help me level the playing field on depreciation for 
this critically important sector of our energy industry.
  I should also point out that this legislation would allow refineries 
to change only the timing of the depreciation of their equipment, but 
not the amount. Meanwhile, it would increase the size of our tax base 
by encouraging industry to build new refineries and increase capacity.
  Testifying before the Senate Energy and Natural Resources Committee 
in 2005, Mr. Bob Slaughter of the National Petrochemical & Refiners 
Association said that an important solution to the energy crisis would 
be to ``expand the refining tax incentive provision in the Energy Act 
[and] reduce the depreciation period for refining investments from 10 
to . . . five years in order to remove a current disincentive for 
refining investment.''
  These changes are incorporated in the legislation I am introducing 
today.
  Mr. Slaughter gave this testimony in the aftermath of hurricane 
Katrina. Every American has felt the effects of the storms on our 
energy sector. Refineries have been pummeled and, at one point, an 
unprecedented 25 percent of our Nation's refining capacity was taken 
offline. The rising gas prices hurt families' budgets, businesses that 
pay high travel expenses, and even school districts that must fuel 
buses to transport students. Once again, forecasters are predicting a 
terrible storm season this summer with hurricanes comparable to those 
of 2005.
  We have learned that when it comes to our Nation's energy security, 
refining is where we are the most vulnerable. This legislation will 
help us deal with the energy crisis and make our Nation more secure 
from the attacks of Mother Nature and terrorists. I hope my colleagues 
will join me in pursuing the secure and independent refining program 
that this country truly needs. I ask unanimous consent that the text of 
the bill be printed in the Record.
  There being no objection, the text of the bill was ordered to be 
printed in the Record, as follows:

[[Page S7548]]

                                S. 1591

       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 2007''.

     SEC. 2. FULL EXPENSING FOR QUALIFIED REFINERY PROPERTY.

       (a) In General.--Subsection (a) of section 179C of the 
     Internal Revenue Code of 1986 (relating to election to 
     expense certain refineries) 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)(III) 
     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.
                                 ______