House Passes Refinery Siting Bill

Legislation intended to speed siting of new oil refineries and thus increase U.S. capacity cleared the House of Representatives the evening of June 7. The bill's passage had long been sought by House Republicans as necessary to reduce the amount of refined-oil products—particularly gasoline???imported to the U.S.

On the other hand, House Democrats and a handful of Republicans argued that the bill would infringe on state oversight of the permitting process and that it was unnecessary.

H.R. 5254 would establish a federal coordinator to oversee all government agencies involved in refinery permitting decisions for new construction or expansion and make the coordinator???s decisions binding in federal court. It also would give EPA authority to oversee environmental regulations and require the President to identify at least three closed military bases as possible new refinery sites.

"The message we hear from home is 'America needs American energy,' " says Rep. Joe Barton (R-Texas), chairman of the House Energy & Commerce Committee and the bill's chief advocate. ???One part of that need is for more domestic refining capacity.???

Democrats, most of whom voted against the bill, voiced concern that the bill cuts the authority of state and local regulators. Barton countered on the House floor that the bill would give governors the authority to control whom on the state level takes part in permitting decisions. The role for regulators, other than EPA, would be left to the governor to decide.

How this bill affects the regulations for refinery siting under the Clean Air Act is unclear, and that, in turn, could influence which Senate committee has jurisdiction, says a spokeswoman for the Senate Energy & Natural Resources Committee. The bill could be referred to the Senate's Energy Committee, its Environment & Public Works Committee, or both.

Opponents of the bill have also questioned the need for it. They point to House testimony by Red Cavaney, president and chief executive officer of the American Petroleum Institute and a supporter of efforts to ease permitting. Cavaney said that no new U.S. refineries have been built since 1976, blaming regulations in part for the deficit.

But Cavaney also noted that refiners have increased capacity at operating plants by about 1% per year over the past decade—the equivalent of 12 new 200,000-barrel-per-day refineries—despite the permitting requirements.

He also noted that U.S. refiners plan another 1.3 million bbl per day in capacity upgrades between 2006 and 2011, bringing capacity to 18.5 million bbl a day, which he said would be an all-time U.S. high. He stressed that additional expansions may be under consideration that had not been made public.