House energy subcommittee deletes phase-in for low-sulfur diesel


By the OGJ Online Staff

WASHINGTON, DC, July 13 -- A House Energy and Commerce subcommittee Thursday approved an energy efficiency bill that includes a proposal to drop the phase-in period for a controversial low-sulfur diesel rule.

The amendment, sponsored by Rep. Ed Bryant (R-Tenn.), would bring low-sulfur diesel on the market at one time in 2006, rather than phase it in between then and 2010.

The bill goes to the full committee for approval next week. The Senate must approve the bill before it has any effect.

Refiners have consistently sought a phase-in.

Fuel marketing associations had sought the change, saying otherwise they might have to store two different types of diesel fuel during the phase in period.

Environmental groups said the action was backed by the oil industry as a back-door attempt to gut the entire rule.

"I fear it's a Trojan horse, and will be followed up with an amendment at the full committee to postpone the whole diesel cleanup," said Frank O'Donnell of the Clean Air Trust lobby group.

The White House says there is enough scientific evidence to suggest low-sulfur diesel fuels are needed to allow the rule, which becomes effective in June 2006, although some refiners would have until 2010 to comply. Industry meanwhile has filed lawsuits, and further complicating the issue are the regulators themselves: policy makers have also signaled they may revisit the issue.

A recent report by the US Energy Information Administration said it could not predict whether refiners and importers will be able to supply enough low-sulfur diesel fuel to meet market demand in 5 years (OGJ Online, May 8, 2001).

The agency's comments were in a report requested by the House Committee on Science last December on the possible impact of the new low sulfur requirement on the diesel fuel market. EIA did not offer any recommendations; instead, it presented several possible scenarios that could occur when the 15-ppm standard becomes effective in June 2006.

EIA also noted that under rules issued by the Environmental Protection Agency last year, up to 20% of highway diesel fuel produced may continue to meet the current 500-ppm sulfur limit through May 2010. The remaining 80% of the highway diesel fuel produced must meet the stricter standard. EIA said that highway diesel represents about 12% of total petroleum consumption, compared to 43% for gasoline.

The subcommittee also voted 29-3 to approve an amendment by Rep. Richard Burr (R-NC) requiring corporate average fuel economy standards for light trucks and SUVs at a level that would drop gasoline demand by 5 billion gal between model years 2004-10 compared to the current (2002) model year.

Considered and later withdrawn were amendments by Rep. Henry Waxman (D-Calif.) to give the states the choice to remove the oxygenate content requirement from reformulated gasoline.

That battle will likely be fought at the full committee level, expected next week.

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