Increased governors' role urged in refinery permitting

Nick Snow
Washington Correspondent

WASHINGTON, DC, July 14 -- Federal refinery permitting legislation should increase the role of state governors, a US Senate Energy and Natural Resources Committee member said on July 13 during the committee's hearing on a bill that has already passed the House.

"I have introduced a measure that's similar [to H.R. 5254], with one difference in that the request would come from a state's governor," said Republican George Allen, who served a term as Virginia's governor before his election to the Senate in 2000.

Allen's bill would direct the federal government to identify three closed military bases as potential sites for new refineries, one of which would produce biofuels.

HR 5254, which the House passed on June 8, contains a similar provision. But its focus is on designating a federal coordinator who would work with applicants; state, federal, and local governments; and other stakeholders to expedite permitting.

Chairman Pete V. Domenici (R-NM) said action on the bill might not come this year, adding, "It seems that having a governor involved from the outset would make sense."

Removing uncertainty
Three of the hearing's four witnesses said they generally support the House bill. Glen McGinnis, chief executive of Arizona Clean Fuels, which has the only active proposal for a grassroots US refinery, said it could improve permitting by reducing uncertainty.

"What's critical is for government agencies to create certainty around the process," McGinnis said. "There's no one today who operates as the director of scheduling."

National Petrochemical and Refiners Association Pres. Bob Slaughter said US refiners have added 1.4 million b/d of processing capacity in the last 10 years and plan further additions of 1.8 million b/d.

"There should be encouragement for efficiency and promptness in obtaining permits," he said. "Governors certainly have to be involved. I question whether they should have veto authority."

Bob Meyers, associate assistant administrator for air and radiation at the US Environmental Protection Agency, said the administration of President George W. Bush endorses efforts to increase domestic refining capacity as long as environmental protections aren't compromised.

But S. William Becker, executive director of two associations representing state and local air-quality regulators, warned that HR 5254 could create delays by adding a layer of bureaucracy and creating a mechanism that would send disputes into court instead of letting participants negotiate informally.

"The reason that new refineries aren't being built in this country is because of economic considerations. The industry prefers to expand existing refineries, and state and local agencies issue permits for these projects in a matter of months, not years," said Becker, who leads the State and Territorial Air Pollution Program Administrators (STAPPA) and the Association of Local Air Pollution Control Officials (ALAPCO).

Moved site
McGinnis said the bill also could improve permitting by providing a regulatory agency such as the Arizona Department of Environmental Quality, which did not have extensive experience considering questions raised by construction of a refinery, access to staff and resources to speed its deliberations.

He said a main reason the proposed Arizona refinery was delayed was that it had to be moved to Yuma County when Phoenix and the vicinity became an air-quality nonattainment area. Since then, Arizona Clean Fuels has worked to identify local business and agricultural concerns and address them by holding public meetings, McGinnis said.

Obtaining environmental permits is only part of the process, he emphasized. Refiners also have to line up investors and obtain land, steps that Arizona Clean Fuels still hasn't completed.

But Slaughter said one NPRA member, Motiva Enterprises LLC, wants to expand its Port Arthur, Tex., refinery by 300,000 b/d. Three environmental groups announced this week that they plan to challenge the project's permit application, with a representative of one of them noting that the approval process, which already takes a long time, would take longer now because "a challenge pushes the application to the bottom of the pile."

Other committee members agreed that more domestic refining capacity is needed. "Nobody questions that," said Ron Wyden (D-Ore.).

Domenici noted that another member of the committee, Dianne Feinstein (D-Calif.), has asked Gov. Arnold Schwarzenegger to examine ways refineries in their state can add capacity quickly. "This apparently is an issue Republicans and Democrats can agree on," Domenici said.

Contact Nick Snow at nsnow@cox.net.

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