Commentary: Recalcitrant Tier 3 refineries shouldn’t get tax break

(Trent Nelson | The Salt Lake Tribune) Utah Gov. Gary Herbert tops off the tank of his state-issued SUV at the opening of a new Speedway convenience store and gas station that will sell lower-sulfur “Tier 3” gasoline, in Salt Lake City on Monday Nov. 25, 2019.

If you’ve spoken with a legislator on either side of the aisle about funding bills this year, you’ve most likely been told that there is little to no money.

To oversimplify a complicated situation, Utah’s general fund revenue (i.e., sales tax) is not keeping up with demand and budgetary restraint is up, with legislators closely monitoring where every penny will be spent during the next state fiscal year.

Even with this “watchdogging” to ensure that the state government isn’t living beyond its means, there is an effort to find a way to reward two of Utah’s refineries for not producing Tier 3 gas on a timetable that has already been met by our three other refineries.

Why all of this effort over Tier 3 gas? Tier 3 gas can reduce PM 2.5 emissions from newer automobiles by as much as 80%. Using Tier 3 gas in older vehicles can make even the dirtiest cars on the road significantly cleaner. You can find out more about the benefits and where to buy this gas at Tier3Gas.org. This is a game-changer for air quality in Utah.

In 2017, with Gov. Gary Herbert’s leadership, the Legislature approved a sales tax exemption to refineries to incentivize them to speed up the production of lower-sulfur Tier 3 gas and meet the 2020 EPA requirement. A provision in EPA’s regulation allowed refineries to meet the requirement for Tier 3, by: (1) producing Tier 3 to meet a national average requirement regardless of where the air pollution problems are the worst (for example, a company may produce Tier 3 gas at larger facilities in other states and skip smaller ones in Utah); or (2) by purchasing credits.

Utah created an incentive to encourage local refineries to make the switch to producing Tier 3 locally. Marathon, Chevron and Silver Eagle hustled to convert to Tier 3. But the other two refineries, Big West and HollyFrontier, have not made the change.

Now they want to retain the benefit of the tax exemption while not actually complying with the terms of the incentive in a timely manner. Instead, they want the timeline extended for three and a half more years. This is like telling kids who turned in their homework on time that the kids who didn’t would be given an extra week without penalty.

Legislative analysts estimated that giving this exemption to Big West and its parent company, FJ Management, would cost the state $2.1 million in 2019 alone, let alone future costs.

The purpose of giving refineries a tax exemption was to encourage timely Tier 3 gas production in Utah. The refineries were given multiple years and ample opportunity to begin producing this cleaner fuel. Extending this tax exemption now would reward these two refineries for inaction. It would symbolize fiscal irresponsibility at the cost of the taxpayers.

When the state celebrated the production of Tier 3 gas in Utah last fall, we recognized the three refineries as good corporate citizens. We didn’t call attention to the lack of action by the other two. We certainly want all gasoline produced and sold in Utah to be Tier 3.

Rewarding inaction isn’t the right approach. When the Legislature creates incentives to assure Utah industries operate in the best interests of its residents, we, as legislators, have an obligation to make sure they are applied fairly. We must hold corporations accountable for delivering the intended results.

As citizens we have the power to vote with our wallets. Utah’s airshed and taxpayers need the benefits resulting from Tier 3 gasoline as soon as possible. We want all refineries to produce Tier 3, and it’s now up to them to make the change.

Fill up your tank with gas from stations listed at Tier3gas.org, and do your part for cleaner air.

Submitted by the co-chairs of the Utah Bipartisan Legislative Clean Air Caucus: Sen. Luz Escamilla, D-Salt Lake City; Sen. Todd Weiler, R-Woods Cross; Rep. Patrice Arent, D-Salt Lake City; Rep. Joel Briscoe, D-Salt Lake City; Rep. Stephen Handy, R-Layton; and Rep. Suzanne Harrison, D-Draper.