DRILLERS, REFINERS ARE SPLIT OVER DRAWBACK BILL

DRILLERS, REFINERS ARE SPLIT OVER DRAWBACK BILL

Domestic oil drillers are trying to enlist the aid of Sen. Lloyd Bentsen, D- Texas, in fighting legislation that would grant millions of dollars in new import duty refunds to the oil industry, saying it would cheapen imports and hurt their business.

The split between drillers and refiners is over Senate legislation sponsored by Sen. Steve Symms, R-Idaho, and backed by the American Petroleum Institute that would extend eligibility for import duty refunds known as drawbacks to imported refined fuels for aircraft and vessels on international and some domestic routes.The Senate Finance Committee chaired by Sen. Bentsen last week voted to add the drawback measure as an amendment to a miscellaneous tariff bill despite objections from the U.S. Customs Service and the Treasury. Drawback refunds on import duties are generally designed to encourage re-exports.

J.W. Chenoweth, director of corporate affairs at Lone Star Steel Co. of Dallas, a producer of drilling equipment, said Tuesday he is writing to Sen. Bentsen for the second time asking for help opposing the measure.

"We are fairly convinced that the enactment of this bill would result in even cheaper imports of oil, further decreasing domestic drilling incentives, with consequent adverse impact on our predominant business," Mr. Chenoweth wrote in a letter to Sen. Bentsen last October.

Mr. Chenoweth argued that the measure is neither revenue-neutral nor non- controversial and should therefore not have been tacked on to the tariff bill. A spokesman for Sen. Symms said there is now "no impediment" to the legislation reaching the Senate floor.

Backers of the duty measure have billed it as a paperwork saver because it would reverse a 1988 Customs decision requiring refiners to account for drawback-eligible oil on a daily rather than a monthly basis and keep records on imports and exports in individual tanks rather than entire tank farms where more than one refiner may share facilities.

According to Lone Star, American Petroleum Institute officials have said the measure would yield $16 million in initial refunds to some of its members with an additional $7 million to $10 million annually. Customs officials say the impact could be far larger because of broad language that could apply to other oil derivatives. The API has said only that it supports the legislation.

A spokesman for Sen. Bentsen could not be reached for comment.