The following is a memorandum and a press release from Jaron Bourke,
who works for Representative Dennis Kucinich, a member of the US
House of Representatives. Representatives Kucinich, Baldacci,
Pallone and Barrett have introduced legislation to expand the
compulsory licensing provisions of the US Clean Air Act, to include
patents on reformulated gasoline (RFG). This bill is designed to address
problems with a Unocal patent on RFG that has been responsible for
significant increases in gasoline prices in the US Mid West.
Jamie
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Date: Tue, 27 Jun 2000 12:42:07 -0400
MEMO
From: Jaron Bourke, Office of Rep. Kucinich, 225-5871
<Jaron.Bourke@mail.house.gov>
Date: June 26, 2000
Re: Kucinich-Baldacci-Pallone-Barrett bill to lower gasoline
prices.
Reps. Kucinich, Baldacci, Pallone and Barrett (WI) introduced HR 4739, a
bill to lower gasoline prices, on Friday, June 23, 2000.
The bill addresses one of the reasons the oil industry has blamed for the
high price of gasoline, especially reformulated gasoline in the mid-west.
The industry says patents owned by Unocal for reformulated gasoline are
deterring the industry from making RFG, and are making RFG more expensive
for consumers. According to the American Petroleum Institute, "If the
Unocal patents stand, they could impact supplies of RFG...[S]ome refiners,
importers and blenders have said they will seek to avoid potentially
infringing on the Unocal patents by choosing to supply less reformulated
gasoline to the market than they would otherwise have done." (from "The
Gasoline Patent Case," American Petroleum Institute, June 15, 2000).
According to Alexander's Gas & Oil Connections, "Unocal, which holds patents
on the clean gasoline formulas, has made many refiners hesitant to make the
grade... this is fueling gasoline prices, " (from "Oil refiners to make
fortunes from new gasoline regulations" Vol. 5, Issue #10, Friday, June 9,
2000). In other words, the patents caused a diminished supply of RFG, which
in turn has driven up the price that consumers pay at the pump.
The Clean Air Act has a provision intended to address this sort of
situation. In the event of diminished competition or tendency to create a
monopoly, the Attorney General has the authority to order the licensing of
patents at a fair and competitive price to all manufacturers to meet federal
standards. (42 USC 7608). However, when this section was drafted in 1970,
reformulated gasoline did not exist, so the Attorney General does not have
the authority to order the licensing of RFG patents.
The Kucinich-Baldacci-Pallone-Barrett bill simply perfects ?7608 by adding
RFG to the list of technologies the Attorney General can order licensed.
The Kucinich-Baldacci-Pallone-Barrett bill will lead to lower gasoline
prices because it will make the process for manufacturing RFG available to
all oil companies. The owners of the patents will be fairly compensated.
More RFG will be produced, and the price of RFG will fall.
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News release
Reps. Kucinich, Baldacci, Pallone and Barrett introduce bill to lower
gasoline prices.
Bill would make reformulated gasoline blending process widely available, and
waive monopoly on reformulated gasoline.
Reps. Dennis Kucinich (D-OH), John Baldacci (D-ME), Frank Pallone (D-NJ),
and Tom Barrett (D-WI) announced the introduction of a bill to lower
gasoline prices. HR 4739, the "Lower Gasoline Prices Through Technology
Access Act of 2000," would lower gasoline prices by making the patent for
reformulated gasoline more widely available to all refiners. Oil companies
would be able to supply more gasoline at a lower price, which would bring
down the price of gasoline at the pump.
With gasoline prices exceeding two dollars per gallon in the midwest,
Congress has been searching for a cause and solution. In introducing HR
4739, Reps. Kucinich, Baldacci, Pallone and Barrett were identifying a cause
of higher gasoline prices - the behavior of the owners of patents on the
process for making reformulated gasoline. Indeed, the oil industry itself
has complained about the high cost and other barriers caused by patents on
reformulated gasoline. The American Petroleum Institute, for instance,
wrote, "if the Unocal patents stand, they could impact supplies of RFG ...
[S]ome refiners, importers and blenders have said they will seek to avoid
potentially infringing on the Unocal patents by choosing to supply less
reformulated gasoline to the market than they would otherwise have done."
The bill builds upon authority the Attorney General already has under the
Clean Air Act to mandate licensing of patents to spur competition to make
buildings, hazardous chemicals and engines comply with environmental
standards. HR 4379 simply adds reformulated gasoline to the short list of
technologies the Attorney General may order licensed. The owners of the
patents will receive a reasonable return for their inventions, but they will
not be able to deny licenses or charge exorbitant fees for their use.
Rep. Kucinich said, "We are calling the oil industry on their bluff.
They've said the owners of the patents are gouging them. Our bill takes the
monopoly profits out of the patents on reformulated gasoline technology."
Rep. Baldacci said, "I believe it's in the national interest to take steps
like this that keep energy affordable, which has been a key component of our
current economic boom."
Rep. Pallone said, "this bill is important, particularly at this time,
because it would 'level the playing field' for all refiners and eliminate
disincentives for refiners to refine and supply reformulated gasoline. In
turn, the price of reformulated gasoline would go down."
"This bill is yet another important step we can take to lower gas prices in
the Midwest," Rep. Barrett said. "Oil companies have complained that the
patent process makes reformulated gas prices more expensive. This would
remove that price barrier so that the price can continue to come down. We
are leaving no stone unturned."
Rep. Pallone and Barrett are members of the Commerce Committee. Rep.
Kucinich is a member of the Government Reform Committee. Rep. Baldacci is a
member of the Transportation and Agriculture Committees.
Jaron Bourke, Legislative Director
Office of Congressman Dennis J. Kucinich