Tuesday, February 17, 2015

HR 702 Introduced – Export of Crude Oil

As I noted earlier, Rep. Barton (R,TX) introduced HR 702, a bill to adapt to changing crude oil market conditions (for some reason no fancy name was included in the language of this bill). The bill would remove restrictions on the export of coal, petroleum products, natural gas, or petrochemical feedstocks.

Removing Export Restrictions

The bill is very short with just four sections. The first section outlines the ‘congressional findings’ that provide the reasons for the actions outlined in the bill. Those findings relate to the changing international oil market and the fact that the United States has drastically increased its domestic production of crude oil.

The second section of the bill repeals 42 USC 6212. This was passed by Congress in 1979 during the ‘second oil crisis’ and authorized the President to draft regulations to control the exports of “coal, petroleum products, natural gas, or petrochemical feedstocks” {42 USC 6212(a)(1)} as well as the supplies, equipment and technology used to “maintain or further exploration, production, refining, or transportation of energy supplies” {42 USC 6212(a)(2)}. Thus this bill would remove the authorization for any such regulations. This repeal would potentially affect much more than the export of just the crude oil mentioned in the congressional findings.

The third section of the bill would reinforce the repeal of §6212 by specifically prohibiting the action of any federal agency to “impose or enforce any restriction [emphasis added] on the export of crude oil”. This was done to insure that any export controls not based upon §6212 could not be used to control the export of crude oil.

Unintended Consequences

This §3 language reflects a general mistrust for the current administration (and perhaps government in general). Unfortunately the broad language of this section (starting with the ‘Notwithstanding any other provision of law’) could potentially be used to justify the avoidance of hazmat shipping restrictions of crude oil at various stages of the crude oil export supply chain. Given the problems seen with some of the rail the shipments of Bakken crude oil, this was probably not the intent of Rep. Barton. But, wide sweeping language frequently carries unintended consequences.

The Inevitable Study

Section four of this bill would require the Secretary of Energy to conduct a study and report to Congress on “on the appropriate size, composition, and purpose of the Strategic Petroleum Reserve”. The report would be due to Congress within 120 days of passage of the bill.

Moving Forward

Given the current world price for oil it is unlikely that there will be any urgent push for passing this bill. This bill would almost certainly be able to pass in the House given the Republican majority. Whether this bill could garner enough Democratic support to overcome a liberal filibuster in the Senate is another question entirely. Modification of the language in Section 3 might increase those chances.

NOTE: HR 666, the earlier version of this bill that was essentially ignored by its author due to the assigned bill number, has identical language. No one will touch that bill.

No comments:

/* Use this with templates/template-twocol.html */