Foreign Oil Biggest Beneficiary of Ill-advised, Non Bipartisan Bills

July 30th the House of Representatives, now on recess, passed the 225 page HR 3534 Offshore Drilling Regulation Bill and the 16 page HR 5851 Offshore Oil & Gas Worker Whistleblower Act. The Democratic Leadership headed by Congressman Ray Rahall of West Virginia allowed debate, amendments, and a simple majority vote. Representative Doc Hasting of Washington presented the Republican opposition. If the Rules had been Suspended, it would have required a 2/3 majority vote. The Bills can be accessed on www.thomas.gov or www.house.gov. There may be a C-Span video replay of the House HR 3534 Debate.

There was little drama. The Democrats control the House of Representatives with 255 members to 178 Republicans with 2 vacant seats. HR 5851 was introduced a few days ago with no debate. The one point of drama or frustration was when Representative Lummis of Wyoming reminded the House members their voter approval rating had fallen to 11% and this was a “crazy” Bill. Amendments were selected on a non bipartisan basis. Basically the House Democratic Majority can pass legislation on a non bipartisan basis as demonstrated today, but that is why we have Congressional elections every two years.

HR 3534 is an offshore oil industry restructuring Bill with billions of dollars in increased taxes, royalties, and fees. It vastly increases federal regulations over federal offshore and onshore drilling and state offshore leasing. It creates a new federal leasing agency with vastly increased powers. The main Republican criticism is that the Offshore Drilling Regulation Bill has major provisions which have nothing to do with the offshore industry. For example it mandates $30 billion of mandatory spending on public parks on shore. A further criticism is that it is a major “Job Killer,” with some estimates of a projected loss of several hundred thousand jobs. It will make the U.S. more dependent upon foreign imported oil. Plus the $22 billion in increased offshore industry taxes will not apply to foreign oil companies. One estimate is that the bill will create $17 billion in litigation. There will no limit on corporation liability, which will prohibit small and medium size offshore companies from obtaining insurance. Representative Hasting sees this as a revenue producing , job killing, and increased government regulation Bill. The end result will substantially increase the federal bureaucracy regulating the offshore oil industry.

Democratic Representative Rahall kept stressing that this is a Bill against “Big Oil.” Other Democrats praised this as a Clean Oceans Bill, a safety bill, worker protection, and a great tax and revenue bill to reduce our federal deficit.

To what extent these Bills will permanently damage our essential domestic offshore industry with unintended consequences cannot be estimated. The harm will be severe, especially combined with other Administration Bills which negatively impact the offshore oil industry.

Next week, perhaps Wednesday, August 4, the Senate may deal with the counterpart 409 page Bill presented by Senator Harry Reid. Since the Senate goes on recess August 6^th, the effort to reconcile differences between the House and Senate Bills will be dealt with after the House and Senate return on September14^th. There will be strong Republican Minority opposition in the Senate, but the Democrats control the Senate currently.