Bill Lifting Crude Oil Export Ban Contains $500 Million Earmark for Labor Unions
On Friday, the House is scheduled to vote on H.R. 702, a bill which would lift the decades-old embargo on exporting crude oil. Under current law, companies must refine crude oil domestically before they are allowed to export the resulting petroleum products. The policy changes made in H.R. 702 are commendable, but a last minute addition to the bill has entangled good policy in corporate welfare and a $500 million labor union buyoff.
According to the Section-by-Section summary provided by the House Rules Committee, a newly added section would “increase the annual operating stipend for the 60 ship Maritime Security Fleet.” The Maritime Security Program (MSP) was established in 1996 and currently provides contract payments of $3.1 million a year to vessels participating in the program. The program was reauthorized for ten years on January 2, 2013. Last week, 270 Representatives voted for the FY2016 National Defense Authorization Act (H.R. 1735), which included the following language:
SEC. 3504. PAYMENT FOR MARITIME SECURITY FLEET VESSELS. (a) PER-VESSEL AUTHORIZATION.—Notwithstanding section 53106(a)(1)(C) of title 46, United States Code, and subject to the availability of appropriations, there is authorized to be paid to each contractor for an operating agreement (as those terms are used in that section) for fiscal year 2016, $3,500,000 for each vessel that is covered by the operating agreement. (emphasis added)
The $3.5 million figure represents a 12.9-percent increase over current levels, whereas the bill intended to implement free-market energy changes (H.R. 702) would increase the funding per ship by 61.3 percent. Nearly 40 percent of the new funding will go to two US-based subsidiaries of the Dutch shipping company, Maersk Line. All told, those two subsidies will rake in nearly $30 million a year EXTRA for being part of the MSP.
If the 61.3 percent increase in MSP funding was truly a matter of national security, there is every reason to expect it would have been included in the defense bill that the Senate is expected to clear later this week. Instead, reminiscent of the earmarking days, taxpayer money is being used to literally buy votes. On Monday night, Bloomberg BNA wrote that the $500 million provision was “a tweak backed by maritime unions that could draw more Democratic support for the bill.” According to ClearView Energy Partners, a Washington research firm, the provision “seems transparently intended” to buy Democrat votes. Another GOP lobbyists with ties to the oil industry said “As a Democrat, it’s hard to look at the maritime guys and say ‘no.’”
The payoff is even more incredible considering a new president – who will take office in about 15 months – has the authority to lift ban. There is no reason lawmakers should cede to the cronyist demands of longshore unions and a handful of massive, international shipping companies.
Washington isn’t broken. It is a well-oiled machine that works for the well-connected and responds to the well-heeled. This corrupt nexus of favoritism and cronyism tends to leave hardworking Americans behind. If House Republicans want to change that perception, they should strip the $500 million provision from an otherwise commendable bill and redirect that money toward deficit reduction.