Conservatives Quarrel Over $500 Million ‘Union Buyoff’ In Oil Export Bill

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Michael Bastasch DCNF Managing Editor
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After months of political maneuvering, Republican-backed legislation to lift the decades-old ban on crude oil exports could be hindered by a small tweak that ended up in the bill just to win over Democrats.

A small provision in the oil export bill, an attempt to gain support among maritime unions, is causing some concerns among conservatives who initially backed the effort to boost oil production and flood international markets with American crude.

Republicans inserted language to increase funding to the Maritime Security Program (MSP) from 2017 to 2021. The MSP pays about 60 privately-owned vessels to be on-the-ready to be requisitioned by the Defense Department. Ship owners are compensated for having to break shipping contracts to help the military on a moment’s notice.

Republicans increased MSP payments to shipping companies for vessels under the program, and also in the hopes it would win over maritime labor unions. MSP funding hasn’t increased since 1996 and the military is worried about private ships “unflagging,” but others on the right have questioned the move.

The conservative advocacy group Heritage Action has labeled the effort a “$500 million labor union buyoff” because of the increased funding for the MSP. Heritage Action argues that the National Defense Authorization Act already increases MSP funding by 13 percent over current levels. The oil exports bill increases MSP funding 61.3 percent over current levels.

“Nearly 40 percent of the new funding will go to two US-based subsidiaries of the Dutch shipping company, Maersk Line,” writes Heritage Action’s Dan Holler. “All told, those two subsidies will rake in nearly $30 million a year EXTRA for being part of the MSP.”

Though not all conservatives agree with Heritage Action. Dan Kish with the Institute for Energy Research argues that the bill would kill two birds with one stone — it’s free market friendly and would prevent ships from leaving the MSP program.

“The US will be the only country banned from exporting oil after sanctions are lifted on Iran, so it’s long past time we free up our markets, put Americans back to work producing more oil and make America stronger here while by providing alternatives to our allies currently depending on Vladimir Putin for their lifeblood oil supplies,” Kish told The Daily Caller News Foundation. “That’s why the Green Left hates it.”

“Since the bill also generates new money that helps ensure the Defense Department will have adequate sealift capability to respond to crises around the world when we need it, this bill is a win-win, no matter how you slice it,” Kish said.

The CBO says the oil exports bill would generate $1.4 billion in increased royalties over the next decade. It’s that revenue that Republicans want to use to fund the MSP. Increasing the MSP stipend from the NDAA’s proposed $3.5 million per vessel to $5 million per vessel is necessary to “because the current stipend is seen as not sufficient to offset the higher cost of operating a U.S.-flag, U.S.-crewed vessel,” according to American Shipper.

Republicans and the petroleum industry have been pushing for months on legislation to lift the 1970s-era ban on exporting crude. But Republicans want to make sure any bill they pass can survive a veto by President Barack Obama.

For Republicans, the road hasn’t been easy, even with majorities in both chambers of Congress. Refiners and environmentalists have opposed allowing more crude oil exports, bringing Democratic lawmakers along with them.

The House is set to vote on lifting the oil export ban this week.

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