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Senate action opens on lift of crude export ban

Legislative Update by Tim Charters, NSWA Vice President of Governmental Affairs

01 MAY 2015

This week during the debate on Iran Sanctions, Congress will get the first opportunity to consider legislation repealing the 40-year-old ban on crude oil exports. While this is the start of the debate, it’s only one step in what will be a longer process and it’s unlikely this debate will even reach a vote. This week, Senator Lisa Murkowski (R-AK) will offer an amendment to the Senate Iran Sanctions bill crafted by Senators Bob Corker (R-TN) and Ben Cardin (D-MD).

The amendment is three pieces…First it requires a report from the Department of Energy in 60 days from becoming law identifying the ability of Iranian oil to be sold on the world market if sanctions are lifted versus the ability of American oil to be sold on the world market under current law. This finding will simply be a restatement of what we know which is that Iran can sell oil, the U.S. can't. Then, 30 days after issuing the report, the Administration would be required to treat crude oil with the same export restrictions and controls that are currently applied to petroleum products. This policy puts crude oil on par with petroleum products, minimizing the strength of the objections from refiners. Finally, the amendment reiterates the President's emergency authority to stop exports as contained in current law.

Since first announcing the amendment, Sen. Murkowski has been joined by Sen. Heidi Heitkamp (D-ND), Sen. John Hoven (R-ND) and Sen. James Lankford (R-OK).  During the first opportunity for debate on the amendment Senator Murkowski described the amendment:

“So what this amendment does, it adds a third section to the Corker-Cardin Iran Review Act of 2015, it would require a DOE report on Iranian crude oil and condensate exports and it would lift then the de facto ban on U.S. crude oil and condensate exports. It still preserves the emergency authorities of the president to prohibit exports if it's warranted. So there is that safety valve there. The deadline for submission of this report to Congress would be 60 days following the enactment of the act, it would still be required even if an agreement with Iran was not reached, and it would effectively address two issues. The ability, the relative ability of U.S. and Iranian oil producers to compete in the global market, which is pretty important out there, and the extent to which any agreement with Iran would increase Iranian oil exports through the lifting of sanctions.” – Sen. Murkowski, April 29, 2015.

Senator Heitkamp quickly followed up the Murkowski Statement by saying:
“The antiquated policy that we're talking about today didn't have a lot of logic after we deregulated oil. And it has even less logic in the dangerous world that we live in. We know that so many of our foreign enemies rely on oil revenue -- rely on oil revenue -- to basically fund their terrorism activity, to basically fund their government, to supply the necessary government services that keep them in power. And we have an opportunity to say to our allies, whether it's Japan or in Europe, don't worry about whether somebody is going to hold you hostage because you won't be able to heat your homes in the winter or provide gasoline to your communities and your consumers, don't worry about that because we've got your back. But we can't have their back if we don't have the ability to export our crude oil. And the bottom line is that on every level in terms of foreign policy, in terms of what we should be in this country, on every level a policy of maintaining an embargo, a restriction against exports of crude oil makes no common sense, absolutely none.”

It remains unclear at this point if the amendment will get an actual vote, that outcome remains highly unlikely.  Primarily because the Sen. Corker will express grave concerns about adding this amendment to the carefully crafted, Administration-approved (reluctantly) Iran Sanctions bill.  The White House is very interested in finding any excuse to veto the Iran Sanctions bill, and adding crude oil exports could offer the President exactly that option.

However, Sen. Murkowski and Sen. Heitkamp are using this as a tremendous opportunity to engage their fellow Senators to start counting votes, to push Senators into directly considering the issue and how they may be prepared to vote. The outcome of these discussions and the sense of where Senators are prepared to vote will leave supporters with a stronger understanding and better prepared when the next opportunity to repeal the export ban arrives.

And that next opportunity will likely be soon. Sen. Murkowski is drafting exports legislation and has high hopes to get a bipartisan exports repeal package introduced in a near term.  We have also heard that Sen. Heitkamp is drafting legislation on the issue and having already shown that they are prepared to work together to find common ground again and push standalone legislation forward. Indications are that may happen as Congress moves into May. Once introduced that will start another avenue for progress on the legislation for exports and NSWA will continue working to support the efforts to repeal the export ban and support opening foreign markets to domestically-produced energy.