A Multitude of Problems with the Farm Bill

By July 27, 2007General

The House adopted the rule for consideration of H.R. 2419, the farm bill reauthorization, last night bya roll call vote of 222-202 (Roll Call No. 746). We’ve already written about the anti-investment provisions, the $7.5 billion tax increase in the bill. Other bad things are surfacing, including provisions that would damage domestic energy development. In a letter to the House yesterday, the NAM argued:

In particular, we oppose provisions in the bill that would: impose a fee on 1998-99 deep water leases that are not renegotiated to include price thresholds; repeal provisions of the Energy Policy Act (EPAct05) that preclude the Bureau of Land Management from collecting certain fees; prevent additional royalty relief for oil and gas produced from the OCS, ultra deep wells, very deep waters and Alaska; and authorize the Secretary of Interior to modify the term of oil and gas leases in the national petroleum reserve in Alaska.

Oil and gas from federal lands and waters is critical to meeting the nation’s energy needs, providing approximately 32 percent of all oil and 32 percent of all natural gas produced in the United States. EPAct was intended to encourage energy efficiency and conservation, to reduce dependence on foreign sources of energy, and to increase domestic production of oil and natural gas. The repeal of provisions contained in the EPAct that were designed to encourage domestic production would be a step backward for U.S. energy security.

To too many members of Congress, “energy independence” is a talking point; once they’re done, you can point to a lot of talking as being the major achievement.

Meanwhile, for an interesting, purely political take on the farm bill — its horsetrading and the domination by special interests — check out this story in the San Francisco Chroncle, “Dem Leaders Shield Farm Bill.” Headline aside, the story is mostly about the battle between urban and rural members over who gets the bigger piece of the pie.

P.S. We’ve placed the full text of yesterday’s letter to the Hill in the extended entry below.


TEXT OF NAM LETTER TO ALL HOUSE MEMBERS:

The National Association of Manufacturers (NAM)—the nation’s largest industrial trade association—strongly supports Congressional efforts to enhance America’s energy security. The U.S. manufacturing sector uses nearly one-third of the nation’s energy both as a fuel and a feedstock. We are concerned, however, about proposals included in the pending farm bill (H.R. 2419) that would increase energy costs and discourage needed investment in domestic energy infrastructure and supply. In order to ensure an adequate and affordable energy supply, the U.S. needs a comprehensive strategy that encourages the energy industry’s efforts to develop America’s resources.

In particular, we oppose provisions in the bill that would: impose a fee on 1998-99 deep water leases that are not renegotiated to include price thresholds; repeal provisions of the Energy Policy Act (EPAct05) that preclude the Bureau of Land Management from collecting certain fees; prevent additional royalty relief for oil and gas produced from the OCS, ultra deep wells, very deep waters and Alaska; and authorize the Secretary of Interior to modify the term of oil and gas leases in the national petroleum reserve in Alaska.

Oil and gas from federal lands and waters is critical to meeting the nation’s energy needs, providing approximately 32 percent of all oil and 32 percent of all natural gas produced in the United States. EPAct was intended to encourage energy efficiency and conservation, to reduce dependence on foreign sources of energy, and to increase domestic production of oil and natural gas. The repeal of provisions contained in the EPAct that were designed to encourage domestic production would be a step backward for U.S. energy security.

At a time when our nation is looking to decrease its dependence on foreign oil, this legislation also would set back attempts to boost domestic production. The existing royalty relief program has effectively encouraged offshore development, especially in deep water, expanding U.S. oil and natural gas production while providing billions in revenue to the federal government. Overall, deep water gas production is up 407 percent and oil production has risen 386 percent since 1996. There are now about 150 deep water discoveries of which more than 107 are producing. The deep water activity in the Gulf of Mexico has been a major success story in other ways as well. Without royalty relief incentives, it is likely that these areas would not be developed.

The debate over energy policy should not be about imposing new taxes or new costs on the domestic energy industry. Rather, it should focus on enhancing America’s energy security through increased production of all types of energy, improved conservation and energy efficiency, more research on technology and alternative energy, increased access to domestic sources with continued environmental protections, and improved distribution. Thank you in advance for opposing these ill-conceived provisions.

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