Letter Opposing H.R. 6899, the "Comprehensive American Energy Security and Taxpayer Protection Act"

September 16, 2008

TO THE MEMBERS OF THE U.S. HOUSE OF REPRESENTATIVES:

The U.S. Chamber of Commerce, the world's largest business federation representing more than three million businesses and organizations of every size, sector, and region, strongly opposes H.R. 6899, the "Comprehensive American Energy Security and Taxpayer Protection Act." Judged in total, this legislation represents a small step forward and several giant steps backwards for domestic energy production. The Chamber believes Congress should work in a bipartisan manner to approve legislation to expand domestic energy production before the end of this Congress.

H.R. 6899 would authorize a restricted expansion of Outer Continental Shelf (OCS) energy exploration. However, the bill places such stringent limits on offshore exploration that very little new energy will likely be produced. For instance, the bill permanently outlaws exploration within 50 miles of the coast, despite evidence that these areas are particularly rich in oil and gas. It would establish a burdensome process requiring states to "opt in" to allow energy exploration between 50 and 100 miles from their coasts, but denies states any real incentive to do so by failing to include revenue sharing provisions.

In exchange for this limited expansion of offshore exploration, H.R. 6899 resurrects many controversial "poison pill" provisions that would actually limit domestic energy production. Although these proposals have been voted on in the 110th Congress—some repeatedly—none have been sent to the President to be signed into law. For example, the Chamber has longstanding opposition to provisions of this legislation related to:

• New punitive taxes—The tax provisions would do nothing more than single out the oil and gas industries for punitive treatment. The Chamber continues to oppose the denial of the section 199 deduction for oil and gas companies. This change would discourage energy investment, result in the loss of jobs, and ultimately decrease supply and increase energy costs for businesses that rely on oil and gas. The Chamber also opposes the proposed modification of the foreign tax credit rules for oil and gas companies, as it would place domestic firms at a competitive disadvantage to foreign oil and gas manufacturers.
• "Use it or lose it"—Provisions that would establish time limits on oil and gas leases are unnecessary because oil and gas producers already operate under binding, statutory time limits for their leases. Provisions of H.R. 6899—which mirror provisions included in bills that have failed on votes under suspension of the rules in the House twice in 2008—do not consider the complexity and time necessary to undertake energy exploration. According to the American Association of Petroleum Geologists, the process of leasing, evaluating, drilling, and developing an oil or natural gas field typically takes five to 10 years, and delays frequently occur due to permitting or regulatory concerns, or the unavailability of data acquisition, drilling equipment, and crews. However, throughout much of this multi-year process, the site under development will be listed as "nonproducing." It is extremely doubtful any energy company would invest millions of dollars to perform geological research, drill delineation wells, obtain government permits, and design and install complex production facilities at a site, only to be told the site has not been "diligently developed" as required by the provisions of this bill.
• Electricity mandates—H.R. 6899 would provide a 15% mandatory federal renewable electricity standard (RES). America needs more energy, and an RES that excludes clean energy technologies such as nuclear and clean coal makes no sense. The RES contained in this bill would force states that cannot meet the 15% percent standard (perhaps due to a lack of wind or sun) to purchase credits from other states, a major wealth transfer with little upside.

The Chamber renews its call to the House and Senate to take significant, meaningful, and bipartisan steps to address domestic energy production. The Chamber continues to strongly support H.R. 6709, the "National Conservation, Environment, and Energy Independence Act." H.R. 6709, sponsored by Reps. Peterson and Abercrombie, would provide a major step forward towards increasing domestic energy production without any of the controversial poison pill provisions included in H.R. 6899.

The Chamber strongly urges you to oppose H.R. 6899, the "Comprehensive American Energy Security and Taxpayer Protection Act," and may consider votes on, or in relation to, these issues in our annual How They Voted scorecard.

Sincerely,
R. Bruce Josten