November 1998 Vol. 219 No. 11  Washington

Charles D. Matthews,  Contributing Editor

Oil patch short-changed while Congress leaves town to campaign

The political conditions currently prevalent in our nation’s capital are so fouled up, it’s difficult to stay abreast of the important happenings. It’s like Gilbert and Sullivan’s game from  The Mikado — it’s being played "on a cloth untrue with a twisted cue and elliptical billiard balls."

Congress returned from its annual August recess running far behind its legislative schedule. Members needed to get out of town, again, at least by early October, so they could rush back home to campaign for re-election. When one has spent most of his or her career in Washington, he or she learns to expect the closing weeks of a Congress to be chaotic, and legislative casualties to be strewn everywhere. But this year takes the prize for being the worst mess in generations.

The Washington Postwrote on Oct. 5, 1998, "Rarely has there been so much legislative carnage spread over so broad a political terrain and affected both parties.... The wreckage has been especially pronounced in the Senate, where rules, personalities and political imperatives have combined to create a lose-lose situation, in which both parties can block each other’s bills, but neither can pass much on its own."

Most of the furor was caused by Billy Clinton’s affair with Monica Lewinsky in the White House, and his subsequent lying under oath on several occasions and allegedly indulging in numerous other illegal activities to cover up his obstruction of justice. Finally, as a result of (special prosecutor) Ken Starr’s investigations, the House of Representatives approved, by a vote of 258 to 176, the Judiciary Committee’s request to begin a full-scale, open-ended inquiry into possible grounds for impeachment of the President. The next phase of this saga will occur after the elections on November 3.

Effect of last days of 105th Congress on petroleum companies. The major conflicts between Democrats and Republicans in the closing days centered around taxes and the final appropriation bills needed to run the government. Solution of these conflicts was made more difficult, because of the so-called riders of all sorts that were attached to the bills that seemed likely to be passed. The primary effort was to get the riders, some of them of interest to oil companies, enacted without incurring a veto by Clinton. His veto at that late date could have closed down part of the government, as he did in 1995–1996.

Tax-cut legislation couldn’t get out of the Senate. In late September, the House Ways and Means Committee reported their version of a tax-cut bill that had resulted from several months of work by most of the Republicans. They knew a large tax-cut bill required using part of the projected federal budget surplus, and to use the surplus would require waiving last year’s massive budget agreement. Democrats opposed a tax-cut bill, arguing that the surplus should be preserved until the needs of the Social Security system can be determined and protected.

The bill passed the House but died in the Senate because of the budget agreement. The Senate could not consider the bill without the support of at least 60 senators. Clinton threatened to veto any tax-cut bill that was funded with the projected surplus. That stopped it cold.

Marginal well tax credit. The industry has worked hard during this Congress to pass a marginal well tax credit bill, but it had to be attached to another bill that seemed to be going somewhere. When the tax legislation became one of the pivotal political fights mentioned above, the marginal well tax credit died again for the 105th Congress. IPAA said it will continue to work hard with the administration and Congress to develop support for the credit legislation. Many Republican leaders are said to be discussing possible early development of legislation for the 106th Congress.

Important oil and gas legislation in limbo. Congress adjourned again in early October to resume campaigning before it was too late. The adjournment was nosine die, but subject to the leadership’s call to return. Before leaving, negotiators for both houses cut the plan to buy $420 million of crude oil for the Strategic Petroleum Reserve, to work out differences in the fiscal 1999 Treasury / Postal Service appropriations. Supporters of the effort, however, continued working diligently to get the oil purchase bill into the omnibus appropriations bill. Industry won a victory on oil royalty valuation. MMS’s final date for publishing new royalty valuations calculations was extended to June 1, 1999.

House majority whip gives advice to oil industry. Rep. Tom DeLay (Republican-Texas) gave some sage advice to NOIA’s Domestic Energy Advocates (DEA) at a luncheon in Houston. Responding to a question about Clinton’s directive extending the drilling moratoria for federal waters, DeLay said the drilling moratoria issue has been such a difficult political problem because of the intense opposition to offshore development. Winning that political fight will take strong allies and lots of them. He said, "There is a real need for a broad-based conservative coalition. The Left for years have been working for each other — labor unions working for pro-abortion groups, pro-abortion groups working for environmental extremists, and so on. That is a big advantage in Washington."

The history of the oil and gas industry’s losing battle (so far) against the Left’s successful closing of almost all of America’s OCS proves DeLay’s point.

Charles D. Matthews is president of Charles Matthews & Co., consultants and advocates on government relations, Arlington, Virginia.

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