Oil and gas in Washington
La Niña hits WashingtonThe news media have been saturating us with terrible stories and pictures of the climatic chaos being created by the infamous Pacific Ocean currents that are still moving eastward. Most of North America, it seems, has been shocked by El Niño's (Spanish for "Little Boy Child") devastating effects. At the same time, however, the Mid-Atlantic region of the United States has been breaking all-time records for relatively moderate weather — cherry blossoms were blooming in February. In Washington, the media have flooded everyone with terrible stories of political chaos created by devastating allegations about activities in the White House with a new "La Niña" ("Little Girl Child"). For the remainder of 1998, the quality and productivity of the 105th Congress, as well as the outcome of mid-term elections this fall, will seriously affect oil and gas. Overview of industry issues. Recently, NOIA invited two important guests from Capitol Hill to talk with a group of its local members about immediate and long-term committee priorities. In outlining the remainder of this critical election year, both Bill Condit, Staff Director of the House Energy and Mineral Resources Subcommittee, and Mike Poling, Natural Resources Counsel for the Senate Energy Committee, fulfilled their missions very well. In the House. Condit believes the thorny royalty-in-kind (RIK) issue will be a key item before the House subcommittee. Drafting of important legislation to alleviate the problem was completed in early March. Almost immediately, the bill was introduced in the House by its cosponsors, Rep. William M. (Mac) Thornberry (Republican-Texas) and Energy and Minerals Resources Subcommittee Chairman Barbara Cubin (Republican-Wyoming). Hearings began March 19 on the bill, with a second hearing day set for a later date. The MMS also has been notified of the subcommittee's intent to move the bill. If readers remember last year during the House debate on the Interior Appropriations bill, House Resources Committee Chairman Don Young (Republican-Alaska) promised Florida's Rep. Porter Goss (Republican) that his panel would hold a hearing this year on OCS moratoria. Condit said the hearing is planned for May or June before a subcommittee of the Resources Committee, or perhaps a full committee oversight. In either case, it will be held with balanced pro and con representations from witness panels. The committee is interested in tying OCS impact assistance into that hearing, as well as economic, environmental and other benefits realized from a strong OCS oil-and-gas industry. He told the group that the subcommittee will monitor MMS's implementation of its geological and geophysical rulemaking, and activities related to deepwater development. That's a heavy load. In the Senate. Mike Poling did an excellent job, too, of highlighting the outlook from his committee's side of the Hill. He began by focusing on OCS impact assistance. Both Chairman Frank Murkowski (R-Alaska) and Sen. Mary Landrieu (D-Louisiana) have expressed interest and have met to discuss strategy to get it moving. The committee also will use its oversight responsibility to monitor MMS activity regarding crude oil valuation and future royalty issues. Poling mentioned Murkowski's strong, continuing interest in getting attention directed toward incentives that would support Arctic OCS activity through exploration credits and development incentives. Did repealing NGPA also repeal producers' Section 29 tax credits? Recently, 15 national and regional oil-and-gas associations filed a "Friend of the Court" brief in the Neilson-True vs. Internal Revenue Service (IRS) case to find the answer to that question. In this case, the court ruled that an individual well determination made by the Federal Energy Regulatory Commission (FERC) was necessary before a producer can use the Section 29 tax credit. This was based on the fact that Section 503 of the Natural Gas Policy Act (NGPA) requires a well determination as a prerequisite for Section 29 eligibility. But when NGPA was repealed, FERC terminated the review process. Producers attempting to obtain the credit for pre-1993 wells or post-1992 uphole completions currently have no agency to determine whether a well qualifies. The appeal and recent legal brief of the united oil and gas associations argued that Congress did not intend to repeal the tax credit when it repealed NGPA. Now, perhaps, the answer for everyone may be decided. Energy Policy and Conservation Act Extension. Right before Congress recessed for a 10-day tribute to Washington's and Jefferson's birthdays (combined as Presidents' Day), the Senate concurred in an amendment to H.R. 2472, to extend certain programs under the Energy Policy and Conservation Act (EPCA), with the Coverdell (for Murkowski) Amendment in the nature of a substitute. The Senate then insisted on its amendment and requested a conference with the House. All of this was done by voice vote. That sounds like a lot of gobbledygook, but that's the way things are done when Congress is in session. Primary purpose of these actions was to extend the authorization for two vital energy
security measures that have expired — the Strategic Petroleum Reserve and U.S.
participation in the International Energy Agency. Antitrust exemptions in EPCA also will be
changed to comply with current IEA policy.  Charles D. Matthews is president of Charles Matthews & Co., consultants and advocates on government relations, Arlington, Virginia.
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