March 1999

Oil and gas in Washington

Despite impeachment distractions, Congress "stumbles" on with its business

March 1999 Vol. 220 No. 3 

Charles D. Matthews, 
Contributing Editor  

Congress stumbles on with nation’s business

The political upheaval Congress went through during the impeachment procedures earlier this year had much greater impact on the participants than most of the country understood. The final outcome of the trial and its aftermath is well known, and Slick Willy has done it again. But the partisan emotions and hurt of the members of Congress will impact on legislative activities for some time to come. The revered senator from West Virginia, Robert C. Byrd probably summed it up best in an interview with Cokie Roberts on ABC’s "This Week." He said, "There is no doubt about it in my mind that the charges against the President rise to high crimes and misdemeanors. There has been such polarization, such a division among the American people, and to remove him, does it help that? Or does it make the wound deeper?"

Energy committee told about industry’s deep troubles. While Congress’ preoccupation with the trial seemed to be all encompassing, taking care of the nation’s business was going on quietly in both the House and Senate. IPAA members came to Washington during that time to share with the Senate Energy and Natural Resources Committee and Congress a serious account of the independent oil and gas industry in severe economic trouble. They warned the committee that if some form of federal and state relief is not forthcoming this year, many independents will not be in business in 2000. A year of historically low oil prices is shaking the very foundation of the nation’s domestic oil and gas production, which if lost, could place the U.S. entirely in the hands of foreign oil producing countries.

As examples of what Congress can do to help in this crisis, the panelists strongly called for enactment of the package of oil and gas tax incentives introduced by Sen. Kay Bailey Hutchison (R-Texas) and a similar package of incentives introduced by Rep. Wes Watkins (R-Oklahoma). Hutchison’s bill (S. 325) includes a marginal well tax credit that would kick in when oil prices are low. Producers would get $3 per barrel tax credit on the first three barrels of oil production to offset the operation of marginal wells.

At the end of the hearing, Chairman Frank Murkowski said, "I hope we can provide timely and necessary relief right away." He also urged the industry to talk to their other Representatives and Senators directly about the measures lawmakers can take to help the industry.

President challenged to support producers. Rep. Lamar Smith (R-Texas) released a statement recently challenging Clinton to support a bill he has introduced to provide relief for oil and gas producers. The news release said, "The embattled oil and gas industry deserves the same relief we granted to farmers and (with which) the administration supports the steel industry." It concluded, "Oil lubricates the Texas economy. When oil prices hit crisis levels, we must act."

Rep. Smith also introduced legislation that could lead to the largest purchase of crude oil for the Strategic Petroleum Reserve since 1987. Under his bill, the government could spend $300 million to purchase 24 million barrels of oil at today’s prices, and that could lead to an average reserve fill rate of 65,000 bpd.

Impact assistance legislation introduced. Sen. Mary Landrieu (D-Louisiana) fulfilled her promise to introduce the Conservation and Reinvestment Act of 1999 (CARA) soon after the beginning of the 106th Congress. The bill, S. 25, was introduced with the same bipartisan cosponsors she had last fall, with the addition of Sen. Judd Gregg (R-New Hampshire). The bill, if enacted, will redistribute 50% of federal OCS revenues to three programs: coastal impact assistance; Land and Water Conservation Fund (LWCF) program; and state wildlife programs. The remaining 50% will remain in the Federal Treasury.

Pressure from private property owners helped the authors of S. 25 include provisions governing the purchase of land within conservation areas established by Congress. Concerns of landholders in Western States were accommodated by providing that three-quarters of the monies must be spent on land acquisition east of the 100th meridian (east of Texas). Those provisions are more restrictive than the current law governing the use of LWCF monies for federal land acquisition.

The Senate Energy and Natural Resources Committee started CARA hearings on January 27, with witnesses from Alabama, Alaska, Louisiana and Mississippi who have first-hand experience with the impacts of OCS oil and gas activities. Together, they strongly supported CARA and highlighted the benefits each state has derived from the oil and gas business occurring off their coastlines and the attendant onshore impacts resulting from that activity. Senate Energy Committee Chairman Frank Murkowski said future committee hearings will include opportunities for states that currently have moratoria on OCS development to present their views. Additional hearings are expected to focus on the LWCF and wildlife provisions of the bill, including testimony from inland states, the National Governors Association and the Administration.

A similar House proposal was introduced by House Resources Committee Chairman Don Young (R-Alaska) on February 10. The measure is very much like the one Young circulated late last year with strong bipartisan support from members such as John Dingell (D-Michigan), Billy Tauzin (R-Louisiana) and Chris John (D-Louisiana). It differs only slightly from S. 25, namely in the proportion of OCS revenues being directed to the three funding programs.

Vox populi. "Washington insiders ... used to believe the President had an obligation to tell the truth; now they believe they have an obligation to help him get away with lies." Quoted from Michael Kelly, Editor National Journal, The Washington Post, Feb. 10, 1999, Op Ed. WO


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

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