October 1999

Oil and gas in Washington

U.S. federal loan program; Clinton challenged on 1996 Utah land grab

October 1999 Vol. 220 No. 10 

Charles D. Matthews, 
Contributing Editor  

U.S. oil industry loan program is now law!

While Congress was gone for its usual mid-year recess, President Clinton took time out to sign into law the Emergency Steel Loan Guarantee and Emergency Oil and Gas Guarantee Loan Act. This long-sought help came in the form of a $500-million loan guarantee program. Now, small oil and gas producers and service companies have access to a large revolving fund that stands behind needed loans made in the private market.

Qualified companies will be able to borrow up to $10 million, each, at more reasonable rates and conditions, until the total loans reach $500 million. The new law provides a government-backed repayment guarantee for 85% of each loan. To manage the fund, a $2.5-million administration appropriation has been provided, and it will sunset in five years. However, the lives of the loans can be longer.

Sen. Pete Domenici (Republican-New Mexico) deserves a major part of the credit for pushing the legislation through the Senate last June. He said about 400 oil and gas companies are expected to be helped by the program, and the average loan should be about $1.2 million.

Proposed leasing restrictions off Florida opposed. Charles Bedell, representing Murphy Exploration and Production Co., testified before the House Resources Committee’s Energy and Minerals Resources Subcommittee against H.R. 33, a bill to impose new restrictions and requirements on leasing lands offshore Florida. Speaking for the National Ocean Industries Association (NOIA) and five allied trade associations, Bedell denounced the bill as being superfluous and pointed toward the elaborate mechanism that currently governs oil and natural gas leasing and development offshore. Current law and regulations have produced a very reliable framework under which companies have invested billions of dollars, just for the right to explore and develop OCS oil and gas resources. All of this has been carried out in a system that has produced oil and gas resources that our nation needs while protecting the environment at the same time.

Bedell also said that the additional studies called for in the bill would add little to the vast amount of environmental and socioeconomic data already in hand, or to those studies continually being added to the database. He said, "The real problem is not an inadequate factual basis for OCS decision-making, but rather that facts do not matter to a general public, whose views are driven by perception."

Jay Hakes, administrator of the U.S. DOE’s Energy Information Administration, made a cogent point, when he told the hearing that Florida is the third-largest consumer of petroleum and electricity in the U.S. As the state’s population continues to grow, so will its demand for energy. That applies to the whole country.

Clinton stumbled on the Grand Staircase. About two months before the 1996 presidential election, President Clinton and his gang made a monumental grab of 1.7 million acres of mineral-rich land in Utah. They made that grandstand play for the environmentalists’ votes, no matter the cost to the nation or the Utah residents. The grab was so sneaky and controversial, that Clinton, Vice President Al Gore and Interior Secretary Bruce Babbitt and gang went to the Grand Canyon—about 150 mi from Utah — to make the big "environmental announcement" (see this column, page 49, World Oil, July 1997, for more details). The Utah governor, the state’s entire congressional delegation and other elected officials were totally shocked by the speech, because they had been assured by Babbitt just a week before the bombshell that there was no such action contemplated. But, professional environmental groups like the Sierra Club (that contributed several million dollars toward electing Democrats) certainly were consulted in advance and invited to the front row of the show.

The Utah Association of Counties and the Mountain States Legal Defense Fund subsequently filed suit in Utah, charging Clinton with several different things, including violating the Antiquities Act and exceeding his authority under the U.S. Constitution. After the oral arguments, government lawyers asked the court to dismiss the suit. They had not even tried to argue that what Clinton had done was legal. They tried to say that he could do this, because Congress had essentially ratified the President’s action by passing legislation changing the monument boundaries, appropriated money for it and rejected a bill limiting presidential power under the Antiquities Act.

In mid-August, the federal district judge in Utah strongly refused to throw out the lawsuit. In doing so, Judge Dee Benson wrote in his finding that to approve what the President did, based on the administration’s arguments to the court, would "violate the doctrine of separation of powers and disenfranchise the American voter." He said that to agree with the administration’s arguments might be the final act in a drama "in which not one branch of government operated within its constitutional authority. It could be, in effect, an unintentional conspiracy of the three branches of government to do something none of them actually did, and thereby robs the people of their voice."

Judge Benson went on to clarify his written decision. "First, the President did something he was not empowered to do. Second, Congress, lacking the votes and the will to vote directly into law what the President had done, nevertheless passed just enough legislation (to provide slight financial support and make some necessary boundary adjustments) to create an argument to the Judicial Branch for congressional ratification.

"Finally," continued Benson, "the Judiciary, by a finding of ratification, would validate the illegal set-aside (of Utah land as a monument) and recognize as valid something Congress could not have accomplished in a vote where everyone knew what they were voting on." Kenneth Smith, deputy editor of the Washington Times, wrote on August 26, 1999, that it was a monumental mistake for the administration to duck such a vote. "With Judge Benson’s help, Utah residents and Congress may get one yet." WO


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

contents   Home   current

Copyright © 1999 World Oil
Copyright © 1999 Gulf Publishing Company

Connect with World Oil
Connect with World Oil, the upstream industry's most trusted source of forecast data, industry trends, and insights into operational and technological advances.