Oil Producers Left Out of Emergency Spending Bill

Wednesday, July 28, 1999
U.S. Senate and House negotiators have left out several programs in a nearly $15 billion emergency spending bill that would have helped U.S. oil and natural gas producers. While language was left in the spending measure to delay new royalty valuation rules on crude oil production, lawmakers rejected separate programs to provide emergency loans and other royalty relief to small oil and natural producers. Negotiators also turned down a proposal to allow natural gas producers to forgo paying hundreds of millions of dollars in interest due on refunds to customers. The original intent of the emergency spending bill, which will be voted on by the full Congress and then sent to President Clinton for his approval, was to provide money to fight the war in Yugoslavia. However, it quickly became the vehicle for lawmakers to try to attach other special interest projects, including the following energy items: Oil Royalties: Sen. Kay Bailey Hutchison (R-Texas) successfully kept in language to delay until Oct. 1 new rules from the Interior Department to increase the federal royalties oil companies pay on their crude production. Those rules were scheduled to take effect on June 1. This is the second delay Hutchison has won against the higher royalty rules, originally set to begin last October. Loans for Small Producers: Sen. Pete Domenici (R-N.M.) was unable to save his $500 million emergency loan program for small oil and natural gas producers suffering from recent low energy prices. However, congressional leaders told Domenici a vote will be taken at a later date on his loan program in separate legislation. Royalty Relief: A related $125 million program sponsored by Sen. Jeff Bingaman (D-N.M.) that would have provided royalty relief to independent oil and natural gas producers was also left out of the spending bill. Under Bingaman's program, low-volume producers would have been allowed to reduce their royalty programs by one dollar for every dollar they spent to improve their oil and natural gas output when energy prices were low. A Bingaman staffer said the senator may try to include the royalty relief program in Domenici's emergency loan legislation when it comes up for a vote. Gas Producer Refunds: Separately, lawmakers also rejected a plan by Sen. Pat Roberts and Sam Brownback, both Kansas Republicans, to forgive $200 million in interest owed by natural gas producers on $140 million in refunds due to customers. The originally $140 million was a Kansas state tax that federal regulators said two decades ago producers could pass on to their customers. However, regulators reversed their decision in 1993 and order the refunds plus interest. Roberts and Brownback said they have asked the General Accounting Office to study how any refund money is collected and distributed. A Roberts staffer also said the senator hasn't ruled out attaching refund relief to Domenici's bill.-Reuters

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