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  • 04

    Governmental Affairs - February 2014

    Martin Frost

    The clock is ticking on this year’s Congressional session which is expected to be relatively short considering that both parties are looking toward a tight election for control of the US Senate this November and everyone will want to be back home talking to voters as often as possible.

    Let’s look at some key events that will occur pretty soon:

    1) Transition in Senate Committee leadership positions – Once the Senate confirms Sen. Max Baucus as US ambassador to China, there will be a new person as chair of the Senate Finance Committee which determines tax policy. Every indication is that Sen. Ron Wyden of Oregon, the current chair of the Senate and Energy and Natural Resources Committee, will take the gavel at Finance. Wyden would be replaced as Energy Committee chair by Sen. Mary Landrieu of Louisiana. It is expected that all this could occur during the month of February.

    Wyden wants to move tax reform legislation to the floor but it is questionable that this could occur during the time remaining in the 2014 session. Wyden has a history as a reformer who would like to act on a bipartisan basis but getting agreement between Democrats and Republicans on something as contentious as tax reform will not be easy. Wyden will be looking for ways to compromise on major issues facing the Finance Committee which means that virtually everything will be on the table. Landrieu is strongly pro-oil and -gas and will be an ally on the Energy Committee.

    2) Tax Reform in the US House of Representatives – Ways and Means Chairman Dave Camp of Michigan has repeatedly said that he wants to present a chairman’s mark (draft bill) to his Committee on tax reform this year even if the committee does not actually take it up for a vote. If he does release a chairman’s mark, it is important that Camp’s draft does not change treatment of Intangible Drilling Costs (IDCs) or percentage depletion because his mark could well be the starting point for tax reform in the next Congress.

    The House GOP leadership is leery of Camp issuing a chairman’s mark because it undoubtedly will dramatically change some popular tax provisions since you can’t get to a lower rate (28 percent or 25 percent) without eliminating a number of current tax preferences . If Camp publishes a chairman’s mark, incumbent Congressmen will then be asked whether they support eliminating some very popular provisions which could cause them significant grief in the coming election if they side with Camp. The key question is whether the House GOP leadership can convince Camp not to move forward now and have Congress deal with tax reform after the elections. All this will probably play out during February.

    3) Retirements – A number of key Members of the US House in both parties have announced that they will not run for re-election this year. Most observers think that these retirements are driven by bipartisan disgust over how little Congress has been able to accomplish recently. Filing deadlines differ from state to state. Some states like Texas have early primaries, and other states like New York have primaries later in the year. These retirements are important because they permit younger members to move up into positions of leadership more quickly than otherwise possible. Some of the recent retirements have occurred in safe, one-party districts so that they won’t affect the partisan balance in Congress but they will affect who gets to call the shots. Some other retirements will give the opposing party the chance to pick up a seat or two. These retirement announcements will occur on a rolling basis over the next few months as filing deadlines occur.

    4) President Obama’s use of executive orders – President Obama is attempting to bypass Congress by using Executive Orders to implement policy changes. This is particularly true in the areas of environment and health care. Republicans will go to court to challenge his legal authority to issue these orders. This will play out over a number of months but should be watched closely by the industry.

    Never a dull moment in Our Nation’s Capitol.

    Martin Frost is a former United States Congressman and DEPA lobbyist. Frost is a keen observer of national politics who has held a number of leadership positions for the Democratic Party and is considered one of the party’s top strategists.

  • 30

    DEPA Chairman testifies before Senate Energy and Natural Resources Committee


     WASHINGTON, DC – Today on Capitol Hill, Harold Hamm, Chairman of the Domestic Energy Producers Alliance (DEPA) and Continental Resources Chairman and Chief Executive Officer, testified before a full hearing of the Senate Energy and Natural Resources Committee that lifting the 40-year-old ban on domestic crude oil exports wouldn’t increase fuel prices for US consumers.

    In his testimony, Hamm addressed what he called false claims that lifting the ban would raise the price of gasoline for American consumers, stating, “The popular belief is that we’re not exporting petroleum. Nothing could be further from the truth. Major oil companies are exporting refined petroleum products like gasoline and diesel with no limitations. Why shouldn’t independent producers be allowed to do the same? Are we to be relegated to forever being their milk cows?”

    The DEPA leader added, “Over the years, some have argued granting US crude oil producers free access to world markets would drive up the cost of gasoline and other petroleum products for American consumers. The opposite is actually true. By imposing trade restrictions on a single segment of the energy industry, namely domestically produced crude, our government is arbitrarily subsidizing some US refineries – many of which are foreign-owned – by giving them the ability to source American oil at prices well below the world market price, while at the same time giving them the ‘green light’ to sell petroleum products into higher-priced international markets.”

    Hamm went on to explain that opening up foreign markets to US crude oil exportation would be a hugely significant policy step toward American energy independence.

    “In October 2011, DEPA put a stake in the ground and predicted American energy independence by 2020. America’s independent oil and gas producers have unlocked the technology and resources that make this a reality. As a result, we can today mark the recent 40th anniversary of the OPEC oil embargo by ending the era of oil scarcity in America and, along with it, ending the last of shortsighted regulations passed during that period,” he said.

    DEPA represents a majority of the individuals and companies responsible for the current renaissance in American oil and natural gas production. More than 18,000 independent producers – the huge majority of which are small or medium-sized, private companies – drill about 95% of US oil and natural gas wells and account for 67% of US oil and gas production.

    Hamm’s complete testimony, as prepared for delivery, can be viewed here.

  • 01

    Governmental Affairs - January 2014

    Martin Frost

    I know this is hard to believe – just when you thought that the long-running issue of tax reform could not take another twist, it suddenly did.  Right before Christmas, Senate Finance Chairman Max Baucus of Montana was nominated by President Obama as the next US ambassador to China.

    Baucus had been a major driving force behind tax reform and had been working closely with his House counterpart, Ways and Means Chairman Dave Camp of Michigan. It is widely expected that Baucus will be quickly confirmed by his Senate colleagues after the first of the year and that he will leave the Senate to take up his new job in China.

    Baucus is expected to be replaced as chairman of the Finance Committee by Senator Ron Wyden of Oregon, also a proponent of tax reform; however, most observers now believe that the tax reform issue will be put on the back burner until the new Congress convenes in January of 2015.

    By that time, Camp who is term-limited as chairman, could be replaced by the current Budget Chair Paul Ryan of Wisconsin, though other ambitious Republicans could turn this into a contest inside the Senate GOP caucus.

    Assuming for sake of argument that Wyden and Ryan emerge as leaders of the two tax-writing committees in the next Congress, it is worth taking a minute to examine the nature of their working relationship and personal political approaches.

    Both have a reputation for innovation and an interest in seeking bipartisan solutions. In other words, tax reform could be a “live round” in the next Congress. The good news is that both Wyden and Ryan have expressed an appreciation for the role of the domestic oil and gas industry in making American less dependent on imported oil. Wyden also is a strong proponent of changing the tax code to provide a “level playing field” for renewable energy sources as our country addresses its energy needs in the future.

    Ryan’s role in seeking bipartisan solutions was put on display during the recent successful round of budget negotiations he headed along with Democratic Senator Patty Murray of Washington. Wyden’s innovative role has also been demonstrated in his campaign to place limits on wide-scale electronic records collection by the National Security Agency. Neither legislator is to be taken lightly.

    There’s history of the two of them working together. In 2011, they teamed up to offer legislation designed to change the way Medicare is run in the future, challenging political orthodoxy on the subject. Their legislation didn’t go anywhere but now they could both be in positions to advance it in Congress.

    This game of musical chairs is not yet over. Baucus could decide to stay in Congress for months more to work on tax reform and Ryan could lose out next Congress in his effort to head Ways and Means. Also, the coming Congressional campaign could either elevate or deemphasize tax reform as an issue in 2015.

    However, if all works as currently projected, the not-so-odd couple of Ron Wyden and Paul Ryan could be the Oscar and Felix of the next Congress. Let the dialogue continue.

    Martin Frost is a former United States Congressman and DEPA lobbyist. Frost is a keen observer of national politics who has held a number of leadership positions for the Democratic Party and is considered one of the party’s top strategists.