Watching Government The rest of the story

With Patrick Crow from Washington, D.C. [email protected] Last week President Clinton deftly took some of the credit for a bill that grants owners of new federal leases a 7-year limit on back royalty collections. Clinton signed the bill before officials of 17 oil firms and six trade groups during a break in his Wyoming vacation.

Aug. 19, 1996

3 min read

Last week President Clinton deftly took some of the credit for a bill that grants owners of new federal leases a 7-year limit on back royalty collections.

Clinton signed the bill before officials of 17 oil firms and six trade groups during a break in his Wyoming vacation.

He said "By simplifying the way that royalties are collected and clarifying existing laws, this law will speed the collection of millions of dollars in federal and state revenues, create many new jobs for America's workers, and most important of all, will help to reduce our own nation's reliance on foreign oil and gas."

The real story

Actually, the administration fought the bill most of the way. And when Clinton vetoed a federal budget bill that contained the royalty provisions last year, the White House specifically complained they would "invite evasion by making collection more difficult and costly" (OGJ, Dec. 18, 1995, p. 30).

Clinton also fudged a little when he declared the bill "passed with unanimous bipartisan support in both houses of Congress.''

True, there was no recorded opposition. It passed by voice votes on both floors. But its main sponsors, Sen. Don Nickles of Oklahoma and Rep. Ken Calvert of California, are Republicans.

And debate in the House resources committee was quite partisan. All Republicans present voted for the bill; only three of 10 Democrats did. The seven dissenters filed a strong protest that argued the bill was unnecessary.

The administration's major complaint with the bill was a provision allowing the Interior Department to delegate its royalty collection activities to producing states.

The federal government splits its onshore royalties with the states after deducting collection expenses. Some states, Wyoming in particular, think they can do the job much more cheaply (OGJ, Aug. 7, 1995, p. 21).

Interior theoretically can delegate collections now, but is not keen on the idea. As Sen. Craig Thomas (R-Wyo.) noted, "Unless Congress is willing to push the Department of Interior to allow the states to assume the royalty collection functions, it will never happen."

The House bill said Interior must delegate collections to the states; the Senate bill said it could. The White House finally agreed to accept the Senate bill.

The law also would let operators of marginal properties prepay their estimated federal royalties for the rest of the lease term, avoiding yearly accounting.

Clinton, industry visit

When he met with the oil industry people last week, Clinton cited his administration's energy policy achievements, including royalty relief for heavy oil production and the export of Alaskan North Slope crude.

The industry people raised several other issues: more relief for marginal wells, better access to federal lands, new pipelines for Rocky Mountain production, natural gas marketing cooperatives, and federal regulatory certainty.

Marathon Oil Co. Pres. Victor Beghini told Clinton that the best day of a producer's life is when he gets a federal lease, and the worst day is when he discovers what he must do before he can drill on it.