From the Texas Tribune: Texas Supreme Court Grapples With Billion-Dollar Question

Another issue that might end up on the agenda next session.

- Click here for the article.

With billions of dollars at stake, the Texas Supreme Court heard arguments Tuesday in a tax showdown whose outcome could shake up the next legislative session while straining the historically friendly relationship between state lawmakers and the iconic oil and gas sector.

Throughout a spirited debate over arcane accounting rules and oil-tinged science, the justices offered few clues as to how they might rule.

“They’re all great poker faces,” said James LeBas, an economist with the Texas Oil & Gas Association and a former chief revenue estimator for Texas, following arguments.
The case ultimately focuses on a single question: Are metal pipes, tubing and other equipment used in oil and gas extraction exempt from sales taxes?

Texas Comptroller Glenn Hegar has warned state lawmakers that a yes to that question, brought by Midland-based Southwest Royalties in an appeal of a lower court’s ruling, could trigger a flood of refunds that would wipe out the state’s projected $4 billion budget surplus.

“This one’s as big as they come,” the Republican said ahead of the arguments.

From TaxPayers for Common Sense: Political Footprint of the Oil and Gas Industry Lobby - April 2014

Here's a look at the number of ex-members of Congress who have lobbied for the oil and gas industry since leaving office. It helps explain the industry's influence.

- Click here for the report. 

Last year, the oil and gas industry spent $144.7 million, or more than $396,000 per day, lobbying the U.S. Congress and federal agencies, according to the Center for Responsive Politics. It employed 763 lobbyists, nearly two for each member of the U.S. House of Representatives. More than 60 percent of these lobbyists were “revolving door” personnel, including former members of Congress, and Congressional staff. The industry has also spent more than $15 million in political campaign contributions since the beginning of 2013.

The oil and gas industry boasts an impressive roster of hired guns. Among the lobbyists working for the industry, 23 lobbyists were former Members of Congress, including 15 who had served on a relevant Committee (e.g. the Senate Energy and Natural Resources Committee). These include:

Former Senator Blanche Lincoln (D-AR): Lincoln served on the Senate Finance Committee and the Senate Energy and Natural Resources Committee. Her firm, Lincoln Policy Group, lobbies on behalf of the Interstate Natural Gas Association of America and the Valero Energy Corporation.

Former Senator Trent Lott (R-MS): Lott served as the Senate Majority Leader and as Chairman of the Senate Rules and Administration Committee. He now works for the international law firm Patton Boggs LLP, which represents Exxon Mobil and Royal Dutch Shell, among other clients.

Former Senator Don Nickles (R-OK): Nickles served on the Senate Finance Committee and the Senate Energy and Natural Resources Committee and was the Senate Majority Whip. His firm, The Nickles Group, LLC, lobbies on behalf of the Anadarko Petroleum Corporation and Exxon Mobil. Nickles has also served on the Board of Directors of the Chesapeake Energy Corporation and currently serves on the Board of Directors of the Valero Energy Corporation.

In addition, at least 48 lobbyists were former White House employees, 20 worked at the U.S. Department of Energy, and 10 worked at the U.S. Department of the Interior. These lobbyists include former high-level agency executives (e.g. Assistant Secretaries). 

From OpenSecrets: Senate Keystone “Yea” Votes Took In Six Times More Oil & Gas Money Than Opponents

Here's the story. It fits with this week's look at interest group influence.

Senate Democrats successfully blocked a bill Tuesday that would have approved construction of the Keystone XL pipeline. The controversial measure fell one vote shy of overcoming a filibuster, with 59 senators supporting it and 41 opposing. The vote followed the bill’s approval in the House by a much wider margin, with 252 lawmakers voting to advance the pipeline.

The vote largely fell along party lines. All Senate Republicans supported construction of the pipeline but they were joined by 14 Democrats, including three of the four Democrat incumbents who lost their re-election bids earlier this month. For Sen. Mary Landrieu (D-La.), the bill’s main sponsor, the vote was considered an important test of her effectiveness in advance of a Dec. 6 runoff that will determine whether she keeps her seat. In the House, 31 Democrats crossed the aisle to side with the Republican majority.

Here's the breakdown of contributions - red indicates money to Republican senators, blue to Democrats.

Denton votes to ban fracking in the city. The oil industry is not very happy about it.

The voters in Denton chose to ban fracking in the city, and neither the oil industry or state regulators are happy about it. It's a good example of not only local - state conflict in the city, but of the limits of democracy.

Denton, Texas Voters Are First In State To Ban Fracking.
- Read this for background. Similar bans were on the ballot in other cities, some passed some didn't.

How the Denton Fracking Ban Could Work.- Some detail on the initiative process, how this got to the ballot to begin with.

Denton Voted To Ban Fracking. So Now What?- Responses by industry, the state and landowners were expected.

Denton Fracking Ban Could Spur Wider Legal Clash.- The current conflict was anticipated.

Texas Oil Regulator Says It Will Not Honor Town’s Vote To Ban Fracking.
- The chair of Railroad Commission will continue to issue permits to drill in the city.


First Lawsuits Filed Over Denton's New Fracking Ban.
- Details here on the lawsuits filed by affect groups.

From the TSHA: Historic World War II pipelines sold

The Texas State Historical Association tells us that on this day in 1947 the Big Inch and Little Inch pipelines were sold by the US government to a private company - Texas Eastern Transmission Corporation, which was headquartered in Houston. Both pipelines also connected Houston with the northeast, which helped solidify Houston as the center of the oil and gas industry.

This might be an interesting read for both 2305 and 2306 students. 2305 students should consider the interplay of interests involved in the construction of the pipeline before and during WW2, and the decision about what to do with the pipeline once the war was over. 2306 students ought to think about the role government policies played in the development of the local area and the degree to which local power brokers were able to ensure that these policies benefited them, as well as the local area.

WW2 was very good for the local economy and the business interests located here.

Here's the note sent out by the TSHA:

On this day in 1947, the Big Inch and Little Big Inch, two strategic pipelines laid during World War II from East Texas to the Northeast, were sold by the U.S. government to a private company. Secretary of the Interior Harold Ickes realized as early as 1940 that shipment of petroleum to the Northeast by tankers would be impossible in time of war because of German submarines. In 1941, at Ickes's urging, oil industry executives began to plan the building of two pipelines. One, twenty-four inches in diameter, called the Big Inch, transported crude oil. The other, twenty inches in diameter, called the Little Big Inch, transported refined products. The Big Inch ran from Longview to Southern Illinois, thence to Phoenixville, Pennsylvania. Twenty-inch lines continued from there to New York City and Philadelphia. The Little Big Inch began in the refinery complex between Houston and Port Arthur and ended in Linden, New Jersey. Together the pipelines carried over 350 million barrels of crude oil and refined products to the East Coast before the war in Europe ended in August 1945.

And from the TSHA entry on the Big Inch and Little Inch Pipelines:

After the war, the pipelines became the focus of a clash of interest groups, with the oil and gas industry wanting to convert them to natural-gas pipelines and the railroad and coal industries opposing this. The Surplus Property Administration, given the task of determining future use, hired an engineering firm to study options; this study recommended that the pipelines be converted to natural-gas transmission. At the same time the United States Senate held hearings on their future use. In January 1946 the SPA recommended that first preference should be to continue use as in the war to ensure availability of the lines in a national emergency. However, by June 1946 the War Assets Administration announced an auction for the lines. All bids were ultimately rejected because no defined use preference had been established. After a strike by coal miners in November 1946 the WAA solicited bids to lease the lines, with Tennessee Gas and Transmission Company awarded a lease for natural-gas use to run from December 3, 1946, to April 30, 1947. Once it was established that the lines were viable for natural-gas transmission, the WAA again offered them for auction. The high bid of $143,127,000 came from a new corporation, Texas Eastern Transmission Corporation, formed by George Rufus and Herman Brown and their partners. The purchase was final on November 14, 1947. As of 1993, Texas Eastern had its headquarters in Houston.

An energy regulations "fixer"

The Chronicle ran a Sunday profile of a woman who has made a career of advising oil companies on how to navigate the federal regulatory process. She's a fixer, someone who has a good understanding of hwo a specific institutional arrangement works and offers that knowledge to clients. Worth a look to see how policies regarding the personal relationships that can determine how public policies are actually implemented.

"Jodie is legendary in my mind," said Frank Paskewich, a Coast Guard veteran who was captain of the port in New Orleans and now is executive director of the spill oil response cooperative Clean Gulf Associates. "Everyone knows her. She has single-handedly done more for the exploration and production industry than anyone I have come across in the last 20 years. She is very, very knowledgeable and very up-to-date on keeping track of the pending and existing regulations, interpreting them and getting the industry to comply with the regulations."


That knowledge also draws admiration from captains of industry.

"She has a pulse on everything and anything working with the government - it gives you great confidence," said Tom Young, vice president of business development for Deep Gulf Energy. "All our operations are on federal lands and you have to have a firm understanding and great relation with the agencies; they can make or break you. She keeps up with the rules and has the relationships to get beyond the black and white to understand what makes regulators tick."

 

Texas counties bear costs of illegal dumping of oil and gas waste - the state seems unconcerned

The oil and gas boom has imposed environmental costs on counties in the state. The existing regulatory environment is not strong enough to environmental rules, and there seem to be some confusion about the jurisdiction of counties, and that of the Railroad Commission. It seems that counties want to take a more aggressive stance towards polluters than the state.

Story in StateImpact Texas

A look at the current state of the oil and gas industry

Restaurants and cultural offerings are icing on the local cake - oil and gas still power the local economy. Here's a look at the current state of the industry, taking into consideration boom underway as a result of fracking.

Will the sequester slow oil and gas drilling?

Texans on the Potomac reports that the across the board cuts mandated by the sequester will impact the Interior Department's ability to process drilling leases on public lands. Will this persuade the energy sector to get involved to stop the sequester?:

Oil and gas leasing programs are among the initiatives that could get slashed if Congress doesn’t stop automatic spending cuts set to begin March 1, a top congressional Democrat warned today.

The warning from Rep. Ed Markey, D-Mass. came as the Obama administration stepped up pressure on lawmakers to agree to a deal to avert the across-the-board spending cuts. Flanked by firefighters and other emergency responders at the White House on Tuesday morning, President Barack Obama appealed to Congress to pass a short-term fix, lest the cuts jeopardize “investments in education, health care and national defense.”

But those aren’t the only investments and programs at risk, Markey suggests. An 8.2 percent spending cut at the Interior Department would translate to fewer offshore drilling inspectors and fewer onshore drilling leases, Markey said. Permitting of oil and gas projects on public lands and waters also could slow down, Markey speculated.

“Republicans say they want to drill, baby, drill,” Markey said, invoking the GOP chant that caught on after oil price spikes in 2008. “Yet by letting the sequester go forward, Republicans in Congress will put the brakes on oil and gas development on public lands in America and reduce our ability to protect against another offshore drilling disaster.”

Obama calls for ending breaks in oil, gas and coal

From the Chron:

Obama is calling for the elimination of a dozen tax breaks for oil, gas and coal companies to raise $46 billion over 10 years. These funds would be diverted to help pay for putting 1 million electric vehicles on the road by 2025, doubling the share of electricity from clean energy by 2035 and increasing the efficiency of energy use in buildings by 20 percent.


- More from the Hill.
- And of course the oil industry isn't happy about it.

More on the MMS

They apparently allowed drilling in the gulf before required permits were obtained.

Obama calls the relationship between MMS and the Oil Industry "cozy."

Most of the oil spill seems to be hugging the gulf floor.

MMS to be Split in Two

The much maligned Minerals Management Service is about to be split in two. The part that collects royalties is to be split from the part that actually regulates wells for safety violations. The solution to many bureaucratic problems seems to be a redesign of the institutions at issue. Here's an example.

Oversight Hearings Held on Gulf Oil Spill

The House Energy and Commerce Committee's Subcommittee on Oversight and Investigations held hearings on the Gulf Oil spill.

MMS: A Captured Agency?

More evidence that the Minerals Management Service was captured by the oil industry.

Agency records show that from 2001 to 2007, there were 1,443 serious drilling accidents in offshore operations, leading to 41 deaths, 302 injuries and 356 oil spills. Yet the federal agency continues to allow the oil industry largely to police itself, saying that the best technical experts work for industry, not for the government.

Critics say that, then and now, the minerals service has been crippled by this dependence on industry and by a climate of regulatory indulgence.

Does the Oil Lobby Own Government Regulators?

Perhaps.