Senate and House lawmakers are expected to vote this week on a$15-billion emergency funding measure that, among other things,would provide some long-sought relief to natural gas and oilproducers.

Although a number of energy friendly proposals were strippedfrom the legislation, the bill still contains language that woulddelay the Minerals Management Service’s (MMS) implementation of thefinal oil royalty valuation rule by four months and wouldstreamline the processing of coalbed-methane lease permits. TheHouse is expected to take up the bill today, while a Senate vote islikely on Thursday.

Stripped from the legislation were proposals that would haveprovided emergency loans to producers, offered millions of dollarsin producer royalty relief, and excused the interest owed byproducers on Kansas ad valorem tax refunds to customers. Theseissues, which were deleted to assure President Clinton’s approvalof the spending bill, are “by no means dead,” however, said PatrickKelly, a spokesman for the Independent Petroleum Association ofAmerica (IPAA). He said legislators promised that the issues,especially the emergency loans and royalty relief, would berevisited soon in another legislative vehicle.

From an energy standpoint, the IPAA views the emergency spendinglegislation as half full rather than half empty, he noted. “Weobviously are very pleased that the moratorium language [for theoil valuation rule] is still in there…Coalbed methane is anothervery important component.”

The original intent of the legislation was to provide emergencyfunding for the war in Yugoslavia, but it has evolved into avehicle in which lawmakers are seeking funding for their own petprojects, including energy.

Sen. Kay Bailey Hutchison (R-TX) successfully managed to keeplanguage in the bill that would defer until Oct. 1 theimplementation of new MMS rules that would boost the federalroyalties paid on crude production. The new rules had beenscheduled to go into effect on June 1. Keeping this in theemergency spending legislation was a “big plus” for producers,Kelly said.

Also still in the bill is a provision that would provide about$1 million to help speed up and streamline the processing ofcoalbed-methane lease permits, particularly in Montana and Wyoming,he told Daily GPI.

Eliminated from the bill was an amendment proposed by Sen. PeteDomenici (R-NM) that would establish a $500 million program toextend emergency loans to small oil and gas producers that havebeen hit by rock-bottom oil prices. Also falling by the wayside wasan amendment by Sen. Jeff Bingaman (D-NM), which was “closely tiedto the Domenici proposal,” that would offer $125 million worth ofroyalty relief to independent producers. Under the Bingaman plan,small producers would be able to decrease their royalty payments bythe like dollar amount that they spend to boost production output.The IPAA believes the Domenici and Bingaman amendments willre-surface later in other legislation, Kelly said.

But the future is a little bit more clouded for a proposal bySens. Sam Brownback and Pat Roberts, both Kansas Republicans, thatwould forgive $200 million in interest payments owed by gasproducers on $140 million in Kansas ad valorem tax refunds tocustomers. The Federal Energy Regulatory Commission originallyruled that producers could pass the state tax on to theircustomers, but it later reversed its decision, thus leavingproducers who purchased gas produced in Kansas in the 1980s to notonly pay customer refunds but interest also. Producers have arguedthey shouldn’t be required to pay the interest since theirnon-payment of the ad valorem tax was based on a faulty FERCdecision. The IPAA’s Kelly questioned whether the hot-bed issuewould be raised later by legislators.

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