5-230 10:00 4/10 Baucus Wallop R Long Boren Nickles R Armstrong R Pryor Bentsen Dole R Kassebaum R re : finance cmte oil issues all attended (crossed out) 451-0831 818 795-1107 Bilbury Lisa Soder 101 N (illegible) rd Alex 22314 (end crossed out) (page 2) BOB DOLE KANSAS United States Senate OFFICE OF THE MAJORITY LEADER WASHINGTON, DC 20510 April 10, 1986 MEMORANDUM TO: SENATOR DOLE FROM: RICH BELAS SUBJECT: POSSIBLE OIL INDUSTRY AMENDMENTS At your meeting at 10:00 a.m., Senator Boren will probably bring up the attached list of issues. I have spoken at length with Bob Woody on behalf of Dick Smith. He has told me that their first priority would be to remove the 50 percent net income limitation and second priority would be to repeal the proven property transfer rule. They recognize that the latter would be more difficult to justify. They, of course, would like the Windfall Profit tax to be repealed. Repeal of the net income limitation should not have any significant revenue impact, given the current state of the energy sector. I have not yet been able to get an official estimate from Joint Tax. According to Joint Tax staff, repeal of the Windfall Profit Tax would cost $7.4 billion over five years compared to the Packwood package, using the CBO assumptions they normally use. Using the current price of oil adjusted for inflation, the revenue impact would be negligible. Att. (page 3) DAVID BOREN OKLAHOMA RUSSELL BUILDING WASHINGTON, DC 20510 621 NORTH ROBINSON OKLAHOMA CITY, OK 73102 440 SOUTH HOUSTON TULSA, OK 74127 MUNICIPAL BUILDING SEMINOLE, OK 74868 Joyce MEMBER COMMITTEE ON FINANCE COMMITTEE ON AGRICULTURE, NUTRITION AND FORESTRY COMMITTEE ON SMALL BUSINESS SELECT COMMITTEE ON INTELLIGENCE United States Senate WASHINGTON, DC 20510 April 2, 1986 (handwritten) Betty Joyce ? (end handwritten) The Honorable Robert Dole United States Senate Washington, D.C. 20510 Dear Bob: The situation has become so critical because of the impact of the falling oil prices on striper productions that immediate action is needed to prevent the premature plugging of wells. I am hoping that the five of us on the Finance Committee (highlighted) (Dole, Long, Bentsen, Wallop and Boren) from oil producing states can get together Tuesday to consider what we might do. (end highlight) Attached is a list of several proposed options. I would greatly value your thinking about any or all of them. (handwritten) NICKLES (end handwritten) My secretary will be calling your secretary very shortly to see if we can make arrangements for a meeting on Tuesday. It might be advisable for each of us to include the tax legislative aides from the five offices. Sincerely, (signature) David L. Boren United States Senator DLB/lr 4/7 Copy to Joyce 10:00 Thursday S-230 April 10th (page 4) PROPOSED OPTIONS 1. Provision of a tax credit for stripper production calculated as the difference between cost of production and market price. 2. Repeal of the proven property transfer rule. 3. Repeat of the 50% of net income limitation. 4. Extension of the depletion allowance for all stripper production regardless of who owns the property. 5. Restoration of the depletion allowance to 22.5% from the current 15%. 6. Repeal of the so-called windfall profits tax. 7. Reclassification of geological and geophysical costs and unrecoverable surface casing expenditures as intangible drilling costs. 8. Repeal of the fuel use act. And any other ideas pertaining to the improvement of the Senate Finance Committee draft on tax reform as it relates to the oil and gas industry.