Oil and Gas Incentives - Tax Reform Meeting, May 17, 1985

Item

Other Media

lead_387_075_all_tr.docx

Extent (Dublin Core)

5 Pages

File Name (Dublin Core)

lead_387_075_all

Title (Dublin Core)

Oil and Gas Incentives - Tax Reform Meeting, May 17, 1985

Date (Dublin Core)

1985-05-17

Date Created (Dublin Core)

1985-05-17

Congress (Dublin Core)

99th (1985-1987)

Topics (Dublin Core)

See all items with this valueEnergy tax credits--Law and legislation--United States

Policy Area (Curation)

Energy

Creator (Dublin Core)

Dole, Robert J., 1923-2021

Record Type (Dublin Core)

notes (documents)

Names (Dublin Core)

See all items with this valueWallop, Malcolm

See all items with this valueBaker, Howard H., Jr. (Howard Henry), 1925-2014

Rights (Dublin Core)

http://rightsstatements.org/vocab/CNE/1.0/

Language (Dublin Core)

eng

Collection Finding Aid (Dublin Core)

https://dolearchivecollections.ku.edu/index.php?p=collections/findingaid&id=26&q=

Physical Location (Dublin Core)

Collection 007, Box 387, Folder 75

Institution (Dublin Core)

Robert J. Dole Institute of Politics, University of Kansas, Lawrence, KS

Archival Collection (Dublin Core)

Robert J. Dole Republican Leadership Collection, 1985-1996

Full Text (Extract Text)

(Page 1)
Friday, May 17, 1985
9:45a.m.
Meeting with Secretary Baker
Oil and gas incentives and tax reform
(Checkmark) Dole
(Checkmark) Simpson
(Checkmark) Domenici
(Checkmark) Nickles
(Checkmark) Symms
(Checkmark) Wallop
McClure will be here if he is in town
Heinz will not be able to attend
Gramm will not be able to attend - may be out of town
Stevens - out of town
Laxalt - will not be able to attend
(Checkmark) Secretary baker
Dick Darman
(Checkmark) Bruce Thompson
(Checkmark) Rod
(Page 2)
May 16, 1985
To: Senator Dole
From: Rod DeArment
Subject: Impact of Tax reform proposal on ouil and gas incentives
Treasury 1 proposal:
The treasury department's November tax reform plan proposed to do the following
Repeal expensing of intangible drilling costs (Including IDCs for dry holes
Revenue gain:
FY 1987 - $8.6 billion
Five-year total $32.1 billion
Repeal percentage depletion and replace with cost depletion adjusted for inflation
Revenue gain:
FY 1987 - $2.4 billion
Five-year total - $12.2 billion
Repeal expense of qualified tertiary expense
Revenue gain:
FY 87 - $57 million
Five-year total - $477 million
(Page 3)
Begin Phaseout of the Windfall Profit in 1988 rather than 1991
Revenue gain
Five-year total - $3.9 billion
The industry believes that the wholesale elimination of long-standing tax incentives will devastate the domestic oil and gas exploration and make us more dependent on foreign oil
IPAA contends that if the treasury plan had been in effect in 1984:
30,000 fewer oil and gas wells would have been drilled
Capital available to independents for drilling would have been reduced by 50% and;
No fewer than 4,000 of the 15,000 independent producers would have been forced out of business
An interstate Oil Compact Commission impact study on the impact of the treasury 1 package on the Kansas economy estimated that the repeal of IDC expensing alone would:
Cause the loss of 12,810 Kansas jobs because of reduced drilling
Cause 17,994 fewer wells to be drilled in Kansas; and
Cut the number of drilling rigs operating in Kansas by 57%
The same IOCC study concluded the loss of percentage depletion for stripper wells would:
Cause the premature abandonment of 3,945 Kansas stripper wells;
Cause the loss of 7,146 jobs in petroleum and other industries in Kansas; and
Reduce State severance tax payment by more than $3 million.
Department of Energy Proposal
Several weeks ago energy secretary Herrington called a meeting of a number of key energy industry representatives to propose the following:
Permit dry hole costs to continue to be expressed;
Restore percentage depletion for stripper wells only; and
(page 4)
Require the IDCs be written off over 5 years under the new depreciation system
The DoE officials apparently expected the industry to endorse the tax package if these changes were made, but this proposal was universally and soundly rejected by those in attendance
Possible Compromise:
Based on discussions with the independents, the following might be an acceptable compromise:
1. a. repeal IDC expensing and
b. replace with an expansion of R&D provision under which dry hole costs and unrecoverable costs to the "casing point" would be expensed; and
c. Unrecoverable cost, after the "casing point" leasehold costs and tangible depreciated over 5 years.
2. a. Percentage depletion generally repealed; and
b. unrecoverable costs would be recovered as ordinary income, but other net income treated as capital gain, and
c. an election for continuing percentage depletion for stripper wells would be permitted
(Page 5)
Subject: oil and gas incentives and tax reform
Dole, Wallop + baker
Date: Friday, may 17
Time: 3:00 (crossed out) 11:00 (Crossed out)
Location: 9:45
Sometime tomorrow
Republican Leadership
Senator
Position
Invited
Yes
No
Armstrong (Checkmark)
Policy-Chairman - 2084
(Checkmark)
WEB

Chafee
Conference-Chairman



Cochran
Conference-Secretary



Dole (Boxed) (Checkmark)
Majority Leader
(Checkmark)
(Checkmark)

Heinz
Senatorial Comm.-Chairman



Simpson (Boxed) (Checkmark)
Asst. Majority Leader 2792
(Checkmark)
(Checkmark)

Thurmond
President Pro Tempore




Committee Chairman
Senator
Committee
Invited
Yes
no
ABDNOR
Joint Economic



ANDREWS
Select - Indian Affairs



DANFORTH
Commerce



DOMENICI (Boxed) (Checkmark)
Budget 7093
(Checkmark)
(Checkmark)

DURENBERGER
Intelligence



GARN
Banking



GOLDWATER
Armed Services



HATCH
Labor



HATFIELD
Appropriations



HEINZ (Boxed) (Checkmark)
Special - Aging 7744
WCB (Checkmark) Not sure


HELMS
Agriculture



LUGAR
Foreign Relations



MATHIAS
Rules and Administration



McCLURE (Boxed) (Checkmark)
Energy Jane 1003
(Checkmark) web
If X in town
Not sure
MURKOWSKI
Veterans Affairs



PACKWOOD ?
Finance



ROTH
Governmental Affairs



RUDMAN
Select - Ethics



STAFFORD
Environment



THURMOND
Judiciary



WEICKER
Small Business




Republicans
BOSCHWITZ
COHEN
D'AMATO
DENTON
EAST
EVANS
GORTON
GRAMM (Boxed, Checkmark) NO 2934
GRASSLEY
HAWKINS
HECHT
HUMPHREY
KASSEBAUM
KASTEN
LAXALT (Checkmark) NO 1057
MATTINGLY
McCONNELL
NICKLES (Boxed, Checkmark) 5754 OK
PRESSLER
QUAYLE
SPECTER
STEVENS (Checkmark) NO 3004
SYMMS (Checkmark, boxed) W.C.B.
TRIBLE
WALLOP (Boxed, Checkmark) WCB
WARNER
WILSON
(Break)
Democrats
BAUCUS
BENTSEN
BIDEN
BINGAMAN
BOREN
BRADLEY
BUMPERS
BURDICK
BYRD
CHILES
CRANSTON
DeCONCINI
DIXON
DODD
EAGLETON
EXON
FORD
GLENN
GORE
HARKIN
HART
HEFLIN
HOLLINGS
INOUYE
JOHNSTON
KENNEDY
KERRY
LAUTENBERG
LEAHY
LEVIN
LONG
MATSUNAGA
MELCHER
METZENBAUM
MITCHELL
MOYNIHAN
NUNN
PELL
PROXMIRE
PRYOR
RIEGLE
ROCKEFELLER
SARBANES
SASSER
SIMON
STENNIS
ZORINSKY
(Break)
566-2037
Dick Darman
Bruce Thompson
(Break)
Administration:
Jim Baker - web
4 meeting with POTUS
4:30 Houston Tomorrow
Return late Wed.
Cabinet mtg and another mtg with President

(Page 1)
Friday, May 17, 1985
9:45a.m.
Meeting with Secretary Baker
Oil and gas incentives and tax reform
(Checkmark) Dole
(Checkmark) Simpson
(Checkmark) Domenici
(Checkmark) Nickles
(Checkmark) Symms
(Checkmark) Wallop
McClure will be here if he is in town
Heinz will not be able to attend
Gramm will not be able to attend - may be out of town
Stevens - out of town
Laxalt - will not be able to attend
(Checkmark) Secretary baker
Dick Darman
(Checkmark) Bruce Thompson
(Checkmark) Rod
(Page 2)
May 16, 1985
To: Senator Dole
From: Rod DeArment
Subject: Impact of Tax reform proposal on ouil and gas incentives
Treasury 1 proposal:
The treasury department's November tax reform plan proposed to do the following
Repeal expensing of intangible drilling costs (Including IDCs for dry holes
Revenue gain:
FY 1987 - $8.6 billion
Five-year total $32.1 billion
Repeal percentage depletion and replace with cost depletion adjusted for inflation
Revenue gain:
FY 1987 - $2.4 billion
Five-year total - $12.2 billion
Repeal expense of qualified tertiary expense
Revenue gain:
FY 87 - $57 million
Five-year total - $477 million
(Page 3)
Begin Phaseout of the Windfall Profit in 1988 rather than 1991
Revenue gain
Five-year total - $3.9 billion
The industry believes that the wholesale elimination of long-standing tax incentives will devastate the domestic oil and gas exploration and make us more dependent on foreign oil
IPAA contends that if the treasury plan had been in effect in 1984:
30,000 fewer oil and gas wells would have been drilled
Capital available to independents for drilling would have been reduced by 50% and;
No fewer than 4,000 of the 15,000 independent producers would have been forced out of business
An interstate Oil Compact Commission impact study on the impact of the treasury 1 package on the Kansas economy estimated that the repeal of IDC expensing alone would:
Cause the loss of 12,810 Kansas jobs because of reduced drilling
Cause 17,994 fewer wells to be drilled in Kansas; and
Cut the number of drilling rigs operating in Kansas by 57%
The same IOCC study concluded the loss of percentage depletion for stripper wells would:
Cause the premature abandonment of 3,945 Kansas stripper wells;
Cause the loss of 7,146 jobs in petroleum and other industries in Kansas; and
Reduce State severance tax payment by more than $3 million.
Department of Energy Proposal
Several weeks ago energy secretary Herrington called a meeting of a number of key energy industry representatives to propose the following:
Permit dry hole costs to continue to be expressed;
Restore percentage depletion for stripper wells only; and
(page 4)
Require the IDCs be written off over 5 years under the new depreciation system
The DoE officials apparently expected the industry to endorse the tax package if these changes were made, but this proposal was universally and soundly rejected by those in attendance
Possible Compromise:
Based on discussions with the independents, the following might be an acceptable compromise:
1. a. repeal IDC expensing and
b. replace with an expansion of R&D provision under which dry hole costs and unrecoverable costs to the "casing point" would be expensed; and
c. Unrecoverable cost, after the "casing point" leasehold costs and tangible depreciated over 5 years.
2. a. Percentage depletion generally repealed; and
b. unrecoverable costs would be recovered as ordinary income, but other net income treated as capital gain, and
c. an election for continuing percentage depletion for stripper wells would be permitted
(Page 5)
Subject: oil and gas incentives and tax reform
Dole, Wallop + baker
Date: Friday, may 17
Time: 3:00 (crossed out) 11:00 (Crossed out)
Location: 9:45
Sometime tomorrow
Republican Leadership
Senator
Position
Invited
Yes
No
Armstrong (Checkmark)
Policy-Chairman - 2084
(Checkmark)
WEB

Chafee
Conference-Chairman



Cochran
Conference-Secretary



Dole (Boxed) (Checkmark)
Majority Leader
(Checkmark)
(Checkmark)

Heinz
Senatorial Comm.-Chairman



Simpson (Boxed) (Checkmark)
Asst. Majority Leader 2792
(Checkmark)
(Checkmark)

Thurmond
President Pro Tempore




Committee Chairman
Senator
Committee
Invited
Yes
no
ABDNOR
Joint Economic



ANDREWS
Select - Indian Affairs



DANFORTH
Commerce



DOMENICI (Boxed) (Checkmark)
Budget 7093
(Checkmark)
(Checkmark)

DURENBERGER
Intelligence



GARN
Banking



GOLDWATER
Armed Services



HATCH
Labor



HATFIELD
Appropriations



HEINZ (Boxed) (Checkmark)
Special - Aging 7744
WCB (Checkmark) Not sure


HELMS
Agriculture



LUGAR
Foreign Relations



MATHIAS
Rules and Administration



McCLURE (Boxed) (Checkmark)
Energy Jane 1003
(Checkmark) web
If X in town
Not sure
MURKOWSKI
Veterans Affairs



PACKWOOD ?
Finance



ROTH
Governmental Affairs



RUDMAN
Select - Ethics



STAFFORD
Environment



THURMOND
Judiciary



WEICKER
Small Business




Republicans
BOSCHWITZ
COHEN
D'AMATO
DENTON
EAST
EVANS
GORTON
GRAMM (Boxed, Checkmark) NO 2934
GRASSLEY
HAWKINS
HECHT
HUMPHREY
KASSEBAUM
KASTEN
LAXALT (Checkmark) NO 1057
MATTINGLY
McCONNELL
NICKLES (Boxed, Checkmark) 5754 OK
PRESSLER
QUAYLE
SPECTER
STEVENS (Checkmark) NO 3004
SYMMS (Checkmark, boxed) W.C.B.
TRIBLE
WALLOP (Boxed, Checkmark) WCB
WARNER
WILSON
(Break)
Democrats
BAUCUS
BENTSEN
BIDEN
BINGAMAN
BOREN
BRADLEY
BUMPERS
BURDICK
BYRD
CHILES
CRANSTON
DeCONCINI
DIXON
DODD
EAGLETON
EXON
FORD
GLENN
GORE
HARKIN
HART
HEFLIN
HOLLINGS
INOUYE
JOHNSTON
KENNEDY
KERRY
LAUTENBERG
LEAHY
LEVIN
LONG
MATSUNAGA
MELCHER
METZENBAUM
MITCHELL
MOYNIHAN
NUNN
PELL
PROXMIRE
PRYOR
RIEGLE
ROCKEFELLER
SARBANES
SASSER
SIMON
STENNIS
ZORINSKY
(Break)
566-2037
Dick Darman
Bruce Thompson
(Break)
Administration:
Jim Baker - web
4 meeting with POTUS
4:30 Houston Tomorrow
Return late Wed.
Cabinet mtg and another mtg with President

(Page 1)
Friday, May 17, 1985
9:45a.m.
Meeting with Secretary Baker
Oil and gas incentives and tax reform
(Checkmark) Dole
(Checkmark) Simpson
(Checkmark) Domenici
(Checkmark) Nickles
(Checkmark) Symms
(Checkmark) Wallop
McClure will be here if he is in town
Heinz will not be able to attend
Gramm will not be able to attend - may be out of town
Stevens - out of town
Laxalt - will not be able to attend
(Checkmark) Secretary baker
Dick Darman
(Checkmark) Bruce Thompson
(Checkmark) Rod
(Page 2)
May 16, 1985
To: Senator Dole
From: Rod DeArment
Subject: Impact of Tax reform proposal on ouil and gas incentives
Treasury 1 proposal:
The treasury department's November tax reform plan proposed to do the following
Repeal expensing of intangible drilling costs (Including IDCs for dry holes
Revenue gain:
FY 1987 - $8.6 billion
Five-year total $32.1 billion
Repeal percentage depletion and replace with cost depletion adjusted for inflation
Revenue gain:
FY 1987 - $2.4 billion
Five-year total - $12.2 billion
Repeal expense of qualified tertiary expense
Revenue gain:
FY 87 - $57 million
Five-year total - $477 million
(Page 3)
Begin Phaseout of the Windfall Profit in 1988 rather than 1991
Revenue gain
Five-year total - $3.9 billion
The industry believes that the wholesale elimination of long-standing tax incentives will devastate the domestic oil and gas exploration and make us more dependent on foreign oil
IPAA contends that if the treasury plan had been in effect in 1984:
30,000 fewer oil and gas wells would have been drilled
Capital available to independents for drilling would have been reduced by 50% and;
No fewer than 4,000 of the 15,000 independent producers would have been forced out of business
An interstate Oil Compact Commission impact study on the impact of the treasury 1 package on the Kansas economy estimated that the repeal of IDC expensing alone would:
Cause the loss of 12,810 Kansas jobs because of reduced drilling
Cause 17,994 fewer wells to be drilled in Kansas; and
Cut the number of drilling rigs operating in Kansas by 57%
The same IOCC study concluded the loss of percentage depletion for stripper wells would:
Cause the premature abandonment of 3,945 Kansas stripper wells;
Cause the loss of 7,146 jobs in petroleum and other industries in Kansas; and
Reduce State severance tax payment by more than $3 million.
Department of Energy Proposal
Several weeks ago energy secretary Herrington called a meeting of a number of key energy industry representatives to propose the following:
Permit dry hole costs to continue to be expressed;
Restore percentage depletion for stripper wells only; and
(page 4)
Require the IDCs be written off over 5 years under the new depreciation system
The DoE officials apparently expected the industry to endorse the tax package if these changes were made, but this proposal was universally and soundly rejected by those in attendance
Possible Compromise:
Based on discussions with the independents, the following might be an acceptable compromise:
1. a. repeal IDC expensing and
b. replace with an expansion of R&D provision under which dry hole costs and unrecoverable costs to the "casing point" would be expensed; and
c. Unrecoverable cost, after the "casing point" leasehold costs and tangible depreciated over 5 years.
2. a. Percentage depletion generally repealed; and
b. unrecoverable costs would be recovered as ordinary income, but other net income treated as capital gain, and
c. an election for continuing percentage depletion for stripper wells would be permitted
(Page 5)
Subject: oil and gas incentives and tax reform
Dole, Wallop + baker
Date: Friday, may 17
Time: 3:00 (crossed out) 11:00 (Crossed out)
Location: 9:45
Sometime tomorrow
Republican Leadership
Senator
Position
Invited
Yes
No
Armstrong (Checkmark)
Policy-Chairman - 2084
(Checkmark)
WEB

Chafee
Conference-Chairman



Cochran
Conference-Secretary



Dole (Boxed) (Checkmark)
Majority Leader
(Checkmark)
(Checkmark)

Heinz
Senatorial Comm.-Chairman



Simpson (Boxed) (Checkmark)
Asst. Majority Leader 2792
(Checkmark)
(Checkmark)

Thurmond
President Pro Tempore




Committee Chairman
Senator
Committee
Invited
Yes
no
ABDNOR
Joint Economic



ANDREWS
Select - Indian Affairs



DANFORTH
Commerce



DOMENICI (Boxed) (Checkmark)
Budget 7093
(Checkmark)
(Checkmark)

DURENBERGER
Intelligence



GARN
Banking



GOLDWATER
Armed Services



HATCH
Labor



HATFIELD
Appropriations



HEINZ (Boxed) (Checkmark)
Special - Aging 7744
WCB (Checkmark) Not sure


HELMS
Agriculture



LUGAR
Foreign Relations



MATHIAS
Rules and Administration



McCLURE (Boxed) (Checkmark)
Energy Jane 1003
(Checkmark) web
If X in town
Not sure
MURKOWSKI
Veterans Affairs



PACKWOOD ?
Finance



ROTH
Governmental Affairs



RUDMAN
Select - Ethics



STAFFORD
Environment



THURMOND
Judiciary



WEICKER
Small Business




Republicans
BOSCHWITZ
COHEN
D'AMATO
DENTON
EAST
EVANS
GORTON
GRAMM (Boxed, Checkmark) NO 2934
GRASSLEY
HAWKINS
HECHT
HUMPHREY
KASSEBAUM
KASTEN
LAXALT (Checkmark) NO 1057
MATTINGLY
McCONNELL
NICKLES (Boxed, Checkmark) 5754 OK
PRESSLER
QUAYLE
SPECTER
STEVENS (Checkmark) NO 3004
SYMMS (Checkmark, boxed) W.C.B.
TRIBLE
WALLOP (Boxed, Checkmark) WCB
WARNER
WILSON
(Break)
Democrats
BAUCUS
BENTSEN
BIDEN
BINGAMAN
BOREN
BRADLEY
BUMPERS
BURDICK
BYRD
CHILES
CRANSTON
DeCONCINI
DIXON
DODD
EAGLETON
EXON
FORD
GLENN
GORE
HARKIN
HART
HEFLIN
HOLLINGS
INOUYE
JOHNSTON
KENNEDY
KERRY
LAUTENBERG
LEAHY
LEVIN
LONG
MATSUNAGA
MELCHER
METZENBAUM
MITCHELL
MOYNIHAN
NUNN
PELL
PROXMIRE
PRYOR
RIEGLE
ROCKEFELLER
SARBANES
SASSER
SIMON
STENNIS
ZORINSKY
(Break)
566-2037
Dick Darman
Bruce Thompson
(Break)
Administration:
Jim Baker - web
4 meeting with POTUS
4:30 Houston Tomorrow
Return late Wed.
Cabinet mtg and another mtg with President

(Page 1)
Friday, May 17, 1985
9:45a.m.
Meeting with Secretary Baker
Oil and gas incentives and tax reform
(Checkmark) Dole
(Checkmark) Simpson
(Checkmark) Domenici
(Checkmark) Nickles
(Checkmark) Symms
(Checkmark) Wallop
McClure will be here if he is in town
Heinz will not be able to attend
Gramm will not be able to attend - may be out of town
Stevens - out of town
Laxalt - will not be able to attend
(Checkmark) Secretary baker
Dick Darman
(Checkmark) Bruce Thompson
(Checkmark) Rod
(Page 2)
May 16, 1985
To: Senator Dole
From: Rod DeArment
Subject: Impact of Tax reform proposal on ouil and gas incentives
Treasury 1 proposal:
The treasury department's November tax reform plan proposed to do the following
Repeal expensing of intangible drilling costs (Including IDCs for dry holes
Revenue gain:
FY 1987 - $8.6 billion
Five-year total $32.1 billion
Repeal percentage depletion and replace with cost depletion adjusted for inflation
Revenue gain:
FY 1987 - $2.4 billion
Five-year total - $12.2 billion
Repeal expense of qualified tertiary expense
Revenue gain:
FY 87 - $57 million
Five-year total - $477 million
(Page 3)
Begin Phaseout of the Windfall Profit in 1988 rather than 1991
Revenue gain
Five-year total - $3.9 billion
The industry believes that the wholesale elimination of long-standing tax incentives will devastate the domestic oil and gas exploration and make us more dependent on foreign oil
IPAA contends that if the treasury plan had been in effect in 1984:
30,000 fewer oil and gas wells would have been drilled
Capital available to independents for drilling would have been reduced by 50% and;
No fewer than 4,000 of the 15,000 independent producers would have been forced out of business
An interstate Oil Compact Commission impact study on the impact of the treasury 1 package on the Kansas economy estimated that the repeal of IDC expensing alone would:
Cause the loss of 12,810 Kansas jobs because of reduced drilling
Cause 17,994 fewer wells to be drilled in Kansas; and
Cut the number of drilling rigs operating in Kansas by 57%
The same IOCC study concluded the loss of percentage depletion for stripper wells would:
Cause the premature abandonment of 3,945 Kansas stripper wells;
Cause the loss of 7,146 jobs in petroleum and other industries in Kansas; and
Reduce State severance tax payment by more than $3 million.
Department of Energy Proposal
Several weeks ago energy secretary Herrington called a meeting of a number of key energy industry representatives to propose the following:
Permit dry hole costs to continue to be expressed;
Restore percentage depletion for stripper wells only; and
(page 4)
Require the IDCs be written off over 5 years under the new depreciation system
The DoE officials apparently expected the industry to endorse the tax package if these changes were made, but this proposal was universally and soundly rejected by those in attendance
Possible Compromise:
Based on discussions with the independents, the following might be an acceptable compromise:
1. a. repeal IDC expensing and
b. replace with an expansion of R&D provision under which dry hole costs and unrecoverable costs to the "casing point" would be expensed; and
c. Unrecoverable cost, after the "casing point" leasehold costs and tangible depreciated over 5 years.
2. a. Percentage depletion generally repealed; and
b. unrecoverable costs would be recovered as ordinary income, but other net income treated as capital gain, and
c. an election for continuing percentage depletion for stripper wells would be permitted
(Page 5)
Subject: oil and gas incentives and tax reform
Dole, Wallop + baker
Date: Friday, may 17
Time: 3:00 (crossed out) 11:00 (Crossed out)
Location: 9:45
Sometime tomorrow
Republican Leadership
Senator
Position
Invited
Yes
No
Armstrong (Checkmark)
Policy-Chairman - 2084
(Checkmark)
WEB

Chafee
Conference-Chairman



Cochran
Conference-Secretary



Dole (Boxed) (Checkmark)
Majority Leader
(Checkmark)
(Checkmark)

Heinz
Senatorial Comm.-Chairman



Simpson (Boxed) (Checkmark)
Asst. Majority Leader 2792
(Checkmark)
(Checkmark)

Thurmond
President Pro Tempore




Committee Chairman
Senator
Committee
Invited
Yes
no
ABDNOR
Joint Economic



ANDREWS
Select - Indian Affairs



DANFORTH
Commerce



DOMENICI (Boxed) (Checkmark)
Budget 7093
(Checkmark)
(Checkmark)

DURENBERGER
Intelligence



GARN
Banking



GOLDWATER
Armed Services



HATCH
Labor



HATFIELD
Appropriations



HEINZ (Boxed) (Checkmark)
Special - Aging 7744
WCB (Checkmark) Not sure


HELMS
Agriculture



LUGAR
Foreign Relations



MATHIAS
Rules and Administration



McCLURE (Boxed) (Checkmark)
Energy Jane 1003
(Checkmark) web
If X in town
Not sure
MURKOWSKI
Veterans Affairs



PACKWOOD ?
Finance



ROTH
Governmental Affairs



RUDMAN
Select - Ethics



STAFFORD
Environment



THURMOND
Judiciary



WEICKER
Small Business




Republicans
BOSCHWITZ
COHEN
D'AMATO
DENTON
EAST
EVANS
GORTON
GRAMM (Boxed, Checkmark) NO 2934
GRASSLEY
HAWKINS
HECHT
HUMPHREY
KASSEBAUM
KASTEN
LAXALT (Checkmark) NO 1057
MATTINGLY
McCONNELL
NICKLES (Boxed, Checkmark) 5754 OK
PRESSLER
QUAYLE
SPECTER
STEVENS (Checkmark) NO 3004
SYMMS (Checkmark, boxed) W.C.B.
TRIBLE
WALLOP (Boxed, Checkmark) WCB
WARNER
WILSON
(Break)
Democrats
BAUCUS
BENTSEN
BIDEN
BINGAMAN
BOREN
BRADLEY
BUMPERS
BURDICK
BYRD
CHILES
CRANSTON
DeCONCINI
DIXON
DODD
EAGLETON
EXON
FORD
GLENN
GORE
HARKIN
HART
HEFLIN
HOLLINGS
INOUYE
JOHNSTON
KENNEDY
KERRY
LAUTENBERG
LEAHY
LEVIN
LONG
MATSUNAGA
MELCHER
METZENBAUM
MITCHELL
MOYNIHAN
NUNN
PELL
PROXMIRE
PRYOR
RIEGLE
ROCKEFELLER
SARBANES
SASSER
SIMON
STENNIS
ZORINSKY
(Break)
566-2037
Dick Darman
Bruce Thompson
(Break)
Administration:
Jim Baker - web
4 meeting with POTUS
4:30 Houston Tomorrow
Return late Wed.
Cabinet mtg and another mtg with President

(Page 1)
Friday, May 17, 1985
9:45a.m.
Meeting with Secretary Baker
Oil and gas incentives and tax reform
(Checkmark) Dole
(Checkmark) Simpson
(Checkmark) Domenici
(Checkmark) Nickles
(Checkmark) Symms
(Checkmark) Wallop
McClure will be here if he is in town
Heinz will not be able to attend
Gramm will not be able to attend - may be out of town
Stevens - out of town
Laxalt - will not be able to attend
(Checkmark) Secretary baker
Dick Darman
(Checkmark) Bruce Thompson
(Checkmark) Rod
(Page 2)
May 16, 1985
To: Senator Dole
From: Rod DeArment
Subject: Impact of Tax reform proposal on ouil and gas incentives
Treasury 1 proposal:
The treasury department's November tax reform plan proposed to do the following
Repeal expensing of intangible drilling costs (Including IDCs for dry holes
Revenue gain:
FY 1987 - $8.6 billion
Five-year total $32.1 billion
Repeal percentage depletion and replace with cost depletion adjusted for inflation
Revenue gain:
FY 1987 - $2.4 billion
Five-year total - $12.2 billion
Repeal expense of qualified tertiary expense
Revenue gain:
FY 87 - $57 million
Five-year total - $477 million
(Page 3)
Begin Phaseout of the Windfall Profit in 1988 rather than 1991
Revenue gain
Five-year total - $3.9 billion
The industry believes that the wholesale elimination of long-standing tax incentives will devastate the domestic oil and gas exploration and make us more dependent on foreign oil
IPAA contends that if the treasury plan had been in effect in 1984:
30,000 fewer oil and gas wells would have been drilled
Capital available to independents for drilling would have been reduced by 50% and;
No fewer than 4,000 of the 15,000 independent producers would have been forced out of business
An interstate Oil Compact Commission impact study on the impact of the treasury 1 package on the Kansas economy estimated that the repeal of IDC expensing alone would:
Cause the loss of 12,810 Kansas jobs because of reduced drilling
Cause 17,994 fewer wells to be drilled in Kansas; and
Cut the number of drilling rigs operating in Kansas by 57%
The same IOCC study concluded the loss of percentage depletion for stripper wells would:
Cause the premature abandonment of 3,945 Kansas stripper wells;
Cause the loss of 7,146 jobs in petroleum and other industries in Kansas; and
Reduce State severance tax payment by more than $3 million.
Department of Energy Proposal
Several weeks ago energy secretary Herrington called a meeting of a number of key energy industry representatives to propose the following:
Permit dry hole costs to continue to be expressed;
Restore percentage depletion for stripper wells only; and
(page 4)
Require the IDCs be written off over 5 years under the new depreciation system
The DoE officials apparently expected the industry to endorse the tax package if these changes were made, but this proposal was universally and soundly rejected by those in attendance
Possible Compromise:
Based on discussions with the independents, the following might be an acceptable compromise:
1. a. repeal IDC expensing and
b. replace with an expansion of R&D provision under which dry hole costs and unrecoverable costs to the "casing point" would be expensed; and
c. Unrecoverable cost, after the "casing point" leasehold costs and tangible depreciated over 5 years.
2. a. Percentage depletion generally repealed; and
b. unrecoverable costs would be recovered as ordinary income, but other net income treated as capital gain, and
c. an election for continuing percentage depletion for stripper wells would be permitted
(Page 5)
Subject: oil and gas incentives and tax reform
Dole, Wallop + baker
Date: Friday, may 17
Time: 3:00 (crossed out) 11:00 (Crossed out)
Location: 9:45
Sometime tomorrow
Republican Leadership
Senator
Position
Invited
Yes
No
Armstrong (Checkmark)
Policy-Chairman - 2084
(Checkmark)
WEB

Chafee
Conference-Chairman



Cochran
Conference-Secretary



Dole (Boxed) (Checkmark)
Majority Leader
(Checkmark)
(Checkmark)

Heinz
Senatorial Comm.-Chairman



Simpson (Boxed) (Checkmark)
Asst. Majority Leader 2792
(Checkmark)
(Checkmark)

Thurmond
President Pro Tempore




Committee Chairman
Senator
Committee
Invited
Yes
no
ABDNOR
Joint Economic



ANDREWS
Select - Indian Affairs



DANFORTH
Commerce



DOMENICI (Boxed) (Checkmark)
Budget 7093
(Checkmark)
(Checkmark)

DURENBERGER
Intelligence



GARN
Banking



GOLDWATER
Armed Services



HATCH
Labor



HATFIELD
Appropriations



HEINZ (Boxed) (Checkmark)
Special - Aging 7744
WCB (Checkmark) Not sure


HELMS
Agriculture



LUGAR
Foreign Relations



MATHIAS
Rules and Administration



McCLURE (Boxed) (Checkmark)
Energy Jane 1003
(Checkmark) web
If X in town
Not sure
MURKOWSKI
Veterans Affairs



PACKWOOD ?
Finance



ROTH
Governmental Affairs



RUDMAN
Select - Ethics



STAFFORD
Environment



THURMOND
Judiciary



WEICKER
Small Business




Republicans
BOSCHWITZ
COHEN
D'AMATO
DENTON
EAST
EVANS
GORTON
GRAMM (Boxed, Checkmark) NO 2934
GRASSLEY
HAWKINS
HECHT
HUMPHREY
KASSEBAUM
KASTEN
LAXALT (Checkmark) NO 1057
MATTINGLY
McCONNELL
NICKLES (Boxed, Checkmark) 5754 OK
PRESSLER
QUAYLE
SPECTER
STEVENS (Checkmark) NO 3004
SYMMS (Checkmark, boxed) W.C.B.
TRIBLE
WALLOP (Boxed, Checkmark) WCB
WARNER
WILSON
(Break)
Democrats
BAUCUS
BENTSEN
BIDEN
BINGAMAN
BOREN
BRADLEY
BUMPERS
BURDICK
BYRD
CHILES
CRANSTON
DeCONCINI
DIXON
DODD
EAGLETON
EXON
FORD
GLENN
GORE
HARKIN
HART
HEFLIN
HOLLINGS
INOUYE
JOHNSTON
KENNEDY
KERRY
LAUTENBERG
LEAHY
LEVIN
LONG
MATSUNAGA
MELCHER
METZENBAUM
MITCHELL
MOYNIHAN
NUNN
PELL
PROXMIRE
PRYOR
RIEGLE
ROCKEFELLER
SARBANES
SASSER
SIMON
STENNIS
ZORINSKY
(Break)
566-2037
Dick Darman
Bruce Thompson
(Break)
Administration:
Jim Baker - web
4 meeting with POTUS
4:30 Houston Tomorrow
Return late Wed.
Cabinet mtg and another mtg with President

(Page 1)
Friday, May 17, 1985
9:45a.m.
Meeting with Secretary Baker
Oil and gas incentives and tax reform
(Checkmark) Dole
(Checkmark) Simpson
(Checkmark) Domenici
(Checkmark) Nickles
(Checkmark) Symms
(Checkmark) Wallop
McClure will be here if he is in town
Heinz will not be able to attend
Gramm will not be able to attend - may be out of town
Stevens - out of town
Laxalt - will not be able to attend
(Checkmark) Secretary baker
Dick Darman
(Checkmark) Bruce Thompson
(Checkmark) Rod
(Page 2)
May 16, 1985
To: Senator Dole
From: Rod DeArment
Subject: Impact of Tax reform proposal on ouil and gas incentives
Treasury 1 proposal:
The treasury department's November tax reform plan proposed to do the following
Repeal expensing of intangible drilling costs (Including IDCs for dry holes
Revenue gain:
FY 1987 - $8.6 billion
Five-year total $32.1 billion
Repeal percentage depletion and replace with cost depletion adjusted for inflation
Revenue gain:
FY 1987 - $2.4 billion
Five-year total - $12.2 billion
Repeal expense of qualified tertiary expense
Revenue gain:
FY 87 - $57 million
Five-year total - $477 million
(Page 3)
Begin Phaseout of the Windfall Profit in 1988 rather than 1991
Revenue gain
Five-year total - $3.9 billion
The industry believes that the wholesale elimination of long-standing tax incentives will devastate the domestic oil and gas exploration and make us more dependent on foreign oil
IPAA contends that if the treasury plan had been in effect in 1984:
30,000 fewer oil and gas wells would have been drilled
Capital available to independents for drilling would have been reduced by 50% and;
No fewer than 4,000 of the 15,000 independent producers would have been forced out of business
An interstate Oil Compact Commission impact study on the impact of the treasury 1 package on the Kansas economy estimated that the repeal of IDC expensing alone would:
Cause the loss of 12,810 Kansas jobs because of reduced drilling
Cause 17,994 fewer wells to be drilled in Kansas; and
Cut the number of drilling rigs operating in Kansas by 57%
The same IOCC study concluded the loss of percentage depletion for stripper wells would:
Cause the premature abandonment of 3,945 Kansas stripper wells;
Cause the loss of 7,146 jobs in petroleum and other industries in Kansas; and
Reduce State severance tax payment by more than $3 million.
Department of Energy Proposal
Several weeks ago energy secretary Herrington called a meeting of a number of key energy industry representatives to propose the following:
Permit dry hole costs to continue to be expressed;
Restore percentage depletion for stripper wells only; and
(page 4)
Require the IDCs be written off over 5 years under the new depreciation system
The DoE officials apparently expected the industry to endorse the tax package if these changes were made, but this proposal was universally and soundly rejected by those in attendance
Possible Compromise:
Based on discussions with the independents, the following might be an acceptable compromise:
1. a. repeal IDC expensing and
b. replace with an expansion of R&D provision under which dry hole costs and unrecoverable costs to the "casing point" would be expensed; and
c. Unrecoverable cost, after the "casing point" leasehold costs and tangible depreciated over 5 years.
2. a. Percentage depletion generally repealed; and
b. unrecoverable costs would be recovered as ordinary income, but other net income treated as capital gain, and
c. an election for continuing percentage depletion for stripper wells would be permitted
(Page 5)
Subject: oil and gas incentives and tax reform
Dole, Wallop + baker
Date: Friday, may 17
Time: 3:00 (crossed out) 11:00 (Crossed out)
Location: 9:45
Sometime tomorrow
Republican Leadership
Senator
Position
Invited
Yes
No
Armstrong (Checkmark)
Policy-Chairman - 2084
(Checkmark)
WEB

Chafee
Conference-Chairman



Cochran
Conference-Secretary



Dole (Boxed) (Checkmark)
Majority Leader
(Checkmark)
(Checkmark)

Heinz
Senatorial Comm.-Chairman



Simpson (Boxed) (Checkmark)
Asst. Majority Leader 2792
(Checkmark)
(Checkmark)

Thurmond
President Pro Tempore




Committee Chairman
Senator
Committee
Invited
Yes
no
ABDNOR
Joint Economic



ANDREWS
Select - Indian Affairs



DANFORTH
Commerce



DOMENICI (Boxed) (Checkmark)
Budget 7093
(Checkmark)
(Checkmark)

DURENBERGER
Intelligence



GARN
Banking



GOLDWATER
Armed Services



HATCH
Labor



HATFIELD
Appropriations



HEINZ (Boxed) (Checkmark)
Special - Aging 7744
WCB (Checkmark) Not sure


HELMS
Agriculture



LUGAR
Foreign Relations



MATHIAS
Rules and Administration



McCLURE (Boxed) (Checkmark)
Energy Jane 1003
(Checkmark) web
If X in town
Not sure
MURKOWSKI
Veterans Affairs



PACKWOOD ?
Finance



ROTH
Governmental Affairs



RUDMAN
Select - Ethics



STAFFORD
Environment



THURMOND
Judiciary



WEICKER
Small Business




Republicans
BOSCHWITZ
COHEN
D'AMATO
DENTON
EAST
EVANS
GORTON
GRAMM (Boxed, Checkmark) NO 2934
GRASSLEY
HAWKINS
HECHT
HUMPHREY
KASSEBAUM
KASTEN
LAXALT (Checkmark) NO 1057
MATTINGLY
McCONNELL
NICKLES (Boxed, Checkmark) 5754 OK
PRESSLER
QUAYLE
SPECTER
STEVENS (Checkmark) NO 3004
SYMMS (Checkmark, boxed) W.C.B.
TRIBLE
WALLOP (Boxed, Checkmark) WCB
WARNER
WILSON
(Break)
Democrats
BAUCUS
BENTSEN
BIDEN
BINGAMAN
BOREN
BRADLEY
BUMPERS
BURDICK
BYRD
CHILES
CRANSTON
DeCONCINI
DIXON
DODD
EAGLETON
EXON
FORD
GLENN
GORE
HARKIN
HART
HEFLIN
HOLLINGS
INOUYE
JOHNSTON
KENNEDY
KERRY
LAUTENBERG
LEAHY
LEVIN
LONG
MATSUNAGA
MELCHER
METZENBAUM
MITCHELL
MOYNIHAN
NUNN
PELL
PROXMIRE
PRYOR
RIEGLE
ROCKEFELLER
SARBANES
SASSER
SIMON
STENNIS
ZORINSKY
(Break)
566-2037
Dick Darman
Bruce Thompson
(Break)
Administration:
Jim Baker - web
4 meeting with POTUS
4:30 Houston Tomorrow
Return late Wed.
Cabinet mtg and another mtg with President

(Page 1)
Friday, May 17, 1985
9:45a.m.
Meeting with Secretary Baker
Oil and gas incentives and tax reform
(Checkmark) Dole
(Checkmark) Simpson
(Checkmark) Domenici
(Checkmark) Nickles
(Checkmark) Symms
(Checkmark) Wallop
McClure will be here if he is in town
Heinz will not be able to attend
Gramm will not be able to attend - may be out of town
Stevens - out of town
Laxalt - will not be able to attend
(Checkmark) Secretary baker
Dick Darman
(Checkmark) Bruce Thompson
(Checkmark) Rod
(Page 2)
May 16, 1985
To: Senator Dole
From: Rod DeArment
Subject: Impact of Tax reform proposal on ouil and gas incentives
Treasury 1 proposal:
The treasury department's November tax reform plan proposed to do the following
Repeal expensing of intangible drilling costs (Including IDCs for dry holes
Revenue gain:
FY 1987 - $8.6 billion
Five-year total $32.1 billion
Repeal percentage depletion and replace with cost depletion adjusted for inflation
Revenue gain:
FY 1987 - $2.4 billion
Five-year total - $12.2 billion
Repeal expense of qualified tertiary expense
Revenue gain:
FY 87 - $57 million
Five-year total - $477 million
(Page 3)
Begin Phaseout of the Windfall Profit in 1988 rather than 1991
Revenue gain
Five-year total - $3.9 billion
The industry believes that the wholesale elimination of long-standing tax incentives will devastate the domestic oil and gas exploration and make us more dependent on foreign oil
IPAA contends that if the treasury plan had been in effect in 1984:
30,000 fewer oil and gas wells would have been drilled
Capital available to independents for drilling would have been reduced by 50% and;
No fewer than 4,000 of the 15,000 independent producers would have been forced out of business
An interstate Oil Compact Commission impact study on the impact of the treasury 1 package on the Kansas economy estimated that the repeal of IDC expensing alone would:
Cause the loss of 12,810 Kansas jobs because of reduced drilling
Cause 17,994 fewer wells to be drilled in Kansas; and
Cut the number of drilling rigs operating in Kansas by 57%
The same IOCC study concluded the loss of percentage depletion for stripper wells would:
Cause the premature abandonment of 3,945 Kansas stripper wells;
Cause the loss of 7,146 jobs in petroleum and other industries in Kansas; and
Reduce State severance tax payment by more than $3 million.
Department of Energy Proposal
Several weeks ago energy secretary Herrington called a meeting of a number of key energy industry representatives to propose the following:
Permit dry hole costs to continue to be expressed;
Restore percentage depletion for stripper wells only; and
(page 4)
Require the IDCs be written off over 5 years under the new depreciation system
The DoE officials apparently expected the industry to endorse the tax package if these changes were made, but this proposal was universally and soundly rejected by those in attendance
Possible Compromise:
Based on discussions with the independents, the following might be an acceptable compromise:
1. a. repeal IDC expensing and
b. replace with an expansion of R&D provision under which dry hole costs and unrecoverable costs to the "casing point" would be expensed; and
c. Unrecoverable cost, after the "casing point" leasehold costs and tangible depreciated over 5 years.
2. a. Percentage depletion generally repealed; and
b. unrecoverable costs would be recovered as ordinary income, but other net income treated as capital gain, and
c. an election for continuing percentage depletion for stripper wells would be permitted
(Page 5)
Subject: oil and gas incentives and tax reform
Dole, Wallop + baker
Date: Friday, may 17
Time: 3:00 (crossed out) 11:00 (Crossed out)
Location: 9:45
Sometime tomorrow
Republican Leadership
Senator
Position
Invited
Yes
No
Armstrong (Checkmark)
Policy-Chairman - 2084
(Checkmark)
WEB

Chafee
Conference-Chairman



Cochran
Conference-Secretary



Dole (Boxed) (Checkmark)
Majority Leader
(Checkmark)
(Checkmark)

Heinz
Senatorial Comm.-Chairman



Simpson (Boxed) (Checkmark)
Asst. Majority Leader 2792
(Checkmark)
(Checkmark)

Thurmond
President Pro Tempore




Committee Chairman
Senator
Committee
Invited
Yes
no
ABDNOR
Joint Economic



ANDREWS
Select - Indian Affairs



DANFORTH
Commerce



DOMENICI (Boxed) (Checkmark)
Budget 7093
(Checkmark)
(Checkmark)

DURENBERGER
Intelligence



GARN
Banking



GOLDWATER
Armed Services



HATCH
Labor



HATFIELD
Appropriations



HEINZ (Boxed) (Checkmark)
Special - Aging 7744
WCB (Checkmark) Not sure


HELMS
Agriculture



LUGAR
Foreign Relations



MATHIAS
Rules and Administration



McCLURE (Boxed) (Checkmark)
Energy Jane 1003
(Checkmark) web
If X in town
Not sure
MURKOWSKI
Veterans Affairs



PACKWOOD ?
Finance



ROTH
Governmental Affairs



RUDMAN
Select - Ethics



STAFFORD
Environment



THURMOND
Judiciary



WEICKER
Small Business




Republicans
BOSCHWITZ
COHEN
D'AMATO
DENTON
EAST
EVANS
GORTON
GRAMM (Boxed, Checkmark) NO 2934
GRASSLEY
HAWKINS
HECHT
HUMPHREY
KASSEBAUM
KASTEN
LAXALT (Checkmark) NO 1057
MATTINGLY
McCONNELL
NICKLES (Boxed, Checkmark) 5754 OK
PRESSLER
QUAYLE
SPECTER
STEVENS (Checkmark) NO 3004
SYMMS (Checkmark, boxed) W.C.B.
TRIBLE
WALLOP (Boxed, Checkmark) WCB
WARNER
WILSON
(Break)
Democrats
BAUCUS
BENTSEN
BIDEN
BINGAMAN
BOREN
BRADLEY
BUMPERS
BURDICK
BYRD
CHILES
CRANSTON
DeCONCINI
DIXON
DODD
EAGLETON
EXON
FORD
GLENN
GORE
HARKIN
HART
HEFLIN
HOLLINGS
INOUYE
JOHNSTON
KENNEDY
KERRY
LAUTENBERG
LEAHY
LEVIN
LONG
MATSUNAGA
MELCHER
METZENBAUM
MITCHELL
MOYNIHAN
NUNN
PELL
PROXMIRE
PRYOR
RIEGLE
ROCKEFELLER
SARBANES
SASSER
SIMON
STENNIS
ZORINSKY
(Break)
566-2037
Dick Darman
Bruce Thompson
(Break)
Administration:
Jim Baker - web
4 meeting with POTUS
4:30 Houston Tomorrow
Return late Wed.
Cabinet mtg and another mtg with President