2016 Washington Report - API/media/Files/Policy/16-March... · 1220 L Street, NW • Washington, DC...

1220 L Street, NW • Washington, DC 20005-4070 • www.api.org 1

2016 Washington Report

Brian M Johnson, MPA

Director, Federal Relations

American Petroleum Institute

[email protected]

Prepared for API Customs & International Trade Conference – New Orleans, LA

mailto:[email protected]


A Review of API


Mission

To influence public

policy in support of a

strong and viable U.S.

oil and natural gas

industry essential to

meet the energy needs

of consumers in an

efficient and

environmentally

responsible manner.

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As the U.S. oil and natural

gas industry’s primary trade

association, API:

Engages in federal and state

legislative and regulatory advocacy

that is based on scientific research;

technical, legal and economic

analysis; and public issues

communication;

Provides an industry forum to develop

consensus policies and collective

action on issues impacting its

members; and

Works collaboratively with all industry

oil and gas associations, and other

organizations, to enhance industry

unity and effectiveness in its

advocacy.

API also provides the

opportunity for standards

development, technical

cooperation and other

activities to improve the

industry’s competitiveness

through sponsorship of

self-supporting programs.


About API

The only national trade association

that represents all aspects of America’s

oil and natural gas industry.

Represents members on legislative,

regulatory, and other policy issues

impacting the industry.

Speaks on behalf of the industry in a

variety of forums and public events,

including the media.

Provides services to members at both

the national and state level, with over

250 staff located in Washington, D.C.

and in 33 state capitals, and 5 global

offices.


API Engagement

Legislative & Regulatory

o Federal Level

o State Level

Communications

Mobilization

Technical

o Standards Development

o Certification

o Safety

o Training


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U.S. Industry Size/Strength

OIL & NATURAL GAS

2.8 MILLION

Building Construction

1.4 million

Machinery Manufacturing

989,000

Utilities

565,000

Rail Transportation

212,000

Coal

81,000

Biorefineries

9,000


State &Mobilization Assets



Gridlock in Washington, combined with broader support for natural gas, has

caused our opposition to—smartly—refocus their efforts on state

legislatures and local and state ballot initiatives.

Industry’s Added Challenge:

Federal, State and Local

FEDERAL • Increased regulations

on fracking

• Ozone regulations

• Offshore drilling 5-year

program

• Renewable Fuel

Standard

• Approval of KXL

STATE • Statewide fracking bans

• Infrastructure battles

• Severance tax fights

• Biofuels Mandates

LOCAL • Local Control

• Community Bill of

Rights

• Fracking bans

• E-15

• Infrastructure battles


Effective Grassroots Advocacy • Constituents Hold the

Power: Key to re-election is

a “happy” constituency

• Power in Numbers: The

more legislators hear from

their voters on a particular

issue, the more likely they

are able to support or change

their position

• Air Cover: Showing strong

grassroots support is the

most effective way to provide

“air cover” to influential

legislators


API Program Model

Increased

Access to Oil

& Natural Gas

Resources

Increased

Shareholder

Value

Increased

Energy

Production

More Jobs

ENERGY

NATION

ENERGY

CITIZENS

ENERGY

FORUM

Environmental Performance & Integrity

Economic Growth

& Employment

Affordable

& Reliable Energy

Labor Groups

Veterans

Affinity Groups

Business Groups

Women

Conservation

& Outdoor

Retirees

Employees &

Families

Vendors & Suppliers

Royalty

Holders

Registered

Voters

Micro-Targets

Energy

Security

Investors

EXPANDING

THE ENERGY BASE

Native

Americans

Engage & Educate

Motivate Activate

General Public

Industry Employees

Non-Traditional

Strategic Partners

Stakeholder Groups & Interests


Maximize value by reaching outside of Capitol Hill to build key, long-term ally

relationships relying on the principle that conditioned allies are likely to be better

advocates and be willing to underscore implications on Election Day.

Program Approach

Policymakers

Community-based value proposition of the industry through elected officials and staff, business leaders, small-business owners, community leaders, media.

Local Influentials

Industry, fact-based expertise and perspective to the policymaking process.

Industry Voices

Empower rank-and-file

constituent and

industry voices to

demonstrate

widespread support

and communicate the

personal/community

impact of industry and

energy policy.

Energy Voters


Energy Nation

Advocacy platform for employees, spouses, vendors, and retirees of oil and gas industry

– Education and mobilization tool

– Networking and community-building resource

– Facilitator for digital, social, and community participation

• Infrastructure and support resource for industry partners

– Document and promote industry presence and impact

– Provide communications and engagement tools and support

– Advocacy trainings, events and logistics

energynation


Energy Citizens

• Citizens concerned about energy who are self-

motivated and active in their communities

• More than 1,300,000 members in 435 CD;

• Nearly 400,000 prospective champions: Boots On

The Ground

• Powerful online community: Reach and impact

• Volume activations

• Online discussion impacts issue sentiment now more

than ever

• Grassroots, community voices: Diverse and

active

• Local volunteer leaders and organizers in 12 states

• Scaleable infrastructure

• House parties and member events

• Phone banking and canvassing

• Meetings with legislators

• Earned media

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Energy Forums

• Active on-the-ground teams in 23 states

• Grass-tops and Strategic Partner Outreach

• Cultivate relationships with politically influential third parties

• Facilitate new public policy outcomes for the industry by surrounding

lawmakers with the most politically persuasive constituents.


Microtargets

Political microtargeting: combines demographic and consumer data, voter

behavior and in-depth surveys to most efficiently and effectively identify target

voters and the messaging which can motivate and activate those voters.

In the case of API, we have identified high propensity voters (3 of 4 and 4 of 4

voters) who are likely to support, or be persuaded to support API’s policy

positions.

– Highly informed, motivated

– Majority non-Republican

– Growing women and minorities


Louisiana Assets


Louisiana Heat Map -- Microtargets

• Contacted over 2.1 million voters across the country to

educate them on the issue

• Sent over 110,000 emails/calls to Members of Congress

• Over 60,000 micro-target contacts with government

officials

• Oct 9: Lifting the export ban passed the House

• In December it was signed into law as

part of a larger deal

• Success!

Example: Crude Exports



Why Mobilization Matters

• Complements federal/state relations

• Enforces D.C. message on the ground

• Voters continue to support the energy

sector

• Places pressure on members back home

• Puts a real face on the issue

• Continues the dialogue

• Moves the needle

• Results in non-traditional allies


2016 Legislative Outlook


How 2015 set the stage

25

• 2015 cleaned the slate for 2016…

• DOA Presidential Budget

• FAA and why it matters

• TPA / Customs / TPP / MTB / T-TIP (dizzy

yet?)

• A tale of two tax reforms

• …but an election year? Can anything happen?

Overview

1220 L Street, NW • Washington, DC 20005-4070 • www.api.org


Obama Budget

• Mainly - same old,

same old

• Some items reflect

price impact on

industry

• Some new items of

note

– Per barrel oil fee

– EOR

Issue FY 2010 FY2017 Reinstate Superfund taxes

(approx. industry share - 50%) ($8,379) ($11,160)

Repeal LIFO (approx. industry share - 35%) ($25,948) ($28,467)

Modify tax rules for dual capacity taxpayers ($4,490) ($9,635)

Levy tax on certain offshore oil and gas

production ($5,283) n/a

Per barrel tax on crude oil n/a ($319,070) Repeal expensing

intangible drilling costs ($3,349) ($10,050)

Repeal deduction for tertiary injectants ($62) ($77) Repeal passive loss exemption ($49) ($103) Repeal percentage depletion ($8,251) ($4,990)

Repeal section 199 for

oil and gas activities ($13,292) ($9,149)

Increase G&G amortization period for

Independents ($1,189) ($1,515)

EOR/Marginal Well Credits n/a ($8,803)

Oil Spill Tax n/a ($1,352)

Treat MLPs for Fossil fuels as C corps n/a ($1,408)

Total - Tax Only ($70,291) ($405,779)

Amounts in $M and over 10 year period per OMB score


FAA…

• Likely the only thing moving with a tax title

• End of 2015 deal wasn’t good for everyone

• Last hope for many other industry’s tax items

28

• TPA was anything but easy

• TPP has major issues, WH prepared to abandon

• T-TIP work continues, long road ahead

• MTB has renewed hope recently

• 2016 politics complicates trade agenda

Trade Engagement


29

• Issue: CBP 2009 ruling continues to remain problematic for

trade facilitation and harmonization.

• Goal: To codify status quo into law – ACHIEVED

• Approach:

• API has formed the Business Residue Coalition

• Had bi-partisan House and Senate bills introduced

• Our language made it into the Chairman’s marks in both

Chambers

• Passed and signed into law

Customs / Residue



House Tax Activity

• Speaker Ryan task forces

– Focused on poverty and pro-growth message

– Areas

• International Only

– API international only principles

– Changes to subpart F

– Patent-box proposal

• National security

• Tax reform

• Reducing regulatory

burdens

• Health care reform

• Poverty reduction

• Restoring constitutional

authority


Senate Tax Activity

• Energy tax hearing

• Business tax reform working group hearing

• Corporate Integration

– Another path to corporate tax reform

– Dividend deduction method

• Avoids politics of rate cut

• Companies withholding on shareholder

– Impacts

• Tax exempt shareholders

• Treatment of foreign taxes


Direction of Country and Presidential

Job Approval

Americans are increasingly sorted into think-

alike communities that reflect not only their

politics but their demographics.

“These days Democrats and

Republicans no longer stop at

disagreeing with each other’s ideas.

Many in each party now deny

the other’s facts, disapprove of each

other’s lifestyles, avoid each other’s

neighborhoods, impugn each other’s

motives, doubt each other’s

patriotism, can’t stomach each other’s

news sources, and bring different

value systems to such core social

institutions as religion, marriage and

parenthood. It’s as if they belong not

to rival parties but alien tribes.” Source: Pew Research Center


Public Opinions


No body likes me…


2016 Presidential Head-to-Head


Open Convention & What Could

Happen… ¯\_(ツ)_/¯ • Trump wins a majority of delegates and goes on to win on a first ballot.

• Once he amasses the necessary delegates, he turns into a professional candidate.

• Trump wins a majority of delegates and goes on to win on a first ballot…but the congressional wing of

the party goes it alone.

• He wins the nomination, but GOP gives up and gives a back-handed endorsement to Hillary Clinton by

campaigning on the need to have a solid Republican Congress in order to stop what they consider

President Hillary Clinton’s worst ideas.

• Trump wins enough delegates to win on a first ballot but he does not have enough friends at the grass

roots level of the Republican Party to elect delegates who are loyal to him.

• The draft rules for the Republican National Convention stipulate that delegates have to vote for the person

who won their state, or at least cast their votes proportionally. But these rules can be changed by a vote of

the convention rules committee which is different from the Republican National Committee’s rules

committee. If the convention rules committee changes the rules and all convention delegates vote to agree

with them, they could open the door to defections from Trump. Then, Trump fails to get a majority on the

first ballot; Cruz and Kasich make a deal and Cruz most likely wins the presidential nomination on the

second ballot, with Kasich becoming the vice presidential nominee.

• The outside compromise.

• This is a variation of option #3 except that the convention does not turn to Cruz or Kasich and instead

someone like Speaker Ryan will become their standard bearer.

• Trump goes into the convention with a plurality but not a majority of delegates.

• This guarantees a second ballot even without his opponents having to win votes on rule changes. In this

scenario, there is no test vote to determine which other candidate might have the strength to put together a

majority so expect either a long period of negotiations between the first and second ballot or more than two

ballots. If none of the candidates who have delegates in the hall can win on a second ballot, the convention

could well turn to an outside candidate. Basically why Cruz and Kasich are telling people to vote for them

and why Paul Ryan keeps saying “hell no” – this could happen.

Legislative Outlook: FAA gets punted through July, then likely another short

term punt until Sept where it could be combined with a CR. House fails to pass a

budget, Senate sends appropriation bills to the House. Tax reform drafts are

released in the House and Senate and see no further action. Puerto Rico is

addressed. TPP has little potential in Lame Duck.

Political Environment: Very toxic, internal GOP fighting with far right (aka

Freedom Caucus), Dems unify behind likely Clinton nominee who trends toward

center post-nomination.

Political Landscape: Senate GOP control narrows or flips +/- 1-2, House retains

GOP control, Clinton likely elected (especially with Trump nomination).

Key Takeaways


Questions?


2016 Washington Report - API/media/Files/Policy/16-March... · 1220 L Street, NW • Washington, DC...

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Transcript of 2016 Washington Report - API/media/Files/Policy/16-March... · 1220 L Street, NW • Washington, DC...