A Fascinating Discussion With a Former Democratic Congressman

By: David Blackmon

I’ve debated with myself about writing about this call since I gained a degree of respect for the former congressman, a Democrat from an oilproducing state, who called me out of the blue in early October. He had read a story I wrote for another publication back in August, in which I discussed his political party’s fraudulent allegations that oil and gas companies enjoy tax “subsidies” from the federal government.

Here, in part, is what I wrote then:

The oil and gas industry does not receive “subsidies” of the type that wind, solar and electric vehicles enjoy, i.e., direct transfer payments from the government to enormous corporations like Tesla, General Motors and Ford totaling billions of dollars every year. Some in the industry—mainly small producers and royalty owners—do benefit from the expensing of intangible drilling costs, which is similar to appliance manufacturers or pharmaceutical companies expensing their own cost of goods sold every year. Small independents and royalty owners also benefit from percentage depletion, a provision that is similar to depreciation of inventory in other industries. Biden proposes to single oil and gas out by repealing those oil and gas-related provisions, which have existed in the tax code for more than a century.

In all, (Biden’s) Green Book contains a whopping total of $147 billion in new industry taxes, which would negatively impact mainly the red states where oil and gas is produced in the U.S.: Texas, Alaska, Wyoming, Montana, Louisiana, North Dakota, Ohio and Pennsylvania. In most respects, it is the same nakedly political move that was attempted during all eight years of the Obama/Biden administration without success. We’ve seen it all before, most of it, anyway. (End)

I’ve written about this subject for many years. I spent my first 15 years in the oil industry as an accountant for several companies. I know this stuff like the back of my hand. Trust me, these are not “subsidies” by any honest definition.

Anyway, this former congressman is a lawyer—turns out that he is actually a law professor at a state-run university in his home state who served a couple of terms in congress recently but then lost a bid for re-election. I won’t identify him by name or the state he’s from because we had a respectful discussion, and I respect his privacy.

Here’s what he wanted to talk about: Throughout his entire time in Congress, he was told by his staff, his colleagues, the Democrat party leadership and activists who visited his office that these long-time, century-old tax treatments specific to oil and gas were the same kinds of subsidies that wind and solar and EVs get and that most of those alleged oil industry subsidies actually go to major, integrated companies like Exxon. That’s literally what he believed when we began our discussion.

When I told him that Exxon does not, in fact, benefit in any way from those treatments and neither do any of the other major oil companies, he told me he didn’t believe me and was frankly a little belligerent about it. But I assured him I was right and also told him the respective years in which those treatments were taken away from integrated oil companies and even many large independent producers—1975 for percentage depletion, 1992 for deduction of intangible drilling costs.

He was incredulous when I told him that. Why? Because he and all of his colleagues were told exactly the opposite by people they trusted. In fact, the religious dogma spread by the climate alarmists alleged these “subsidies” were an invention by evil Dick Cheney and W. Bush in the 2005 time frame. Abject nonsense. Pure fantasy.

I told him to go do a little research, and he would see I was right and referred him to an expert he could check with in Washington, DC, if he wanted to do so. That at least mollified him a bit.

But then it got even better. “But,” he said, as he got down to his apparent existential dilemma, “but, here’s the thing: if what you’re saying is true, then the Democrats in Washington are intentionally trying to harm the domestic oil industry just for pure political reasons.”

“Well…yes,” I replied. “They are.” How could that possibly come as a surprise to him?

“But…but that can’t be,” he said. “The oil industry employs millions of people. Our economy is still hugely dependent on oil and gas.”

“Well…yes. Yes, it is.”

“But…but if what you are saying is true, and the Biden people know this, and Pelosi and Schumer know this, then they are trying to intentionally damage the U.S. economy,” he continued, as he followed this all out to its inevitable logical conclusion.

“Well…yes,” I said again. I have to admit I was chuckling at this point.

“But that doesn’t make any sense!”

“Well, it does if your goal is to intentionally

create shortages of oil, natural gas and coal to make renewables and EVs more competitive in the marketplace.”

“…”

“Congressman, this is the plan, and it has been the plan since you served in congress. Long before then, in fact,” I said.

“No. No one said that to me,” he said. “I can’t believe this is true. You must be wrong.”

“No, I’m right, I assure you,” I said and again referred him to the expert in DC.

Our conversation continued back and forth along these lines for quite some time until I finally told him to take a look at the group of zealot anti-oil and gas advisors with whom this president has surrounded himself:

• John Kerry • Leftwing ex-Michigan Gov. Jennifer Granholm as Energy Secretary • An unapologetic eco-terrorist, Tracey Stone-

Manning, as Director of the Bureau of Land

Management • A life-long anti-oil and gas activist, Deb Haaland, as Secretary of Interior (who the congressman said is a personal friend of his and would never do anything to harm the oil and gas industry) • An array of appointees at EPA, DOI, Commerce and Treasury that come out of the radical anti-oil and gas climate alarm groups

“Which of these advisors do you think are advising President Biden to strengthen the domestic oil and gas industry?” I asked. “Who among them do you think is telling the president the truth about these tax treatments?”

“…”

“Tell me this, congressman,” I added. “In your entire time in Congress, representing a significant oil and gas state, did you ever receive a single visit from a single representative of the oil and gas industry to talk to you about any of this? I’m betting the answer is ‘no.’”

“No, I never had any requests for meetings from anyone in the business.”

“So, in your defense, that’s the industry’s fault, isn’t it? I mean, how are you or any other Democrat member of congress supposed to hear the industry’s side of this if they don’t come talk to you?”

“Yes, that’s true,” he said. “But that’s just how it is in Washington now. There are only a handful of Democrat members that anyone in the industry bothers with.”

“Yes, I know. By the same token, though, there are only a handful of Republican members that the radical greens bother with, right?”

“That’s true.”

“Yes, it is true. And it’s also how you end up with members of one party ending up believing abject nonsense like this fantasy that “Big Oil” gets a bunch of federal tax subsidies, like wind and solar and EVs do, right?”

“Right. If what you’re saying is true.”

“Oh, it’s true.” The conversation ended shortly after.

Two days later, he sent me an email telling me he enjoyed our discussion and that “your arguments are persuasive.” I felt like responding with something like “they aren’t arguments — they’re facts,” but I decided to check myself on that since he truly had been mainly gracious in our call and really did seem to be trying to find the truth.

Honestly, I don’t know if he will be willing or able to ultimately accept the inevitable logical conclusion that his own reasoning during our call will lead him to. It’s hard for anyone to give up what is without doubt religious dogma with which they have been indoctrinated by true religious zealots like those in the climate alarm industry and Democrat party leadership.

I hope he does, though, since he is in the business of influencing young minds now. The dogma has to end somewhere if our country is going to survive.

Throughout his entire time in Congress, he was told by his staff, his colleagues, the Democrat party leadership and activists who visited his office that these long-time, century-old tax treatments specific to oil and gas were the same kinds of subsidies that wind and solar and EVs get and that most of those alleged oil industry subsidies actually go to major, integrated companies like Exxon

About the author: David Blackmon is the Editor of SHALE Oil & Gas Business Magazine. He previously spent 37 years in the oil and natural gas industry in a variety of roles — the last 22 years engaging in public policy issues at the state and national levels. Contact David Blackmon at editor@shalemag.com.

Arbitration vs. Litigation: Which is the Best Forum for Your Legal Dispute?

By: Kellen R. Scott

When drafted and implemented properly, arbitration can have significant advantages over litigation. It can be faster, less expensive, and confidential. The process can also offer more flexibility than litigation and be designed to fit the specific needs of the parties and their dispute. It’s no wonder that arbitration has become a popular dispute resolution mechanism over the past few decades. And, as civil courts continue to be overloaded due to crowded dockets, understaffing and pandemic-related delays, parties may continue to turn to arbitration as their preferred forum to resolve their legal disputes. But is arbitration right for you and your business, or should you consider litigation? This article highlights some of the more consequential advantages and disadvantages of arbitration and litigation. Carefully consider each before deciding which is best for you.

Decision timing. Arbitration is a creature of contract and requires both parties to agree to arbitrate their disputes. If the parties do not reach an agreement to arbitrate, litigation will be the default forum for the parties’ dispute. The decision whether to arbitrate or litigate frequently arises when parties first negotiate a contract, as opposed to after a dispute has arisen. If you choose to include an arbitration clause in your agreement to cover future disputes, make sure to draft it carefully to avoid enforcement issues. For example, use a format that is recognized in the jurisdictions of both parties, so the agreement and any future award are enforceable. Pre-dispute arbitration agreements usually are enforceable, although more recently, there has been some groundswell to outlaw pre-dispute arbitration agreements in certain employment contexts.

While it may be easier to determine whether arbitration is more beneficial after a dispute has arisen and its parameters clearly delineated, the other party may elect to litigate, especially if it perceives that delaying matters will be a strategic advantage.

Expediency. Depending on the complexity of the dispute, parties who arbitrate can frequently reach a resolution in twelve months or less. Moreover, additional fasttrack procedures are available for smaller claims. Conversely, litigation typically takes more than twelve months, with disputes often taking years to be resolved in increasingly busy courthouses, a situation only exacerbated by the COVID-19 pandemic.

On the other hand, litigation may create opportunities for the presiding judge to make legal rulings prior to the trial, including summary judgments and other early dispositions, to dismiss or narrow the scope of the claims in the case. Whereas arbitrators typically have the authority to issue similar rulings prior to the final hearing, parties may not be as successful in obtaining those rulings from arbitrators. Furthermore, some parties may challenge the enforceability of an arbitration agreement in court, thus delaying the dispute resolution process at the very outset and nullifying the benefit of expediency.

Expense. Over the years, arbitration has been promoted as a less-cumbersome and lessexpensive alternative to litigation since arbitrators and the parties can streamline the proceedings by limiting the scope of pre-hearing fact-gathering, the number of witnesses and evidence admitted to avoid unnecessary costs.

However, increasingly so, arbitration expenses can be on par with the price tag of litigation. Court filing fees are nominal, and judges are not paid directly by the parties for their service, whereas, depending on the type of dispute, arbitration can involve significant filing and arbitrators’ fees and case management expenses. For example, fees for commercial disputes are typically higher than those related to employment

disputes because they are assessed based on the value of the claim. Furthermore, parties also have to cover hourly or daily arbitrator fees, which can quickly add up. In employment disputes, the employer can be expected to shoulder much more of the load for the case management fees and arbitrator costs. Therefore, if the predominant factor for selecting a dispute is the potential for a more economical forum, you should carefully consider whether your particular dispute truly will result in savings by resolving it through arbitration.

The decision-maker. The COVID-19 pandemic has exacerbated already overloaded dockets, limiting the time judges can spend resolving individual disputes. Arbitrators, on the other hand, typically have more time to properly consider and decide matters.

Additionally, parties can exert more influence over the selection process, including deciding how many arbitrators should resolve the dispute — be it a single arbitrator or a panel. Parties also can vet arbitrators based on their specific industry experience and client roster and agree that their arbitrator has to possess specific knowledge, experience, professional background or certifications relevant to the parties’ dispute. For more complex issues, this selection process can result in the parties appointing a highly qualified arbitrator with particular experience that is relevant to the dispute. Parties have virtually no input over the judge to whom a case is randomly assigned in court.

Beyond determining the composition of the arbitral panel, parties also can select the seat of the arbitration and the location of any hearings. This consideration is particularly important when parties originate from different jurisdictions or even different national legal systems, and they prefer to avoid resolving the dispute by the “home” courts of the other party, instead selecting an impartial, efficient and pro-arbitration legal system. For example, in international arbitration, it’s quite common for the chair of the tribunal to be from a country different from those of the parties.

Arbitrators also are considered to be more predictable than a jury of peers and less likely to be swayed by emotional appeals that are not substantiated by evidence. In contrast, arbitrators sometimes are perceived to be more inclined to split the proverbial baby and issue rulings that benefit or harm both parties relatively equally. Because rules of evidence and procedure have less force in arbitration, arbitrators are not only more likely to allow irrelevant witnesses or evidence; they also can refuse to accept procedural defenses that may terminate a dispute early.

As with any mission-critical decision, one solution does not fit all scenarios. Arbitration and litigation have their advantages and disadvantages, so it is crucial to consider them carefully in the context of your specific dispute and your values

Ruling finality and legal errors. Arbitration awards typically are final and binding and lack a customary right to appeal an unfavorable decision. While some arbitration agreements outright remove any right to appeal, the statutory bases to reverse an arbitration award are exceptionally narrow. As a rule, arbitrators are not bound by legal principles and are allowed to make rulings based on what they consider to be just and equitable. Additionally, arbitrators do not have to justify or detail the rationale for their decisions, which typically are not reviewed for legal errors. Errors in the interpretation or application of the law or facts generally are not permissible bases to upset an arbitration award. Because of these factors, arbitration decisions are less likely to be overturned, even if a party strongly believes the evidence does not support the outcome. This can make a party skittish when selecting arbitration. On the other hand, the general finality of the award may be a welcome result for a weary party that is tired of challenges and appeals.

Conversely, rulings in litigation tend to be better documented, and unfavorable or erroneous decisions can be appealed to a higher court. Some parties may value the finality of an arbitration award, whereas others place higher importance on the ability to seek recourse if a decision is viewed to be erroneous or unjust.

Confidentiality. While court proceedings and their case records are open to the public, arbitration proceedings enjoy a large degree of confidentiality, making it the preferred dispute resolution forum for many for that reason alone.

As with any mission-critical decision, one solution does not fit all scenarios. Arbitration and litigation have their advantages and disadvantages, so it is crucial to consider them carefully in the context of your specific dispute and your values. You should reach your decision by assessing which attribute is most important to you. Is it confidentiality? Or, do you want to retain the ability to appeal an erroneous ruling? It is always a good idea to consult an experienced attorney to walk you through all relevant determinants before selecting or agreeing to a particular dispute resolution mechanism. About the author: Kellen Scott is a shareholder in Chamberlain Hrdlicka’s Labor and Employment and Litigation sections. He represents businesses before state and federal administrative agencies and in court and arbitration proceedings involving wage and hour, classification, and restrictive covenant issues. Scott also advises clients on a variety of pre-dispute issues. He can be reached at kellen.scott@chamberlainlaw.com.

While court proceedings and their case records are open to the public, arbitration proceedings enjoy a large degree of confidentiality, making it the preferred dispute resolution forum for many for that reason alone.