True Story

Diemer True is an oilman, one of Wyoming’s biggest, a son of the legendary Wyoming wildcatter, H.A.  “Dave” True. Diemer True joined the family business in 1968 after taking a business degree at Northwestern, and became a partner four years later.ix In the late ’90s, when royalty-in-kind was emerging as the oil industry’s solution to the inconvenience of federal valuation rules, the True Companies approached complete vertical integration, with a vast portfolio of oil and gas exploration, development, drilling, marketing, and pipeline companies, as well as in agriculture and financial services. Among these were Black Hills Trucking Inc., Belle Fourche Pipeline, Cambria Europe, Inc., 88 Oil LLC, Equitable Oil Purchasing Company, Midland Financial Corp., Toolpushers Supply Company, True Environmental Remediating LLC, and True Geothermal Energy. The family property also included True Ranches LLC; The LandReport Magazine listed the True family of Casper as the nation’s 27th largest landholder, with nine ranches and two feedlots totaling 255,000 acres. True Oil had its own private FAA-approved heliport nine miles northwest of Casper’s business district.

The True companies run their own Political Action Committee, the True Responsible Government Committee, to collect and donate money to pro-business candidates (True Company workers can have a payroll department check-off give part of their wages to the True PAC) and Diemer True, his wife Susie, and the large extended family all contributex generously to the national and state Republican Party organizations and candidates. True is a member of the board of BIPAC, Business Industry Political Action Committee, a group that, according to its website, creates “grassroots” support for corporations’ political agendas by “using political communication tools” to “communicate with employees and in turn have them communicate with policy makers.”

But perhaps most importantly for the nation, Diemer True is an activist oilman, a tireless worker in his industry’s political pressure groups.

“Diemer True has been one of the energy industry’s strongest advocates for many years,” said Joe Alvarado, presenting to True the 2008 Chief Roughneck Awardxi for lifetime achievement as a petroleum industry leader. “His dedication, perseverance, ingenuity, leadership and integrity in every situation remind us all of what it takes to be successful and ensure the continued growth and prosperity of our industry.”

Diemer True had of course worked in the Petroleum Association of Wyoming, but he also led one of the nation’s largest and most powerful industry groups. True was chairman of the 7,000-member Independent Petroleum Producers Association from 2001-03 (today he is the treasurer), but in 1998, when royalties were the issue of the day, he chaired of the IPAA’s Land and Royalty Committee. Thus, he was perfectly placed to carry forward the industry push for royalty-in-kind.

Diemer True liked the idea of paying federal royalties in kind. Eighty-Eight Oil Company, a marketing outfit, was one of the “essential parties” that attended the 1997 federal RIK workshop in Casper and pressed Minerals Management Service to boldly implement royalty in kind.

“IPAA intends to begin working to reform current valuation rules by ‘taking our advocacy to the Hill,’” True told the Energy Report on March 9, 1998.  “We want to introduce legislation and we will be supporting the legislation.”

A late March storm held True snowbound in Wyoming, unable to appear and testify for his protégée Barbara Cubin’s Royalty Enhancement Act of 1998, but he sent a representative and his thoughts and exhibits were entered in the record, along with those of the IPAA, numerous individual energy company executives, and the Domestic Petroleum Council, which all strongly supported the bill.

As the American Geological Institute observed, HR 3334 “quickly became the rallying call for the oil industry and other pro-RIK supporters.” Several took the opportunity of the Congressional hearings to deplore Minerals Management Service’s proposed oil valuation rules or Minerals Management itself, and one Wyoming outfit accused the agency of driving it into bankruptcy by demanding back royalty payments.

Cynthia Quarterman was also called to testify March 19, and she did not mince words either. The Clinton administration did not want mandatory royalty in kind.

“RIK is unproven and risky for royalty collection in the U.S.,” the Minerals Management director began. “As stewards of public assets, we must have assurance that the revenue and administrative effects of RIK are decidedly positive before moving to implementation. Anything less is a gambler’s folly with the taxpayers’ money.”

The Royalty Enhancement Act was, she said, “weighted heavily in favor of the oil and gas industry” and would force the United States to give up many of its rights, while relieving energy companies of many of their obligations.

“We must seriously ask ourselves how it is to the advantage of the citizens of the United States to give up these rights, and […] a substantial part of the value they receive for the production of their non-renewable resources,” Quarterman said, noting that the effect of HR 3334 would be “an unjustified major economic gift” to the industry.

“We can only conclude that this legislative initiative is primarily designed to enhance the interests of oil and gas producers, at the expense of the American taxpayer,” she stated. “[The bill] clearly represents a dramatic transfer of costs and obligations from the oil and gas industry to the American taxpayer.  … [T]he revenue loss would be … on the order of hundreds of millions of dollars at a minimum. … Because of the disastrous effect this bill would have on the taxpayer and the budget, the Department is prepared to recommend a veto.”

At a March 31 hearing, Cubin–who had said she would not support RIK legislation unless government economists did–requested that the Interior Department and the petroleum industry each submit an analysis of the economic impact of her bill. In late April, the Department of Interior turned in a report saying, as expected, that mandatory royalty-in-kind would lose millions. On May 4, Diemer True, speaking for the IPAA, disagreed, as did the industry’s report.

“With only just a quick examination of the Interior Department’s report on HR 3334, already we see a great deal of the alleged revenue loss from a royalty in-kind program is based on an inaccurate interpretation of the bill,” True said in a press release. “In fact, when you take a closer look, you also realize that DOI completely ignores aspects of the bill that will increase revenue for the federal government.”

True said that “industry looks forward to working with members of Congress and the Department of the Interior’s Minerals Management Service … to develop the best possible royalty in-kind program for the U.S. taxpayer.”

Cubin’s subcommittee easily approved the bill on June 18 and sent it on to the entire House Resources Committee. There it died, killed by an August 1998 General Accounting Office report’s strongly negative assessment of a mandatory, national royalty-in-kind program.

Taking royalties in kind, the GAO reported, would not be “feasible” except under certain conditions: relatively easy access to transport pipelines; leases that produce relatively large volumes of oil and gas; competitive arrangements for processing gas; and expertise in marketing oil and gas. “However,” the report said, “these conditions are currently lacking for the federal government and for most federal leases.”

The Accounting Office noted that although mostxii of the states that receive federal royalty disbursements supported MMS’s proposed valuation regulations, “oil industry representatives generally oppose them [and] believe that oil companies should not pay royalties on higher prices.” The new valuation rules that Minerals Management was proposing tied royalties due to prices received in the marketplace; taking royalties in-kind avoided this.

The death of mandatory federal royalty in kind was not the end of industry opposition to new valuation rules, still pending three years after they were proposed, or of efforts to impose RIK nationwide or at least greatly expand the existing RIK programs.

Nor was it the end of political efforts to do something generous for the oil and gas industry. Barbara Cubin carried on with a bill, her Federal Oil and Gas Lease Management Improvement Act of 1999, to give  tax breaks to the corporations. This bill didn’t have the sex appeal of mandatory RIK, and got only one co-sponsor, Rep. Joe Skeen of New Mexico. Perhaps part of the problem was the speech Cubin made when she introduced the bill on the House floor in May 1999.  Potential supporters, even true lovers of the oil and gas industry, might have been put off by Cubin’s tender sympathy for the agony of the oil industry, and her dismissive contempt for the selfish American consumer.

“Mr. Speaker, production of oil and gas from our public lands is fast becoming a rarity,” she began. “The ‘oil patch’ in the United States is in tough shape. Consumers blissfully enjoyed record low gasoline prices until very recently, but producers have suffered immeasurably from the diminished proceeds they have received for their crude oil …. Our bill will provide some incentives to federal oil and gas lessees to ‘stay the course’’ when prices drop….”

The bill went to the Resources Committee, was referred to Cubin’s own Subcommittee on Energy and Mineral Resources, and died there without a hearing.

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  1. I’ve read the story twice now, and while very well researched and reported, I have to come back to my initial thought on Part I, and not to be rude, but what the heck is the story here? I keep waiting for something cool, unethical or interesting to happen…