Plenary Session Transcripts

A controversial policy position considered by the Governors was to urge that Congress prohibit or restrict the use of oil drilling take-or-pay contracts and contracts with indefinite escalators. ["Take-or-pay" referred to a contract under which a fixed price was set but the purchaser was obligated to pay for the duration of the contract, whether or not ‘he' wished to continue taking the product. Ultimately, deregulation—with its resulting drop in prices—caused defaults or payment delays on the part of those who had signed "take-or-pay" contracts at higher fixed prices.]

Supporters of the policy position argued that during the phase-in of deregulation (scheduled to be finalized in 1985), automatic escalator clauses would impose serious burdens on consumers in addition to what they were already experiencing. In addition, take-or-pay contracts forced consumers to pay higher prices when less expensive alternatives were available. In contrast, opponents of the policy position—representing oil-producing states—argued that without the take-or-pay guarantee for whatever was being produced to be sold, there would be no incentive for drilling, and in the end, consumers would be best served by more energy production. The policy position was adopted after a friendly amendment was attached that urged Congress to consider restrictions on (as opposed to prohibiting) industry practices that tended to inflate prices artificially by undermining market forces.

Another controversial motion considered by the Governors was to support a constitutional amendment to balance the federal budget. Opponents contended that it gave too much power to the Executive Branch at the expense of the legislative branch. Supporters argued that it was time for Congress to show restraint, and that the requirement for state ratification ultimately left the decision in the hands of legislatures at the state level, representing the American people directly. In the end, support was insufficient to achieve the three-fourths vote required for adoption of the motion.

Governor Richard Snelling of Vermont said: "Federalism describes a larger role for people in setting realistic priorities appropriate to their state and community. Federalism does not seek increases or decreases in spending. It seeks an end to the waste and neglect which result from decisions made too far away from accountability." Governor Snelling also said: "Federalism may be a little bit like the institution of marriage. One can make a very strong case for the institution, which does not mean that one has to accept any given proposition. We are entitled to seek a federalism that is harmonious to our beliefs—the states' beliefs—about what will work and what will not work."

Speaking in support of a motion to adopt a constitutional amendment to balance the budget, Governor William Janklow of South Dakota said: "As an additional safeguard, every now and then...we have found it necessary to put into our Constitution protections for our citizenry from fears of abuses by government...It is kind of like some of us who are overweight. We go on a diet every Monday morning, but somehow, for various reasons, we don't have the resolve to get through the diet. It is like our Congress' passing resolutions all the time. They can't even figure out how to pass an annual budget. They can't figure out how to pass any programs that bring any fiscal sense to anything. The political process in America won't let them...We cannot trust these people that we have elected to represent us. So just like the First Amendment, the Second Amendment, the Third Amendment and the various other amendments embodied in the Bill of Rights, the time has truly come for the people of America to stand up and say that we must have an additional protection and safeguard from our government."

Speaking against the motion to adopt a constitutional amendment to balance the budget, Governor John Rockefeller of West Virginia said: "I find it hard to believe that a group of governors is about to vote to do something that will preside over the reasonably prompt annihilation of the states over which we are elected by our constituencies to have stewardship...One consulting group, Data Resources, Inc., says that state and local governments would lose $49 billion tomorrow, that 2.6 million people would become unemployed almost immediately, that the inflation rate would be affected a total of three-tenths of 1 percent downward, which means that for each one-tenth of 1 percent downtrend in the inflation rate, you would be throwing 1 million people out of work. This balanced budget amendment would force extraordinary cuts in the federal budget...you and I know that whereas not all Congressmen are geniuses, and neither are all of us, they are of a mind that they have to face up to this problem...But to do it by constitutional amendment...would be asking for the most total devastation of human services for the people of this country."

Selected Policy Positions Adopted:
(1) Clarifying NGA's position that avoidance of federal preemption of state laws and policies should include protection of a state's authority to structure its own revenue system; (2) calling on the federal government to fully develop the Strategic Petroleum Reserve as quickly as possible and to use interim and regional storage of both crude and refined petroleum products in order to make emergency supplies of fuel resources available to all states; (3) calling on the federal government to limit imports of uranium to protect against threats to national security; (4) with respect to the production and marketing of natural gas, urging Congress to prohibit or restrict the use of take-or-pay contracts and contracts with indefinite price escalators, and to consider measures to ensure intrastate pipelines the access to natural gas equal to that available to interstate pipelines; and (5) reaffirming support for the Equal Rights Amendment.