[Congressional Record Volume 144, Number 40 (Wednesday, April 1, 1998)]
[Extensions of Remarks]
[Page E539]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




             1998 EMERGENCY SUPPLEMENTAL APPROPRIATIONS ACT

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                               speech of

                           HON. GEORGE MILLER

                             of california

                    in the house of representatives

                        Tuesday, March 31, 1998

  The House in Committee of the Whole House on the State of the Union 
had under consideration the bill (H.R. 3579) making emergency 
supplemental appropriations for the fiscal year ending September 30, 
1998, and for other purposes:
  Mr. MILLER of California. Mr. Chairman, the House Report accompanying 
the Supplemental Appropriations bill contains a little-noticed section 
that could cost taxpayers many millions of dollars in revenues from 
public lands in the Gulf of Mexico.
  Technological advances in recent years have made it much cheaper to 
find and produce oil and gas in what was formerly considered ``deep 
water'' in the Gulf. In 1995, the Congress unwisely passed a Deepwater 
Royalty ``holiday'' to stimulate oil companies (most of whom were 
already enormously interested in deep water leases) to bid on these 
tracts. Here's how Congress provided that incentive: instead of 
charging royalties on oil and gas produced from these new leases, the 
oil companies would be given as much as 87.5 million barrels absolutely 
free! We have given away hundreds of millions, if not billions, of 
dollars in royalties from leases on public lands that the oil industry 
was already clamoring to bid on. It came as little surprise that 
companies are snapping up the royalty-free leases and paying higher 
than normal front end bonuses to acquire them. Why wouldn't you pay 
more if you know you will get nearly 100 million barrels of production 
royalty-free?
  Thanks to improved technology and cheaper production costs, oil 
exploration and production in the Gulf are booming. As reported in 
Forbes magazine last year, Gulf of Mexico deepwater development costs 
have dropped to as little as $3 per barrel, one-third the level in 
1987.
  This is great news for the oil industry, but might not be quite so 
good a bargain for the taxpayers who own the oil and gas. The Minerals 
Management Service, which oversees offshore production, wants to look 
at possibly raising the royalty rates on the holiday leases once 
royalties do begin to apply in an effort to determine whether or not 
the public is actually receiving fair market value on its oil and gas. 
MMS is fully allowed to take such corrective action under the 1995 law 
that gave away the leases royalty-free.
  But the oil industry, enjoying the benefits of the 1995 law and flush 
with money from Gulf leases, now wants to curtail the government's 
legal right to make adjustments to ensure the public's financial 
interest is fully protected. The House Appropriations Committee's 
Report on the Emergency Supplemental Appropriations bill includes 
language to prevent the Secretary of the Interior from making any 
changes to the lease terms. This language undermines the Secretary's 
authority to set terms that guarantee the taxpayer receives fair market 
value on the sale of its mineral resources.
  Congress should be protecting the public's right to receive a fair 
return--not tying the hands of the Interior Department when it is 
attempting to secure fair market value for the taxpayers. This Report 
languages is irrelevant to the Emergency Supplemental and, by revising 
the authority granted Interior in the 1995 law, constitutes an indirect 
effort to legislate on an appropriations bill.
  I would hope such instructions are not included in the Conference 
Report or the Statement of Managers. And I would recommend that Members 
oppose the Conference Report should it be included. If the weakening 
recommendation is in the Statement, the MMS should ignore this unwise 
effort to tamper with the law and shortchange taxpayers.

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