[Congressional Record Volume 145, Number 118 (Monday, September 13, 1999)]
[Senate]
[Pages S10774-S10777]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




                           ORDER OF BUSINESS

  Mr. GORTON. Mr. President, with respect to the Interior 
appropriations bill, there will be a vote on or in relation to the 
Bryan amendment and the second-degree Wyden amendment tomorrow morning 
at 10:30.
  It may well be that that will be the last contested matter in 
connection with this appropriations bill other than the disposition of 
the Hutchison amendment. I am not entirely certain of that at this 
point. But we are close to having agreed-upon managers' amendments both 
with respect to legislative matters and with respect to money matters, 
with the exception of the motion to reconsider the invocation of 
cloture.
  For that reason, this is a notice and a request to Members that if 
they have other matters they wish debated, or if they have other 
matters they wish brought to the managers' attention, they should do so 
very promptly. We will not in the managers' amendment dispose of all 
the amendments which were reserved, but I think we probably will be 
able to take care of all of those that look as if they would be 
otherwise brought up and voted on.
  We are tantalizingly close to finishing. But, of course, we will not 
finish or go to third reading under the present circumstances at least 
until after disposition of the motion to reconsider the motion to 
invoke cloture, and that motion will certainly pass, and there will be 
at least one more vote on cloture itself.
  The PRESIDING OFFICER. The Senator from California.
  Mrs. BOXER. Mr. President, thank you very much.
  I would just like to comment upon the vote the Senate has just taken 
on whether to shut down debate on the Hutchison amendment. I thank very 
much those colleagues who voted against that cloture motion. I think it 
is very important that the light and the truth be shone upon this 
matter. I think the way to do it is to have more discussion.
  I just want to say to the Senate that when I made my 2\1/2\-minute 
presentation, it is always very difficult to say everything in your 
heart in 2\1/2\ minutes. But I said the reason I am doing this--there 
is no other reason in the world for me to be delaying a vote on an 
amendment--is that I love the Senate too much to see it be a party to 
such a scheme by just 5 percent of the oil companies to essentially rob 
this Treasury of millions and millions of dollars.
  This is the fourth time that Senator Hutchison has attempted to pass 
this rider. It never had a Senate vote before. This is the first vote 
in any way about the Hutchison amendment.
  By the way, I know that some people who voted aye on the cloture 
motion will vote with me on the substance. I am looking forward to 
that.
  But the bottom line is, when we look at this closely, we see a number 
of things--that most of the oil companies are doing the right thing on 
their royalty payments. Ninety-five percent of

[[Page S10775]]

them are doing the right thing. They pay the appropriate royalty when 
they drill on Federal lands, onshore or offshore, and they send that 
check over to the taxpayers. You know where the funds go--right into 
the Land and Water Conservation Fund and Historic Preservation Fund to 
be used for environmental purposes for the upkeep of our parks and for 
the upkeep of our historical monuments. We all know from both sides of 
the aisle that we need to do more for our parks and open space.
  As a matter of fact, there are bipartisan proposals to pass 
legislation to do that. Yet at the same time, too many people seem 
willing to shut their eyes to a raid on the Treasury that would lower 
the revenues to the Land and Water Conservation Fund.
  You have to ask yourself why the oil companies are so interested in 
this. I think the answer is in the Record. There have been several 
whistleblowers who have come forward who have stated in the most 
eloquent of terms that when they were working for the oil companies, 
the companies purposely undervalued the oil so that they could pay 
fewer dollars of royalty payments.
  As USA Today says, what if we all woke up one day and said: You know, 
I don't think I am paying a fair amount of rent. Forget about the 
contract I signed with my landlord. I am just going to cut it back.
  It wouldn't be too long before that tenant was out on the street, and 
rightly so. If he or she signed an agreement, they have to pay it.
  What if one of us decided not to pay our mortgage and just say, let's 
take 10 or 20 percent off the top? The answer is, if we did that on a 
continual basis, the banker would take over our home, and rightly so, 
because we signed an agreement.
  The oil companies have signed an agreement. They have signed an 
agreement with the Federal Government, and 95 percent of them are doing 
the right thing, but 5 percent of them are not.
  The Interior Department wants to make sure that those 5 percent do 
the right thing by clarifying the rules that govern these royalty 
payments. The Hutchison amendment would stop the Interior Department in 
its tracks from trying to collect the fair royalties.
  I have used another analogy in this debate before. If somebody came 
running through the Senate Chamber with a big sack of money that he had 
just stolen from the Treasury, every one of us on both sides of the 
aisle would stop that individual. Frankly, this is no different.

  How do I know that?
  The whistleblowers have told us so under penalty of perjury that they 
sat around and said: Let's undervalue this oil and ``wait for the day 
of judgment.'' That is what one of the whistleblowers actually said.
  How else do we know there is cheating going on?
  Look at all the settlements that the oil companies are agreeing to 
with the various States all throughout our country on this matter. They 
don't want to go to court. They are afraid they are going to lose 
because the whistleblowers will get out there--because the facts are 
there. So they are settling for millions of dollars.
  Ironically, Mr. President, I think I even sent it to your office on 
Friday, two more big oil companies are settling this week for over $100 
million rather than take their weak case to the court.
  We know that the posted prices they are paying their royalty on are 
just made up and they are far less than the market price.
  All Interior wants to do is fix the situation.
  You will hear the argument: It is a bureaucracy run amok. Let me say 
this: You could say that about anything. But the facts belie that 
statement because the Interior Department has held many meetings. By 
the way, they have opened up their rule for further comment.
  All I want to say to my colleagues by way of thanking them for this 
is that because of your standing with me against this cloture 
amendment, it means we are going to continue to have the American 
people focus in on this scam. When they do, they are going to want to 
know who stood with them or who stood with the vertically integrated 
oil companies that had been getting away with this robbery.

  That is all I want. I don't gain anything out of this. There are lots 
of oil companies in my State. They are not thrilled. This is not 
something I do to be popular. But if in your heart you know you are 
right, and if in your heart you don't want to see the Senate associated 
with this kind of scam, then you have to stand up and be counted. Many 
of my colleagues, including Senator Durbin, Senator Feingold, Senator 
Wellstone, and Senator Murray, stood with me and entered statements in 
the Record or stood by my side on the floor of the Senate.
  I say to my friend, Senator Hutchison, she was the one who wanted a 
vote on Monday originally. The vote was supposed to be held on Tuesday. 
I did not object to an earlier vote. A lot of people came back for the 
vote. Therefore, of course, I insisted we have a vote. We are going to 
have another vote. This could be from my perspective a very short-lived 
victory. It is true, they could come up with the 60 votes. But I feel 
good tonight. We have courage on this floor. This was not an easy vote.
  Senator Feingold has taken to the floor. He has shown the biggest 
contributions have come from oil companies. I understand the power of 
that. I understand that. It is hard to stand up when these 5 percent--
and they are the big ones, the billion-dollar companies--call you on 
the phone and say: Come on, this is just a procedural matter, stick 
with us.
  What will we have in the end? More delay and a $66 million loss to 
the Treasury on top of the $88 million we have already lost from the 
Land and Water Conservation Fund. I think if the American people will 
focus on this, they will thank those colleagues who stood with me 
today. They are all consumers. They all understand this.
  There has been a lot of talk on the floor that oil companies are 
suffering. I was very strongly in support of helping the oil companies 
and the steel companies that were in trouble. I am the first one to say 
we need to give them help. But don't allow 5 percent to cheat the 
taxpayers. That is a different issue. The interesting thing about 
royalty payments is they go down when there is a depression in all 
prices.
  Wouldn't it be nice if our rent went down if there was a depression 
or we lost our job? Wouldn't it be wonderful if our mortgage 
automatically went down if there was a recession? That is what happens 
with these royalty payments. They are very fair. They are based on the 
fair market value of the oil. There is no set price because we want to 
be fair to the oil companies.
  It is a privilege to drill on the people's land. It is a privilege, 
whether it is offshore or onshore. If it is Federal land, the 
taxpayers, the American people own that land. We want to make sure we 
work in a cooperative spirit with those who would like to exploit our 
resources. Make sure, at the same time, that they are good corporate 
citizens. What stuns me about this debate is that 95 percent of them 
are and 5 percent of the oil companies are not.
  All the Department of the Interior is saying is: Please, let us 
straighten this mess out with these 5 percent. It is a lot of money to 
the Treasury, money that is necessary to keep our parks up, preserve 
our remaining open space, invest in our historical monuments that this 
great Nation so cherishes. It is a shame to see these 5 percent of the 
oil companies--and this is the fourth time this rider is before the 
Senate--walking off with millions of dollars that belong to the 
American taxpayers.
  Senator Hutchison says the Office of Management and Budget is wrong 
when they say it is a $66 million loss. The Interior Department says it 
is a $66 million loss. The CBO tells Senator Hutchison it is about $11 
million. I say it doesn't matter if it is $11 million or $66 million. 
Maybe it is somewhere in between. It is the principle here of millions 
of dollars that belong to the taxpayers not winding up in the Land and 
Water Conservation Fund to take care of our natural resources.

  Whether this is a victory for those who believe in fairness and 
justice and truth, if it is a victory that lasts 24 hours, so be it. To 
me it is an important point. We have made our point. This is not a 
trivial debate. This is not a trivial argument. As a matter of fact, I 
think the Senator from Idaho, Mr. Craig, was on the floor and said it 
is a baseless debate. It is far from baseless.

[[Page S10776]]

 We see that tonight with this vote, however it winds up. This is a 
divided Senate.
  Again, I thank the people who stood for fairness, who stood with the 
taxpayers, who stood with the environment, who stood with those who say 
you have to be a good corporate citizen. That is all we are saying. We 
expect our citizens to be good. Boy, if they don't pay their taxes, we 
are after them. And don't have the lawyers that the oil companies have 
on their side to drag out these arguments in court, month after month--
ordinary citizens don't have that. If they don't pay their taxes, they 
have to explain why. If they don't pay their rent, they better explain 
why. If they don't pay their mortgage, they better tell the bank why.
  We shouldn't have a double standard just because an oil company is 
powerful, just because an oil company can give millions of dollars of 
contributions, just because an oil company is influential. This day we 
stood up for the average person. I hope we do it again. For me, it was 
all worth it.
  I yield the floor.
  Mrs. HUTCHISON. Mr. President, I think it is very clear that the 
Senate has seen through all of the rhetoric, through all of the 
hyperbole, and they have made the right decision on this amendment. I 
am very proud tonight that if everyone had been here we would have had 
60 votes for cloture. As it is, we had 55 votes. The clear will of the 
Senate is to do the right thing on this issue--not to be led down a 
path, bringing up issues that are unrelated in order to make a point 
that isn't relevant to what we are talking about today.
  The Senate voted, overwhelmingly, to come to closure and take control 
of the tax policy of this country. After all, if the Senate doesn't 
make the tax policy along with our colleagues in the House, are we 
going to let unelected bureaucrats make decisions that will affect our 
economy, the jobs of thousands of people, possibly sending them 
overseas for foreign jobs instead of American jobs? Our Senate 
colleagues tonight said the Senate of the United States is going to 
speak on oil and gas tax policy. We spoke very clearly that we want a 
1-year moratorium. We hope MMS will do the right thing in giving a 
simple and fair tax that will be paid by the oil companies for the 
right to drill on public lands. That is the issue here.
  There has been a lot said tonight. First of all, the quote was made 
from a USA Today article saying that this would be like a lessee 
saying: I'm not going to pay $500 a month for this apartment; I'm going 
to pay $400 a month even though I agreed to pay $500 a month.
  Actually, it is just the opposite. The oil companies have a contract 
with the Federal Government. They have met all the criteria that the 
Federal Government has put down in order to drill on Federal lands. 
What the Senator from California has asked that we do is to allow the 
Mineral Management Service to raise the rent on the apartment in the 
middle of the month. They are breaking a contract and saying: We are 
going to raise your taxes right in the middle of the contract.
  If we allow that to happen, who will be next? Who is the next person 
who is going to have a contract and have the price increased in the 
middle of the contract? Contract rights are part of the basis of the 
rule of law in this country, and we seem to be blithely going over it 
as if, ``It's a big oil company; we can run over them.'' That is not 
the rule of law. We should not be raising taxes in the middle of a 
contract. It is not right and I hope in the end the Senate will prevail 
and we will make the tax policy for this country.
  No. 2, the Senator from California keeps saying only 5 percent of the 
oil companies are going to be affected by the MMS-proposed rule. In 
fact, every company that drills on public lands is affected by this 
ruling. I want to put in the Record the letter that was received on 
September 13, 1999, by the California Independent Petroleum 
Association.

       Dear Senator Hutchison:
       The California Independent Petroleum Association represents 
     450 independent oil and gas producers, royalty owners, and 
     service companies operating in California. We want to set the 
     record straight. The MMS oil royalty rulemaking affects all 
     California producers on federal land. It is false to claim 
     that this rulemaking only affects the top 5 percent of oil 
     producers.
       How are California independents affected? The proposed 
     rulemaking allows the government to second guess a wellhead 
     sale. If rejected, a California producer is subjected to an 
     ANS index that adjusts to the wellhead set by the government. 
     Using a government formula instead of actual proceeds results 
     in a new tax being imposed on all producers of federal oil.

  I ask unanimous consent the entire letter be printed in the Record.
  There being no objection, the material was ordered to be printed in 
the Record, as follows:

                                            California Independent


                                        Petroleum Association,

                               Sacramento, CA, September 13, 1999.
     Hon. Kay Bailey Hutchison,
     U.S. Senate,
     Washington, DC.


CIPA SUPPORTS YOUR AMENDMENT TO EXTEND ROYALTY RULEMAKING AN ADDITIONAL 
                                  YEAR

       Dear Senator Hutchison: The California Independent 
     Petroleum Association (CIPA) represents 450 independent oil 
     and gas producers, royalty owners and service companies 
     operating in California CIPA wants to set the record 
     straight. The MMS oil royalty rulemaking affects all 
     California producers on federal land. It is false to claim 
     that this rulemaking only affects the top 5% of all 
     producers.
       How are California independents affected? The proposed 
     rulemaking allows the government to second guess a wellhead 
     sale. If rejected, a California producer is subjected to an 
     ANS index that adjusts to the wellhead set by the government. 
     Using a government formula instead of actual proceeds results 
     in a new tax imposed on all producers of federal oil.
       It doesn't end, if a California producer chooses to move 
     its oil downstream of the well, the rulemaking will reject 
     many of the costs associated with these activities. Again, to 
     reject costs results in a new tax being levied on the 
     producer.
       Senator Hutchison, California producers support your 
     amendment to extend the oil royalty rulemaking an additional 
     year. We offer our support not on behalf of the largest 
     producers in the world but instead on behalf of independent 
     producers in the state of California. Your amendment will 
     provide the needed impetus to craft a rule that truly does 
     affect the small producer and creates a new rulemaking 
     framework that is fair and equitable for all parties.
       Again, thank you for offering this amendment. We cannot 
     allow the government to unilaterally assess an additional tax 
     on independent producers. After record low oil prices. 
     California producers are barely beginning to travel down a 
     lengthy road to recovery. To assess a new tax at this time 
     could have a devastating effect on federal production and the 
     amount of royalties paid to the government.
           Sincerely,
                                                 Daniel P. Kramer,
                                               Executive Director.

  Mrs. HUTCHISON. Mr. President, I submit for the Record the very 
people who are affected are from the home State of the Senator from 
California, the small producers, the independents who do not have the 
luxury of big margins. They are very much affected and very concerned 
about this rule and what it would do to somebody who has a contract, 
who says: Pull your truck up and I will sell you 1000 barrels of oil. 
Here is the price, $12 a barrel.
  And the Government says: No, we will not accept the $12 a barrel, 
even though they are picking it up right there.
  That is exactly what the MMS rule does. So every independent is 
affected and it is the independents who are having to lay people off in 
this industry because the oil prices have been so low over the last 
year that they have not been able to stay in business.
  Do you know what happens when somebody shuts down? Every family that 
is dependent on employment from that small producer no longer has a 
job, and they may live in a place where it is not easy to find another 
job. The big oil companies just chose to move overseas where they know 
what the regulatory environment is. They know it is stable. They do not 
want to create foreign jobs, but that is what they are forced to do 
because it is so hard to do business in the United States and 
especially when an unelected bureaucracy is able to change the taxes in 
the middle of a contract. That is just not the American way.
  I am very proud the people of the Senate spoke clearly tonight, very 
clearly; 55 Members of the Senate voted to make the tax policy in this 
country.
  Congress did hope we could simplify oil royalty rates. We asked the 
Mineral Management Service to come forward with a simplified system so 
everyone would know exactly what the price

[[Page S10777]]

would be to drill on Federal lands. Simply, they have failed so far in 
the proposed rule.
  This is the diagram of what will happen if this rule goes into effect 
against the wishes of Congress that we simplify it so oil companies 
will know what they owe without question. By the time you go through 
all of this, how could anyone know for sure what they owed?
  Furthermore, the MMS will not allow the ruling for one company on oil 
royalty rates and the basis for those rates to apply to any other 
person who is drilling, unlike the IRS, which will give you a ruling 
letter so you will know this is the precedent, this is the way the IRS 
will treat this particular fact situation so anyone else with the same 
fact situation can rely on the precedent and can give IRS that ruling 
document and know they will be treated the same. That is not the case. 
The MMS refuses to be bound by the precedents they set themselves, even 
if the facts happen to be the same. That is not sound policy. That is 
not fair treatment for the taxpayers and the people doing business and 
creating jobs in our country.
  The Senate has clearly spoken. The question is, Will the Senator from 
California let the majority rule? Will the Senator from California say 
55 Members on both sides of the aisle have voted for Congress to set 
tax policy and to require the oil companies to pay a fair price for 
drilling on public lands? That is the question.
  The Senate has voted 55, with 5 Members missing--according to the 
votes that have been taken it will be 60 votes if everyone is here and 
voting. So we have the vast majority to invoke cloture, and the 
question is, Will the Senator from California do the honorable thing? 
She said earlier in this debate she wanted fair treatment of this 
amendment. Fair treatment means an up-or-down vote on the amendment. So 
the question is, in the face of the overwhelming majority of the Senate 
who want to do the right thing, who want fair taxation of our oil and 
gas industry, will she let the majority rule? She said, in the 
Congressional Record on September 9:

       Mr. President, I thank the chairman of the committee for 
     being so gracious in preserving my rights. My friend from 
     Texas and I feel equally strongly on the point, just on 
     different sides. I think each of us wants to have justice 
     done on the amendment.

  If the Senator from California will stick with her commitment that we 
would have justice done on the amendment, she will allow the majority 
to rule. The majority has heard the debate on this issue; they have 
seen through the rhetoric; they have seen that lawsuits are not a part 
of making a fair rule. They have seen it is the responsibility of 
Congress to set policy because we do have accountability. We are 
accountable to the people.
  So if the Senator from California means to do justice by the 
amendment, as she stated on September 9 in the Congressional Record, 
she will let us have an up-and-down vote on this amendment and let the 
majority rule in the Senate.

                          ____________________