[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.
____________________