[Congressional Record Volume 152, Number 18 (Tuesday, February 14, 2006)]
[House]
[Pages H244-H245]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




                      THE POLICY OF ROYALTY RELIEF

  Mr. GEORGE MILLER of California. Mr. Speaker, I ask unanimous consent 
to claim the time of the gentleman from American Samoa (Mr. 
Faleomavaega).
  The SPEAKER pro tempore. Is there objection to the request of the 
gentleman from California?
  There was no objection.
  The SPEAKER pro tempore. Under a previous order of the House, the 
gentleman from California (Mr. George Miller) is recognized for 5 
minutes.
  Mr. GEORGE MILLER of California. Mr. Speaker, today Americans woke up 
to the unfortunate news that because of the actions of this Congress, 
the major oil companies that are drilling in the Gulf of Mexico are in 
all likelihood not going to be paying any royalty on billions of 
dollars, some $65 billion worth of oil, that they will be extracting 
from the Outer Continental Shelf of this country and on which they 
would be expected to pay some $7 billion in royalties; and, in fact, 
they may not be paying that. It may go even further that some of the 
majors have suggested that they are not required to pay any royalties 
on oil extracted from the Outer Continental Shelf. In that case, the 
cost to the taxpayers would be maybe $35 billion, $35 billion in lost 
revenue to this country at a time when we are running record deficits, 
at a time when we are telling people we cannot afford to help them with 
their home heating oil, at a time we are making basic cuts to basic 
education; and it goes on and on and on and on.
  The fact of the matter is the policy of royalty relief that the 
Congress passed was an unwise policy when we passed it. But the oil 
companies convinced this Congress to do so, and they have convinced the 
administration to allow it to continue. Although the Bush 
administration opposed the further extension in expansion of the oil 
royalty relief program that was in their most recent energy bill that 
was just signed by President Bush, unfortunately, his opposition did 
not go to such an extent that he insisted that it be taken out of the 
bill.
  So what do we have? We have the major oil companies securing leases 
on land that is owned by the public, land that is owned by the 
taxpayers of this Nation, to go in and to drill those lands. And in 
exchange for that, they said that they would not go in there and drill 
unless we gave them royalty relief, unless we took away the royalties 
that they were entitled to pay to the landowners, the taxpayers of this 
country, for the privilege and the right to drill those reserves.
  These are some of the most important reserves in this country. They 
are some of the more important reserves in the world. There is a huge 
amount of competition for drilling for this. At the time, it was 
suggested that nobody would bid on these leases, that nobody would 
participate, that nobody would raise the capital to do so if they did 
not have royalty relief. The fact of the matter is I think the record 
will show that at the same time they were arguing that, they were 
already in the construction of the rigs that were necessary for 
deepwater drilling and that the decisions had already been made. Some 
companies decided they would bet on the gulf. Other companies decided 
they would go to the Caspian Sea. But the fact of the matter is the 
competition was hot and heavy.
  For this Congress to have then just given away those royalties is a 
horrible mistake, and it is a mistake that the Congress must correct. 
Nobody, even the proponents of royalty relief, believed that there was 
going to be a complete escape from the royalties owed to the taxpayers 
for the development of this oil. They believed, as the administration 
has said, that at a minimum they were not going to get oil royalties 
relief, they were not going to get relief from the payment of the rent 
to the taxpayers if oil was over $34 a barrel. Well, as we all know, 
the world price of oil today is hovering around $60 a barrel. It has 
been as high as $70, and it has been in the mid-50s, back and forth.
  The fact of the matter is these very same oil companies that are 
seeking a royalty holiday, freedom from the payment of these royalties, 
have just reported the biggest profits in the history of these 
companies, in the history of the world in the oil industry. And at the 
same time, they are suggesting that they have no obligation to pay the 
taxpayers of this country what is due

[[Page H245]]

them for the privilege of drilling on the Outer Continental Shelf.
  Today, some of us introduced legislation to prevent any future 
royalty holidays for the oil companies, to seek and direct the Minerals 
Management Service to renegotiate these leases so that it does include 
the provisions of a minimum of a trigger but hopefully even a better 
royalty policy than that, and if those companies do not want to 
cooperate with that renegotiation, then they should be barred from 
future bids on the Outer Continental Shelf.
  Now, to their credit, some of the major oil companies are suggesting 
that, in fact, they do owe the royalties, that there is a trigger 
mechanism. But Kerr-McGee and apparently some other companies have 
decided that they are going to challenge the whole law. They believe 
they are not obligated to pay any of these royalties, there is no 
trigger in this law. If that is the case, the taxpayer is just going to 
be hung out to dry by the major oil companies, and the major oil 
companies are going to abscond with the natural resources that belong 
to the people of this country.
  It is wrong and Congress ought to correct it.

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