[Congressional Record (Bound Edition), Volume 145 (1999), Part 16]
[Senate]
[Page 22622]
[From the U.S. Government Publishing Office, www.gpo.gov]



                         OIL ROYALTY VALUATION

 Mr. McCAIN. Mr. President, I want to state for the record 
that, had I been able to, I would have voted against the Hutchison 
amendment to the Interior appropriations bill, which proposed to 
continue a moratorium on revising Interior regulations governing how 
much oil companies pay for oil drilled on public lands and resources. I 
regret that previous commitments prevented my availability to be in the 
Senate for this critical vote.
  This issue seems fairly straightforward. Oil companies are required 
to pay royalties for on- and off-shore oil drilling. Fees are based on 
current law which clearly states that ``the value of production for 
purposes of computing royalty on production . . . shall never be less 
than the fair market value of the production.'' Revenues generated from 
these royalties are returned to the federal treasury. However, for many 
years, oil companies have been allowed to set their own rates.
  In the past, I have supported similar amendments which extended a 
moratorium on rulemaking while affected parties were involved in 
negotiations to update the regulations. However, this process has been 
stalled for years, with little possibility of reaching resolution 
because these legislative riders imposing a moratorium on regulation 
changes have created a disincentive for oil companies to agree to any 
fee increases, resulting in taxpayers losing as much as $66 million a 
year.
  Who loses from this stalemate? The taxpayers--because royalties 
returned to the federal treasury benefit states, Indian tribes, federal 
programs such as the Historic Preservation Fund and the Land and Water 
Conservation Fund, and national parks.
  I supported cloture twice to end debate on this amendment because I 
believe we should vote on the underlying amendment to allow a fair and 
equitable solution of royalty valuation of oil on federal lands. On the 
final vote, however, I would have opposed the Hutchison amendment to 
continue this moratorium because I believe we should halt the process 
by which oil companies can set their own rules and determine how much 
they pay the taxpayers for the use of public assets. I do not support a 
structure which only serves to benefit big oil companies and allows 
them to continue to be subsidized by the taxpayers.
  We should seek fairness for each and every industry doing business on 
public lands using public assets, and we should insist that same 
treatment be applied to oil companies. Fees that are assessed from 
drilling oil on public lands are directed back to the federal treasury 
and these fees should reflect the true value of the benefit oil 
companies receive.
  We have a responsibility, both as legislators and as public servants, 
to ensure responsible management of our public lands and a fair return 
to taxpayers. That responsibility includes determining a fair fee 
structure for oil drilling on public lands. Despite passage of this 
amendment which continues this moratorium for yet another year, I hope 
that we can reach a reasonable agreement to ensure proper payment by 
oil companies for utilizing public resources.

                          ____________________