[Congressional Record (Bound Edition), Volume 147 (2001), Part 11]
[Extensions of Remarks]
[Page 16210]
[From the U.S. Government Publishing Office, www.gpo.gov]



PROVIDING FOR CONSIDERATION OF H.R. 4, SECURING AMERICA'S FUTURE ENERGY 
                              ACT OF 2001

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                               speech of

                          HON. THOMAS E. PETRI

                              of wisconsin

                    in the house of representatives

                       Wednesday, August 1, 2001

  Mr. PETRI. Mr. Speaker, I am disappointed that this rule does not 
allow the Rahall-Petri-Kind amendment to be considered by the members 
of the House. Yesterday we went before the Committee on Rules to ask 
that our amendment striking Title II of Division F of H.R. 4 be made in 
order during floor debate.
  This title addresses various aspects of oil and gas production from 
federal lease lands, both onshore and offshore. The title reportedly 
seeks to provide greater incentives and royalty relief to oil and gas 
producers to encourage exploration and development in these areas. 
These incentives raise several serious policy questions. Unfortunately, 
this amendment was not made in order, and the full House was denied the 
opportunity to address this important issue.
  The incentives contained in this section are far too generous. They 
are not in the public interest. They will not provide for our energy 
security. Further, none of these provisions was contained in President 
Bush's report on Energy Policy. Indeed, this title is an oil and gas 
producer's dream, but it is a taxpayer's nightmare.
  First, this section provides a full royalty holiday for certain 
offshore leases granted over the next 2 years. Royalty payment 
suspension will be allowed for drilling operations in water as shallow 
as 400 meters. Just a few weeks ago, Interior Secretary Norton 
testified before the Resources Committee that the Administration does 
not support granting relief for production in water under 800 meters in 
depth. And, importantly, the Secretary currently has the authority to 
waive royalties. We don't need to mandate it--especially at a time of 
high prices. The CBO cost estimates for this relief are only the tip of 
the iceberg--taxpayers will continue to lose hundreds of millions, if 
not billions, of dollars of revenue during the full lifetimes of these 
leases.
  Second, this title proposes to allow the Secretary of the Interior to 
replace the current royalty system with a ``Royalty-in-Kind'' program 
which allows royalties for oil and gas taken from public lands to be 
paid in actual deliveries of crude oil or natural gas. This would 
require enlarging the size of the federal presence in these western 
states so that federal employees can assume private sector 
responsibilities. This cannot be done efficiently; an audit of a recent 
royalty-in-kind pilot program in Wyoming found that it had lost $3 
million.
  Third, this legislation would mandate a royalty holiday for, and 
expand the definition of, marginally producing oil and gas wells. 
Onshore wells producing less than 30 barrels of oil per day would be 
considered marginal. It is my understanding that approximately 85 
percent of all the oil wells on public lands produce less than 30 
barrels of oil per day. Clearly, this stretches anyone's definition of 
marginal. Moreover, relief for truly marginal wells is already provided 
in this bill through the expansion of the marginal well tax credit.
  Fourth, the legislation contains several provisions which transfer 
the costs of regulatory compliance to taxpayers. Such fees are normally 
paid by permit applicants. There is no good reason to grant this type 
of financial relief, and I can think of no other federal program in 
which taxpayers bear these costs.
  I agree that we need to address our energy future to assure all 
Americans access to reliable and affordable energy. But I fail to see 
how granting a royalty holiday for oil and gas production on federal 
leases will accomplish this goal. This title benefits the oil and gas 
industry without providing any benefit for taxpayers--these royalties 
are, afterall, rent payments for the privilege of extracting energy 
resources from publicly owned land. Again, I am disappointed that the 
rule did not allow members to consider separately these questionable 
royalty relief provisions.

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