[Congressional Record (Bound Edition), Volume 152 (2006), Part 5]
[Senate]
[Pages 6123-6125]
[From the U.S. Government Publishing Office, www.gpo.gov]




MAKING EMERGENCY SUPPLEMENTAL APPROPRIATIONS FOR THE FISCAL YEAR ENDING 
                     SEPTEMBER 30, 2006--Continued

  The PRESIDING OFFICER. The Senator from Louisiana is recognized.


                    Amendment No. 3648, as Modified

  Mr. VITTER. Mr. President, I ask that my amendment No. 3648, which I 
spoke about, be modified with the changes at the desk, which are 
technical in nature.
  The PRESIDING OFFICER. The Senator has that right. The amendment is 
so modified.
  The amendment (No. 3648), as modified, is as follows:

       On page 140, on line 22, insert ``vessels and'' after 
     ``repairing''.

  Mr. VITTER. I yield back my time.
  The PRESIDING OFFICER. The Senator from Oregon is recognized.


                           Amendment No. 3665

  Mr. WYDEN. Mr. President, I have an amendment at the desk.
  The PRESIDING OFFICER. The clerk will report.
  The legislative clerk read as follows:

       The Senator from Oregon [Mr. Wyden] proposes an amendment 
     numbered 3665.

   (Purpose: To prohibit the use of funds to provide royalty relief)

       On page 253, between lines 19 and 20, insert the following:


      PROHIBITION OF FUNDS FOR OIL AND NATURAL GAS ROYALTY RELIEF

       Sec. 7032. (a) No funds made available under this Act or 
     any other Act for any fiscal year for royalty and offshore 
     minerals management may be used by the Secretary of the 
     Interior to provide relief from a requirement to pay a 
     royalty for the production of oil or natural gas from Federal 
     land during any period in which--
       (1) for the production of oil, the average price of crude 
     oil in the United States is greater than $55 a barrel; and
       (2) for the production of natural gas, the average price of 
     natural gas in the United States is $10 per 1,000 cubic feet 
     of natural gas.
       (b) In administering funds made available for royalty or 
     offshore minerals management, the Secretary of the Interior 
     may waive or specify alternative requirements if the 
     Secretary of the Interior determines that royalty relief is 
     necessary to avoid oil or natural gas supply disruptions as a 
     consequence of hurricanes or other natural disasters.


[[Page 6124]]

  Mr. WYDEN. Mr. President, the oil companies are supposed to pay 
royalties to the Federal Government when they extract oil from Federal 
lands. Now, in order to stimulate production of oil in our country, the 
Federal Government over the last decade has been discounting these 
royalty fees. These discounts now amount to billions of dollars. It 
appears that the royalty relief that is given to the oil companies is 
now the granddaddy of all of the subsidies.
  We have been talking considerably on the floor of this body over the 
last few days about tax breaks for oil companies. The President, it 
seems to me, to his credit, over the last few days has indicated that 
he understands that these tax breaks are no longer needed. I was very 
pleased to see that because when the energy executives came to the 
committee, I literally went down the row and asked them if they 
continued to need all of these tax breaks. They don't, but Congress has 
continued to ladle them out. But on top of these record profits, record 
prices, and record tax breaks, there is now record amounts of royalty 
relief granted to the oil companies as well.
  Now that the prices have shot up, I don't see how anybody can justify 
this multibillion-dollar subsidy. The point of this amendment is to say 
that we are going to get rid of these special oil company discounts, 
the special breaks that amount to billions of dollars, unless the price 
of oil comes down, or unless the Bush administration indicates that 
royalty relief is necessary to avoid supply disruption.
  Mr. President, it is astounding that there is a tremendous chorus now 
of support, saying that royalty relief is needed. Yet nobody seems to 
be doing anything concrete to roll back these unnecessary subsidies.
  For example, to show the bipartisan interest in this, not long ago, a 
distinguished member of the other body who chairs the resources 
committee, Richard Pombo, said in a newspaper interview that there is 
no need for this particular incentive. That is not the head of some 
consumer group; that is the distinguished chairman of the resources 
committee, Mr. Pombo, from California. He has said there is no need for 
this kind of royalty relief. Mr. Michael Coney, a lawyer for the Shell 
Oil Company, said the same thing. He basically said that in this kind 
of climate you cannot make a case for this particular kind of 
multibillion-dollar subsidy.
  The architect of the program, our former colleague, Senator Bennett 
Johnston, has said that what has taken place with respect to the 
royalty relief program isn't anything close to what he had in mind when 
he developed this program.
  So what you have is a Democratic Member of the Senate saying let's 
roll back these subsidies unless the Bush administration certifies they 
are needed to avoid disruption or unless the price goes down, and let's 
do it because there is a bipartisan consensus that this Royalty Relief 
Program is completely out of whack.
  By the way, Mr. President, I know you have had great interest in the 
effort to target these subsidies. You and I have talked about it on a 
number of occasions. Consistently what we find is the way these 
multibillion-dollar subsidies find their way on to our tax rolls and 
Government programs is on a bipartisan basis somebody messes up. 
Somebody isn't watchdogging the way these dollars fly out the door, and 
that was certainly the case with the Clinton administration.
  Previously, there had been a particular provision in the Royalty 
Relief Program that said when the oil prices shot up, when they went 
above a certain level--then it was considered about $34 a barrel--the 
companies would have to, once again, start paying these royalties. But 
the Clinton administration just wasn't watching the store, wasn't 
watchdogging this program as they should have, and so they didn't put 
that particular clause--the clause that protects the taxpayers--into a 
number of these royalty relief agreements. What has happened is we just 
had a litigation derby with scores and scores of lawsuits.
  Now the General Accountability Office estimates that at a minimum, 
the Federal Government is going to be out $20 billion. This is the 
biggest subsidy of them all, and given all of the litigation that has 
taken place, this subsidy could go up and up.
  Under the Energy bill signed into law last summer, the oil companies 
were given new subsidies in the form of reduced royalty fees for the 
oil and gas they extract from Federal land, including offshore drilling 
in the Gulf of Mexico. This particular new subsidy was signed into law 
when the companies were already reporting these extraordinary profits. 
We were already seeing the consumer taking a shellacking at the gas 
pump. It would have been the ideal time for the U.S. Congress to do 
what colleagues such as Congressman Pombo in the other body are talking 
about, lawyers for the Shell Oil companies tell the newspapers, what I 
and others and a bipartisan group who have been interested in this have 
said for a long time: It doesn't pass the smell test to be dispensing 
billions and billions of dollars of royalty relief to the oil companies 
on top of everything else they already receive from the taxpayers' 
wallet. So what I hope we will be able to do here is roll back this new 
subsidy.
  By the way, the program was useful back when prices were low. For 
example, it significantly helped in the Gulf of Mexico at a time when 
prices were low. That is not the case now. As our colleague in the 
other body, Mr. Pombo, notes, they sure don't need any incentives when 
the marketplace is providing all the incentives anybody could possibly 
ask for.
  Government subsidies, sure, when the price is low, when we have to 
stimulate production, when our economy needs a shot in the arm. But 
billions of dollars of royalty relief for oil companies in this kind of 
time? I don't get it, and tomorrow I hope a majority of the Senate will 
share my view and will share the view of other colleagues who have 
taken a good look at this particular program.
  It seems to me this is a time when the Congress ought to say: Let's 
look carefully at all of these various subsidies and breaks. As the 
distinguished Senator from Oklahoma has said, let's shine some light on 
it, let's take a sharp pencil out and really make some concrete 
judgments about what is in the taxpayers' interest.
  At a time when consumers are already paying more at work, they are 
paying more at home, they are paying more when they drive everywhere in 
between, we ought to be giving them a break in their personal energy 
bills before we give breaks to the oil companies on the amounts they 
owe for drilling on our Nation's lands.
  With oil selling for more than $70 a barrel, $15 a barrel higher than 
the price that the President said incentives were not needed, Congress 
should not be giving away more taxpayer money for more unnecessary 
subsidies that benefit profitable energy interests.
  Let me highlight that particular point and explain why it is so 
pivotal in this discussion for royalty relief for oil companies.
  The President of the United States said that he doesn't see the case 
for additional incentives and Government benefits to encourage 
production when oil is over $55 a barrel. Now we are talking about oil 
at $70 a barrel. We are talking about billions of dollars of new 
payments to the companies at a time when the General Accountability 
Office says the minimum tab will be $20 billion. And all I am saying to 
the Senate tonight is I want to cut off those payments unless one of 
two things happens: If the price of oil comes down, you bet, let's go 
back and say we need some incentives for production. If the President 
of the United States, the Secretary of the Interior, the people who are 
in the administration who know a lot about the oil business say that we 
have to have these multibillion-dollar discounts in order to encourage 
production, my amendment doesn't apply.
  In effect, the President of the United States can say we have to have 
the Royalty Relief Program in order to get the oil industry moving 
again in our country. But with prices high and no

[[Page 6125]]

argument for these breaks, not on the basis of my judgment but on the 
basis of what the President has said in the past, I want to cut off 
these particular breaks.
  I hope my colleagues will want to save our taxpayers money and 
promote fiscal responsibility. This is a program which is completely 
out of control. This is a program which has lost its moorings. You 
cannot defend this, in my view, in front of any group of our citizens. 
That is why a variety of leaders and individuals in the private sector, 
many of them coming from the oil industry itself, have said there is no 
logical argument for royalty relief at this particular time.
  Certainly there are going to be some who will say it is never enough. 
There is litigation going on now where some companies are in court 
trying to secure additional information. I am looking at a recent 
article in the press authored by Edmund L. Andrews headlined: ``General 
Accounting Office Sees Loss in Oil Royalties of at Least $20 Billion.''
  We know that the Government Accountability Office isn't an 
organization with any ax to grind. They are our nonpartisan 
investigators. Those are the people who take out the sharp pencil and 
are given the job of actually looking to see if taxpayer money is being 
used wisely. They have essentially said recently--this year, just 
months ago--that billions of dollars are going to be wasted with this 
Royalty Relief Program.
  The Interior Department has indicated that they know they are going 
to lose billions of dollars in royalty payments. I don't see anybody 
saying that the price of oil is going to fall precipitously anytime 
soon. If it does, the President and the Department of Energy can 
essentially waive my amendment. We explicitly say that if the price of 
oil goes down, if there are any national security questions, any 
disruptions that threaten supply, the amendment can be set aside.
  It is time to rein in these costs that are going through the 
stratosphere. The Royalty Relief Program is the granddaddy of all 
subsidies. I hope tomorrow, when the Senate has an opportunity to vote, 
we will say that we ought to prohibit further royalty relief, unless 
prices go down or we face a disruption, and save our citizens' hard-
earned tax dollars for more worthy causes.
  Mr. President, I hope my colleagues will support this amendment.
  I yield the floor. I suggest the absence of a quorum.
  The PRESIDING OFFICER. The clerk will call the roll.
  The assistant legislative clerk proceeded to call the roll.
  Mr. WYDEN. Mr. President, I ask unanimous consent that the order for 
the quorum call be rescinded.
  The PRESIDING OFFICER (Mr. Coburn). Without objection, it is so 
ordered.
  Mr. WYDEN. Mr. President, I am going to propound a unanimous consent 
request for wrap-up momentarily. I will also note, as I have been 
speaking on this amendment to forego some royalty relief for oil 
companies, that when we go back in at approximately 10 o'clock, I will 
continue a discussion regarding this amendment and hopefully have a 
chance to hear from colleagues on both sides of the aisle.

                          ____________________