[Congressional Record (Bound Edition), Volume 153 (2007), Part 12]
[Senate]
[Pages 16591-16622]
[From the U.S. Government Publishing Office, www.gpo.gov]




  CREATING LONG-TERM ENERGY ALTERNATIVES FOR THE NATION ACT OF 2007--
                               Continued

  The ACTING PRESIDENT pro tempore. The Senator from Louisiana.


                           Amendment No. 1658

  Mr. VITTER. Mr. President, I rise in strong support of an amendment I 
filed at the desk some time ago, Vitter amendment No. 1658, and I would 
like to briefly explain what that is.
  At its core, this amendment would allow Louisiana to use more Federal 
coastal impact assistance dollars, which are already going to the State 
under preexisting law, a law we passed a couple of years ago, to be 
used specifically for one of our top priorities in the wake of 
Hurricanes Katrina and Rita, and that is a hurricane protection effort.
  By way of background, in 2005, we passed the Energy Policy Act, and 
that did a very important thing for the State of Louisiana and other 
producing States. It established a Coastal Impact Assistance Program 
for the six States in the United States that produce offshore energy, 
particularly oil and gas. Obviously, that includes Louisiana. Under 
that 4-year Coastal Impact Assistance Program, certain Federal dollars 
flow to those producing States in light of the enormous work they do 
producing energy for our country and

[[Page 16592]]

the negative impact that activity has in many cases on our coastline.
  Back at that time, a provision was made to restrict the amount of 
those funds that could go specifically to infrastructure projects, and 
that cap was established, with the work of Senator Bingaman and others, 
at 23 percent. Back in 2005, I argued strongly and worked with Senator 
Bingaman and others to say that cap should be lifted with regard to 
hurricane protection work, at least in Louisiana, because that work was 
absolutely so vital, so essential for our very existence. 
Unfortunately, that argument did not hold the day. The cap was not 
lifted, and an exemption was not put in place for hurricane protection 
efforts.
  I am trying to get that cap lifted for hurricane protection work in 
Louisiana now. My argument that we should do it comes down to two 
words--two words that happened, that devastated our coastline between 
then and now, and the two words are ``Katrina'' and ``Rita.'' Since 
that original act in 2005, Katrina and Rita struck, and they struck 
literal death blows to the Louisiana coast. If hurricane protection was 
a big priority before that, it has only grown enormously with those two 
hurricanes coming upon our shores.
  I think there is every rationale, every reason to allow us to use 
more of that coastal impact assistance money for hurricane protection 
efforts and to lift that arbitrary ceiling of 23 percent for 
infrastructure projects, specifically when we are talking about 
hurricane protection efforts.
  I have been in contact with Senator Bingaman about this issue. We 
have just discussed it on the Senate floor. I know he is considering 
these arguments. Perhaps in wrapping up my discussion, I could invite 
the Senator to engage in a brief colloquy and ask him again to focus on 
the extreme needs of the Louisiana coast in the wake of Hurricanes 
Katrina and Rita and to continue consideration of lifting this cap in 
light of those extreme needs and to see where we are in that 
discussion.
  The ACTING PRESIDENT pro tempore. The Senator from New Mexico.
  Mr. BINGAMAN. Mr. President, let me respond to the comments the 
Senator from Louisiana made.
  Procedurally, we are not able to bring up or consider the amendment 
he has talked about today. I have explained to him the reason for that 
is there is a Republican objection to us bringing up and considering a 
great many amendments that Democratic Members would like to bring up 
and consider at the same time. So I regret that.
  On the substance, I am not in a position to indicate right now 
whether this kind of change would take place. I would assume that to 
make that judgment, we would have to know something about the hurricane 
assistance that has been provided and whether there are still adequate 
funds available for some of this wetland assistance that was the 
purpose of the original legislation in 2005.
  Obviously, I think the entire Senate has been anxious to be of 
assistance to all of the gulf coast. This legislation he is referring 
to, the wetlands protection part of the 2005 Energy bill, was part of 
that. There have been several things that have been done since the 
devastating hurricanes hit that region. But I do not know enough about 
the specifics of those assistance programs to pass judgment on the 
contents of his amendment. I commend him for offering it, but I am not 
in a position to support it or oppose it.
  Mr. VITTER. Mr. President, reclaiming my time.
  The ACTING PRESIDENT pro tempore. The Senator from Louisiana is 
recognized.
  Mr. VITTER. Reclaiming the floor, I will put that down as an 
``undecided,'' and ``maybe.'' I want to continue these discussions with 
the Senator from New Mexico. He is essentially the key to clearing this 
amendment, probably without objection.
  Again, I restate that because of the devastating impact of Hurricanes 
Katrina and Rita, I think there is every reason in the world to lift 
this arbitrary cap of 23 percent, specifically and only for hurricane 
protection work on our coast. It is absolutely vital for our survival. 
It will not mean we are not doing everything else we have been talking 
about. That is moving forward for a number of reasons, including the 
revenue sharing piece we were able to pass into law late last year. 
That will give significant new revenue to our coastal restoration 
efforts and other things. I again urge the Senator to continue to look 
at this and hopefully clear this so it can be adopted without even the 
need for a vote on the floor, adopted by unanimous consent.


                           Amendment No. 1776

  Now I wish to move to a second very important amendment I have at the 
desk, which is amendment No. 1776. I just happened to get that number 
but I think it is a very appropriate number for this amendment because 
this goes to our very important, patriotic efforts to increase our 
energy independence and to get away from our enormous reliance on the 
Middle East, including very dangerous countries and regimes in the 
Middle East that are clearly not friends of ours at all.
  This amendment is straightforward. It would allow increased domestic 
production of minerals or renewable energy in Federal areas that are 
not allowed now, if and only if all four of these things happen--really 
five.
  No. 1, the national average gasoline price would have to exceed $3.75 
a gallon at the pump.
  No. 2, in addition, foreign imports of oil would have to exceed 65 
percent of all oil use.
  No. 3, in addition, the President would have to determine that an 
ample supply of renewable fuels is insufficient to meet fuel demand 
domestically at that time.
  No. 4, in addition, the President would have to determine that 
continued and growing reliance on foreign oil imports is a threat to 
national security.
  If all of those four preconditions were met, then and only then, No. 
5, the Governor of a State, with the concurrence of the State 
legislature, could petition the Secretary of the Interior to initiate 
leasing activities on specified Federal lands within the State or 
within the administrative boundaries of the Outer Continental Shelf 
related to that State for oil and gas or alternative energy production. 
So if everything I mentioned happened, then and only then a State 
itself, through its Governor, through its State legislature, can say: 
Yes, sir, Mr. President, we want to be part of the solution. This is a 
dire, extreme case. This is a real national security threat. We want to 
be part of the solution by producing, safely and in an environmentally 
friendly way, more oil and gas, more renewable energy for America.
  I think this is an utterly commonsense and very much needed amendment 
to increase domestic production, decrease reliance on foreign sources. 
That goes to energy security. As such, it goes to economic security. It 
goes to national security.
  Again, none of this would happen unless all of those things happened 
first: gasoline prices at $3.75 at the pump, foreign imports over 65 
percent of everything we are using in this country, the President 
saying renewables cannot make up the difference, the President saying 
this is a real national security issue, the Governor of the State 
saying we want to do this, it is our home, we can do it responsibly, 
and the State legislature of the State concurring. All of those things 
would have to happen before opening up either land within the State or 
part of the Outer Continental Shelf off the State to leasing activity, 
in terms of Federal land.
  It is very important that we do a balanced approach, all sorts of 
things, to decrease our reliance on foreign sources. This is a very 
commonsense part of that menu.
  With that, I understand there may be objection, but I ask unanimous 
consent to set aside the pending amendment so that this very 
commonsense amendment, which goes to the heart of this debate and the 
heart of the bill, Vitter amendment No. 1776, can be called up and made 
pending.
  The ACTING PRESIDENT pro tempore. Is there objection?
  Mr. BINGAMAN. I object.

[[Page 16593]]


  Mr. REID. Could I ask a question, through the distinguished Senator 
from Louisiana, to the manager of the bill, the Senator from New 
Mexico?
  The ACTING PRESIDENT pro tempore. The majority leader is recognized.
  Mr. REID. Would the distinguished chairman of the Energy Committee 
inform the Senate why there isn't more done on this bill? People have 
said to me we want to have it debated--and not just Democrats; 
Republicans have asked me the same question--why aren't we able to move 
on to get some of this done?
  Mr. BINGAMAN. Mr. President, let me respond to the majority leader by 
saying there are a great many good amendments Republican Members would 
like to offer, there are good amendments Democratic Members would like 
to offer. We are informed there is objection to us bringing up any of 
these amendments and getting a vote on them at this time because of 
objections from a Senator on the Republican side.
  For that reason, we are somewhat unable to proceed with any of these 
legislative matters. I know the time is running toward the vote on 
cloture--both on the tax package and on the bill itself. I know there 
is good faith on both sides in wanting to do some more business before 
those cloture votes occur. But obviously, good faith on the part of 
many Senators does not ensure we can make progress. We have to have 
unanimous consent and we cannot get that.
  Mr. REID. I don't know if the Senator from Louisiana still wants the 
floor?
  Mr. VITTER. Yes, I do.
  Mr. REID. Would it be OK if I direct another question to the manager 
of the bill?
  Mr. VITTER. Certainly.
  Mr. REID. I say through the Chair to the distinguished Senator from 
New Mexico, I have worked for all the time I have been in the Senate, 
for more than a dozen years, on a very close, intimate basis while we 
were managing the Energy and Water appropriations bill, with the senior 
Senator from New Mexico, Senator Domenici. What is going on here, as 
the comanager of this bill, is very unlike Senator Domenici. Senator 
Domenici likes things debated. He likes votes to take place. He likes 
movement here in the Senate.
  Senator Domenici is not part of holding this legislation up, is he?
  Mr. BINGAMAN. Mr. President, let me respond to the majority leader. I 
think it is fair to say there is a good-faith effort on the part of 
both managers to try to move forward with legislation in a way that is 
fair to both Republicans and Democrats, and allows consideration of 
amendments on both sides. But we are being blocked by others.
  Mr. REID. One last question, if the Senator will be patient, the 
Senator from Louisiana.
  The Senator from New Mexico, the senior Senator from New Mexico, the 
manager of the bill, has been in the Senate longer than I have, and he 
knows more about procedure than I do, but has the Senator tried, for 
example, having 60-vote margins on some amendments that people may not 
want, to see if there is any other way to move this along to get that 
objection withdrawn?
  Mr. BINGAMAN. Again, Mr. President, in response, let me say we have 
tried to get agreement that certain of the amendments that are 
objectionable to some Members on the Republican side--we would agree 
that we would be bound by a 60-vote threshold on those amendments. But 
at least at this point, my understanding is the objection is to any 
consideration of the amendments, regardless of what the threshold is 
going to be. We are unable to proceed right now. I hope that changes. I 
hope we can dispose of some of the very meritorious amendments that 
both Republican Senators and Democratic Senators wish to offer before 
we get to cloture.
  Mr. REID. Mr. President, I want the record to reflect my appreciation 
for the courtesy extended to me by the distinguished Senator from 
Louisiana.
  The ACTING PRESIDENT pro tempore. The Senator from Louisiana is 
recognized.
  Mr. VITTER. Mr. President, I was happy to do that.
  Reclaiming the floor, all of that is interesting. It is also what is 
commonly referred to as ``inside baseball.'' For the sake of the 
insiders here, let me translate for you what the American people just 
heard. To quote Charley Brown, ``Wah, wah, wah, wah, wah, wah, wah.''
  The fact is, what Americans are faced with is an energy crisis and we 
have all this ``inside baseball'' tangling us up in the Senate, in the 
House, and we are not doing a darned thing about it.
  The other fact is there is no objection on the Republican side to 
calling this amendment up, No. 1776, to making it pending, to 
considering it. There are all sorts of debate and all sorts of 
discussions about other amendments. There is certainly no objection on 
our side to this amendment. Why should there be? Why shouldn't we allow 
individual States to say: Yes, we want to be part of the solution, 
particularly when all of the following events occur: average price of 
gasoline reaches $3.75 a gallon, foreign imports top 65 percent of 
everything used in the country, the President certifies that renewables 
can't make up the gap, the President certifies there is a continuing 
reliance on foreign oil, which is a national security threat? If all of 
those things happen, shouldn't we be allowing a State, through its 
Governor, through the State legislature, to be part of the solution in 
a safe and environmentally sensitive way to produce more energy in this 
country that doesn't take away the need for alternative fuels, that 
doesn't take away the need for conservation or everything else?
  But the clear and simple fact is, this problem is so big we need to 
do all of the above. Certainly this commonsense approach should be on 
that menu, should be among all of the above.
  Let's get beyond the Washington insider ``Wah, wah, wah,'' all the 
running around, all the objections, all the being tied up in knots, and 
present some reasonable, commonsense solutions to this growing national 
energy crisis.
  I hope those who control the floor and leave the floor, starting with 
the distinguished majority leader, to whom I deferred a few minutes ago 
on the floor, can be part of that.
  The PRESIDING OFFICER (Mr. Sanders). The Senator from West Virginia 
is recognized.
  (The remarks of Mr. Byrd are printed in today's Record under 
``Morning Business.'')
  Mr. BINGAMAN. Mr. President, 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. NELSON of Florida. I ask unanimous consent that the order for the 
quorum call be rescinded.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  Mr. NELSON of Florida. Mr. President, the moment of truth is coming 
on this Energy bill very shortly as to whether we will stick with the 
bill which requires the meeting of cars and light trucks to be 35 miles 
per gallon not for another 13 years, until 2020, and thereafter the 
mileage standards to improve by 4 percent a year. There is a great deal 
of consternation going on here, particularly by the automobile industry 
that does not want to comply with these standards.
  I was prepared to offer an amendment that I think 35 miles is too 
low. We have the technology. The question is, Do we have the political 
will? We have the technology to go to 40 miles per gallon. I have filed 
an amendment. But apparently, because of the dynamics of the Senate 
taking up this issue, we are struggling to get the votes in order to 
keep the 35-miles-per-gallon standard in the bill.
  There are all kinds of side discussions going on in the corridors and 
anterooms of the Capitol as to whether there will be any offer, 
particularly by the Senator from Michigan, Mr. Levin, as to reduced 
standards. Originally, he was proposing a standard of 36 miles per 
gallon but not to be achieved until the year 2025, with other trucks 
exempted from that. So you see the battle, the choice that is basically 
set.

[[Page 16594]]

  Why should we do this now? Let's look at history. I came into public 
office in 1972, now 35 years ago. At the time in the early 1970s, we 
had an embargo by the oil-producing countries, particularly in the 
Persian Gulf region. There was a panic. There were long lines at the 
gas stations. The price of oil shot up from a low price of something 
less than $10 a barrel back then, it shot up considerably and everybody 
was concerned. Americans were impatient. The Persian Gulf region became 
a target of our disaffection. Then the spigot was turned on. The oil 
began to flow again. The embargo was released. The price started to 
recede. America went back to sleep.
  It happened again in the late 1980s, about the time I was elected to 
Congress. Again, there were long gas lines, the cost of gasoline shot 
up, the enmity toward the Persian Gulf region nations, the double 
whammy that interest rates soared upward of 15, 16 percent. All of that 
was a real crunch on Americans. But the spigot was turned on again. The 
oil flowed. The price receded a little bit--not nearly as much as it 
was back in the early part of the decade of the 1970s--and America went 
back to sleep again.
  All the time at each of these moments, the alarm was sounded that 
from a defense posture, the United States did not want to be dependent 
on foreign oil. Yet each time dependence increased and the amount of 
foreign oil imported into the United States increased to the point that 
today we are importing 60 percent of our daily consumption of oil. 
Where is it coming from? It is coming from places such as the Middle 
East, the Persian Gulf, Nigeria, and Venezuela. I have mentioned four 
parts of the world that are relatively unstable. Yet this is what is 
supplying us with 60 percent of our daily consumption of oil.
  So we come to the moment of truth which may occur this afternoon, if 
an alternative amendment is offered to the miles per gallon required in 
this Energy bill. The moment of truth is, is America ready to have the 
political will to change its gas-guzzling ways? We are talking about 
reasons of energy. We haven't even said anything about what the excess 
carbon dioxide as a result of the burning fossil fuels is doing going 
into the air, creating the greenhouse effect and heating up the Earth. 
That is another complete story. But it is all as a result of this.
  People say: Another part of this, we are going to talk about 
renewable fuels for electric utilities. That is an important part too. 
But when you look at where do we consume most of the oil, the petrol, 
it is in the sector of transportation. Within transportation, where is 
most of the oil consumed? It is consumed in private vehicles. So we are 
coming to the moment of truth. Are we going to finally require, without 
many exceptions, the automobile industry to do what technology easily 
allows us to do--but not even do it tomorrow, phase it in over a 13-
year period to the year 2020, requiring that we have greater miles per 
gallon and, therefore, what does that mean? Less consumption of oil. 
That means less dependence on foreign oil. This is where the greatest 
consumption of oil is, our private vehicles. The moment of truth is 
here.
  There is clearly a defense reason we ought to explore as to why we 
ought to do this as well. Can you imagine the different posture of the 
Armed Forces of the United States if we did not have to be the 
protector, almost the sole protector, of the sealanes upon which the 
great supertankers of the world steam in order to satiate an oil-
thirsty world? Thus, who do you think defends and protects the sealanes 
coming out of the Persian Gulf, coming through one of those 
chokepoints, a military chokepoint called the Strait of Hormuz, 19 
miles wide, on one side Iran, on the other side of the 19 miles, Oman, 
through which narrow passage the supertankers of the world have to flow 
to get out into the Indian Ocean? Who protects that? The United States.
  Wouldn't it be different from a defense posture with a Latin American 
President such as Hugo Chavez, who continues to thumb his nose at the 
United States because he can since he has petrol dollars, since he 
supplies 12 to 14 percent of our daily consumption. And, by the way, 
his company, which has been nationalized by the Government of 
Venezuela, the oil industry called PDVSA, did you know that they own 
all the Citgo stations in the United States? So his threat of cutting 
off is more hollow than real because he would be, to use the old 
expression, ``cutting off his nose to spite his face''--if he were to 
suddenly shut down the oil supply going into all of his gasoline 
stations around the United States. Nevertheless, he has made that 
threat. In the process, with his oil wealth, because we do buy half of 
his oil production, he can buy friends around the region. Happily, he 
has not been totally successful. But he can buy friends and buy 
influence with his petrol dollars, either in the form of direct 
financial remuneration or in the form of oil and gasoline supplies to 
oil- and gasoline-thirsty countries, such as the little countries in 
the Caribbean, the little countries in Central America. That is another 
thing we are facing. The moment of truth has come.
  I had an automobile dealer, one of the very best from my State of 
Florida, sit with me yesterday and tell me the automobile industry 
could not make this adjustment. But that is what the automobile 
industry has been saying for the last 35 years, ever since we had that 
first major oil disruption in the early 1970s. In his particular case, 
he has tried, within the industry, to get the industry to be willing to 
reform itself and use the technology we have to do much higher miles 
per gallon. I thanked him profusely and congratulated him on his 
efforts. But Mr. Automobile Industry, backed up by Mr. Oil Industry, 
don't come tell me we don't have the technical capability and the 
American people the capability of buying automobiles that will take us 
from what is now, on the average, about 22 miles per gallon on 
vehicles--they have a different standard; it is something like 27, but 
in reality it is only 22--don't tell me we don't have the technology in 
13 years to get us to 35 miles per gallon. I wish it were 40. But if we 
can get this, we are all the better off.
  I wish to share one more thing, as we are coming to the moment of 
truth.
  Two weeks ago, during the break, I spent it going around on an 
intelligence mission in Africa, and it became quite apparent in one of 
those countries, Nigeria--we get 12 to 14 percent of our daily supply 
and consumption of oil from that one country, Nigeria--it became very 
apparent to me those facilities were defenseless.
  At the same time, it was very apparent to me that al-Qaida is on the 
rise in Africa. They are coming out of Arabia, into the Horn of Africa, 
there at Somalia, in all the midst of that chaos, and they are moving 
across the Sahel and the Sahara of Africa. They have even changed some 
of the names of the terrorist groups there in Africa to be AQIM, al-
Qaida in the Islamic Maghreb. That is the group that just tried to 
assassinate the President of Algeria a couple months ago, and they got 
close. They got a big truck bomb, suicide bomber, next to the 
Presidential palace. It killed a dozen people, but they did not get the 
President. But it is on the rise.
  Guess what one of their targets is going to be. The oil facilities in 
Nigeria. The only way we are going to stop that, since the Nigerian 
Government cannot protect them, is through the cooperative arrangement 
we have with African nations' intelligence services cooperating with 
our intelligence services. That cooperation is going on and has saved 
some of the terrorist strikes elsewhere in the world. That is the only 
way we are going to interdict--to find out ahead of time and stop it; 
otherwise, it is going to happen. When that happens, right there, with 
14 percent of the daily supply suddenly cut off, we are going to rue 
the day if, on this day, this moment of truth, we have not set 
ourselves on a mandatory course of higher miles per gallon in order to 
force less consumption of oil, particularly foreign oil.
  That is the message. I do not see how any Senator can ignore this 
message. Yet we are scrambling for 60 votes to close off debate to get 
to the end of this bill because of that provision in it.

[[Page 16595]]

  Senators, the moment of truth is coming, portending enormous 
consequences for the future of our country and for the future of the 
free world, and it is going to happen today.
  Mr. President, I yield the floor.
  The PRESIDING OFFICER. The Senator from Arizona.


                Amendment No. 1800 To Amendment No. 1704

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

       The Senator from Arizona [Mr. Kyl] proposes an amendment 
     numbered 1800 to amendment No. 1704.

  Mr. KYL. Mr. President, I ask unanimous consent that reading of the 
amendment be dispensed with.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  The amendment is as follows:

(Purpose: To disallow the credit for renewable diesel for fuel that is 
                      coprocessed with petroleum)

       On page 69, lines 17 to 20, strike ``to so much of the 
     renewable diesel produced at such facility and sold or used 
     during the taxable year in a qualified biodiesel mixture as 
     exceeds 60,000,000 gallons''.

  Mr. KYL. Mr. President, I wish to ask the chairman of the committee, 
is it not correct that at this time there is agreement to have a 
debate--40 minutes equally divided--on this particular amendment, and 
the vote to be set at a later time, but we would try to conclude the 
debate at this time?
  Mr. BINGAMAN. Mr. President, in response, that is my understanding, 
that we will have 40 minutes equally divided prior to a vote on or in 
relation to the amendment, and that vote may take place later in the 
afternoon.
  Mr. KYL. Mr. President, I thank the Senator very much.
  The PRESIDING OFFICER. Is there objection?
  Without objection, it is so ordered.
  Mr. KYL. Mr. President, this amendment is designed to get back to the 
original intent with regard to the Energy Policy Act of 2005 in 
relation to a very specific, rather narrow provision, but an important 
provision, that provided a $1 per gallon credit for renewable diesel. 
The idea was to encourage the creation of new technologies for 
renewable diesel. The idea was primarily to try to get products, such 
as cellulosic products, that could eventually be added to or be turned 
into a fuel that could be burned as diesel fuel. As a result, that $1 
per gallon credit was deemed an important way to create a new kind of 
product.
  Well, as entrepreneurs will do, a couple of very bright people 
figured out they could take an existing product, which is already 
used--namely, animal fat--and put that in with diesel fuel, in effect--
I am simplifying the process--and, voila, it all burns the same, but it 
would qualify as renewable diesel, biomass under the credit and, 
therefore, they would get the $1 per gallon credit for doing something 
that adds essentially nothing to the process and uses animal fat--
primarily, tallow--which is already used by the oleochemical industry, 
which is seeing the price skyrocket because of the interpretation these 
oil companies have gotten IRS to agree to that they could actually use 
this animal fat in their diesel and, therefore, get the credit for 
producing a new kind of diesel.
  That was never the intent. The intent was to find some new kinds of 
biomass processes that could be converted to a diesel fuel and have it 
be a renewable diesel fuel--something truly new--not to take existing 
diesel and take an existing product that is already used by a very 
green industry.
  By the way, the oleochemical industry is an industry that gets no 
subsidy, and uses this animal fat--something that is good to dispose 
of--to make plastics, cleaning products, home cleaning products, some 
rubber kinds of products, and most especially soap. The basic 
ingredient in soap is tallow. There is a finite market for that. The 
soap people buy all the stuff that is on the market, but they found 
that the cost has gone up 100 percent in the last 6 months because of 
this interpretation that tallow could be bought up by, primarily, one 
big oil company, Conoco oil company, which has figured out they can get 
the advantage of this $1 per gallon subsidy.
  That is wrong. It was never intended for that. If they want to go out 
and invent a new process with the big tax credit we have given them, 
that is great, but not to use the tax credit to do something that can 
be done anyway and which has the effect, the unintended consequence, of 
hurting an industry that employs at least 4,000 people. By the way, if 
that industry is not able to buy the tallow--the animal fat that is 
being used here--then the only alternative is to produce things like 
soap in foreign countries that have alternative supplies to what we 
have in the United States.
  So the unintended consequence of this is not just that somebody gets 
to take advantage of a $1 per gallon tax credit that is very generous--
and not producing anything new--but they are also driving out of the 
United States an important industry which does use this waste animal 
fat, and uses its very productively, without any subsidy.
  Mr. President, I ask unanimous consent to have printed in the Record 
a letter from the chief executive officer of the National Biodiesel 
Board, who wrote to me on June 20.
  There being no objection, the material was ordered to be printed in 
the Record, as follows:

                                     National Biodiesel Board,

                                Jefferson City, MO, June 20, 2007.
     Hon. Jon Kyl,
     U.S. Senate,
     Washington, DC.
       Dear Senator Kyl: The National Biodiesel Board (NBB) 
     supports your efforts to promote sound energy policy by 
     ensuring that renewable diesel produced through petroleum co-
     processing does not qualify for the $1.00 per gallon 
     renewable diesel excise tax credit.
       In a time of budget deficits and rising fuel prices due in 
     large part to limited domestic refining capacity, the NBB 
     questions the wisdom of directing tax benefits and limited 
     feedstock to subsidize existing oil refining operations at 
     the expense of free-standing producers of biodiesel and 
     renewable diesel. Under your amendment, vegetable oils and 
     animal fats co-processed with petroleum would not qualify for 
     the $1.00 per gallon renewable diesel tax credit, but would 
     continue to qualify for a 50 cents per gallon credit that is 
     provided under current law. The NBB believes that your 
     amendment represents balanced energy policy and is consistent 
     with the goals of the underlying legislation.
       Again, the NBB thanks you for your efforts on this issue 
     and urges Senators to support passage of your amendment to 
     preclude petroleum co-processing from qualifying for the 
     $1.00 per gallon renewable diesel tax credit.
           Sincerely,
                                                         Joe Jobe,
                                          Chief Executive Officer.

  Mr. KYL. Here is what the letter says:

       The National Biodiesel Board supports your efforts to 
     promote sound energy policy by ensuring that renewable diesel 
     produced through petroleum co-processing does not qualify for 
     the $1.00 per gallon renewable diesel excise tax credit.
       In a time of budget deficits and rising fuel prices due in 
     large part to limited domestic refining capacity, the NBB 
     questions the wisdom of directing tax benefits and limited 
     feedstock--

  That is the animal fat--

     to subsidize existing oil refining operations at the expense 
     of free-standing producers of biodiesel and renewable diesel. 
     Under your amendment, vegetable oils and animal fats co-
     processed with petroleum would not qualify for the $1.00 per 
     gallon renewable diesel tax credit, but would continue to 
     qualify for a 50 cents per gallon credit that is provided 
     under current law. The NBB believes that your amendment 
     represents balanced energy policy and is consistent with the 
     goals of the underlying legislation.

  And so on.
  We are not eliminating the tax credit. We are not eliminating this 
other credit. All we are doing is getting back to the original intent, 
which was not to provide this additional $1 per gallon credit for 
something that could be done anyway. We want you to go out and invent 
something new here using biomass for biodiesel, not using something 
that can already be done.
  According to the testimony of the company that is primarily going to 
be doing this, this has not resulted in any major expenditure on their 
part. I will quote from ConocoPhillips' 2005 annual report. They have 
``conducted a successful test that converted vegetable

[[Page 16596]]

oil into high-quality renewable diesel fuel . . . , and can be produced 
with existing refinery equipment with minimal incremental capital 
investment.'' In other words, this is not something that requires some 
new investment that requires the American taxpayers to subsidize it.
  As I said, they are taking something they can do right now, and they 
are simply taking advantage of a tax break we did not intend to be used 
by a company like that.
  Now, in anticipation of this boondoggle--and it has gotten quite a 
bit of press--there has been a suggestion: Well, we can limit it to 
taxpayers with 60 million gallons of production. The problem is, in the 
Finance Committee mark that was changed from ``taxpayer'' to 
``facility.'' So now a company can have 20 different facilities, each 
one producing 60 million gallons, and they are right back in business. 
It is no limitation at all.
  So my colleagues should not be hornswoggled--to use the old phrase my 
grandfather used to use--that somehow there is some kind of limitation 
on this. Very cleverly, the Conoco folks were able to get in this 
legislation that it applies per facility; and by having multiple 
facilities, there is, in effect, no limitation.
  Mr. President, I will be happy to give those who want to speak in 
opposition to this amendment an opportunity to try to refute what I 
have said, but I think this is very straightforward. There is no sense 
in rewarding what I would consider to be behavior that was never 
intended by this Congress in providing this kind of a tax credit.
  When we are going to take a tax benefit--in effect, using taxpayer 
dollars--to promote something, we want to make sure we are promoting 
something that is in the best interest of the American taxpayer, not 
just a way for somebody who knows how to make a buck to use it to make 
a buck, especially if it has a negative consequence on an existing 
industry, the oleochemical industry, and, in particular, the soap 
makers of this country.
  The PRESIDING OFFICER. Who yields time?
  The Senator from Montana.
  Mr. BAUCUS. Mr. President, I yield myself such time as I might 
consume.
  Yesterday, the Finance Committee passed the Energy Advancement and 
Investment Act. That measure passed by a vote of 15 to 5. That is a 
very broad-based, bipartisan majority for the Finance Committee 
amendment that is now pending on this energy bill.
  It is a major amendment. The committee spent a lot of time trying to 
figure out the best way for America to turn the corner, for the United 
States to begin to wean ourselves away from OPEC, to wean ourselves 
away from our reliance upon foreign oil, to try to enhance our national 
security, make the United States a little more able to determine its 
own destiny with respect to energy.
  In doing so, we therefore also created lots of incentives for 
American production of renewables, for renewable energy, conservation, 
hybrid automobiles, hybrid plug-ins, cellulosic ethanol--a whole 
multitude of ways to help America become much more self-sufficient and, 
hopefully, therefore, be able to get our gasoline prices down a little 
bit because at the current time we very much are in the throes of big 
oil's control as to what they charge at the gas pump. This is a very 
thoughtful amendment. We spent a lot of time trying to put all this 
together.
  The Finance Committee amendment includes a compromise on the topic of 
Senator Kyl's amendment; that is, renewable diesel. There are a lot of 
offsetting interests here, to be honest about it, from different parts 
of the country. Some are more concerned about biodiesel produced from 
products such as soybeans; others are much more concerned about 
renewable diesel produced by other products that could be organic 
products. In trying to get that balance put together, the goal is the 
same, which is to displace foreign oil.
  I hope, therefore, that the amendment offered by the Senator from 
Arizona is not agreed to because the effect of it will be not to 
displace a good bit of foreign oil, which is contrary to the main point 
of the underlying legislation.
  Under current law, there is a $1-a-gallon credit for renewable 
diesel, including that produced with animal fats. There is also a $1-
per-gallon credit for biodiesel, which is made from soybeans and other 
seeds. The committee amendment extends both of these credits for 2 
years, until 2010; otherwise, they will expire at the end of next year.
  The Senator from Arizona appears to be concerned that renewable 
diesel coprocessors--such as Conoco, for example--will increase the 
cost of consumer goods. He thinks consumer goods are going to go up as 
a consequence of our assistance for renewable diesel. He argues that 
the price of animal fats to be used in making renewable diesel, which 
are also used in making soap, will drive up the cost of those consumer 
goods.
  I might say that fancy term ``coprocessors'' includes companies such 
as ConocoPhillips, which will use some of its existing infrastructure 
to produce renewable diesel. That is true.
  The Senator from Arizona also appears to be concerned about the size 
of the subsidy--$1 per gallon--for this fuel. I might say that this was 
a question which members of the committee were concerned with. There 
are those who thought that biodiesel would be in competition with 
renewable diesel, so we worked to find a way to work together to reach 
a balance. This is a compromise we worked out: the dollar credit for 
each, but in addition, the committee capped the tax credit for 
renewable diesel coprocessors at 60 million gallons per facility. We 
put a cap on it. Another way to say it is that once that cap is 
reached, then the $1-per-gallon credit will no longer be available. We 
have a limit. We are cognizant of the points made by the Senator from 
Arizona.
  We also commissioned a study on the effects of energy tax incentives 
on consumer goods. The 60-million limitation is the same as the 
definition used for a small producer of biodiesel or ethanol. Now, is 
60 million a magic number? No. But it is a standard used in current 
law. That is why we took it. It is not something pulled out of thin 
air. One might ask: Should the $1 subsidy remain current law for good? 
My answer is, probably not. This is a bold step in the sense that we 
are trying to push-start and help kick-start renewables and alternative 
energies. We don't know if these incentives are exactly right. They are 
probably not exactly right, but they are the best we could come up with 
at this time, and we think that probably they will work pretty well, 
but we will have to come back and revisit them. Some are not going to 
work very well, some will be increased and some will be decreased.
  I say all that because the committee amendment before us extends this 
$1 for each--that is, for biodiesel and renewable--for just 2 more 
years. It is not a 5-year or a 10-year extension. It is not a permanent 
provision. It is just for 2 years. It will sunset in 2 years. That is 
contrary to most of the recommendations we have been getting from 
industry across the board; namely, they like 5-year incentives toward 
capital needs. A couple years, 3 years; 1 year is not enough, 2 years 
is not enough. We extended most of these credits on renewables and 
alternatives for 5 years. Section 485, which is renewable credits, is 
extended for 5 years, but we limited this to just 2 years as an 
extension because we are not as confident that is what the exact 
provision should be.
  So I hope this amendment offered by the Senator from Arizona is not 
agreed to. The underlying Finance Committee amendment, which is 
pending, we thought it through the best we could. We think it is 
balanced. We think it is fair. Therefore, we hope it is sustained. Let 
me restate that every gallon of renewable diesel produced is a gallon 
of foreign oil displaced, which I think is pretty important.
  I appreciate the efforts of my good friend from Arizona, but I think 
by and large they are not well placed.
  I understand there are a couple of others who wish to speak on our 
side. How many minutes would the Senator

[[Page 16597]]

from Iowa like to speak? For 5 minutes. Senator Lincoln, about the 
same.
  Mr. President, how much time is remaining on our side?
  The PRESIDING OFFICER. Twelve minutes.
  Mr. BAUCUS. Mr. President, I yield 5 minutes to each Senator who 
wants to speak, and I first yield to the Senator from Iowa, my good 
friend, Senator Grassley.
  Mr. GRASSLEY. Mr. President, I thank the Senator for yielding. I am 
glad to come to the floor to speak about renewables. I am going to 
speak against the Kyl amendment.
  I think we ought to put things in perspective. For two decades, maybe 
longer than that, this country has been seeking various approaches to 
alternative energy so that we are not dependent upon foreign sources 
and, more recently, violent and unpredictable sources of energy for the 
United States for reasons of national security, for reasons of our 
economy. There are a lot of good reasons we shouldn't be so dependent 
upon fossil fuels and foreign sources of energy. So we have had two or 
three decades, starting out with ethanol and now going into other 
things such as biodiesel, wind, Sun, and things of that nature.
  Now we are finding that the things this country was so united on, 
such as the need for renewables, the need for helping agriculture, the 
need for lowering our trade deficit, the needs of national security, 
the needs of a cleaner environment--everybody was united that we ought 
to be doing it, and now we are being somewhat successful. It used to be 
we would have to listen to all of the excuses of big oil, fight big 
oil, why we shouldn't have renewables. Now we are finding out about the 
high price of food, the high price of animal feed, just as if all of 
the problems of our country are on the backs of the American farmers, 
which is very unfair. Now we are finding some dissension from other 
industries being affected. We are still in the infancy of these 
industries, whether it is ethanol after a couple of decades or whether 
it is biodiesel after 3 or 4 years. We are in a state of infancy yet in 
renewables.
  We ought to be as united today as we were over the past two decades 
on what is right for this country, good for agriculture, good for the 
environment, good for our national defense, good for good-paying jobs 
in parts of rural America where it has never been before. Everything 
about it is good, good, good. We better stick together because 
otherwise we will continue to be dependent upon those violent regions 
of the world for energy; we are going to be dependent on something God 
made a finite quantity of, such as fossil fuels. We need to move 
forward, united. This is the second amendment today and, who knows, we 
may have 10 other amendments which are very detrimental to the causes 
of getting this infant industry of renewables off the ground.
  Having said that as a backdrop, I wish to speak specifically about 
what is wrong with the amendment that is before us. I can't replace the 
good things--or I can only add to the good things which the Senator 
from Montana has already spoken to. But there is no cap on any 
biodiesel production. They may go forth and produce and meet their 
specific chemical standards. They have the right to produce as many 
gallons of biodiesel as they like, and it will be qualified for the 
excise tax credit through the end of 2010. Now, people will argue that 
it ought to be longer, but you have to fit things into what we have 
offsets for, so it is the year of 2010. If they are a small producer, 
they will be able to receive the credit until December 2012. If you are 
a noncoprocessing facility and do 100 percent biomass, not including 
chemicals, catalysts, and the like, they have the same rules as 
biodiesel. If you coprocess at a facility, your total credit is limited 
to 60 million gallons. If you claim a renewable diesel credit, the 60 
million gallons is the current definition of a small producer. So a 
coprocessor facility will not be able to receive any more tax benefits 
than the small producer. For example, if you have a 100-million-gallon 
facility that you are concerned about, they have a built-in $40 million 
advantage over any coprocessing facility. Obviously, a barrel of 
vegetable oil or animal oil is substantially more expensive than a 
barrel of crude oil, and the credit by law is limited to only the 
volumetric amount of the biomass.
  I hope this makes it clear that we should not support the amendment 
of the Senator from Arizona.
  I yield the floor.
  The PRESIDING OFFICER. The Senator from Arizona is recognized.
  Mr. KYL. Mr. President, may I be informed as to how much time remains 
on this side?
  The PRESIDING OFFICER. Twelve minutes for the Senator from Arizona 
and 6\1/2\ minutes for the Senator from Montana.
  Mr. KYL. Might I take a little bit of time, then, before the other 
side speaks again on this issue?
  I respect my colleagues who have spoken, but I have not really heard 
an argument that, to me, anyway, argues against the specific amendment 
I am offering. Remember, I am not doing away with the credit. The 
arguments that have been raised here make it sound as if we are trying 
to do away with the credit. That is absolutely not true. The credit 
remains. What we are trying to do is essentially reverse an IRS ruling, 
which I submit was made in error, with respect to the application of 
the tax credit. They said you could actually apply it to a process to 
which it was never intended to be applied.
  A letter to the Secretary of Treasury at the time this legislation 
was originally considered makes that crystal clear.
  Congressman Blunt wrote:

       It has been brought to my attention that some taxpayers are 
     suggesting to the Department of Treasury that section 1346 of 
     the Act, the renewable diesel provision, could be broadly 
     interpreted to include traditional processes. This is not 
     what we intended in the provision, and neither the statute 
     nor the associated JCT estimate of revenue implications in 
     any way support such a reading.

  What he is saying is this: Two years ago when this tax credit was 
created, it was designed to incentivize the creation of a new product 
so that we didn't have to continue to explore for oil or export it from 
foreign sources; we could begin to make renewable diesel out of 
biomass. That was the idea. We have all of this waste product of 
biomass. We have cellulosic products we can create here, and that will 
create a new renewable fuel source.
  Everybody said: That is a great idea. To get it promoted, let's have 
a dollar-per-gallon tax credit for the production of that. It was not 
intended to apply, as the Congressman from Missouri pointed out, to 
include traditional processes for refining and producing fuel. In other 
words, it was designed to promote something new.
  So when these folks found that they could take animal fat, 
essentially, to greatly simplify it, and add it to their existing 
stocks, voila: a biomass renewable fuel that qualified for a generous 
tax benefit, that was never intended. All my amendment does is to say 
that interpretation is not correct; you can't do that. The underlying 
dollar-per-gallon credit exists. The other 50-cent-per-gallon credit 
exists. We don't take away any of that. All we do--and the primary 
person or company that is affected by this, I acknowledge, is Conoco 
Oil Company. They have figured out, with minimal new investment, as 
they themselves wrote in their annual report, that they could take 
advantage of this tax credit by using the animal fat.
  Now, again, I suppose it wouldn't matter that much if a big oil 
company is taking undue advantage of a tax credit we create. That is 
probably done all the time. I don't like it. That is why taxpayers are, 
frankly, sometimes upset with Congress that we pass these great, 
generous subsidies and sometimes they are utilized by people who 
shouldn't be utilizing them, not to create a new kind of diesel fuel in 
this case but to keep using the same old diesel fuel.
  The other unintended consequence, though, is one that affects another 
industry, a clean industry, an industry that is using the waste fat, 
the vegetable oil and animal fat, the waste product of turkeys and 
chickens, for example. It is utilized today in a variety of these oleo 
chemical products

[[Page 16598]]

which are products we use every day--house-cleaning products, soap, as 
I said.
  The problem is that because these existing refineries are buying up 
these waste products, they are driving up the cost. There is only so 
much of this animal fat around. It is a finite amount. When the demand 
is increased by having these oil refineries buy it all up so they can 
put it into their diesel fuel so they can get an extra credit, that is 
driving up the price which, as I said, has gone up 100 percent in the 
last 6 months.
  If that continues, these soap companies are not going to be able to 
afford the primary feedstock for the soap, and they are going to have 
to produce it abroad, another great unintended consequence of what 
started out to be a good idea but didn't turn out to be such a hot 
idea.
  This is a very parochial issue. I submit, except for the chairman and 
ranking member of the committee, primarily the opponents of this are 
from places that take advantage of this provision. I cannot object to 
their fighting for their local industries, but I think it is important 
for us to recognize that as a national energy policy and as a national 
tax policy, we have to look at it in nationwide terms. When we have 
created a credit to produce something new, and it ends up not being 
used to produce something new but to produce something that currently 
exists by existing refineries and uses up the feedstock of another 
important industry, driving the cost of that industry way up, we better 
pay attention to that. The fix doesn't hurt anybody, except primarily, 
as I said, this one big oil company because it leaves the credit in 
place, it leaves the 50-cent credit in place. It doesn't do anything 
with those credits. It doesn't say they are not extended. All it does 
is say we go back to the way it was prior to this IRS ruling that said 
they could take advantage of this provision for the existing refiners.
  I will conclude. We don't need to subsidize existing oil-refining 
operations at the expense of freestanding producers of biodiesel and 
renewable diesel. That is who this tax credit was designed to help, the 
freestanding facilities, the ones that were actually producing 
something new.
  A key component of rising fuel prices in this country is a lack of 
refining capacity in the United States. We all know that. Freestanding 
biodiesel and renewable diesel producers have both fuel and refining 
capacity. We ought to be encouraging them, and that is what the $1-per-
gallon credit was designed to do.
  By contrast, coprocessed renewable diesel adds no new net fuel and no 
new refining capacity to the diesel pool. This was not intended to help 
the existing refiners. They are already in business, they are already 
making money, and we don't need to give them $1-a-gallon credit for 
doing something we don't need to have them do.
  Finally, as I said, the availability of feedstock, such as animal fat 
and vegetable oils, is essentially fixed, and this $1 renewable diesel 
credit is the motivation for integrating the oil companies to engage in 
coprocessing. This will clearly increase demand for the feedstock 
needed to produce biodiesel and increase costs. It is not wise tax 
policy to drive tax policies and limited feedstock to support existing 
refinery operations at the expense of biodiesel and freestanding 
renewable diesel production.
  The economic benefits associated with freestanding biodiesel 
production could be lost if this $1-per-gallon renewable tax incentive 
is directed to support operations in existing oil refineries.
  I ask my colleagues to please keep this in perspective and take into 
account that those who say this amendment is bringing the end of the 
world, no, it is not. It doesn't change existing law at all. All it 
does is say to go back to the original intent and apply this very 
generous tax credit for the purpose we originally intended: to produce 
something new, not to use existing refineries and give them a tax 
credit for doing something they are already doing.
  I hope when the amendment is called that my colleagues will see 
through some of the smokescreen that has been presented, not in the 
Chamber but on the outside with regard to this amendment, and will 
agree that national policy dictates that we take care of taxpayers' 
dollars carefully, that we set our energy policy carefully, and that we 
not let people take undue advantage of it in ways we did not intend.
  The PRESIDING OFFICER. The Senator from New Mexico.
  Mr. BINGAMAN. Mr. President, I ask the Senator from Arizona, before 
the debate proceeds, we now have agreements with Senator Inhofe for two 
votes. One is a vote in relation to amendment No. 1693 and then a vote 
in relation to amendment No. 1666. I was wondering if the Senator will 
agree that following the debate on those two amendments, which will 
take an hour, if the Senator will be able to return to that point and 
debate his second amendment and then we can have a stack of four votes.
  Mr. KYL. Mr. President, I will be happy to do this on my time because 
I am going to yield back my time on this amendment in any event. I am 
happy to have the vote on this amendment stacked with the Inhofe 
amendment at whatever time that will occur.
  With regard to the second amendment, which I am going to propose, I 
am not at liberty to do that right now because there are numerous 
people who wish to speak. I assure the chairman that as soon as I have 
that list and know how much time it is, I will let him know that.
  Mr. BINGAMAN. I appreciate the response.
  I yield the floor.
  Mr. BAUCUS. Mr. President, I yield to the Senator from Arkansas 5 
minutes.
  The PRESIDING OFFICER. The Senator from Arkansas.
  Mrs. LINCOLN. Mr. President, I start first by thanking both the 
chairman and ranking member and their staff for some incredibly hard 
work to get this legislation ready to come to the floor. It was 
absolutely no small feat, but it is so very important that we bring 
this portion of our objective in leading our Nation away from 
dependence on foreign oil and back to our ability to provide for 
ourselves.
  This energy tax package that Chairman Baucus and Senator Grassley 
have brought together is remarkable--remarkable in its balance, it is 
remarkable in the engine it provides to drive the incentives industry 
needs to move us toward renewable fuels.
  I wish to say how much I appreciate their effort. Throughout the 
history of our Nation, we have faced great technological challenges 
that we have confronted and overcome. We didn't put a man on the Moon 
by talking about how important it was. We developed a plan, and we 
committed the resources necessary to achieve that plan. We are at that 
juncture now in this country in regard to renewable fuels and our 
dependence on foreign oil. I applaud their efforts in what they have 
done and accomplished.
  I also wish to point out, in terms of what the Senator from Arizona 
has brought up, he mentioned this is not a new product. I venture to 
say how many people have heard of diesel made from animal fat, 
particularly chicken fat? This is a new product. It is a product that 
produces a renewable diesel that is very clean burning and very 
positive for our environment and the overall objective of what we are 
trying to reach in this underlying bill and that is reducing our 
CO2 emissions, reducing what is going into the environment, 
and reducing our dependence on foreign oil.
  The Senator from Arizona mentions the original intent. The original 
intent was to promote renewable diesel. In fact, the renewable diesel 
credit is drafted as technology neutral, regardless of the state of the 
art or process at the time of enactment. The EPAct statute simply 
provides that renewable diesel fuel, in order to qualify for the 
credit, must be produced using a thermal depolymerization process. We 
have the history on that process. We know what the intent and the 
purpose of EPAct was and is, and we meet that intent. We meet that 
intent with the encouragement of making sure we are

[[Page 16599]]

looking at all the renewable feedstocks in this country to put into the 
mix to lessen our dependence on petroleum products and to create 
variety in what it is we go to.
  I know there are some in this body on both sides who think maybe this 
is an opportunity to get even with big oil. That is not the intent of 
this bill, and I hope we would not stray to that. I hope we would not 
stray to the idea that we are here to get even with big oil but that we 
are here to encourage those in the oil industry to move into renewable 
fuels, to move into the opportunities that exist in technology, to push 
them into an area where renewables make sense.
  Senator Kyl's amendment does not solve the problem he raises 
regarding the increase in the price of fat. The credit that Senator Kyl 
seeks to strike is for a process that is in the very early stages of 
production. This process has not even been produced in terms of barrels 
of fuel in this country. So it is difficult to see how it could have 
had the profound effect on the prices that Senator Kyl claims it has.
  The fact is, the price of fat has been driven up in part due to its 
use in the production of biodiesel. Senator Kyl said in our hearing 
yesterday that if he could, he would try to remove all credits he 
believes might distort existing markets.
  If we think we are going to move ourselves as a nation and as a 
people, with the culture and the amenities to which we have become 
accustomed, to a society that depends on renewable fuels without making 
at least some minor changes in the marketplaces of our existing 
feedstocks, we might as well pack it up and go home right now.
  If we are going to eliminate all the credits and all the 
opportunities that exist to go to renewable fuels, and we are going to 
eliminate them because of some blip they may cause momentarily before 
we begin to move into the decade where we can balance our needs for 
renewable feeds with other items, we might as well go home because that 
is going to happen.
  What we have done is crafted in this bill a very sensible solution. 
Senator Kyl mentions the stand-alone renewable diesel facilities need 
to be protected, they need to be maintained. They are. They have no cap 
whatsoever in this bill, just as there is no cap on biodiesel. But 
where we have facilities that are taking the steps in the right 
direction to coproduce, they are going to get a credit. They are going 
to get a credit up to the amount where they meet what the small 
producers are doing, a 60-million-gallon-per-facility cap. It is very 
reasonable, and it certainly speaks to the efforts of what we are 
trying to do in this underlying bill.
  Today's amendment may only affect renewable diesel, but it is 
entirely possible that next year the target will be biodiesel or 
ethanol or cellulosic ethanol, if what he wants to do is eliminate 
credits that protect those underlying feedstocks.
  While it may be good intention for something that is parochial for 
the Senator from Arizona, I say let us all remember what the ultimate 
objective of this bill is: to lessen our dependence on foreign oil, 
clean our environment, and make sure that we are moving to renewables. 
That is exactly what the underlying bill does.
  The PRESIDING OFFICER. The Senator from New Mexico.
  Mr. BINGAMAN. Mr. President, how much time remains?
  The PRESIDING OFFICER. The Senator from Montana has no time 
remaining.
  Mr. BINGAMAN. Mr. President, I see no Senators on either side, so I 
will propound a unanimous consent request.
  I ask unanimous consent that Senator Alexander be recognized for 10 
minutes, to be followed by 10 minutes for Senator Klobuchar, and 
following that, the pending amendments be set aside so I may offer 
amendment No. 1693 and that Senator Inhofe can then offer his first-
degree amendment No. 1666; that the two amendments be debated 
concurrently for 1 hour, to be equally divided between Senator Inhofe 
and myself; that at the conclusion or yielding back of time, the Senate 
vote in relation to amendment No. 1693, to be followed by 2 minutes for 
debate and a vote in relation to amendment No. 1666; that no amendments 
be in order to either amendment prior to the votes in relation to the 
amendments; and that upon the disposition of the Inhofe amendment, the 
Senate vote in relation to the Kyl amendment No. 1800, with 2 minutes 
of debate prior to the vote.
  The PRESIDING OFFICER. Is there objection?
  Mr. DOMENICI. We have no objections. We have worked together to 
arrive at this schedule.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  The Senator from Tennessee.
  Mr. ALEXANDER. I thank the Senator from New Mexico for the courtesy 
of the next 10 minutes, and I would ask the Chair to let me know when 1 
minute remains.
  Mr. President, I compliment both Senators from New Mexico for their 
work on energy. As they did 2 years ago, they have made some important 
proposals. The 2005 bill was a terrific step forward, and there are 
some important suggestions in this bill. I want to especially say a few 
words about the tax part of the bill that came out today, and I will 
have more to say about that tomorrow and amendments to offer.
  It is probably not the first time it has been said of the Senate that 
there is too much wind here, but I would like to suggest there is too 
much of that in the tax bill that has been reported to the Senate. Here 
is the tax bill. As I read the figures: $28.5 billion more over the 
next 10 years, $10 billion of it for wind. Almost all of it is for 
subsidies to wind developers. 34 percent of the bill's total goes 
toward this tax credit.
  This isn't the first time the Senate has been generous to wind. In 
the 2005 bill it was 19 percent. Why would I say that is a little too 
much wind? It is because in many parts of the country the wind doesn't 
blow sufficiently for us to rely on it for electricity.
  We have had some debate about Senator Bingaman's proposal, which 
might work very well in New Mexico or some other States to say that 15 
percent of the electricity ought to be from renewable energy, mostly 
wind under this definition.
  This map of the United States shows that much of the wind in the 
Southeast and Eastern United States doesn't blow enough for that to 
happen there. So under that proposal, the one we were debating earlier, 
called the renewable portfolio standard, I am afraid Tennesseans would 
have to pay basically a tax of 2 cents per kilowatt-hour, which would 
be $410 million a year.
  We have one wind farm in the entire Southeast, and it is in Tennessee 
on Buffalo Mountain. Last August, while we were all sweating and 
perspiring with our fans on the front porch, the wind farm operated for 
7 percent of the time. Most of us want our air conditioners when it's 
hot--not just when the wind blows enough to make electricity.
  We are not the only ones who are beginning to see the limits of wind. 
Yesterday, the President of Pacific Gas and Electric in California, 
which likes wind power and is using wind power, said, according to 
California Energy Markets, that they will not make substantial new 
investments in wind generation, and ``we think we are approaching in 
California itself the limit on wind.''
  So why then if we are going to spend $28 billion for energy 
sufficiency--that would mean reliable, clean electricity for the 
country in the world that uses 25 percent of all the energy in the 
world--why then would we develop a national wind turbine policy instead 
of a national energy policy? Isn't $10 billion more--which would make 
our total investment over the next 10 years more than $2 billion a year 
for wind turbines--isn't that too much wind?
  I am not even talking so much about the fact of what these look like. 
I think I have said many times on this floor that in Tennessee I don't 
like the fact that these only work, when they work, on our most scenic 
ridgetops. We would prefer not to have them. That is not the case with 
everybody, I understand that. But it is important for people to know 
these aren't your grandmother's windmills.

[[Page 16600]]

  These are twice as tall as the sky boxes at the football stadium, and 
the rotor blades go from the 10-yard line to the 10-yard line. So there 
are limits as to where they should go.
  Across the country, even when performing well, they only work a third 
of the time. They often blow at the wrong time--at night, when people 
are asleep and not using so much electricity. And you can't store the 
wind. Basically, a utility makes a big investment, paying somebody $20 
million--in the TVA Buffalo Mountain case $60 million for 20 years--to 
buy wind, whenever it comes, and if it comes at night when the lights 
are off, tough, they just lose it. If it comes 7 percent of the time in 
August, when everybody's air conditioners are up, it doesn't help very 
much. Of course, even if you had it, you still need nuclear or coal or 
something else because most people want their computers and their 
electricity on when they want them on.
  As I mentioned, it is very difficult to store. It only uses about 1 
percent of our current electricity needs. It does little to clean the 
air because we already have caps on sulfur and nitrogen, which I would 
like to accelerate, and it means lots of new power lines. So we have a 
400-percent increase in wind capacity that would produce no change in 
emissions of nitrogen, no change in sulfur, and very little in carbon.
  My point is, I believe there are better ways to spend that $10 
billion of the $28 billion we propose to spend over the next 10 years, 
better ways to spend one-third of all this money than on a national 
wind policy, since it doesn't work very well, it is not very reliable, 
and much of the country can't use it at all.
  For example, take fluorescent lighting. I know Senators Bingaman and 
Domenici have talked about this, but if we spent $2 billion a year just 
in tax credits for fluorescent lighting, we could save enough energy to 
equal eight 1,000-megawatt nuclear reactors, or 18,000 1.8-megawatt 
wind turbines.
  Let's take another idea. What if we took the $2 billion a year and 
gave a credit for appliances, such as dishwashers, washing machines, 
and refrigerators. There is such a credit in the tax bill, and that is 
good. It costs about $100 million a year to encourage that. Why don't 
we extend that to 10 years? That would be $1 billion of the $10 billion 
we are spending on wind. It would save more electricity than we would 
get building wind.
  We talk about not just carbon but clean air. I know Vermont wants 
clean air. We want clean air in the mountains in Tennessee. For $2 
billion a year we could buy six new scrubbers a year at $300 million a 
scrubber. A scrubber takes the sulfur out of the air that contributes 
to the unhealthy aspects and to the soot and to the smog that is 
unhealthy for people and interferes with our view of the mountains.
  Or take utility bills. The average utility bill for Tennesseans is 
$100 a month. This is $2 billion a year. We could just give the money 
to Tennesseans, 1.7 million households, for a full year. One month's 
electric bill for 20 million households, that is what we could do for 
$2 billion.
  If we were a little more creative, we might go to the metering that 
some utilities are now putting in homes and say: If your electric bill 
is $100, and you reduce your use of electricity by $20, we will match 
it by $20 and we will collect all that information in the utility. And 
as a result, you will get a $60 bill instead of a $100 bill each 
month--instead of investing in more wind.
  Or you could use that money for clean coal power plants. The 2005 
bill that Senator Bingaman and Senator Domenici worked on had a number 
of initiatives for nuclear, clean coal, IGCC, and a number of things 
that are underfunded. We don't have enough money for them. Well, if we 
don't have the money for those things--which we decided by consensus in 
2005 was the best way to create clean reliable electricity for a 
country that uses 25 percent of all the energy in the world--if we 
didn't have the money in 2005, why don't we take this $28 billion over 
the next 10 years, or at least some of this $10 billion for wind, and 
put it in clean coal or these other areas?
  The PRESIDING OFFICER. One minute remains.
  Mr. ALEXANDER. I thank the Chair.
  Mr. President, I wanted the Senate to know that of the $28 billion, 
one-third of it goes to wind turbines. We have a national wind policy 
instead of a national energy policy.
  We will be spending $2 billion a year on wind subsidies. And there 
are many other wind subsidies in the Federal Government. You get bonds 
to build them, you get accelerated depreciation, and then there are the 
State subsidies. So I am suggesting there is too much wind, and a wiser 
use of at least half that $10 billion would be for conservation, 
efficiency, scrubbers, and other forms of energy that are reflected in 
the 2005 Energy bill.
  I thank the Chair and the Senator from New Mexico for the time.
  Mr. DOMENICI. Mr. President, I ask unanimous consent the Senate grant 
me 1 minute at this point to make a statement and ask the Senator a 
question.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  Mr. DOMENICI. Senator, first of all, I listened. Some people might 
say the Senator from New Mexico shouldn't listen again because I have 
listened now at least twice to you on this subject matter.
  To tell you the truth, your analysis of the situation becomes more 
relevant every single month that passes in the Congress because today 
we are about to decide what to do with $30 billion, more or less; that 
we are going to levy a tax; and you have come before us and told us 
what you might do.
  I might say, as chairman of the Energy Committee, I don't serve on 
the Finance Committee. That is the breaks of the way things are done in 
the Senate. I am not complaining, but I can guarantee you and the 
Senate that I, as one Senator, and as chairman of the Energy Committee 
a year and a half ago--not now--I would never have voted to put that 
much money in wind and so little in other technologies and breakthrough 
science items.
  The PRESIDING OFFICER. The Senator's time has expired.
  Mr. DOMENICI. I yield the floor.
  The PRESIDING OFFICER. The Senator from New Mexico.
  Mr. BINGAMAN. Mr. President, I ask unanimous consent to have printed 
in the Record a statement from the Joint Tax Committee which does an 
estimate of the amount of the new tax package that would go to wind.
  The estimate for a 5-year extension of section 45 credit is $10,292 
million, and the amount attributed to wind is $7,846, in their 
estimation. The rest would be used for biomass and geothermal and other 
energy sources.
  There being no objection, the material was ordered to be printed in 
the Record, as follows:

                                    Congress of the United States,


                                  Joint Committee on Taxation,

                                                   Washington, DC.
     Hon. Jeff Bingaman,
     U.S. Senate.

                                                  FISCAL YEARS
                                              [millions of dollars]
----------------------------------------------------------------------------------------------------------------
             Item                2007      2008      2009      2010      2011      2012     2007-12    2007-17
----------------------------------------------------------------------------------------------------------------
5-year extension of section    ........  ........       -75      -294      -610      -949    -1,929      -10,292
 45 credit...................
    Amount attributable to     ........  ........       -52      -199      -419      -679    -1,350       -7,846
     wind....................
8-year extension of section    ........  ........       -75      -294      -610      -949    -1,929      -13,110
 45 credit...................
    Amount attributable to     ........  ........       -52      -199      -419      -679    -1,350      -10,122
     wind....................
5-year extension of section    ........  ........       -83      -129      -107      -116      -434        -655
 48 credit...................
----------------------------------------------------------------------------------------------------------------
Note: Details may not add to totals due to rounding.


[[Page 16601]]

       I hope this information is helpful to you. If we can be of 
     further assistance in this matter, please let me know.
           Sincerely,
                                               Thomas A. Barthold,
                                            Acting Chief of Staff.

  Mr. BINGAMAN. Mr. President, I yield the floor.
  The PRESIDING OFFICER. The Senator from Minnesota.


                           Amendment No. 1557

  Ms. KLOBUCHAR. Mr. President, I am here once again to address my 
amendment for a national greenhouse gas registry. As you know, this is 
an amendment that I am cosponsoring with Senator Snowe and two other 
Republicans, as well as Senator Bingaman.
  This is an idea whose time has come. This is an amendment that 
doesn't actually say what the policy will be with regard to greenhouse 
gases. It simply requires that on a national basis we collect accurate 
information so we can make smart policy decisions.
  I am sorry to say the other side has not yet agreed to vote on this 
amendment. It is looking a little bleak as time ticks on, but I am 
still here. It puzzles me because the senior Senator from Oklahoma, in 
a trade magazine--Environment and Energy Daily--was recently quoted in 
a short interview, after repeatedly calling global warming a hoax, as 
saying that he predicted this measure, this bill, would probably be 
adopted, if offered. And I think that may be accurate.
  We know a number of Republicans are interested in this bill. We have 
worked very hard and we think it is important. That is why it is very 
distressing to me that we are not even going to be allowed to have a 
vote on this.
  It is distressing because one of the reasons Senator Snowe and I came 
up with this amendment is because we did hear what we considered 
something of an outcry from businesses across this country. As you 
know, 31 States have come up with plans involving greenhouse gas 
emissions and climate change, and they are actually starting their own 
registry out of complete and utter frustration with the Federal 
Government. It is absurd to think a majority of States is having to put 
together a greenhouse gas registry because our national Government is 
so complacent. Back in January we had a number of these companies that 
gathered together and came to us and said we want action on climate 
change. We want to get this registry going. We want to have it done by 
the end of the year.
  I have been here long enough to know we are not going to get it done 
by the end of the year unless we vote on it now.
  I want to mention some of the companies that expressed interest in 
this: Alcan Inc., Alcoa, American International Group, Inc.--that is, 
AIG--Boston Scientific Corporation, BP America Inc., Caterpillar Inc., 
ConocoPhillips, Deere & Company, the Dow Chemical Company, Duke Energy, 
DuPont, Environmental Defense, FPL Group, Inc., General Electric, 
General Motors Corp., Johnson & Johnson, Marsh, Inc. PepsiCo, Pew 
Center on Global Climate Change, PG&E Corporation, PNM Resources, 
Shell, Siemens Corporation. They all said they wanted us to get 
something done on climate change.
  You can imagine my surprise when we found out that in fact the U.S. 
Chamber of Commerce opposed this bill. They never talked to me about 
it; they just sent out a letter. In fact, they threatened this could be 
one of the key votes for the chamber this year, depending on how people 
voted on this little bill that simply asks that accurate data be 
collected and be able to be posted on a Web site as they do in Canada 
and other places. But they said it might be a key vote, right up there 
with the estate tax last year and some of the other votes that were 
national issues.
  There have been a lot of things said about this bill. The senior 
Senator from Oklahoma actually sent out a letter about it. He talked 
about how it would apply to virtually every business in America in this 
letter.
  The simple truth is we wrote this amendment with business in mind 
because we had the impression, from what we had heard, that business 
wants to work with us on this important issue of climate change. The 
amendment contains explicit provisions excluding companies for which 
reporting was excessively burdensome or expensive. The new registry 
only covers major emitting facilities and major sources of fossil 
fuels. Utilities already reporting under the Clean Air Act would not 
have to report their data twice.
  For facilities facing costs and purchasing advanced monitoring 
equipment, the EPA would accept basic information on the amount and 
type of fossil fuels they consume, which is collected by businesses for 
general accounting purposes. Section 165(b)(10)(c) of my amendment 
specifies that confidential business information will not be published 
under the National Greenhouse Gas Registry.
  The legislation also has an exception for small businesses, the 
exception as defined by the Small Business Administration--businesses 
that generate fewer than 10,000 metric tons of greenhouse gas 
emissions. And 10,000 metric tons is not an arbitrary number. The 
American Chemical Society released a report in 2003 which talked about 
this as a threshold, 10,000 metric tons, a threshold which

     . . . effectively relieves the agriculture and commercial 
     building sectors from reporting, substantially reduces the 
     number of manufacturing facilities that would report while 
     continuing to capture 80 percent of emissions.

  Clearly this is not true.
  We also know the current status. We have some businesses, major 
emitters, reporting to the Department of Energy. Some report to the 
EPA. Some report every 3 years. Some report every week. Some report 
every year. This is not the kind of information we expect to have in 
order to make policy decisions on climate change.
  In his letter, the senior Senator from Oklahoma also said 
organizations such as the Sierra Club or the Natural Resources Defense 
Council would be put in charge of third-party verification and have 
access to confidential business information. This is so inaccurate I do 
not even know where to begin. Under my amendment, the EPA Administrator 
may ensure that reports are certified by a third-party entity, but as 
with the California Climate Registry, third-party verifiers will have 
to be verified themselves as experienced firms in providing greenhouse 
gas emission certifications. These are engineering firms; they are not 
political interest groups.
  Finally, they claim this amendment did not go through the committee 
process. That interests me because a little over 5 years ago, Senator 
Brownback, the Republican Senator, along with then-Senator Corzine of 
New Jersey, passed an amendment in this Chamber creating a greenhouse 
gas registry. This registry would have been voluntary, but after 5 
years, if the registry contained less than 60 percent of the total 
greenhouse gas emissions in the U.S.--that is clearly where it is now--
mandatory reporting would have been triggered. Sadly, the bill didn't 
get ultimately through this Congress. But the point is, this Chamber 
has already voted on this.
  Here is a simple truth. This amendment seeks to create common 
standards for measuring, tracking, verifying, and reporting greenhouse 
gas emissions by major industries. It requires the Environmental 
Protection Agency--not exactly an engine of radical reform at this 
moment--to consider cost and coordinate with existing Federal and State 
programs to implement this registry.
  This is an opportunity that the Senate should be willing to put its 
head up and vote for. It is an opportunity to at least get the accurate 
data so we can start talking about climate change reform.
  I never knew I would end up here in the Senate. I grew up in a 
middle-class family. My grandpa was a miner and a logger. My dad was a 
journalist. My mom was an elementary schoolteacher. I worked jobs all 
my life--as a pie cutter. I worked as a car hop. I worked as a 
secretary. I went to public high

[[Page 16602]]

school. I got a law degree. I went to a law firm, and I ended up being 
privileged to be the district attorney for the largest county in 
Minnesota. When Senator Dayton decided he wasn't going to run again for 
the Senate, I ran for the Senate.
  It has been my belief throughout my life that you can get things done 
if you have right on your side, and if you are able to work with other 
people, you can get things done and you can change things. It started 
in the fourth grade when I was the first girl to wear bell-bottom 
pants, the first girl to wear pants in my public elementary school. I 
was kicked out by Mrs. Quady, the principal, but I came back the next 
day and within a year the girls were allowed to wear pants.
  In high school they said we couldn't raise enough money to have our 
high school prom, and we sold Life Saver lollipops and we got it done. 
In DA, we had troubled crime in a lot of our neighborhoods and we 
reached out to these neighbors and organized, and they did a lot of 
good work and we had some amazing examples of individual citizens 
getting things done on the front end.
  Now we are here. We have a major challenge confronting us. That is a 
challenge of climate change. There are people out there waiting for us 
to do something about it. There is a scientist out there right now 
seeing how the sea level is going up. There is another scientist who 
measures the temperatures and sees how, since the ice age, we have only 
had a 5-degree increase in temperature and just the last century we 
have seen a 1-degree increase, with the EPA estimating a 3-degree 
increase in the next hundred years. There are little kids out there 
wearing ``Save the Penguins'' buttons right now. There is a hunter in 
Hinckley, MN, who sees changes in the wetlands. He is waiting for us to 
act. There is a ski resort on up in Grand Marais, MN, that had 30 
percent less profits in this last year because of the decrease in snow. 
He is waiting for us to act.
  That is why I ask my colleagues on the other side of the aisle to 
allow this important amendment to be heard. It doesn't dictate what the 
policy will be. It simply asks that we collect accurate information.
  I am an optimist. The seat I hold was once held by Hubert Humphrey. 
At the end of his life, he said the words that are on his grave:

       People consider me sentimental but to the end I remain an 
     optimist. I remain an optimist with joy and without apology 
     about this great American experiment in Democracy.

  I remain an optimist too. I remain an optimist because I have seen 
the great work the Senator from New Mexico and others have done in this 
energy bill, and I believe more can be done. I remain an optimist that 
this bill will ultimately pass. If not today, this amendment will 
ultimately pass on another bill.
  I yield the floor.
  The PRESIDING OFFICER (Mrs. McCaskill). The Senator from New Mexico.
  Mr. BINGAMAN. For the information of Senators, we have now an hour 
equally divided, half of it under the control of Senator Inhofe and 
half of it under my control. It is for two purposes. It is to debate 
amendment No. 1693, which I have submitted, and also to debate 
amendment No. 1666, which Senator Inhofe has submitted.
  Why don't I take 5 minutes at this point.


                Amendment No. 1693 To Amendment No. 1502

  Let me call up amendment No. 1693.
  The PRESIDING OFFICER. The clerk will report.
  The assistant legislative clerk read as follows:

       The Senator from New Mexico [Mr. Bingaman], for himself, 
     Mrs. Boxer and Mr. Reid, proposes an amendment numbered 1693 
     to amendment No. 1502.

  Mr. BINGAMAN. I ask unanimous consent the reading of the amendment be 
dispensed with.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  The amendment is as follows:

(Purpose: To ensure that the renewable fuel standard does not harm the 
                              environment)

       On page 59, after line 21, insert the following:

                  Subtitle D--Environmental Safeguards

     SEC. 161. GRANTS FOR PRODUCTION OF ADVANCED BIOFUELS.

       (a) In General.--The Secretary shall establish a grant 
     program to encourage the production of advanced biofuels.
       (b) Requirements and Priority.--In making grants under this 
     section, the Secretary--
       (1) shall make awards to the proposals for advanced 
     biofuels with the greatest reduction in lifecycle greenhouse 
     gas emissions compared to the comparable motor vehicle fuel 
     lifecycle emissions during calendar year 2007; and
       (2) shall not make an award to a project that does not 
     achieve at least a 50-percent reduction in such lifecycle 
     greenhouse gas emissions.
       (c) Authorization of Appropriations.--There is authorized 
     to be appropriated to carry out this section $500,000,000 for 
     the period of fiscal years 2008 through 2015.

     SEC. 162. STUDIES OF EFFECTS OF RENEWABLE FUEL USE.

       Section 211 of the Clean Air Act (42 U.S.C. 7545) is 
     amended by adding at the end the following:
       ``(t) Studies of Effects of Renewable Fuel Use.--
       ``(1) In general.--Not later than 1 year after the date of 
     enactment of this subsection, the Administrator shall offer 
     to enter into appropriate arrangements with the National 
     Academy of Sciences and any other independent research 
     institute determined to be appropriate by the Administrator, 
     in consultation with appropriate Federal agencies, to conduct 
     2 studies on the effects of increased domestic use of 
     renewable fuels under the Renewable Fuels, Consumer 
     Protection, and Energy Efficiency Act of 2007.
       ``(2) Matters to be studied.--
       ``(A) In general.--The studies under this subsection shall 
     assess, quantify, and recommend analytical methodologies in 
     relation to environmental changes associated with the 
     increased domestic use of renewable fuels under the Renewable 
     Fuels, Consumer Protection, and Energy Efficiency Act of 
     2007, including production, handling, transportation, and use 
     of the fuels.
       ``(B) Specific matters.--The studies shall include an 
     assessment and quantification, to the maximum extent 
     practicable, of significant changes--
       ``(i) in air and water quality and the quality of other 
     natural resources;
       ``(ii) in land use patterns;
       ``(iii) in the rate of deforestation in the United States 
     and globally;
       ``(iv) to greenhouse gas emissions;
       ``(v) to significant geographic areas and habitats with 
     high biodiversity values (including species richness, the 
     presence of species that are exclusively native to a place, 
     or the presence of endangered species); or
       ``(vi) in the long-term capacity of the United States to 
     produce biomass feedstocks.
       ``(C) Baseline comparison.--In making an assessment or 
     quantifying effects of increased use of renewable fuels, the 
     studies shall use an appropriate baseline involving increased 
     use of the conventional transportation fuels, if displacement 
     by use of renewable fuels had not occurred.
       ``(3) Reports to congress.--The Administrator shall submit 
     to Congress a report summarizing the assessments and findings 
     of--
       ``(A) the first study, along with any recommendations by 
     the Administrator to mitigate adverse effects identified by 
     the study, not later than 3 years after the date of enactment 
     of this subsection; and
       ``(B) the second study, along with any recommendations by 
     the Administrator to mitigate adverse effects identified by 
     the study, not later December 31, 2015.''.

     SEC. 163. INTEGRATED CONSIDERATION OF WATER QUALITY IN 
                   DETERMINATIONS ON FUELS AND FUEL ADDITIVES.

       Section 211(c)(1) of the Clean Air Act (42 U.S.C. 
     7545(c)(1)) is amended--
       (1) by striking ``nonroad vehicle (A) if in the judgment of 
     the Administrator'' and inserting ``nonroad vehicle--
       ``(A) if, in the judgment of the Administrator, any fuel or 
     fuel additive or'';
       (2) in subparagraph (A), by striking ``air pollution 
     which'' and inserting ``air pollution or water pollution 
     (including any degradation in the quality of groundwater) 
     that''; and
       (3) by striking ``, or (B) if'' and inserting the 
     following: ``; or
       ``(B) if''.

     SEC. 164. ANTI-BACKSLIDING.

       Section 211 of the Clean Air Act (42 U.S.C. 7545) (as 
     amended by section 162) is amended by adding at the end the 
     following:
       ``(u) Prevention of Air Quality Deterioration.--
       ``(1) Study.--
       ``(A) In general.--Not later than 18 months after the date 
     of enactment of the Renewable Fuels, Consumer Protection, and 
     Energy Efficiency Act of 2007, the Administrator shall 
     complete a study to determine whether the renewable fuel 
     volumes required by that Act will adversely impact air 
     quality as a result of changes in vehicle and engine 
     emissions of air pollutants regulated under this Act.

[[Page 16603]]

       ``(B) Considerations.--The study shall include 
     consideration of--
       ``(i) different blend levels, types of renewable fuels, and 
     available vehicle technologies; and
       ``(ii) appropriate national, regional, and local air 
     quality control measures.
       ``(2) Regulations.--Not later than 3 years after the date 
     of enactment of the Renewable Fuels, Consumer Protection, and 
     Energy Efficiency Act of 2007, the Administrator shall--
       ``(A) promulgate regulations to implement appropriate 
     measures to mitigate, to the greatest extent achievable, 
     considering the results of the study under paragraph (1), any 
     adverse impacts on air quality, as the result of the 
     renewable volumes required by that Act; or
       ``(B) make a determination that no such measures are 
     necessary.
       ``(3) Other requirements.--Nothing in title I of the 
     Renewable Fuels, Consumer Protection, and Energy Efficiency 
     Act of 2007 supercedes or otherwise affects any Federal or 
     State requirement under any other provision of law that is 
     more stringent than any requirement of this title.''.

  Mr. BINGAMAN. Madam President, let me take up to 5 minutes to speak 
on amendment No. 1693 and then yield to my colleague Senator Boxer 10 
minutes for her to speak on that same amendment.
  This amendment addresses a number of important environmental issues 
associated with renewable fuels. It contains four sections. The first 
section makes an authorization for grants to encourage production of 
advanced biofuels with the most favorable greenhouse gas emission 
characteristics.
  The second section provides for a study by EPA of potential issues 
that may arise as a result of increases in the renewable fuels 
standard. That study will result in two reports to Congress, one in 
2010, the other in 2015.
  The third part of the amendment allows the EPA to consider 
groundwater impacts when regulating fuel additives under the Clean Air 
Act. One of the reasons we had a problem with MTBE as a fuel additive 
was that we looked at it in a one-dimensional way. This section of our 
amendment will allow a full look at all relevant impacts of fuel 
additives going forward.
  The final part of the amendment is a provision commonly known as 
antibacksliding. It basically allows EPA to address air quality issues 
that might arise as a result of the increased volumes of renewable fuel 
mandated by the Energy bill. These changes have been developed by 
Senator Boxer and her staff, and myself and my staff, in a 
collaborative manner. I thank her and her staff for the good work they 
did on these provisions.
  I also acknowledge the assistance and support we have received on 
this amendment from the Renewable Fuels Association.
  This is a consensus amendment on the part of those with interests in 
enhancing our energy security through increased use of renewable fuels 
in an environmentally responsible way.
  I urge my colleagues to support this amendment.
  I will now yield to the Senator from California for her comments on 
this, and I will yield her up to 10 minutes, and I will then speak in 
opposition to the amendment by the Senator from Oklahoma.
  The PRESIDING OFFICER. The Senator from California is recognized.
  Mrs. BOXER. Madam President, thank you so much.
  I thank Senator Bingaman very much for this amendment we have worked 
very hard on for days now. I am delighted we are able to offer it.
  I see my ranking member is here because he has an amendment that in 
concept--I am going to look at the details--in concept makes a lot of 
sense. In terms of this amendment, I hope I will be able to support it 
because what we are trying to make sure of is that in the new fuels 
program, this bill, we do not lose any ground in terms of the Clean Air 
Act so we still are able to give EPA important authority under the 
Clean Air Act to mitigate any adverse air quality impacts that might 
result from the increased use of renewable fuels.
  What we learned when we dealt with MTBE, which was an additive in 
gasoline, was we were not prepared for any adverse impacts from MTBE. 
We thought it was going to be the answer. As you know, MTBE permeated 
the water supplies in many States. We thought it was going to clean up 
the air and, guess what, it did. But it created havoc with our water 
quality.
  We want to make sure--we worked hard on this--that in this new fuels 
program, we do not backslide and that we are able to have all the 
protections we need. So at first, we fixed the water problem and now 
this is fixing the air quality problem.
  What we do is, we give EPA authority under the Clean Air Act to 
consider impact on water quality when regulating fuel. Such authority, 
as I say, will prevent future MTBE situations. We require EPA to 
contract with the National Academy of Sciences to conduct a 
comprehensive study of the environmental impact of increasing use of 
renewable fuels.
  The study will analyze impacts of renewable fuels on air quality, 
water quality, land-use patterns, deforestation rates, greenhouse gas 
emissions, ecologically important areas, and the long-term ability to 
produce biomass feedstocks.
  Now, I wanted to say to my ranking member, Senator Inhofe, if I can 
have his attention, that I know what he is trying to do in his 
amendment in many ways parallels this. We, in this amendment, make sure 
that EPA can look at the long-term to produce biomass feedstock because 
that is a very important point.
  I think the Senator and I both care about this. I think the Senator 
and I both care that the EPA is not going to lose jurisdiction over 
this new fuels program.
  The amendment to me is also exciting because it includes a grant 
program for biofuels that achieve at least a 50-percent reduction of 
lifecycle emissions of greenhouse gases. So what we are saying is, we 
want innovation, and we are saying we will start a grant program so we 
get that technology that we all know is going to, in fact, step up and 
meet the challenge of global warming.
  There are so many ways we can meet the challenges of reducing our 
carbon footprint. One way is to have fuels that have a 50-percent 
better carbon footprint. This amendment ensures that EPA will play a 
critical role in protecting our environment from any adverse 
environmental impact that may be realized from an increase in the 
production and use of renewable fuels.
  So it is pretty simple. The Senator from New Mexico and I have been 
in very close contact over these last several days. I have been helping 
him to manage this bill, although I have to say, he is very competent 
at doing it himself.
  But I have given him my advice and my help and the help of my good 
staff. We did have a worry at the very beginning that we did not want 
to live to see another MTBE problem, that is, unintended consequences 
of a new fuels program and unintended consequence. So how we would 
protect against is to be very vigilant, and we are very vigilant.
  We say to the EPA: Make sure that whatever these fuels are, they are 
real good for our people, good for our air, good for our water, good 
for our land use, and also our long-term ability to produce biomass 
feedstocks.
  Again, we go a step further we set up a grant program for new fuels, 
biofuels that achieve at least a 50-percent reduction in the lifecycle 
emissions of greenhouse gases. This particular program is authorized at 
$500 million. Of course, it is subject to appropriations. I do not have 
the need to speak any longer on this amendment. I would retain the 
balance of my time Senator Bingaman gave me.
  I yield the floor.
  The PRESIDING OFFICER. The Senator from Oklahoma.


                Amendment No. 1666 to Amendment No. 1502

  Mr. INHOFE. Mr. President, it is my understanding that the unanimous 
consent request was for the two amendments to be side by side.
  At this point, I call up amendment 1666 and ask for its immediate 
consideration.
  The PRESIDING OFFICER (Mr. Obama). The clerk will report the 
amendment.
  The assistant legislative clerk read as follows:

       The Senator from Oklahoma [Mr. Inhofe], for himself, Mr. 
     Burr, and Mrs. Dole, proposes an amendment numbered 1666 to 
     amendment No. 1502.


[[Page 16604]]

  Mr. INHOFE. Mr. President, I ask unanimous consent that the reading 
of the amendment be dispensed with.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  The amendment is as follows:

 (Purpose: To ensure agricultural equity with respect to the renewable 
                            fuels standard)

       At the end of subtitle A of title I, add the following:

     SEC. 113. AGRICULTURE EQUITY.

       (a) Assessment of Food and Feed Availability.--
       (1) In general.--The Administrator of the Environmental 
     Protection Agency (referred to in this section as the 
     ``Administrator'') shall conduct an assessment of the 
     availability of corn for food and feed uses by not later than 
     July 31 and November 30 of each calendar year after the date 
     of enactment of this Act.
       (2) Regional weather conditions.--
       (A) In general.--Not later than August 1, 2007, and 
     annually thereafter, the Administrator, in consultation with 
     the Secretary of Agriculture, the Secretary of Commerce, and 
     the Association of American Feed Control Officials, shall 
     submit to Congress, and publish in the Federal Register, an 
     assessment of the Administrator regarding--
       (i) regional weather conditions during the current crop 
     year; and
       (ii) the impact of the conditions on projected local corn 
     supplies.
       (B) Factors for consideration.--In conducting the 
     assessment under subparagraph (A), the Administrator shall 
     take into consideration, as applicable--
       (i) the impacts of drought, including reduced 
     precipitation;
       (ii) the impacts of flooding, including increased 
     precipitation; and
       (iii) projected local demand for corn during the following 
     crop year.
       (3) Estimates.--
       (A) In general.--Not later than December 1, 2007, and 
     annually thereafter, the Administrator shall conduct an 
     assessment of the most current estimates of the ratio that, 
     with respect to the marketing year beginning in September of 
     the calendar year in which the assessment is conducted--
       (i) United States domestic ending stocks of corn; bears to
       (ii) total use of corn.
       (B) Factors for consideration.--In conducting the 
     assessment under subparagraph (A), the Administrator shall 
     take into consideration, and rely on, the data published by 
     the Secretary of Agriculture in the monthly report entitled 
     ``World Agricultural Supply and Demand Estimates'' (or 
     similar public and authoritative estimates provided by the 
     Secretary of Agriculture).
       (b) Potential Economic and Consumer Harm Assessment.--
       (1) Regional weather conditions.--If the Administrator 
     determines that an assessment of the Administrator under 
     subsection (a)(2) indicates that there is a reasonable 
     likelihood that the ratio described in subsection (a)(3)(A) 
     will be equal to or less than 0.10, the Administrator shall 
     publish the determination in the Federal Register by not 
     later than 14 days after the date on which the determination 
     is made.
       (2) Estimates.--If the Administrator determines that an 
     assessment of the Administrator under subsection (a)(3) 
     indicates that there is a reasonable likelihood that the 
     ratio described in subsection (a)(3)(A) will be equal to or 
     less than 0.10, the Administrator, in consultation with the 
     Secretary and the Secretary of Agriculture, shall publish, by 
     not later than 14 days after the date on which the 
     determination is made, the intention of the Administrator to 
     request the President to modify a portion of the requirement 
     described in section 111(a)(2).
       (3) Regional disruption.--If the Administrator determines 
     that an assessment of the Administrator under subsection 
     (a)(2) indicates that a regional disruption to the 
     availability of feed corn with respect to livestock producers 
     will occur, the Administrator, in consultation with the 
     Secretary of Agriculture, shall develop and implement a plan 
     to ensure that regional food and feed supplies are 
     maintained, to the maximum extent practicable, including 
     through adjustments to the applicable renewable fuels 
     standard under section 111(a) in the affected region.
       (c) Actions To Prevent Economic and Consumer Harm.--
       (1) In general.--Subject to paragraph (2), the 
     Administrator may submit to the President a petition to 
     request a modification of a requirement under the renewable 
     fuels standard under section 111(a) in a quantity of gallons 
     sufficient to ensure, to the maximum extent practicable, that 
     the ratio described in subsection (a)(3)(A) will be at least 
     0.10.
       (2) Limitation.--A requirement under the renewable fuels 
     standard under section 111(a) shall not be reduced by more 
     than 15 percent during any calendar year.
       (3) Effective period.--A modification under paragraph (1) 
     shall be effective during the 1-year period beginning on the 
     effective date of the modification.
       (d) Public Participation.--
       (1) In general.--The Administrator shall--
       (A) make each assessment conducted, and each modification 
     provided, pursuant to this section available to the public; 
     and
       (B) provide an opportunity for public comment relating to 
     each assessment and modification for a period of not more 
     than 30 days.
       (2) Modifications.--Not later than 14 days after the end of 
     the comment period described in paragraph (1)(B), the 
     President shall promulgate the modification that is the 
     subject to the comment period, unless the President, in 
     consultation with the Administrator, determines that clear 
     and compelling evidence demonstrates that the modification 
     would not have a material effect on the quantity of corn 
     available for food and feed use.

  Mr. INHOFE. Mr. President, let me first respond to something the 
chairman of the committee, Senator Boxer, had stated. I believe I agree 
that our committee should have the jurisdiction. I do agree with her.
  There are some other things. In fact, there is an easier way to do 
it, I would suggest to my chairman. That would be to strike the portion 
in the bill, the underlying bill, that talks about the President or the 
administration and merely put in the EPA. If you do that, then, of 
course, you correct the jurisdictional problems. It is another way of 
doing it.
  My concern is that your amendment does get into some areas I do not 
find I get quite as excited about as the chairman does, such as having 
us study land-use patterns, which I do not think is as appropriate for 
the Federal Government to do as State and local government.
  We had this debate in the past. But I would say I would like to 
accomplish some of the things that the chairman has tried to accomplish 
with her amendments.
  Mrs. BOXER. May I ask my friend to yield. It can come off my time.
  Mr. INHOFE. No, it can come off mine.
  Mrs. BOXER. Thank you so much. Let me say to my ranking member I 
agree with him. We tried that approach. We were not able to gain 
ground. So I am with you. But we were not able to do it in our 
negotiation with the Energy Committee. So we went as far as we could 
go, and I think we have made tremendous progress.
  Again, it was give and take and it was tough and your staff was very 
helpful as they were helping us get the best we could get. But I think 
after this amendment, we can foresee a future where any President--this 
one said he would not do it, but a future President could take the 
whole fuels program and eliminate EPA. So I would hope my friend would 
join me in this.
  The other part, we are asking for reports from the EPA, we are not 
giving them authority over these issues. We are going to get 
information from them. That information we can share with local and 
State.
  So I know my friend is going to give it some real hard thought, as I 
am about his amendment. But perhaps we can wind up supporting each 
other's amendments. But we will see where we go from here. But I say to 
my friend, he is absolutely right, striking the offending language 
would have been great for me, but we were not able to achieve that with 
the Energy Committee.
  Mr. INHOFE. I appreciate the comments of the chairman. I recognize 
her concern with MTBE contamination. I understand that. But getting the 
Administrator authority to use the Clean Air Act to regulate water 
quality is something I would have to think about a little bit.
  Let me go back and talk a little bit about the amendment we are 
running concurrently with the other amendments. This is amendment 1666. 
We have a lot of cosponsors to this. I would invite more to come down. 
I think people would see this is a very rational way to address one of 
the problems with the mandates that come with this bill.
  We seek to ensure the bill does not pick winners and losers in 
domestic agriculture. Although high corn prices might be good for corn 
farmers, it is harmful for livestock and poultry industries.
  Now, in my State of Oklahoma, I don't have a dog in this fight, or I 
guess I could say I have all the dogs in this fight, because we are a 
corn State, we are a very large livestock State. I have heard from a 
lot of our people there expressing their concerns.

[[Page 16605]]

  In fact, 15 industry groups have joined together and sent both Senate 
leaders a letter expressing their concern that the biofuels title in 
this bill could harm their industries.
  I ask unanimous consent at the conclusion of my remarks to have 
printed in the Record a copy of that letter.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  (See exhibit 1.)
  Mr. INHOFE. Unfortunately, the collective livestock and grocery 
producers' concern continues. In fact, the earlier coalition has grown 
to 18 industry representatives, including cattle, poultry, swine 
producers, Coca-Cola, Pepsi, even Cargill. In a letter to me, the 
coalition writes:

       We are asking Congress to provide those that utilize and 
     rely on corn and corn products a reasonable amount of 
     certainty that adequate supplies are available to all users 
     of this commodity.

  We know right now the price of corn is very high. This obviously 
has--it does not happen in a vacuum. Too often on the Senate floor we 
believe things can be done without affecting others. In this case, it 
is definitely affecting others, as indicated by these communications.
  Now, with respect to our amendment, they state:

       Your amendment would go a long way in ensuring a safety net 
     ensuring those of us that utilize corn and corn products will 
     have enough to go around should a drought or flood occur that 
     would limit the harvested amount that is available.

  Now, our amendment seeks to provide some of the much needed equity in 
the current system. This amendment simply requires that the USDA 
provide information on projected corn harvests each year. Well, they do 
that anyway. This is not going to incur anymore of a hardship on the 
USDA; they have that capability; they are already doing it.
  If the projected harvest is below a certain percentage, then the 
administrator has the authority to modify the mandate for the next 
year.
  So that if it comes down and we see we are going to have a drought, 
we are going to have some kind of a problem, we would be able to 
address that by making a small adjustment to the mandate that is there.
  Now, I would expect the ethanol industry to support our amendment, 
since first they claim there is no food versus feed issue. Second, 
because they have stated repeatedly that corn farmers can grow much 
more renewable--Fuels Association President Bob Dineen said--this is 
the one who is very strong in the ethanol mandate the American farmer 
absolutely has the ability to grow more corn to provide sufficient 
quantities of grain and food and feed for fuel usage and we are going 
to see that that happens.
  Well, if that is the case, then there is not a problem. So I am not 
suggesting or picking any favorites with this amendment. I am saying we 
ought to be sure in the event that something that can be foreseen, and 
these droughts can be foreseen--as I say, they are doing it right now. 
So this amendment supports that concept.
  Corn farmers have done a great job in increasing yield per acre in 
the past and they will continue to do that. Our amendment simply 
provides, as a collective food industry State, a reasonable amount of 
certainty and a safety net, so that all the U.S. agriculture is able to 
prosper.
  I know there are others who are on the floor who would disagree with 
my amendment. I certainly wish to make sure they have time to express 
themselves. So if the Senator from Iowa is prepared at this point to 
speak, I would be glad to yield to him.

                               Exhibit 1

                                                    June 20, 2007.
     Sen. James Inhofe,
     Russell Senate Office Building,
     Washington, DC.
       Dear Ranking Member Inhofe: We believe in the need to 
     advance renewable and alternative sources of energy. New fuel 
     sources offer the potential to eliminate our dependence on 
     foreign oil while contributing to the long-term stability of 
     our rural economies. But, as we seek to implement policy that 
     will move us toward accomplishing this objective, it is 
     essential that we carefully weigh the impacts of our actions 
     on other segments of the economy. Additionally, we would hope 
     that any policy that is agreed upon during this debate would 
     not overly tax one group in an effort to hopefully achieve 
     the objective of energy independence.
       We are concerned that the very aggressive increase in 
     biofuels mandates proposed in S. 1419 raises fundamental 
     questions about the impact that an increased federal 
     government mandate for corn-based ethanol, in addition to new 
     state mandates, will have on the livestock, poultry and food 
     industry's ability to produce competitively available, 
     affordable food. It is vitally important that we fully 
     appreciate and understand the implications of quintupling the 
     Renewable Fuel Standard (RFS) mandate, and we would ask that 
     you use careful consideration and listen to the significant 
     issues being raised by those in the agriculture and food 
     products community.
       Rapid development of the corn-based ethanol industry is 
     already having adverse impacts on food supplies and prices, a 
     major concern for us. Rising food prices, coupled with the 
     rising energy prices we are seeing throughout the country, 
     pose a threat to the health of our national economy. 
     According to a recent report by Merrill Lynch Chief 
     Investment Strategist Richard Bernstein, within the first 
     three months of the year, food prices rose at an annualized 
     rate of 7.3 percent. That is slightly higher than the 
     anticipated annual rise in healthcare costs over the next 
     decade, according to the Centers for Medicare and Medicaid 
     Services' National Health Statistics Group. In addition, the 
     continued aggressive expansion of corn ethanol production 
     diminishes the availability of soybeans and other crops. We 
     need a safety valve that ensures availability and that works.
       We are asking Congress to provide those that utilize and 
     rely on corn and corn products a reasonable amount of 
     certainty that adequate supplies are available to all users 
     of this commodity. Your amendment to S. 1419, the Agriculture 
     Equity Adjustment Provision (#1666) would go a long way in 
     achieving a safety net ensuring those of us that utilize corn 
     and corn products will have enough to go around should a 
     drought or flood occur that would limit the harvested amount 
     that is available.
       We look forward to working with you to achieve a balanced 
     approach between all competing uses of corn as we go forward 
     in this energy debate. We need an adequate contingency plan 
     in place, and this amendment achieves that goal.
       Thanks again for your leadership and efforts.
           Sincerely,
         American Feed Industry Association, American Meat 
           Institute, Cargill, The Coca Cola Company, ConAgra 
           Foods, General Mills, Grocery Manufacturers/Food 
           Products Association, Hormel Foods, National 
           Cattlemen's Beef Association, National Chicken Council, 
           National Pork Producers Council, National Restaurant 
           Association, National Turkey Federation, PepsiCo, Inc., 
           Seaboard Corporation, Tyson Foods, United Egg 
           Association, United Egg Producers.

  The PRESIDING OFFICER. The Senator from New Mexico.
  Mr. BINGAMAN. Mr. President, I would be glad to yield the Senator 
from Iowa up to 5 minutes to speak in opposition to this amendment.
  The PRESIDING OFFICER. The Senator from Iowa.
  Mr. GRASSLEY. Mr. President, this is the third amendment today that 
has been very detrimental to the future of ethanol and other renewable 
fuels.
  If we had had this attitude expressed 20 years ago when we started, 
in a very elementary way, down the road to a successful renewable fuels 
industry that we are now developing, and it is still an infant 
industry, we would never be here today, where we could say that we have 
a strong opportunity of renewable fuels.
  This is the third amendment that raises questions about whether we 
are going to continue to have investment in renewable fuel production 
and everything that is connected with it.
  Something that bothers me more than anything else, and I have 
expressed it on previous amendments today, is throughout the 
development of renewable fuels, and particularly agriculture being the 
production of the renewable feedstock, we have always had agriculture 
very much united between renewable fuels.
  Within the last 4 or 5 months, because corn has gone from $2 to $4 a 
bushel, we now have beef producers raising questions about whether we 
ought to have an ethanol industry. You have the pork producers--and 
evidently we have the poultry people--raising the same question. If 
agriculture is not going to be united, if they had not been united, we 
would never have gotten here. I do not know what happens in a

[[Page 16606]]

matter of 4 or 5 months, that after 20 years, all of a sudden things 
are bad about renewable fuels, and the farmer is being blamed for 
everything, $4 corn, food going up, energy prices going up.
  You know, food prices, a farmer gets a nickel out of a big box of 
Corn Flakes that is half full of air when you buy it for $4. The farmer 
is being blamed for $4 corn, raising the price of food, raising the 
price of energy, causing livestock feed to go up.
  You know, for the last 40 years, we have had a principle in 
agriculture that we call the hog-corn ratio. It was never felt, during 
the corn-hog ratio, when you use that, that the high price of corn was 
bad for livestock because, you know, livestock prices would soon rise, 
and it was considered good, good, good. Everything about ethanol has 
been considered good, good, good: Good for the farmers, good for the 
environment, good for high-paying jobs in the small towns of rural 
America, good for national defense because of less dependence upon 
violent parts of the world for petroleum to be delivered, good for our 
balance of trade. Everything is good, good, good about renewable 
energy.
  Now, in the last 4 or 5 months--do you think the price of corn is 
going to be $3.50 or $4 forever? This fall at harvest time, we might 
find corn at $2.50. We had 77 million acres of corn planted last year. 
We have 91.5 million acres believed to be planted this year. When June 
30 comes and the USDA makes their next report, it may be 95 million 
acres of corn--the most acres planted since 1944. When you have that 
supply of grain coming in, the fact that the price is going to be where 
it is today is a dream. In 1995, we had a drought. Corn got to $4 or 
$5. Everybody thought it was going to be $4 or $5 for the next 5 years. 
The next harvest season, it was down to $1.60 a bushel. Here we have 
people raising questions about the stock ratio, the stock on hand that 
we have of grain, that when it gets down to a certain level, we are not 
going to use grain for renewable fuels. What are you going to do? Are 
you going to go shut down every ethanol plant that is operating in the 
United States? What other amendment comes to the floor with the idea 
that we are going to shut down an industry under certain circumstances? 
It never happens.
  This is not a very good approach, particularly the use of stock 
ratios as proposed in this amendment. There are even questions about 
the use of that among economists at this point.
  This is a very bad amendment for renewable fuels, for agriculture. 
All that is good about renewable fuels, and you shut down the whole 
industry, it is for naught. You can't do that.
  I ask Members to vote against the amendment.
  The PRESIDING OFFICER. The Senator from New Mexico.
  Mr. BINGAMAN. Mr. President, how much time remains on both sides?
  The PRESIDING OFFICER. The Senator from Oklahoma has 23 minutes and 
the Senator from New Mexico has 16 minutes.
  Mr. BINGAMAN. Mr. President, let me speak briefly in opposition to 
the amendment by the Senator from Oklahoma.
  First, I ask unanimous consent to have printed in the Record 
following my remarks a letter I received from the American Coalition 
for Ethanol, the American Farm Bureau Federation, the National 
Association of Wheat Growers, the National Corn Growers Association, 
National Farmers Union, the National Sorghum Producers, and the 
Renewable Fuels Association.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  (See exhibit 1.)
  Mr. BINGAMAN. I would like to briefly hit the high points of this 
letter and explain why they are so strongly in opposition to Inhofe 
amendment No. 1666. I will read parts of the letter into the Record so 
Members will be aware of their position. It says:

       As the Senate continues to debate the energy bill . . . we 
     urge all Senators to vote against the amendment offered by 
     Senators [Inhofe, Burr, and Dole] when it is brought up for a 
     vote. We strongly oppose this amendment as it would 
     effectively gut the RFS and thwart the growth of the domestic 
     ethanol industry.

  It goes on to say:

       Senators Inhofe, Burr and Dole are proposing an amendment 
     to the energy bill that would put in place a stocks-to-use 
     mechanism that would suppress crop prices and be detrimental 
     to the American farmer and to domestic renewable fuels. 
     Stocks-to-use has limited value as an indicator of demand and 
     expected price. It is an oversimplified way to look at 
     supply/demand and pricing and does not often provide an 
     accurate picture of how markets would be impacted.

  It goes on with various examples.
  The Senator from Iowa pointed out that the price of corn is high 
today but may not be high indefinitely. It makes the same point here. 
It says:

       Most long-run economic models [from the] (U.S. Department 
     of Agriculture and Food and Agricultural Policy Research 
     Institute, and others) project stocks-to-use ratio slightly 
     under 10 percent for the next several years, with prices in 
     the $3.00-$3.50 range. Additionally, many economists have 
     stopped using the stocks-to-use ratio in their econometric 
     models as a tool to forecast price because of its obvious 
     limitations.

  They go on and on along the same line, pointing out deficiencies in 
the approach being taken by the Senator from Oklahoma in the amendment.
  Let me conclude with their final statement:

       Efforts to undermine the continued growth of the U.S. 
     ethanol industry should not be tolerated. A careful look at 
     the facts reveals that American farmers have met, can and 
     will continue to meet our domestic and international 
     commitments for food and feed while still making a 
     significant and growing contribution to lessening our 
     dependence on imported oil with homegrown, American-made 
     renewable fuels. We strongly urge you to oppose the Inhofe/
     Burr/Dole amendment.

  It is hard to know how to do better than that letter in pointing out 
the deficiencies in the amendment. It is clearly an amendment we should 
oppose.

                               Exhibit 1

                                                    June 20, 2007.
     Majority Leader Harry Reid,
     U.S. Senate.
     Chairman Jeff Bingaman,
     Committee on Energy and Natural Resources,
     U.S. Senate.
     Minority Leader Mitch McConnell,
     U.S. Senate.
     Ranking Member Pete Domenici,
     Committee on Energy and Natural Resources,
     U.S. Senate.
       Dear Senators: As the Senate continues to debate the energy 
     bill, H.R. 6, we urge all Senators to vote against the 
     amendment offered by Senators James Inhofe (R-OK), Richard 
     Burr (R-NC), and Elizabeth Dole (R-NC) when it is brought up 
     for a vote. We strongly oppose this amendment as it would 
     effectively gut the RFS and thwart the growth of the domestic 
     ethanol industry.
       Senators Inhofe, Burr, and Dole are proposing an amendment 
     to the energy bill that would put in place a stocks-to-use 
     mechanism that would suppress crop prices and be detrimental 
     to the American farmer and domestic renewable fuels. Stocks-
     to-use has limited value as an indicator of demand and 
     expected price. It is an oversimplified way to look at 
     supply/demand and pricing and does not often provide an 
     accurate picture of how markets would be impacted. For 
     example, in 2003/04 the stocks-to-use ratio was one of the 
     lowest in the last 20 years at 9.4 percent, but prices 
     remained at $2.50 for a season average. Most long-run 
     economic models (U.S. Department of Agriculture and Food and 
     Agriculture Policy Research Institute, and others) project 
     stocks-to-use ratio slightly under 10 percent for next 
     several years, with prices in the $3.00-3.50 range. 
     Additionally, many economists have stopped using the stocks-
     to-use ratio in their econometric models as a tool to 
     forecast price because of its obvious limitations. As corn 
     usage are likely to increase substantially to 13, 14, or even 
     15 billion bushels in the future, a 10 percent stocks-to-use 
     ratio could very well equate to carry-out of 1.3, 1.4, or 1.5 
     billion bushels. So while the stocks-to-use ratio might seem 
     low in these cases, actual carry-out levels would be right in 
     line with the l2-year average (95/96 to 06/07) of 1.38 
     billion bushels.
       According a recent analysis from the University of 
     Illinois, ``the stocks-to-use ratio is generally used as a 
     `short cut' approximation for summarizing annual supply and 
     demand conditions. However, very different supply and demand 
     conditions in individual years can lead to similar ratios of 
     stocks-to-use, but very different prices. The most obvious 
     example is the contrast between a year of very small 
     production that results in a low stocks-to-use ratio, but 
     also requires very high prices to force a reduction in 
     consumption and a large crop year that results in a high 
     level of consumption, a low stocks-to-use ratio, but low 
     prices.''
       Without the strong domestic market corn farmers won't have 
     the incentive to plant as many acres and take the risk that 
     large production will drive down corn prices. An arbitrary 
     stocks-to-use ratio trigger that restricts corn use for 
     ethanol would likely diminish overall demand and put downward

[[Page 16607]]

     pressure on the price for corn. This would serve as a 
     disincentive to farmers and discourage them from planting 
     more corn at a time when more corn is what the feed and fuel 
     industries need. The food and feed industries have assumed 
     that farmers will continue to produce record crops regardless 
     of prices and profitability. If production declines, or even 
     grows more slowly, stocks could also fall, eventually driving 
     prices higher. In the long-term, America's farm sector is 
     better off maintaining a strong and growing domestic demand 
     base and adding value markets.
       The corn industry will continue to strive to satisfy a 
     variety of important demands and maximize the utility of its 
     product. Seed technology developments, increasing 
     agricultural efficiency, innovation in biofuels production 
     processes and other breakthroughs will ensure that growers 
     will continue to meet the world's need for food, feed, fuel, 
     and other uses.
       Efforts to undermine the continued growth of the U.S. 
     ethanol industry should not be tolerated. A careful look at 
     the facts reveals that American farmers have met, can and 
     will continue to meet our domestic and international 
     commitments for food and feed while still making a 
     significant and growing contribution to lessening our 
     dependence on imported oil with homegrown, American-made 
     renewable fuels. We strongly urge you to oppose the Inhofe/
     Burr/Dole amendment.
           Sincerely,
         American Coalition for Ethanol, American Farm Bureau 
           Federation, National Association of Wheat Growers, 
           National Corn Growers Association, National Farmers 
           Union, National Sorghum Producers, Renewable Fuels 
           Association.

  Mr. BINGAMAN. I see the Senator from South Dakota here. I yield him 4 
minutes to speak in opposition.
  The PRESIDING OFFICER. The Senator from South Dakota.
  Mr. THUNE. Mr. President, I rise to express my opposition to this 
amendment. I worked closely with my colleague from Oklahoma on a number 
of issues when I was a member of the Environment and Public Works 
Committee. I worked with him last week on an amendment to expand 
refinery capacity because we have a shortage of refinery capacity. It 
is something that needs to be addressed. Unfortunately, that amendment 
failed. This amendment, however, is not necessary because we don't have 
a shortage of corn. In fact, demand for corn has increased because of 
ethanol production. It is expected to increase further thanks in part 
to the growth and expansion of renewable fuels. But to suggest for a 
minute that somehow we are going to run out of corn simply is not true. 
In fact, one of the most respected economists in the agricultural 
community, USDA's Dr. Keith Collins, has testified before the Senate 
Agriculture Committee about corn and ethanol production. I will 
highlight some of the points he made.
  First, since 1948, corn yields have increased fourfold--from 40 
bushels per acre to 160 bushels per acre--due to fertilizer, better 
management, technology, and improved crop genetics. Corn yields in the 
past couple of years have moved above the long-term trend and may 
continue to do so in coming years as well, helping to meet biofuel 
demand and reduce pressure on corn prices and acreage. Over the past 
few years, new-generation rootworm-resistant corn has been introduced 
and is showing strong yield increases in many areas.
  As we look out over the next decade, USDA trend projections suggest 
that U.S. corn yields per acre are going to rise to 168 bushels per 
acre by the year 2016, and some seed companies suggest they are going 
to go even higher, as much as 20 bushels per acre above that level. 
Every 5-bushel increase in yield above the current trend level would be 
the equivalent of adding around 2.5 million acres to corn plantings, 
enough to produce 1 billion gallons of ethanol each year.
  If you look State by State, Arkansas growers are expected to plant 
560,000 acres of corn in 2007, up from 190,000 in 2006, a nearly 300 
percent increase in corn acreage in 1 year. Louisiana farmers intend to 
plant 700,000 acres in 2007, up from 300,000 acres in 2006, a 233-
percent increase in corn acreage. In Mississippi, corn producers are 
expected to plant 950,000 acres in 2007, up from 340,000 acres in 2006, 
a 280-percent increase in corn acreage.
  My point is, in the underlying bill, basically, there is a 
stipulation that ethanol production can't exceed about 15 billion 
gallons. USDA's Dr. Keith Collins, who is an expert economist down 
there, says we can get to 15 billion gallons of ethanol based on corn 
production. Today, we are producing about 6.5 billion gallons of 
ethanol. So to get to 15 billion gallons, which is what the USDA's 
Chief Economist says we can reach, we have a long way to go. There is a 
lot of headroom to 15 billion gallons. To suggest for a minute that 
somehow we need this sort of an amendment that would put all these 
additional restrictions on the renewable fuels standard, I submit is 
unnecessary.
  The underlying bill has provisions already that address this issue 
and waivers in place for economic hardships experienced by certain 
regions or States. Specifically, the President can waive the RFS if one 
of the following conditions is met: implementation of the requirement 
would severely harm the economy or environment of a State or region or 
the United States; if extreme and unusual circumstances exist that 
prevent distribution of an adequate supply of domestically produced 
renewable fuel to consumers.
  I would also add that this particular amendment creates lots of 
problems for areas of the country because it forces investors to make 
investment decisions based upon the weather. We all know we can't 
protect the weather or predict the weather with certainty.
  This amendment is misguided and unnecessary. I hope we will vote it 
down.
  The PRESIDING OFFICER. The Senator from Oklahoma.
  Mr. INHOFE. Mr. President, let me inquire of the time remaining on 
each side, please?
  The PRESIDING OFFICER. There is 23 minutes for the Senator from 
Oklahoma, and the Senator from New Mexico has 7\3/4\ minutes.
  Mr. INHOFE. First, I may be yielding back some time. Let me respond 
to a couple assertions that have been made.
  The Senator from Iowa was talking about in the event that livestock 
would not be hurt because they would actually end up going up later in 
the market and that will take care of that problem. I would suggest to 
you that a lot of individuals don't agree with that. I have a letter I 
will read a little bit out of. It is signed by the National Cattlemen's 
Beef Association, the Chicken Council, the Pork Producers Council, the 
Restaurant Association, and the Turkey Federation. All of them don't 
feel this is going to be the market result.
  Since the Senator from New Mexico read some excerpts of a letter 
signed by a large number, we have many more who have signed this letter 
than the letter which was submitted by the Senator from New Mexico.
  One of the paragraphs in here says: We are concerned that the very 
aggressive increase in biofuels mandates proposed in S. 1419 raises 
fundamental questions about the impact that an increased Federal 
Government mandate for corn-based ethanol, in addition to new State 
mandates, will have on the livestock, poultry, and food industry's 
ability to produce competitively available, affordable food.
  In other words, this is going to affect a lot of people in their 
estimation in terms of the cost of food, not just livestock, not just 
the grain concern that is out there.
  It continues: It is vitally important that we fully appreciate and 
understand the implications of quintupling the renewable fuels standard 
mandate, and we would ask that you use careful consideration and listen 
to the significant issues being raised by those in the agriculture and 
food products community.
  Let me mention, I know the Senator from South Dakota was not in the 
Chamber when I made my remarks, but Oklahoma also is a corn State. I 
really believe the excellent statement that was made by the Senator 
from South Dakota--who has been a real champion, maybe the No. 1 
champion, in this body of corn ethanol--really makes my case for me. If 
these States are increasing their production the way they are, then 
there is no problem. Nothing in this amendment is going to affect 
anything at all. In fact, the only

[[Page 16608]]

concern we have is in the event there is a year where this is not true.
  Let me just go ahead and make sure everyone understands what this 
amendment does and does not do. Quite often on the floor, we get people 
opposing something, and then you scratch your head and say: Wait a 
minute, is that my amendment they are talking about?
  The amendment is a modification provision for food and animal feed 
based on the ratio of cornstalks to projected demand. In the case of a 
short- or low-corn crop year, there is currently no meaningful safety 
valve that would address this situation. This amendment would provide a 
small level of confidence to producers as well as investors that corn 
would be available to meet the needs of all uses. In other words, if 
the production is up, there is not a problem. This addresses disasters 
and worst-case scenarios and assures the renewable fuels standard does 
not lead to a shortage of corn for human or animal consumption.
  It requires the USDA and the EPA to make a midyear-end determination 
of current weather conditions, followed by an end-of-the-year 
determination on the stalks-to-use ratio following harvest. If the 
determination estimates the stalks-to-use ratio is below 10 percent, it 
would trigger a temporary adjustment in the RFS to account for the need 
for increased availability of corn feed. The amendment would not permit 
the RFS to fall more than 15 percent in any given year.
  Now, it has been said--I suspect there is a letter floating around 
somewhere that says this would be the end of the world and it would 
completely destroy what they are trying to do. Let me just read the one 
limitation that is in this amendment. It says:

       A requirement under the renewable fuels standard under 
     section 111(a) shall not be reduced by more than 15 percent 
     during any calendar year.

  That is, if there is some kind of a drought or some kind of a real 
serious problem--it can be too much water or not enough water--then it 
would not affect it by more than 15 percent. Well, that is 15 percent. 
That is not the end of the world. It means 85 percent of these mandates 
are still going to be there and still be in effect.
  So I think it is a very modest approach. The list of people who share 
this concern is a very long one. I mentioned some of the names--these 
industries. I will go ahead and read them at this time: American Feed 
Industry Association, American Meat Institute, Cargill, the Coca-Cola 
Company, ConAgra Foods, General Mills, Grocery Manufacturers/Food 
Products Association, Hormel Foods, the National Cattlemen's Beef 
Association, the National Chicken Council, National Pork Producers 
Council, the National Restaurant Association, National Turkey 
Federation, PepsiCo, Incorporated, Seaboard Corporation, Tyson Foods, 
United Egg Association, United Egg Producers--and the list goes on and 
on. So there is this concern out there.
  Again, my State is not dissimilar in any way to the State of New 
Mexico. They are right next door. I would suggest we probably have 
about the same size corn industry, as well as perhaps our cattle 
industry is not quite as large as it is in New Mexico, but it certainly 
is not dissimilar. There is nothing I would do to be damaging to the 
corn industry because that is a major industry, of course, in my State.
  The Food Products Association--let me mention to you how they feel. 
In a worst-case scenario, if you do not have some kind of a safety 
valve, it could be damaging. They say: More and more pursuit of corn-
based ethanol is resulting in higher food and feed prices. The price of 
corn has jumped 55 percent since September.
  According to USDA's Chief Economist, the consequences of ethanol are 
the biggest thing going on in agriculture today. An increase in ethanol 
production is already having a significant impact on food and feed 
supplies, such as corn, soybeans, and wheat.
  The U.S. Labor Department recently reported that February prices for 
foodstuffs and feedstuffs were 18 percent above year-ago levels. That 
was in the Wall Street Journal of March of this year. According to the 
Wall Street Journal, the higher corn prices have raised costs for 
livestock and poultry which are fed corn and for crops such as 
soybeans, which farmers are replacing so they can grow more corn. The 
corn companies are starting to pass those higher prices on to 
consumers. Wholesale consumer food prices were 6.8 percent above year-
ago levels.
  So this is not happening in a vacuum. Obviously, the mandates are 
there for corn ethanol, and they will continue to be there. As we look 
down the road, Oklahoma has been pretty active in the work they are 
doing right now on the other types of cellulosic biomass. Right now, 
one of our companies in Oklahoma has been very active in that. We are 
leading the field. We have Oklahoma State University and Oklahoma 
University and the Noble Foundation leading the country in the pursuit 
of these technologies.
  The coal-to-liquid technology is here. We are currently flying B-52s 
with all eight engines running on this type of a fuel. So we know it is 
coming. So it is not all just corn ethanol. Again, we are a corn State. 
We are also a big livestock State. I think this is a middle-of-the-road 
type of amendment.
  Again, you have to respond to these statements that you are going to 
destroy something, when the limitation by law would be 15 percent of 
the current mandate in the event of some kind of a disaster. USDA is 
already making these studies and doing it, and it is not really 
requiring anything more.
  With that, Mr. President, I will retain the remainder of my time and 
yield the floor.
  The PRESIDING OFFICER. The Senator from New Mexico.
  Mr. BINGAMAN. Mr. President, how much time remains on both sides?
  The PRESIDING OFFICER. The Senator from New Mexico has 7 minutes 45 
seconds, and the Senator from Oklahoma has 13\1/2\ minutes.
  Mr. BINGAMAN. Mr. President, I suggest the absence of a quorum.
  The PRESIDING OFFICER. The clerk will call the roll.
  The legislative clerk proceeded to call the roll.
  Mr. BINGAMAN. Mr. President, I ask unanimous consent that the order 
for the quorum call be rescinded.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  Mr. BINGAMAN. Mr. President, I yield the floor.
  The PRESIDING OFFICER. The Senator from Mississippi.


                           Amendment No. 1510

  Mr. COCHRAN. Mr. President, it is my intention to offer an amendment 
at the appropriate time to reduce the impact of future disruptions of 
our supplies by enlarging the Strategic Petroleum Reserve. This 
amendment, which is cosponsored by Senators Bayh, Lott, and Landrieu, 
will expand the capacity of the Strategic Petroleum Reserve from 1 
billion barrels to 1.5 billion barrels.
  The economic security of the United States is threatened by our 
vulnerability to disruptions of the world oil supply and the volatile 
prices of energy. Whether we like it or not, our Nation's 
transportation sector, our major industries, and our military forces 
are all dependent upon petroleum. We must protect ourselves from the 
instability and the uncertainty of the international oil market.
  The existing inventory in the Strategic Petroleum Reserve represents 
only 56 days of net petroleum imports. Our obligation to the member 
countries of the International Energy Agency requires us to maintain 
the equivalent of 90 days of net petroleum imports. Increasing the 
authorized capacity of our reserves will help ensure that we meet our 
international obligations.
  Mr. INHOFE. Mr. President, will the Senator yield?
  Mr. COCHRAN. Mr. President, I am happy to yield for a question.
  Mr. INHOFE. Yes, for a question.
  It is my understanding that the time you are taking right now will be 
taken off of our time equally, and since we are under a UC for a time-
certain for a vote, I know that would not be the Senator's intention.
  Mr. COCHRAN. No, it would not. I will be happy to put these remarks 
in the Record.

[[Page 16609]]


  Mr. INHOFE. Well, I think that is probably a good idea.
  Mr. COCHRAN. No one was speaking when I asked for recognition. I have 
a statement that lasts maybe 5 minutes.
  Mr. INHOFE. Go ahead.
  Mr. COCHRAN. All day long, I have been trying to get an opportunity 
to make this statement.
  Last December, the Department of Energy identified the salt domes 
near Richton, MS, as a preferred site for a new Strategic Petroleum 
Reserve storage facility. My State welcomes the opportunity to help 
meet our Nation's energy needs. Other sites in Texas and Louisiana will 
also gain additional reserves under the plan being developed by the 
Department of Energy.
  Mr. President, our Nation's energy security and stability depend on a 
combination of efforts to increase domestic supplies of oil, gas, and 
petroleum, as well as the development and promotion of new renewable 
energy technologies. The combination of these efforts will make it 
possible for us to reduce our dependence upon foreign oil and provide 
for a bright economic future for all Americans.
  I urge the Senate to adopt this amendment.
  Mr. President, I ask unanimous consent to have a copy of the 
amendment printed in the Record.
  There being no objection, the material was ordered to be printed in 
the Record, as follows:

       On page 314, after line 2, add the following:

     SEC. 708. INCREASE IN CAPACITY OF STRATEGIC PETROLEUM 
                   RESERVE.

       (a) Strategic Petroleum Reserve.--
       (1) Policy.--Section 151(b) of the Energy Policy and 
     Conservation Act (42 U.S.C. 6231(b)) is amended by striking 
     ``1 billion'' and inserting ``1,500,000,000''.
       (2) Creation.--Section 154(a) of the Energy Policy and 
     Conservation Act (42 U.S.C. 6234(a)) is amended by striking 
     ``1 billion'' and inserting ``1,500,000,000''.
       (b) Filling Strategic Petroleum Reserve to Capacity.--
     Section 301(e) of the Energy Policy Act of 2005 (42 U.S.C. 
     6240 note; Public Law 109-58) is amended by striking 
     ``1,000,000,000-barrel'' and inserting ``1,500,000,000-
     barrel''.

  The PRESIDING OFFICER. The Senator from New Mexico.
  Mr. BINGAMAN. Mr. President, let me once again ask how much time 
remains.
  The PRESIDING OFFICER. There is approximately 12\1/2\ minutes for the 
Senator from Oklahoma. The Senator from New Mexico has approximately 4 
minutes.
  Mr. BINGAMAN. Mr. President, in light of that, since there is 12 
minutes still remaining for the Senator from Oklahoma--I do not know 
how much of that time he wants to use. Once he has used his time, I was 
going to take a couple minutes to sum up my position in favor of the 
first amendment that is being offered and we are voting on, and then I 
would yield that time. But I defer to the Senator from Oklahoma to make 
any statement he has.
  The PRESIDING OFFICER. The Senator from Oklahoma.
  Mr. INHOFE. All right. Mr. President, I say to the Senator, I do not 
think adequate time has been given to the amendment you want to 
address, the Boxer amendment, and if you would want some of my time to 
do that, I would be willing to give it up. I am really prepared to 
yield back at the appropriate time on this amendment.
  Let me make this comment. If people are concerned my amendment is 
going to be devastating, just keep in mind we have this limitation. 
There is a very sizable mandate that is out there. The very maximum 
that would be used would be to reduce that mandate--in a year when a 
disaster occurs--by only 15 percent. In other words, 85 percent of that 
mandate would still be in effect. I think that is a very reasonable 
approach to it.
  With that, Mr. President, I will yield the floor.
  The PRESIDING OFFICER. The Senator from New Mexico.


                           Amendment No. 1693

  Mr. BINGAMAN. Mr. President, let me sum up my argument in favor of 
the first amendment we are going to be voting on in this sequence of 
three amendments; that is, amendment No. 1693 that I have cosponsored 
with Senator Boxer.
  The amendment does address a number of important environmental issues 
associated with renewable fuels. It is an amendment that contains four 
sections.
  The first makes an authorization for grants to encourage production 
of advanced biofuels with the most favorable greenhouse gas 
characteristics.
  Second, we have a study by the EPA of potential issues that may arise 
as a result of increases in the renewable fuels standards. That study 
will result in two reports to Congress, both in 2010 and 2015.
  The third part allows the EPA to consider groundwater impacts when 
regulating fuel additives under the Clean Air Act, which is a good 
provision.
  The final part is a provision commonly known as an anti-backsliding 
provision, basically allowing EPA to address air quality issues that 
might arise as a result of the increased volumes of renewable fuel 
mandated in this Energy bill.
  Mr. President, let me at this time conclude my remarks and ask the 
Senator from California if she wishes to make any concluding remarks.
  Mrs. BOXER. Mr. President, I say to the Senator, if you could yield 
me about 2 minutes.
  Mr. BINGAMAN. Mr. President, I yield the remainder of my time to the 
Senator from California.
  The PRESIDING OFFICER. The Senator from California.
  Mrs. BOXER. Mr. President, I thank the Senator.
  Mr. President, the Senator from Illinois has asked if he could have a 
minute and a half. If there is no objection, I suggest we allow that to 
happen at this time, and I will then follow him with 2 minutes.
  The PRESIDING OFFICER. The Senator from Illinois.


                           Amendment No. 1666

  Mr. DURBIN. Mr. President, one of the pending amendments we will 
consider very shortly is by Senator Inhofe, and this would create an 
additional mechanism that would interrupt the bill's renewable fuels 
standard depending on the ratio of stocks of corn to total corn use, 
known as the stocks-to-use ratio.
  Statistics show that stocks-to-use does not correlate to price and 
supply information. In addition, there is already a waiver provision in 
the bill that offers protection to consumers if corn prices or 
availability becomes unsustainable.
  According to one economic analysis, the 10-percent stocks-to-use 
trigger required by this amendment would suppress corn prices to $2.50 
to $2.60 a bushel. In the current farm bill, the target price is $2.63. 
So by artificially suppressing the price of corn from $2.50 to $2.60, 
the Inhofe amendment would put downward pressure on prices and cause 
the triggering of loan deficiency payments. As a result, this amendment 
would cost the Government more in farm payments.
  I am going to urge my colleagues to oppose this amendment. I 
understand there is a budget point of order. I have notified Senator 
Inhofe that I will raise that point of order at the appropriate time.
  I reserve the remainder of my time.
  The PRESIDING OFFICER. The Senator from California is recognized.


                           Amendment No. 1693

  Mrs. BOXER. Mr. President, I just wanted to say I hope amendment No. 
1693 that has been offered by Senator Bingaman and myself will be 
overwhelmingly supported by both sides. We know what happens when we 
ignore unintended consequences. I think this amendment makes sure we 
don't experience another MTBE; that, in fact, we are careful, 
regardless of what the fuels turn out to be, because we are not picking 
winners and losers. We are saying: Let technology go.
  As a matter of fact, in this program we have to assist in the 
development and production of biofuels, cellulosic. So what we don't 
know is when these fuels come, what are they going to do to the 
environment? We all want to be free of foreign oil. Every one of us. 
But we don't want to make mistakes.
  So I hope this amendment No. 1693 will be strongly supported. It 
ensures that the EPA stays involved. It doesn't give away all the 
powers of EPA to the Department of Energy. We just need to make sure 
what we are doing in the future is sound.

[[Page 16610]]

  I think Senator Inhofe has made a very important point about corn. 
There are wonderful things about corn, but there are some negatives.
  The PRESIDING OFFICER. The Senator's time has expired.
  Mrs. BOXER. I think this first amendment can protect against these 
problems.
  I yield the floor.
  Mr. INHOFE. Mr. President, how much time is remaining on both sides?
  The PRESIDING OFFICER. There is 1\1/2\ minutes remaining.
  Mr. INHOFE. On my side?
  The PRESIDING OFFICER. On your side.
  Mr. INHOFE. And on the other side?
  The PRESIDING OFFICER. The time has expired.
  Mr. INHOFE. Mr. President, I ask unanimous consent to include Senator 
Pryor as a cosponsor of amendment No. 1666.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  Mr. BINGAMAN. Mr. President, I ask unanimous consent to add to 
amendment No. 1693 Senators Dodd, Cardin, and Sanders as cosponsors, to 
the amendment we are about to vote on.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  Mr. INHOFE. Mr. President, I also ask unanimous consent to add 
Senator Gregg as a cosponsor.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  Mr. BINGAMAN. Mr. President, I believe Senator Gregg would be a 
cosponsor to amendment No. 1666?
  Mr. INHOFE. That is correct.
  Mr. BINGAMAN. Mr. President, at this point I ask for the yeas and 
nays on amendment No. 1693.
  The PRESIDING OFFICER. Is there a sufficient second? There appears to 
be a sufficient second.
  The question is on agreeing to the amendment.
  The clerk will call the roll.
  The legislative clerk called the roll.
  Mr. DURBIN. I announce that the Senator from Delaware (Mr. Biden), 
the Senator from Connecticut (Mr. Dodd), and the Senator from South 
Dakota (Mr. Johnson) are necessarily absent.
  Mr. LOTT. The following Senators are necessarily absent: the Senator 
from Kansas (Mr. Brownback), the Senator from Oklahoma (Mr. Coburn), 
the Senator from Arizona (Mr. McCain), and the Senator from Alaska (Mr. 
Stevens).
  The result was announced--yeas 58, nays 34, as follows:

                      [Rollcall Vote No. 219 Leg.]

                                YEAS--58

     Akaka
     Alexander
     Baucus
     Bayh
     Bingaman
     Boxer
     Brown
     Byrd
     Cantwell
     Cardin
     Carper
     Casey
     Clinton
     Collins
     Conrad
     Corker
     Dorgan
     Durbin
     Feingold
     Feinstein
     Gregg
     Harkin
     Hutchison
     Inouye
     Isakson
     Kennedy
     Kerry
     Klobuchar
     Kohl
     Landrieu
     Lautenberg
     Leahy
     Levin
     Lieberman
     Lincoln
     Lugar
     McCaskill
     Menendez
     Mikulski
     Murray
     Nelson (FL)
     Nelson (NE)
     Obama
     Pryor
     Reed
     Reid
     Rockefeller
     Salazar
     Sanders
     Schumer
     Smith
     Snowe
     Specter
     Stabenow
     Tester
     Webb
     Whitehouse
     Wyden

                                NAYS--34

     Allard
     Bennett
     Bond
     Bunning
     Burr
     Chambliss
     Cochran
     Coleman
     Cornyn
     Craig
     Crapo
     DeMint
     Dole
     Domenici
     Ensign
     Enzi
     Graham
     Grassley
     Hagel
     Hatch
     Inhofe
     Kyl
     Lott
     Martinez
     McConnell
     Murkowski
     Roberts
     Sessions
     Shelby
     Sununu
     Thune
     Vitter
     Voinovich
     Warner

                             NOT VOTING--7

     Biden
     Brownback
     Coburn
     Dodd
     Johnson
     McCain
     Stevens
  The amendment (No. 1693) was agreed to.


                           Amendment No. 1666

  The PRESIDING OFFICER. Under the previous order, there will now be 2 
minutes for debate equally divided prior to a vote in relation to 
amendment No. 1666 offered by the Senator from Oklahoma, Mr. Inhofe.
  The Senator from Illinois.
  Mr. DURBIN. Mr. President, this Inhofe amendment is one I am 
opposing, and I urge my colleagues to oppose it. There is already a 
waiver provision in the bill that offers protection to consumers if 
corn prices or availability become unsustainable.
  Unfortunately, the language of the Inhofe amendment could trigger a 
dramatic decrease in income of farmers and a dramatic increase in 
Government costs. As a result, I raise a point of order that the 
pending amendment violates section 201 of Senate Concurrent Resolution 
21, the concurrent resolution on the budget for fiscal year 2008.
  The PRESIDING OFFICER. The point of order must be made after time has 
expired.
  The Senator from Oklahoma.
  Mr. INHOFE. Mr. President, there have been some misconceptions about 
this amendment. First, my State of Oklahoma is a corn State. It is a 
livestock State. If my colleagues will look at the groups of people 
that have joined in and said we need to have this safety valve, it is 
virtually everyone: the National Cattlemen's Beef Association, the 
Chicken Council, port producers, Restaurant Association--all of these 
recognizing that in the event something should happen with a severe 
drought--and these are easy to predict--we should have some kind of a 
trigger that would allow the mandate to be reduced.
  All this does is simply provide that if the USDA determines because 
of weather patterns there is going to be a real problem in the crop of 
corn, the mandated limit can be reduced by as much as 15 percent. In 
other words, we are still going to have an 85-percent mandate.
  I suggest my colleagues look very carefully at this amendment. This 
is going to offer some assistance in the event of a serious drought or 
something that will affect the corn crop in America.
  I ask my colleagues to support my amendment.
  The PRESIDING OFFICER. The Senator's time has expired.
  The Senator from Illinois.
  Mr. DURBIN. Mr. President, do I have any time remaining for debate?
  The PRESIDING OFFICER. The Senator has half a minute remaining.
  Mr. DURBIN. Mr. President, first, I ask unanimous consent to have 
printed in the Record a letter in opposition to the Inhofe amendment 
from the American Coalition for Ethanol, the American Farm Bureau 
Association, the National Association of Wheat Growers, the National 
Association of Corn Growers, National Farmers Union, National Sorghum 
Producers, and the Renewable Fuels Association.
  There being no objection, the material was ordered to be printed in 
the Record, as follows:
                                                    June 20, 2007.
     Majority Leader Harry Reid,
     U.S. Senate.
     Chairman Jeff Bingaman,
     Committee on Energy and Natural Resources,
     U.S. Senate.
     Minority Leader Mitch McConnell,
     U.S. Senate.
     Ranking Member Pete Domenici,
     Committee on Energy and Natural Resources,
     U.S. Senate.
       Dear Senators: As the Senate continues to debate the energy 
     bill, H.R. 6, we urge all Senators to vote against the 
     amendment offered by Senators James Inhofe (R-Okla.), Richard 
     Burr (R-N.C.) and Elizabeth Dole (R-N.C.) when it is brought 
     up for a vote. We strongly oppose this amendment as it would 
     effectively gut the RFS and thwart the growth of the domestic 
     ethanol industry.
       Senators Inhofe, Burr and Dole are proposing an amendment 
     to the energy bill that would put in place a stocks-to-use 
     mechanism that would suppress crop prices and be detrimental 
     to the American farmer and domestic renewable fuels. Stocks-
     to-use has limited value as an indicator of demand and 
     expected price. It is an oversimplified way to look at 
     supply/demand and pricing and does not often provide an 
     accurate picture of how markets would be impacted. For 
     example, in 2003/04 the stocks-to-use ratio was one of the 
     lowest in the last 20 years at 9.4 percent, but prices 
     remained at $2.50 for a season average. Most long-run 
     economic models (U.S. Department of Agriculture and Food and 
     Agriculture Policy Research Institute, and others) project 
     stocks-to-use ratio slightly under 10 percent for next 
     several years, with prices in the $3.00-3.50 range. 
     Additionally, many economists have stopped using the stocks-
     to-use ratio in their econometric models as a tool to 
     forecast price because of its obvious limitations. As corn 
     usage are likely to increase substantially to 13, 14, or

[[Page 16611]]

     even 15 billion bushels in the future, a 10 percent stocks-
     to-use ratio could very well equate to carry-out of 1.3, 1.4, 
     or 1.5 billion bushels. So while the stocks-to-use ratio 
     might seem low in these cases, actual carry-out levels would 
     be right in line with the 12-year average (95/96 to 06/07) of 
     1.38 billion bushels.
       According to a recent analysis from the University of 
     Illinois, ``the stocks-to-use ratio is generally used as a 
     ``short cut'' approximation for summarizing annual supply and 
     demand conditions. However, very different supply and demand 
     conditions in individual years can lead to similar ratios of 
     stocks-to-use, but very different prices. The most obvious 
     example is the contrast between a year of very small 
     production that results in a low stocks-to-use ratio, but 
     also requires very high prices to force a reduction in 
     consumption and a large crop year that results in a high 
     level of consumption, a low stocks-to-use ratio, but low 
     prices.''
       Without the strong domestic market corn farmers won't have 
     the incentive to plant as many acres and take the risk that 
     large production will drive down corn prices. An arbitrary 
     stocks-to-use ratio trigger that restricts corn use for 
     ethanol would likely diminish overall demand and put downward 
     pressure on the price for corn. This would serve as a 
     disincentive to farmers and discourage them from planting 
     more corn at a time when more corn is what the feed and fuel 
     industries need. The food and feed industries have assumed 
     that farmers will continue to produce record crops regardless 
     of prices and profitability. If production declines, or even 
     grows more slowly, stocks could also fall, eventually driving 
     prices higher. In the long-term, America's farm sector is 
     better off maintaining a strong and growing domestic demand 
     base and adding value markets.
       The corn industry will continue to strive to satisfy a 
     variety of important demands and maximize the utility of its 
     product. Seed technology developments, increasing 
     agricultural efficiency, innovation in biofuels production 
     processes and other breakthroughs will ensure that growers 
     will continue to meet the world's need for food, feed, fuel 
     and other uses.
       Efforts to undermine the continued growth of the U.S. 
     ethanol industry should not be tolerated. A careful look at 
     the facts reveals that American farmers have met, can and 
     will continue to meet our domestic and international 
     commitments for food and feed while still making a 
     significant and growing contribution to lessening our 
     dependence on imported oil with homegrown, American- made 
     renewable fuels. We strongly urge you to oppose the Inhofe/
     Burr/Dole amendment.
           Sincerely,
     American Coalition for Ethanol.
     American Farm Bureau Federation.
     National Association of Wheat Growers.
     National Corn Growers Association.
     National Farmers Union.
     National Sorghum Producers.
     Renewable Fuels Association.

  Mr. DURBIN. I make the point again that there is already a waiver 
provision in this bill. The Inhofe amendment goes too far in that 
regard.
  If it is the appropriate time, I will raise my point of order.
  The PRESIDING OFFICER. The Senator may make the point of order.
  Mr. DURBIN. Mr. President, I raise a point of order that the pending 
amendment violates section 201 of Senate Concurrent Resolution 21, the 
concurrent resolution on the budget for fiscal year 2007.
  Mr. INHOFE. Mr. President, I move to waive the applicable points of 
order against my amendment and ask for the yeas and nays.
  The PRESIDING OFFICER. Is there a sufficient second?
  There appears to be a sufficient second.
  The question is on agreeing to the motion. The clerk will call the 
roll.
  The bill clerk called the roll.
  Mr. DURBIN. I announce that the Senator from Delaware (Mr. Biden) and 
the Senator from South Dakota (Mr. Johnson) are necessarily absent.
  Mr. LOTT. The following Senators are necessarily absent: the Senator 
from Kansas (Mr. Brownback), the Senator from Oklahoma (Mr. Coburn), 
and the Senator from Arizona (Mr. McCain).
  The PRESIDING OFFICER (Ms. Klobuchar). Are there any other Senators 
in the Chamber desiring to vote?
  The yeas and nays resulted--yeas 31, nays 63, as follows:

                      [Rollcall Vote No. 220 Leg.]

                                YEAS--31

     Alexander
     Boxer
     Bunning
     Burr
     Cardin
     Carper
     Chambliss
     Cochran
     Collins
     Cornyn
     DeMint
     Dole
     Enzi
     Hutchison
     Inhofe
     Isakson
     Kyl
     Leahy
     Lott
     Mikulski
     Murkowski
     Pryor
     Reed
     Sanders
     Schumer
     Sessions
     Shelby
     Snowe
     Stevens
     Sununu
     Vitter

                                NAYS--63

     Akaka
     Allard
     Baucus
     Bayh
     Bennett
     Bingaman
     Bond
     Brown
     Byrd
     Cantwell
     Casey
     Clinton
     Coleman
     Conrad
     Corker
     Craig
     Crapo
     Dodd
     Domenici
     Dorgan
     Durbin
     Ensign
     Feingold
     Feinstein
     Graham
     Grassley
     Gregg
     Hagel
     Harkin
     Hatch
     Inouye
     Kennedy
     Kerry
     Klobuchar
     Kohl
     Landrieu
     Lautenberg
     Levin
     Lieberman
     Lincoln
     Lugar
     Martinez
     McCaskill
     McConnell
     Menendez
     Murray
     Nelson (FL)
     Nelson (NE)
     Obama
     Reid
     Roberts
     Rockefeller
     Salazar
     Smith
     Specter
     Stabenow
     Tester
     Thune
     Voinovich
     Warner
     Webb
     Whitehouse
     Wyden

                             NOT VOTING--5

     Biden
     Brownback
     Coburn
     Johnson
     McCain
  The PRESIDING OFFICER. On this vote, the yeas are 31, the nays are 
63. Three-fifths of the Senators duly chosen and sworn not having voted 
in the affirmative, the motion is rejected. The point of order is 
sustained and the amendment falls.


                           Amendment No. 1800

  Under the previous order, there will now be 2 minutes of debate 
equally divided prior to a vote in relation to amendment No. 1800, 
offered by the Senator from Arizona, Mr. Kyl.
  Mr. KYL. Madam President, this amendment very simply changes an IRS 
interpretation of the 2005 Energy bill that provides a $1-per-gallon 
tax credit for creation of biodiesel. An interpretation by IRS said 
that if you take animal fat and add it to the biodiesel--or add it to 
diesel, you have biodiesel and then get the $1-per-gallon credit. That 
was not what was intended when this was created.
  What has happened is all of the animal fat used to do this was 
already being used by the oleo chemical industry. Folks, for example, 
who make soap and detergents and the like, are finding the cost of the 
animal fat, their feed stock, has skyrocketed 100 percent this past 
year because of the way this has been done. As a result, we are simply 
changing the interpretation IRS put on it that big oil companies can 
take advantage of what was not intended to be a tax credit for them, 
people who are already refining diesel fuel. But rather, those who 
would create legitimate new diesel fuel from legitimate biomass, the 
credit remains; nothing changes for that. It simply means the oil 
companies taking advantage of the credit in an improper way would no 
longer be able to do so.
  The PRESIDING OFFICER. The Senator from Montana is recognized.
  Mr. BAUCUS. Madam President, the Senator from Arizona seeks to strike 
the provision of the underlying Finance Committee amendment--frankly, 
the amendment package which the committee voted to report by a vote of 
15 to 5. The underlying amendment before us extends for 2 years the $1-
per-gallon credit for renewable diesel, including diesel produced from 
animal fats. That credit is in current law. It is only 2 years old. We 
should give it time to work.
  Under the language in the underlying Finance Committee amendment, we 
will revisit subsidies for most fuels, including this one, in the year 
2010. The bottom line is we want to displace foreign oil imports--that 
is the goal--and every gallon of renewable diesel produced is a gallon 
of foreign imports displaced.
  I urge my colleagues to help decrease foreign oil imports and oppose 
the Kyl amendment.
  I yield the remainder of my time.
  The PRESIDING OFFICER. The question now is on agreeing to the Kyl 
amendment.
  Mr. KYL. Madam President, I ask for the yeas and nays.
  The PRESIDING OFFICER. Is there a sufficient second? There is a 
sufficient second.
  The clerk will call the roll.
  The assistant legislative clerk called the roll.
  Mr. DURBIN. I announce that the Senator from Delaware (Mr. Biden) and 
the Senator from South Dakota (Mr. Johnson) are necessarily absent.

[[Page 16612]]


  Mr. LOTT. The following Senators are necessarily absent: the Senator 
from Kansas (Mr. Brownback), the Senator from Oklahoma (Mr. Coburn), 
and the Senator from Arizona (Mr. McCain).
  The PRESIDING OFFICER. Are there any other Senators in the Chamber 
desiring to vote?
  The result was announced--yeas 45, nays 49, as follows:

                      [Rollcall Vote No. 221 Leg.]

                                YEAS--45

     Alexander
     Allard
     Bennett
     Cantwell
     Clinton
     Coleman
     Collins
     Corker
     Cornyn
     Craig
     Crapo
     DeMint
     Dodd
     Domenici
     Durbin
     Ensign
     Enzi
     Feingold
     Graham
     Gregg
     Harkin
     Hatch
     Inhofe
     Kennedy
     Kerry
     Klobuchar
     Kyl
     Lautenberg
     Martinez
     McCaskill
     McConnell
     Menendez
     Murkowski
     Murray
     Obama
     Schumer
     Sessions
     Shelby
     Snowe
     Specter
     Sununu
     Thune
     Voinovich
     Warner
     Webb

                                NAYS--49

     Akaka
     Baucus
     Bayh
     Bingaman
     Bond
     Boxer
     Brown
     Bunning
     Burr
     Byrd
     Cardin
     Carper
     Casey
     Chambliss
     Cochran
     Conrad
     Dole
     Dorgan
     Feinstein
     Grassley
     Hagel
     Hutchison
     Inouye
     Isakson
     Kohl
     Landrieu
     Leahy
     Levin
     Lieberman
     Lincoln
     Lott
     Lugar
     Mikulski
     Nelson (FL)
     Nelson (NE)
     Pryor
     Reed
     Reid
     Roberts
     Rockefeller
     Salazar
     Sanders
     Smith
     Stabenow
     Stevens
     Tester
     Vitter
     Whitehouse
     Wyden

                             NOT VOTING--5

     Biden
     Brownback
     Coburn
     Johnson
     McCain
  The amendment (No. 1800) was rejected.
  Mr. BINGAMAN. Madam President, I move to reconsider the vote and move 
to lay that motion on the table.
  The motion to lay on the table was agreed to.
  Mr. BINGAMAN. Madam President, 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.
  The PRESIDING OFFICER. The Senator from New Mexico is recognized.
  Mr. BINGAMAN. Madam President, I ask unanimous consent that the order 
for the quorum call be rescinded.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  Mr. BINGAMAN. Madam President, I ask unanimous consent that there be 
up to 2 hours 10 minutes for debate prior to a vote in relation to the 
Kyl second-degree amendment to the Baucus amendment No. 1704, and the 
cloture vote on the Baucus amendment; with the time divided as follows: 
60 minutes to be used during today's session, and 70 minutes available 
for debate when the Senate resumes consideration of H.R. 6 on Thursday, 
June 21; with all time equally divided and controlled between Senators 
Baucus and Kyl or their designees; with the Republican time being 
controlled 15 minutes by Senator Kyl and 20 minutes by Senator 
Domenici; that no other amendment be in order prior to disposition of 
the Kyl amendment; with 30 minutes of the time on Thursday available 
for debate with respect to the motion to invoke cloture on the Baucus 
amendment No. 1704; and then, upon the use or yielding back of time, 
the Senate proceed to a vote in relation to the Kyl amendment; that 
upon disposition of the Kyl amendment, the Senate proceed to a vote on 
the motion to invoke cloture on the Baucus amendment No. 1704.
  The PRESIDING OFFICER. Without objection, it is so ordered.


                Amendment No. 1733 to Amendment No. 1502

  The PRESIDING OFFICER. The Senator from Arizona.
  Mr. KYL. Madam President, I have an amendment at the desk, No. 1733, 
and would ask that it be called up at this time.
  The PRESIDING OFFICER. The clerk will report the amendment.
  The assistant legislative clerk read as follows:

       The Senator from Arizona [Mr. Kky] proposes an amendment 
     numbered 1733 to amendment No. 1502.

  Mr. KYL. I ask unanimous consent that further reading of the 
amendment be dispensed with.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  The amendment is as follows:

 (Purpose: To provide a condition precedent for the effective date of 
                          the revenue raisers)

       At the end of subtitle B of title VIII add the following:

     SEC. ___. CONDITION PRECEDENT FOR THE EFFECTIVE DATE OF 
                   REVENUE RAISERS.

       Notwithstanding the provisions of this subtitle, the 
     amendments made by this subtitle shall not take effect unless 
     the Secretary of Energy certifies that such amendments shall 
     not increase gasoline retail prices and the reliance of the 
     United States on foreign sources of energy.

  Mr. KYL. Madam President, I will speak for one minute and then yield 
about 10 minutes to the Senator from Kentucky who will begin the 
discussion. Actually, I would like to read the entirety of this 
amendment. It will take me about 10 seconds. It explains what the 
amendment does.

       Notwithstanding the provisions of this subtitle, the 
     amendments made by this subtitle shall not take effect unless 
     the Secretary of Energy certifies that such amendments shall 
     not increase gasoline retail prices and reliance of the 
     United States on foreign sources of energy.

  What this amendment does very simply is to say that the $28.6 billion 
in tax increases called for by this bill will be allowed to go into 
effect as long as the Secretary of Energy can certify that it would not 
raise gas prices or cause further dependence on foreign oil. The reason 
for the amendment, obviously, is to make a point. It is going to be 
very difficult to have $28.6 billion in tax increases on oil producers 
not reflected on our gasoline cost at the pump. I predict Americans 
will pay more for their gasoline because of the tax increases in this 
legislation.
  I will have more to say about the three different kinds of tax 
increases, why I believe that is the case, why I think it is a bad idea 
for us to increase our dependence on foreign oil and increase the cost 
of gasoline to consumers as a result of the tax increases embodied in 
this bill.
  At this time, I yield 10 minutes to the Senator from Kentucky.
  The PRESIDING OFFICER. The Senator from Kentucky is recognized.
  Mr. BUNNING. Madam President, I thank Senator Kyl for yielding. I 
rise in support of amendment No. 1733 that would prevent the tax 
increases in this bill from going into effect if the tax provisions 
raise gasoline prices or increase our dependency on foreign oil. I 
voted against these tax increases in the Finance Committee, and I 
strongly oppose all the tax increases in this bill. But there is one 
provision I oppose in particular. I am referring to the 13-percent 
severance tax on oil and gas leases.
  There are several reasons why the Federal Government will never see 
the $10.6 billion allegedly raised by this provision and why we should 
not, under the banner of tax law, confiscate property. Very simply, the 
United States should not break its contracts. A deal is a deal. The 
Clinton administration bid out these lease contracts in the Gulf of 
Mexico in 1998 and 1999, more than 1,000 of them. Now, with the benefit 
of hindsight, the small number of performing leases--about 20 of them--
look like a bad deal for the Government. That may be true. Some leases 
negotiated before and after the period in question have 12.5 percent 
royalty rates. These leases have a zero rate.
  On the other hand, the favorable terms that Senator Bingaman 
complains about encourage the oil companies to pay more at the outset 
to drill in deeper waters. Senator Bingaman knows he cannot tear up the 
contracts he does not like, so he has proposed an unprecedented and 
unusual targeted severance tax that falls almost exclusively on the 
current holders of these leases. This tax is so unusual, the Federal 
Government has never imposed a severance tax on resources, and we never 
have enacted a tax that can be offset by royalty payments.
  If there is any doubt about the purpose of this tax, Senator Bingaman 
cleared that up earlier today when he explained the tax will not impact 
future leaseholders. The only people who actually pay this 13 percent 
tax are the

[[Page 16613]]

holders of the leases Senator Bingaman thinks are a bad deal. As 
Senator Bingaman explained, future leases are expected to have a 
royalty rate higher than the tax, and royalties can be used to offset 
the tax under Senator Bingaman's scheme. The problem with this is 
Congress cannot reverse contracts legislatively without paying 
compensation. The Supreme Court has said as much in two recent cases: 
Winstar and Mobil Oil. What is more, the Federal courts have said 
Congress cannot use its taxing power to break or modify a Government 
contract.
  But that is precisely what this measure aims to do. If we enact this 
legislation, we will cast a small degree of doubt on every contract the 
Federal Government ever writes. We will raise the cost of Government 
today and for generations because every contractor will wonder whether 
their Congress might step in to claw back the benefits of the deal.
  Here is a true story. During the savings and loan crisis, Federal 
regulators tried to encourage healthy thrifts to buy up failing thrifts 
to stabilize the savings and loan industry. They agreed to more lenient 
regulatory standards and tax benefits that would be available to the 
healthy thrifts. Later, when the cost of the savings and loan bailout 
became a concern, Congress enacted laws that took back some of these 
benefits. One of these laws was the Guarini amendment, a targeted tax 
provision. Similar to the Bingaman severance tax, the law seemed to 
raise revenue on paper. But in the end, the Federal courts reversed 
themselves, and the Federal Government paid out millions in damages for 
breach of contract. The same Federal court that decided these cases has 
exclusive jurisdiction to decide whether the 13-percent severance tax 
is legal. I am not optimistic.
  We should make sure this provision never becomes law by voting for 
the Kyl amendment. It is unconstitutional. It is un-American. It will 
raise gasoline prices across the board, not lower them, by imposing 
additional costs on the American oil and gas companies. Most of them 
are small companies that risk capital to search for oil in the Gulf of 
Mexico.
  I thank the Chair and yield the floor.
  The PRESIDING OFFICER. The Senator from Arizona.
  Mr. KYL. Madam President, unless the chairman of the committee would 
like to speak next, I yield 5 minutes to the Senator from Colorado.
  The PRESIDING OFFICER. The Senator from Colorado is recognized.
  Mr. ALLARD. I thank the Senator from Arizona for yielding me the time 
to speak on his amendment which basically requires a certification from 
the Secretary of Energy that these taxes will not increase retail 
gasoline prices or the reliance of the United States on foreign sources 
of energy. I think it is a good amendment. Here is why. The current 
bill, as I see it, does nothing to produce more energy. It doesn't do 
anything to make energy less expensive. It makes us more dependent on 
foreign oil from my perspective. This amendment helps remediate the 
provisions of the current Energy bill before us.
  I think back to the previous Energy bill passed in the fall of 2005, 
in which we accomplished a lot. We did a lot to increase the supply of 
energy through incentives and to hold down costs because we were 
increasing supply. It made us less dependent on foreign oil.
  In that particular legislation, we took nothing off the table. We 
kept traditional fuels out there. Many of those were the petroleum 
products, but included hydroelectric plants. We also had incentives in 
there for nuclear fuels. We did a lot to encourage renewable fuels. We 
had provisions to encourage production of solar energy, production of 
wind-generated energy, geothermal energy, probably one of the more 
practical and efficient ways of generating energy, with some of the 
local governments in the State of Colorado taking advantage of the 
source. Hydrogen was a source, cellulosic sources of alcohol and energy 
fuels, corn ethanol. We even had conservation provisions in there, for 
example, provisions which would allow tax credits for housing and 
construction projects that produced buildings that conserved energy. It 
was a good, well-balanced bill, and it didn't have many mandates in it.
  One of the concerns I have is the huge amount of mandates and tax 
increases we have in this bill which will make it more difficult to 
generate energy. Not only will it make it more difficult to generate 
energy, but it will also make it more expensive. When you make anything 
more expensive, consumer demand will go down, but also production will 
go down because what you are implementing is taxes that are directed to 
the producer.
  As Senator Bunning commented, there is going to be an injustice. It 
wouldn't surprise me if we have court action and if it doesn't turn 
away some of the revenue-producing provisions of this bill.
  I am not in support of the bill as it stands now. With the adoption 
of the Kyl amendment, I think it remediates many of the provisions in 
this bill that I have an objection to. These provisions undo a lot of 
what we did in the big Energy bill in 2005.
  I am urging my colleagues to join me in supporting the Kyl amendment. 
It simply states that the amendments shall not take effect unless the 
Secretary of Energy certifies that such amendments shall not increase 
gasoline retail prices and the reliance of the United States on foreign 
sources of oil. It is very simple, straightforward. I urge my 
colleagues to join me in supporting this important amendment.
  I yield the floor.
  The PRESIDING OFFICER. The Senator from Arizona.
  Mr. KYL. Mr. President, I ask unanimous consent that the amendment I 
have offered, No. 1733, be modified to reflect that it is a second-
degree amendment to the Baucus amendment No. 1704.
  The PRESIDING OFFICER (Mr. Casey). Without objection, it is so 
ordered.
  The PRESIDING OFFICER. The Senator from Montana.
  Mr. BAUCUS. Mr. President, I yield myself such time as I may consume.
  First, let me begin by reminding the Senate why we are here today. We 
want a strong energy policy. I think most Senators agree that the 
underlying bill, plus the Finance Committee bill, moves this country 
very much in the right direction, making us less dependent upon OPEC. 
It enhances national security. It will move us more toward alternative 
and renewable fuels, conservation, cellulosic ethanol, and also clean 
coal technology. This is a very good bill.
  It is important to remind ourselves why we have these provisions that 
are the subject of the amendment offered by the Senator from Arizona. 
We have to pay for what we do here. It is something called pay-go. 
Essentially, whenever we decrease taxes--and that is what the 
underlying Finance Committee bill does, it decreases taxes; it gives 
incentives to lots of different organizations to help develop new 
technologies, this is a tax-decrease bill--we also, under our rules, 
have to raise revenue the same amount that we decrease revenue.
  We are here today to debate the offsetting amendment offered by the 
Senator from Arizona. Basically, should we pay for what we are doing? 
That is the basic question.
  I say that is the basic question because it is one that offers no 
alternative. He just wants to strike the provisions that raise revenue 
in this bill to pay for other things, to pay for the tax decreases. So 
on a net basis, it is zero. Some like to say this is a tax increase 
bill. It is not. It is a net zero--zero-zero.
  So the Senator from Arizona is not suggesting any alternative. He 
just says, no, we do not pay for what we are trying to do here. I think 
this body all agrees we need to pay and should pay for what we do. The 
question is whether this is a proper pay-for. I remind my colleagues 
that this full committee amendment, which includes the provisions which 
are the subject of the amendment of the Senator from Arizona, passed 
the committee by a vote of 15 to 5--a very strong, bipartisan vote. 
Many Senators believed--15 Senators believed--this is proper. It is

[[Page 16614]]

right to have these provisions in this legislation.
  We clearly do not want to increase the deficit. If the Senator's 
amendment passes, and these incentives for clean energy remain, it will 
have an effect of increasing the deficit.
  Let's go in a little more detail about these offsets. The first is 
the section 199. What is that? I think all of our colleagues remember 
that several years ago--basically prior to 2004--the United States had 
a program called FSC-ETI. That was a program placed to give incentives 
for companies to manufacture products that are shipped to foreign 
countries. It was an incentive for domestic manufacturers to ship 
products overseas. The World Trade Organization ruled that this 
incentive violated WTO rules. The Europeans have something similar. 
They just constitute it a little differently, so they are able to have 
their stimulus for their exports that go overseas. But ours was ruled 
illegal by the WTO.
  So what did we do about that in the Congress? We decided we were 
going to enact this section 199. What is that? Basically, it gives a 
deduction for domestic manufacturers, and it is phased in. When fully 
phased in in 2010, it will allow 9 percent of qualified production 
activities income to be deducted.
  Well, here we are today saying: Well, for the five major oil 
companies, that 199 deduction for their production is no longer 
available to them. Some here suggest: Well, that is going to have the 
effect of increasing prices at the pump and it will maybe discourage 
domestic production in the United States.
  Look at the record. Look at the facts. The facts are basically these. 
Since this provision went into effect--section 199--what has happened 
domestically in the United States? The major oil companies have gotten 
a significant break. It comes down to approximately $10 billion over 10 
years. Domestic production by the five major oil companies has actually 
declined, even though they had this break, they got this additional 
incentive. Did it increase production in the United States? No, it did 
not increase production in the United States. It decreased production. 
Remember, this is a provision which applies to domestic production. It 
did not increase domestic production. Domestic production by oil 
companies actually decreased over this period of time.
  I might also say that the Joint Committee on Taxation has done an 
analysis on this issue, and they demonstrated many of the points I am 
making.
  So if you look at all the various factors that bear on this issue, 
you reach the conclusion that domestic production has gone down. So the 
argument that this one bill, this one portion will be responsible for 
decreasing domestic production is a specious argument. The facts show 
the opposite.
  What determines gasoline prices charged at the pump? The Joint 
Committee on Taxation looked at this question, and it is their 
determination that--and it is obvious--the price at the pump is 
determined by an awful lot of complex factors. It is global demand. It 
is a lot of supply factors. I could go on as to all the factors the 
Joint Committee on Taxation believes contributes to this issue. To say 
there is a direct link that this provision is actually going to 
increase prices is just not accurate. It is just not going to happen. 
It is a fallacious argument to try to discourage and confuse people 
into saying, therefore, this is not a good pay-for.
  What are the other oil provisions? There are three of them. I already 
mentioned one. The second one is a loophole-closer.
  Basically, this is a loophole identified by the Joint Committee on 
Taxation. In short, it has to do with credit American companies get for 
taxes paid overseas. For oil and gas production, there are two specific 
provisions relating to foreign taxes. One provision, called foreign oil 
and gas extraction income, or FOGEI, applies to extraction costs of oil 
and gas. The other, foreign oil related income, or FORI, applies to 
downstream distribution costs.
  The long and short of it is that the Joint Committee on Taxation 
recommended changes to the system of credits against foreign taxes, a 
streamlining of FOGEI and FORI. And that's what the Finance Committee 
has done.
  We closed this loophole, and it happens to raise over $3 billion. 
This is a loophole closer. That is what this is. I cannot see any 
reason why anyone would have any problem with that.
  In fact, the oil company people tell us it is probably a good thing 
to close this loophole. Why? Because it is so complicated to comply 
with.
  Now, let's go to the third provision in this bill. This is the 
provision with respect to Outer Continental Shelf severance taxes. 
Clearly, constitutionally, the Congress always has the power to enact a 
tax. This is a 13-percent tax on production in the gulf. That is what 
it is. Producers can offset that tax with royalties they otherwise 
would pay for those leases in the gulf.
  Now, the provision applies not just to the so-called years in 
question--1998 and 1999. It applies to a much broader range of leases 
in the gulf. This is not targeted to those 2 years people discuss. This 
is a severance tax that Congress has the power to levy in this area.
  A couple points: The President himself enacted a higher level of 
royalties for all new leases at 16\2/3\ percent. On his own, he raised 
the royalty rate to 16\2/3\ percent for most new offshore deepwater 
federal oil and gas leases.
  In this amendment, we are talking about a 13-percent severance tax. 
Is this a breach of contract? No. We have asked the American Law 
Division of the Congressional Research Service to research this point 
for us because we do not want to do anything that is going to be 
unconstitutional and wrong. They say no, that basically Congress has 
the power to enact this provision. Under the broad public purposes, 
which is the basic standard, which is utilized here in the courts, 
Congress does have the power to do this. The question is, Is this a 
taking or confiscatory? No. This is not confiscatory. Nobody can make 
an argument this is confiscatory. So there is no takings, fifth 
amendment question here. Someone can raise it, but I think any 
reasonable person looking at this issue would say it is not a taking, 
it is not confiscatory, and second, this is not a breach of contract 
because we are saying: Hey, Congress has the power to enact the tax and 
credit royalties against it.
  Do not forget, the President already said those folks, those 
companies are not paying enough. So he raised the royalty rate to 16\2/
3\. We are saying 13 percent, in the form of a tax. We are trying to be 
reasonable. We are trying to do what is right. We came up with that 13 
percent.
  Another point that is kind of tricky about this amendment--it is kind 
of interesting about this amendment--essentially, it is delegating to 
the Secretary whether or not the oil companies are going to pay taxes. 
That is basically what the amendment says: Congress, you cannot decide; 
it is not your prerogative; it is up to the Secretary. Because he has 
this little clause in there that says: Unless the Secretary certifies, 
it is not going to increase prices. Come on. The Secretary can say 
anything he wants to say in this area because it is so complicated. It 
is so complicated. We should not be giving such broad authority to the 
Secretary for him to determine whether this offset should be enacted. 
But that is what the Kyl amendment does. I think any reasonable person 
would say: Hey, that is not the right thing to do. We do not want to 
give the Secretary this authority. You guys--men and women in 
Congress--we elected you to do what is right. Basically, what is right 
is to enact these provisions.
  So I, therefore, urge all of us--the body--let's keep our heads on 
straight. Let's keep our feet on the ground. This is common sense. 
Let's oppose this thing that does not make any sense.
  Mr. President, I ask how much time remains on both sides?
  The PRESIDING OFFICER. The Senator from Montana has 16\1/2\ minutes. 
The Senator from Arizona has 16 minutes.
  Mr. BAUCUS. I thank the Chair.
  The PRESIDING OFFICER. The Republican whip is recognized.
  Mr. LOTT. Mr. President, I have not spoken on this energy 
legislation.

[[Page 16615]]

There is no question in my mind that we need a national energy policy. 
I do not think this bill, in its current form, does what we need to do. 
I have always believed what we need to do in America is produce more 
energy here at home. More supply--that is the answer--not try to do 
with less, try to shrink what we have in terms of energy or conserve 
ourselves into an energy policy. I want more. This is America.
  We can produce more of everything. More oil? Yes. More natural gas? 
Absolutely, and do a lot of innovative things with it. More coal? I am 
for clean coal technology. I am for changing coal to liquids. I am for 
doing whatever we can with coal. I am for hydro. We should have more 
hydroplants, but we have people who have reservations about that. It 
has environmental or conservation problems. And more nuclear. It is 
clean. It is safe. But what are we doing to get more of them on line? 
Nothing.
  This bill has turned out to be really about alternative fuels, 
conservation, and green policies.
  Now, for years, I have said I do not want any of that. I want 
production. By the way, in my State, we can do it. We can have more of 
everything: oil, gas, coal to liquid, lignite coal, ethanol. We are 
trying to do it all. We are going to be energy independent. In fact, we 
are going to wield our power to other parts of the country. So that is 
what I wanted, but I am over that. I want a national energy policy. I 
am prepared to accept alternative fuels, some renewables if they make 
sense, if they are justified in the market but not paid for by 
outrageous tax credits that don't produce anything. I am for 
conservation. We should encourage that. Get different light fixtures, 
look at the utilities we have in our houses, the appliances, are they 
using too much electricity; insulation, I am for all of that.
  So let's have the grand compromise on energy. Let's do it all. This 
bill doesn't do it. To my colleagues, I want to say I believe America 
is in great danger because of our inability to come together and do it 
all.
  I was in Russia 3 or 4 weeks ago. I had a chance to see their 
transmission network of gas and to look at their fields in Siberia, the 
oil and natural gas. I met with the leadership of Gazprom, the Russian 
Government-controlled energy company. It was scary. I have no doubt in 
my mind they intend to use gas as a weapon. They are going to be 
shipping natural gas that provides the power to all of Europe, Eastern 
Europe, Western Europe, all the way to Ireland. By the way, if they 
don't get what they want, they will cut it off.
  Here we are in America. We are dependent for our energy sources, 80 
percent on foreign oil. Is that good? No, that is bad. Look at whom we 
are depending on: Russia, Iraq, Iran, Nigeria, Venezuela, and then some 
who I guess are more stable for now: Saudi Arabia, Kuwait. Is that what 
we want? No, we don't want that. This is a dangerous situation.
  So we should encourage and facilitate the whole package. Flexible 
fuels, I am for that. We should try to see what we can do with 
renewables. I don't believe for a minute we are going to get 15 percent 
of our energy needs from wind. Come on now. Wind and solar. There are 
people who think we are going to heat, power, and supply all our energy 
needs in the future from wind and solar. For heaven's sake, get real. 
We have already sunk billions of dollars into some of these ideas that 
might work or might not. I am willing to try them. I will buy the deal, 
but this is not the deal. This is another tax increase: $28.6 billion. 
I thought it would be $15 billion.
  By the way, let me make it clear. There is some good stuff in here. 
Some of it I supported, some of it I voted for. But overall, what we 
have is an energy bill that came out of the Energy Committee that now 
doesn't amount to very much; it is all about renewables and green 
policy. It is not going to produce another drop of oil, 1 cubic foot of 
natural gas. In fact, now, we are going to discourage oil and gas 
exploration in the Gulf of Mexico.
  By the way, I should be able to talk about this because this is in my 
neck of the woods. I have lived in the shadow of oil and gas rigs for 
years in the gulf. The best fishing in the gulf is around the rigs. We 
have oil and gas out there. Our policy in America is we don't want to 
drill where it is. We don't want to drill in the gulf, we don't want to 
drill on the west coast, we don't want to drill on the east coast, we 
don't want to drill in ANWR. I have a novel idea of where we ought to 
drill: Drill where it is, and do it safely. We can do that. Finally, 
after a lot of huffing and puffing and stroking and scratching last 
year, we finally said: Yes, we are going to have more oil and gas 
exploration in the Gulf of Mexico. It is going to be in a defined area. 
It is not going to be close to the shore, which I think it should be, 
much closer to the Florida coast, for instance--and my coast, too, for 
that matter--but we did it for control in a responsible, acceptable 
way. The States, by the way, are going to get some royalties out of it 
for the first time ever, or for the first time in many years. We came 
up with a good deal.
  Now, in this bill, we are going to go back, and we are going to levy 
a 13-percent tax on oil and gas production in the Gulf of Mexico that 
will cost $10.6 billion on the oil companies. Now, look, I am not going 
to cry any tears for oil companies. I have a populist streak in me. I 
don't like gasoline prices. But, buddy, let me tell you, this bill is 
not going to reduce anybody's gasoline prices. This bill is not a 
national energy policy.
  This bill will lead to less American production in the critical areas 
where we could do something quickly. By the way, we are going to tax 
them. Are we never going to learn when you tax something, you get less? 
If you get less, what do you think it is going to do to the price of 
gasoline? By the way, we are going to ride these cats--these 
companies--offshore. They are not going to put up with all these taxes. 
They are going to go get it somewhere else. They can do business 
internationally. The biggest company in the world, ExxonMobil--they are 
not the biggest company in terms of oil or gasoline in America, no; 
there are other companies that fit that role--much of their business is 
overseas.
  So there is about $21 billion more on the oil companies, and I think 
it is being done in the wrong way. But we can't come out and talk about 
how we are going to make such great changes and that we are going to do 
something about energy prices and the price of gasoline, when the 
reverse is true. This bill would say that--exactly, it would 
effectively strike all the tax increases unless and until such time as 
the Energy Secretary can certify they will not result in increased gas 
prices or increased dependence on foreign sources of energy.
  You are right, you know, they would not be able to certify that. This 
would not be good for the country.
  Yes, again, I wish to say the Wyden amendment is in there. I support 
it. I voted against the amendment awhile ago that Senator Kyl had. I am 
not pure either. I am over trying to be pure. But I do expect us to not 
do the wrong things on energy policy--don't do the bad things, even if 
we can't do the right things.
  I am extremely upset about what we have come up with out of the 
Finance Committee and on the energy package as a whole. This is not 
going to do the job. It is not going to become law.
  So here again, the Senate is spinning its wheels. Yes, well, we are 
making a statement. Maybe we will feel better. But in terms of 
addressing an energy policy, this will not do it.
  I yield the floor. Thank you for the extra time.
  Mr. BAUCUS. Mr. President, I yield 5 minutes to the Senator from New 
York, but I don't see him yet. So I yield the balance--11 minutes plus 
5 is 16--so I yield 11 minutes to the Senator from Oregon, Mr. Wyden, 
and the remaining 5 to the Senator from New York when he appears on the 
floor.
  The PRESIDING OFFICER. The Senator from Oregon is recognized.
  Mr. WYDEN. Mr. President, I wish to pick up on the comments of my 
friend from Arizona and my friend from Mississippi, two Senators whom I 
have

[[Page 16616]]

worked with on many issues and must unfortunately disagree with them on 
this one. I want the Senate to understand exactly what the implications 
would be if the Kyl amendment were to pass.
  If the Kyl amendment were to pass, the major oil companies would 
receive billions and billions of dollars of subsidies that President 
Bush says the major oil companies do not need. I wish to be specific on 
this as we go to the debate with the Senator from Arizona and the 
Senator from Mississippi.
  The President of the United States has said that when the price of 
oil is over $55 a barrel, the oil companies do not need incentives to 
develop and explore. Let me repeat that. President Bush has said when 
the price of oil is over $55 a barrel, the oil companies do not need 
incentives to explore and search for oil. The price of oil at this time 
is substantially over $55 a barrel. So if the Kyl amendment passes and 
we refuse to strip these incentives the President says aren't needed, 
we are going to continue business as usual.
  The Kyl amendment says, essentially: Let us continue these practices 
we have had for the last few years that have done nothing--nothing--to 
reduce our dependence on foreign oil.
  What we have had in the past are billions of dollars of subsidies. 
For example, in section 199 of the Tax Code, not for investing in 
refinery capacity, not for investing in new production, not for 
investing in renewable fuels but essentially continuing the practices 
that have nothing--done nothing to reduce our dependence on foreign 
oil. I have always said we ought to target tax breaks and incentives 
where there is an opportunity for new production. That is why I have 
always favored looking at potential incentives for small companies.
  But that is not what this amendment is all about. This amendment is 
about continuing the giveaways for the big companies, the giveaways the 
President of the United States says are not needed.
  So where we are is oil is at almost $70 a barrel, gas is over $3, 
more imports than ever, and it seems to me continuing business as usual 
as the Kyl amendment would do is not a case you can make. The Finance 
Committee amendment changes our course. It ends the section 199 tax 
breaks for the major oil companies. It takes steps to end our addiction 
to oil. It takes steps to end our addiction to continuing billions of 
dollars of subsidies that the President says are not needed.
  Let us not continue these billions and billions of dollars in the 
name of a modern energy policy. It is not. The idea that shoveling all 
these breaks, these billions of dollars of breaks at the oil industry 
is somehow going to be good for America is not borne out by the record. 
It is not borne out by the record, and in my view, until we take these 
steps to protect taxpayers and protect consumers and protect the 
security of the country, I think what will happen is we will continue 
to increase our addiction to foreign oil, we will continue to have 
these prices, these staggeringly high prices of $70 a barrel and 
consumers will still get clobbered at the pump.
  I am going to have more to say about this in the course of tomorrow, 
but I would say in closing--and I see my good friend from Arizona on 
the floor of the Senate--that if the Senate supports this particular 
amendment, the Kyl amendment, what it will be doing is it will be 
continuing billions of dollars in tax breaks that if you use the test 
applied by the President of the United States, those major companies do 
not need. No one has been able to make a case, it seems to me, that the 
President of the United States is wrong. In fact, every time this topic 
has come up, I have said I think the discussion ought to begin with the 
comment of the President. I credit the President for his statement 
because I think it reflects modern reality. The President knows a lot 
about the oil business, and the President says you don't need these 
subsidies when the price is over $55 a barrel.
  But along comes the Kyl amendment, and the Kyl amendment says: No, I 
pretty much don't see it the way the President of the United States 
sees it. I am going to continue the billions and billions of dollars of 
subsidies when it is not needed.
  The last point I would like to make very quickly deals with the 
Bingaman language. We have heard again and again that this somehow 
retroactively sweeps in and unravels previous agreements. That is 
untrue. Yesterday, I asked in the Senate Finance Committee the counsel 
about this. The counsel was very clear it applies prospectively, it 
does not apply retroactively, and it applies to all of the activity 
going on in the gulf.
  The Government Accountability Office has said that in terms of our 
position in the world, we stand almost alone in terms of our position 
relative to getting a fair shake on revenue and protecting taxpayers. 
The reality--and the Bingaman amendment picks up on this--is taxpayers 
are getting fleeced by major oil companies when they drill on public 
land.
  We are talking about our land, the people's land. We are not talking 
about private lands. We are talking about our lands. And the Bingaman 
amendment takes steps to correct that situation.
  I hope my colleagues will reject the amendment of the Senator from 
Arizona. If I have made one point tonight, I want it understood, if the 
Kyl amendment is adopted, major oil companies would continue to receive 
billions of dollars of subsidies that the President of the United 
States has said they do not need.
  Mr. President, I note that my colleague from New York has not 
arrived. The Senator from Arizona, I am sure, wants to respond. I 
reserve the time that was propounded in the request by Senator Baucus 
for Senator Schumer when he arrives. Since he is not here, and Senator 
Kyl is, I yield the floor to him with the reservation for Senator 
Schumer when he arrives.
  The PRESIDING OFFICER. The Senator from Arizona.
  Mr. KYL. Mr. President, I wish to respond to some of the comments my 
colleagues made to remind everyone many of the dire predictions, 
including the ones of my good friend from Oregon, are a little beside 
the point.
  If you look at the actual wording of my amendment, it does not say 
anything about subsidies to big oil companies or anything of the like. 
Maybe I better read it again:

       Notwithstanding the provisions of this subtitle--

  And those are the tax increases on oil companies, as well as the 
other tax increases in the legislation--

     the amendments made by this subtitle shall not take effect 
     unless the Secretary of Energy certifies that such amendments 
     shall not increase gasoline retail prices and the reliance of 
     the United States on foreign sources of energy.

  That is all it says. There isn't any more. There isn't anything about 
subsidies to oil companies or anything of the like.
  What the Senator from Oregon might be saying is that the provisions 
of the bill are not going to go into effect because it is true that the 
tax increases will, in fact, raise prices for American gasoline 
consumers and will increase our dependency on foreign oil. If, as the 
chairman of the committee said, that is not true, there is no 
relationship--in fact, his exact words were: It is fallacious to argue 
that these new taxes in the bill will raise fuel costs. If that is 
true, then there would not be any effect. The argument of the Senator 
from Oregon then falls. But if it is true the taxes in this legislation 
will raise prices for oil consumers or gasoline consumers and will 
further our dependence on foreign oil, then the Senator from Oregon at 
least has a point to argue because one provision out of the three major 
tax provisions relates to the general subject that he and I have worked 
on in the past and that he was talking about, which is the royalties 
that should be paid by offshore oil companies.
  One of two things is true, but they can't both be true. It might be 
true the tax increases in this legislation are going to raise the cost 
of gasoline to American consumers and increase our dependency on 
foreign oil, and then at least one of the things the Senator from 
Oregon talked about would at least come into play.

[[Page 16617]]

  Or it could be, as the Senator from Montana said, there would not be 
any effect because this would not raise gasoline prices, in which case 
the Senator from Oregon is simply incorrect when he says that the 
effect of my amendment is to provide subsidies for oil companies. They 
can't both be true.
  What is the probability? I think the probability is that the tax 
increases in this legislation will raise prices for American consumers 
and will increase our dependency on foreign oil. And that is just not 
my guess, although it is fairly intuitive if you understand anything 
about economics. If you tax something, more generally the producer of 
that product is going to reflect the prices in what he charges to 
consumers, and the price, therefore, paid at the pump, in the case of 
gasoline, goes up.
  A recent study by the Heritage Foundation found that the tax 
provisions alone in this legislation, setting aside the other mandates 
in the Energy bill, will likely increase gas prices by 21 cents per 
gallon over the next 8 years. Taking all of the provisions together, 
the Energy bill could increase the price of regular unleaded gasoline 
from $3.14 a gallon to $6.40 a gallon by the year 2016, a 104-percent 
increase.
  For comparison, current policies will lead to gas prices climbing 
from $3.14 to $3.67 in the year 2016. And in just the next year alone, 
consumers can expect to pay between $3.16 to $3.79 due to the impact of 
this bill.
  During the next decade, between now and the year 2016, due to this 
bill alone, consumers can expect to spend an average of $1,445 more per 
year on gasoline. Again, that is not just speculation. It is obviously 
the law of supply and demand. It is the law of economics. If you are 
going to impose this tax, it is going to be passed on by the people who 
pay the tax. So American consumers can expect to pay a lot more for 
gasoline at the pump.
  I don't think anybody would argue that our dependence on foreign oil 
is going to decrease. In fact, because of one of the three provisions 
of this bill, the foreign tax credit tax increase, it is obvious our 
oil producers are going to be put at an economic disadvantage vis-a-vis 
those abroad, and it is obvious we are going to have to be more 
dependent on foreign oil, not less.
  It was interesting that the Senator from Montana started out his 
argument saying the purpose of this bill is to get more energy, 
especially from renewable fuels. It is true the purpose of a good 
energy bill should be to get more energy. The problem is, this bill 
doesn't provide any more energy. It does focus some subsidies on 
renewable fuels, and the only way we are going to get more renewable 
fuel energy, obviously, is by subsidizing those particular energy 
sources. But the bill itself provides not a drop of new oil. Yet 
somehow or another it costs $28.5 billion, and that gets to the second 
point the Senator from Montana made.
  He said this is not a tax-increase bill; this is a tax-decrease bill. 
But then he lets the cat out of the bag by saying: Of course, we must 
still pay for what we are doing. Well, indeed. We do have to pay for 
what we are doing, and what we are doing is spending $28.5 billion. So 
the bill raises taxes by $28.6 billion. That is the estimate the 
Congress must use. That is what the Finance Committee is required to 
use, $28.6 billion in new taxes. The reason: to pay for what we are 
doing, for what the bill spends.
  Granted, some of the spending in the bill is in the form of tax 
breaks, such as the last tax break we talked about. Unfortunately, my 
amendment was not adopted, so a tax break is going to be misused, and 
we are going to be paying billions of dollars because of that misuse. 
But I think there is no question that the tax increases that are 
provided for in this bill will be seen as tax increases.
  Mr. President, has my time expired?
  The PRESIDING OFFICER. Yes, it has.
  Mr. KYL. That is the end of my time. I will resume this argument 
tomorrow morning and remind my colleagues why it is that I think we 
don't want to pass the tax increases in the bill.
  Mr. WYDEN. Parliamentary inquiry.
  The PRESIDING OFFICER. The Senator from Oregon.
  Mr. WYDEN. Mr. President, I believe I have a couple of minutes, and 
then Senator Schumer has time reserved. I ask unanimous consent that 
Senator Klobuchar follow Senator Schumer.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  Mr. WYDEN. Mr. President, I will be very brief. The Senator from 
Arizona makes the point that he always does eloquently about markets, 
and I come back to the fact that President Bush has said you don't need 
subsidies when the marketplace price is over $55 a barrel. So what we 
want to do is cut back on the subsidies and begin to create the kind of 
market that I know the Senator from Arizona favors.
  I also ask unanimous consent to have printed in the Record a 
Government Accountability Office report of May 1, 2007, which makes it 
very clear that taxpayers are being ripped off for the drilling by 
major companies on public lands.
  There being no objection, the material was ordered to be printed in 
the Record, as follows:

                                          United States Government


                                        Accountability Office,

                                      Washington, DC, May 1, 2007.
     Subject: Oil and Gas Royalties: A Comparison of the Share of 
         Revenue Received from Oil and Gas Production by the 
         Federal Government and Other Resource Owners

     Hon. Jeff Bingaman,
     Chairman, Committee on Energy and Natural Resources,
     U.S. Senate.
     Hon. Nick J. Rahall II,
     Chairman, Committee on Natural Resources,
     House of Representatives.
     Hon. Stevan Pearce,
     Ranking Member, Subcommittee on Energy and Mineral Resources, 
         Committee on Natural Resources, House of Representatives.
     Hon. Mary L. Landrieu,
     U.S. Senate.
       Amid rising oil and gas prices and reports of record oil 
     industry profits, a number of governments have taken steps to 
     reevaluate and, in some cases, increase the share of oil and 
     gas revenues they receive for the rights to develop oil and 
     gas on their lands and waters. For example, the State of 
     Alaska has recently passed new oil and gas legislation that 
     will increase the state's share of revenue received from oil 
     and gas companies operating state leases. In January 2007, 
     the Department of the Interior announced an increase in the 
     royalty rate for future leases granted in the deepwater 
     region of the Gulf of Mexico. Companies engaged in 
     exploration and development of oil and gas resources do so 
     under terms of concessions, leases, or contracts granted by 
     governments or other resource owners. The terms and 
     conditions of such arrangements are established by law or 
     negotiated on a case-by-case basis. One important aspect of 
     the arrangements is the applicable payments from the 
     companies to the resource owners--in the United States, these 
     include bonuses, rentals, royalties, corporate income taxes, 
     and special fees or taxes. The precise mix and total amount 
     of these payments, referred to as the ``fiscal system'' 
     varies widely across different resource owners. The total 
     revenue, as a percentage of the value of the oil and natural 
     gas produced, received by government resource owners, such as 
     U.S. federal or state governments is commonly referred to as 
     the ``government take.'' For example, a government take of 50 
     percent means that the government receives 50 percent of the 
     cash flow produced from an oil or gas field.
       In fiscal year 2006, oil and gas companies received over 
     $77 billion from the sale of oil and gas produced from 
     federal lands and waters, and the Department of the 
     Interior's Minerals Management Service (MMS) reported that 
     these companies paid the federal government about $10 billion 
     in oil and gas royalties. Clearly, such large and financially 
     significant resources must be carefully developed and managed 
     so that our nation's rising energy needs are met while at the 
     same time the American people are ensured of receiving a fair 
     rate of return on publicly owned resources, especially in 
     light of the nation's daunting current and long-range fiscal 
     challenges.
       As requested, this report documents the information 
     provided to your staffs in March 2007 on the U.S. 
     government's take and implications associated with increasing 
     royalty rates. Specifically, this report discusses (1) the 
     United States' government take relative to that of other 
     government resource owners and (2) the potential revenue 
     implications of raising royalty rates on federal oil and gas

[[Page 16618]]

     leases going forward. To address the government take, our 
     work included reviewing results of studies done by oil 
     companies and industry consultants. We also collected and 
     analyzed various studies generated by MMS, the agency 
     responsible for collecting oil and gas royalties from federal 
     lands and waters. In addition, we reviewed results of studies 
     prepared over the last 13 years by various private and 
     government sources on government take and interviewed Alaskan 
     state and private consulting firm officials. In evaluating 
     the study results we conducted interviews with study authors 
     and an industry expert to discuss the study methodologies and 
     the appropriate interpretation of the results. Based on these 
     interviews and our review of study results, we believe the 
     general approach that these study authors took was reasonable 
     and that the study authors are credible. However, we did not 
     fully evaluate each study's methodology or the underlying 
     data used to make the government take estimates. Overall, 
     because all the studies came to similar conclusions with 
     regard to the relative government-take ranking of the U.S. 
     federal government and because such studies are used by oil 
     and gas industry companies and governments alike for the 
     purposes of evaluating the relative competitiveness of 
     specific fiscal systems, we are confident that the broad 
     conclusions of the studies are valid. To address the revenue 
     implications of raising royalty rates, we gathered 
     information from reports, studies, and government documents, 
     and drew from past GAO reports related to oil and gas 
     royalties. We also discussed the material in this report with 
     MMS officials and they made helpful suggestions about the 
     factors affecting the revenue implications of raising royalty 
     rates. Our work was done from January 2007 through March 2007 
     in accordance with generally accepted government auditing 
     standards.


                               In Summary

       Based on results of a number of studies, the U.S. federal 
     government receives one of the lowest government takes in the 
     world. Collectively, the results of five studies presented in 
     2006 by various private sector entities show that the United 
     States receives a lower government take from the production 
     of oil in the Gulf of Mexico than do states--such as 
     Colorado, Wyoming, Texas, Oklahoma, California, and 
     Louisiana--and many foreign governments. Other government-
     take studies issued in 2006 and prior years similarly show 
     that the United States has consistently ranked low in 
     government take compared to other governments. For example, a 
     study completed in 2006 for MMS showed that the U.S. federal 
     government take in the Gulf of Mexico deepwater and shallow 
     water was lower than 29 and 26, respectively, of the 31 
     fiscal systems analyzed. In deciding where and when to invest 
     oil and gas development dollars, companies consider the 
     government take as well as other factors, including the size 
     an availability of the oil and gas resources in the ground; 
     the costs of finding and developing these resources, 
     including labor costs and the costs of compliance with 
     environmental regulations; and the stability of the fiscal 
     system and the country in general. All else held equal, more 
     investment dollars will flow to regions in which the 
     government take is relatively low, where there are large oil 
     and gas deposits that can be developed at relatively low 
     cost, and where the fiscal system and government are deemed 
     to be relatively more stable. Regarding the deepwater areas 
     of the U.S. Gulf of Mexico, the current size of the 
     government take, the relatively large estimated amounts of 
     oil and gas in the ground, and the proximity to the large 
     U.S. market for oil and gas make this region a favorable 
     place to invest. However, the high costs of operating in 
     deepwater may deter some investment.
       Increasing royalty rates on future federal oil and gas 
     leases would likely increase the federal government take but 
     by less than the percentage increase in the royalty rate 
     because higher royalty rates would likely reduce some taxes 
     and other fees and may also discourage some development and 
     production. For example, the recently announced increase in 
     royalty rates from 12.5 percent to 16.67 percent on future 
     leases sold in the deepwater regions of the Gulf of Mexico 
     will, according to MMS, increase overall federal revenues but 
     will also cause reductions in some fees and in oil and gas 
     production. Specifically, MMS estimates that the new royalty 
     rate of 16.67 percent will increase revenue by $4.5 billion 
     over 20 years. MMS also estimates that, by 2017, this 
     increased revenue will be partially offset by revenue losses 
     of $820 million over 20 years as a result of reduced rental 
     fees as well as a decline in production of 5 percent. A lower 
     royalty rate can encourage oil companies to pursue oil 
     exploration and production and thereby provide an economic 
     stimulus to oil producing regions. For example, according to 
     a MMS study issued in 2006, as the industry expands output in 
     the Gulf of Mexico, employment levels in all Gulf Coast 
     states-including Alabama, Louisiana, Mississippi, and Texas-
     tend to rise to meet industry needs. As part of an energy 
     strategy to meet the nation's energy needs and balance the 
     impacts of energy use on the environment and climate, a 
     healthy domestic oil and natural gas industry is essential, 
     and that means that the United States must continue to create 
     a market that is competitive in attracting investment in oil 
     and natural gas development. Such development, however, 
     should not mean that the American people forgo a competitive 
     and fair rate of return for the extraction and sale of these 
     natural resources, especially in light of the current and 
     long-range fiscal challenges facing our nation. The potential 
     trade-offs between higher revenue collections and higher oil 
     production highlight the broader challenge of striking a 
     balance between meeting the nation's increasing energy needs 
     and ensuring a fair rate of return for the American people 
     from oil production on federally leased lands and waters.


                               background

       The Department of the Interior, created by the Congress in 
     1849, oversees and manages the nation's publicly owned 
     natural resources, including parks, wildlife habitat, and 
     crude oil and natural gas resources on over 500 million acres 
     onshore and in the waters of the Outer Continental Shelf. In 
     this capacity, the Department of the Interior is authorized 
     to lease federal oil and gas resources and to collect the 
     royalties associated with their production. The Department of 
     the Interior's Bureau of Land Management is responsible for 
     leasing federal oil and natural gas resources on land, 
     whereas, offshore, MMS has the leasing authority. To lease 
     lands or waters for oil and gas exploration, companies 
     generally must first pay the federal government a sum of 
     money that is determined through a competitive auction. This 
     money is called a bonus bid. After the lease is awarded and 
     production begins, the companies must also pay royalties to 
     MMS based on a percentage of the cash value of the oil and 
     gas produced and sold. Royalty rates for onshore leases are 
     generally 12 and a half percent whereas offshore, they range 
     from 12 and a half percent for water depths of 400 meters or 
     deeper (referred to as deepwater) to 16 and two-thirds 
     percent for water depths less than 400 meters (referred to as 
     shallow). However, the Secretary of the Interior recently 
     announced plans to raise the royalty rate to 16 and two-
     thirds percent for most future leases issued in waters 400 
     meters or deeper. MMS also has the option of taking a 
     percentage of the actual oil and natural gas produced, 
     referred to as ``taking royalties in kind,'' and selling this 
     energy itself or using it for other purposes, such as filling 
     the nation's Strategic Petroleum Reserve. In addition to 
     bonus bids and royalties, companies pay taxes on corporate 
     profits. The sum of all these and other payments comprises 
     the government take. Because different governments set 
     different levels of taxes, fees, and royalties, the relative 
     size of any one component of government take generally varies 
     across different fiscal systems.


 study results indicate that the federal government receives among the 
                  lowest government takes in the world

       Results of five studies presented in reports or testimony 
     to the Alaskan state legislature in 2006 indicate that the 
     federal government receives one of the lowest government 
     takes among the jurisdictions evaluated. The hearing was held 
     to discuss a proposed new state tax on oil company profits. 
     This proposal eventually was adopted and, in 2006, the State 
     of Alaska enacted a new oil and gas production tax law which 
     imposed a 22.5 percent tax on oil company profits. Two of the 
     studies presented were from major oil companies, and three 
     were from private consulting firms. The five studies had 
     differing scopes and somewhat different estimates of 
     government take. For example, one study focused primarily on 
     comparing U.S. federal, state, and Canadian fiscal systems, 
     while other studies focused on international comparisons. The 
     results of the five studies are summarized below and in more 
     detail in enclosure I.
       BP (formerly British Petroleum), one of the world's largest 
     oil companies. testified that the federal government's take 
     for leases in the Gulf of Mexico (45 percent) was lower than 
     9 out of 10 other fiscal systems presented, including 
     Colorado, Wyoming, Texas, Oklahoma, California, and Louisiana 
     (between 51 percent and 57 percent).
       ConocoPhillips, Alaska's number-one oil producer in 2005, 
     testified that the federal government's take for leases in 
     the Gulf of Mexico (43 percent) was lower than all 8 other 
     fiscal systems presented, including the United Kingdom (52 
     percent) and Norway (76 percent).
       CRA International (formerly Charles River Associates), a 
     global firm specializing in business consultancy and 
     economics, testified that the federal government's take in 
     the Gulf of Mexico--both deepwater (42 percent) and shallow 
     water (50 percent)--was lower than the 6 other fiscal systems 
     it evaluated, including Australia (61 percent).
       Daniel Johnston and Company, an independent petroleum 
     advisory firm providing services to the oil and gas industry, 
     testified that the federal government's take in the Gulf of 
     Mexico for deepwater (between 37 and 41 percent) was 4th 
     lowest and for shallow water (between 48 and 51 percent) was 
     8th lowest among 50 fiscal systems it evaluated.
       Van Meurs Corporation--a company which provides 
     international consulting services in several areas including 
     petroleum legislation, contracts, and negotiations--reported 
     that the federal government's take in the Gulf of Mexico (40 
     percent) was the lowest

[[Page 16619]]

     among 10 fiscal systems it evaluated, including Alaska (53 
     percent) and Angola (64 percent).
       It should be recognized that the studies presented in this 
     testimony were done before the recent increase in the royalty 
     rate for future deepwater leases in the Gulf of Mexico. This 
     action will, as new leases are added to the mix over time, 
     cause the average government take in the Gulf of Mexico to 
     rise somewhat. In addition, 4 of the 5 studies compared 
     government take based on 11 fiscal systems or fewer. A 
     comparison of a much larger number of fiscal systems provides 
     more comprehensive information. In this regard, we found that 
     other expanded government-take studies have been issued. 
     These are summarized below and more details are presented in 
     enclosure II.
       A study issued in 2006 and done under contract with MMS by 
     the Coastal Marine Institute of the Louisiana State 
     University reported on 31 fiscal systems in 25 countries. The 
     study showed, out of the 31 fiscal systems, Gulf of Mexico 
     deepwater, at between 38 and 42 percent, was lower than 29 
     other systems and Gulf of Mexico shallow water, at between 48 
     percent and 51 percent, was lower than 26 systems. Three 
     other offshore fiscal systems were also shown. This included 
     Trinidad & Tobago offshore with a government take between 48 
     percent and 50 percent, Australia offshore with a government 
     take of between 53 percent and 56 percent, and Egypt offshore 
     with a government take of between 79 percent and 82 percent. 
     Of the 31 fiscal systems presented, Mexico had the lowest 
     government take at between 30 percent and 32 percent, and, at 
     the other end of the spectrum, Venezuela had the highest 
     government take at between 88 percent and 93 percent.
       A second study, issued in 2002 by Wood MacKenzie, a private 
     consulting firm, analyzed 61 fiscal systems within 50 
     countries. The study showed that, out of 61 fiscal systems, 
     Gulf of Mexico deepwater ranked lower than 54 other systems 
     with a federal government take of about 42 percent, while 
     Alaska's government take was about 64 percent. Of the 61 
     fiscal systems analyzed, Cameroon had the lowest government 
     take at about 11 percent, and at the other end of the 
     spectrum, Iran had the highest government take at about 93 
     percent.
       A third study, issued by Van Meurs Corporation in 1997, 
     analyzed 324 fiscal systems in 159 countries. The study 
     showed that, out of 324 fiscal systems, Gulf of Mexico water 
     greater than 800 meters ranked lower than 298 other systems 
     with a federal government take of about 41 percent and Gulf 
     of Mexico water between 200 and 400 meters ranked lower than 
     276 systems with a federal government take of about 47 
     percent. The study also indicated that governments tend to 
     compete regionally and that the regional average government 
     take for countries within North America was about 57 percent.
       Finally, one of the first expanded, or comprehensive, 
     studies was completed by Van Meurs Corporation in 1994 for 
     the World Bank. That study showed that the government take 
     from federal onshore lands, Gulf of Mexico deepwater, and 
     Gulf of Mexico shallow, ranked lower than 194, 191, and 180 
     out of 226 fiscal systems in 144 countries, territories, and 
     joint development zones analyzed.
       The last few years of high oil and gas prices and record 
     industry profits have been a factor in causing a number of 
     resource owners to reevaluate their fiscal systems. For 
     example, and as already discussed, the State of Alaska 
     enacted in 2006, a new oil and gas production tax law which, 
     among other things, imposed a 22.5 percent tax on oil company 
     profits. In addition, at least five states--including New 
     Jersey, New York, Pennsylvania, Washington, and Wisconsin--
     and Alberta Province in Canada are considering new oil and 
     gas tax legislative proposals.
       The level of government take can influence investment in 
     oil and gas development and production. Resource owners are 
     competing to some extent for finite private investment in oil 
     and gas development, and in considering the ideal government 
     take, the resource owners must consider that there may be a 
     trade-off between the magnitude of government take and the 
     level of investment. From the oil and gas industry's 
     perspective, government take represents one of the costs of 
     doing business. As with any industry, if the costs in one 
     geographic area increase, industry may pursue locations 
     elsewhere.
       In addition to the overall government take, the mix of 
     taxes, fees, and royalty rates that comprise the government 
     take may also be important in determining the level of 
     investment. For example, in commenting on Alaska's then-
     proposed revisions to its oil and gas tax law, a BP official 
     testified that a fiscal system should be equitable to 
     investors and the government alike and should be profit-
     related, that is, with a tax levied on profits not revenues. 
     Similarly a ConocoPhillips official testified that a balanced 
     fiscal system is critical for future oil and gas investment 
     in Alaska and that Alaska must maintain its fiscal system 
     competitiveness on a global basis.
       Further, the size of oil and gas reserves, the costs of 
     exploration and development, and the stability of the 
     government and regulatory environment play a role in 
     companies' investment decisions. In many regards, the United 
     States is a desirable place to invest in oil and gas 
     development and production. For example, of non-OPEC 
     countries, the United States held almost 10 percent of oil 
     reserves as of 2006. In addition, including the existence of 
     a nearby market for all that is produced, the United States 
     is generally considered a stable place to invest, especially 
     when compared to many countries, such as Venezuela and 
     Nigeria, that have large oil and gas reserves. For example, 
     in Venezuela, it was reported last year that the government 
     had taken a series of steps to increase the government take 
     as well as take greater control over oil operations in that 
     country, and in Nigeria, it was recently reported that there 
     have been repeated instances of oil company employees being 
     kidnapped or attacked. However, much of the estimated oil 
     reserves in the United States, such as those in the deepwater 
     areas of the Gulf of Mexico, and the smaller pockets of oil 
     remaining in mature oil fields will be more costly to develop 
     than oil in some other regions, and these higher costs are a 
     deterrent for investment. In addition, to the extent that 
     environmental regulations in the United States are stricter 
     than in some other oil producing countries, this could 
     increase compliance costs and necessitate to some extent a 
     lower government take in the United States. Further, to the 
     extent that labor costs are a factor in determining the 
     profitability of oil development projects, the United States 
     may have higher labor costs than some other oil producing 
     countries, and this would also necessitate, to some extent, a 
     lower government take.


  increasing royalty rates on future federal oil and gas leases would 
              likely increase the federal government take

       Increasing royalty rates on future federal oil and gas 
     leases would likely increase the federal government take but 
     by less than the percentage increase in the royalty rate 
     itself because higher royalty rates will likely reduce some 
     taxes and other fees and may also discourage some development 
     and production compared to what it would be under lower 
     government take conditions. For example, because the federal 
     government assesses taxes on corporate profits, an increase 
     in royalty rates would raise oil and gas company costs, 
     thereby reducing their profits and, consequently, the 
     corporate income taxes they pay. In addition, an increase in 
     royalty rates may reduce the amount, in fees or bonuses, oil 
     and gas companies are willing to pay for the rights to 
     develop individual leases. Because such fees or bonuses are 
     determined competitively, this may lead to lower government 
     revenue. Finally, higher royalty rates may deter some 
     development or production of oil and gas if companies can 
     find more profitable investment opportunities elsewhere and 
     for which other factors, such as stability and the amount of 
     oil and gas reserves are comparable.
       MMS' analysis that accompanied a recently announced 
     increase in the royalty rate for new federal deepwater 
     offshore Gulf of Mexico leases illustrates how the increase 
     in royalty rates can be offset somewhat by reduced fees and 
     production. MMS estimates that the increased royalty rate of 
     16.67 percent--from 12.5 percent--will increase revenue from 
     royalty payments by $4.5 billion over 20 years. However, MMS 
     also recognized that this royalty rate increase will likely 
     cause declines in bonus and rental revenues as well as reduce 
     oil and gas production compared to what it would have been 
     under the lower royalty rate. Specifically, MMS estimated a 
     decline of bonus and rental revenues amounting to $820 
     million over 20 years and a decline in production of 5 
     percent, or 110 million barrels of oil equivalent, over 20 
     years compared to what production would have been at the 
     lower rate. Nonetheless, MMS estimates that by 2017, the net 
     increase in total revenue will still be substantial.
       In addition to revenue considerations, there are a number 
     of other considerations that could be considered when 
     establishing a royalty rate or the overall government take. 
     These include environmental issues and socioeconomic effects. 
     Royalties or other fees or taxes may reduce the amount of 
     investment in oil and gas development and production and, 
     therefore, to the extent that higher royalty rates reduce oil 
     and gas development and production in the United States, 
     could be used as a policy tool to reduce the domestic 
     environmental impacts of oil and gas development. Regarding 
     socioeconomic effects of oil and gas development and 
     production, a 2006 study done under contract for MMS noted 
     that as the oil and gas industry expands output in the Gulf 
     of Mexico, employment levels in all Gulf Coast states--
     including Alabama, Louisiana, Mississippi, and Texas--tend to 
     rise to meet industry needs.
       As agreed with your offices, unless you publicly announce 
     the contents of this report earlier, we plan no further 
     distribution until 30 days from the date of this report. At 
     that time, we will send copies to appropriate congressional 
     committees, the Secretary of the Interior, the Director of 
     MMS, the Director of the Office of Management and Budget, and 
     other interested parties. We will also make copies available 
     to others upon request. In

[[Page 16620]]

     addition, the report will be available at no charge on GAO's 
     Web site at http://www.gao.gov.
       If you or your staff have any questions or comments about 
     this report, please contact me. Contact points for our 
     Offices of Congressional Relations and Public Affairs may be 
     found on the last page of this report. GAO staff who made 
     contributions to this report include Frank Rusco, Assistant 
     Director; Robert Baney; Dan Novillo; Dawn Shorey; Barbara 
     Timmerman; and Maria Vargas.

                                             Mark E. Gaffigan,

                                Acting Director, Natural Resources
                                                  and Environment.

  Mr. WYDEN. Mr. President, this General Accounting Office report makes 
it very clear that relative to all the other countries in the world, 
our taxpayers are not getting a fair shake. So this is ultimately about 
cutting back on subsidies the President says are not needed in order to 
create markets and to prevent the taxpayers of this country from being 
fleeced.
  I thank my colleague. I know Senator Schumer has been patient.
  Mr. KYL. Mr. President, I ask unanimous consent that Senator 
McConnell be added as a cosponsor to my amendment.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  Mr. SCHUMER. Parliamentary inquiry, Mr. President: Do I have 5 
minutes?
  The PRESIDING OFFICER. The Senator has 6 minutes.
  Mr. SCHUMER. It is my lucky day, Mr. President.
  I rise to speak against the amendment offered by my good friend from 
Arizona which will restore many of the tax breaks for big oil we voted 
to eliminate in the Finance Committee just yesterday.
  After a wave of mergers in the industry over the past two decades, we 
now have an elite group of five very large integrated oil companies 
dominating our domestic petroleum market. These companies are price 
leadership. They all seem to set the same price. They don't get in a 
room and do it. One leads and the others follow. They wink at each 
other. It shouldn't be legal, but it is.
  They have the power to block alternative fuels, such as E85, at their 
branded stations and, as we all know, they have the political power to 
secure billions of dollars in tax breaks they don't need and we can 
ill-afford.
  It is time to get serious about our energy policy and stop giving 
away taxpayers' dollars that just end up in the pockets of big oil 
rather than going to renewable energy alternatives or curbing the cost 
of gasoline at the pump.
  On the surface, it seems that big oil is pumping cash rather than 
pumping petrol. They don't try to find much new oil, and ExxonMobile 
alone bought back $29 billion of its stock in the last year. The bottom 
line is, if they have all this extra money to buy back their stock, why 
are we giving them tax breaks?
  When the head of ExxonMobile, one of the big oil companies, came to 
us in the Judiciary Committee, he said he didn't believe in alternative 
fuels. I wouldn't either if I were the head of one of the five big oil 
companies that had an oligopolistic stranglehold on the market. I 
wouldn't want an alternative. So they are not going to do what most 
other businesses, where there was a semblance of competition, would do: 
find a new product because they know their old product is getting 
expensive and may run out someday.
  So that is our job. We are taking back these taxes. We are not just 
putting them into the Treasury. It is not taxing for taxing sake. We 
are putting them into tax breaks for alternative fuels. Since the oil 
companies would not look at alternatives, we are going to take the 
money that we have given them in taxes, and never should have, and give 
it to other companies that will invest in alternative fuels.
  This is a mature industry by any standard and no longer does it need 
tax breaks. I have actually introduced a bill to repeal every special 
tax break received by the major oil and gas companies.
  The policy of giving them breaks has failed. Despite ever-increasing 
petroleum products and general Federal tax giveaways, the oil companies 
don't believe they need to compete. The oil companies believe they 
don't need to compete to create new domestic gasoline supply. We 
haven't had a new refinery built in 30 years. When they have merged, 
they have closed refineries. So it hasn't worked.
  While ExxonMobile doled out $29 billion, or 60 percent of its 
cashflow, on stock buyback alone, their overall production has barely 
budged since the 1999 merger. Exxon never should have been allowed to 
merge with Mobile. On the Joint Economic Committee, we are looking it 
over, seeing if we can look into undoing some of those unfortunate 
mergers, which occurred, by the way, under both Democratic and 
Republican Presidents. But at the same time, we have to get moving on 
alternative fuels.
  The Finance Committee chairman and ranking member--bipartisan--were 
right to scale back the tax breaks that go to this very profitable 
industry and instead target them to renewable energy in a way that 
ensures technology will succeed.
  The finance amendment extends tax breaks for alternative fuels by 
several additional years. When we were at our issues conference in New 
York City, DPC, Democratic Policy Committee, we heard a brilliant 
presentation by an investment banker from Goldman Sachs who said we are 
great at developing new technologies, but we are not very good at 
commercializing them, implementing them. That is because the tax breaks 
we give go for a year, 2 years, and no business wants to invest when 
they are not sure these breaks will continue.
  The proposal in the bill, which I was proud to cosponsor, says the 
tax breaks will be extended for 5 years and longer so that companies 
will know they do keep those tax breaks and have an incentive to 
invest. So it makes eminent sense. Take the money away from taxes for 
the oil companies which refuse to engage in finding alternatives and 
give them to new companies that will. It is a policy that makes sense 
for the good of the consumer because, in the long run, it will lower 
prices; for the good of our foreign policy because it will decrease our 
dependence on dictators and potentates we don't like, such as the heads 
of Iran and Venezuela; and it is good for our climate because as we 
move to alternative fuels, less CO2 will be put in the 
atmosphere.
  For the first time in 6 years, this Congress is willing to stand up 
to the oil companies. I know many on the other side of the aisle 
aren't. The previous energy bills reflect what the Bush administration 
believes: What is good for the oil companies is good for our energy 
policy is good for America. They are wrong, as the price at the pump, 
as the increase of CO2 in our air reveals, and as our 
increasing imports of oil show. We are changing that policy.
  I know others on the other side of the aisle are blocking us because 
of obeisance to big oil, but we will succeed because the American 
people are behind us, and our country needs no less.
  Mr. OBAMA. Mr. President, I was unable to be present during the vote 
on the Gregg amendment due to a previously scheduled conflict. But had 
I been present, I would have voted against waiving the Budget Act in 
relation to the Gregg amendment to eliminate the 54-cents-per-gallon 
tariff on imported ethanol.
  This amendment to lift the tariff against Brazilian ethanol would 
merely replace our dependence on foreign oil with a new dependence on 
foreign ethanol. If we are serious about addressing national and 
economic security, we need to develop a robust renewable fuels industry 
in this country. This amendment would frustrate that goal.
  Mr. KERRY. Mr. President, I would like to speak to the two amendments 
proposed yesterday, which invest in coal particularly as a 
transportation fuel and which threaten to increase the dangers of 
climate change rather than lessening them. These two amendments offer 
the Senate false choice: either to reduce our dependence on foreign oil 
or to worsen the rise of global climate change. But the truth is, we 
don't have to choose between our security at home and the security of 
our planet.
  Energy policy today is more critical than ever because it touches on 
not one

[[Page 16621]]

but two of our most vital national interests: namely, energy security 
and climate change. We cannot afford to sacrifice our fight against 
climate change at the altar of energy independence. Promoting the 
conversion of domestic coal to liquefied fuel will dramatically 
increase CO2 emissions and that is no better than robbing 
Peter to pay Paul.
  The truth is, we can break the stranglehold of foreign oil, we can 
create new jobs in energy, and we can strengthen our hand addressing 
global climate change and we shouldn't settle for approaches that don't 
help us achieve all three of these national imperatives.
  Here's what scientists are telling us: On nearly a weekly basis, we 
see mounting scientific evidence highlighting the need to act. The most 
recent report from the Intergovernmental Panel on Climate Change 
written by more than 600 scientists, reviewed by another 600 experts, 
and edited by officials from 154 governments has confirmed the threat 
and the need for urgent action.
  Because it will set back the fight against climate change, coal to 
liquids offers us--at best--a Pyrrhic victory in our struggle to create 
a sensible, sustainable energy policy. Study after study has shown that 
liquid fuels derived from coal produce significantly higher 
CO2 emissions than traditional fuels. Transforming coal into 
liquid fuel involves heating it to 1,000 degrees and mixing it with 
water to create a gas, which is then converted into fuel usable in cars 
and jets. If that sounds like an energy-intensive process, it is. And 
energy-intensive processes generate a lot of CO2 emissions. 
Every gallon of liquid fuels derived from coal produces up to 2.5 times 
more well-to-wheels global warming emissions than gasoline or diesel 
fuel from crude oil. That means that even with 85 percent capture of 
CO2 during production, well-to-wheels Coal to Liquid 
emissions are 19-25 percent higher than conventional gasoline or 
diesel.
  I understand that all coal-to-liquids amendments are not created 
equal my Democratic coal State colleagues have attempted to build 
environmental safeguards into their amendments. And I thank them for 
that. The Bunning amendment, by contrast, is full of loopholes and 
hollow environmental mandates that crumble under scrutiny, leaving only 
big subsidies for big coal. But ultimately neither should pass. This is 
a question of priorities, and with limited Federal dollars available, 
we need to support those technologies that promise the greatest oil 
savings and the greatest emissions reductions.
  We should be turning to increased fuel economy standards, increased 
energy efficiency standards for commercial and residential buildings, 
strong renewable electricity standards, and incentives for biofuels and 
advanced vehicles.
  Let me repeat--this is a question of priorities.
  I would like to briefly address several of the arguments that are 
being made by coal-to-liquids industry supporters. These arguments are 
intended to confuse what is a very complicated process. I will do my 
best to unmask their arguments and make the reality as clear as 
possible.
  First, many proponents cite the emissions reductions associated with 
coprocessing coal and biomass at coal-to-liquids production facilities. 
However, these benefits simply come from using a promising new clean 
technology to mask the flaws of coal. These coprocessing facilities, 
when equipped with carbon capture, may indeed result in lower emissions 
than traditional fuels, but this has nothing to do with the coal and 
everything to do with the biomass. We should be having a serious 
conversation about biomass and how it can be best integrated into our 
energy supply, which is a matter of some large debate, rather than 
blindly buying into the coal industry's assumption that coprocessing 
biomass and coal is the most direct road to a clean energy future.
  Second, proponents focus on tailpipe emissions and argue that diesel 
fuel produced from coal-to-liquids has fewer emissions than traditional 
gasoline.
  Again, we need to make sure we are comparing apples to apples. The 
tremendous increase in well-to-wheels CO2 emissions comes 
during the production process, not at the point of tailpipe emissions. 
In fact, tailpipe emissions from diesel generated from crude oil and 
diesel generated from coal are roughly the same. Same story with 
gasoline generated from crude oil and gasoline generated from coal. 
Comparing diesel to gasoline is just a distraction diesel engines are 
more efficient than gasoline engines and therefore emit less 
CO2, regardless of whether you are talking about traditional 
fuels or coal-to-liquids
  Third, proponents talk about the environmental benefits associated 
with coal-to-liquids. This is frankly laughable.
  I have spoken about the doubling of emissions associated with the 
coal-to-liquids production process. But if we are talking about the 
environmental impacts of coal mining, we have to look even beyond the 
emissions and consider the severe impacts to water quality. In 
Appalachia alone, mountaintop removal has destroyed more than 2,500 
mountain peaks and leveled more than 1 million acres. This waste is 
dumped into river valleys and contaminates over 1,200 rivers and 
streams throughout the region. That waste, combined with acidic mine 
runoff, destroys habitat for fish and wildlife everywhere that coal is 
mined today. Before we jump-start a new industry in this country and 
ramp up coal production, we need to have a serious conversation about 
these and other impacts.
  There are too many unknowns associated with coal-to-liquids 
technology, but here is what we do know: well-to-wheel emissions are 
two and a half times those of traditional fuels, and even when carbon 
capture is applied which has not yet been demonstrated on a commercial 
scale emissions are 19-25 percent greater than traditional fuels.
  The cost of these plants is exorbitant MIT estimates that the cost of 
constructing a coal-to-liquids plant is four times that of a 
traditional refinery. The same study estimated that it would cost $70 
billion to build enough plants to replace 10 percent of American 
gasoline consumption.
  Finally, I would like to close by saying a few words on another issue 
that will be coming to a vote later this afternoon. Senators Cardin and 
Mikulski have introduced an amendment addressing the siting of 
liquefied natural gas terminals. This is an important amendment, and I 
am proud to support and cosponsor it. This is a contentious issue in 
Fall River, MA, where powerful interests are fighting to construct a 
LNG terminal far too close to a major population center. This proposal 
is strongly opposed by Governor Patrick and numerous State and Federal 
representatives. I strongly support Senators Cardin and Mikulski's 
amendment, which would require state approval of LNG siting decisions. 
While LNG is an important part of our clean energy mix, it is essential 
that these facilities be sited in safe and appropriate locations. This 
amendment guarantees the state its appropriate and necessary role in 
approving these decisions. I urge my colleagues to support it.
  Mr. KENNEDY. Mr. President, I strongly support the important 
legislation under consideration. Like many of the bills the Senate has 
taken up this year, it is the product of Democrats and Republicans 
working together, and I commend its authors for their hard work.
  The bill before us does the things the Nation must do to become more 
energy self-reliant, starting with raising fuel economy standards for 
cars and trucks. Over 30 years ago I cosponsored Scoop Jackson's 
legislation which first established fuel economy standards to improve 
the fuel efficiency of automobiles. Unfortunately, very little progress 
has been made since then.
  There is no silver bullet for ending our dependence on foreign oil or 
slowing the rate of greenhouse gas emissions, but raising CAFE 
standards is the single most important step we can take to make 
positive changes in this area. Increasing the average efficiency

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of passenger cars by just over 5 miles per gallon would eliminate the 
need for American oil imports from the Persian Gulf. The CAFE provision 
the Commerce Committee reported will increase fuel economy in cars from 
27.5 miles a gallon to 35 miles per gallon by 2020. It is the best 
chance this Congress will have to raise fuel economy standards, and I 
hope that the Senate will preserve the Commerce Committee's strong 
provisions.
  The bill will make more cars capable of running on biofuels. Ethanol, 
in particular, has incredible promise as a biofuel, and it will emit 
far less carbon dioxide than conventional oil. The bill will ramp up 
production of biofuels over the next 15 years and mandate that a 
growing number of new vehicles be able to run on these kinds of fuels. 
It also provides funding to ensure that these new biofuels can reach 
fuel stations across the country. This provision is particularly 
important to New England, which has just one E85 pump located in 
Chelsea, MA. Brazil has shown us the way by producing ethanol from 
sugarcane in amounts equivalent to 300,000 barrels of oil each day. The 
United States must invest in biofuels, so that we too can reduce our 
dependence on foreign oil.
  The bill also reauthorizes the Weatherization Assistance Program, 
which is especially important for low-income families struggling with 
high energy costs throughout the Nation. In Massachusetts, energy costs 
are among the highest in the Nation, but this program has weatherized 
more than 10,000 homes in the last decade. Vulnerable families can't 
afford to make these expensive improvements themselves, so these wise 
investments by the government will help families save on energy and 
reduce the Nation's fossil fuel emissions.
  Another critical issue is the inclusion of a strong renewable 
electricity standard. The RES will provide the certainty the renewable 
energy market needs to invest in innovative technologies. In April, 
Senators Durbin, Snowe, and Reid led a bipartisan letter expressing 
support for mandating that major utilities generate a percentage of 
their electricity from renewable sources. I was one of the 50 Senators 
who signed the letter, and I commend Chairman Bingaman for his work on 
a renewable electricity standard.
  I also commend the Finance Committee for its work to provide tax 
incentives for renewable energy technology, and repealing tax breaks 
for oil and gas companies. While most Americans are seeing less and 
less in their paychecks, the Big Oil companies are making money hand 
over fist. During the first quarter of this year, Big Oil reaped $29.5 
billion in profits. Repealing these tax breaks will save taxpayers 
billions of dollars in subsidies to Big Oil and allow the Nation to 
invest in clean energy technologies.
  Last week, I joined Senator Salazar, Senator Smith and several other 
Senators in urging the Finance Committee to extend tax incentives for 
fuel cell technology. Hydrogen fuel cells are an energy storage 
technology, like batteries, that can deliver clean and reliable power. 
They have a broad range of uses for vehicles, auxiliary power units, 
and electronic devices, and they are helping us diversify our fuel 
supply and find better ways to deliver clean energy. Massachusetts is 
among the world's major centers of this technology, with more than 60 
companies involved in fuel cell and hydrogen technologies. I commend 
Chairman Baucus and the Finance Committee for allowing tax credits for 
this important technology.
  Overall, this bill brings us closer to a cleaner and more secure 
energy future for our nation, and I look forward to its enactment.
  Mr. President, I yield back the remaining time.
  Ms. KLOBUCHAR. Mr. President, I ask to speak as in morning business.
  The PRESIDING OFFICER. Without objection, it is so ordered.

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