Making Emergency Supplemental Appropriations for the Fiscal Year Ending September 30, 2006 Part II
MAKING EMERGENCY SUPPLEMENTAL APPROPRIATIONS FOR THE FISCAL YEAR ENDING SEPTEMBER 30, 2006 -- Part II
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The PRESIDING OFFICER. The Senator from Oregon.
Mr. WYDEN. Mr. President, reclaiming my time, just so we can make sure all the dots are connected, I ask unanimous consent that my amendment be voted on during the next group of amendments.
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Mr. WYDEN. Mr. President, I intend to withdraw my unanimous consent request at this time, and my staff is happy to work with Senator Stevens, as we have done on so many issues, to see if we can work something out that is acceptable.
The PRESIDING OFFICER. The unanimous consent request is withdrawn.
Mr. WYDEN. Mr. President, having said that, I want to state once again that I am anxious to work with all of the Senators who are on the floor, and I am sure there are others hovering about the Chamber, to get on with the business of the Senate. All I want to be able to do is what I think is pretty customary in the Senate, and that is to get a vote at some point--at the time when we have the next set of amendments. But clearly, there are those here who don't want to allow that. So I think I will just have to persist.
One additional area I want to focus on, I say to my colleagues, is that I and others, particularly a bipartisan group on the Energy Committee, have been trying to get an explanation from the Interior Department for months and months about what is going on with this program. What we would like to do is see if we could get some accountability.
A number of Senators wrote back in January to express our concerns. We never got an answer. And what I would like to do is highlight a few points of the Senators' concerns because I think, once again, they go to this point about whether there is going to be some accountability in a multibillion-dollar program that has been costly to our taxpayers.
The Senators said, in a January 24, 2006, letter:
There is a series of steps the Interior Department can take to remedy the flaws with this program. For example--
The letter notes-- you could reinstate the full audits of the royalty relief program that have been scaled back during the Bush administration.
Now, as to auditing this program, auditing a multibillion-dollar program that you can't justify at a time of $70-a-barrel oil costs, you would think that having these audits would be pretty much a no-brainer. You would say that the Interior Department, particularly after they have been criticized by their Inspector General on this particular point, would be willing to step up the audits. They would be willing to take some steps, some concrete steps, to make sure that so many taxpayer dollars weren't being wasted. Unfortunately, that has not taken place. We haven't seen the audits that even the Inspector General has called for in the program.
Another step that has been noted by the Senators would require enforcement of existing rules for this program, such as those requiring companies to start paying royalties when market prices reach a threshold level. Again, we have seen no response--no response--to practical, concrete suggestions that Senators have made to make sure we get some accountability into this particular program.
I also note that Senators have indicated they would be supportive of legislation that would require greater accountability for this program so that, in effect, it would be possible for people to see how it actually works in broad daylight. That, too, is probably too logical, and I would only say that given the fact that this program was sweetened--and expensively so--behind, essentially, closed doors last year, it seems to me that at a minimum we ought to have greater openness for this program, additional funding for auditors, and that, too, has not been forthcoming.
So concrete suggestions made by Senators to better watchdog this program and to protect the billions and billions of taxpayer dollars that are needed are highlighted by our challenge right here, which is: As we debate an emergency spending bill, a bill that is an emergency because the Government really doesn't have the money to pay for it, we are still seeing billions of dollars go out the door needlessly.
In addition, the letter from the Senators states:
We are troubled by the suggestion that companies involved in the program have made differing representations of the costs to the Securities and Exchange Commission and the Department of Interior.
These are both Federal agencies. In order for the Congress to carry out its own oversight responsibilities and probe the magnitude of these discrepancies, what the Senators asked is for information with respect to oil and gas prices over the last few years. Once again, it looks to me like a very reasonable kind of request, and I want to highlight again that when you have an out-of-control program, when you have Senators making practical suggestions like having better audits, like having better enforcement of existing laws, saying we ought to follow up on discrepancies in the information that is furnished to the Government, that strikes me as a no-brainer. Every Member of the Senate should say: Of course, we want to watchdog the way these monies are being spent.
I would like to read a little bit about these disparities in the costs of the program. Johnnie M. Burton, Director of the Interior Department's Minerals Management Service--I am just going to read from a report, a news report on it--said the disparities, the differences in the information that was furnished by the industry ``were mostly the result of deductions that the regulations let companies take, reducing the sales price they report to the government.''
Now let's just think about that. The companies take these deductions; that reduces the sales price that is reported to the government; and still the Department of Interior won't step in and say: We are going to try to straighten out these discrepancies in the information about this program.
To read further, the Director of this program said that she, ``had not known and could not explain why companies were reporting higher sales prices to their shareholders and to the Securities and Exchange Commission than to her office.''
Once again, that is an extraordinary statement, a statement that comes from the Director of the Minerals Management Program. And she wraps it up, when she is asked by the news media to respond--and I will quote here from the news reports:
I can't answer because I don't know. We don't look at SEC filings. We don't have enough staff to do all of that. If we were to do that, then we would have to have more staff and more budget. You know, there is such a thing as budget constraint, and it has been real tough, let me tell you.
So what we have is the Government not even getting the straight story about the program. You have Senators saying that different representations of costs by the companies are being given to the SEC and the Department of Interior, and yet the person who runs the program says: I don't know, can't do it. Can't get to the bottom of how a multibillion-dollar program operates.
Mr. President, I say to my colleagues, this is the granddaddy of all of the oil subsidy programs. My friend, Senator Nelson from Florida, came to the floor to talk about a particular subsidy he was concerned about and said that the cost of the subsidy was about $1 billion. That is certainly a lot of money to the people of South Carolina and the people of Oregon. This program that I am saying we ought to rein in and get some accountability over involves, according to the General Accounting Office, a minimum--a minimum--of $20 billion. And, if the litigation that surrounds the Royalty Relief Program is successful, we would see the cost to the Government be $80 billion.
I have been at this for several hours. No Senator of either political party has come to the floor and made a case against my amendment. I have been pretty surprised about it. I was pleased to have Senator Kyl and Senator Lieberman sign on as cosponsors of my particular effort. But I would sure like to have a dialogue in the Senate with respect to the program. I think we have a good handle on how to reform it.
We would say: You can have royalty payments when you need them. It is not rocket science. It is very straightforward. If the price of oil goes down, if the President of the United States says we are going to have a disruption of our oil markets, then you can stay royalty relief. It is not a complicated proposition. But all I can conclude is that Senators--we have had a number of Senators come over and yet nobody has said anything against my amendment. That seems to say, well, just chew up our day letting this fellow from Oregon hold forth.
I have not had to do this in my time in the Senate. It is not a whole lot of fun when you have colleagues and friends who obviously put in a lot of work, a lot of time into amendments that they feel strongly about. I have asked on several occasions to see if I could just get an opportunity to have a vote, up or down, in some kind of fashion, at some point when we do the next block of amendments. But we haven't been able to get that agreement, so here we are, working through lunchtime on this particular program.
I will also tell the Senate with respect to where we are right now that the amount of the subsidy that is out there today could increase--this is in an article from U.S. News and World Report--fivefold. So we are talking about billions of dollars that go out the door today, and if the litigation is successful, then we will see vast additional sums going out.
In the speech that the President made earlier in the week, the President, to his credit, said that he really didn't see the case for subsidies with the price of oil well over $70 per barrel. I don't see anybody making that argument. I don't see anybody making it outside of the Senate. And as I have said over the course of the morning, I don't see anybody making it in the Senate today. I wish somebody would because maybe then we could begin a real discussion and we could get on with what the Senator from Mississippi desires, which is to complete his important legislation. But we have not been able to have that kind of debate, nor have we been able to get a commitment to have this amendment come up as part of a block.
About the only thing we know for certain is we have a program that is completely out of control, and even the original author of the legislation, our former colleague, Senator Johnston, has indicated that.
Under the Energy bill that was signed into law last summer, the companies were given new subsidies in the form of reduced royalty fees. The way that came about is we did not have any floor votes, we didn't have extended debate as we are having this morning; it was done after midnight in the conference committee. It was done after the claim was made that this would not cost anybody anything. That is pretty farfetched. The General Accounting Office says it will cost a minimum of $20 billion.
The Senate has indicated that we are concerned about the practices of lobbyists. I say to Senators, this is a classic case. This is one you would write in the textbooks, of how a small group of lobbyists can figure out a way--essentially behind closed doors and in the dead of night when people are not exactly following debate about energy policy, after midnight--to work their will. So I am doing something I have not done in the Senate and that is to say I am going to stand here and try to do my very best to protect taxpayers. I think it is critical right now, when we are dealing with emergency spending legislation. This program alone uses up a decent portion of the tab for this piece of legislation.
Colleagues have talked a bit about tax breaks and the like, but we have not had any real discussion before today about royalties under the Minerals Management Program. That is what we are talking about here. The House discussed it in its legislation. I think that is why we ought to discuss it.
I don't think this is going to harm in any way the incentives to produce oil in this country. We certainly need to do that. We are as dependent on foreign oil as we were 20 years ago. I personally think getting a new energy policy is about the most patriotic thing we can do in our country. Getting a new energy policy is about as red, white, and blue as it gets. But you sure don't get a new energy policy if you are going to keep sweetening, with billions of dollars, a program that doesn't work, a program that has lacked oversight, lacked accountability.
By the way, I have mentioned it has been bipartisan. I see the distinguished Senator from Alaska, Senator Stevens. I have highlighted the fact that the previous administration, the Clinton administration, somewhere, someplace in the bureaucracy, was not watchdogging this program, was not watching the threshold that was needed to ensure that this money would be used wisely.
By the way, they were talking about $34 a barrel at that time. Now the price of oil is over $70 a barrel. The President of the United States says we don't need subsidies when it is over $50 a barrel.
My hope is we can get this Minerals Management Program under control. It needs to be under control. The bill that came over from the House addresses the royalties issue as well. I think it is time for the Senate to step up. This is a subsidy that is not needed at this time. I wish some Member of the Senate would come to the floor and say, Let me tell you why the subsidy is needed. We have three Senators on the floor and certainly a lot of others have been coming through at various times, but Senator Johnston, who made the case years ago that this program was needed in the 1990s--I think Senator Stevens probably knows the most about the history of the program of any of us--I think Senator Johnston's argument in the 1990s was the gulf coast was hurting. The gulf coast had gotten clobbered. Senator Johnston and others were concerned about how things were going to go in the future. The price of energy had dropped very dramatically. The concern of Senator Johnston was that you were going to see very little investment unless you had changes in the Government's policy.
I know people at that time--I have seen the press reports--were comparing the Gulf of Mexico to the Dead Sea. We are not faced with anything like that. In fact, the program worked well in those middle 1990s.
Now we have a very different situation. Now we have a very different climate. In fact, those are virtually the words that were used by one of the lawyers from the Shell Oil Company. The lawyer from the Shell Oil Company said we don't need royalty relief in this kind of environment, in this kind of climate.
I hope we will get the Senate to dig into the merits of this. I have read the comments from news reports, from Senator Johnston. Senator Johnston told the press recently:
The one thing I can tell you is this is not what we had intended.
Given all of the fuzzy and confusing language that was in this program, what we have seen is the companies, those that have tried to milk this program in every way possible, have been able to do it. I was particularly troubled by some of the changes the Secretary of Interior, Secretary Norton, made administratively. But I think the Senate, in going forward with this discussion, ought to reflect on some of the comments that have been made by people who I think have been about as supportive of the oil industry as they possibly could be. In the other body, the chair of the natural resources committee, Congressman Pombo, says:
There is no need for an incentive. They've got a market incentive to produce at $70 a barrel.
Think about that comment of Congressman Pombo. Congressman Pombo is saying there is no need for incentives right now.
I wanted to be sensitive in my amendment to the fact that things can change. We always have to deal with that in any legislative proposal. What I said is, look, the President of the United States says we could have a supply disruption. If the President of the United States says, for example, that with prices going down we need to reinstitute the program, so be it. But that apparently is not acceptable to some here in the Senate so we cannot get an opportunity at some point to get a vote.
But this is high-stakes stuff, folks. This is not small sums of money. Senator Nelson raised a question that was important to him about a particular subsidy program he was concerned about. It involved $1 billion. But as a number have noted, if the legal battles that are taking place right now about the Royalty Relief Program are successful, we are talking about upwards of $30 billion in additional royalty relief over the next few years. How much more do we need to prod those who care about this to look at reforming this particular program? Certainly they don't need more incentives to go out and drill. Nobody needs to prod the oil industry in that regard. We have seen a great deal of effort on the part of the Senate to make it attractive to be in the energy business. But what I am seeking to do, with the support of Senators KYL and LIEBERMAN and I know other Senators, is to get this program under control, is to have some accountability. It seems to me what we are faced with is essentially a trifecta of subsidies.
First, you have the companies getting tax breaks. The Joint Tax Committee has estimated that the costs of those would be in the vicinity of $10 billion. I am beginning to think we are making some headway on that particular point because we are hearing Senators on both sides of the aisle say they want to review those tax breaks. When we had the executives come before the Energy Committee, I went right down the row and asked each one of them if they needed the tax breaks in the new Energy bill. When it got to broad daylight, they said they didn't need those particular tax breaks. So I think we are making some headway.
I then went to the Senate Finance Committee and was able to get a modest reduction in the tax breaks the companies would get. That is now in the reconciliation bill. I think it is the only actual cut in tax breaks the companies have gotten in quite some time. I am hopeful that will make its way into the reconciliation legislation. Senator Grassley and Senator Baucus have been extremely helpful in that regard.
But the first part of the trifecta is essentially the tax breaks. I am hoping we can get Senators of both political parties at a minimum to review them, review them comprehensively--something that hasn't gone on. Yesterday, to their credit, Senator Grassley and Senator Baucus indicated they would begin that particular review.
The second part of the trifecta is we have mandatory spending programs. That was one that Senator Nelson spoke about earlier, one that involves $1 billion.
Then we come to the Royalty Relief Program, which is the big daddy, the granddaddy of all the subsidy programs. That is the one I have said I am not going to let the Senate duck any longer.
It appears both the Chair and the ranking minority member have left the floor. I think that is unfortunate because I want to try to work out an effort to move ahead on this. But I will continue.
Mr. STEVENS. Will the Senator yield?
Mr. WYDEN. Again, under our unanimous consent.
Mr. STEVENS. I am the senior member of the Appropriations Committee and former chairman, and I will be happy to work with you to arrange consideration of ANWR at any time.
Mr. WYDEN. I thank the distinguished Senator. I know the Senator, having chaired the Appropriations Committee, is anxious to try to work this out. My door is open to try to do that. If the Senator can do what apparently we couldn't get worked out with Senators MCCAIN, SALAZAR, NELSON, and others, no one will be happier than I.
I want to note exactly what the amendment does. It blocks the Federal Government from sweetening the already sweetheart royalty deals that are being dispensed under this legislation. This is needed because even as the prices have shot up, the previous Secretary of Interior was giving more royalty relief to the companies. It has been reported in the press that the Secretary of Interior made the incentives more generous by raising the threshold prices. Her action allowed drillers to escape royalties in 2005, when prices spiked to record levels. She also offered to sweeten the contracts that were not generous enough, in her opinion.
Think about that one. She went back and offered to sweeten the contracts that she felt were not generous enough, contracts the drillers signed before the new regulations were approved. What this amendment does is it prohibits the kind of sweetening of the deals for those who are drilling when prices are high.
When prices are high and we have no threat of disruption, then I am saying the Government has to step in and watchdog this program and do a better job for the taxpayers.
These are royalty deals which are already laden with sugar. They do not need any further sweetening. What is needed in the Senate is for the Senate to say now we are going to do what has not been done; we are going to step in and protect the taxpayers and the American people.
Under this amendment I am trying to get up in front of the Senate, the next Secretary of Interior would not be able to do what was done last year and give away more royalty relief when oil prices are above $55 per barrel. That is what we are all about today.
I hope we will have discussion of other aspects of the oil business. I know that colleagues have amendments of a variety of types they wish to offer.
But these are the sweetest deals in town. They are laden with sugar. They do not need any further sweetening. And at some point you have to ask, Is the Senate ever going to draw the line and have some real accountability in this program?
I have now been speaking about this for probably close to 3 hours. No Member of the Senate has spoken in favor of running the Royalty Relief Program the way it is. I want to repeat that. After 3 hours of debate and a chance for anybody here in the Senate to come and say, Look, I think it is important, I think we ought to keep the program the way it is, nobody in the Senate has come before this distinguished body and made the case for this program on the floor of the Senate.
I think that says it all. Nothing could better illuminate the history of this out-of-control program than the fact that nobody has opposed it here or has opposed my amendment on the floor of the Senate.
The way decisions are made with respect to this program is like what happened with the conference committee in 2005 on the Energy bill. After midnight, when nobody would have a chance to see what was going on, an argument was made that this doesn't cost any money. A couple of Senators were present. They said, You have to be kidding. There has been one Government report and audit after another of this program. Nobody can say with a straight face that this program costs nothing. Yet that was the argument made after midnight in the energy conference. So this legislation kept getting sweeter and sweeter and sweeter.
Billions of dollars are at stake. We already have record prices. We already have record profits. The question becomes, Are we going to have record royalty payments?
I think it is important now for the Senate to draw the line. I want to make sure the Senate is aware of how my amendment would work. Right now the oil companies are supposed to pay royalties to the Federal Government when they extract oil from Federal lands. To stimulate production when the price of oil was cheap, the Federal Government reduced the amount of royalty payments the companies had to make. Now that the price of oil has shot up to over $70 a barrel, the discounted royalty payments amount to a needless subsidy of billions and billions of dollars.
So the practical effect of all of this is the Senate works on a supplemental spending program. It is called an emergency because the Government doesn't have the money. That is why we are in this situation today. We have an emergency. The Government doesn't have the money, but yet the Senate is still willing to look the other way when billions and billions of dollars go out the door at a time when the President of the United States has said you don't need subsidies when the price of oil is over $50 a barrel.
Experts in and out of the Government share my view that this subsidy defies common sense. I have described the views of the chairman of the natural resources committee, Congressman Pombo, who talked about what the folks at Shell Oil have said. Former Senator Johnston wrote this particular program. There isn't anybody defending this program in its current form. That is the amazing part of this debate. Nobody has stood up and said, I want the Royalty Relief Program to operate just the way it is. I thought for sure we would have some discussion about this topic. I thought somebody would actually stand up and oppose what I am talking about. Somebody might say, Look, just because you say it is the granddaddy of all subsidies doesn't mean it doesn't do any good. But nobody has done that. In the course of speaking at some length about this particular program, nobody here in the Senate has said they want to come to the floor and defend it. I think that tells a whole lot about the situation we are in.
By the way, I think it says a lot about whether the Senate is willing to hold these companies accountable and is going to watchdog the program which costs billions and billions of dollars.
We have all had our phones flooded with folks concerned about the price of oil. I heard a discussion from the distinguished Senator from Arizona who said that earmarks were the top question he had heard about from citizens. Like the Senator from South Carolina, I have an enormous amount of respect for the Senator from Arizona. But I think while earmarks are certainly important--and I don't want to get into some kind of competition about what is the most important--I can tell you everything I am seeing right now is that gasoline prices is the issue the American people want to address.
I want a new energy policy. I am anxious to work with colleagues to do so. As I have spoken here on the floor of the Senate, I would say arguably the best idea we have seen in energy as it relates to production comes from our friend from Wyoming, Senator Thomas, who has pointed out that we are probably not getting a big chunk of the oil production out of existing wells. It is an amazing thing; experts in the field say we may be losing as much as a third of what is out there in existing wells. If you go and get that oil, first, you begin to add to the production that all Senators want to encourage but also you do something that is sensible for the environment because you don't run the risk of additional environmental problems.
As we have looked at on the Commerce Committee under the distinguished chair, Senator Stevens, there is a lot of new technology in the oil business. So it is possible to capture some of the gases that are emitted and better protect the environment. There are good ideas for getting a fresh energy policy and certainly increasing production.
As I have said publicly and privately, I think Senator Thomas is one of the best. But there are also some programs that make no sense. This one doesn't. This one is the biggest of them all. If the Senate is serious about reining in these practices that drain our Treasury, which is a factor in our having to come to the floor and ask for emergency spending programs, then I think we have to tackle this kind of program.
Government subsidies--sure, you can make a case for them when the price is low, when you have to stimulate production, and when our economy needs a shot in the arm. But billions of dollars of royalty relief for the companies with these kinds of prices? I don't get it. I don't think it is even a close call. Perhaps that is why we have not seen anybody come to the floor and argue on behalf of doing business this way.
My amendment would ensure that you have royalty relief when it is needed. When you need royalty relief, under this particular amendment--when there is a supply disruption or when prices fall--you would be able to have that relief. But it ought to be targeted. It ought to be targeted as it was in the middle 1990s. That was a period when the price of energy was way down. Parts of our country that could produce oil were hurting. There was a judgment made before my good friend from South Carolina and I were in the Congress, there was a judgment made in the middle of the 1990s to say, all right, let us give these companies a break. If they go out and take some risk, if they will go out and drill and take those chances as you do as part of the free enterprise system because the Government wanted to encourage production at an important time, there was bipartisan consensus that it be done.
The author of the program, Senator Johnston, our former colleague from Louisiana, put together an impressive coalition to get it passed. As I have quoted Senator Johnston here on this floor recently, what we have isn't anything close to what was intended. He was kind of baffled about the whole thing. He said the whole thing is confusing.
It is time for the Senate to say that on the biggest subsidy program, the one that costs the most, which is going to be greater, as far as I can tell, than all of the subsidies combined, and if the litigation involving this program costs approximately what the whole supplemental costs, this is the program we have to deal with.
I don't think it passes the smell test to keep dispensing billions and billions of dollars of royalty relief at this time from the taxpayers' wallet. This is a program that was useful a decade ago. But nobody could say that we need these kinds of incentives at this time.
Back when they were talking about this program in the middle 1990s, the price of oil was in the vicinity of $34 or $35 a barrel. That was the threshold they were talking about at that time. Now the price of oil is twice the threshold that was used back in those days, in the 1990s.
This is a program that it seems to me the Senate has to step in and start watchdogging. One of the reasons I have come to the floor of the Senate today is because the Department of the Interior won't even answer questions from Senators. After there were news reports earlier this year, a number of Senators asked very practical questions. They wanted to know about additional audits; they wanted to make sure there was an effort to enforce the law; they pointed out discrepancies in reports on this program; that the Securities and Exchange Commission was given one set of facts and statistics and the Department of Interior was given another set of facts and statistics. Think about that. We now have companies not even using the same information the Government has so the Government can watchdog the program. Then they go over to the person who heads the Minerals Management Office, which runs this particular program, and what that person says is, Gosh, we don't know. We don't have the auditors. We can't keep track of this. We are not people with expertise. I guess I could see that point if it were involving a small program; in other words, you would be talking about something with a modest sum of money, and they said they did not have enough auditors. Senators could work on a bipartisan basis and beef up the program.
But it was not an emergency because you were talking about a much smaller amount of money. We know the phrase a billion here, a billion there starts to add up to real money. Everett Dirksen talked about millions; now we are talking about billions.
The point is, this is not a small program. This is one of the biggest programs, $20 billion minimum. The General Accounting Office says $20 billion minimum is involved. If the litigation surrounding this program is successful, it could approach the amount that would pay for the entire emergency supplemental program. That is pretty amazing.
One program subsidizing the companies with royalty relief--and no Senator has come to the Senate over the last few hours to defend the operation of the program in its current form--one program can pick up the tab for most of the emergency supplemental. Yet we cannot get a vote up or down as part of any kind of practice that resembles what the Senator from South Carolina and this Senator have customarily seen in the Senate.
We have a discussion over a batch of amendments. Usually a big batch of amendments takes a reasonable period of time. I have done this. The Senator from South Carolina has done it scores and scores of times. Then the amendment you offer is put into a package of other amendments, and there is a vote at a time when Senators of both political parties have been notified and all Members are aware of what is coming up in the Senate. We cannot do that. Somehow, we cannot do that.
I see the distinguished chairman of the committee, Senator Cochran, has returned. I have propounded a variety of different questions to see if we could at some point do what is the customary practice in the Senate, which is at some point have a vote, at some point that is convenient for all who want to offer their amendments. As far as I can tell, we are not having any discussions about how to do that. I have not heard any discussions about others who want to amend this in some way. We have, essentially, a one-sided discussion. This side would very much like to see if we can move forward and get about the business of the Senate.
I have outlined the key questions about a program which is a classic example of what happens when you do not have the Government watchdogging the taxpayers' wallet. The money does not fly out of the sky and land in Washington and all of a sudden get used for one program or another. This is taxpayers' hard-earned money.
We have a situation in South Carolina, Oregon, and elsewhere where people are getting clobbered at the pump. They are all up in arms about the cost of gasoline. We have these record prices at the pump. We have record profits people constantly read about, and the CEOs get pensions. Some of the pensions the CEOs are getting come to sums that are greater than whole communities, as far as I can tell, in terms of their pension relief. So citizens hear about this sort of thing and want to know what the Congress is doing to straighten out the priorities.
What this is about, folks, is straightening out the priorities. I don't think the priorities ought to be to have a minimum of $20 billion used for a royalty relief program when the price of oil is over $70 a barrel. The priorities ought to be for the kinds of things the distinguished Senator from Mississippi and his counterpart on the Democratic side have been working to get done. We do have emergencies. We have emergencies we have to address. I want to see it done. I will tell the Senate when we are subsidizing an amount that could possibly come to the full cost of this supplemental, this cries out for the Senate to step in.
I am going to do everything I can do and will continue to try to engage colleagues on both sides of the aisle so we can do what is necessary to protect the public; that is, essentially reining in a program that has been driven by a small number of lobbyists. A small number of lobbyists for a small number of companies has figured out how to make off with the bank. That is essentially what has happened. We have a program that very few know much about.
When it hit the newspapers a few months ago, Senators and others were up in arms. It is fair to say very few knew a great deal about how the program operated. Those headlines--``General Accounting Office Says Minimum of $20 Billion Will Be Lost''--should have served as a wake-up call.
After we saw those news reports, Senators began writing letters, some of them bipartisan, saying to the Department of Interior: Give us the facts about the program. They said: We have read all these reports indicating what a waste of money, what a colossal waste of money this is. Give us the facts.
The Department of Interior has stonewalled Senators who are trying to get the facts about how the program works. The Senators pointed out the discrepancies in the information furnished. Senators pointed out there did not seem to be people watching this program and watchdogging it,but still no response from the Department of Interior.
So we get to the point, it seems to me, that somebody ought to come to the Senate and describe how an industry that is finding profit everywhere it looks ought to be given more relief from the Federal taxpayer. That is what it comes down to. This industry is doing exceptionally well. Everyone understands the importance of energy production. We understand the importance of seeing it produced in the United States. But the good ideas for getting production going in this country are not ones that drain the Treasury of billions and billions of dollars. The good ideas are the kinds of ideas offered by the distinguished Senator from Wyoming, Mr. Thomas, who talks about getting more production out of existing wells. That is the kind of thing we ought to be doing to get a new energy policy, a red, white, and blue energy policy that is patriotic.
Frankly, our energy policy does a great disservice to those who honor us by wearing the uniform overseas. I know the Senator from South Carolina has been a great advocate for those people. When I meet with folks in the military, I say: You have honored us with your extraordinary service by wearing the uniform and putting your health and the well-being of your family on the line. I want to get a new energy policy so it is less likely that your kid and your grandkid will be off in the Middle East fighting another war where people are saying it is about oil.
We owe it to those courageous people who honor our Nation by wearing the uniform to get them a fresh energy policy from ideas such as those offered by Senator Thomas. This program is not one of them.
I see one of my cosponsors of this legislation in the Chamber. I am ecstatic he has arrived in the Chamber, and I yield to him under the unanimous consent agreement.
Mr. KYL. May I ask my colleague a couple of questions with the understanding he retains the floor?
The PRESIDING OFFICER. Without objection, it is so ordered.
Mr. KYL. I compliment the Senator from Oregon for bringing this matter to the attention of the Senate. It is my pleasure to cosponsor the amendment with the Senator. I also compliment the chairman of the Committee on Appropriations for his patience, his great patience, and his willingness to work with everyone and try to get this bill to a conclusion.
Let me first ask a couple of questions to make sure everyone knows exactly what we are talking about. It is my understanding that back in 1995, the Congress passed something called the Deepwater Royalty Relief Act designed to encourage the development of new sources of energy and that there were some mandatory provisions in that act that required the waiver of the payment of royalties from Federal land, from oil extracted from Federal land. The concept was we wanted to encourage the production of more oil and gas on these Federal lands and the best way to do that would be to enable the oil companies to keep the revenues and not pay the Government any royalties. Is that your understanding of the original concept of this legislation?
Mr. WYDEN. The Senator has summed it up very well. And at least reduce royalties.
Mr. KYL. And then what happened was in the Energy bill we adopted, we thought, well, if it was a good enough
idea then, even though these mandatory provisions of the act expired in 2001, it would be a good idea to continue them, but the administration at that time, observing the fact that oil prices were going up now, came to the conclusion that the extension of this royalty relief was not necessary and, in fact, issued its statement of policy on the Energy bill on June 14, 2005, saying the President believes that additional taxpayer subsidies for oil and gas exploration are unwarranted in today's price environment and urges the Senate to eliminate the Federal oil and gas subsidy and other exploration incentives contained in the bill.
So when the President made his statement about whether we should extend this mandatory royalty relief, he was saying at that time--this was in June of 2005, not quite a year ago; the prices were up but not nearly where they are now--but even at that level he was saying this provision is not necessary to encourage more exploration. Is that the Senator's understanding?
Mr. WYDEN. The Senator is absolutely right. It is Congress that kept ladling out this money and the President, to his credit, has been making the point that these subsidies are not needed.
Mr. KYL. Might I ask further, the number that I have of the estimate of how much this is going to cost the American taxpayer over the next 5 years is $7 billion. Does that number comport with what the Senator from Oregon has?
Mr. WYDEN. The General Accounting Office has said this program will cost, at a minimum, $20 billion. I am looking at the headline of the newspaper that ``GAO Sees Loss in Oil Royalties of At Least $20 Billion,'' but one of the calculations has been $7 billion.
Mr. KYL. Mr. President, $7 billion may be a very low estimate. Is $20 billion over a 5-year period?
Mr. WYDEN. That is over 25 years. And the cost, if the litigation that is underway is successful, the evidence indicates that could add up to $80 billion. The entire supplemental is $100 billion, so depending on how this litigation turns out before too long, the amount of money involved could be close to the cost of the entire supplemental.
Mr. KYL. Mr. President, I noted that the Senator said something earlier in his remarks that I thought was very important in the context of our consideration of this supplemental appropriation. We all agree we have to appropriate the funds not only for relief from the hurricane to States such as that of the Presiding Officer, but also to ensure that everything our troops need to conduct their activities in the war against terror is provided to them and that the bulk of the money in the supplemental appropriations bill is going for that purpose, but that this is emergency spending we have not offset in any other way.
What the Senator from Oregon has pointed out is that actually, in great measure, a great deal of this could be offset if we simply eliminate some of the costly taxpayer subsidies such as that which is the subject of this amendment, so that we are in total agreement that we have to provide this funding for our military, and that one way we can help to pay for it is for the taxpayers to not have to continue this subsidy, which by all accounts is totally unnecessary to produce additional oil and gas, at least at this time.
Let me ask the Senator further, I don't know what the crude oil price was in June of last year when the President made his statement that this royalty was simply not necessary, but it probably was somewhere in the neighborhood of half of what it is today. Maybe the Senator has an idea on that. But the estimates today, I think--when I last looked at the market--were about $72 a barrel. Therefore, if it is true the measure was not necessary a year ago, as lawyers say: a fortiori, it is not needed today.
Does the Senator from Oregon have any thoughts on that?
Mr. WYDEN. Again, I think the Senator has summed it up. The price of oil has doubled in the last 5 years. The Senator from Arizona asks about last year. I think, again, speaking off the top of my head, it was somewhere in the middle sixties somewhere, the price of oil per barrel. But I think the bottom line is, the Senator from Arizona is correct, it is now well over $70 a barrel. And that is vastly higher than the amount the President says would warrant an incentive.
Mr. KYL. Mr. President, let me ask another question of the Senator from Oregon.
Your amendment does not just wipe out this provision that waives royalties but, rather, allows for a situation, as I understand it, when the price drops to a point where maybe some incentive is necessary to provide for this production. It actually does not eliminate the possibility of that incentive. Is that correct? Could the Senator explain that?
Mr. WYDEN. I am very grateful for the Senator from Arizona getting into this discussion because what I have tried to do is ensure we will have royalty relief when it is needed. Essentially one of two conditions would be met, and then you could have the royalty relief resume. One is, as the Senator from Arizona has said, the price of oil falls and you do need incentive.
The other, which, in effect, gives the President of the United States the last word, is a stipulation that allows the President, through the Secretary of the Interior, to say--if we need to prevent a disruption of supply; if the President determines we would have a disruption of supply at this crucial time when our country is at war--then the President of the United States can say: We will resume the Royalty Relief Program because we need this incentive for production; it is my judgment that without this Royalty Relief Program we would have a disruption in supply.
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Mr. WYDEN. Mr. President, before he leaves, I hope the Senator can stay a bit longer as well because I so appreciate his insight and input on this issue.
The Senator from Arizona has been making these points ever since--in the Finance Committee and in the Energy Committee we were talking about this legislation. And you and I and others said: Let's think through now how to use scarce taxpayer resources wisely. Let's take out a sharp pencil and say there are going to be some areas that you set aside, and there are going to be some areas you promote.
I have been talking about Senator Thomas's efforts at some length here today because I think Senator Thomas gets it in terms of what we ought to be looking at as far as our long-term needs in terms of production.
The Senator from Arizona said we should be taking our hat off to people who produce energy. I certainly second that. And I am glad the Senator has done that. I want to say I think what we are trying to do in our amendment--and you and I and Senator Lieberman in particular--is we are saying not only do we want to be supportive verbally of what people are doing to produce energy in our country, but we want to say, as we have outlined in the royalty relief amendment we are talking about here, is they can get royalty relief when it is needed. In other words, this is not a bunch of verbiage where people come over to the floor of the Senate and say: Oh, maybe you will be able to do this; maybe you will be able to do that.
I think what we have spelled out, as a result of your thoughtful questioning, is that when relief is needed--either the prices are down or we have a threat of disruption--not only are we going to say we are for the producers, we are going to back it up, and they will be in a position of being able to secure that royalty relief support.
I am happy to yield to the Senator from Arizona for additional questioning.
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