Making Emergency Supplemental Appropriations for the Fiscal Year Ending September 30, 2006 Part III
MAKING EMERGENCY SUPPLEMENTAL APPROPRIATIONS FOR THE FISCAL YEAR ENDING SEPTEMBER 30, 2006 -- Part III
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Mr. WYDEN. I thank my friend from Arizona.
I would also say with respect to this issue of relevance, not only would we be able to save a significant chunk of the tab for this overall emergency supplemental, but the House, the other body, at page 64 of their bill, talks specifically about the Minerals Management Service. So we are already seeing some concern, at least on the part of the other body, that the Congress ought to be looking at this program.
So it is my hope--and you were talking about making sure there is an effort to watchdog this program. Now is when you watchdog it because the spigot is on, and it is gushing taxpayer money. It is gushing taxpayer money at a time when the Government does not have it. And the Government's lack of funds has forced the distinguished Senator from Mississippi to come and work on an emergency spending measure because the Government does not have any money.
So I think that highlights why this is so important. And, once again, well into 3 hours of discussion on this, I want to review for colleagues that we have not been able to work out an arrangement to get a chance to vote on this as part of a batch of amendments. No Senator has come to the floor to speak against this amendment. No Senator, neither political party, has said this amendment is off base.
What we just heard from the distinguished Senator from Arizona, who sits on both the Finance Committee and the Energy Committee, is that we need this. We need this to make sure we watchdog the use of taxpayer dollars. This program worked in the 1990s.
It boosted oil production substantially. We were all glad to see it. But the fact is, the President says we can get the production now without these kinds of subsidies when the price of oil is over $70 a barrel. I am hopeful we can continue to work--I see the chairman of the full committee, Senator Cochran, here to get it worked out--so that we could do what is customary in the Senate, and that is make this amendment part of a batch of amendments.
I do want the Senate to know a little bit about the payment terms of this program and how this program works in terms of royalties and rentals. I will read a little bit from a Congressional Research Service report that describes it. The leases are conditioned upon payment to the Government of a royalty of at least 12.5 percent in amount or value of oil or gas production that is removed or sold from the leased land. Leases subject to rates in effect after December 22, 1987, generally pay a 12.5-percent royalty, but this percentage can increase if a lease is canceled because of late payments and then reinstated. The Secretary of Interior also has the power to reduce the oil royalty on a noncompetitive lease if it is deemed to be equitable to do so.
Once again, we are talking about very favorable terms for the companies. We are talking about noncompetitive leases. We are talking about something I don't think anybody sees in the private sector in Mississippi or Louisiana or Oregon, but yet that is the way we do business in this particular program.
The Congressional Research Service goes on to say: For oil and gas leases, the royalty must be paid in value unless the Department of the Interior specifies that a royalty payment in kind is required. Once the royalty has been paid, the Secretary is required to sell any royalty or gas except whenever, in their judgment, it is desirable to retain the same for the use of the United States.
That is the heart and soul of how this program works. The Secretary is given this extraordinary waiver authority to suspend or reduce rentals and royalties under certain conditions. Unfortunately, we have seen some problems in terms of the Secretary using that discretion. That is one of the reasons I have come to the floor and raised this concern.
Senators know who is getting the profits. I have tried to talk about the trifecta: The profits that are being made, the mandatory spending that goes out the door in terms of this program. Then we have the granddaddy of them all, the question of royalty relief. What it really comes down to is the Senate's saying, after years of decisions being made about this program behind closed doors, we are actually going to have a debate about this and at some point work out a way to take a vote on it. I don't think that is an unreasonable position.
This is a program that is out of control. This is a program that ensures that billions of subsidy dollars will fly out the door, even when the President says it is not necessary. The price of oil is $70 a barrel plus right now. The President said hold the line on the subsidies when it is over $50 a barrel. The Royalty Relief Program holds no lines.
Essentially, the Royalty Relief Program is a wish list for a handful of very powerful interests who have figured out how, behind closed doors, to have their way with the program. This is the sweetest of the sweetheart deals. It needs to change. I would like to see a Senator come to the floor and defend the Royalty Relief Program as it is presently constituted. This involves billions and billions of dollars.
For example, think about what we could do for the Low Income Home Energy Assistance Program. That is a program about which many Senators have been concerned. Think about what we could do for the Low Income Home Energy Assistance Program if we reconfigured the Royalty Relief Program to one essentially based on need, with prices going down, or supply disruption being the only factors in making a decision about whether to have the royalty relief.
We could have plenty of money left over for deficit reduction, even after helping the Low Income Home Energy Assistance Program.
The Senator from Mississippi has a bill that has a number of provisions in it I strongly support. But budgets are about choices. As a Senator, I cannot explain to the people of my State how a program like this is going to be run like business as usual. When billions of dollars are shoveled out the door, when independent audits continually site the lack of controls, when the companies that look to this program give one set of facts to one agency and another set of facts to another agency, that is unacceptable. That is what I want to change. I guess we will be here on the floor of the Senate a while in order to try and get it worked out.
I am reading again from news reports. The General Accounting Office has said that the best case for the amount of money that would be lost to the American taxpayer is $20 billion. The press has already reported that this would involve an instance where energy prices are over what is called the so-called threshold in the years ahead. The companies that have sought this have won a huge victory at taxpayers expense. They have won legal victories in the past. All the more reason for Congress to step in and establish some accountability and ground rules. There are prospects that if they win their next lawsuit, we could be spending another $50 or $60 billion over the years ahead on top of the most optimistic projection for the cost of the program, which would be $20 billion. We are talking about big sums of money.
I would like to read from a report that shows how conservative these numbers are. The New York Times said, in an analysis of this program, that the General Accounting Office based its estimate on the assumption that crude oil would sell for about $45 a barrel, a level well below what was then the $66 cost in the futures market. So these are very conservative projections. I am concerned that with the General Accounting Office lowballing the cost of the program, the tab to the taxpayers will be much greater than anyone has envisioned.
I hope Senators will want at some point to come to the floor and see if we can work out a way to vote, look at further suggestions and revisions. If they don't, we will have to stay at it and continue to talk about this issue.
I want to address one of the issues that came up in the discussion over the Energy bill, that somehow this program wasn't going to cost taxpayers any money. Folks said that with a straight face. They said: No, it is not going to cost people any money. We are going to have to figure out a way to deal with this issue.
They said: It is not going to cost people any money. That statement was made by some of the supporters of the program back in 1995. They said in 1995 this would produce revenue for taxpayers, and they were concerned that people were somehow saying otherwise.
The reality is, this has not been a no-cost program. This has been a pricing program. This is a program that is going to cost the taxpayers billions and billions of dollars. It is the biggest of the programs. I am still struck by the discussion that we had with Senator Nelson earlier. Senator Nelson was concerned about a program that cost a billion dollars. That is a lot of money to taxpayers, a billion-dollar subsidy. Here we are talking about a program that could go to $80 billion. Senator Cochran's supplemental comes in, I believe, in the vicinity of $100 billion. Depending on how the litigation plays out, the amount of money involved comes to an amount equal to what will be spent in this emergency supplemental.
This is a subsidy that is more than a dubious use of taxpayer resources. This is a subsidy for which there is no logical argument at all. We are not seeing low prices. We are not seeing an investment climate with ominous signs over it--quite the opposite. We are seeing an investment climate in energy that is certainly promising. If we look at stocks and profits and the like, energy prices have been very high. We are not talking about crude oil selling for $16 a barrel. Back in 1995, that is what they were talking about. They were talking about crude oil selling for $16 a barrel.
Let's think about that. In 1995, when this program was originated, when there was a discussion about how to proceed and move ahead, the price was $16. Now we have prices at over $70 a barrel. How can one argue that a program that was conceived at a time when we were talking about prices of under $20 a barrel is needed when the price of oil is over $70 a barrel? That is what we are dealing with here, and that is why I and others want to rein in this program.
To furnish all of this royalty relief on top of the record profits and on top of the record cost, I don't get. I don't get how, when you have the industry prospering as it is today, and taxpayers, particularly the middle class, feeling the crunch, how do you make the argument that you ought to use taxpayer dollars this way?
I have introduced tax reform legislation targeted to the middle class. The reason I have is that the middle class today is being squeezed as we have never before seen. Certainly, we have not seen it in the last 50 years. For the last 50 years, when corporate profits have gone up, when you have seen increases in productivity, the middle class has benefited. We have seen them enjoy the fruits of expanded profits and productivity. We are not seeing that today.
The middle-class folks from Mississippi, Louisiana, and Oregon are getting shellacked. This bill cannot do everything that is needed for the middle class, certainly, but it seems to me what we can say is the middle-class person should not see their tax dollars used for a program such as this that is totally out of control. I wish to see middle-class folks get a break. When I have my community meetings at home--and, like other Senators, I get to every part of the State--I have these open meetings and folks can come in. Almost always the second word is ``bill.'' First, it is medical bill, and then gas bill, then home heating bill, then mortgage bill, then tax bill. The middle-class folks cannot keep up.
So if the Senate keeps this program going in its current form, as opposed to what I am trying to do, which is to reconfigure it, target it to where it is needed, what will happen when Senators go home and middle-class people ask them about what is being done? In effect, what is happening is that tax dollars from middle-class people, at a time when they need a break and some relief--they would have to say that essentially they go into the coffers of the Government and then out they go in terms of billions of dollars of royalty relief, when the President of the United States says it is not necessary. That doesn't make any sense.
This is essentially a debate about priorities. What I think we ought to be doing, especially on this middle-class issue, where people making $40,000, $50,000, $60,000, or $70,000 have been hit so hard and they are living payday to payday--that is how middle-class folks get by. They get their paycheck and they use it until the next one comes along. The Federal Reserve said not long ago that middle-class people have seen virtually no increase in their net worth over the last 5 years.
Whose side is the Senate on? Are we on the side of those who want to keep milking this Royalty Relief Program, at a time when it is not needed, at a time when we are seeing record profits and record costs or are we on the side of middle-class folks? I want to be on the side of middle-class folks. I want to better protect the use of their tax dollars. This is the most flagrant waste of tax dollars I have seen in a long time. That is why no Senator comes to the floor of this body to defend it.
This is such an exorbitant expenditure. This is such a waste of taxpayer dollars that no Member of the Senate wants to come to this floor and defend the way this program is now being run. That is what it comes down to. Nobody wants to defend it, but somehow we cannot work out a way to get a vote and to actually see where the Senate stands on whether this program ought to continue as it is, or whether the Senate is willing, as I am proposing, to try to change it and make sure that instead of special interests and lobbyists being able to hotwire this whole program behind closed doors and talk to people at the Department of Energy, that we stand up for the public. It is all about choices.
At a unique time in our country's history, when we are seeing an extraordinary economic transformation, when the people of Louisiana, Oregon, and Mississippi are not just competing against somebody down the road and we are competing against tough global markets--those in China and India--I want to see us change our priorities. I want to see us pay for this legislation responsibly.
Senator Cochran has a bill that in many respects, I believe, makes a lot of sense. I am anxious to go forward with his legislation and see, on a bipartisan basis, how we can deal with the emergency needs of our country. What I am not willing to do, however, is to look the other way on this program any longer. I am not willing to do it. We may have a vote at some point. Maybe I will prevail and maybe I will not. When I talked to Senator Cochran this morning, we were talking about the way the Senate works. The Senator from Mississippi has always been very fair in the past. He said: Look, the Senate debates and then the Senate has, through its customs and rules, a way to ensure that the Senate takes a position. That is all I am asking. I am asking that the Senate do what it customarily does. What we do, as far as I can tell, practically every single week we are in session--almost every week I have been here, we deal with a variety of issues that come up from Senators in the form of amendments. The amendments are debated and then the Senators have an opportunity to have the Senate go on record on their particular amendment as a part of a group of measures that are considered. That is not what is going on here. I am curious why.
I wish we would hear from some who possibly oppose the legislation why we cannot do what is done virtually every week in the Senate, which is to have a debate, have a discussion, and then the Senate makes a judgment on whether a particular amendment or effort is meritorious.
I see the distinguished Senator from Washington, who is such a wonderful advocate for the Pacific Northwest. She has done extraordinary work, particularly on infrastructure, on port security, on making sure we have good investments in transportation. You cannot have big league quality of life with a little league transportation system. So what we find is when the Senator from Washington wants to see scarce dollars go into infrastructure and into port security, and a number of the valuable areas she has been advocating, we cannot do that because a minimum of $20 billion is going to be lost to this particular program, and if the litigation is successful, it will be $80 billion.
So, again, this is going to come down to choices. I like the kinds of choices the distinguished Senator from Washington, Senator Murray, has been talking about. I think she said we ought to focus on middle-class folks, we ought to focus on infrastructure, we ought to focus on a handful of choices in a difficult budgetary climate. But it is not going to be possible to have the resources the distinguished Senator from Washington has been talking about if you continue to throw money out the door in a wasteful fashion. That is what it is all about.
This is not very complicated. It has been documented. How the Senate can essentially stiff the General Accounting Office on its recommendations to get some controls on this program is beyond me. I guess that is still what some wish to do. But I am going to do everything I can to prevent it. This program, as Senator Bennett Johnston said some time ago, is not what was intended. Those are not my words. Those are not the words of Senator Kyl or Senator Lieberman, my cosponsors of this particular effort. Those are the words of the author of the legislation, who hails from the same State as the distinguished Senator in the chair. So with the author of the program saying it wasn't intended, with people all across the political spectrum saying you don't need royalty relief in this particular climate, I wish to see the Senate take a position up or down as to whether this kind of royalty relief is needed.
If the Senate doesn't, it seems to me what the Senate is saying is we will do business as usual, in terms of all of these subsidies. In other words, we talk a lot about tax breaks and the like and what we might be doing on some of them. This is the biggest subsidy. This is No. 1. This is the one that counts if we are serious about all of the speeches that are given about cutting back needless subsidies to the oil sector. Senator Nelson summed it up very well. He was concerned about spending a billion dollars in terms of a subsidy program that was ill-advised. I think Senator Nelson is on track, and I am anxious to find out more about the program he is concerned about. But that is a tiny fraction of what is at issue.
So I think if the Senate is concerned about changing our energy policy, at a time of record profits, at a time of record prices, it cannot duck the big ticket items. You cannot say you are serious about using taxpayer money more prudently and then pass on the programs such as this one at the Minerals Management Office that count. In particular, you should not duck them when all of the evidence indicates that the historical rationale for starting this program in the 1990s, with low prices and a need to boost production, isn't present any longer.
I see colleagues on the floor. I see my friend from Colorado, Senator Salazar. He did extraordinary work in what was called, I think, the Gang of 14, I believe, in terms of getting the Senate to come together on some judicial nominations. Perhaps he can work his great talent into finding a way for us to move ahead now. Senator Murray is also one who is no weak soul in terms of parliamentary procedure. I see two good friends on the floor.
I am happy to yield to my friend under the unanimous consent agreement.
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Mr. WYDEN. Mr. President, if I can reclaim my time, the Senator from Mississippi is a person of enormous integrity. I agree with the vast majority of what the Senator has said with respect to our conversation. The only part I take exception to is I did not ask to be put to the head of the line. I have never asked to be put to the head of the line. I told my friend from Mississippi that I had offered the amendment last night, so it was the pending business, and I said, fearing exactly what we have seen, that I was open to just about any possible way to do what the Senate always does, and that is to have amendments considered, have them put in to a batch, and voted.
So I simply want to say, because I do have the highest regard for the Senator from Mississippi, that I agree with the vast amount of what he has said, but I do take exception to the part where I asked to be put ahead of other Senators. I said I am open to working this out in any way. Frankly, I don't really care whether it is even in the first batch of votes that the Senate would take. If we can work it out so it is in the second batch of votes, fine by me as well.
I see now we have the Senator from New Mexico here who knows more about this program than anybody else, frankly, on the planet. I am glad he is here, and I hope we can have a discussion about this, because I have been troubled by the fact that we are not having debate about it, and maybe the presence of the Senator from New Mexico will get us to the point where we can get to a vote.
Senator Kyl and I both serve on the committee. Like you, Senator Cochran, Senator Domenici is very fair. He and I have disagreed on loads of issues. When I think of Senator Domenici, I always think of fairness--always. That is what I am interested in, having become a part of all of this. To me, fairness--fairness--is when the Senate has a debate, and we have had that now for many hours, and amendments are pulled together in a cluster, and I am open to being part of the first cluster or the second cluster. And maybe there are other ways to work this out. I would have been very pleased to have done what Senator Salazar and Senator Murray are talking about.
Would the Senator from New Mexico like me to yield to him for a question? I yield to the Senator, again, under the unanimous consent agreement.
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Mr. DOMENICI. I will ask: Do you know that? I started off by asking if you know that.
Mr. WYDEN. I do. And in response specifically to the Senator, nothing in the amendment says that threshold couldn't be lower. Of course, the threshold should be addressed in a responsible way. All we are saying is that we are not going to shovel taxpayer money out when it is over $55 a barrel. But nothing in my amendment says the threshold couldn't be lower, and that is why it better targets the resources and would do something about it.
Again, the General Accounting Office is not some group with a political ax to grind; it is the Government Accountability Office, the people we hire as our auditors who have been talking about all the waste in this program.
As the distinguished chair of the committee knows because he has seen the letter from the Senators, this program is so riddled--so riddled--with questionable issues, the companies don't even give the same facts to the government. They say one thing to the Securities and Exchange Commission and say another thing to the Department of the Interior, and the Department of the Interior people say: Well, we don't know what to make of it.
So I am very glad the Senator is on the floor, and if the Senator would be willing to work with me, I am interested in trying to do what Senator Kyl and I and Senator Lieberman have been working on with this bipartisan amendment. But in response to the particular point made by the chairman of the committee, nothing in this amendment says that the threshold couldn't be lower, and obviously it needs to be.
I think now the Senator from Colorado is next, and I yield to him.
The PRESIDING OFFICER. Without objection, it is so ordered.
Mr. SALAZAR. I thank the Chair, and I thank my colleague from Oregon. I would like to ask a question of my friend from Oregon and a question of the Senator from Mississippi, Mr. Cochran. If we can find an agreement that will allow three amendments from the Democratic side and three amendments from the Republican side, and then at the end of those six amendments being sent to the desk, returning back to your amendment as the pending business of the Senate, is that something that the chairman of the committee would object to? If we were to offer a unanimous consent agreement with respect to those six amendments and we would agree to what those six amendments would be, would then the chairman of the committee object to us moving forward with that kind of a unanimous consent agreement, understanding that we would be returning to the amendment of the Senator from Oregon at the end of that?
The PRESIDING OFFICER. Does the Senator propose that as a unanimous consent agreement?
Mr. SALAZAR. I do propose that as a unanimous consent agreement.
Mr. WYDEN. Reserving my right to object, Mr. President.
The PRESIDING OFFICER. The Senator from Oregon.
Mr. WYDEN. Mr. President, again, wanting very much to accommodate the Senator from Colorado, could the Chair clarify that if we did what the Senator from Colorado is talking about exactly as he has so stated, that after that group of amendments, I believe it was six that the Senator from Colorado talked about, we would return to the amendment that I am offering being the pending business of the Senate?
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Mr. WYDEN. Mr. President, reclaiming the floor, what Senator Salazar and I are both saying is we do not want to be at the head of the line, but we want to have a place in the line, which is the custom of the Senate. The custom is that you have these debates, you have these discussions, and at some point the leadership on both sides gets together. I see the distinguished leader, Senator Reid, and Senator Durbin. What happens is they get together with Senator Frist and Senator McConnell after everybody has had a chance to discuss their amendments. Then at some point you get in the queue.
I have enormous respect for the distinguished Senator from Mississippi. That is why I called him a half hour before we even went in today, in an effort to try to work this out. He consistently says I want to be at the head of the line; I want special treatment.
I don't want to be at the head of the line, but I think at some point Senators ought to have a place in line. My amendment was offered late last night because I stayed here, again anticipating the possibility of this. So it was pending when we came in.
So Senators are very clear, I am interested in working out what Senator Salazar wants to do. I am interested in amendments being clustered as we traditionally have done in the Senate. What I am not willing to do is this: At a time of record profits, at a time of record costs, I am not willing to sit by while record amounts of royalty relief are handed out while all of the independent auditors say it ought to be stopped.
I have read to my colleagues, for example, that in the other body the chair of the natural resources committee, Congressman Pombo--hardly anti-oil, as our good friend, the chair of our Energy Committee, knows; Congressman Pombo has consistently been proproduction--Congressman Pombo says we don't need this incentive for production. Those are his words, you don't need an incentive for production at a time when oil is $70 a barrel.
Senator Dodd and Senator Dorgan have a variety of approaches they want to explore with respect to the Tax Code, and Senators will weigh in, one way or another. There is a trifecta of programs now. There are tax breaks, there is mandatory spending, and there is royalty relief, which is the granddaddy of all of these breaks. I do not see how we can justify sweetening this sugar-laden giveaway again and again and do it behind closed doors.
I have been out here I guess upwards of 4 hours. I sure wish this were not necessary. I would certainly like to do what Senator Salazar has been talking about, which is get an order for these amendments and all of us find a reasonable place in line. But I am not going to sit by while taxpayers get fleeced again. I am just not. I may lose when it comes time, if we can get one, to vote, but until then I am just going to hold forth.
We have colleagues here. Senator Dodd, for example, knew the author of the program very well. Senator Bennett Johnston was the author of the program. Senator Bennett Johnston has said nothing like what we have seen was what he intended.
There are no people arguing on behalf of doing business as usual, as I guess some in the Senate want to consider. But all of the independent experts--the lawyers for Shell oil company--again not the first place you look for anti-oil kinds of arguments--the lawyers for Shell oil company say you don't need this kind of break in this sort of climate. So you have Congressman Pombo, you have the folks from Shell oil company, you have the author of the program, Senator Bennett Johnston--all of them weighing in.
If the litigation that is now underway with respect to this program is successful, I would say to colleagues, the tab for this program could be $80 billion. The emergency supplemental is $100 billion. So over the life of this program, it could come to a very significant fraction of what we need to do in terms of the emergency spending. The distinguished chair of the committee is on his feet, and I am glad to recognize him for a question at this time, keeping my place here on the floor.
Mr. DOMENICI. Senator, first of all, I don't quite know how to ask the question, but I am going to try. Are you aware that the years of 1998 and 1999--for 2 full years, all the leases that were issued had no thresholds in them? Are you aware of that, Senator?
Mr. WYDEN. To respond to the chairman, I am very much aware. It is clear that some of those in the Clinton administration--and I have talked about this at some length. Frankly, those omissions by midlevel people in key level positions in the Clinton administration have contributed mightily to this problem. If they had been doing their job and been watching this threshold question, we would not be in this problem.
Mr. DOMENICI. Yes.
Mr. WYDEN. I think the chairman knows, I believe energy policy has to be bipartisan. We have the distinguished Senator from Tennessee in the chair. I have been talking to him for some weeks on an innovative approach we would like to explore. I want to do business in a bipartisan way. I think I was bipartisan, frankly, before it even became fashionable around here. But I am telling you this has to end. I am glad the Senator from New Mexico has brought up the point about how we got into the situation.
By the way, during the Clinton years when folks weren't watchdogging this program, as I say--the Senator from New Mexico knows a lot more about this than I do--the price of oil was $34 a barrel. We were talking about a price that was a fraction of the cost right now. So what you have is a program that was designed when the price of oil was $16 a barrel. The folks in the Clinton administration muffed the ball in the middle of 1990 when the price was $34 a barrel. Now the President of the United States comes along and says, to his credit, let's knock off the subsidies at a time when the price of oil is more than $50 a barrel. That is what I am trying to do in this particular amendment.
This program made sense in the middle 1990s, when folks in the oil patch were hurting. Probably Senator Dodd remembers a bit of that history. Senator Johnston, whom we all respect so much, came to people in the Senate and talked about the need for the program. Folks in that part of the country were hurting, and the price of energy was very low. There was a good argument saying there was a role for Government.
I have sat in many hearings with the distinguished chairman of the Energy Committee where we talked about the notion that there is a role for the private sector, a role for Government. We want production. What I have done in my amendment is say--Senator Kyl and I got a little bit into this--not only are we going to put a lot of verbiage behind the notion that we are going to support production, what I said is, if there is any evidence this incentive is needed--the President says we will have a disruption of supply--if the price of oil goes down, bingo, the Government can get back into the royalty business. That is what we are trying to do here.
I recall that energy conference committee, I say to my friend from New Mexico. The decisions were made on this particular provision after midnight. I am not even completely sure how it came about. I don't believe I was even in the room. But this time, the Senate is going to take a position, if I have anything to say about it. As colleagues know, I have had plenty to say in the last 4 1/2 hours. I very much want this worked out so we can get to the point of a vote.
Did the distinguished chairman want the floor?
Mr. DOMENICI. Would the Senator yield in a different way, so I could speak for 5 minutes and return the floor to you and you lose none of your rights?
Mr. WYDEN. Let me propound a parliamentary inquiry. I would very much like to do what Senator Domenici, the chair of the Energy Committee, has asked for. If I yield to him to speak for any amount of time, will I lose my place to be able, on the pending amendment, to speak on it? Would the Chair so advise at this point?
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Mr. WYDEN. Mr. President, I thank the Senator from Nevada for propounding that unanimous consent request because I think now it is clear what has happened in the Senate; that is, it will not be possible to get an up-or-down vote at any point on rolling back this outrageous boondoggle that wastes taxpayer money.
My good friend from New Mexico made the point, and I want to kind of summarize it because I think we are getting close to being able to wind down.
Mr. REID. Mr. President, will the Senator yield for a question without losing his right to the floor?
Mr. WYDEN. Of course, I yield to my friend.
Mr. REID. Is the Senator's understanding the same as mine, that no matter how he tried to do all the different proposals which he has made he is not being allowed a vote by the majority? Is that your understanding?
Mr. WYDEN. The distinguished Democratic leader is exactly right. We have done summersaults since last night. I called the chairman of the committee, Senator Cochran, half an hour before we went in in an effort to try to work it out. I have been supportive of Senator Salazar's request. But what we saw in the last few minutes is the ball game--you can't get a vote up or down in the Senate on a ripoff of taxpayer money. It is not me who concluded it; the General Accounting Office has done that. The Shell Oil Company says we don't need this particular incentive right now.
In the other body, the chairman of the natural resources committee says you don't need it. Even the author of the bill says it is not working as he intended.
But what we saw as a result of the request of the Senator from Nevada is that the Senate is not going to take a position on the granddaddy of all oil company subsidies. This is the biggest, folks. This is the one that really counts.
I want to respond briefly to the distinguished chairman of the Energy Committee, Senator Domenici. Senator Domenici essentially said a little bit ago that there were great problems in 1998 and 1999 with some in the Clinton administration who weren't watch_dog_ging the program. I very much share the chairman's view. I talked about this probably two or three times over the course of the morning and early afternoon.
Where I take exception with my friend, however, is he essentially said the Clinton administration caused all of these problems, and along came Secretary Norton who cleaned it up. That was essentially the argument.
I would like to read verbatim and then enter into the RECORD a discussion in the New York Times of what happened under Secretary Norton. While I respect the chairman of the committee tremendously, I want the Senate to know what happened over the last few years.
Gale Norton, who stepped down this month as Interior Secretary, moved quickly to speed up approval of new drilling permits. Starting in 2001, she offered royalty incentives to shallow-water producers who drilled more than 15,000 feet below the sea bottom. In January 2004, Ms. Norton made the incentive far more generous by raising the threshold price. Her decisions meant that deep-gas drillers were able to escape royalties in 2005 when prices spiked to record levels and would probably escape them this year as well.
Continuing to quote:
She also offered to sweeten less generous contracts the drillers had signed before the regulation was approved.
I ask unanimous consent that this article be printed in the RECORD.
There being no objection, the material was ordered to be printed in the RECORD, as follows:
[From the New York Times, Mar. 27, 2006]
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Mr. WYDEN. There we have it, folks. In essentially the late 1990s--1998-1999--as the distinguished chairman of the committee has pointed out, the Clinton administration dropped the ball. No question about it. It was costly to taxpayers.
But I have just read a recitation of how the Secretary of the Interior compounded the problem and how on her watch the sweetener got even sweeter. The price of oil was still shooting up. The price of oil had doubled over the last few years, and she just kept ladling out the sugar. It just kept coming.
Then, on top of it, we had the energy conference agreement between the House and the Senate. So on top of the problem that we see stemming from the last administration and then Secretary Norton sweetening the pot even more, we then had in the energy conference agreement additions to the royalty program, additions at a time when clearly they were not in the public interest.
I think we are close to being able to move ahead in the Senate. I want to have some discussion with the floor manager, the distinguished Senator from Washington.
But what we have seen in the last few minutes as a result of the unanimous consent request propounded by the Senator from Nevada is that this Senate will not be allowed to vote at any time on the granddaddy of all of the subsidies. We have tried to work out arrangements to have a vote that would be fair to both sides. I have propounded a variety of requests through the Chair in an effort to do it. But somehow for some reason continuing this outrageous use of taxpayer money seems to be the big priority around here.
I am staggered. I can't understand. I cannot understand why the Senate would say at a time of record profits, at a time of record prices, it would want to continue to dispense record royalty relief.
The President of the United States said, to his credit, that we don't need all of these incentives when the price of oil is over $50 a barrel. This program started when the price of oil was $16 a barrel.
As the distinguished Senator from New Mexico has indicated, the last administration muffed it when the price of oil was $34 a barrel. But Secretary Norton has made it worse. The energy conference agreement adds more sugar on top of it.
I wish to see the Senate step in and protect the public.
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Mr. WYDEN. I thank the Senator from Illinois for his question. We tried to get into this something like 5 hours ago. It is very helpful to have the Senator from Illinois asking exactly the question he has asked.
The way this program works is that the oil companies are supposed to pay royalties to the Federal Government when they extract oil from Federal lands. In order to stimulate production when the price of oil was cheap, the Federal Government reduced the amount of royalty payments the companies had to make.
It is my view and the view of all of the independent experts, including our former colleague in the House, Congressman Pombo, who chairs the Committee on Resources, it is the view of all of these experts across the political spectrum that with the price of oil soaring to over $70 a barrel, the discounted royalty payments amount to a needless subsidy of billions and billions of dollars. The General Accounting Office has estimated that at a minimum it would be $20 billion. There are projections because there is litigation underway.
For some oil companies, even this is not enough, so they keep litigating and trying to get more and more and more. There are estimates that if the litigation is successful, the Government would pay $80 billion just in royalty relief. And that $80 billion would pay a significant fraction of the entire cost of this emergency spending bill.
Mr. DURBIN. If the Senator will further yield for a question, so that I understand it, if I own an oil company and I want to drill on somebody else's land, in this case the land of the Federal Government, I was required to pay the Federal Government for drilling oil that belonged to somebody else that I was going to sell, and if the price of oil was so low that it did not justify drilling, they would appeal, the oil companies would appeal to the Federal Government, saying, we will pay less for what we are drilling because the price of oil is so low, thus this royalty payment for drilling oil on Federal Government land.
Now the tables have turned and the price of every barrel of oil brought out of Federal land is worth $70 to $75 and the Senator from Oregon is arguing why in the world would you give them relief from their royalty payments when they are making so much money on oil that comes out of Federal lands that we all own.
It would seem to me the Senator's argument is that the oil companies, which are doing quite well, thank you, are going to experience a windfall if the price of oil goes up and the amount they have to pay to the Federal Government continues to be discounted or lowered. So they want it both ways. They want the consumer to pay more at the pump and they want the taxpayers to receive less for the oil they are taking from land they do not even own.
Am I missing something in this analysis?
Mr. WYDEN. I think the Senator has said it very well. In a climate such as this, when prices are high, they get to privatize their gains and socialize their losses. This makes no sense at all. This is a program designed for a period when production was down and the price of oil was very low.
What I have tried to do--because I have spent a lot of hours sitting next to the distinguished chairman of our committee, the Energy Committee, who points out, and correctly so, that energy is a volatile part of our economy--I made an exception so that if the President of the United States says there is going to be a supply disruption or the price of oil falls back down again, bingo, we are back to looking at royalty relief.
The Senator from Illinois puts it very well.
To drive home the point, I say to the Senate, particularly the Senator from Illinois who did great work on the Low-Income Home Energy Assistance Program, we could have taken care of the needs of the Low-Income Home Energy Assistance Program plus have money left over for deficit reduction if we were to stop this wasteful expenditure of taxpayer funds.
Mr. DURBIN. If the Senator from Oregon will yield for a question, through the Chair, you were suggesting in your amendment we should no longer subsidize the extraction of oil by private companies from Federal lands when they are clearly in a very profitable position. We should no longer ask taxpayers to give up royalties which they were entitled to because the oil companies frankly are doing well and the discounted oil was designed for the times when they were doing poorly.
If I understand what the Senator is saying, the same oil companies have been going to court challenging the Federal Government when it comes to these royalty payments and royalty discounts, so with all the talk about too much litigation, it turns out some of these oil companies believe litigation is a healthy thing if it protects their profit margins and protects their Federal subsidy.
If the Senator from Oregon would be kind enough to explain to me exactly what the impact of his amendment would be on this bill and how much money it could bring back to the Treasury for purposes already outlined--whether it is the LIHEAP program or money for education or health care, whatever it might be, that currently is going to oil companies that are doing well and experiencing record profits.
Mr. WYDEN. The Senator asks a very good question. This is the granddaddy, this is the biggest subsidy the Government gives--to the oil sector.
The General Accounting Office, which did a review of this, indicates that a minimal projection is $20 billion for the cost of the program. If the litigation is successful, it is up to $80 billion.
What we have is, at a time when middle-class folks, the people who are living paycheck to paycheck and being squeezed as hard as they are, at a time when our Government ought to be looking at trying to give them a break, give them a bit of help, what we are seeing is the middle-class folks have their tax dollars flow into the Federal Government and go out in terms of royalty relief at a time when the price of oil is vastly above the amount the President has indicated. It is for that reason I felt so strongly about this.
I also point out this is a program that grew under Secretary Norton. After the initial mistakes with the previous administration, it was added to by the energy conference legislation between the House and the Senate which sweetened the sweetheart deal even more.
I am saying this is enough. We do not need record royalty payments on top of record profits and on top of record prices. I have said I will draw the line. I have not done anything like what I have done today in the Senate since I have been here. I have had the pleasure of serving with the distinguished Senator from Illinois for a long time, going back to the days when I had a full head of hair and rugged good looks. I have never done anything like this. I regret this tremendously. But we have to protect the taxpayers of this country.
I am happy to yield if the Senator from Illinois has anything further.
Mr. DURBIN. I will ask the Senator, you are asking for an opportunity to call your amendment to be voted on up or down, whether this subsidy to profitable oil companies will continue or whether the money will come back to the Federal Treasury. Is that your intention in taking the floor?
Mr. WYDEN. That is exactly what I have been seeking since last night when I called the distinguished chairman of the committee, and what I indicated, contrary to what has been said in the Senate, I am not seeking any special treatment. I have not been seeking to be put first in the line. What I have been seeking is what I have seen virtually every week since I have been in the Senate.
The distinguished Senator from Illinois is an expert in the rules, and it is my understanding that what we customarily do, we debate a variety of amendments, then we cluster them into a group, five, six, eight--sometimes the number will vary--and at some point the Senate goes on a vote.
I offered to the chairman of the committee to be put in the second or third cluster. I don't have to go first if colleagues feel strongly about this, but at some point it seems to me we ought to say the Senate is accountable, at a time with record profits and record prices, for a program that is the biggest of them all. That is the Royalty Relief Program.
I am happy to yield further.
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