Secure Fence Act of 2006--Motion to Proceed
SECURE FENCE ACT OF 2006--MOTION TO PROCEED -- (Senate - September 21, 2006)
BREAK IN TRANSCRIPT
OIL COMPANY ROYALTY PAYMENTS
Mr. WYDEN. Mr. President, all of us in the Senate know that each of the executive branch agencies have an inspector general. Last week, the inspector general at the Department of Interior made an extraordinary statement about the lack of ethics, in his view, at the Department of Interior. I have come to the Chamber this afternoon to discuss that and to bring to the Senate's attention some new developments on this issue.
What the Interior Department's inspector general, Mr. Earl Devaney, said last week is essentially that the Department has lost its ethical compass, and specifically the inspector general stated:
Simply stated, short of a crime, anything goes at the highest levels of the Department of Interior.
Mr. Devaney pointed to a number of instances where he thought the Department was essentially defending the indefensible and was particularly troubled by the way the Department's royalty efforts--the efforts to collect money owed to the Federal Government--were going forward.
This morning, there are new developments on this issue which are particularly relevant to the Senate's work for the rest of the session. This morning, there was a news account documenting how for some time the nonpolitical auditors in the Interior Department have been raising concerns about underpayment of millions of dollars of royalties for oil and gas leases. What the article says is these auditors, who are nonpolitical, professional people, were overruled by their superiors when they wanted to go out and aggressively protect the taxpayers of this country. Some of these auditors, according to these news reports this morning, were so outraged by the Interior Department's failure to collect the full amount of royalties that were owed the people that they have filed False Claims Act lawsuits against the oil companies for defrauding the Government.
For example, one senior auditor identified an oil company scheme to reduce its royalty payments by apparently selling oil it extracted from Federal lands at a discount, thereby reducing the amount of royalty it paid to the U.S. Treasury. According to the news accounts, the superiors in that instance told the auditor not to pursue a collection of the oil company's underpayments. So the auditor felt that, to get any justice for the taxpayers, he had to go out and file a false claims lawsuit against the company responsible. Apparently, after he did that, he was subjected to retaliation by Interior Department officials, and then he was eventually terminated.
Several additional false claims lawsuits have recently been unsealed as well where, here again, auditors apparently uncovered underpayments but were not allowed to pursue collection of the full amounts owed to the Government. In each of these cases, the Federal Government declined to join the suit to recover on behalf of the taxpayers the money that oil companies allegedly were underpaying for their oil and gas leases.
If this were just one isolated case, you could say that maybe this was a person who just had a bad experience and they are angry at this point. But when you have a number of cases--a number of cases brought by nonpolitical professional people, people who are putting themselves at risk by bringing this out--that issue becomes too important for the Government to ignore.
I am bringing it to the attention of the Senate this afternoon because it goes to the heart of something I have been talking about for many months. In fact, months ago, I spent over 4 hours right in this spot trying to blow the whistle on the fact that it was time to stop stonewalling on this issue of collecting billions and billions of dollars in royalty payments that are owed by oil companies that are extracting that oil from land owned by the people of this country.
In this case, the Interior Department's inspector general has identified underpayments of just a tiny fraction of what is owed, but it seems to me this highlights how serious a problem this is. It also undermines the argument of the administration and some supporters of the oil industry that this money is going to be collected if the Congress just stays out of it and the executive branch goes after it on its own. That is one of the reasons that apparently we can't get a vote on an effort to collect these royalties here in the Senate, because some have said the executive branch is on this case, they are going to go after it, and they are going to bring in these dollars. Well, today, on the front page of one of the country's newspapers, we are seeing that not only is the administration not going after these royalty payments, but when independent, professional auditors go out and try to collect the money, not only is there no effort to support them, but they end up getting rolled when they try to bring these cases and collect money that is owed to the taxpayers of this country.
Under Federal law, oil companies are supposed to pay the Federal Government royalties when they extract oil or gas from Federal lands or offshore drilling. During the 1990s, to encourage drilling when oil prices were low, Congress provided relief to suspend royalty payments when prices were below certain threshold levels. It was, however, the intent of Congress that royalties would resume when the prices got back above those thresholds. But the leases that were signed during 1998 and 1999 failed to include the price threshold. As a result, a number of oil companies have been allowed to extract oil without paying the royalties that are owed under these leases, even when the oil prices went to record levels, as we saw this past summer.
The Government Accountability Office has estimated that the failure to include price thresholds in just those leases--just the ones I mentioned--could cost the Federal Treasury and the taxpayers $10 billion. What is more--and I think this will be truly eye-opening for the Senate and for the country--is that given the fact there is litigation pending surrounding this program, the loss to the taxpayers could perhaps soar to as much as $80 billion, according to an estimate by an industry source.
That is why I took the time a few months ago to stand on the floor of the Senate for well over 4 hours to make the case of reforming the oil royalty program, and that is why I have come to the Chamber today to bring to the attention of the Senate the concerns that are coming from the professional auditors.
When we debated it, or when I had a chance to raise the concern before the Senate on that occasion and others, I heard some saying that the Interior Department is going to go out and get these funds, they are going to make sure the taxpayers don't get ripped off. We have heard that argument advanced time and time again. It essentially has been stated that the Interior Department has begun the efforts to renegotiate those leases that are costing the $10 billion I mentioned and that Congress can only get in the way by trying to take legislative action.
Well, these news reports that have come out this morning make it very clear that Interior officials are not willing to address the problems with the royalty program on their own. When given the chance to pursue the issues raised by nonpolitical auditors working for the Department, according to this morning's report and these lawsuits, those high up in the Department blocked the auditors' efforts to collect the full amount owed to the U.S. Treasury and to taxpayers.
The Interior Department's negotiations with the oil companies on the 1998 and 1999 leases didn't even start until after Congress included language in the Interior appropriations bills to prevent companies from getting new leases unless they renegotiated their old leases to include price thresholds. And the mediation process that is now underway between the companies and the Interior Department is nonbinding, so the companies can walk away at any point. In my view, that is why Congress ought to step in now and require the Interior Department to fix the royalty program through legislation.
The companies are doing everything they can to keep this issue from coming to a vote on the floor. That is what happened when I stood in this spot for more than 4 hours a few months ago. The oil companies knew on that occasion that if there was a vote here in the Senate to reform this program which is so out of hand--because even our esteemed former colleague who is from the State of Louisiana, former Senator Bennett Johnston, said the program is out of hand.
If we had a vote that day, the vote would have been overwhelming to fix the royalty program. But we could not get that vote because there were some in the Senate who knew that the taxpayers would win, and they didn't want to have the vote. Now the session is about to end. The subsidies are going to continue. Based on this morning's report, auditors who are professional are being overruled by their superiors when they want to get those dollars owed to the taxpayers.
In my view, time is not on the side of those of us who want to put a stop to these senseless subsidies. The oil companies and their supporters know that the time left in this session is limited, so if they can keep the Senate from voting on these royalties, the legislation that the House adopted after my discussion in the Senate will almost certainly disappear when the Interior bill gets rolled into some kind of an end-of-the-session comprehensive bill called, around here, omnibus legislation.
The negotiations now underway with oil companies, that have the most generous deals of all, in my view, are going to get dragged out and delayed and postponed until the last legislative vehicle leaves town. Then the oil companies can walk away from the table, return to claiming those needless subsidies, and I assume fewer auditors will step forward in the future because they will see that there has not been a Congress backing them up.
We have seen the ``run out the clock scenario'' play out before. It happened, for example, on the issue of needless tax breaks to the oil companies. I was able to get legislation through the Senate Finance Committee to begin the effort to roll back some of the tax breaks that the oil companies were getting. These were oil companies getting breaks that even they said they didn't need when I asked them questions when they came before the Senate Finance Committee. But by the time we were done on the tax side, the oil companies had been able to water down much of what I had originally gotten out of committee, and they are still getting billions and billions of dollars in tax breaks that they themselves have testified before the Senate they do not need.
I believe, on the basis of the news reports that we saw this morning and the fact that the inspector general of the Department of Interior has said that anything goes with respect to ethics at the Interior Department, that this Senate ought to step in and protect the taxpayers of this country. This Senate ought to address this problem, which the inspector general has called ``indefensible'' and has, in effect, said the Department is still trying to defend it. My view is that if the Senate ducks this issue, it will be very difficult to explain to the American people how Congress can propose to allow additional billions of dollars of royalty money to be given away before it puts a stop to what already has gone out the door.
The distinguished Senator from Louisiana and my colleague who is my seatmate, the distinguished Senator from Louisiana, Ms. Landrieu, has sure made a good case to me about the suffering that folks in New Orleans and in her State have endured. But what has been troubling to me is how do you make a case for starting a new royalty program, a new offshore oil royalty program, when you are wasting money on the last one that got out the door? So I will continue to try to make the case, force the Senate to reform this oil royalty program, and I am going to continue to press this every time I think there is a new development in this case.
I urge my colleagues to read the important article by Mr. Andrews in the paper today describing the efforts of these auditors to try to make sure taxpayers do not get stiffed.
It is one thing if one person comes forward. It is another when you have a whole pattern of these cases, by people who are nonpolitical, who are professional people. We have had a bipartisan effort in the Senate to change this. I have been particularly appreciative that Senator Kyl, Senator DeWine, and Senator Feinstein have joined me in past efforts. But we have not been able to offer that amendment and actually get a vote on a bipartisan proposal that would finally clean up this program and protect the taxpayers of this country.
As a result, some of the most profitable companies in the country are continuing to get billions and billions of dollars of royalty relief and giveaways that are paid for by the taxpayers of this country.
It was one thing to start that program back in the days when oil was $19. It is quite different when you have royalty relief, taking hard-earned dollars out of the pockets of our citizens when that relief clearly is not necessary. I urge colleagues in the Senate, on both sides of the aisle, to join me in these efforts to clean up this program, stop the outrageous giveaway of taxpayer money, and take a good look at this morning's report. The combination of what the inspector general has said and what these independent auditors have said this morning, in my view, is too important to ignore. The Senate ought to step in and make sure the taxpayers' interests in this country are protected.
I yield the floor. I suggest the absence of a quorum.
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