Pete Domenici

Mr. DOMENICI

Mr. DOMENICI. Sure.

Mr. DOMENICI. I say to the Senator, you don't think that should be the case? Who knows. My heart's content may be only 3 or 4 minutes on this issue. Mr. President, I believe under the guise of the Constitution, which gives the President, as Commander in Chief, some very, very strong powers over what he does, where he places, and what he asks our military to do, that we are beginning now, in this President's administration, to go down the slippery path that the President can engage our military almost anywhere, any time, so long as it pleases him and he decides it is in our national interest. I say, shame on the President. If this is such an important matter, why could he not trust the Senate and the House to ask us whether we concur? Let me say, Mr. President--not the President who occupies the Chair, but our President down on Pennsylvania Avenue--with your last budget, we will have spent $12.3 billion in Bosnia--$12.3 billion. There was not even enough money in the defense budget. At one point we had to declare it an emergency, after 3 years of being involved, to pay for it, because to pay for it would have stripped our military of other things that they desperately need to be our strong military force. What are we up to? We are going to take up the budget on the floor, and I predict that if we authorize, or do not authorize the President, he is going to do it anyway. And there will be Senators from the other side of the aisle who will stand up and want to take money out of the Defense Department to spend on domestic programs. But they will vote here tonight to send our men and women off to this war and claim they will never go in there. But let me tell you, this is a very, very unintelligible plan. You cannot rationally accept the President's reasoning unless you conclude that they do not want to tell you where it is going to end up. It does not take a lot of sense to say airstrike No. 1 may not work, airstrike No. 2 may not work. We have been told by military experts years ago that airstrikes would not work in this area of the world. So what then happens? That is the extent of our plan? Who believes that? I ask those who believe in the great United States of America, with its President leading the way, who sent the bombers in, sent in the stealth fighters, sent in the Tomahawk missiles--and the big leader who has caused all the trouble is not dead yet and will not quit, what are we going to do? I asked the question already of the leaders representing the President, and they say there is no plan. Wait a minute. No plan? Well, NATO may have a plan, but America does not have a plan for the third phase, which is probably putting military men and women in harm's way. What is NATO without America? They have just described, NATO without America in these airstrikes probably could not get the job done. The whole of NATO without us probably would not undertake it. So do you believe the third phase, which we do not want to talk about, is going to get done without America, if there is a third phase? And will there be a third phase? I do not know. I have a hunch that phase 1, of airstrikes from a distance through Tomahawk missiles, and phase 2, with actual airplanes of one sort or another, may not work. I would think it would be fair for the President of the United States, since we have been at this issue for months--as it got worse they threatened and then pulled the threat--to ask the Senate, as George Bush did, and get concurrence. And if we did not concur, wouldn't it be a pretty good signal that we do not think it is right? What is wrong with that? As I understand it, there will be an amendment, there will be a proposal, freestanding perhaps, asking that we concur with the President of the United States in airstrikes. I am not going to vote for it, because I do not think that is the end of it. I ask one simple question: Is this not a declaration of war without asking us, who, under the Constitution, were given authority to declare war? Isn't it an invasion of a sovereign country by a military that is more than half American? I believe it is. You can make all kinds of rationalizations that it is not an invasion, but it is. Is it not a civil war? Yes, it is. Is it not a civil war of long lasting? It did not start last week. These people have been at civil war for God knows how long. And they are going to be there after the airstrikes unless there is a large contingent of soldiers to keep the peace. Is that what we are going to do? Are we going to have soldiers in there under the third phase or the fourth phase? What if they just do not agree to a peace treaty after all these bombs? Do we walk away? I do not believe we will. From my standpoint, we never should have gone in. So, Mr. President, I believe the President of the United States, once again, has waited so long that he has us right in a spot. He does it all the time. He has us in the spot that a terrible tragedy is going to occur unless we agree with him in the next 24 hours, or perhaps he even thinks unless you have already agreed with me today. But who knows, the Tomahawks may be flying tonight. At this point it is dark over there. And that is when they will start. Everybody knows that. So I say to the President of the United States, since you like us to consider your prerogatives under the U.S. Constitution--and we do it all the time--why don't you consider ours? Why don't you ask us? And why don't you wait until we give you an answer? That seems fair to me. What we are doing is not fair to the Congress. And if it isn't fair to us, it is not fair to our people. I yield the floor.

Mr. DOMENICI. Then I will speak to my heart's content.

Mr. DOMENICI. May I have 3 minutes? I ask unanimous consent that I have 3 minutes.

Mr. DOMENICI. Thirty minutes has expired?

Mr. DOMENICI. May we have order, Mr. President?

Mr. DOMENICI

Mr. DOMENICI. Mr. President, last year, despite opposition from me, Senator Campbell, Chairman of the Senate Committee on Indian Affairs and Senator Inouye, Vice-Chairman of our committee, the Enzi amendment succeeded in suspending Secretarial authority to establish a regulatory route for Indian gaming compacts until March 31, 1999. This prohibition prevents the Secretary of the Interior from proceeding with a regulatory route for tribes who have asked states to negotiate compacts and find the state to be unwilling. Tribes lost their right to sue states under the Indian Gaming Regulatory Act, IGRA, in 1996, when the Supreme Court, in the Florida Seminole case, determined that IGRA was unconstitutional in its provisions allowing tribes to sue states. The Supreme Court upheld states rights under the 11th Amendment. If a state refuses to negotiate for compacts and that state allows gambling by any person for any purpose (all do in some form, except Utah and Hawaii), the Secretary of the Interior would have an alternative route to compacts, essentially negotiated through his Department, where he also has trust responsibility for Indian tribes. New Mexico Indian tribes are opposed to the Enzi amendment, even though there is no immediate effect in New Mexico. As Governor Milton Herrera of Tesuque Pueblo wrote, ``Section 2710 (d)(7)(B)(vii) of IGRA specifically allows tribes to go directly to the Secretary and ask for alternative procedures to conduct Class III gaming.'' The Governor also objects to Congressional action on this issue without a hearing and as a violation of Senate Rule 16, which prohibits authorizing legislation in an appropriations bill. Governor Herrera goes on to say, Gaming is to Indian tribes what lotteries are to state governments. Indian gaming revenues are used to fund essential government services including law enforcement, health care services, aid for children and elderly, housing and much-needed economic development. Through gaming, tribal governments have been able to bring hope and opportunity to some of this country's most impoverished people. Contrary to popular opinion, gaming has not made Indian people rich; it has only made some of us less poor. As written, the Enzi amendment before us today would delay any Secretarial actions to develop alternative regulations until 8 months after the expected report from the National Commission on Gambling (June 1999), or until February of the year 2000. If this amendment fails, lawsuits are expected over whether the Secretary has the legal right to develop these regulations that essentially skirt states rights to object to compacts. Mr. President, given the delicate balances between sovereign states and tribes in IGRA, I would rather see a judicial determination of the Secretary's rights under IGRA to develop such regulations. Like Governor Herrera has pointed out, without a hearing, it is difficult for the Senator to make this judgment. For these reasons, I remain opposed to the Enzi amendment.

Mr. DOMENICI

Mr. DOMENICI. Mr. President, I rise to offer an amendment to expand the State of New Mexico High Intensity Drug Trafficking Area (HIDTA) to include three counties in the north that are under siege from ``black tar'' heroin. This amendment designates Rio Arriba County, Santa Fe County, and San Juan County as part of the New Mexico HIDTA and provides $750,000 for the remainder of fiscal year 1999 to these counties to combat this serious drug problem. This amendment is fully offset for both budget authority and outlays according to the Congressional Budget Office. Mr. President, this is part of an overall effort to combat the serious drug epidemic in northern New Mexico. Rio Arriba County leads the nation in per capita drug-induced deaths. The rate of heroin overdoses is reportedly three times the national average. Last month, I held meetings with State and local officials and community representatives to assess the overall illegal drug situation in northern New Mexico. I am pleased to say that the State and the communities have been aggressive in trying to address this problem. Our task now is to marshal additional resources to the problem so that there is a comprehensive strategy to get this drug problem under control. This comprehensive strategy will include law enforcement, such as this HIDTA designation and the additional, targeted resources in my amendment, as well as programs for prevention, education, after school activities for our children, and treatment. It will take all of these steps, with prosecution and jail time for drug traffickers, to combat this drug epidemic in New Mexico. I have also enlisted the assistance of Federal agencies in this battle. The Department of Justice law enforcement agencies can assist with the illegal trafficking of ``black tar'' heroin and other drugs, some of which are smuggled into the United States by illegal Mexican nationals. The Department of Health and Human Services is also a valuable ally in this fight through the National Institute on Drug Abuse and the Substance Abuse and Mental Health Services Administration. I am committed to marshaling both federal and state and local resources to tackle this serious problem. This amendment also provides additional resources for a national program to crack down on illegal methamphetamine laboratories and trafficking. This is another serious drug problem for the nation, but my own home State of New Mexico, has seen a marked increase in these illegal activities. As a largely rural State, and so close to the border with Mexico, New Mexico has been inundated with methamphetamine. Many States are in this same predicament, and I applaud the subcommittee for boosting the resources for this important national effort. Mr. President, illegal drug trafficking and use is a serious problem for our nation. In spite of the significant federal and state and local resources targeted to these illegal activities, the problem remains overwhelming in some of our communities and states. I urge the adoption of my amendment. amendment no. 101 (Purpose: To provide relief from unfair interest and penalties on refunds retroactively ordered by the Federal Energy Regulatory Commission) At the appropriate place, insert:

Mr. DOMENICI

Mr. DOMENICI. Mr. President, I ask unanimous consent that the Subcommittee on Clean Air, Wetlands, Private Property, and Nuclear Energy be granted permission to conduct a hearing on EPA's Risk Management Plan Program of the Clean Air Act Tuesday, March 16, 9:30 a.m., Hearing Room (SD-406).

Mr. DOMENICI. Mr. President, I ask unanimous consent that the Committee on Health, Education, Labor, and Pensions be authorized to meet during the sessions of the Senate on Wednesday, March 17, 1999; Thursday, March 18, 1999; and Friday March 19, 1999. The purpose of these meetings will be to consider S. 326, the Patients' Bill of Rights, and several nominations.

Mr. DOMENICI. Mr. President, I ask unanimous consent that the Committee on Small Business be authorized to meet during the session of the Senate for a hearing entitled, ``The President's Fiscal Year 2000 Budget Request for the Small Business Administration.'' The hearing will begin at 10 a.m. on Tuesday, March 16, 1999, in room 428A Russell Senate Office Building.

Mr. DOMENICI. Mr. President, I ask unanimous consent that the Committee on Armed Services be authorized to meet on Tuesday, March 16, 1999, at 9:30 a.m. in closed session, to receive testimony on alleged Chinese espionage at Department of Energy laboratories, and at 11 a.m. in open session, to receive testimony on the Department of Energy national security programs, in review of the Defense authorization request for fiscal year 2000 and the Future Years Defense Program.

Mr. DOMENICI. Mr. President, the Finance Committee requests unanimous consent to conduct a hearing on Tuesday, March 16, 1999 beginning at 10 a.m. in room 215 Dirksen.

Mr. DOMENICI. Mr. President, the Committee on Veterans' Affairs would like to request unanimous consent to hold a joint hearing with the Senate Appropriations Subcommittee on Labor, Health and Human Services, and Education to assess the roles and preparedness of the Department of Health and Human Services and the Department of Veterans Affairs to respond to a domestic chemical or biological weapon attack. The hearing will be held on Tuesday, March 16, 1999, at 9:30 a.m., in room 106 of the Dirksen Senate Office Building.

Mr. DOMENICI. Mr. President, I ask unanimous consent that the Committee on Health, Education, Labor, and Pensions be authorized to meet for a hearing on ``Educating the Disadvantaged'' during the session of the Senate on Tuesday, March 16, 1999, at 9:30 a.m.

Mr. DOMENICI. Mr. President, I ask unanimous consent that the Subcommittee on Forest & Public Land Management of the Committee on Energy and Natural Resources be granted permission to meet during the session of the Senate on Tuesday, March 16, for purposes of conducting a Subcommittee on Forest & Public Lands Management hearing which is scheduled to begin at 2 p.m. The purpose of this oversight hearing is to consider the President's proposed budget for FY 2000 for the U.S. Forest Service.

Mr. DOMENICI. Mr. President, I ask unanimous consent that the Subcommittee on International Trade and Finance of the Committee on Banking, Housing, and Urhan Affairs be authorized to meet during the session of the Senate on Tuesday, March 16, 1999, to conduct a hearing on reauthorization of the Export Administration Act.

Mr. DOMENICI. Mr. President, I ask unanimous consent that the Committee on Armed Services Subcommittee on Emerging Threats and Capabilities be authorized to meet at 2:30 P.M. on Tuesday, March 16, 1999, in closed/open session, to receive testimony on information warfare and critical infrastructure protection, in review of the defense authorization request for fiscal year 2000 and the future years defense program.

Mr. DOMENICI

Mr. DOMENICI. Mr. President, I ask for the yeas and nays on the pending amendment.

Mr. DOMENICI

Mr. DOMENICI. Mr. President, we were rotating. I will take the privilege of saying that Senator Kennedy would yield to Senator Johnson.

Mr. DOMENICI. Mr. President, I will be managing the time on our side until Senator Jeffords arrives. I yield myself 6 minutes and then I will yield to the distinguished Senator. Mr. President, first, I rise in strong support of the Education Flexibility Partnership Act. I begin with a brief quote: An investment in knowledge always pays the best interest. Benjamin Franklin stated that in the early years of our Republic. Building upon this statement, I say it is a simple fact--which the occupant of the Chair, as a distinguished Governor in a State that has seen great economic growth and prosperity and better jobs and more opportunity--it is a simple fact that the future is prejudiced in favor of those who can read, write, and do math. A good education is a ticket to a secure future in this United States. And obviously, the opposite is equally true. As the earning gap between brains and brawn grows even larger, almost no one doubts that there is a link between education and the individual's prospects, even in this great land of opportunity. Today, the Senate is taking a first step to improve our Nation's educational system, because everyone acknowledges that our children are the future of this country and we must make every effort to provide them with the tools to succeed. Our action provides States with increased flexibility to ensure that our students have an even better opportunity to succeed. I submit that because we have so many programs at the national level, small and large--and I will allude to the number shortly--that if you are looking for a place to reform, maybe you ought to start right here. Maybe we ought to look at the whole package of targeted educational programs at the national level and see how far off the mark they really are when it comes to helping children in the United States. This takes some of our programs and says that one size doesn't fit all, and Washington bureaucrats and interpreters of these various laws don't always know best, so we are going to give local teachers and administrators who know the problems the opportunity to create flexibility in terms of how these various programs are used in the field for our children. I want to move ahead to a summary that was given to us by the GAO that, in conjunction with the Budget Committee staff and under the leadership of Senator Frist, looked at a whole myriad of U.S. Federal programs to see just what we were doing and what we were not doing. And so, Mr. President, I want to inform you that your concern when you were Governor of Ohio of all the bureaucracy and paperwork and missing the target by Federal programs, if you wondered why, this is why. Our National Government has funded over 86 teacher training programs in 9 agencies and offices; 127 at-risk and delinquent youth programs in 15 agencies and offices; and over 90 childhood programs in 11 Federal agencies and 20 offices. Now, it is quite obvious that the U.S. Government, our committees, and our Secretary, are not the know-all and end-all of good education occurring in Ohio, New Mexico, Arizona or Massachusetts. How could we be the end-all and the know-all when, essentially, we contribute less than 7 percent of the funding? Now, it almost makes us, standing on the floor speaking so eloquently about what the Federal Government is doing with its money on education, to some extent, borderline unreasonable in terms of credibility, because how can you change this big education system--and I am going to estimate that we are spending $427 billion a year on kindergarten through 12 in all our sovereign States and all the school districts. You tell me how that $200 million or $300 million targeted in some way--Mr. President, a former Governor, tell me how that $200 million or so spread across this land can have a real impact on a system that is as diverse as America and into which we are spending $417 billion and we can't get the job done. It can't be that the million dollars is going to help. It is only that we make it appear as if it is going to help. We invent the amendments and the bills, and sometimes we even take a poll before we invent them to see what it is the people want. Who can be against more teachers? But if you fund the States with more money for IDEA, the disabled children, which we are already obligated to do, it relieves an equal number of dollars for them to use for teachers if they would like. Some are frightened, however, that the States and the schools might not use it for more teachers. They might use just a little piece of it for that because they already might have sufficient teachers. It is not a new thing in education that we dreamt up here in Washington that we need more teachers in our schools, although it is still not unequivocal as to whether reducing the size to the level we contemplate nationally is what every school system thinks would do the job best for their children. That is not decided yet. That is still out there feverishly being tossed around with many other concepts in terms of education. So, Mr. President, this is just the beginning--this flexibility--of what I hope is a real effort by the U.S. Government to reform its own education commitment to our States. We are all saying we want the States to reform, we want them to be more accountable. Well, when the bill comes up this year on primary and secondary education, it is my hope that we will not do more of the same. It is my hope that we will seriously consider a total reform of those programs, because if we are asking the States to do better, it is pretty obvious that we can do better also. As a matter of fact, I believe it is borderline these days as to just how much the Federal Government's assistance is really raising the education level of our children. I repeat, if I had my way, and we could focus it into the right channels, I would be for more Federal aid to education, not less. But I guarantee you, with the myriad of programs, as I have described them, spread throughout Government with no accountability, one program to another, I would not be for spending more money to feed that kind of educational assistance when I have very serious doubts as to whether it has contributed significantly to helping our young people. I yield the floor. Mr. JOHNSON addressed the Chair.

Mr. DOMENICI

Mr. DOMENICI. Mr. President, I rise today to introduce the Domestic Oil and Gas Crisis Tax Relief and Foreign Oil Reliance Reversal Act of 1999. It is a comprehensive, graduated approach to ensure that the United States retains control of its foreign policy and its economic destiny. I believe that oil is essential to our way of life. Oil is power. It has been pointed out by numerous commentators that major oil reserves and political volatility go together. The Middle East has the world's most abundant and cheapest oil, unfortunately, the U.S. does not. Saudi Arabia, United Arab Emirates and Kuwait are our current allies, but Iran and Iraq are not. Russia is a major natural gas producer, but reliable Russia is not. Our dependence on foreign oil is reaching 57 percent, projected to reach 68 percent by 2010 if current prices prevail. This isn't the usual boom and bust that the oil and gas industry goes through. The price has dropped by half in the past two years. In real terms, oil now costs roughly what it did before 1973. And prices could stay low or drop lower according to the March 6th, Economist magazine. Chairman Greenspan, thus, far has been more cautious. At a Budget Committee hearing recently, I asked Chairman Greenspan about the oil and gas depressed prices. For the first time that I can remember, Greenspan blessed Independent Petroleum Association of America (IPAA) numbers. Greenspan said, ``In the short term, profits for the oil and gas industry are likely to come under pressure. According to industry surveys, exploration and production spending in the U.S. is projected to decline 21 percent this year to $22.6 billion from $28.2 billion in 1998. A recent survey by the Independent Petroleum Association of America (IPAA) estimates that over 36 thousand crude oil wells and more than 56 thousand natural gas wells have been shut down since November 1997. During the same period, the IPAA estimates that 24 thousand jobs in the industry have been eliminated * * * The financial pressures are most serious among small producers in the United States.'' Let me describe the financial pressures facing New Mexico. One of the city officials told me that oil and gas revenues were so low that the town of Eunice has to decide which it will keep open--the school or the hospital. There isn't enough tax revenue in the coffers to do both! In New Mexico, the oil and gas industry is a major source of revenue. For some communities it is the only significant source. The bill I am introducing today is a comprehensive, graduated response to the problem of the shrinking domestic oil and gas industry. It builds upon, and includes all of the provisions included in S. 325 introduced by Senator Kay Bailey Hutchison and cosponsored by Senators Nickles, Murkowski, Breaux and Landreu and myself. The Hutchison bill focuses on helping our independent producers and maintaining marginal wells. These are wells that produce less than 15 barrels a day by IRS definition, but in reality, on average produce about 2.2 barrels of oil a day. There are a lot of marginal wells in the United States, and together they produce as much oil as the United States imports from Saudi Arabia. I am also told if prices stay where they are the state could lose half of those wells by the end of the year. Title I of the bill I am introducing today is part of S. 325. It includes a marginal well tax credit designed to prolong marginal domestic oil and gas well production. The credit is equal to $3.00 a barrel. The bill also provides a Federal income tax exclusion for income earned from inactive wells. It is an incentive for producers to keep pumping and not to plug the wells because low prices make them uneconomic. Once a well is plugged, the oil from that well is lost for ever. The bill expands the Enhanced Oil Recovery credit (EOR) that was enacted in 1990. Enhanced oil recovery techniques can recover the other seventy-five percent of the oil left behind when regular techniques have pumped as much oil as they can from a well. The EOR credit is expanded to cover additional techniques and to be used by AMT taxpayers. The oil and gas industry is a capital intensive industry. When the price of oil drops, the cash flow for small producers dries up. There are countless producers who haven't been able to make an interest payment on their operating loans in months and as loans come due, the banks haven't been willing to renew them. The world is feasting on cheap oil, and yet the oil patch is starving for capital. This credit crunch is made all the more painful because producers know that they have accumulated tax benefits and credits that they have not been able to use, first, because they were Alternative Minimum Tax (AMT) taxpayers, and more recently, because low prices have devastated their bottomline. The AMT was intended to make sure that profitable companies paid their fair share of taxes. It has not worked as it was intended. In practice, the AMT imposes four penalties on investments made by U.S.- based taxpayers who explore for and produce oil and natural gas. Penalties are imposed on drilling investment and asset depreciation. These penalties significantly increase the after-tax costs and the business risks of drilling new wells. This is a very imprudent policy at a time when the U.S. is experiencing historically low drilling activity and growing import dependency. The AMT increases the cost of capital of AMT taxpayers by approximately 15 to 20 percent over what it would be under the regular corporate income tax according to testimony given before the Senate Finance Committee. TITLE II of the bill tries to correct the past imprudence of the AMT and other tax cod provisions by providing domestic oil and gas industry crisis tax relief triggered when the price of oil is below $15 a barrel. This title of the bill creates what I call a ``credits to cash'' program. The purpose is to transform earned tax credits and other accumulated tax benefits into working capital for the cash-strapped domestic oil and gas producers and service companies. This is accomplished by creating a ten year carry-back for unused AMT credits, and unused percentage depletion for oil and gas producers. The bill would also eliminate one of the most restrictive limitations on an oil and gas producer's ability to claim his intangible drilling costs-- the so-called 65 percent net income limitation. The bill repeals it so that producers can finally recover their out of pocket costs. The bill also includes a provision similar to a bill introduced by Congressman Thomas. My bill allows both producers and the oil and gas service industry to go back ten years and use up their Net operating losses (NOL)s. Hard times tax relief when price of oil is less than $14 a barrel The National Energy Policy Act partially eliminated Intangible Drilling Costs as a preference item under the AMT. This bill finishes the job for any year when the price of oil is less than $14 a barrel (phased out when oil prices hit $17) IDCs are up front, out of pocket costs that have to be paid before a producer even knows whether there will be any oil produced. IDCs are one of the principal ordinary and necessary business costs of the oil and gas industry. IDCs can comprise up to 80 percent of the total costs incurred in developing a well. IDCs are comparable to research and development costs because they are incurred before a capital asset is known to exist. Examples of IDCs include amounts paid to negotiate and finalize drilling contracts; costs to prepare the drill site, costs of transporting and setting up the rigs and costs of cementing casing in place; costs for wages, fuel, repairs, supplies, and other costs in the drilling, shooting and cleaning of wells, onsite preparation for the drilling of wells, and the construction of the physical structures that are necessary for the drilling of wells. IDCs are funded with cold, hard cash and typically cannot be financed by a bank or financial institution, and must be paid through an operator's internal cash flow or outside equity money supplied by an investor. Under the regular corporate tax, IDCs are generally allowed to be expensed. If they were the expenses of any other business they would not be included as add-back preference items for purposes of the AMT. We took the first step to correcting this injustice in the National Energy Policy Act. It is time to finish the job now. Percentage depletion is also an ordinary and necessary business cost. It recognizes that the economic profit from successful wells must compensate for economic losses from dry holes and marginal wells that do not recover their investment. Percentage depletion also recognizes that oil and gas properties are wasting assets with no residual value. These expenses correspond to ordinary business expenses that are deductible for every other business without limitations. The bill would also eliminate the depreciation adjustment under the AMT for oil and gas assets so that the depreciation schedules for the regular tax are also used for AMT. The oil and gas industry must spend significant amounts of capital to acquire, find, develop and produce oil and gas resources The regular tax system's modified accelerated cost recovery system (MACRS) is designed to encourage such investments. The incentive of accelerated tax depreciation is especially important in periods when oil is cheap and companies are under economic pressure to reduce capital investment and jobs. Yet, the depreciation adjustment required under the AMT results in removing much of the regular tax incentive precisely when it is needed most. This occurs because companies in the industry are more likely to be subject to AMT in periods of low commodity prices. While the AMT is the second tax system imbedded in our Internal Revenue code, the Accumulated Current Earnings (ACE) effectively acts as a third system of taxation, in addition to the regular tax system and the AMT. ACE generally acts to measure income in the same manner ``earnings and profits'' which is a measure of income used by ``C'' corporations to determine whether their dividends will be taxable. Under ACE, a corporate taxpayer must compute the deductions for equipment depreciation (pre-1994), and intangible drilling cost recovery in a third manner in addition to that mandated under the regular tax system and the AMT. Congress has nibbled at fixing the ACE several times in the 1990's. It is time to get rid of it and its complexity. The bill eliminates the Adjusted Current Earnings adjustment (ACE) as it applies to IDCs. The bill would also permit the EOR credit and the Section 29 credit to reduce the Alternative Minimum Tax. The Alternative Minimum Tax (AMT) imposes tax penalties on the oil and gas industry. It taxes investment, not income, and it is more punitive the less profitable a company is. The longer prices are low and profits thin, the harsher is the AMT's impact. The bill recognizes that the Oil for Food program is contributing to the depressed oil and gas prices and is causing economic hardship for our domestic oil and gas producers. To compensate our domestic industry for the economic loss that is being caused by this UN policy, the bill would restore percentage depletion to 27.5 percent. It also would include the remaining tax provisions included in S. 325 e.g., Allows expensing geological and geophysical expenditures Allows producers to make an election to Expense Delay Rentals payments; and provides an Extension of Spudding rule Title III of the bill would be triggered whenever foreign oil reliance exceeds 50 percent. The purpose of this title is to reverse the trend of increased foreign dependence of oil and gas by encouraging exploration and development of oil and gas reserves here at home in the U.S. Our goal should be to double current domestic oil and gas production. The bill provides a 20 percent exploration and development credit. Title IV recognizes that 60 percent foreign oil dependence is a national security risk and provides for an emergency procedure. When foreign imports exceed 60 percent the President is required to implement an energy security strategic plan designed to prevent crude oil and product imports from exceeding 60 percent. I will remind my colleagues that when we experienced the economic disruption of the 1973 oil embargo our dependence on foreign oil was only 36 percent. Mr. President, we need a comprehensive response to foreign oil dependence. We need to have a healthy domestic oil and gas industry. This bill along with measures to help the industry through the current credit crunch are essential. I ask that my colleagues join me in developing a comprehensive plan to insure our energy and foreign policy independence. Mr. President, I ask unanimous consent that the text of the bill and a summary be printed in the Record.

Mr. DOMENICI

Mr. DOMENICI. Mr. President, I rise today to introduce the Domestic Oil and Gas Crisis Tax Relief and Foreign Oil Reliance Reversal Act of 1999. It is a comprehensive, graduated approach to ensure that the United States retains control of its foreign policy and its economic destiny. I believe that oil is essential to our way of life. Oil is power. It has been pointed out by numerous commentators that major oil reserves and political volatility go together. The Middle East has the world's most abundant and cheapest oil, unfortunately, the U.S. does not. Saudi Arabia, United Arab Emirates and Kuwait are our current allies, but Iran and Iraq are not. Russia is a major natural gas producer, but reliable Russia is not. Our dependence on foreign oil is reaching 57 percent, projected to reach 68 percent by 2010 if current prices prevail. This isn't the usual boom and bust that the oil and gas industry goes through. The price has dropped by half in the past two years. In real terms, oil now costs roughly what it did before 1973. And prices could stay low or drop lower according to the March 6th, Economist magazine. Chairman Greenspan, thus, far has been more cautious. At a Budget Committee hearing recently, I asked Chairman Greenspan about the oil and gas depressed prices. For the first time that I can remember, Greenspan blessed Independent Petroleum Association of America (IPAA) numbers. Greenspan said, ``In the short term, profits for the oil and gas industry are likely to come under pressure. According to industry surveys, exploration and production spending in the U.S. is projected to decline 21 percent this year to $22.6 billion from $28.2 billion in 1998. A recent survey by the Independent Petroleum Association of America (IPAA) estimates that over 36 thousand crude oil wells and more than 56 thousand natural gas wells have been shut down since November 1997. During the same period, the IPAA estimates that 24 thousand jobs in the industry have been eliminated * * * The financial pressures are most serious among small producers in the United States.'' Let me describe the financial pressures facing New Mexico. One of the city officials told me that oil and gas revenues were so low that the town of Eunice has to decide which it will keep open--the school or the hospital. There isn't enough tax revenue in the coffers to do both! In New Mexico, the oil and gas industry is a major source of revenue. For some communities it is the only significant source. The bill I am introducing today is a comprehensive, graduated response to the problem of the shrinking domestic oil and gas industry. It builds upon, and includes all of the provisions included in S. 325 introduced by Senator Kay Bailey Hutchison and cosponsored by Senators Nickles, Murkowski, Breaux and Landreu and myself. The Hutchison bill focuses on helping our independent producers and maintaining marginal wells. These are wells that produce less than 15 barrels a day by IRS definition, but in reality, on average produce about 2.2 barrels of oil a day. There are a lot of marginal wells in the United States, and together they produce as much oil as the United States imports from Saudi Arabia. I am also told if prices stay where they are the state could lose half of those wells by the end of the year. Title I of the bill I am introducing today is part of S. 325. It includes a marginal well tax credit designed to prolong marginal domestic oil and gas well production. The credit is equal to $3.00 a barrel. The bill also provides a Federal income tax exclusion for income earned from inactive wells. It is an incentive for producers to keep pumping and not to plug the wells because low prices make them uneconomic. Once a well is plugged, the oil from that well is lost for ever. The bill expands the Enhanced Oil Recovery credit (EOR) that was enacted in 1990. Enhanced oil recovery techniques can recover the other seventy-five percent of the oil left behind when regular techniques have pumped as much oil as they can from a well. The EOR credit is expanded to cover additional techniques and to be used by AMT taxpayers. The oil and gas industry is a capital intensive industry. When the price of oil drops, the cash flow for small producers dries up. There are countless producers who haven't been able to make an interest payment on their operating loans in months and as loans come due, the banks haven't been willing to renew them. The world is feasting on cheap oil, and yet the oil patch is starving for capital. This credit crunch is made all the more painful because producers know that they have accumulated tax benefits and credits that they have not been able to use, first, because they were Alternative Minimum Tax (AMT) taxpayers, and more recently, because low prices have devastated their bottomline. The AMT was intended to make sure that profitable companies paid their fair share of taxes. It has not worked as it was intended. In practice, the AMT imposes four penalties on investments made by U.S.- based taxpayers who explore for and produce oil and natural gas. Penalties are imposed on drilling investment and asset depreciation. These penalties significantly increase the after-tax costs and the business risks of drilling new wells. This is a very imprudent policy at a time when the U.S. is experiencing historically low drilling activity and growing import dependency. The AMT increases the cost of capital of AMT taxpayers by approximately 15 to 20 percent over what it would be under the regular corporate income tax according to testimony given before the Senate Finance Committee. TITLE II of the bill tries to correct the past imprudence of the AMT and other tax cod provisions by providing domestic oil and gas industry crisis tax relief triggered when the price of oil is below $15 a barrel. This title of the bill creates what I call a ``credits to cash'' program. The purpose is to transform earned tax credits and other accumulated tax benefits into working capital for the cash-strapped domestic oil and gas producers and service companies. This is accomplished by creating a ten year carry-back for unused AMT credits, and unused percentage depletion for oil and gas producers. The bill would also eliminate one of the most restrictive limitations on an oil and gas producer's ability to claim his intangible drilling costs-- the so-called 65 percent net income limitation. The bill repeals it so that producers can finally recover their out of pocket costs. The bill also includes a provision similar to a bill introduced by Congressman Thomas. My bill allows both producers and the oil and gas service industry to go back ten years and use up their Net operating losses (NOL)s. Hard times tax relief when price of oil is less than $14 a barrel The National Energy Policy Act partially eliminated Intangible Drilling Costs as a preference item under the AMT. This bill finishes the job for any year when the price of oil is less than $14 a barrel (phased out when oil prices hit $17) IDCs are up front, out of pocket costs that have to be paid before a producer even knows whether there will be any oil produced. IDCs are one of the principal ordinary and necessary business costs of the oil and gas industry. IDCs can comprise up to 80 percent of the total costs incurred in developing a well. IDCs are comparable to research and development costs because they are incurred before a capital asset is known to exist. Examples of IDCs include amounts paid to negotiate and finalize drilling contracts; costs to prepare the drill site, costs of transporting and setting up the rigs and costs of cementing casing in place; costs for wages, fuel, repairs, supplies, and other costs in the drilling, shooting and cleaning of wells, onsite preparation for the drilling of wells, and the construction of the physical structures that are necessary for the drilling of wells. IDCs are funded with cold, hard cash and typically cannot be financed by a bank or financial institution, and must be paid through an operator's internal cash flow or outside equity money supplied by an investor. Under the regular corporate tax, IDCs are generally allowed to be expensed. If they were the expenses of any other business they would not be included as add-back preference items for purposes of the AMT. We took the first step to correcting this injustice in the National Energy Policy Act. It is time to finish the job now. Percentage depletion is also an ordinary and necessary business cost. It recognizes that the economic profit from successful wells must compensate for economic losses from dry holes and marginal wells that do not recover their investment. Percentage depletion also recognizes that oil and gas properties are wasting assets with no residual value. These expenses correspond to ordinary business expenses that are deductible for every other business without limitations. The bill would also eliminate the depreciation adjustment under the AMT for oil and gas assets so that the depreciation schedules for the regular tax are also used for AMT. The oil and gas industry must spend significant amounts of capital to acquire, find, develop and produce oil and gas resources The regular tax system's modified accelerated cost recovery system (MACRS) is designed to encourage such investments. The incentive of accelerated tax depreciation is especially important in periods when oil is cheap and companies are under economic pressure to reduce capital investment and jobs. Yet, the depreciation adjustment required under the AMT results in removing much of the regular tax incentive precisely when it is needed most. This occurs because companies in the industry are more likely to be subject to AMT in periods of low commodity prices. While the AMT is the second tax system imbedded in our Internal Revenue code, the Accumulated Current Earnings (ACE) effectively acts as a third system of taxation, in addition to the regular tax system and the AMT. ACE generally acts to measure income in the same manner ``earnings and profits'' which is a measure of income used by ``C'' corporations to determine whether their dividends will be taxable. Under ACE, a corporate taxpayer must compute the deductions for equipment depreciation (pre-1994), and intangible drilling cost recovery in a third manner in addition to that mandated under the regular tax system and the AMT. Congress has nibbled at fixing the ACE several times in the 1990's. It is time to get rid of it and its complexity. The bill eliminates the Adjusted Current Earnings adjustment (ACE) as it applies to IDCs. The bill would also permit the EOR credit and the Section 29 credit to reduce the Alternative Minimum Tax. The Alternative Minimum Tax (AMT) imposes tax penalties on the oil and gas industry. It taxes investment, not income, and it is more punitive the less profitable a company is. The longer prices are low and profits thin, the harsher is the AMT's impact. The bill recognizes that the Oil for Food program is contributing to the depressed oil and gas prices and is causing economic hardship for our domestic oil and gas producers. To compensate our domestic industry for the economic loss that is being caused by this UN policy, the bill would restore percentage depletion to 27.5 percent. It also would include the remaining tax provisions included in S. 325 e.g., Allows expensing geological and geophysical expenditures Allows producers to make an election to Expense Delay Rentals payments; and provides an Extension of Spudding rule Title III of the bill would be triggered whenever foreign oil reliance exceeds 50 percent. The purpose of this title is to reverse the trend of increased foreign dependence of oil and gas by encouraging exploration and development of oil and gas reserves here at home in the U.S. Our goal should be to double current domestic oil and gas production. The bill provides a 20 percent exploration and development credit. Title IV recognizes that 60 percent foreign oil dependence is a national security risk and provides for an emergency procedure. When foreign imports exceed 60 percent the President is required to implement an energy security strategic plan designed to prevent crude oil and product imports from exceeding 60 percent. I will remind my colleagues that when we experienced the economic disruption of the 1973 oil embargo our dependence on foreign oil was only 36 percent. Mr. President, we need a comprehensive response to foreign oil dependence. We need to have a healthy domestic oil and gas industry. This bill along with measures to help the industry through the current credit crunch are essential. I ask that my colleagues join me in developing a comprehensive plan to insure our energy and foreign policy independence. Mr. President, I ask unanimous consent that the text of the bill and a summary be printed in the Record.

Mr. DOMENICI

Mr. DOMENICI. Mr. President, I would like pay tribute to one of the most widely admired and respected Members of Congress of this half of the century, Morris `Mo' Udall. It has been said that Mo Udall represented a time when friendships mattered more than politics. Indeed, he was an honest and straightforward person in a town notoriously short on such people, and he always tried to foster cooperation, especially among representatives from the Western states. We collaborated on many issues over the years, and I considered him a very good friend. During the 1980's we served as co-chairman of the Copper Caucus and worked to help address the serious issues facing the American copper industry at the time. Together, we championed the cause of a new dollar coin, which, I'm pleased to say, is scheduled to go into circulation next year. We also worked to craft a sound nuclear waste management policy, and as Chairman of the House Committee on Interior and Insular Affairs, his help was invaluable in designating parks, wilderness, and other recreation areas in New Mexico. I believe it is this area--land stewardship--where he left his most indelible mark. He cherished the land not only for the natural resources it can provide, but for its recreational and ecological value as well. Under his 14 year leadership, the House Interior Committee became one of the most efficient and effective committees in Congress, sometimes responsible for a quarter of the legislation passed by the House of Representatives. It is true that every person who stops to take a picture at a national park or hikes through a wilderness area owes a debt of gratitude to Mo Udall. His efforts in this area have touched us all. Perhaps the second greatest legacy Mo Udall leaves behind is his legendary humor. In his 1988 book ``Too Funny to be President,'' he wrote ``It's better to have a sense of humor than no sense at all.'' Mo put this ``sense'' to good use, often employing it to make a point or defuse a tense situation. His philosophy was that the best political humor always ``has a little love behind it,'' and I can hardly think of a man more loved by his peers than Mo Udall. Today, a new generation represents the Udall name in Congress. Mo's nephew, Tom Udall, is the newest member of the New Mexico Delegation, and I look forward to working with him in the same manner as I worked with his uncle. Tom and Mo's son, Mark Udall, do have big shoes to fill, but they also have an exemplary model to follow, and I trust they will carry on the Udall tradition of unswerving integrity and honor. Arizona has lost a beloved native son, and New Mexico has lost a good friend and neighbor. His wit, grace and unflagging passion for the West will be missed by all of us who had the privilege to work with him.

Mr. DOMENICI

Mr. DOMENICI. Mr. President, pursuant to paragraph 2 of Rule XXVI of the Standing Rules of the Senate, I ask unanimous consent to have printed in the Congressional Record the rules of the Committee on the Budget for the 106th Congress as adopted by the Committee. The rules follow: Rules of the Committee on the Budget One-Hundred-Sixth Congress I. Meetings (1) The committee shall hold its regular meeting on the first Thursday of each month. Additional meetings may be called by the chair as the chair deems necessary to expedite committee business. (2) Each meeting of the Committee on the Budget of the Senate, including meetings to conduct hearings, shall be open to the public, except that a portion or portions of any such meeting may be closed to the public if the committee determines by record vote in open session of a majority of the members of the committee present that the matters to be discussed or the testimony to be taken at such portion or portions-- (a) will disclose matters necessary to be kept secret in the interests of national defense or the confidential conduct of the foreign relations of the United States; (b) will relate solely to matters of the committee staff personnel or internal staff management or procedure; (c) will tend to charge an individual with crime or misconduct, to disgrace or injure the professional standing of an individual, or otherwise to expose an individual to public contempt or obloquy, or will represent a clearly unwarranted invasion of the privacy of an individual; (d) will disclose the identity of any informer law enforcement agent or will disclosed any information relating to the investigation or prosecution of a criminal offense that is required to be kept secret in the interests of effective law enforcement; or (e) will disclose information relating to the trade secrets or financial or commercial information pertaining specifically to a given person if-- (i) an act of Congress requires the information to be kept confidential by Government officers and employees; or (ii) the information has been obtained by the Government on a confidential basis, other than through an application by such person for a specific Government financial or other benefit, and is required to be kept secret in order to prevent undue injury to the competitive position of such person. (f) may divulge matters required to be kept confidential under other provisions of law or Government regulations. ii. quorums and voting (1) Except as provided in paragraphs (2) and (3) of this section, a quorum for the transaction of committee business shall consist of not less than one-third of the membership of the entire committee: Provided, that proxies shall not be counted in making a quorum. (2) A majority of the committee shall constitute a quorum for reporting budget resolutions, legislative measures or recommendations: Provided, that proxies shall not be counted in making a quorum. (3) For the purpose of taking sworn or unsworn testimony, a quorum of the committee shall consist of one Senator. (4)(a) The Committee may poll-- (i) internal Committee matters including those concerning the Committee's staff, records, and budget; (ii) steps in an investigation, including issuance of subpoenas, applications for immunity orders, and requests for documents from agencies; and (iii) other Committee business that the Committee has designed for polling at a meeting, except that the Committee may not vote by poll on reporting to the Senate any measure, matter, or recommendation, and may not vote by poll on closing a meeting or hearing to the public. (b) To conduct a poll, a Chair shall circulate polling sheets to each Member specifying the matter being polled and the time limit for completion of the poll. If any Member requests, the matter shall be held for a meeting rather than being polled. The chief clerk shall keep a record of polls; if the committee determines by record vote in open session of a majority of the members of the committee present that the polled matter is one of those enumerated in rule I(2)(a)-(f), then the record of the poll shall be confidential. Any Member may move at the Committee meeting following a poll for a vote on the polled decision. iii. proxies When a record vote is taken in the committee on any bill, resolution, amendment, or any other question, a quorum being present, a member who is unable to attend the meeting may vote by proxy if the absent member has been informed of the matter on which the vote is being recorded and has affirmatively requested to be so recorded; except that no member may vote by proxy during the deliberations on Budget Resolutions. iv. hearings and hearing procedures (1) The committee shall make public announcement of the date, place, time, and subject matter of any hearing to be conducted on any measure or matter at least 1 week in advance of such hearing, unless the chair and ranking minority member determines that there is good cause to begin such hearing at an earlier date. (2) A witness appearing before the committee shall file a written statement of proposed testimony at least 1 day prior to appearance, unless the requirement is waived by the chair and the ranking minority member, following their determination that there is good cause for the failure of compliance. v. committee reports (1) When the committee has ordered a measure or recommendation reported, following final action, the report thereon shall be filed in the Senate at the earliest practicable time. (2) A member of the committee who gives notice of an intention to file supplemental, minority, or additional views at the time of final committee approval of a measure or matter, shall be entitled to not less than 3 calendar days in which to file such views, in writing, with the chief clerk of the committee. Such views shall then be included in the committee report and printed in the same volume, as a part thereof, and their inclusions shall be noted on the cover of the report. In the absence of timely notice, the committee report may be filed and printed immediately without such views. vi. use of display materials in committee (1) Graphic displays used during any meeting or hearing of the committee are limited to the following: Charts, photographs, or renderings: Size: no larger than 36 inches by 48 inches. Where: on an easel stand next to the Senator's seat or at the rear of the committee room. When: only at the time the Senator is speaking. Number: no more than two may be displayed at a time.