Kay Hutchison

Mrs. HUTCHISON

Mrs. HUTCHISON. Mr. President, this shows there would be a proposed difference in income of $11 million. In addition to putting that in the Record, I want to say that we have offset that $11 million. I have to say I think it is ludicrous that you would say we think that in the future you won't get $11 million and, therefore, we need to make up that proposed lost revenue for a tax that has not even been put in place. Nevertheless, that was the ruling we were given, so we did offset with $11 million. But it is ridiculous to say that you have to offset the tax that hasn't been put in place because you don't know what businesses are going to pull up stakes and say: It is too expensive to drill with this kind of royalty rate. We are going to go overseas and we are going to take our jobs with us. So I am not sure that it would be $11 million, or anything at all. My hunch is that we are going to lose jobs and we are going to lose income, and the schoolchildren of this country are going to suffer because the oil business has not yet recovered from the crisis. Mr. President, on that note, I have to also say that I think it is very important that when we are talking about a proposed rule that hasn't been put in place and we are already saying how much will be missed, clearly, there is no concept of how business can work and make a profit and continue to create jobs. So I am concerned that if we raise this royalty valuation, which is a tax on the oil industry, at a time when many of them are on their knees anyway, we are not going to have income of $11 million, or $60 million, or anything else. In fact, I think we are going to go into negative income, which is exactly what has happened in Texas in the last year and a half, where schools have had to shut their doors and close down and consolidate classrooms because they could not make their budget because of the oil income not coming in. We lost $150 million just in the last year in oil royalty revenue in Texas alone. So this is not the time to raise rates. Let's talk about the kind of taxes. We are talking about fairness. In fact, we are talking about what we tax. Today, the oil is valued as it comes out of the ground, after it has been cleaned up and is ready to be sold. You take out the contaminants and it is clean and that is where it is valued. But what the Government and MMS are proposing to do is say, no, we want you to go out and get a buyer for the oil and incur the cost of buying; and then we want you to put it in a pipeline and take it to where it is going to be picked up by the buyer, and we are going to value it there. That is taxing the cost. That just doesn't make sense. That is like saying to McDonald's, whatever you spend in advertising, we are going to tax you that amount. We are going to tax you on your advertising for McDonald's hamburgers. Mr. President, that concept will not fly. It doesn't happen in any other industry. Whenever would the Government expect taxes on expenses? It just doesn't make sense. But sometimes I think people I hear arguing on the Senate floor have never been in business. If you have never been in business and have never met a payroll, then you don't really understand how hard it is to make a profit and create new jobs and do right by your employees. I have been in business. I have met a payroll. I know how hard it is, especially in a small business. And when the prices are $7 or $8 a barrel and the costs are $14 a barrel, you can't stay in business very long. And if you can't stay in business very long, there are a lot of people and families who don't have jobs; and if you have to lay off people who are working at the well, then you also have to lay off people in the oil fields service industry and the oil supply industry because you aren't going to need the supplies if you are not drilling. And if it is too expensive to drill in America, you are going to go somewhere else, and you are going to create jobs in a foreign country. Mr. President, I guess the last thing I will say in refuting the arguments I heard from the Senator from Illinois and the Senator from California is that it always seems the tack is to say, well, they don't really care about this issue; they are supporting big oil because big oil has contributed to their campaigns. I don't go around looking at whether trial lawyers give to other Senators and, therefore, they don't vote for tort reform. I don't accuse people of not representing the interests of their States. Of course, I have oil workers in my State. I hope I am supported by people who work in my State and live in my State. But I would not do anything that would hurt the people of my State. The idea that that is connected to campaign contributions I just think is cynical, and I don't think it adds integrity to the debate. You gauge that against a most incredible statement when you accuse people who want to keep jobs in America, who want fair pricing, fair taxing, and fair payment of taxes--you accuse people of having some kind of other motive, and then you pick up a magazine called Inside Energy and the Department of Interior communications director says on November 2 of 1998, regarding the Hutchison-Domenici amendment that would require them to have a fair valuation: We are sticking to the position we have taken. It gives us an issue to demagog for another year. Mr. President, I think we have heard a lot of demagoguery on this issue. I have heard the most outrageous debate and arguments that I have heard on just about any subject on this issue, trying to make it seem as if oil companies that are being sued are somehow connected to whether or not we have a fair royalty valuation, trying to mesh those issues. That just does not make sense. It does not add to the debate. But to have the kind of demagoguery that we have heard on the floor and then to have the Department of the Interior admit that what they want is an issue to demagog, I have to say I think the Los Angeles Times editorial proves they did get a demagoguery editorial. I think some of the network television bought into it. I think there has been some very unfair coverage because we are talking about Congress standing up for its right to tax. If Congress doesn't stand up, who will? Who is accountable at the Department of the Interior? It is a matter of fairness. I am not going to walk away from that responsibility. I know what I am doing is right because I know we can have fair taxes of royalty. We are talking about an industry that paid $58 billion in the last 40 years in royalty rates. They have given a lot back to this country. They have given jobs. They have paid royalty rates. I want them to pay fair royalty rates. I would never stand up and say they shouldn't, or if they haven't that they shouldn't be fined. I think they should. But we are talking about people. We are talking about jobs. We are talking about the American economy. We are talking about retirement plans that depend on stable oil companies and the oil industry. I think fair taxation is the responsibility of Congress. That is what the Hutchison-Domenici amendment will assure--fair taxation intended by Congress. We will have some more debate on this. I certainly hope in the end my colleagues will not be susceptible to rank demagoguery--to rhetoric that is harsh and not in any way fair. It may be fun to ask questions back and forth on the Senate floor indicating that people's motives are not the right motives or are not pure, but that doesn't add to the debate. It is our responsibility to make policy. We are going to do it.

Mrs. HUTCHISON. Mr. President, I do want to address some of the issues and some of the facts that were misstated by the Senator from California because I think it is very important that the Record be set straight. I attempted to correct the Senator from California while she was speaking, but she preferred to continue to speak, so I want the Record to be very clear on some of these important facts. First, the Senator from California and the Senator from Illinois made much of the testimony of a former executive from Arco who had testified, they said, under oath that oil companies had in fact misstated and actually tried to hide the value of the oil and not pay their fair share in oil royalties to the State of California and the City of Long Beach. In fact, I am very pleased that they brought that up because the case has actually been settled just in the last couple weeks. In fact, the Senators from California and Illinois mentioned that several oil companies had settled because they, for whatever reason, did not want to go forward with the costly litigation. But Exxon decided not to settle, and the Arco employee did testify in the Exxon case, under oath, that the oil companies were misstating the value of the royalties they owed to the State and to the City of Long Beach. This case went to a jury, a jury in California of 12 citizens. The jury found that the Arco employee was not credible. The jury of his peers determined that the Exxon Corporation had not cheated the taxpayers of California or the City of Long Beach, and they threw out that suit from Long Beach and the State of California. Exxon showed that it had not undervalued its oil. This was a suit for $750 million. So the Arco executive who testified under oath was in fact discredited in the court, and the jury found that the Arco executive was not persuasive. I say that because so much was made of it, as if the case had gone the other way. But 12 citizens in California got together and the jury verdict was in favor of Exxon. But having said that, I have said from the very beginning that the lawsuits are not an issue. If any oil company did not value correctly under the present law or regulations, they ought to pay. So it has never been an issue. You would think, from the rhetoric of the Senator from the State of California, that this amendment had something to do with companies not paying their fair share under the present law. Nothing could be further from the truth. In fact, what we are talking about is changing the valuation of oil royalties. We are talking about unelected Department of Interior employees, who have no accountability, usurping the rights of Congress to set tax policy in this country and affect oil jobs to a huge extent. The fact of the matter is, what we are trying to do with the amendment, with the Hutchison-Domenici amendment, is we are saying we want it to be fair, we want to continue the moratorium until the Department of the Interior has a fair valuation that accedes to the wishes of Congress, because Congress makes the laws. That is the prerogative of Congress. That is the responsibility of Congress. And it is further the responsibility of Congress to stand up when they delegate authority to a Federal agency to make a rule and that Federal agency does not do what Congress intended for it to do. Only Congress can step forward and say: No, we did not intend to raise oil royalty rates the way you intend to do it, so we are going to put a moratorium on your rule until you do an oil royalty rate that is simpler, fairer, will be right for the citizens of our country and right for the oil industry that is very important to this country. So that is what we are talking about today. I did not like the tone of the rhetoric that ``oil is bad,'' that ``big oil is worse,'' that ``everything about oil companies is bad.'' I thought I was back in the 1960s when it seemed that ``business was bad.'' Well, business is people. Business is jobs. Business is people. My heavens, why wouldn't we want business to be successful in America so that we have jobs in America? Sometimes when I hear people talking about the ``big bad oil companies,'' I think: Do you want more foreign oil, more foreign jobs, rather than American jobs and American revenue? I think we have a choice here. Those ``big bad oil companies'' are the basis of the California teacher retirement system pension plan. They are a very important part of the stability of retirement for California teachers, and Texas teachers, for that matter, and probably Illinois teachers as well, because the big oil companies have been a stable source of dividends for maybe 100 years. I don't know when the big oil companies first started, but they have been good citizens for our country. They are the basis of pension plans and retired people's security all over our country, and they do create thousands of good jobs. So I do not think we have to beat up on oil companies. They are part of our economy and they are part of the security of our country. And, oh, by the way, since 1953 they have paid more than $58 billion for the right to drill on the people's land--$58 billion in oil royalty payments. If they did not pay their fair share, I want them to pay their fair share. So talking about settlements and lawsuits is not really an issue, even though a jury of their peers in California did find that Exxon had not cheated in any way. That isn't the issue. The issue is, we want them to pay. In order for them to pay a fair share, they need to be able to know exactly what they owe, and that is why we hope the MMS will simplify the regulation. In fact, the MMS refuses to even abide by its own previous rulings. So an oil company that is trying to do the right thing goes to a previous ruling on how oil is valued in a particular place, in a particular way, and the MMS says: No, we are not going to be bound by what we did in another case. That walks away from the value of precedent that is the hallmark of our judicial system and the regulatory system in our country. In most instances, the IRS most certainly abides by its previous rulings. They give opinion letters that people can rely on so they can pay their fair share of taxes. Courts set precedents with rulings every day so people will know what the law is and what they must do to comply. Not the MMS. They have one opinion here and one opinion there. Congress asked them to make it simpler, and they have gone far beyond what Congress intended. It is our responsibility to make sure they do what is right for the taxpayers of America. That is what the Hutchison-Domenici amendment will assure they do. This is not an industry that has had an easy time in the last year and a half. In fact, oil prices have been lower than ever in the history of our country, adjusted for inflation, $7, $8 a barrel, a lot of that because of the glut of imported oil on the market. We have lost half a million jobs in the oil industry in the last 10 years. We are importing 57 percent of the oil in our country. If we have bad oil royalty principles, it also affects natural gas, which is the most important substitute fuel in many of our coal burning areas. Natural gas is much cleaner, better for the environment than coal. So when you start tampering in a negative way with the oil royalty rates, you also are going to affect the price and availability of natural gas, because natural gas, of course, is a byproduct of drilling for oil. If you discourage our American companies and our American people from being able to get our own oil resources, you are also cutting back on our supply of natural gas. That could be dangerous to our economy and dangerous to the people who live in our country who depend on natural gas to heat their homes. I think it is important we put this in perspective. It is important we look at what we are talking about. Senator Boxer said the new rule would only affect 5 percent of the oil companies, and it would be just the big oil companies. She said she supports small oil companies. Well, I hope she will, because if she will, she will support the Hutchison- Domenici amendment because it is the Hutchison-Domenici amendment that will keep our small producers in business after the devastating effects of low oil prices from the last year. In fact, every single oil company is affected. There are 2,400 producers with Federal leases. Only 70 of them are not classified by the SBA as small businesses. All 2,400 are opposed to this new rule that will require them basically to pay taxes on their costs. The small oil companies that the Senator said she would support are very opposed to her position. They are for the Hutchison-Domenici amendment because they don't want a new rule that would second-guess sales of oil at the wellhead and make fuzzy exactly when the oil should be valued. They don't want a new duty to market and incur the costs of marketing and selling the product and bear the cost without any allowance. They are very concerned about this. If Senator Boxer believes that the small oil companies are against the Hutchison amendment, I hope she will talk to them. They will assure her that this is going to put one more chink in their ability to create jobs and continue to drill oil and natural gas in our country, rather than choosing to go overseas where it is much cheaper to do it and where you don't have to pay as much as we pay in America. I hope very much that she will reconsider, knowing that all of the small companies are affected by this new ruling. I will read from some of the letters of people and groups that are supporting the Hutchison-Domenici amendment. People for the USA writes: Dear Senator Hutchison: We support your fight to simplify the current royalty calculation system. On behalf of 30,000 grassroots members of People for the USA, I want to thank you for your diligent efforts to bring common sense to royalty calculations on Federal oil and gas leases. Energy Secretary Bill Richardson has suggested that domestic oil field workers look to opportunities overseas. Senator, an administration that talks about kicking American resource producers out of the country has a badly skewed set of priorities. That is signed by Jeffrey Harris, Executive Director. The National Black Chamber of Commerce writes: Dear Senator Hutchison: The efforts of MMS are, indeed, ludicrous. Collectively the national economy is booming and the chief subject matter is ``tax reduction,'' not ``royalty increase,'' which is a cute term for tax increase. What adds salt to the wound is the fact that despite a booming economy from a national perspective, the oil industry has not been so fortunate and is on hard times. We need to come up with vehicles that will stimulate this vital part of our economic bloodstream, not further the damage. That is signed by Harry Alford, President and CEO, National Black Chamber of Commerce. Citizens for a Sound Economy: The 1999 Omnibus Appropriations Act included moratorium language concerning a final crude oil valuation rule, with the expectation that the Department of Interior and industry would enter into meaningful negotiations in order to resolve their differences. Unfortunately, more time is still needed for government and industry to reach a mutually beneficial compromise. It is signed by Paul Beckner, President. Citizens Against Government Waste: Passage of this provision in the Interior Appropriations bill will provide the time necessary for the MMS and the industry to reach a fair and workable agreement on the rule benefiting both sides. It is signed by Council Nedd II, Director, Government Affairs, Citizens Against Government Waste. Frontiers of Freedom: In a misleading letter dated July 21, 1999, detractors of the Hutchison-Domenici amendment allege it will cost taxpayers, school children, Native Americans and the environment. That is not so. It is time to set the record straight. This amendment does not alter the status quo at all. This amendment says to Secretary Babbitt, spend no money to finalize a crude oil valuation rule until the Congress agrees with your proposed methodology for defining value for royalty purposes. That is signed by Grover Norquist, President, Americans for Tax Reform; George Landrith, Executive Director for Frontiers of Freedom; Patrick Burns, Director of Environmental Policy, Citizens for a Sound Economy; Fred Smith, President Competitive Enterprise Institute; Al Cors, Jr., Vice President for Government Affairs, National Taxpayers Union; Jim Martin, President, 60 Plus; David Ridenour, National Center for Public Policy Research; Adena Cook, Blue Ribbon Coalition; Bruce Vincent, Alliance for America; Chuck Cushman, American Land Rights Association; and Malcolm Wallop, Chairman of Frontiers of Freedom. Mr. President, I ask unanimous consent that these letters be printed in the Record.

Mrs. HUTCHISON. Mr. President, as was unanimously consented to earlier in the evening, Senator Gorton requested that all of the arguments on the Hutchison amendment be put together. So I ask unanimous consent that my remarks be put following the Boxer remarks on the Hutchison amendment, which I think is the next in line, in order to keep them in the same area so that they will follow along.

Mrs. HUTCHISON. I will not object, as long as the Record also shows the CBO has said $11 million and that assumes people are not going to go out of business.

Mrs. HUTCHISON. Mr. President, I object. I do want the Senator to be able to enter her documents in the Record, but I want to also have entered in the Record that the Congressional Budget Office has estimated it would be $11 million. That would be the cost to the taxpayers; that is, if the oil companies continue to drill. So she may----

Mrs. HUTCHISON. Mr. President, I wonder if the Senator will yield on that point because I think there has been an error in the amount that we are talking about.

Mrs. HUTCHISON. Mr. President, if I may say so, I appreciate that this is the Hutchison-Domenici amendment. Sometimes it is Domenici- Hutchison because we both have worked so hard on this issue over the last 3 years. I appreciate the leadership of my colleague from New Mexico who feels the loss of oil jobs just as my State of Texas does. It is a team effort. Thank you, Mr. President.

Mrs. HUTCHISON. Mr. President, I offer this amendment on my behalf, and in addition to Senator Shelby, Senators Domenici, Lott, Nickles, Breaux, Murkowski, and Landrieu. This amendment will continue an existing provision that will prevent the Interior Department's Minerals Management Service, MMS, from implementing an overreaching and unwise new oil royalty valuation system. This moratorium was adopted by the Senate Appropriations Committee and continues the same restrictions that have been passed by the Senate and the House and signed by the President three times previously. I add that it has been bipartisan, and the initial moratorium and its subsequent extensions have been supported by Senators on both sides of the aisle, and the same is true on the House side. This will be the fourth time that Congress will have to act to stop this action by the Minerals Management Service. I regret that, and I wish there did not have to be a first time. But this moratorium is absolutely necessary in order to stop the MMS from overriding its regulatory authority by imposing a backdoor tax on the production of oil from Federal leases. We have heard about judges legislating from the bench. This is, I think, legislating from the cubicle. This new rule violates both the language and the intent of Federal law governing the assessment and collection of Federal royalties from oil and gas drawn from Federal lands in the Outer Continental Shelf. Everyone agrees the existing rules are too complex and burdensome, and Congress and the industry groups had welcomed a revision of the rules. But the proposed rule 3 years ago which MMS announced without prior notice to Congress could impose even more costly regulations on oil producers and effectively enact a royalty rate hike or tax increase which the agency simply does not have the authority to do. While the larger oil companies might be able to absorb these costs, hundreds of small independent producers probably will not. This new rule hits them at a time when they are still reeling from the historically low oil prices we have seen lately. Anyone who has any kind of oil production in their States knows that hundreds of thousands of oil-related jobs in our country have gone out of existence in the last 6 months. We all know that oil prices went down to $10 a barrel. We have not seen that in this country for 40 years. We know that small independent producers had to go out of business, thus throwing hundreds of thousands of people off the payroll. In addition, there are two recent developments that justify more than ever before the extension of the moratorium. First, the MMS itself says it needs more time to review its rule; second, a serious ethical and legal question has recently been raised about the rulemaking process. Earlier this year, the Minerals Management Service did reopen the comment period for their rule for 30 days. During that period of time, they received extensive comments dealing with the many facets of this issue, and they have not yet finished reviewing and considering those comments. Because they have held workshops and various oil industry representatives and others interested in this issue have been able to meet together, it is going to take time for the agency to digest the input they have. I hope there is a window in which the Minerals Management Service will be able to sit down and come up with something that is fair and will not put more of our oil industry jobs off the books and into foreign countries. Remember, today we import more than 50 percent of the oil needs of our country. We are certainly not doing anything to help our own oil industry keep oil jobs in America, and it is a security risk to any country that cannot produce 50 percent of its energy needs. I think everything we can do to keep this industry strong is a security issue for our country, and it is certainly a jobs issue. Unfortunately, extending the moratorium through the next fiscal year is the only way we are going to be able to get this agency to produce a workable rule that stays within the bounds of the law. That is what we are trying to do. In fact, I want our oil industry to pay its fair share of royalties to the people of our country. Our taxpayers deserve that. That is exactly what we are trying to do with the MMS. But the MMS has been very heavy handed, and they act as if businesses going out of existence is preferable to having a fair royalty rate in which the industry would pay its fair share and we would keep jobs in America. Several of my colleagues and I strongly urged MMS to sit down with Members of Congress and industry representatives to discuss these issues. It did so last year. Some progress was made, and I thought we were coming toward a compromise. Unfortunately, the Department of the Interior brought the progress to an abrupt halt. The only way we will be able to sit down with the agency is if there is a moratorium until there is a satisfactory resolution of this issue by the MMS and the Members of Congress who are interested in keeping oil jobs in America. In addition, I and other Members of Congress only recently became aware of a situation that, frankly, calls the entire rulemaking process into serious question. This spring it was revealed that a self- proclaimed government watchdog group called Project on Government Oversight, or POGO, gave $350,000 each to two Federal officials: One at the Department of the Interior and the other at the Department of Energy, apparently in connection with their work on the royalty valuation issue. This matter is presently under criminal investigation at the Department of Justice, and it is the subject of an investigation by the Department of the Interior's inspector general. Until these investigations are complete, the prudent course would be for the Interior Department to take a voluntary action to suspend its plan to finalize the new royalty valuation rule. Unfortunately, the Department has indicated it is not willing to do this. I can't imagine an agency that has admitted or at least acknowledged that one of its employees in this rulemaking process took $350,000 as part of a payment in a lawsuit from this government watchdog organization, and the agency is not even willing to say we should call a moratorium on this whole process until we get to the bottom of this. That is why, when things such as this happen, people don't trust their Government. I can't imagine the Interior Department not volunteering to take this action and sit down with us and make sure that this rulemaking process has integrity. The Interior Department's proposed rule defies the law and the intent of Congress. This disregard for the law is what is at the heart of our objection to the proposed new rule, not the $11 million the Congressional Budget Office estimates the proposed rule will generate in new income for the agency. Federal law requires for purposes of royalty payments the value of oil drawn from Federal land is to be assessed at the wellhead; that is, when the oil is drawn from the ground. The MMS, however, continues to try to assess the value of the oil away from the wellhead, after the oil has been transported, processed, and marketed, each of which must occur before the oil can be sold. In effect, the MMS is trying to get a free ride on these costs rather than allowing companies to deduct them from the price they ultimately receive for the oil. So you are asking people to pay a tax on their cost of doing business. That does not make economic sense. It certainly doesn't pass the fairness question. There isn't any question that the existing system of computing Federal oil royalties is overly complex. No one disputes that. Under the current system, oil producers are often unclear as to what their royalty payments are supposed to be, and even the MMS is often at a loss as to what they are owed. But rather than propose a simpler method of ascertaining royalty payments, the MMS has proposed an even more complex and protracted litigation over just what the new rule requires. While the proposed rule could bring in increased Federal revenues, the increased payments could also be eaten up by the need to hire an army of new Federal auditors to ensure compliance with the complex new system. Furthermore, if companies decide not to go forward with their drilling because they can't make any kind of profit, there will be no revenue to the schoolchildren in our country because there will be no oil royalty extracted from those companies. So the new rule is going to be a regulatory thicket that really is not going to help the situation, which is the problem of a too complex regulation today. Let me also emphasize this amendment has nothing to do with the entirely separate issue of whether or not any particular oil company has paid the royalties it owes under the existing system. I have heard a lot of rhetoric on this issue. I have heard my colleagues talk about the lawsuits and the settlements and companies that haven't paid their fair share. If any oil company has not paid its fair share under the existing regulation, I want it to be prosecuted. I want it to have to pay. That is not an issue in this regulation. The only issue before us today is what is going to be the oil royalty valuation process and is Congress going to have the right to raise taxes or is an unelected bureaucrat who is not accountable going to have that right. Federal land and the mineral resources within that land belong to us all. Proper royalties must be paid for the right to extract those resources. Since 1953, those payments have totaled over $58 billion. That is what we have collected in oil royalties. But enforcement of the law and writing the law are two separate things. The MMS seems to have forgotten that it is the responsibility of Congress, not the government bureaucrats, to determine what the royalty is. That is why we must continue this moratorium until Congress says this is the right approach. The new rule imposes upon Federal lease producers a duty to market their oil without allowing the cost to be deducted. Oil does not sell itself. There are overhead costs associated with listing the oil for sale, locating buyers, facilitating the sale, and then ensuring that the oil is delivered to that buyer. Federal law and existing regulations only require that the lessee place the oil in marketable condition; that is, that the oil is ready to be sold by removing water and other impurities from it. But lessees are allowed, under current law, to deduct the costs associated with transporting and marketing the oil. The new rule, as contained in the MMS' own explanation, states that the producers must market the oil for the mutual benefit of the lessee and the lessor. This, then, would mean producers would no longer be allowed to deduct these costs in order to arrive at true wellhead value, as called for by Federal law. There is no other way to slice it. This constitutes a backdoor royalty rate hike; in effect, a tax increase on Federal lands producers. Secondly, the MMS rule would not allow for the proper deduction of transportation costs. Oil producers typically have to bear the cost of transporting the oil to the buyer, either by pipeline or truck. Presently, those costs are determined by using a methodology recognized by the Federal Energy Regulatory Commission, which has regulatory authority over interstate oil pipelines. So the new MMS rule would actually reject the Federal Government's own cost guidelines and impose a new, untested system for determining transportation costs. So it comes down to a simple decision: Do we want unelected bureaucrats enacting policy with regard to our Federal lands, or do we want Congress to establish these policies? There have been other bills introduced that would deal with this issue. I hope we can come to an agreement. But I don't think we can forget what has happened to the oil industry over the last 2 years. In fact, this is coming at a time when oil and gas production in our country is at an all-time low. In March of this year, we saw oil prices in parts of our country going down to even $7 or $8 a barrel. While the price of oil has since begun to come back up--and today stands at about $20 a barrel--the impacts of a year and a half price crash are reverberating throughout the United States. Since the price of oil first fell in late 1997, over 200,000 oil and gas wells have been shut down. Most of these, of course, were the low-yield marginal or ``stripper'' wells that will never again be opened because it is not economically feasible to do it. In March of this year, crude oil production in the lower 48 States fell to 4.8 million barrels per day, the lowest level in 50 years. The number of oil rigs in service in the United States fell to just over 100 for the last week in July, the lowest number in service since records have ever been kept. During this time, foreign oil imports rose steadily and now account for 57 percent of consumption, well above the 36 percent import level we saw during the 1974 oil embargo that nearly shut down the American economy. The oil crisis has also had a devastating impact on American jobs. Since November 1997, we have lost over 67,000 jobs just in the exploration and production sectors of this industry, which represents 20 percent of the total number of jobs in this field. In January 1999 alone, 11,500 oil and gas jobs were lost. If one looks back to 1981, the numbers are even more alarming: Over half a million good-paying American jobs have been lost in the oil and gas industry. There are those who would say this is going to hurt our schoolchildren, that they are not going to get the revenues from our public lands. This is very important in my home State. There are dozens of school districts that rely heavily on oil production; property taxes fall with the price of oil. Statewide school districts will collect an estimated $154 million less in revenues this year than last. That is $154 million worth of teachers' salaries, books, computers, you name it. That is what we are talking about in Texas when we talk about the impact of oil on education. So if we are going to hit the oil business again, what is it going to do to the schoolchildren of our country? Is it going to take another $154 million hit in my State? Do you know that they had to let teachers off in midyear in many counties in Texas because they didn't have the money because of oil companies going out of business and having no income whatsoever? So when my colleagues say the schoolchildren are going to lose $60 million, perhaps, in California alone, I point my colleagues' attention to the fact that we have lost $154 million this year in Texas, and we are cutting teachers off in midyear and shutting down schools because our oil industry is on its knees. During 1998, while the average yield for stocks in the Dow Jones Industrial Average was a positive 18 percent, the yield for oil and gas stocks was a negative 36 percent. So what does that do to the elderly investor, or the person who is investing in mutual funds? What does that do to an industry that is very important for the retirement security of millions of our citizens? For companies inclined toward exploration and production, earnings and stock values have fared even worse. The yield on independent refiner stocks, down 40 percent. The yield on exploration and production stocks, down 63 percent. The yield on drilling stock, down 64 percent. These stock values reflect huge losses by oil companies over the past year and a half. Corporate earnings of the 17 major U.S. petroleum companies fell 41 percent between the first quarter of 1998 and the first quarter of 1999. Fourth quarter losses for 1998 and the first quarter of 1999 were some of the largest witnessed in industry history. Some companies have lost over $1 billion during each of these quarters. So we are not just talking about the loss of revenue to our schoolchildren. We are not just talking about the stability of the retirement pension plans of millions of Americans. We are talking about flat bad policy. We are talking about cutting off an industry that is essential to our security, essential to the retirement security of individuals in this country, essential to job security for thousands of workers; and we are talking about blithely saying let the bureaucrats who aren't accountable increase the taxes without congressional responsibility. Congress didn't say that last year, they didn't say it the year before, and they didn't say it the year before that. They said: No, you will be accountable because we do care about the schoolchildren of this country, we do care about the people living on retirement incomes in this country, and we do care about those who have mutual funds that include oil industry stocks; we want them to be stable, we want them to pay their fair share, and we believe their fair share includes not paying taxes on their expenses. It is economics 101. So I am asking my colleagues, for the fourth straight time, to come forward and vote to keep this moratorium so Congress can exercise its full responsibility, so that we will not put people out of business because the margins are so low and because they have been hit so hard over the last year and a half. We are joined by many groups who care about the economic viability of our country: Frontiers of Freedom, the National Taxpayers Union, Americans for Tax Reform, Citizens Against Government Waste, Citizens for a Sound Economy, the Alliance for America, People for the USA, Sixty-Plus, the Blue Ribbon Coalition, the American Land Rights Association, the Competitive Enterprise Institute, the National Center for Public Policy Research, Rio Grande Valley Partnership. The moratorium that I am proposing to extend will force the Department to take the time to craft a rule that works and accurately reflects the will of Congress--a rule that will be fair to the schoolchildren of our country, a rule that will be fair to the taxpayers of our country, a rule that will make the oil industry pay its fair share, but a rule that will not make the oil industry pay an increased tax on their expenses. That is unheard of in economics in our country, nor good business sense. It is confiscatory taxation, and we will not stand for our retirees having their investments obliterated by taxes that are unfair. The buck stops here. It does not stop on the bureaucrat's desk; it stops here, because we are responsible for keeping the jobs in this country. We are responsible for fair taxation policy. We are responsible for the schoolchildren of our country. And the way to keep these companies paying their fair share, creating the jobs, and creating safe retirement systems for the people of our country is to keep the moratorium on and force the Department of the Interior to do the will of Congress, which is what it is supposed to do. If we don't stand up for our responsibility, who will? Who will stand up for Congress' responsibility if the Senate doesn't? I urge the adoption of the amendment which has been adopted three times before, and which I hope will be adopted again, so that we will keep the oil jobs in our country, so that we will keep the retirement security of the mutual funds that depend on oil companies being stable, so that we will keep the schoolchildren of our country having the ability to get revenue that is fair, and to make the oil industry pay its fair share. That is what this amendment does. I yield the floor.

Mrs. HUTCHISON. Mr. President, I ask unanimous consent that Senator Shelby be added as a cosponsor to this amendment.

Mrs. HUTCHISON. Mr. President, I ask unanimous consent that the reading of the amendment be dispensed with.

Mrs. HUTCHISON. Mr. President, I call up amendment No. 1603.

Mrs. HUTCHISON. I do intend to address the issue of my amendment, but first I ask unanimous consent that privileges of the floor be granted to William Eby during the pendency of the Interior appropriations bill.

Mrs. HUTCHISON

Mrs. HUTCHISON. Mr. President, before I leave, I want to take a moment to also talk about one other issue. That is the issue of what is happening in Indonesia. All of us have seen atrocities and read of atrocities in many parts of the world--most recently in Indonesia where we have seen the people of East Timor vote for independence, and they were told by the Government of Indonesia that vote would be respected. Now we see bands of militia-type people that, it is said, could be connected with the Indonesian Government going in and committing terrible acts. This is a terrible thing. It is horrible. We hate to see it. I think there are many things that can be done. First and foremost, we must call on Indonesia to do what they said they would do and respect the right of the people of East Timor in their independence. I also think we should be supportive of those who are volunteering to go over there if necessary. This is where I think we can show some leadership from the United States. I would call on the President to do that. That is not to all of a sudden start talking about sending American troops into East Timor. I think by beginning to start bandying that around, all of a sudden you are going to start seeing people depend on American troops. I don't think we have to start talking about American troops in East Timor. I think it would be harmful if we did that because of the vast commitment we have in the Balkans right now as well as the DMZ in Korea, as well as in Japan, as well as in Europe, and other places in the world. No one would ever walk away from the responsibility that America must shoulder as a superpower. But Australia has stepped up to the line to try to help bring an end to the chaos that I hope is temporarily erupting in East Timor. I think we should help them do that by offering logistical support but letting people volunteer. This is a time when we can look at the areas of the world that have regional conflicts, and we can let the sophisticated countries that have quality military operations be the main part of a force in those areas. In fact, it appears that Australia, New Zealand, and many others are volunteering to take this policekeeping mission. I think it would be wise for us to let them do that. Let them take that responsibility and offer our logistical help if they need it. But don't start bandying about the possibility of U.S. troops going in on the ground when our troops are stretched so thin--when we have had the worst recruiting year and the worst retention year since the early 1970s because our troops are in mission fatigue. They are not able to stay in top training because they are stretched so thin. I hope the President will take this opportunity to set a U.S. policy and to work with our allies to have a division of responsibility that is fair. If we do that, then America will be able to do what only it can uniquely do, and that is the air power that we have shown that we have in the last 6 months. Let us keep our role to responding where only we are able to keep the peace--in the Middle East, in Korea, in Japan, and in parts of Europe. Let's work with our allies for a fair responsibility sharing that will set a precedent so that we will all have the staying power to provide the critical needs in regions as they occur. I hope President Clinton will take this opportunity to be a leader and to represent the United States and our national security issues and our national security stability. If he will do that, I think you will begin to see a foreign policy that will evolve with all of our allies sharing and keeping all of us strong by not overburdening any one of us to the detriment of all. Thank you, Mr. President. I yield the floor. I suggest the absence of a quorum.

Mrs. HUTCHISON

Mrs. HUTCHISON. Yes. I object. Mr. President, I am sorry, but I would like to have up to 5 minutes, and I did not realize I would be shut off.

Mrs. HUTCHISON. Mr. President, I will speak about why I am going to vote against the Holbrooke nomination. I start by saying, I have never put a hold on this nomination. I thought the process should go forward in due course. I think Richard Holbrooke is a principled man. I think he is a committed public servant. I admire his tenacity, his dedication. I have nothing personal against Richard Holbrooke. I am voting against him because I disagree with the policy that he has put forward in the Balkans. I just can't, in good conscience, vote for someone who I think is taking our country in the wrong direction. This is his policy: that the United States should spend billions of dollars, wear and tear on our equipment and our troops, stretching our military for a goal that I believe is not achievable. I would commit our military immediately if I thought the goal and the mission were the correct one, but I believe our policy in the Balkans is to force factions to live together in an American model, when the circumstances are different from any we have ever had in our country. I don't think we can put American requirements into the Balkans with any chance to succeed. We have had a policy that the United States could use force of vast proportions without strategically assessing what would be more proportional responses in line with our own security threat and our other responsibilities in the world. Richard Holbrooke did not allow the United States, through his policies, to lift the arms embargo on one faction in Bosnia, so one group was unarmed against two groups that were armed. I think if we had lifted the arms embargo 3 years before the Dayton accords, those people would have had a fair chance. I don't think we would have seen the mass slaughter of the Moslems that we did. I disagree with that policy. We never looked at the opportunity for self-determination in the Balkans. We never looked at the opportunity to let these people form governments within their ethnic groups. They are 98 percent in ethnic groups now in Bosnia, but we are still trying to force them to have a coalition government. If we walked out today, I think every expert would agree the fighting would continue. The Washington Post yesterday had a headline, ``NATO Losing Kosovo Battle.'' This was not a headline 2 months ago. It was yesterday. The reason is, we have a policy in the Balkans that I think is going to hurt our own national security by overdeploying our military troops, by wear and tear on our equipment, by not having a sense of proportion in looking for other options, not looking at all of our commitments in the world, but instead trying to force an American model that I think is unrealistic today. I think there are other options to try to help the people in the Balkans create stability with self-determination and then, eventually maybe, they would be able to live closer together in harmony. Mr. President, I want to say I am only voting against Mr. Holbrooke on his foreign policy principles, not on him as a person. I will say again that I think he is a committed public servant. I think he is tenacious in his beliefs, and I admire that in a person. I just believe that our foreign policy is going in the wrong direction in this country. I think we are going to pay a high price for it, and I think Richard Holbrooke is one of the architects of this policy that I believe is quite erroneous. So, for that reason, I will vote against Richard Holbrooke. Thank you, Mr. President.

Mrs. HUTCHISON

Mrs. HUTCHISON. Mr. President, I thank the distinguished chairman of the committee for giving us tax relief for the hard-working American family. We have heard a lot of debate in this Chamber in the last few hours, but it comes down to a very simple issue, and that is whether we are for giving the people who earn the money the right to decide how to spend it. It comes down to one basic issue. We are for tax cuts, and I think the question is, Is the President for tax cuts? He campaigned saying he was for tax cuts for middle-income people, but the President has not supported tax cuts yet. In fact, the major area of tax policy that the President gave us was the largest increase in the history of America. We are trying to cut back on those tax increases because we have a surplus and because we believe that the surplus should be shared with the people who gave it to us in the first place. A lot has been said about Social Security and whether we are going to maintain the stability of Social Security. The answer is emphatically, we are; $2 trillion will come in over the next 10 years in Social Security surplus. The Republican plan that is before us today totally keeps that $2 trillion for Social Security stability. The other $1 trillion in surplus over the next 10 years is in income tax surplus, withholding surplus, people's hard-earned money that they have sent to Washington in too great a quantity. It is that $1 trillion that we are talking about. We are talking about giving 25 cents per dollar of that trillion back to the people who earn it, and we think that is not only fair; it is required. I worked very hard with Senator Ashcroft and Senator Brownback to eliminate the marriage tax penalty. This bill does it. We double the standard deduction so that people will not have a penalty because they get married. And, most of all, the people who need it the most are going to have total elimination of the tax on marriage. That is the schoolteacher and the nurse who get married and all of a sudden are in a double bracket, from 15 percent to 28 percent. One earns $25,000, the other earns $33,000, and together they go into the 28-percent bracket today. This bill eliminates that from the Tax Code forever, period-- gone. The President has said he is going to veto that tax relief, and I don't understand it. Let me talk about what it does for women. Of course, the marriage penalty tax hurts women. But we also know that women live longer and they have smaller pensions. They have smaller pensions because women go in and out of the workplace, and they lose the ability to have that growth in geometric proportions in their pensions. That has been an inequity for women in our country. We eliminate that in this bill, or at least we try. We help by allowing women over 50 who come back into the workplace to be able to set aside 50 percent more in their pensions to start catching up. So where most people--all of us--have a $10,000 limit on a 401(k), a woman over 50 who comes back into the workforce after raising her children will be able to have a $15,000 set-aside in her 401(k). We also give help on IRAs. It is very important to a woman who is going to live longer to have equal pension rights because she is more likely to have children, raise her children, maybe through the 1st grade or maybe through the 12th grade. We want to make sure we equalize that and recognize it. We have done that. Yet the President says he is going to veto this bill. We have tax credits in this bill for those who would take care of their elderly parents, or an elderly relative, because we know one of the hardest things families face is how to take care of an elderly relative who doesn't want to go into a nursing home. Families would like to keep them. Sometimes they don't even want to do that, but long- term care is so expensive that they can't afford it. So we have credits for long-term care insurance, and we have credits for those who would care for their elderly parents. So this bill lowers capital gains, lowers the death tax; it gives a benefit to everyone. The working people of this country deserve it. I hope the Senate will pass it. I hope the President will sign it and make good on all of our pledges to give the working people of this country relief. Thank you, Mr. President.

Mrs. HUTCHISON

Mrs. HUTCHISON. I thank the Senator from Oklahoma. It is clear from the debate this is not an issue that should be taken up on this bill. Clearly there are questions. The scientific basis is not proven at all. I hope we will not do something that will mar the record and take the jurisdiction from where it should be, and that is the Environment and Public Works Committee. Amendment No. 1522 To Amendment No. 1521

Mrs. HUTCHISON. I am happy to yield to the Senator.

Mrs. HUTCHISON. Then you see the chairman of the Committee on Environment and Public Works who says: Excuse me, but this is my jurisdiction, and I would like to address it. And he is, as Senator Domenici said, one of the most distinguished of our Members. I say to Members, do this: MTBE should be looked at. It is a way to clean the air. It is an additive to gasoline to meet the clean air requirements of EPA. We should not have a sense of the Senate that holds up the Agriculture appropriations bill. I hope Members will vote to table this sense of the Senate and give Chairman Chafee the opportunity to look at this issue to determine if there is something wrong with MTBE, which I think is very much a question. But to have something like this continue to hold up this bill, when our farmers certainly need the relief this appropriations bill is going to give us, I think is the wrong approach. I urge Members to table this sense of the Senate.

Mrs. HUTCHISON. Mr. President, I am sitting here looking at the chairman of the Agriculture Appropriations Subcommittee who has been trying to pass a responsible bill all week. All of a sudden, out of the blue, we have a sense of the Senate that doesn't belong on the Agriculture appropriations at all.

Mrs. HUTCHISON

Mrs. HUTCHISON. Mr. President, on rollcall vote No. 234, I voted ``no.'' It was my intention to vote ``aye.'' Therefore, I ask unanimous consent that I may be permitted to change my vote. It will in no way change the outcome of the vote.

Mrs. HUTCHISON. Mr. President, I move to reconsider the vote.

Mrs. HUTCHISON. I ask unanimous consent that Senator Domenici be added as an original cosponsor of the amendment.

Mrs. HUTCHISON. Yes.

Mrs. HUTCHISON. Mr. President, I will finish on my statement. Something very important is happening. What is important is, we are apparently going to pass overwhelmingly the only amendment that will have passed on this bill. On this very important tax cut measure, we are going to add certainly the first amendment, and maybe the only one, that says the marriage tax penalty is not going to be allowed to stand in the United States of America. That is what we are doing today. The bill provides for marriage tax penalty relief in 2005. I applaud the committee for doing that. But I thought we should address it earlier. That is why Senator Ashcroft, Senator Brownback, Senator Domenici, Senator Roth, and Senator Baucus have come together and said that is right. The people of this country who want to get married should not have to pay $1,000 in taxes just because they got married. We are going to end it today because we are sending a signal that is joined by the House that this is our first priority. So a high school football coach and a schoolteacher can get married and not move into a bracket that is almost double just because they got married. It hits our middle-income taxpayers the most. They are the ones who are trying to save for a new house or a new car or to do something special for their new baby. We are going to send a signal out of the Senate, along with the House, to the President, saying: Mr. President, we are going to have $1 trillion in income tax surplus. Are you serious in saying you would veto this bill that gives marriage tax penalty relief to our country, that gives pension relief to the women who go in and out of the workforce who are unable to have the same pension capabilities as those who never leave the workforce? Is the President serious about vetoing a bill that provides for Social Security, that provides for Medicare and education, and, yes, the marriage tax penalty relief? Mr. President, we are making a statement with this amendment. I am proud the Senate is going to take up and I believe overwhelmingly pass a priority of eliminating the marriage tax penalty in this country once and for all. I urge my colleagues to give a unanimous vote for the married people who have been living with a penalty that is not warranted. I yield the floor.