Don Nickles

Mr. NICKLES

Mr. NICKLES. I ask unanimous consent the resolution be agreed to, the preamble be agreed to, and the motion to reconsider be laid upon the table

Mr. NICKLES. Mr. President, I ask unanimous consent that the Senate now proceed to immediate consideration of Senate Resolution 22, reported today by the Judiciary Committee.

Mr. NICKLES

Mr. NICKLES. Mr. President, I rise today to introduce the Federal Royalty Certainty Act. The domestic oil and gas industry is an essential element of the United States economy. The Administration needs to acknowledge the critical importance of this industry and stop hindering it with regulatory obstacles. Right now, our domestic oil and gas procedures are reeling from low oil prices. In Oklahoma alone, 50,000 jobs are dependent on the oil industry. Last year, we had over 350 producing oil rigs in the country, now we have slightly over 100. The industry is in a state of depression, not a decline, and these conditions pose a threat to our national security and our economy. The Administration's policies have failed domestic producers. What is needed is a comprehensive plan to maintain the viability of the domestic oil and gas industry. Part of that plan should be to eliminate or greatly reduce the administrative costs of the current royalty program with simple, clear and certain guidelines. We need to eliminate rules that are burdensome and excessively costly. The Nation cannot afford to allow the devastation of our domestic oil and gas industry to continue. We should be taking action to encourage growth in the industry. Instead, the Administration has advocated policies that undermine it. We must raise our country's awareness and reverse this course of action by providing relief from big government and burdensome regulations. We must provide this critical segment of our economy fairness and efficiency in their contracts with the federal government. Several years ago, I began taking a closer look at oil and gas produced from federal leases and the Department of the Interior's administration of those lease contracts. I was pleased when Congress passed the Royalty Simplification and Fairness Act which I introduced and which became law in August of 1996. What that Act accomplished was to streamline the accounting processes for federal royalties. While that Act made significant steps forward in simplifying the payment of federal royalties, the heart of the issue is still before us--what royalty does a lessee owe to the government under its lease contract for oil and gas produced from a federal lease? When a person or company contracts with the federal government, it should know exactly what is owed under the contract. While this should be a simple question with a simple and unambiguous answer, that is unfortunately not the case today. There appears to be multiple answers, changing answers and a morass of regulatory interpretations that change over time. Such regulatory obstacles prevent industry from knowing what they owe and being able to make business decisions with that knowledge. It also prevents the collection of royalties easily and efficiently. Having a clear understanding of the correct amount due is the central and critical element of any successful royalty management program. Without it, the program cannot operate fairly, efficiently or cost effectively. In January 1997, MMS issued a Notice of Proposed Rulemaking for a new oil valuation rule. The proposed rule was met with a firestorm of protests and thousands of pages of comments have ensued. Despite serious problems that have been raised with the proposal, its workability and its fairness, the Department has repeatedly stated that it will publish its rule as final. As a result, this Congress has imposed two moratoriums on the proposed rule and is in the process of imposing another. Congress and Industry have repeatedly attempted to initiate negotiations with DOI/MMS to no avail. The current moratorium continues until June 1, 1999. Secretary Babbitt has stated that the MMS would publish a final rule on June 1, 1999 and in Congressional briefings the MMS has stated that ``MMS does not believe that further dialogue on the rule would be productive.'' DOI Communications Director Michael Gaulding stated to Inside Energy that ``we're sticking to the position we've taken. It gives us an issue to demogogue for another year.'' Rather than perpetuate the moratoria I believe Congressional action is needed. I am therefore today introducing the ``Federal Royalty Certainty Act.'' This Act addresses and resolves issues related to royalties both when they are paid in value and in amount. This bill amends the Outer Continental Shelf Lands Act and the Minerals Lands Leasing Act and provides that when payment of royalties is made in value, the royalty due is based on oil or gas production at the lease in marketable condition. When royalty is paid in kind, the royalty due is based on the royalty share of production at the lease. If the payment (in value or kind) is calculated from a point away from the lease, the payment is adjusted for quality and location differentials, and the lessee is allowed reimbursements at a reasonable commercial rate for transportation, marketing, and processing services beyond the lease through the point of sale, other disposition, or delivery My bill will codify the fundamental, longstanding principle that royalty is due on the value of production at the lease. The Department of the Interior recognizes this principle and very recently has said ``royalty payments [should be] based on no more than the value of production at the lease'' (News Release, MMS 2/5/98), there should be agreement on this codification. This legislation provides proper adjustments when sales are made downstream of the lease to arrive at values that equal the value of production at the lease. In addition, this legislation includes a consistent basis for valuation of royalty both onshore and offshore. Importantly, this legislation also resolves many of the core issues related to the proposed rule on oil valuation in a manner that is fair and equitable to the people of the United States and the producers who have entered into contracts with the federal government. These provisions will reduce the costs of a complicated system that spawns disputes, while preserving the taxpayer's right to a fair return for its resources. As I have said on many occasions, we need to reduce unnecessary, burdensome and excessively costly regulations. We need a little common sense. In summary, all interested parties need to work together to arrive at a workable, permanent solution--a system whereby the government can collect what is due in a manner that is simple, certain, consistent with lease agreements and fair to all parties involved. The Royalty Fairness bill was a significant first step to simplify and eliminate regulatory obstacles in the Department's accounting procedures. I believe that the Federal Royalty Certainty Act is an important next step.

Mr. NICKLES

Mr. NICKLES. Mr. President, for the information of all Senators, the Senate will convene on Friday at 9:30 a.m. and immediately begin 30 minutes of debate relating to the cloture on the Social Security lockbox issue. Following that debate, the Senate will proceed to two rollcall votes. The first vote will be on the cloture to the Abraham amendment to Senate bill 557. The second vote on Senate Resolution 33, regarding a National Military Appreciation Month, will take place immediately following the first vote. Therefore, Senators can expect two votes at approximately 10 a.m. For the remainder of the day, the Senate may continue to debate the lockbox issue or any other legislation or executive items cleared for action.

Mr. NICKLES

Mr. NICKLES. Mr. President I ask unanimous consent that when the Senate completes its business today it stand in adjournment until 9:30 a.m. on Friday, April 30. I further ask that on Friday immediately following the prayer, the Journal of proceedings be approved to date, the morning hour be deemed to have expired, and the time for the two leaders be reserved for their use later in the day.

Mr. NICKLES

Mr. NICKLES. Mr. President, I ask unanimous consent the resolution be agreed to, the preamble be agreed to, and the motion to reconsider be laid upon the table

Mr. NICKLES. Mr. President, I ask unanimous consent that the Senate proceed to the immediate consideration of Calendar No. 102, Senate Resolution 72.

Mr. NICKLES

Mr. NICKLES. I ask unanimous consent that the Senate immediately proceed to executive session to consider the following nominations: Executive Calendar No. 44 and all nominations reported by the Armed Services Committee today with the exception of Lt. Gen. Ronald T. Kadish. I further ask unanimous consent the nominations be confirmed, the motion to reconsider be laid upon the table, the President be immediately notified of the Senate's action, and the Senate then return to legislative session.

Mr. NICKLES

Mr. NICKLES. I ask unanimous consent the resolution be agreed to, the preamble be agreed to, and the motion to reconsider be laid upon the table

Mr. NICKLES. Mr. President, I ask unanimous consent the Senate proceed to the immediate consideration of Calendar No. 100, Senate Resolution 29.

Mr. NICKLES

Mr. NICKLES. Mr. President, I rise today to introduce the Federal Royalty Certainty Act. The domestic oil and gas industry is an essential element of the United States economy. The Administration needs to acknowledge the critical importance of this industry and stop hindering it with regulatory obstacles. Right now, our domestic oil and gas procedures are reeling from low oil prices. In Oklahoma alone, 50,000 jobs are dependent on the oil industry. Last year, we had over 350 producing oil rigs in the country, now we have slightly over 100. The industry is in a state of depression, not a decline, and these conditions pose a threat to our national security and our economy. The Administration's policies have failed domestic producers. What is needed is a comprehensive plan to maintain the viability of the domestic oil and gas industry. Part of that plan should be to eliminate or greatly reduce the administrative costs of the current royalty program with simple, clear and certain guidelines. We need to eliminate rules that are burdensome and excessively costly. The Nation cannot afford to allow the devastation of our domestic oil and gas industry to continue. We should be taking action to encourage growth in the industry. Instead, the Administration has advocated policies that undermine it. We must raise our country's awareness and reverse this course of action by providing relief from big government and burdensome regulations. We must provide this critical segment of our economy fairness and efficiency in their contracts with the federal government. Several years ago, I began taking a closer look at oil and gas produced from federal leases and the Department of the Interior's administration of those lease contracts. I was pleased when Congress passed the Royalty Simplification and Fairness Act which I introduced and which became law in August of 1996. What that Act accomplished was to streamline the accounting processes for federal royalties. While that Act made significant steps forward in simplifying the payment of federal royalties, the heart of the issue is still before us--what royalty does a lessee owe to the government under its lease contract for oil and gas produced from a federal lease? When a person or company contracts with the federal government, it should know exactly what is owed under the contract. While this should be a simple question with a simple and unambiguous answer, that is unfortunately not the case today. There appears to be multiple answers, changing answers and a morass of regulatory interpretations that change over time. Such regulatory obstacles prevent industry from knowing what they owe and being able to make business decisions with that knowledge. It also prevents the collection of royalties easily and efficiently. Having a clear understanding of the correct amount due is the central and critical element of any successful royalty management program. Without it, the program cannot operate fairly, efficiently or cost effectively. In January 1997, MMS issued a Notice of Proposed Rulemaking for a new oil valuation rule. The proposed rule was met with a firestorm of protests and thousands of pages of comments have ensued. Despite serious problems that have been raised with the proposal, its workability and its fairness, the Department has repeatedly stated that it will publish its rule as final. As a result, this Congress has imposed two moratoriums on the proposed rule and is in the process of imposing another. Congress and Industry have repeatedly attempted to initiate negotiations with DOI/MMS to no avail. The current moratorium continues until June 1, 1999. Secretary Babbitt has stated that the MMS would publish a final rule on June 1, 1999 and in Congressional briefings the MMS has stated that ``MMS does not believe that further dialogue on the rule would be productive.'' DOI Communications Director Michael Gaulding stated to Inside Energy that ``we're sticking to the position we've taken. It gives us an issue to demogogue for another year.'' Rather than perpetuate the moratoria I believe Congressional action is needed. I am therefore today introducing the ``Federal Royalty Certainty Act.'' This Act addresses and resolves issues related to royalties both when they are paid in value and in amount. This bill amends the Outer Continental Shelf Lands Act and the Minerals Lands Leasing Act and provides that when payment of royalties is made in value, the royalty due is based on oil or gas production at the lease in marketable condition. When royalty is paid in kind, the royalty due is based on the royalty share of production at the lease. If the payment (in value or kind) is calculated from a point away from the lease, the payment is adjusted for quality and location differentials, and the lessee is allowed reimbursements at a reasonable commercial rate for transportation, marketing, and processing services beyond the lease through the point of sale, other disposition, or delivery My bill will codify the fundamental, longstanding principle that royalty is due on the value of production at the lease. The Department of the Interior recognizes this principle and very recently has said ``royalty payments [should be] based on no more than the value of production at the lease'' (News Release, MMS 2/5/98), there should be agreement on this codification. This legislation provides proper adjustments when sales are made downstream of the lease to arrive at values that equal the value of production at the lease. In addition, this legislation includes a consistent basis for valuation of royalty both onshore and offshore. Importantly, this legislation also resolves many of the core issues related to the proposed rule on oil valuation in a manner that is fair and equitable to the people of the United States and the producers who have entered into contracts with the federal government. These provisions will reduce the costs of a complicated system that spawns disputes, while preserving the taxpayer's right to a fair return for its resources. As I have said on many occasions, we need to reduce unnecessary, burdensome and excessively costly regulations. We need a little common sense. In summary, all interested parties need to work together to arrive at a workable, permanent solution--a system whereby the government can collect what is due in a manner that is simple, certain, consistent with lease agreements and fair to all parties involved. The Royalty Fairness bill was a significant first step to simplify and eliminate regulatory obstacles in the Department's accounting procedures. I believe that the Federal Royalty Certainty Act is an important next step.

Mr. NICKLES

Mr. NICKLES. Mr. President, if there is no further business to come before the Senate, I now ask unanimous consent that the Senate stand in adjournment under the previous order following the remarks of my colleague, Senator Robb.

Mr. NICKLES

Mr. NICKLES. Mr. President, I would like to announce for the information of the Senate and the public that a hearing has been scheduled before the Subcommittee on Energy Research, Development, Production and Regulation. The hearing will take place on Thursday, May 20, 1999 at 2 p.m. in room SD-366 of the Dirksen Senate Office Building in Washington, DC. The purpose of this hearing is to receive testimony on S. 348, to authorize and facilitate a program to enhance training, research and development, energy conservation and efficiency, and consumer education in the oilheat industry for the benefit of oilheat consumers and the public, and for other purposes. Because of the limited time available for the hearing, witnesses may testify by invitation only. However, those wishing to submit written testimony for the hearing record should send two copies of their testimony to the Subcommittee on Energy Research, Development, Production and Regulation, Committee on Energy and Natural Resources, United States Senate, 364 Dirksen Senate Office Building, Washington, DC 20510-6150. For further information, please call Colleen Deegan, Counsel, or Julia McCaul, Staff Assistant at (202) 224-8115.

Mr. NICKLES. Mr. President, I would like to announce for the information of the Senate and the public that a joint hearing has been scheduled before the Subcommittee on Energy Research, Development, Production and Regulation of the Senate Energy and Natural Resources Committee and the Subcommittee on National Economic Growth, Natural Resources and Regulatory Affairs of the House Committee on Government Reform. The hearing will take place on Thursday, May 20, 1999 at 2:30 p.m. in room SD-366 of the Dirksen Senate Office Building in Washington, DC. The purpose of this hearing is to receive testimony and conduct oversight on the Administration's FY2000 budget request for climate change programs and compliance with various statutory provisions in FY1999 appropriations acts requiring detailed accounting of climate change spending and performance measures for each requested increase in funding. Because of the limited time available for the hearing, witnesses may testify by invitation only. However, those wishing to submit written testimony for the hearing record should send two copies of their testimony to the Subcommittee on Energy Research, Development, Production and Regulation, Committee on Energy and Natural Resources, United States Senate, 364 Dirksen Senate Office Building, Washington, DC 20510-6150. For further information, please call Colleen Deegan, Counsel, or Julia McCaul, Staff Assistant at (202) 224-8115 in the Senate. In the House, please contact Marlo Lewis, Staff Director, or Barbara Kahlow, Professional Staff Member at (202) 225-4407. subcommittee on energy research, development, production and regulation

Mr. NICKLES

Mr. NICKLES. I announce that the Senator from Texas (Mrs. Hutchison) and the Senator from Alaska (Mr. Murkowski) are necessarily absent.

Mr. NICKLES

Mr. NICKLES. I announce that the Senator from Utah (Mr. Bennett), the Senator from Tennessee (Mr. Frist), the Senator from New Hampshire (Mr. Gregg), the Senator from Vermont (Mr. Jeffords), the Senator from Arizona (Mr. McCain), and the Senator from Alabama (Mr. Shelby) are necessarily absent.

Mr. NICKLES

Mr. NICKLES. I announce that the Senator from Arkansas (Mr. Hutchinson) is necessarily absent.

Mr. NICKLES

Mr. NICKLES. I announce that the Senator from Arkansas (Mr. Hutchinson) and the Senator from Colorado (Mr. Campbell) are necessarily absent.

Mr. NICKLES

Mr. NICKLES. Mr. President, if there is no further business to come before the Senate, I now ask unanimous consent the Senate stand in adjournment until 9:30 a.m. tomorrow.

Mr. NICKLES

Mr. NICKLES. For the information of all Senators, the Senate will reconvene on Thursday at 9:30 a.m. and immediately begin the final 5 hours of debate on the budget resolution conference report. Therefore, Senators can expect a rollcall vote on adoption of the conference report at approximately 2 p.m., or earlier if time is yielded back. Under a previous order, the Senate may also expect a final vote on the House version of S. 767, the uniform services tax filing fairness bill. That vote is expected to occur immediately following the vote on the budget conference report.

Mr. NICKLES

Mr. NICKLES. Mr. President, I ask unanimous consent that when the Senate completes its business today it stand in adjournment until 9:30 a.m. on Thursday, April 15. I further ask that on Thursday, immediately following the prayer, the Journal of proceedings be approved to date, the morning hour be deemed to have expired, the time for the two leaders be reserved, and the Senate then resume debate on the budget resolution conference report.

Mr. NICKLES

Mr. NICKLES. Mr. President, I ask unanimous consent that the resolutions be agreed to, the motions to reconsider be laid upon the table, and that any statements relating to the resolutions be printed at the appropriate place in the Record, with the above occurring en bloc.

Mr. NICKLES

Mr. NICKLES. Mr. President, I ask unanimous consent that the Senate proceed, en bloc, to the consideration of the following concurrent resolutions: H. Con. Res. 44, H. Con. Res. 47, and H. Con. Res. 50.

Mr. NICKLES

Mr. NICKLES. I announce that the Senator from Virginia (Mr. Warner) is necessarily absent.

Mr. NICKLES

Mr. NICKLES. I announce that the Senator from Arizona (Mr. McCain) is necessarily absent.