Bill Thomas

Mr. THOMAS

Mr. THOMAS. Mr. Speaker, will the gentlewoman yield?

Mr. THOMAS

Mr. THOMAS. Mr. Chairman, I do want to underscore the fact this legislation will produce revenue to the United States, increase oil production and, in fact, produce additional jobs. The Congressional Budget Office, the nonpartisan Congressional Budget Office, provides figures which support all of those allegations. Let me just for a minute or two talk about the economics of oil. I know the gentleman from Minnesota and others are absolutely flabbergasted with the logic that if you allow North Slope oil to find its economic home, that policy would, in fact, increase production in both Alaska and California and enhance national security. To support the comment of the gentleman from Louisiana about Government getting itself involved in areas where it should not involve itself, I want to mention that just a few years ago, Congress in its wisdom passed a so-called windfall profits tax. That did not produce one penny of windfall profits in my area. What it did do was destroy a portion of the oil production in my area. For example, I talked about heavy oil being produced in our area. You have to heat boilers to drive steam into the ground to allow this heavy oil to come to the surface. There were a number of small refineries that would take the crude oil across the street, down the road from where it was produced. They would refine it only lightly, pull the lights off the top, sell kerosene and other lights at a profit, send the fuel oil or bunker oil back to the boilers to be burned. That was a really nice working arrangement that gave people some jobs and enhanced the oil's value. When the windfall profits tax was passed, since you were charged a tax if that crude oil left your property, what happened was the producers burned crude oil in their boilers. We did not get the small refineries pulling the lights off. They went out of business. We, in fact, produced fewer Btu's with the dirtier residue because Government told them that was the way they were supposed to conduct their business. It did not tell them directly to do that, but the economics of the situation dictated it. I would tell the gentleman from Minnesota it is not logic, it is economics that we are dealing with here. When you tell people in Alaska they can only sell their oil to the lower 48, it means Washington, Oregon, or California. You cannot sell it to the East Coast, because that oil would have to pass through the Panama Canal and go by the second largest producing State in the Union, Texas, and the fourth largest oil-producing State in the United States, Louisiana, before it got to the East Coast. Oil is a fungible commodity around the world. Contrary to what the gentleman from Connecticut said, we are not saying this oil has to be sold to anybody. That is the old policy. The new policy in H.R. 70 is it will find its economic home. If Californians or Washingtonians bid more than anybody else, it will come to the lower 48. If Japan bids more, it goes to Japan. Japan needs the oil. They would have paid sufficient price to get it. Where were they getting oil before that? Probably from the Middle East. The oil going from the Middle East to Japan now does not go to Japan. The Middle East folks are looking for a home for their oil. They will turn toward Europe. The oil going to Europe, you see, from the Middle East now puts a pressure on the European oil in the North Sea. That North Sea oil needs to find a home. Guess what, it can go right across the Atlantic to the East Coast. You can wind up getting more oil at a cheaper price on the East Coast if you open up the whole question of where oil goes. Do not send it where the Government wants it to go. Send it where economics should have it go. You will produce more oil in California, you will produce more oil in Alaska, and we will be more energy self- sufficient.

Mr. THOMAS. Mr. Chairman, this is a kind of an exciting day for me. It is my own personal corrections calendar, if you will. The gentleman from California made a number of assertions. Frankly, for 10 years we have been trying to get people to focus on whether or not we should require all of the oil production in Alaska by Government edict to come to the lower 48 States. Because of geography, the lower 48 States basically are three: Washington, Oregon and California. When you take a look at the population factors on the west coast, overwhelmingly more than 800,000 barrels of oil a day come to California. I represent the 21st District in California. It is in central California. Contained in that district, ever since I came to Congress in 1978, are 4 of the 10 largest oil fields in the United States, among the top 20 oil producing areas of the world. The primary holding in this area is a Government holding. It is called the Naval Petroleum Reserve and it is an area that was called Elk Hills. Let me take you back to the early 1970's and the mid 1970's when we had the scare of the Middle East being able to choke this country by cutting off oil supplies. Unfortunately and regrettably, the Congress, controlled by the then majority party, said that the condition for building a pipeline in Alaska was that all of that oil had to come to the United States. When they took the Naval Petroleum Reserve and opened it up, it was to be held as a reserve. Well, as you know, when you produce oil, it is not a well with a straw in it. When you open it up, it begins to flow. The Congress also decided to store oil in salt domes, and the Strategic Petroleum Reserve was developed in Texas to be able to get oil in that manner. The Elk Hills fields are naturally occurring fields. Much of the oil there is heavy oil and it requires heating or a tertiary process, as we talk about it, to bring the oil to the surface. Billions and billions of barrels of oil are involved. During the Middle East oil crisis, President Ford opened up Elk Hills under the requirement of maximum efficient production, defined as most you could get out of the field. Then along the same time, something called the windfall profits tax was slapped in place. Let me tell you what happens when Government gets into the economics of oil and the way the Government did in the 1970's. Government told Elk Hills, produce at your maximum efficient rate, so Elk Hills began pumping oil out, primarily for California consumption because there is no reasonable way to move that oil out of California to the Midwest or the East. But at the same time the Government had said all of the Alaskan oil production had to come to the lower 48, which is basically California. So here by Government edict you have maximum production of one of the largest oil fields in the world, in California, and by Government edict all the oil produced by one of the largest oil fields in the world in Alaska coming to California. Obviously you had a depression of the price of oil, so that the production that would have occurred in California because of the increased price for oil did not occur. The continued expansion of Alaska production toward the maximum production of oil there, because of the depressed prices, did not occur. So I have for the last 10 years been trying to reconcile this ill- conceived Government policy. Who in the world would want to maintain this kind of a ridiculous Government production by edict, which depressed the ability to respond to the energy crisis with domestically produced oil which would have made us more energy sufficient? Who would have said these tankers have to come up and down the west coast of Alaska, Canada, and the United States by Government edict, to threaten our very sensitive environment along the coast? Who in the world would try to maintain this policy? Who is benefiting by this policy? Guess who benefits? People in California who get a guaranteed, fixed price, depressed, crude product to run through their refineries. And guess where the biggest refineries are? They are in the bay area. These people are fighting to maintain this hypocritical policy so that they can continue to maintain the record profits because of the margin between what they pay for oil and what they can sell the refined product for. It is just ironic that people stand up in the name of the energy conservation, of national security, of the environment, to try to maintain record profit margins for these corporations. We are pleased that the Department of Energy, the Department of Transportation, and the Department of Defense came together to do a study. What they discovered is what we knew for a long time: that in fact this policy does not promote energy security, it puts us at greater risk; that in fact it depresses the ability to produce oil here in the United States, and in Alaska, and it does cost us jobs; and that it is more threatening to the environment to keep this policy in place than to remove it. We believe that not because a Government study said that, because for 10 years we have known it. I am pleased to say today in the well of the House that I have a statement from the administration that at long last recognizes the simple economics of allowing the marketplace to determine the amount of oil produced and recognizes that there is no question that forcing tankers to ply the Pacific waters is indeed a greater environmental risk than to have some of it find its economic home somewhere other than the lower 48. I am also pleased to have a letter from the maritime unions. AFL-CIO is in support of this legislation. More than 75 of my colleagues, both Democrat and Republican, have joined us as well. This bill is long overdue. It is the proper thing to do, because H.R. 1530, the Defense Authorization Act, provides for the privatization of Elk Hills as well. If we are going to produce oil out of a Government reserve at its maximum efficient rate, you should not let Government try to be in the oil business of production and selling. What we should do is privatize Elk Hills. Along with allowing the Alaskan North Slope oil in H.R. 70 to find its economic home, and privatizing Elk Hills in H.R. 1530, we go a long way toward correcting the crazy economics of oil policy that has been in place for almost 20 years. It is indeed an exciting moment. I want to thank very much the chairman of the Committee on Resources who, although he comes from Alaska, I know because of his understanding of the way things work would have been supportive of this bill, notwithstanding the fact that he represents the State. It is just a pleasure to work with him to correct a policy that did not augur well for the citizens and the economy of Alaska. It has not augured well for the citizens and the economy of California. Indeed, it has been a tragic mistake for all Americans over the last 20 years. It is a pleasure to support H.R. 70 and correct this problem.

Mr. THOMAS. Mr. Chairman, I move to strike the last word. Mr. Chairman, as the chairman of the committee indicated, we worked with a number of Members to either resolve their concerns about the bill or worked with them on the amendments that they proposed. The gentleman from Ohio, the gentleman from Hawaii, the gentleman from Washington are good examples. The rule underlying this debate indicated that to the extent possible, we wanted people to preprint their amendments in the Congressional Record. Obviously, the gentleman from Connecticut, for whatever reason, did not make the preprint date. I saw this amendment just a few moments ago, and, of course, we are trying to figure out exactly what it means. Apparently in the gentleman's amendment, and I will assume that the gentleman is offering it in good faith, if there is any deviation from the U.S.-flagged, U.S.-staffed ship, the entire legislation is terminated immediately.

Mr. THOMAS. The problem I have with the gentlemen's amendment, is that it codifies it, it puts it into law. But what it puts into law, is a special benefit for a particular group. Independent refiners are the only ones who get the opportunity to bid on the royalty oil. No one else is allowed to bid. This is one more attempt to create a special relationship under the law. I thank the gentleman for yielding.

Mr. THOMAS. Mr. Chairman, will the gentleman yield?

Mr. THOMAS. Mr. Chairman, I move to strike the requisite number of words. Mr. Chairman, I would ask the gentleman from Washington or anyone who understands this amendment, that I have some questions on the amendments. On line 5, it says, ``The Secretary of the Interior shall offer any such oil accruing to the United States.'' From time to time, the United States receives oil in lieu of royalties. What this amendment says is that when the United States get oil in that fashion, royalty oil is the common term, that the Secretary of the Interior ``shall offer'' any such oil accruing to the United States, and the Secretary of the Interior not only shall offer such oil, they must make it available to independent refiners located in pad 5. Such offer shall be made from time to time for such volumes and such periods as the Secretary deems appropriate, so the Secretary can control the volume and the period, and sales shall be conducted by equtable allocation at fair market value among eligible, independent refiners. As I read this amendment, Mr. Chairman, it is yet again an attempt to carve out a market for a particular group of folk. These are the independent refiners. They are the ones who for years have received the blessing of oil directed to the lower 48. Now we have a group of refiners who call themselves independent refiners. They want to take such royalty oil as comes to the United States, ``shall offer any such oil,'' a mandatory offering to a particular group, the independent refiners. Mr. Chairman, my belief is that this is one of the fallback positions offered by the refiners. If they cannot stop the bill, then they want a fixed amount of oil available to them in the marketplace, the gentleman from California, Mr. Miller's amendment. If they cannot get the fixed amount of oil, 1,350,000 barrels a day, then they want the royalty oil guaranteed only to them, and the Secretary of the Interior shall offer such sales only to the independent refiners. Here we go, with the fallback for a particular group of people to try to get a continuation of the current structure, which is, these people benefit by government policy. H.R. 70's underlying premise is that no one should benefit by government policy. The marketplace should determine the price. Our opposition to the Miller amendment was based upon the marketplace determining the price, and the marketplace should determine volume. The amendment of the gentleman from Washington [Mr. Metcalf] appears to this gentleman from California to be a smaller, narrow attempt, but nevertheless, an attempt to have government dictate who gets what in the marketplace. On that basis, Mr. Chairman, I would oppose the amendment offered by the gentleman from Washington [Mr. Metcalf].

Mr. THOMAS. Mr. Chairman, the amendment of the gentleman from California is interesting. He talks about a world price for oil. I just have to say that, representing the oil patch, I would have to ask him what he means by world price for oil. Is it the price that the Federal Government charges for Elk Hills oil which has to cover the cost of sending it by pipeline to the strategic petroleum reserve? Is it the price of west Texas crude that gets to move through pipelines and through shipping that does not cross the Panama Canal? Frankly, you have to take a look at the price of oil and include the cost of delivering that oil as well. The issue in front of us is whether or not we should lock into a fixed amount on a given year and say that you can only export the amount of oil above that fixed amount. First of all, let us understand that because of the policy that has been in place for 20 years, the Alaska fields are declining fields. In addition to that, they have yielded their production as many fields have around the world and what we need to do is make sure we open up more fields. The idea was that if we could bring the true economic value to Alaska for that oil, they might in fact develop more fields. But what we have here is an amendment that locks in a fixed amount that comes to the lower 48. When we look at the Department of Energy's study, it shows that 1994 is about 1,600,000 production; 1995, beginning to drop. And by the year 2000, in either the pessimistic or the optimistic case, you have clearly reached the oil amount that is in the amendment of the gentleman from California. I think we need to do a little truth in packaging here. What this amendment does is guarantee oil continues to come to California. The whole purpose of this bill is to allow oil to find its economic home. If you put on a volume limit, you automatically affect the price. You cannot deliver in essence an amount of oil that would have violated this figure to a Far Eastern area or any other place because of the restriction placed by this amendment. What we are trying to do is to remove Government restrictions. I think that what we need to take a very long look at is what would happen if refineries on the West Coast would have to pay closer to the world price for oil. In the study it says: The appropriate conclusion is that the gross marginal differential between PAD 5, which is Alaska oil, and the Nation as a whole would amply support an increase in crude oil prices of $1.50 to $2 per barrel without necessarily causing an increase in consumer prices. If you can increase the price for crude oil and you do not increase the price of gasoline to consumers, what happens? In the middle between the crude oil and the consumer are the refineries. Frankly, the refineries, located in the gentleman's district, have enjoyed an enormous benefit over the years. The July 21 edition of the Wall Street Journal says: Tosco Corporation, located in the gentleman's district, net income surged 43 percent in the quarter. The petroleum products company attributed the net increase to improved refining margins. It is the difference between the price of crude oil and the price of gasoline. These people have been living off of an artificial market for years. The amendment of the gentleman from California wants to continue that artificial market. The gentleman wants a fixed amount that has to come. You try to negotiate a world price for oil when you know by Government edict there is a fixed amount that has to come. You break the economics. You do not have a world price for oil. You have somebody over a barrel, and it is the Alaska oil producer and the American consumer. It is about time we ended the sweetheart deal for the refiners. That is exactly what the gentleman's amendment tries to prevent. It tries to perpetuate a sweetheart deal. This legislation changes it. This amendment should be defeated.

Mr. THOMAS. Mr. Chairman, reclaiming my time, I would have loved to have worked with the gentleman over the last 3 months that this bill has either been in front of the committee, of which he is a member, as the ranking member pointed out, and to which he did not offer this amendment or any of the last several weeks after the bill passed the committee when we were working on the legislation, if he felt this burning desire to come up with the proposal or any time last week when he knew this was possibly to be scheduled for floor debate. He did not seem to want to work on an amendment at that time. But now, not only at the 11 hour, but half past midnight when we are debating the bill, he comes to the floor and says he has an amendment on which he would like to work with us. What you need to know is that the exceptions in the bill cover all situations. U.S.-flagged and staffed vessels are required, with the exception of cases covered in any international agreements that we have entered into prior to 1979, and under the provisions of the Oil Emergency Act because, as you will recall, a number of nations were concerned about their ability to get oil if the unstable area of the Middle East, as the gentleman from Connecticut described it, actually denied them oil. We have a number of agreements on an emergency basis in which we will move oil on an as-needed basis. Obviously the President in his wisdom, in trying to assist nations who are being crippled by someone else's oil blackmail, will certainly take into consideration this legislation. But the President as Commander in Chief and the President of this country will make decisions as he sees fit in times of emergency. It is absolutely ludicrous to offer an amendment at this time that says if you do not stick to one provision of the bill, notwithstanding the emergency provisions or the international agreement provisions, that the act itself will terminate. I think we need to read the amendment the way in which I now believe it was presented, and that is as a pernicious amendment by the opponent of the legislation in an attempt to not only weaken it, but indeed to defeat it. I would ask that we reject the gentleman from Connecticut's first amendment, as I understand it.

Mr. THOMAS. I yield to the gentleman form Connecticut.

Mr. THOMAS. Mr. Chairman, I move to strike the requisite number of words. Mr. Chairman, I do want to commend the gentleman from Connecticut on the effort that he is making with this amendment because it sounds extremely reasonable, that until the President makes his determination, we should not export any of the oil. The problem of course is, perhaps the gentleman from Connecticut has not read the amendment in the nature of a substitute offered by the gentleman from Alaska, the chairman. The gentleman from Alaska and this gentleman from California indicated that the administration supports the substitute as written. The substitute as written says that the finding that the President shall make is a negative finding; not a positive one that they should export oil but, in fact, a negative one that they should not. The gentleman from Connecticut is now saying, notwithstanding the fact that the administration supports the legislation and that the Presidential determination is a negative one, no oil should be exported until the President makes his determination, which is, under the substitute, a finding that they should not export any oil. I think when we come full circle, all this is, is, an attempt once again to offer an amendment for purposes that the gentleman from Connecticut well knows are not in the best interests of moving this bill forward and therefore not in the best interests of labor, energy production, or consumers in this country. I would ask that Members oppose the amendment of the gentleman from Connecticut.

Mr. THOMAS. Mr. Chairman, I want to commend the gentleman from Ohio. The gentleman has worked with us on a number of amendments, and it was a pleasure to operate in a process of discussion, in which we were trying to perfect amendments, instead of trying to create an amendment that would gut the bill. I want to thank the gentleman for his cooperation.

Mr. THOMAS

Mr. THOMAS. Mr. Chairman, 10 years ago I thought it was important to have a cooperative effort between the Government and the private sector, not through subsidies, but through a cooperative effort. That is what this program is. My colleagues have heard this is about trade. We are at war. It is post-GATT. My colleagues heard a lot of jokes earlier about raisins and about the Japanese. I ask my colleagues, Do you know the Japanese are our third largest raisin market? My colleagues heard talk about corporations. Sun-Maid is not a corporation; it is 5,000 farmers and 50,000 workers. What we are talking about is something that we have got to do more of. We have got to be competitive in the world marketplace. The single largest positive balance-of-trade category is horticulture-agriculture. That is what we are talking about in the MPP program. We need market share, we need a cooperative effort between our Government and our American workers, farmers, and processors. This program is $100 million. It brings back enormous benefits. It should be $1 billion. Let us knock this ill-conceived amendment where it belongs.

Mr. THOMAS

Mr. THOMAS. Mr. Chairman, reserving the right to object, I do not want to threaten or anything else. I just do not know what we are doing. What is it that has been requested? What is the unanimous- consent request?

Mr. THOMAS. Mr. Chairman, I have no quarrel whatsoever with any of the statements that were made by the gentleman from Pennsylvania. The problem is, none of that applies to this amendment. If someone is passively involved, if it is a hobby of farming, if they do not have labor or management involvement, the 1987 Budget Reconciliation Act said that they cannot participate. Those people have already been taken care of. Please read this amendment. What it says is that you are going to deny the funds to these people when it is made known to the Federal entity. When it is made known? How? When it is made known, it is going to be denied. And it is adjusted gross income of $100,000, adjusted gross income. Come with me to Shafter, California, to Wasco, California, to Pixley, California. Who runs the tractor equipment shop? Who runs the fertilizer shop? Who are the small businessmen in these agriculturally oriented towns? The folks who farm as well. You deny them $100,000 gross income, and they are not either going to be able to be the businessmen or they are not going to be able to farm, and those small towns need both to survive. It is a poorly conceived amendment. You are going after the wrong target. I am with you if you want to get the Sam Donaldsons and the passive people who do not really put labor or management into farms. We have already gotten rid of those folks. You are creating a nightmare in terms of IRS forms, and you are going to destroy small towns by taking small businessmen who are also farmers who provide two good services. And you are saying, you cannot do both. It is a bad amendment. Please vote no. amendment offered my mr. minge to the amendment offered by mrs. lowey

Mr. THOMAS. Mr. Chairman, I did not object on the last unanimous- consent request. The majority leader has told me there will be no rolling of votes, and that the vote will be called when the amendment is ended, and I will serve notice, I will not object, but when the debate is ended, I will ask for a rollcall vote.

Mr. THOMAS. Mr. Chairman, I have a point of order.

Mr. THOMAS. Mr. Chairman, the original request, I believe, was for 20 minutes, if I am correct, 30 minutes, which could have been already completed. We would have started to vote, and we would have gone home. To say that we are going to roll the vote over until tomorrow on an issue which is absolutely critical to my district when somebody else decides they have an amendment, it is going to be a half an hour debate, but the vote will not occur until later. I commend the majority leader for packaging votes on a rollover basis during the day. It has certainly been a time saver. But when you have a half an hour debate and say you are going to postpone the vote until tomorrow, that is an aberration of the concept of rolling votes. That amendment is critical. parliamentary inquiry

Mr. THOMAS. Mr. Chairman, I reserve the right to object.

Mr. THOMAS. Then I object.

Mr. THOMAS. Does the gentleman from New Mexico intend to have a vote tonight following debate on this amendment?

Mr. THOMAS. Reserving the right to object, Mr. Chairman, does that include a vote on that amendment?

Mr. THOMAS

Mr. THOMAS. Mr. Chairman, talk about circular arguments, the gentleman from Michigan just read the dissenting views. That is the Democrats on the Committee on Ways and Means continuing to try to justify why H.R. 1535 is the bill that should be in front of us. As a matter of fact, the Democrats had so much confidence in H.R. 1535 that they did not even ask for a rollcall vote. They refused to even put the votes up in committee. They went quietly. They went meekly. It was a reasonable effort on their part. We listened to Undersecretary Samuelson tell us that this administration had not pursued these people who were leaving. And let us get one thing straight, no one here is in favor of anyone renouncing their citizenship for purposes of avoiding taxes. No one here is in favor of that. The question is, how do you deal with the issue? You will recall earlier in the year, when my colleagues tried to rush to judgment on that issue and we said: Wait a minute. Let us ask the responsible people. Let us take it to the nonpartisan Joint Committee on Taxation and see if they can analyze ways in which we can go after these people, not to avoid going after these people but to really go after them. The Joint Committee on Taxation said: The approach by the gentleman from Florida [Mr. Gibbons] on H.R. 1535 was fatally flawed. There is a loophole in the bill. When you come of age, if you have got the right tax lawyers, and these people have the money, when you have an election period there is a window of opportunity in which you can decide to cut out and lose judgment. There is no perfect mechanism. If there was a perfect mechanism, we would not have this issue on the floor. The reason I said the gentleman from Kentucky [Mr. Ward] had an amendment that was full of chutzpah is very simple. He is trying to take a bill which was introduced, no recorded vote ever anywhere in any subcommittee or committee, and substitute that measure for the will of the Committee on Ways and Means on a recorded vote that passed H.R. 1812. The chairman of the committee wants to take the work product of the committee, passed by a recorded vote, a majority of the committee, and substitute it for the flawed work product that the Democrats would not even bring to a vote in the committee. It just seems to me that, when you take a look at the work product of the Joint Committee on Taxation, that produces more money, that closes more doors, that got a majority of votes, that that is the route to take. It makes no sense whatsoever to try to keep alive a flawed bill which did not even deserve a recorded vote by virtue of the Democrats in the committee. Frankly, I think we should take to heart the advice of the gentleman from Florida [Mr. Gibbons]. Pass the Archer amendment and then in the words of Mr. Gibbons, the Ward amendment is not worth anything and we ought to vote it down. I say to the gentleman from Florida [Mr. Gibbons] that he is right. Pass the Archer amendment and then vote the Ward amendment down.

Mr. THOMAS. Mr. Chairman, I invite you to go over to the Random House Dictionary of the English Language over here, and on page 322 look up the word chutzpa. It says: unmitigated effrontery or impudence; gall. [[Page H 7234]] This amendment takes a bill that never got a recorded vote in committee and substitutes it, in essence, for a bill that passed the Committee on Ways and Means. That is gall. That is chutzpah. And it ain't going anywhere.

Mr. THOMAS

Mr. THOMAS. Mr. Speaker, I yield myself such time as I may consume. (Mr. THOMAS asked and was given permission to revise and extend his remarks.)