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CONFERENCE REPORT ON S. 395, ALASKA POWER ADMINISTRATION ASSET SALE AND TERMINATION ACT
(House of Representatives - November 08, 1995)

Text of this article available as: TXT PDF [Pages H11854-H11881] [[Page H 11854]] CONFERENCE REPORT ON S. 395, ALASKA POWER ADMINISTRATION ASSET SALE AND TERMINATION ACT Mr. McINNIS. Mr. Speaker, by direction of the Committee on Rules, I call up House Resolution 256 and ask for its immediate consideration. The clerk read the resolution, as follows: h. res. 256 Resolved, That upon adoption of this resolution it shall be in order to consider the conference report to accompany the bill (S. 395) to authorize and direct the Secretary of Energy to sell the Alaska Power Administration and to authorize the export of Alaska North Slope crude oil, and for other purposes. All points of order against the conference report and against its consideration are waived. The conference report shall be considered as read. The SPEAKER pro tempore (Mr. Goodlatte). The gentleman from Colorado [Mr. McInnis] is recognized for 1 hour. Mr. McINNIS. Mr. Speaker, for the purpose of debate only, I yield the customary 30 minutes to the gentleman from Texas [Mr. Frost], pending which I yield myself such time as I may consume. During consideration of this resolution, all time yielded is for the purpose of debate only. Mr. Speaker, House Resolution 256 is a simple resolution. The rule simply makes it in order to consider the conference report to accompany the bill S. 395 which authorizes and directs the Secretary of Energy to sell the Alaska Power Administration, and to authorize the export of Alaska North Slope crude oil. All points of order against the conference report and against its consideration shall be waived. This resolution was reported out of the Committee on Rules by an unanimous voice vote. The purpose of the underlying legislation, S. 395, is to lift the ban on the export of crude oil produced on Alaska's North Slope and to provide for the sale of the assets of the Alaska Power Administration. Additionally, the conference report contains a targeted royalty relief provision which, according to the Secretary of Energy Hazel O'Leary, will ``lead to and expansion of domestic energy resources, enhance national security, and reduce the deficit''. This legislation has broad bipartisan support, including the support of the Clinton administration. By lifting the ban on exports we will create thousands of new jobs in this decade, and we will generate millions in receipts to the Federal Government. Mr. Speaker, I reserve the balance of my time. Mr. FROST. Mr. Speaker, I yield myself such time as I may consume. Mr. Speaker, I rise in support of the rule. This rule, as the gentleman from Colorado has explained, waives points of order against the consideration of the conference report on S. 395, a bill to lift the ban on exports of Alaskan oil and to privatize the Alaska Power Administration. Mr. Speaker, this conference report also contains a provision which was not in the House-passed version of this legislation. This provision exempts oil and gas companies drilling under Federal oil and gas leases in deep waters offshore in the Gulf of Mexico, from paying royalties to the Federal Government. The inclusion of this provision is controversial in light of the instructions to conferees adopted by the House last July. That motion, offered by the gentleman from California [Mr. Miller], instructed conferees to insist on the House position on this issue. The House bill, of course, deleted these provisions. The conferees have, however, wisely included these provisions in the bill. Mr. Speaker, these exemptions will encourage exploration and drilling which will in turn increase the amount of available crude oil to U.S. markets. Mr. Speaker, increasing energy production in something our government should encourage and the provisions in this conference report do just that. I would encourage my colleagues to support the conference report and to oppose the Miller motion to recommit this conference report. Mr. Speaker, I reserve the balance of my time. Mr. McINNIS. Mr. Speaker, I yield 4 minutes to the gentleman from Louisiana [Mr. Livingston], chairman of the Committee on Appropriations. (Mr. LIVINGSTON asked and was given permission to revise and extend his remarks.) Mr. LIVINGSTON. Mr. Speaker, I thank the gentleman from Colorado for yielding time to me, and I rise in support of the rule and in support of the bill. Mr. Speaker, I am pleased to support this effort. Mr. FROST. Mr. Speaker, I yield 1 minute to the gentleman from Massachusetts [Mr. Studds]. (Mr. STUDDS asked and was given permission to revise and extend his remarks.) Mr. STUDDS. Mr. Speaker, I rise in support of this rule and of the substance of the conference report, although I shall support the efforts of the gentleman from California [Mr. Miller] to strike an extraneous and controversial provision. This legislation is important because it is vital to preserving the independent tanker fleet and the cadre of skilled men and women who proudly sail today under our flag. Mr. Speaker, I rise in support of the rule and the conference report on S. 395, legislation that authorizes exports of Alaskan oil carried in American-flag vessels. This bill will help enhance our national security by spurring energy production and by helping to preserve our domestic merchant marine. I urge my colleagues to vote in favor of the rule and to overwhelmingly support this legislation, as you did when it was on the floor in July. According to recent press reports, a number of foreign governments continue to complain that the U.S.-flag requirement somehow violates our international obligations. As my colleagues may know, the U.S. Trade Representative has assured Congress that the bill does not violate our GATT obligations. To my knowledge, none of these governments complained when Congress enacted a comparable provision as part of the United States-Canada Free-Trade Agreement. In any event, for the benefit of those who persist in arguing without foundation that the bill poses a problem, let me lay out the case here. This legislation is important because it is vital to preserving the independent tanker fleet and the cadre of skilled men and women who proudly sail today under the American flag. There can be little doubt that our Government has a compelling interest in preserving a fleet essential to national security, especially one transporting an important natural resource. Specifically, section 201 of the conference report requires that, other than in specified exceptional circumstances, Alaskan crude exports must be transported by a vessel documented under the laws of the United States and owned by a U.S. citizen. As my colleagues know, current law already requires Alaskan oil to move to the lower 48, Hawaii, and Canada on so-called Jones Act vessels. When Congress authorized construction of the Trans-Alaska Pipeline system, it established export restrictions that had the effect of ensuring that North Slope crude would move to the lower 48 and Hawaii on U.S.-built, U.S.-owned, and U.S.-crewed vessels. Although the export restrictions have changed over time, there has been no change with respect to the requirement to use Jones Act vessels. In 1988, when Congress passed legislation to implement the United States-Canada Free-Trade Agreement, it agreed to allow up to 50,000 barrels per day of ANS crude to be exported for consumption in Canada, subject to the explicit requirement that ``any ocean transportation of such oil shall be by vessels documented under [46 U.S.C.] section 12106.'' By insisting that exports to Canada move on Jones Act tankers--even though not required by the specific terms of the agreement--Congress established the principle that exports must move on U.S.-flag vessels. Consider also that in negotiating the North American Free-Trade Agreement, the Mexi- can Government reserved to itself the ``transportation . . . [of] crude oil.'' The U.S. Government specifically agreed to this reservation in adopting article 602(3) of NAFTA. Additionally, in two major areas of commercial movements in foreign trade, the U.S. Government has long enforced preference for American vessels. Since 1934, the U.S. Export-Import Bank has reserved for American carriers 100 percent of all cargo the export of which it finances under various programs. The Cargo Preference Act of 1954 also reserves certain government-financed cargo to ``privately owned United States-flag commercial vessels, to the extent such vessels are available at fair and reasonable rates.'' There are plenty of other examples of cargo reservation world wide. Our Government has entered into bilateral treaties with Latin American countries that preserve ``government controlled'' cargoes for national lines. These intergovernmental agreements are supported by [[Page H 11855]] pooling agreements among the lines that effectively divide all cargo-- not merely controlled cargo--on the UNCTAD 40-40-20 basis, with the 20 percent being accorded to such third-flag lines as are admitted to the pools. Similarly, the French Government reserves for French-flag vessels substantial cargoes. The act of March 30, 1928, for example, requires that, unless waived, two-thirds of France's crude oil needs be carried on French-flag vessels. Mr. Speaker, it is quite clear that longstanding precedent supports the U.S.-flag requirement in this bill. Now let me address specific U.S. international obligations and explain why the legislation does not violate the GATS ``Standstill Agreement,'' the General Agreement on Tariffs and Trade, or other of our international obligations. GATS Standstill Agreement.--At the conclusion of the Uruguay Round of multilateral trade negotiations, the United States and other countries for the first time agreed to cover services, as embodied in the General Agreement on Trade in Services [GATS]. Maritime services were effectively excluded, however, because no commitments of any kind were made by the United States. Although a U.S. offer had been briefly tabled, it was withdrawn. Thus, the U.S. Government did not in any way restrain or limit its authority to maintain or promote an American-flag fleet. The only commitment made by the U.S. Government was to continue negotiations until June 1996, with a view to determining whether to make any binding commitments at that time. The ``Ministerial Decision on Negotiations on Maritime Transport Services'' imposed this ``standstill'' commitment or ``peace clause'' for the period during which the negotiations would occur: ``[I]t is understood that participants shall not apply any measure affecting trade in maritime transport services except in response to measures applied by other countries and with a view to maintaining freedom of provision of maritime transport services, nor in such a manner as would improve their negotiating position and leverage.'' Some foreign governments are now arguing that the enactment of the proposed legislation would violate this commitment. They are incorrect. In a letter to me at the time, the U.S. Trade Representative stated that the ``peace clause'' is: Strictly a political commitment by the Parties to the negotiations not to take measures to ``improve their negotiation position or leverage.'' In a worst case scenario, if one of the Parties to this negotiation were to conclude that the United States had taken a measure that contravenes the peace clause, their only remedy would be to leave the negotiating table. Let me assure you that there is nothing in the negotiations that would interfere with maritime reform legislation. . . . Discussion of promotional programs, including government subsidies, would, by no stretch of the imagination, be viewed as undermining these negotiations. This understanding was confirmed by the Presidential Advisory Committee on Trade Policy and Negotiations. In filing its report at the conclusion of the Uruguay Round negotiations, the Committee said: ``[A]ll existing maritime promotional and support laws, programs and policies continue in full force and effect. The United States also may enact or adopt such new measures as it wishes including pending legislation to revitalize the maritime industry.'' GATT.--The General Agreement on Tariffs and Trade covers goods, not services. Under longstanding precedent, vessels in international commerce are not themselves ``products'' or ``goods'' subject to GATT. For purposes of GATT, the relevant ``product'' is ANS crude, which would be transported on American-flag vessels. Requiring that this product be carried on these vessels, as currently required under the implementing legislation for the United States-Canada Free-Trade Agreement, does not conflict with GATT. Article XI of GATT proscribes ``prohibitions or restrictions other than duties, taxes or other charges whether made effective through quotas, import or export licenses or other measures'' by a contracting party ``on the importation of any product'' or ``on the exportation . . . of any product.'' These requirements apply to ``products,'' which do not include vessels in transit between nations. Moreover, these requirements are limited to ``products'' and not to their transportation. This is made clear by the exceptions listed in para. 2, such as (a) measures to prevent or relieve ``critical shortages of food stuffs or other [essential] products'' and (b) restrictions to facilitate ``classification, grading or marketing of commodities.'' Such exceptional restrictions are to be accompanied by public notice ``of the total quantity or value of the product permitted to be imported.'' Thus, the transportation requirements of the committee print are not ``prohibitions or restrictions other than duties'' on goods proscribed under article XI. Article III, the national treatment article, forbids internal taxes or other charges or regulations, affecting, inter alia, the transportation of goods, that discriminate in favor of domestic production. Requiring U.S.-flag vessels for the carriage of certain cargoes in international trade is not an internal regulation of transportation that discriminates against foreign goods. As I said earlier, vessels are not considered goods. Moreover, by operation of the Jones Act, foreign-flag vessels may not today carry ANS crude oil to the lower 48 or Hawaii. Having no claim to carry this crude today, foreign governments can not claim under article III that they somehow will be denied opportunities tomorrow as a result of a change in current law. Article V, the freedom of transit article, requires that member nations permit goods, and also vessels, of other member nations ``freedom of transit through the territory of each contracting party'' of traffic in transit between third countries. The proposed bill, however, is not an inhibition of such movement of foreign goods or vessels within the United States. Article V thus does not apply. GATT Grandfather Clause.--GATT 1994 contains an explicit exemption for the Jones Act. Annex 1A to the agreement establishing the World Trade Organization contains an exception relating specifically to national flag preferences for shipping ``between points in national waters'' enacted before a member became a contracting party to GATT 1947. The exception becomes inoperative if ``such legislation is subsequently modified to decrease its conformity with Part II of the GATT 1994.'' On its face, however, the proposed bill would not operate in commercial applications ``between points in national waters,'' since it concerns the foreign trade. The proposed legislation would not amend the Jones Act and thus does not jeopardize the grandfathering of the Jones Act by Annex 1A. The conformity of the bill with international obligations of the United States does not depend on this exception, but on the terms of those obligations themselves. As I indicated earlier, the proposed bill does not conflict with articles III, V or XI of GATT. OECD Code.--The OECD's Code of Liberalisation of Current Invisible Operations generally requires OECD member countries to liberalize trade in services, with certain specified exceptions. Note 1 to annex A, in defining invisible operations in the maritime sector, states in its first sentence that the purpose of the provision is ``to give residents of one Member State the unrestricted opportunity to avail themselves of, and pay for, all services in connection with international maritime transport which are offered by residents of any other Member States.'' The second sentence of the Note lists ``legislative provisions in favour of the national flag * * * '' as among measures that might hamper the enjoyment of those rights. The Note concludes, however, unambiguously: ``The second sentence of this Note does not apply to the United States.'' Whatever its applicability to the law of other nations, it would not apply with respect to the proposed legislation, which cannot therefore be contrary to it. Thus, while some OECD members have subscribed to equating national flag requirements with disapproved ``invisible operations,'' it is clear that the United States has not. FCN Treaties.--Some foreign governments have raised questions about the propriety of flag reservation in light of various treaties of Friendship, Commerce and Navigation. The treaty clause invoked is this: ``Vessels of either party shall be accorded national treatment and most-favored-nation treatment by the other party with respect to the right to carry all products that may be carried by vessel to or from the territories of such other party. * * *'' Whatever this clause may appear to convey literally, its application in practice has allowed numerous national flag preferences identical with or otherwise indistinguishable in principle from the proposed measure. As I indicated earlier, the most prominent instance is embodied in the United States-Canada Free-Trade Agreement. But there are many other examples. In the 1960's and 1970's, for example, the United States concluded with the former Soviet Union agreements for the sale of grain that, initially, reserved all carriage to American ships so far as available, and later not less than 30 percent. Against protests filed by a number of maritime powers having either national-treatment or most-favored-nation treaties, the United States responded in congressional testimony that, although the fact that the Soviet Union as a government was the purchaser did not alter the character of the transaction as purely commercial, ``[t]he shipping arrangement worked out for the Russian wheat sale is a form of cargo preference involving a unique bilateral agreement between the U.S. and U.S.S.R. establishing a new trade where none existed before.'' This is the same reason the Department of State has advanced in defending preferences for government-financed cargo. So far as this may be considered a controlling factor, it is certainly applicable here, because the bill [[Page H 11856]] is clearly ``establishing a new trade where none existed before.'' In 1973, the President, by proclamation, instituted a system of licensing fees on imports of oil excess to prescribed quotas. Subsequently, however, the President in effect exempted products refined in American Samoa, Guam, the Virgin Islands or a foreign trade zone, if transported to the mainland on American-flag vessels. Like the present bill, the fee waiver was said not to reflect ``a general administration position on reducing licensing fees when U.S.-flag ships are used''. Although the stated purpose was to equalize refinery costs as between territories not subject to the Jones Act and the mainland, the administration suggested in congressional testimony that ``a positive incentive has been provided by the administration for the construction and use of additional U.S.-flag tankers.'' In recent testimony before the Resources Committee on which I sit, the Deputy Secretary of Energy similarly emphasized the importance of the U.S.- flag requirement of the pending legislation in preserving U.S.-flag tankers and the skilled mariners who operate them. In summary, Mr. Speaker, the U.S.-flag requirement of this bill is supported by ample domestic and foreign precedent, does not represent an extension of cargo preference into a new area, and does not violate our international obligations. There is no reasonable basis for a challenge to the legislation before the World Trade Organization or in other international forums. I urge my colleagues to join me in supporting this legislation, which is so vital to preserving a fleet essential to national defense. Mr. McINNIS. Mr. Speaker, I yield 3 minutes and 56 seconds to the gentleman from Louisiana [Mr. Livingston], chairman of the Committee on Appropriations. (Mr. LIVINGSTON asked and was given permission to revise and extend his remarks.) Mr. LIVINGSTON. Mr. Speaker, the United States is now importing 50 percent of our energy needs. The Department of Energy projects 60 percent import level by 2010. The United States has lost 450,000 jobs in the oil and gas industry. The temporary royalty relief in S. 395 will enable the private sector to risk its own funds to find and produce domestic oil and gas to enhance national energy security and create jobs. CBO scored the deep water Gulf of Mexico royalty provisions as a revenue gain of $100 million over 5 years. The Minerals Management Service estimates even greater revenue gains. The administration's Sustainable Energy Strategy stated: The Administration supports targeted royalty relief to encourage the production of domestic oil and natural gas resources in deep water in the Gulf of Mexico. This step will help unlock the estimated 15 billion barrels of oil- equivalent in the deepwater Gulf of Mexico, providing new energy supplies for the future, spurring the development of new technologies, and supporting thousands of jobs in the gas and oil industry and affiliated industries. A letter from Hazel O'leary stated, ``The royalty relief provisions in S. 395 as adopted by the conference committee is a targeted deepwater royalty relief provision that the Administration supports.'' The letter concludes, ``The ability to lower costs of domestic production in the central and western Gulf of Mexico by providing appropriate fiscal incentives will lead to an expansion of domestic energy resources, enhance national security, and reduce the deficit. Therefore, the Administration supports the deepwater royalty relief provision of S. 395.'' The language in the conference report was changed in two important ways: First, it clarifies that the royalty incentives are applicable only to the western and central Gulf of Mexico west of the Alabama/ Florida border. Second, the legislation has been amended to make it clear that it will not affect an OSC area that is under a pre-leasing, leasing, or development moratorium, including any moratorium applicable to the eastern planning area of the Gulf of Mexico located off the Gulf Coast of Florida. The Minerals Management Service determined that the deepwater incentives will result in a minimum net benefit to the Treasury of $200 million by the year 2000. These provisions will create thousands of jobs, enhance national security by reducing dependence on imported oil, and reduce the deficit. I urge my colleagues to support the conference report. {time} 1345 Mr. Speaker, I intend to vote for it, and I hope my colleagues will likewise vote for the rule, which I do support as well. Mr. FROST. Mr. Speaker, I yield 2 minutes to the gentleman from California [Mr. Dooley]. (Mr. DOOLEY asked and was given permission to revise and extend his remarks.) Mr. DOOLEY. Mr. Speaker, as an original cosponsor of the underlying Alaskan oil export legislation, which passed the House on July 24 by a 324 to 77 margin, I rise in strong support of the rule and also the conference report for S. 395. With enactment of this historic legislation we will have a chance to benefit small, independent oil producers throughout this country. Current law may have made a great deal of sense in 1973. But like any other laws, it is having unintended consequences that were not foreseen by our colleagues. We therefore should repeal the Alaskan oil export ban and authorities exports carried in U.S.-flag vessels. What this will allow is to free up oil refining capacity on the west coast of the United States, which will help to encourage oil production and oil exploration in the west coast of the United States, much of that done by the independent oil producers. The California independent oil producers state a compelling case. Like them I was pleased that the Department of Energy similarly concluded last year that the export ban was depressing production and, if lifted, would benefit California and the Nation as a whole. The Department of Energy's comprehensive June 1994 study provides a strong factual basis to support this legislation. Among others, the following study concluded production will increase by 100,000 barrels per day, up to 25,000 additional jobs will be created, State and Federal revenues will increase by hundreds and millions of dollars, and these benefits will be achieved with little, if any, effect on consumer prices. We now have a unique opportunity in this Congress to spur additional energy production and to create jobs. With imports meeting over 50 percent of our domestic consumption because of falling production, we must do something quickly to increase energy production in this country. This legislation, this conference report, will achieve those objectives, and I urge my colleagues to support the rule and the report. Mr. McINNIS. Mr. Speaker, I yield 2 minutes to the gentleman from California [Mr. Rohrabacher]. Mr. ROHRABACHER. Mr. Speaker, I rise today and urge the support of the conference report which is of immense importance to California and to our Nation's economic and national security, as well as our well- being. This legislation will increase our domestic exploration and production of crude oil. It will mean that our reduced balance-of- payments deficit, the deficit in our balance of payments, will be reduced, and everyone agrees that the United States today is too reliant on the import of crude oil. This legislation will spur domestic production, thereby enhancing our national security. As I have just said, it will also affect in a positive way our balance of payments. Mr. Speaker, this legislation lifts the ban on the export of Alaskan crude. This will contribute to reducing our trade deficit, and this legislation thus is good for job creation in the United States, and it is good for our economy in general. My colleagues should not be swayed by side issues. This bill is not about side issues. It is about things that are fundamental to our economy. The legislation is about enhancing our economy and our national security. These things must be the overriding issues of importance, and we should not be sidetracked by some kind of fight over royalty holidays, holidays and other issues, that may be of importance in and of themselves, but coupled with this there is just no comparison. So today I suggest that we keep our eyes on the prize and we do not defeat this conference report on a side issue, and I would say that we should have a vote today for jobs, a vote for national security and thus I would suggest that we vote ``yes'' on the conference report and ``yes'' on the rule. [[Page H 11857]] Mr. FROST. Mr. Speaker, I yield 2 minutes to the gentleman from Texas [Mr. Bentsen]. (Mr. BENTSEN asked and was given permission to revise and extend his remarks.) Mr. BENTSEN. Mr. Speaker, I rise in strong support of this conference report, which will create jobs and help American energy companies compete in the global marketplace. Investment in domestic energy exploration and production is vital to America's economic stability and national security. This conference report encourages such investment by lifting the ban on exports of Alaskan oil and providing royalty relief for energy companies that risk exploration in the deep waters of the Gulf of Mexico. These provisions will create jobs in the energy industry and further limit our reliance on foreign oil, which continues to rise as a percentage of our balance- of-payments deficit. We know the Gulf of Mexico contains large oil reserves. Royalty relief will help uncover the 15 billion potential barrels of oil in the gulf and will also spur the development of new offshore technologies and provide thousands of new jobs in the industry. Our energy industry needs these incentives to compete against innovative technologies and an increasingly skilled work force abroad. This policy is supported by Members of both parties in Congress and the Clinton administration. I want to underscore that royalty relief is not the free ride as some in Congress have portrayed it--the energy industry still must pay a substantial upfront bonus and they must also pay royalties when production exceeds the royalty relief period. In essence, this targeted royalty relief will provide the financial incentives to increase domestic energy exploration and production and to protect our national security. In the long run, by spurring exploration and development, this bill will generate more tax revenues for the Federal Government, not less. This conference report is sound economic policy and smart energy policy, and I urge my colleagues to support it. Mr. FROST. Mr. Speaker, I yield 3 minutes to the gentleman from California [Mr. Beilenson]. Mr. BEILENSON. Mr. Speaker, I must say I think this is really offensive that we are being asked to consider this rule waiving points of order for this controversial conference report that will have a significant effect on our Nation's energy and fiscal policy. There is no good reason at all for taking up this type of rule that waives, as it does, the very rules of the House that should be preventing the consideration of this controversial conference report in the first place. We listened for years to arguments from our colleagues, harangues perhaps one could properly call them, who now constitute the majority about how irresponsible and reckless we Democrats were when we provided waivers of rules for even the most minor provisions or rules violations. Yet here we are today being asked to waive a rule that should have prevented the conferees from including in their agreement a very controversial provision that not only is not germane to the House- passed bill, but which in fact the House voted not to include in the conference report. I remind my colleagues that the bill passed by the House has one main purpose, to lift the ban on the export of Alaskan oil. One can properly question, I suppose, the wisdom of lifting that ban. It does mark a major change in the direction of our energy policy. I personally think it is probably a wise change for us to enact. But the House approved that change in our energy policy, and, as I said, I am not here to argue that point. What the House did not approve--in fact, what the House voted 261-161 to prohibit--is granting royalty relief to U.S. petroleum producers operating in waters in the Gulf of Mexico. This controversial provision ought not to be a part of the conference report before us; we ought not to waive the rule requiring germaneness so that this controversial exemption for oil and gas producers--a provision the house voted to oppose--can become law attached to a much less controversial bill. This royalty exemption is a giveaway that we will live to regret. We should not be taking actions that reduce the Government's revenues from large profitable industries especially at a time of great budgetary constraints, and for the leadership to permit the conferees to get away with including this exemption for certain oil producers in this conference report on an entirely different piece of legislation is, many of us believe, totally irresponsible. Mr. Speaker, I urge our colleagues to join me in opposing this rule and in supporting the motion to recommit the conference report that will be ordered, I believe, by the gentleman from California [Mr. Miller]. Mr. FROST. Mr. Speaker, I yield 5 minutes to the gentleman from California [Mr. Miller]. (Mr. MILLER of California asked and was given permission to revise and extend his remarks.) Mr. MILLER of California. Mr. Speaker, Members of the House, after we consider the rule on this legislation, we will get into general debate on a conference report, a conference report that comes back to us on the Alaska oil export bill of which there is relatively little controversy, but that bill has now been hijacked in the conference by a very controversial provision for a royalty holiday for the oil companies in this country that go into the Gulf of Mexico and drill in what this legislation calls deep water. Although I must tell my colleagues in the industry today and with the technology today where we give a royalty holiday under this bill it is no longer deep water. The technology, the investment, the risks, and the oil have all gone past this legislation. This legislation, the provision that is hijacking the Alaska oil export bill, was originally thought of around 1988 when the Gulf of Mexico was in an oil depression. Since that time the Gulf of Mexico has come roaring back. The oil companies are submitting record high bids in that region to compete for the right to drill out there, and it is, in fact, probably the hottest oil place in the world today. {time} 1400 That is not because I say so, that is because every oil and energy and gas periodical in the country says that, and all of the oil companies say this is where they are going. They have set forth their 5-year plan. They have set forth their 10-year plan. This is where they are going to make their investments, along with their other decisions. What we do here is not going to change that. We are just going to decide whether or not we are going to give away the taxpayers' dollars to a lot of oil companies that do not need it, have not particularly asked for it, and understand that it is not going to change their decisions. They are going to the Gulf of Mexico because that is where the oil is. That is where the profitable oil is. What you have here is you have, today you can be at the creation of corporate welfare because this does not exist today, but should you vote against the motion to recommit this conference report, you will be voting to create corporate welfare that CBO says will cost us $500 million. Weigh that against the other decisions you are going to be asked to make later today: to increase Medicare premiums, to do all the things you are going to be asked to do in budget reconciliation, you will be asked to do in the continuing resolution, all the decisions this Congress has made about children's nutrition programs, about education, about science, about technology, about transportation; and in the middle of that, you are going to provide a royalty holiday to the oil industry of this country. I do not think that is what you want to tell your constituents. There is no need for this. The problem with this is, it is mandatory. It is not that the oil company makes a showing that, but for this, they would have drilled the well, or that they need it. It is mandatory. When they sink the well, they get up to 72 million barrels of oil, royalty free, for simply being there, doing what they were already going to do. As I said, they have already bid on the lands. They have already made the investment calculations. They have already leased the rigs, they have already contracted to build new ones, all absent the royalty oil holiday. This Congress should not be larding up, should not be larding up the budget [[Page H 11858]] of the United States with this kind of special privilege. That is what the motion to recommit is about. The motion to recommit is about, in the middle of when we are making the most difficult budget decisions on both sides of the aisle, we find here a provision that CBO says will net out a $150 million loss to the Treasury of the United States, and $500 million between the year 2000 and 2020. We should not be doing that to the taxpayers, we should not be doing that to people who are asking us to put some balance in the balanced budget provision. The last time we had this provision before us, 100 Republicans and 161 Democrats joined to instruct the conferees not to take this provision. The conferees decided otherwise. That is why this rule waives all points of order, because this is a nongermane provision. This is simply a highjacking of a bill that many of this Congress believe is very important, very important, to do that. For those who think if they vote for the motion to recommit they will be bringing down the bill, let me inform them that there is a conference committee scheduled today on the assumption that the motion to recommit will pass so that we can go back to conference, redo this bill, and send it out here. I have told the sponsor of this bill I would let it go on unanimous consent, so they can have the bill and they can stop the creation of new corporate welfare that just in no way can be justified. Mr. McINNIS. Mr. Speaker, I yield myself such time as I may consume. Mr. Speaker, I would like to point out to the gentleman from California that I was in the chair when we last heard these arguments. Frankly, I was convinced by what the gentleman said. In fact, I supported the gentleman from California, because, and I quote the gentleman's statement, he said it was simply a raid on the Treasury by the Senate and major oil companies. Again today I hear the gentleman from California, and, in fact, I think he used the figure $500 million. After that vote, I had time to further examine the issue. In addition to that, I looked at what the CBO score did. I went through that accounting. I can tell the Members that the representation by the gentleman is not the way that I interpret that particular statement. In fact, according to the Secretary of Energy, who has also assessed the CBO score, the deep water language will actually put the Federal Treasury $200 million ahead. Let me repeat that language: The Minerals Management Service has estimated that the revenue impacts of the new leasing under section 304 of Senate 395 for lease sales in the central and western Gulf of Mexico between 1996 and 2000, the deep water royalty relief provisions would result in an increased bonus of $485 million, $113.5 million in additional bonuses on tracts that would have been leased without relief, and $350 million in bonuses from tracts that would not have been leased until after the year 2000, if at all, without relief. This translates to a present value of $420 million if the time and value of money is taken into account. However, the Treasury would forego, and I think this is the number that the gentleman from California is using, ``an estimated $5.53 million in royalties that would otherwise have been collected through the year 2018.'' But you have to complete the formula. But again, taking into account the time value of the money, this offset in today's dollars is only $220 million. Comparing this loss with the gain from the bonus bids on a net present value basis, the Federal Government would be ahead by $200 million. Mr. Speaker, I think we have to look at the CBO score. I intend to support that today. I think the rule is fair, but I think we have to look at that score accurately. We have to disclose all the numbers. Mr. Speaker, I reserve the balance of my time. Mr. FROST. Mr. Speaker, I yield 2 minutes to the gentleman from California [Mr. Miller]. Mr. MILLER of California. Mr. Speaker, I appreciate everything the gentleman from Colorado stated. CBO went through that exact analysis of the Department of Energy, of Mineral Management Services, and rejected that. I find it rather interesting that we now see the proponents of this royalty holiday relying on an agency that they do not trust to give them estimates in Alaska on reserves and costs, and on the Department of Energy, which they think should be abolished. But they do not want to now look at what CBO, the agency they are relying on and we are all relying on to help us balance the budget, when they reject it and say flat out it is going to cost a net $150 million to the taxpayers. When you get through all of the offsets and you get through the leases that are going to be moved forward and the leases that are going to be moved backwards, what you have in fact is a $150 million net cost, $500 million gross costs in the years 2000 and 2020. So CBO, the agency we are relying on, that you are relying on, that we have given credibility to, that has rejected the administration arguments in many, many instances, now says, ``This is a net cost to the taxpayers of this country.'' That is why we should not be providing a royalty holiday to companies that do not need it. I thank the gentleman for yielding to me. Mr. McINNIS. Mr. Speaker, I yield myself such time as I may consume. Mr. Speaker, clearly the gentleman from California and I disagree as to the value to the Treasury, but I would stand by my comments, as I think the majority of the people on both sides of the aisle will stand by, and that is that this is a positive. This puts money into the Treasury. At a time when we are facing this deficit, I think we need to look at that. It encourages jobs. It is a win-win deal. We have got jobs, we have money for the Treasury. I think we are going to have support from both sides of the aisle, in addition, of course, to the support from the Clinton administration. The Clinton administration has come out and endorsed this theory, this issue, and the way it has been put on this bill. Mr. Speaker, I reserve the balance of my time. Mr. FROST. Mr. Speaker, I yield 2 minutes to the gentleman from Texas, Mr. Gene Green. Mr. GENE GREEN of Texas. Mr. Speaker, I thank my colleague, the gentleman from Texas, for yielding me the time. Mr. Speaker, I rise in support of the conference committee report in its entirety of Senate bill 395, based on three reasons. One, it is safe for offshore drilling. We are only dealing with new leases or expanded leases, and also the jobs and economic growth that my colleague, the gentleman from Colorado, talked about. Let me explain. We are talking about the impact on the current budget and this resolution will help balance our budget. The agreement requires the Department of the Interior to exempt from royalties only new leases, or expanded production; it is production that may not be utilized. We may not receive one penny in royalty, but if they do expand it, if they do have new leases, we will see additional revenue. That is where I see the plus for our Treasury. This resolution also talks about expanded production under existing leases, but it mandates some of the royalty exemptions if the Interior Secretary determines this production will not be economic without royalty relief. We are giving the Department of the Interior the ability to say, ``If you will do it, then we will give you that benefit.'' We are really just letting them say, ``OK, depend on the market, and if it will work, it will help the Treasury and also help in the creation of jobs.'' Let me talk about offshore drilling, because in Texas we do that a lot. I go to Galveston, TX, and see the wells out there and I am concerned, like everyone else, about the pollution in our waters. But, in the latest study I have, it shows that offshore oil production is responsible for only 2 percent of spills, whereas transportation is 45 percent of whatever pollution may be, and waste and runoff is 36 percent. We can solve a lot of problems with pollution of our waterways and our bodies of water if we just clean up what we put into the sewers, but the offshore production is one of the safest, ways to produce energy. We have had production off our coasts, successful production. Again, this would benefit not only those of us who live along the Gulf Coast, but would also benefit the economic security of our Nation. That is why, Mr. Speaker, I encourage the adoption of the conference committee report. Mr. McINNIS. Mr. Speaker, I yield myself such time as I may consume. [[Page H 11859]] Mr. Speaker, I would like to quote from a letter that we have just received from Citizens for a Sound Economy, and as we all know on both sides of the aisle, that is a very economically conservative organization. It watches very carefully for any type of legislation that would be a drain on the Federal Treasury. Their position on this, and I quote: Providing some degree of royalty relief creates economic incentives to make such risky undertakings more feasible, while increasing the supply of a vital natural resource and providing increased employment opportunities. Moreover, the royalty relief is not corporate welfare. It does not place a burden on taxpayers or contribute to the deficit. Mr. Speaker, I yield 3 minutes to the gentleman from Texas [Mr. Archer], chairman of the Committee on Ways and Means. (Mr. ARCHER asked and was given permission to revise and extend his remarks.) Mr. ARCHER. Mr. Speaker, I thank the gentleman for yielding time to me. Mr. Speaker, I rise today in support of the rule and in opposition to the motion to recommit offered by the gentleman from California. Enactment of the OCS Deep Water Royalty Relief Act will generate substantial revenues over the next 7 years as companies bid more for deep water leases and risk investing in leases that are currently too marginal to even consider. The revenues received by the Treasury for oil and gas leases are the combination of bonus bids received at the time of lease sales and royalties paid in the event a lease is developed and brought into production. Since the Federal leasing program began in 1954, $56 billion in bonus payments have been generated versus $47 billion in royalty revenues. In other words, we have received more money from producers paying for the option to produce leases than from actual production royalties. This is especially true in deep waters where only one out of 16 leases ever produce and pay royalties. The Congressional Budget Office has officially stated that this provision will not reduce the receipts to the Federal Government under the pay-as-you-go procedures. The only revenues scored for the provision have been in the context of budget reconciliation where revenues from non-routine asset sales are being counted for deficit reduction purposes. The bottom line is that CBO has conservatively estimated this provision would generate additional revenues of $130 million over seven years. I urge you to vote again the Miller motion to recommit. Mr. FROST. Mr. Speaker, I yield 3 minutes to the gentleman from Minnesota [Mr. Vento]. (Mr. VENTO asked and was given permission to revise and extend his remarks.) Mr. VENTO. Mr. Speaker, I rise in strong opposition to the rule, and believe it should be defeated. It is needed to circumvent the thorough consideration of this special interest's--oil interest's--benefits being placed into law. Mr. Speaker, the Miller motion is our avenue to send this back to conference, as we did in August, or in July, by a vote of 261 to 155. We instructed conferees to reject the Senate language providing royalty holidays to companies drilling for oil and gas in federally controlled deep waters in the Gulf of Mexico. The House voted against the Senate proposal because House Members saw this royalty holiday correctly for what it is. This policy is an unjustified giveaway, a tax break for big corporations at the expense of the American taxpayer. Unfortunately, House conferees completely ignored the wishes of the majority of the House and supported the corporate welfare approved by the Senate. This measure has not passed the House, but was slipped into the Senate measure and is being foisted upon the House through this conference measure, and facilitated by this rule, which I oppose. The deep water royalty fails in terms of process and economics. Royalty holiday legislation has not been introduced in the House, and the committee process has been circumvented by those who want to push this giveaway through without complete consideration. If this is such good legislation, why not subject it to hearings and full debate? Why are we being asked to settle for a nongermane amendment to Alaskan oil export legislation? The reason is simple: that a royalty holiday will not stand up to the light of day. {time} 1415 Today, the big oil companies pay only a 17-percent tax rate, and the small independent companies pay almost nothing after deductions. That beats the rates paid by most American taxpayers and hardly suggests the need for further cutbacks. Moreover, there is ample evidence that new technology has prompted a rush of bids in deep-water tracts in the gulf. The lease auction held last May was the fourth largest in gulf history, under the current tax and lease policies, and the American public would have lost an estimated $2 billion in future royalties if the proposed holiday had been in place then. Over the long haul, CBO estimates the royalty holiday will cost the taxpayers $420 million. The claim that this measure is justified for economic growth should not be the basis for giveaway tax breaks. The fact is that when someone else gets a break in terms of the Tax Code or in terms of royalty, other taxpayers have to make it up. They have to pay for it. So the fact is that if we give this away fast enough, if we can burn dollar bills, that we can heat the house is not a very good justification for a tax policy or for an energy policy. So I would suggest to my colleagues that we quit burning the dollar bills, we start dealing with the deficit by closing and not opening new loopholes, and that is what has happened throughout this Congress. The House tax bill that passed provided 75 percent of the benefits in 10 years went to corporations and to investors--to corporations and investors--not to individual taxpayers. Mr. Speaker, I urge defeat of the rule and passage of the motion of the gentleman from California [Mr. Miller] to recommit to conference this report. Mr. McINNIS. Mr. Speaker, I yield 3\1/2\ minutes to the gentleman from Oklahoma [Mr. Brewster]. (Mr. BREWSTER asked and was given permission to revise and extend his remarks.) Mr. BREWSTER. Mr. Speaker, I rise this afternoon to support this important rule. This afternoon we will have an opportunity to cast a vote that will create jobs, increase domestic production of crude oil and natural gas, decrease our dependence on foreign oil, and raise at least $100 million for the Federal Government over 5 years. Almost every day news stories report more layoffs, more downsizing, more jobs destroyed as companies cut their payrolls. The men and women of the Nation's oil and natural gas industry know those stories too well, because they have lived them. Oil and gas workers have experienced more job losses than workers in any other American industry. Since 1982, 450,000 jobs were lost in just the exploration sector of the U.S. petroleum industry. That is almost half the number of jobs lost in the entire domestic manufacturing sector. More than one out of every two workers who searched for oil and natural gas, or helped recover it, lost their job. But today, Mr. Speaker we can begin to make a difference for oil and gas workers, for those in related industries, and for their families and communities. I urge my colleagues to vote for job creation by voting in favor of the rule to the conference report on S. 395. Congress must provide incentives for deepwater drilling in the central and western Gulf of Mexico. Deepwater incentives, which encourage oil and gas companies to risk their capital on new exploration and production, will create 20,000 new jobs for every $1 billion in private sector investment. These incentives will result in the creation of many new jobs in my State of Oklahoma, a State hundreds of miles from the gulf. There are 378 petroleum equipment supply facilities in my State alone. And nationally, there are 3,532 such facilities spread across 40 States. Deepwater incentives mean jobs not only for oil and gas workers. It means jobs in steel, in machine tools, in heavy equipment and in the high technology industries that support oil and gas recovery. Deepwater incentives will create new jobs in the gulf region, [[Page H 11860]] in my State, and throughout our country. We have been going the wrong way for too long. The United States has sent many oil industry jobs overseas. And we rely too much on foreign oil suppliers, who now deliver over half the oil we use. In just 15 years, the U.S. Department of Energy warns that we will rely on foreign sources for 60 percent of our oil. Mr. Speaker, we must invest in American workers. It is time to turn this situation around, and rely on our own abundant oil and gas resources. And we must create the job opportunities that go with domestic oil and gas exploration and production. Mr. Speaker, I urge my colleagues on both sides of the aisle to support the rule, and the conference report and say yes to jobs. Mr. McINNIS. Mr. Speaker, I yield 3 minutes to the gentleman from Mississippi [Mr. Wicker]. Mr. WICKER. Mr. Speaker, I thank my colleague for yielding me this time. Mr. Speaker, I rise in support of the rule, in support of the bill, and particularly in support of the Outer Continental Shelf deep-water incentives legislation; and I will be asking my colleagues later on to vote against the Miller motion to recommit. Mr. Speaker, I think this legislation is a good idea; and particularly, Mr. Speaker, I believe the OCS deep-water incentives provisions are good for business, they are good for job growth and, most importantly, they are good for the taxpayers. Let us look at the facts. Right now, restrictive royalties have effectively shut down deep-water drilling. Only 6 percent of the deep- water leases are in production. That is compared to 50 percent of leases which are in production in shallow waters. My colleagues should not be fooled by the opponents of this measure. I believe their goal is to shutdown deep-water drilling with restrictive taxes. While Americans have continually rejected this approach to governing for the nonsense that it is, opponents have decided to change their approach to the charge of corporate welfare. So let us look again at this charge of corporate welfare. The Congressional Budget Office, the office that we rely on for our estimates, has determined that this bill will generate $100 million over 5 years in tax revenues. Is that corporate welfare? The Congressional Budget Office says that this bill will reduce our national deficit. Is that corporate welfare? This bill will create jobs. That is not corporate welfare, Mr. Speaker. This bill makes sense for the taxpayers, for the Federal budget and for our national security. What our friends who oppose this bill are not saying is the fact that the taxpayer benefits only if deep-water oil and gas production occurs. If they do not drill, they do not pay taxes. The taxpayer and producers are business partners. They both benefit from deep-water drilling. So who is being taken advantage of by this provision? It is not the offshore workers who sit idle by the drills. It is not the taxpayer who stands to make $100 million over the next 5 years. The only people being taken advantage of in this bill are those who fall for the basic theory of corporate welfare by the opponents of the bill today. This bill will expand domestic energy resources, enhance our energy security, create jobs and reduce the national deficit. Mr. Speaker, this is a good rule, this is good legislation, and I urge its adoption. Mr. McINNIS. Mr. Speaker, I yield 3 minutes to the gentleman from Florida [Mr. Goss]. (Mr. GOSS asked and was given permission to revise and extend his remarks.) Mr. GOSS. Mr. Speaker, I thank my friend the honorable distinguished gentleman from Glenwood Springs, CO [Mr. McInnis], for yielding me this time and for his management of this rule. Mr. Speaker, I rise in support of this rule, and to thank the conferees on S. 395 for going the extra mile to address the concerns of the State of Florida with regard to the deep water drilling provisions contained in the conference report. I, along with many Members of the Florida Delegation, had reservations about the original Senate language that would have provided royalty relief for oil companies drilling in the deep waters of the Gulf of Mexico. The overwhelming majority of Floridians are opposed to taking risks with oil and gas exploration in our fragile coastal waters--risks that could jeopardize our tourism and housing industries. I am pleased that through the efforts of Mrs. Fowler and others on the conference committee, the report now spells out in no uncertain terms that ``nothing in this title shall be construed to affect any offshore pre-leasing, leasing, or development moratorium, including any moratorium applicable to the eastern planning area of the Gulf of Mexico located off the gulf coast of Florida.'' This clarification is consistent with our efforts to provide long-term protection for Florida's valuable coastline, and I support it's inclusion in this conference report. Mr. Speaker, I recognize there are many other issues in this particular report, and they have not all been attended to in exactly the way that is going to make everybody exactly happy. I have never seen a piece of legislation that I can recall that has made everybody happy in this body, and I do not think I will live that long. I think that everybody fees they can improve on it. But for the rule that we have here, I think that is a good rule; and I think it is important to point out that there has been a change and an improvement for the Florida interests that involve the protection of the Florida coastal waters; and I think those involved. Mr. McINNIS. Mr. Speaker, I yield I minute to the gentleman from Florida [Mr. Scarborough]. Mr. SCARBOROUGH. Mr. Speaker, I thank the gentleman for yielding time to me. Mr. Speaker, I am from Florida. This bill does not affect the State of Florida, does not affect drilling off of Florida. This does affect the taxpayers. When I hear people get up and say that CBO has scored this one way or the other, that it is actually going to be $100 million plus, that is doublespeak that I have been hearing Democrats saying on the other side of the aisle, and how Republicans are saying this now for their own purposes shocks me. The fact of the matter is, CBO has scored this, and in their scoring they said it would cost us $450 million. Now, how anybody can stand up after defending CBO numbers for a year and then stand up and say, ``OK, CBO is right on everything but this one,'' absolutely strains any credibility any speaker has. CBO says it. It costs the American taxpayer $450 million. When you take to the microphone and say that you are helping the American taxpayers by shoveling more corporate welfare to big oil, you are lying to the American people. Mr. McINNIS. Mr. Speaker, I yield myself such time as I may consume. Mr. Speaker, I would hope the gentleman from Florida [Mr. Scarborough] stays on the floor long enough to hear some rebuttal, because the gentleman from Florida has very little basis, especially using the kind of strong language that he has used. I think we may have an honest disagreement here. I do not think either side in this situation is lying, as the gentleman from Florida might put it, or telling an untruth. In fact, the CBO has been I think fairly clear on its scoring of this. This will add to the Federal Treasury. Mr. Speaker, I yield 2 minutes to the gentleman from Louisiana [Mr. Tauzin]. Mr. TAUZIN. Mr. Speaker, I thank the gentleman for yielding time to me. As a matter of fact, CBO did say this would yield $100 million to the Treasury in the next 5 years. Confusion has come up when CBO tried to go 25 years out and estimate income and revenue as opposed to losses under the program, and CBO did a classic economic mistake in that analysis. They failed to count the present value of money. Minerals Management has done an analysis as well. Minerals Management, under the Secretary of Energy, has concluded that this bill will produce at least 630 additional leases which would be sold for a total increase in bonuses of $485 million over the next 5 years. Their analysis over the 25-year period is it not only reduces the deficit but it also adds, they believe, about $200 million to the Treasury. [[Page H 11861]] Now, we can debate. Economists are arguing about what is going to happen 25 years from now. But one thing we cannot deny is that the 25- year outlook by CBO originally done, which has been corrected by Minerals Management and the Department of the Interior, failed to take into account a very simple economic principle, the present value of money. When you do that, this is a net gainer for the Treasury. It is a net gainer for the Treasury in the first 5 years. It is a net gainer over the 25-year period, if the bill were extended beyond the first 5 years. In fact, this is good for the Treasury. This produces jobs, economy. It produces income for Americans, and it does something even more vital than that. It produces oil and gas in regions that would not otherwise be produced in the Gulf of Mexico, only in an area where, in fact, economies of scale and deep-water drilling would not permit those drills to occur. This is good for the country. Too many of our young men and women have gone to battle to defend oil products in somebody else's land. It is about time we produce on the leases we have authorized to be produced here in the Gulf of Mexico. I would urge support for this rule and

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CONFERENCE REPORT ON S. 395, ALASKA POWER ADMINISTRATION ASSET SALE AND TERMINATION ACT
(House of Representatives - November 08, 1995)

Text of this article available as: TXT PDF [Pages H11854-H11881] [[Page H 11854]] CONFERENCE REPORT ON S. 395, ALASKA POWER ADMINISTRATION ASSET SALE AND TERMINATION ACT Mr. McINNIS. Mr. Speaker, by direction of the Committee on Rules, I call up House Resolution 256 and ask for its immediate consideration. The clerk read the resolution, as follows: h. res. 256 Resolved, That upon adoption of this resolution it shall be in order to consider the conference report to accompany the bill (S. 395) to authorize and direct the Secretary of Energy to sell the Alaska Power Administration and to authorize the export of Alaska North Slope crude oil, and for other purposes. All points of order against the conference report and against its consideration are waived. The conference report shall be considered as read. The SPEAKER pro tempore (Mr. Goodlatte). The gentleman from Colorado [Mr. McInnis] is recognized for 1 hour. Mr. McINNIS. Mr. Speaker, for the purpose of debate only, I yield the customary 30 minutes to the gentleman from Texas [Mr. Frost], pending which I yield myself such time as I may consume. During consideration of this resolution, all time yielded is for the purpose of debate only. Mr. Speaker, House Resolution 256 is a simple resolution. The rule simply makes it in order to consider the conference report to accompany the bill S. 395 which authorizes and directs the Secretary of Energy to sell the Alaska Power Administration, and to authorize the export of Alaska North Slope crude oil. All points of order against the conference report and against its consideration shall be waived. This resolution was reported out of the Committee on Rules by an unanimous voice vote. The purpose of the underlying legislation, S. 395, is to lift the ban on the export of crude oil produced on Alaska's North Slope and to provide for the sale of the assets of the Alaska Power Administration. Additionally, the conference report contains a targeted royalty relief provision which, according to the Secretary of Energy Hazel O'Leary, will ``lead to and expansion of domestic energy resources, enhance national security, and reduce the deficit''. This legislation has broad bipartisan support, including the support of the Clinton administration. By lifting the ban on exports we will create thousands of new jobs in this decade, and we will generate millions in receipts to the Federal Government. Mr. Speaker, I reserve the balance of my time. Mr. FROST. Mr. Speaker, I yield myself such time as I may consume. Mr. Speaker, I rise in support of the rule. This rule, as the gentleman from Colorado has explained, waives points of order against the consideration of the conference report on S. 395, a bill to lift the ban on exports of Alaskan oil and to privatize the Alaska Power Administration. Mr. Speaker, this conference report also contains a provision which was not in the House-passed version of this legislation. This provision exempts oil and gas companies drilling under Federal oil and gas leases in deep waters offshore in the Gulf of Mexico, from paying royalties to the Federal Government. The inclusion of this provision is controversial in light of the instructions to conferees adopted by the House last July. That motion, offered by the gentleman from California [Mr. Miller], instructed conferees to insist on the House position on this issue. The House bill, of course, deleted these provisions. The conferees have, however, wisely included these provisions in the bill. Mr. Speaker, these exemptions will encourage exploration and drilling which will in turn increase the amount of available crude oil to U.S. markets. Mr. Speaker, increasing energy production in something our government should encourage and the provisions in this conference report do just that. I would encourage my colleagues to support the conference report and to oppose the Miller motion to recommit this conference report. Mr. Speaker, I reserve the balance of my time. Mr. McINNIS. Mr. Speaker, I yield 4 minutes to the gentleman from Louisiana [Mr. Livingston], chairman of the Committee on Appropriations. (Mr. LIVINGSTON asked and was given permission to revise and extend his remarks.) Mr. LIVINGSTON. Mr. Speaker, I thank the gentleman from Colorado for yielding time to me, and I rise in support of the rule and in support of the bill. Mr. Speaker, I am pleased to support this effort. Mr. FROST. Mr. Speaker, I yield 1 minute to the gentleman from Massachusetts [Mr. Studds]. (Mr. STUDDS asked and was given permission to revise and extend his remarks.) Mr. STUDDS. Mr. Speaker, I rise in support of this rule and of the substance of the conference report, although I shall support the efforts of the gentleman from California [Mr. Miller] to strike an extraneous and controversial provision. This legislation is important because it is vital to preserving the independent tanker fleet and the cadre of skilled men and women who proudly sail today under our flag. Mr. Speaker, I rise in support of the rule and the conference report on S. 395, legislation that authorizes exports of Alaskan oil carried in American-flag vessels. This bill will help enhance our national security by spurring energy production and by helping to preserve our domestic merchant marine. I urge my colleagues to vote in favor of the rule and to overwhelmingly support this legislation, as you did when it was on the floor in July. According to recent press reports, a number of foreign governments continue to complain that the U.S.-flag requirement somehow violates our international obligations. As my colleagues may know, the U.S. Trade Representative has assured Congress that the bill does not violate our GATT obligations. To my knowledge, none of these governments complained when Congress enacted a comparable provision as part of the United States-Canada Free-Trade Agreement. In any event, for the benefit of those who persist in arguing without foundation that the bill poses a problem, let me lay out the case here. This legislation is important because it is vital to preserving the independent tanker fleet and the cadre of skilled men and women who proudly sail today under the American flag. There can be little doubt that our Government has a compelling interest in preserving a fleet essential to national security, especially one transporting an important natural resource. Specifically, section 201 of the conference report requires that, other than in specified exceptional circumstances, Alaskan crude exports must be transported by a vessel documented under the laws of the United States and owned by a U.S. citizen. As my colleagues know, current law already requires Alaskan oil to move to the lower 48, Hawaii, and Canada on so-called Jones Act vessels. When Congress authorized construction of the Trans-Alaska Pipeline system, it established export restrictions that had the effect of ensuring that North Slope crude would move to the lower 48 and Hawaii on U.S.-built, U.S.-owned, and U.S.-crewed vessels. Although the export restrictions have changed over time, there has been no change with respect to the requirement to use Jones Act vessels. In 1988, when Congress passed legislation to implement the United States-Canada Free-Trade Agreement, it agreed to allow up to 50,000 barrels per day of ANS crude to be exported for consumption in Canada, subject to the explicit requirement that ``any ocean transportation of such oil shall be by vessels documented under [46 U.S.C.] section 12106.'' By insisting that exports to Canada move on Jones Act tankers--even though not required by the specific terms of the agreement--Congress established the principle that exports must move on U.S.-flag vessels. Consider also that in negotiating the North American Free-Trade Agreement, the Mexi- can Government reserved to itself the ``transportation . . . [of] crude oil.'' The U.S. Government specifically agreed to this reservation in adopting article 602(3) of NAFTA. Additionally, in two major areas of commercial movements in foreign trade, the U.S. Government has long enforced preference for American vessels. Since 1934, the U.S. Export-Import Bank has reserved for American carriers 100 percent of all cargo the export of which it finances under various programs. The Cargo Preference Act of 1954 also reserves certain government-financed cargo to ``privately owned United States-flag commercial vessels, to the extent such vessels are available at fair and reasonable rates.'' There are plenty of other examples of cargo reservation world wide. Our Government has entered into bilateral treaties with Latin American countries that preserve ``government controlled'' cargoes for national lines. These intergovernmental agreements are supported by [[Page H 11855]] pooling agreements among the lines that effectively divide all cargo-- not merely controlled cargo--on the UNCTAD 40-40-20 basis, with the 20 percent being accorded to such third-flag lines as are admitted to the pools. Similarly, the French Government reserves for French-flag vessels substantial cargoes. The act of March 30, 1928, for example, requires that, unless waived, two-thirds of France's crude oil needs be carried on French-flag vessels. Mr. Speaker, it is quite clear that longstanding precedent supports the U.S.-flag requirement in this bill. Now let me address specific U.S. international obligations and explain why the legislation does not violate the GATS ``Standstill Agreement,'' the General Agreement on Tariffs and Trade, or other of our international obligations. GATS Standstill Agreement.--At the conclusion of the Uruguay Round of multilateral trade negotiations, the United States and other countries for the first time agreed to cover services, as embodied in the General Agreement on Trade in Services [GATS]. Maritime services were effectively excluded, however, because no commitments of any kind were made by the United States. Although a U.S. offer had been briefly tabled, it was withdrawn. Thus, the U.S. Government did not in any way restrain or limit its authority to maintain or promote an American-flag fleet. The only commitment made by the U.S. Government was to continue negotiations until June 1996, with a view to determining whether to make any binding commitments at that time. The ``Ministerial Decision on Negotiations on Maritime Transport Services'' imposed this ``standstill'' commitment or ``peace clause'' for the period during which the negotiations would occur: ``[I]t is understood that participants shall not apply any measure affecting trade in maritime transport services except in response to measures applied by other countries and with a view to maintaining freedom of provision of maritime transport services, nor in such a manner as would improve their negotiating position and leverage.'' Some foreign governments are now arguing that the enactment of the proposed legislation would violate this commitment. They are incorrect. In a letter to me at the time, the U.S. Trade Representative stated that the ``peace clause'' is: Strictly a political commitment by the Parties to the negotiations not to take measures to ``improve their negotiation position or leverage.'' In a worst case scenario, if one of the Parties to this negotiation were to conclude that the United States had taken a measure that contravenes the peace clause, their only remedy would be to leave the negotiating table. Let me assure you that there is nothing in the negotiations that would interfere with maritime reform legislation. . . . Discussion of promotional programs, including government subsidies, would, by no stretch of the imagination, be viewed as undermining these negotiations. This understanding was confirmed by the Presidential Advisory Committee on Trade Policy and Negotiations. In filing its report at the conclusion of the Uruguay Round negotiations, the Committee said: ``[A]ll existing maritime promotional and support laws, programs and policies continue in full force and effect. The United States also may enact or adopt such new measures as it wishes including pending legislation to revitalize the maritime industry.'' GATT.--The General Agreement on Tariffs and Trade covers goods, not services. Under longstanding precedent, vessels in international commerce are not themselves ``products'' or ``goods'' subject to GATT. For purposes of GATT, the relevant ``product'' is ANS crude, which would be transported on American-flag vessels. Requiring that this product be carried on these vessels, as currently required under the implementing legislation for the United States-Canada Free-Trade Agreement, does not conflict with GATT. Article XI of GATT proscribes ``prohibitions or restrictions other than duties, taxes or other charges whether made effective through quotas, import or export licenses or other measures'' by a contracting party ``on the importation of any product'' or ``on the exportation . . . of any product.'' These requirements apply to ``products,'' which do not include vessels in transit between nations. Moreover, these requirements are limited to ``products'' and not to their transportation. This is made clear by the exceptions listed in para. 2, such as (a) measures to prevent or relieve ``critical shortages of food stuffs or other [essential] products'' and (b) restrictions to facilitate ``classification, grading or marketing of commodities.'' Such exceptional restrictions are to be accompanied by public notice ``of the total quantity or value of the product permitted to be imported.'' Thus, the transportation requirements of the committee print are not ``prohibitions or restrictions other than duties'' on goods proscribed under article XI. Article III, the national treatment article, forbids internal taxes or other charges or regulations, affecting, inter alia, the transportation of goods, that discriminate in favor of domestic production. Requiring U.S.-flag vessels for the carriage of certain cargoes in international trade is not an internal regulation of transportation that discriminates against foreign goods. As I said earlier, vessels are not considered goods. Moreover, by operation of the Jones Act, foreign-flag vessels may not today carry ANS crude oil to the lower 48 or Hawaii. Having no claim to carry this crude today, foreign governments can not claim under article III that they somehow will be denied opportunities tomorrow as a result of a change in current law. Article V, the freedom of transit article, requires that member nations permit goods, and also vessels, of other member nations ``freedom of transit through the territory of each contracting party'' of traffic in transit between third countries. The proposed bill, however, is not an inhibition of such movement of foreign goods or vessels within the United States. Article V thus does not apply. GATT Grandfather Clause.--GATT 1994 contains an explicit exemption for the Jones Act. Annex 1A to the agreement establishing the World Trade Organization contains an exception relating specifically to national flag preferences for shipping ``between points in national waters'' enacted before a member became a contracting party to GATT 1947. The exception becomes inoperative if ``such legislation is subsequently modified to decrease its conformity with Part II of the GATT 1994.'' On its face, however, the proposed bill would not operate in commercial applications ``between points in national waters,'' since it concerns the foreign trade. The proposed legislation would not amend the Jones Act and thus does not jeopardize the grandfathering of the Jones Act by Annex 1A. The conformity of the bill with international obligations of the United States does not depend on this exception, but on the terms of those obligations themselves. As I indicated earlier, the proposed bill does not conflict with articles III, V or XI of GATT. OECD Code.--The OECD's Code of Liberalisation of Current Invisible Operations generally requires OECD member countries to liberalize trade in services, with certain specified exceptions. Note 1 to annex A, in defining invisible operations in the maritime sector, states in its first sentence that the purpose of the provision is ``to give residents of one Member State the unrestricted opportunity to avail themselves of, and pay for, all services in connection with international maritime transport which are offered by residents of any other Member States.'' The second sentence of the Note lists ``legislative provisions in favour of the national flag * * * '' as among measures that might hamper the enjoyment of those rights. The Note concludes, however, unambiguously: ``The second sentence of this Note does not apply to the United States.'' Whatever its applicability to the law of other nations, it would not apply with respect to the proposed legislation, which cannot therefore be contrary to it. Thus, while some OECD members have subscribed to equating national flag requirements with disapproved ``invisible operations,'' it is clear that the United States has not. FCN Treaties.--Some foreign governments have raised questions about the propriety of flag reservation in light of various treaties of Friendship, Commerce and Navigation. The treaty clause invoked is this: ``Vessels of either party shall be accorded national treatment and most-favored-nation treatment by the other party with respect to the right to carry all products that may be carried by vessel to or from the territories of such other party. * * *'' Whatever this clause may appear to convey literally, its application in practice has allowed numerous national flag preferences identical with or otherwise indistinguishable in principle from the proposed measure. As I indicated earlier, the most prominent instance is embodied in the United States-Canada Free-Trade Agreement. But there are many other examples. In the 1960's and 1970's, for example, the United States concluded with the former Soviet Union agreements for the sale of grain that, initially, reserved all carriage to American ships so far as available, and later not less than 30 percent. Against protests filed by a number of maritime powers having either national-treatment or most-favored-nation treaties, the United States responded in congressional testimony that, although the fact that the Soviet Union as a government was the purchaser did not alter the character of the transaction as purely commercial, ``[t]he shipping arrangement worked out for the Russian wheat sale is a form of cargo preference involving a unique bilateral agreement between the U.S. and U.S.S.R. establishing a new trade where none existed before.'' This is the same reason the Department of State has advanced in defending preferences for government-financed cargo. So far as this may be considered a controlling factor, it is certainly applicable here, because the bill [[Page H 11856]] is clearly ``establishing a new trade where none existed before.'' In 1973, the President, by proclamation, instituted a system of licensing fees on imports of oil excess to prescribed quotas. Subsequently, however, the President in effect exempted products refined in American Samoa, Guam, the Virgin Islands or a foreign trade zone, if transported to the mainland on American-flag vessels. Like the present bill, the fee waiver was said not to reflect ``a general administration position on reducing licensing fees when U.S.-flag ships are used''. Although the stated purpose was to equalize refinery costs as between territories not subject to the Jones Act and the mainland, the administration suggested in congressional testimony that ``a positive incentive has been provided by the administration for the construction and use of additional U.S.-flag tankers.'' In recent testimony before the Resources Committee on which I sit, the Deputy Secretary of Energy similarly emphasized the importance of the U.S.- flag requirement of the pending legislation in preserving U.S.-flag tankers and the skilled mariners who operate them. In summary, Mr. Speaker, the U.S.-flag requirement of this bill is supported by ample domestic and foreign precedent, does not represent an extension of cargo preference into a new area, and does not violate our international obligations. There is no reasonable basis for a challenge to the legislation before the World Trade Organization or in other international forums. I urge my colleagues to join me in supporting this legislation, which is so vital to preserving a fleet essential to national defense. Mr. McINNIS. Mr. Speaker, I yield 3 minutes and 56 seconds to the gentleman from Louisiana [Mr. Livingston], chairman of the Committee on Appropriations. (Mr. LIVINGSTON asked and was given permission to revise and extend his remarks.) Mr. LIVINGSTON. Mr. Speaker, the United States is now importing 50 percent of our energy needs. The Department of Energy projects 60 percent import level by 2010. The United States has lost 450,000 jobs in the oil and gas industry. The temporary royalty relief in S. 395 will enable the private sector to risk its own funds to find and produce domestic oil and gas to enhance national energy security and create jobs. CBO scored the deep water Gulf of Mexico royalty provisions as a revenue gain of $100 million over 5 years. The Minerals Management Service estimates even greater revenue gains. The administration's Sustainable Energy Strategy stated: The Administration supports targeted royalty relief to encourage the production of domestic oil and natural gas resources in deep water in the Gulf of Mexico. This step will help unlock the estimated 15 billion barrels of oil- equivalent in the deepwater Gulf of Mexico, providing new energy supplies for the future, spurring the development of new technologies, and supporting thousands of jobs in the gas and oil industry and affiliated industries. A letter from Hazel O'leary stated, ``The royalty relief provisions in S. 395 as adopted by the conference committee is a targeted deepwater royalty relief provision that the Administration supports.'' The letter concludes, ``The ability to lower costs of domestic production in the central and western Gulf of Mexico by providing appropriate fiscal incentives will lead to an expansion of domestic energy resources, enhance national security, and reduce the deficit. Therefore, the Administration supports the deepwater royalty relief provision of S. 395.'' The language in the conference report was changed in two important ways: First, it clarifies that the royalty incentives are applicable only to the western and central Gulf of Mexico west of the Alabama/ Florida border. Second, the legislation has been amended to make it clear that it will not affect an OSC area that is under a pre-leasing, leasing, or development moratorium, including any moratorium applicable to the eastern planning area of the Gulf of Mexico located off the Gulf Coast of Florida. The Minerals Management Service determined that the deepwater incentives will result in a minimum net benefit to the Treasury of $200 million by the year 2000. These provisions will create thousands of jobs, enhance national security by reducing dependence on imported oil, and reduce the deficit. I urge my colleagues to support the conference report. {time} 1345 Mr. Speaker, I intend to vote for it, and I hope my colleagues will likewise vote for the rule, which I do support as well. Mr. FROST. Mr. Speaker, I yield 2 minutes to the gentleman from California [Mr. Dooley]. (Mr. DOOLEY asked and was given permission to revise and extend his remarks.) Mr. DOOLEY. Mr. Speaker, as an original cosponsor of the underlying Alaskan oil export legislation, which passed the House on July 24 by a 324 to 77 margin, I rise in strong support of the rule and also the conference report for S. 395. With enactment of this historic legislation we will have a chance to benefit small, independent oil producers throughout this country. Current law may have made a great deal of sense in 1973. But like any other laws, it is having unintended consequences that were not foreseen by our colleagues. We therefore should repeal the Alaskan oil export ban and authorities exports carried in U.S.-flag vessels. What this will allow is to free up oil refining capacity on the west coast of the United States, which will help to encourage oil production and oil exploration in the west coast of the United States, much of that done by the independent oil producers. The California independent oil producers state a compelling case. Like them I was pleased that the Department of Energy similarly concluded last year that the export ban was depressing production and, if lifted, would benefit California and the Nation as a whole. The Department of Energy's comprehensive June 1994 study provides a strong factual basis to support this legislation. Among others, the following study concluded production will increase by 100,000 barrels per day, up to 25,000 additional jobs will be created, State and Federal revenues will increase by hundreds and millions of dollars, and these benefits will be achieved with little, if any, effect on consumer prices. We now have a unique opportunity in this Congress to spur additional energy production and to create jobs. With imports meeting over 50 percent of our domestic consumption because of falling production, we must do something quickly to increase energy production in this country. This legislation, this conference report, will achieve those objectives, and I urge my colleagues to support the rule and the report. Mr. McINNIS. Mr. Speaker, I yield 2 minutes to the gentleman from California [Mr. Rohrabacher]. Mr. ROHRABACHER. Mr. Speaker, I rise today and urge the support of the conference report which is of immense importance to California and to our Nation's economic and national security, as well as our well- being. This legislation will increase our domestic exploration and production of crude oil. It will mean that our reduced balance-of- payments deficit, the deficit in our balance of payments, will be reduced, and everyone agrees that the United States today is too reliant on the import of crude oil. This legislation will spur domestic production, thereby enhancing our national security. As I have just said, it will also affect in a positive way our balance of payments. Mr. Speaker, this legislation lifts the ban on the export of Alaskan crude. This will contribute to reducing our trade deficit, and this legislation thus is good for job creation in the United States, and it is good for our economy in general. My colleagues should not be swayed by side issues. This bill is not about side issues. It is about things that are fundamental to our economy. The legislation is about enhancing our economy and our national security. These things must be the overriding issues of importance, and we should not be sidetracked by some kind of fight over royalty holidays, holidays and other issues, that may be of importance in and of themselves, but coupled with this there is just no comparison. So today I suggest that we keep our eyes on the prize and we do not defeat this conference report on a side issue, and I would say that we should have a vote today for jobs, a vote for national security and thus I would suggest that we vote ``yes'' on the conference report and ``yes'' on the rule. [[Page H 11857]] Mr. FROST. Mr. Speaker, I yield 2 minutes to the gentleman from Texas [Mr. Bentsen]. (Mr. BENTSEN asked and was given permission to revise and extend his remarks.) Mr. BENTSEN. Mr. Speaker, I rise in strong support of this conference report, which will create jobs and help American energy companies compete in the global marketplace. Investment in domestic energy exploration and production is vital to America's economic stability and national security. This conference report encourages such investment by lifting the ban on exports of Alaskan oil and providing royalty relief for energy companies that risk exploration in the deep waters of the Gulf of Mexico. These provisions will create jobs in the energy industry and further limit our reliance on foreign oil, which continues to rise as a percentage of our balance- of-payments deficit. We know the Gulf of Mexico contains large oil reserves. Royalty relief will help uncover the 15 billion potential barrels of oil in the gulf and will also spur the development of new offshore technologies and provide thousands of new jobs in the industry. Our energy industry needs these incentives to compete against innovative technologies and an increasingly skilled work force abroad. This policy is supported by Members of both parties in Congress and the Clinton administration. I want to underscore that royalty relief is not the free ride as some in Congress have portrayed it--the energy industry still must pay a substantial upfront bonus and they must also pay royalties when production exceeds the royalty relief period. In essence, this targeted royalty relief will provide the financial incentives to increase domestic energy exploration and production and to protect our national security. In the long run, by spurring exploration and development, this bill will generate more tax revenues for the Federal Government, not less. This conference report is sound economic policy and smart energy policy, and I urge my colleagues to support it. Mr. FROST. Mr. Speaker, I yield 3 minutes to the gentleman from California [Mr. Beilenson]. Mr. BEILENSON. Mr. Speaker, I must say I think this is really offensive that we are being asked to consider this rule waiving points of order for this controversial conference report that will have a significant effect on our Nation's energy and fiscal policy. There is no good reason at all for taking up this type of rule that waives, as it does, the very rules of the House that should be preventing the consideration of this controversial conference report in the first place. We listened for years to arguments from our colleagues, harangues perhaps one could properly call them, who now constitute the majority about how irresponsible and reckless we Democrats were when we provided waivers of rules for even the most minor provisions or rules violations. Yet here we are today being asked to waive a rule that should have prevented the conferees from including in their agreement a very controversial provision that not only is not germane to the House- passed bill, but which in fact the House voted not to include in the conference report. I remind my colleagues that the bill passed by the House has one main purpose, to lift the ban on the export of Alaskan oil. One can properly question, I suppose, the wisdom of lifting that ban. It does mark a major change in the direction of our energy policy. I personally think it is probably a wise change for us to enact. But the House approved that change in our energy policy, and, as I said, I am not here to argue that point. What the House did not approve--in fact, what the House voted 261-161 to prohibit--is granting royalty relief to U.S. petroleum producers operating in waters in the Gulf of Mexico. This controversial provision ought not to be a part of the conference report before us; we ought not to waive the rule requiring germaneness so that this controversial exemption for oil and gas producers--a provision the house voted to oppose--can become law attached to a much less controversial bill. This royalty exemption is a giveaway that we will live to regret. We should not be taking actions that reduce the Government's revenues from large profitable industries especially at a time of great budgetary constraints, and for the leadership to permit the conferees to get away with including this exemption for certain oil producers in this conference report on an entirely different piece of legislation is, many of us believe, totally irresponsible. Mr. Speaker, I urge our colleagues to join me in opposing this rule and in supporting the motion to recommit the conference report that will be ordered, I believe, by the gentleman from California [Mr. Miller]. Mr. FROST. Mr. Speaker, I yield 5 minutes to the gentleman from California [Mr. Miller]. (Mr. MILLER of California asked and was given permission to revise and extend his remarks.) Mr. MILLER of California. Mr. Speaker, Members of the House, after we consider the rule on this legislation, we will get into general debate on a conference report, a conference report that comes back to us on the Alaska oil export bill of which there is relatively little controversy, but that bill has now been hijacked in the conference by a very controversial provision for a royalty holiday for the oil companies in this country that go into the Gulf of Mexico and drill in what this legislation calls deep water. Although I must tell my colleagues in the industry today and with the technology today where we give a royalty holiday under this bill it is no longer deep water. The technology, the investment, the risks, and the oil have all gone past this legislation. This legislation, the provision that is hijacking the Alaska oil export bill, was originally thought of around 1988 when the Gulf of Mexico was in an oil depression. Since that time the Gulf of Mexico has come roaring back. The oil companies are submitting record high bids in that region to compete for the right to drill out there, and it is, in fact, probably the hottest oil place in the world today. {time} 1400 That is not because I say so, that is because every oil and energy and gas periodical in the country says that, and all of the oil companies say this is where they are going. They have set forth their 5-year plan. They have set forth their 10-year plan. This is where they are going to make their investments, along with their other decisions. What we do here is not going to change that. We are just going to decide whether or not we are going to give away the taxpayers' dollars to a lot of oil companies that do not need it, have not particularly asked for it, and understand that it is not going to change their decisions. They are going to the Gulf of Mexico because that is where the oil is. That is where the profitable oil is. What you have here is you have, today you can be at the creation of corporate welfare because this does not exist today, but should you vote against the motion to recommit this conference report, you will be voting to create corporate welfare that CBO says will cost us $500 million. Weigh that against the other decisions you are going to be asked to make later today: to increase Medicare premiums, to do all the things you are going to be asked to do in budget reconciliation, you will be asked to do in the continuing resolution, all the decisions this Congress has made about children's nutrition programs, about education, about science, about technology, about transportation; and in the middle of that, you are going to provide a royalty holiday to the oil industry of this country. I do not think that is what you want to tell your constituents. There is no need for this. The problem with this is, it is mandatory. It is not that the oil company makes a showing that, but for this, they would have drilled the well, or that they need it. It is mandatory. When they sink the well, they get up to 72 million barrels of oil, royalty free, for simply being there, doing what they were already going to do. As I said, they have already bid on the lands. They have already made the investment calculations. They have already leased the rigs, they have already contracted to build new ones, all absent the royalty oil holiday. This Congress should not be larding up, should not be larding up the budget [[Page H 11858]] of the United States with this kind of special privilege. That is what the motion to recommit is about. The motion to recommit is about, in the middle of when we are making the most difficult budget decisions on both sides of the aisle, we find here a provision that CBO says will net out a $150 million loss to the Treasury of the United States, and $500 million between the year 2000 and 2020. We should not be doing that to the taxpayers, we should not be doing that to people who are asking us to put some balance in the balanced budget provision. The last time we had this provision before us, 100 Republicans and 161 Democrats joined to instruct the conferees not to take this provision. The conferees decided otherwise. That is why this rule waives all points of order, because this is a nongermane provision. This is simply a highjacking of a bill that many of this Congress believe is very important, very important, to do that. For those who think if they vote for the motion to recommit they will be bringing down the bill, let me inform them that there is a conference committee scheduled today on the assumption that the motion to recommit will pass so that we can go back to conference, redo this bill, and send it out here. I have told the sponsor of this bill I would let it go on unanimous consent, so they can have the bill and they can stop the creation of new corporate welfare that just in no way can be justified. Mr. McINNIS. Mr. Speaker, I yield myself such time as I may consume. Mr. Speaker, I would like to point out to the gentleman from California that I was in the chair when we last heard these arguments. Frankly, I was convinced by what the gentleman said. In fact, I supported the gentleman from California, because, and I quote the gentleman's statement, he said it was simply a raid on the Treasury by the Senate and major oil companies. Again today I hear the gentleman from California, and, in fact, I think he used the figure $500 million. After that vote, I had time to further examine the issue. In addition to that, I looked at what the CBO score did. I went through that accounting. I can tell the Members that the representation by the gentleman is not the way that I interpret that particular statement. In fact, according to the Secretary of Energy, who has also assessed the CBO score, the deep water language will actually put the Federal Treasury $200 million ahead. Let me repeat that language: The Minerals Management Service has estimated that the revenue impacts of the new leasing under section 304 of Senate 395 for lease sales in the central and western Gulf of Mexico between 1996 and 2000, the deep water royalty relief provisions would result in an increased bonus of $485 million, $113.5 million in additional bonuses on tracts that would have been leased without relief, and $350 million in bonuses from tracts that would not have been leased until after the year 2000, if at all, without relief. This translates to a present value of $420 million if the time and value of money is taken into account. However, the Treasury would forego, and I think this is the number that the gentleman from California is using, ``an estimated $5.53 million in royalties that would otherwise have been collected through the year 2018.'' But you have to complete the formula. But again, taking into account the time value of the money, this offset in today's dollars is only $220 million. Comparing this loss with the gain from the bonus bids on a net present value basis, the Federal Government would be ahead by $200 million. Mr. Speaker, I think we have to look at the CBO score. I intend to support that today. I think the rule is fair, but I think we have to look at that score accurately. We have to disclose all the numbers. Mr. Speaker, I reserve the balance of my time. Mr. FROST. Mr. Speaker, I yield 2 minutes to the gentleman from California [Mr. Miller]. Mr. MILLER of California. Mr. Speaker, I appreciate everything the gentleman from Colorado stated. CBO went through that exact analysis of the Department of Energy, of Mineral Management Services, and rejected that. I find it rather interesting that we now see the proponents of this royalty holiday relying on an agency that they do not trust to give them estimates in Alaska on reserves and costs, and on the Department of Energy, which they think should be abolished. But they do not want to now look at what CBO, the agency they are relying on and we are all relying on to help us balance the budget, when they reject it and say flat out it is going to cost a net $150 million to the taxpayers. When you get through all of the offsets and you get through the leases that are going to be moved forward and the leases that are going to be moved backwards, what you have in fact is a $150 million net cost, $500 million gross costs in the years 2000 and 2020. So CBO, the agency we are relying on, that you are relying on, that we have given credibility to, that has rejected the administration arguments in many, many instances, now says, ``This is a net cost to the taxpayers of this country.'' That is why we should not be providing a royalty holiday to companies that do not need it. I thank the gentleman for yielding to me. Mr. McINNIS. Mr. Speaker, I yield myself such time as I may consume. Mr. Speaker, clearly the gentleman from California and I disagree as to the value to the Treasury, but I would stand by my comments, as I think the majority of the people on both sides of the aisle will stand by, and that is that this is a positive. This puts money into the Treasury. At a time when we are facing this deficit, I think we need to look at that. It encourages jobs. It is a win-win deal. We have got jobs, we have money for the Treasury. I think we are going to have support from both sides of the aisle, in addition, of course, to the support from the Clinton administration. The Clinton administration has come out and endorsed this theory, this issue, and the way it has been put on this bill. Mr. Speaker, I reserve the balance of my time. Mr. FROST. Mr. Speaker, I yield 2 minutes to the gentleman from Texas, Mr. Gene Green. Mr. GENE GREEN of Texas. Mr. Speaker, I thank my colleague, the gentleman from Texas, for yielding me the time. Mr. Speaker, I rise in support of the conference committee report in its entirety of Senate bill 395, based on three reasons. One, it is safe for offshore drilling. We are only dealing with new leases or expanded leases, and also the jobs and economic growth that my colleague, the gentleman from Colorado, talked about. Let me explain. We are talking about the impact on the current budget and this resolution will help balance our budget. The agreement requires the Department of the Interior to exempt from royalties only new leases, or expanded production; it is production that may not be utilized. We may not receive one penny in royalty, but if they do expand it, if they do have new leases, we will see additional revenue. That is where I see the plus for our Treasury. This resolution also talks about expanded production under existing leases, but it mandates some of the royalty exemptions if the Interior Secretary determines this production will not be economic without royalty relief. We are giving the Department of the Interior the ability to say, ``If you will do it, then we will give you that benefit.'' We are really just letting them say, ``OK, depend on the market, and if it will work, it will help the Treasury and also help in the creation of jobs.'' Let me talk about offshore drilling, because in Texas we do that a lot. I go to Galveston, TX, and see the wells out there and I am concerned, like everyone else, about the pollution in our waters. But, in the latest study I have, it shows that offshore oil production is responsible for only 2 percent of spills, whereas transportation is 45 percent of whatever pollution may be, and waste and runoff is 36 percent. We can solve a lot of problems with pollution of our waterways and our bodies of water if we just clean up what we put into the sewers, but the offshore production is one of the safest, ways to produce energy. We have had production off our coasts, successful production. Again, this would benefit not only those of us who live along the Gulf Coast, but would also benefit the economic security of our Nation. That is why, Mr. Speaker, I encourage the adoption of the conference committee report. Mr. McINNIS. Mr. Speaker, I yield myself such time as I may consume. [[Page H 11859]] Mr. Speaker, I would like to quote from a letter that we have just received from Citizens for a Sound Economy, and as we all know on both sides of the aisle, that is a very economically conservative organization. It watches very carefully for any type of legislation that would be a drain on the Federal Treasury. Their position on this, and I quote: Providing some degree of royalty relief creates economic incentives to make such risky undertakings more feasible, while increasing the supply of a vital natural resource and providing increased employment opportunities. Moreover, the royalty relief is not corporate welfare. It does not place a burden on taxpayers or contribute to the deficit. Mr. Speaker, I yield 3 minutes to the gentleman from Texas [Mr. Archer], chairman of the Committee on Ways and Means. (Mr. ARCHER asked and was given permission to revise and extend his remarks.) Mr. ARCHER. Mr. Speaker, I thank the gentleman for yielding time to me. Mr. Speaker, I rise today in support of the rule and in opposition to the motion to recommit offered by the gentleman from California. Enactment of the OCS Deep Water Royalty Relief Act will generate substantial revenues over the next 7 years as companies bid more for deep water leases and risk investing in leases that are currently too marginal to even consider. The revenues received by the Treasury for oil and gas leases are the combination of bonus bids received at the time of lease sales and royalties paid in the event a lease is developed and brought into production. Since the Federal leasing program began in 1954, $56 billion in bonus payments have been generated versus $47 billion in royalty revenues. In other words, we have received more money from producers paying for the option to produce leases than from actual production royalties. This is especially true in deep waters where only one out of 16 leases ever produce and pay royalties. The Congressional Budget Office has officially stated that this provision will not reduce the receipts to the Federal Government under the pay-as-you-go procedures. The only revenues scored for the provision have been in the context of budget reconciliation where revenues from non-routine asset sales are being counted for deficit reduction purposes. The bottom line is that CBO has conservatively estimated this provision would generate additional revenues of $130 million over seven years. I urge you to vote again the Miller motion to recommit. Mr. FROST. Mr. Speaker, I yield 3 minutes to the gentleman from Minnesota [Mr. Vento]. (Mr. VENTO asked and was given permission to revise and extend his remarks.) Mr. VENTO. Mr. Speaker, I rise in strong opposition to the rule, and believe it should be defeated. It is needed to circumvent the thorough consideration of this special interest's--oil interest's--benefits being placed into law. Mr. Speaker, the Miller motion is our avenue to send this back to conference, as we did in August, or in July, by a vote of 261 to 155. We instructed conferees to reject the Senate language providing royalty holidays to companies drilling for oil and gas in federally controlled deep waters in the Gulf of Mexico. The House voted against the Senate proposal because House Members saw this royalty holiday correctly for what it is. This policy is an unjustified giveaway, a tax break for big corporations at the expense of the American taxpayer. Unfortunately, House conferees completely ignored the wishes of the majority of the House and supported the corporate welfare approved by the Senate. This measure has not passed the House, but was slipped into the Senate measure and is being foisted upon the House through this conference measure, and facilitated by this rule, which I oppose. The deep water royalty fails in terms of process and economics. Royalty holiday legislation has not been introduced in the House, and the committee process has been circumvented by those who want to push this giveaway through without complete consideration. If this is such good legislation, why not subject it to hearings and full debate? Why are we being asked to settle for a nongermane amendment to Alaskan oil export legislation? The reason is simple: that a royalty holiday will not stand up to the light of day. {time} 1415 Today, the big oil companies pay only a 17-percent tax rate, and the small independent companies pay almost nothing after deductions. That beats the rates paid by most American taxpayers and hardly suggests the need for further cutbacks. Moreover, there is ample evidence that new technology has prompted a rush of bids in deep-water tracts in the gulf. The lease auction held last May was the fourth largest in gulf history, under the current tax and lease policies, and the American public would have lost an estimated $2 billion in future royalties if the proposed holiday had been in place then. Over the long haul, CBO estimates the royalty holiday will cost the taxpayers $420 million. The claim that this measure is justified for economic growth should not be the basis for giveaway tax breaks. The fact is that when someone else gets a break in terms of the Tax Code or in terms of royalty, other taxpayers have to make it up. They have to pay for it. So the fact is that if we give this away fast enough, if we can burn dollar bills, that we can heat the house is not a very good justification for a tax policy or for an energy policy. So I would suggest to my colleagues that we quit burning the dollar bills, we start dealing with the deficit by closing and not opening new loopholes, and that is what has happened throughout this Congress. The House tax bill that passed provided 75 percent of the benefits in 10 years went to corporations and to investors--to corporations and investors--not to individual taxpayers. Mr. Speaker, I urge defeat of the rule and passage of the motion of the gentleman from California [Mr. Miller] to recommit to conference this report. Mr. McINNIS. Mr. Speaker, I yield 3\1/2\ minutes to the gentleman from Oklahoma [Mr. Brewster]. (Mr. BREWSTER asked and was given permission to revise and extend his remarks.) Mr. BREWSTER. Mr. Speaker, I rise this afternoon to support this important rule. This afternoon we will have an opportunity to cast a vote that will create jobs, increase domestic production of crude oil and natural gas, decrease our dependence on foreign oil, and raise at least $100 million for the Federal Government over 5 years. Almost every day news stories report more layoffs, more downsizing, more jobs destroyed as companies cut their payrolls. The men and women of the Nation's oil and natural gas industry know those stories too well, because they have lived them. Oil and gas workers have experienced more job losses than workers in any other American industry. Since 1982, 450,000 jobs were lost in just the exploration sector of the U.S. petroleum industry. That is almost half the number of jobs lost in the entire domestic manufacturing sector. More than one out of every two workers who searched for oil and natural gas, or helped recover it, lost their job. But today, Mr. Speaker we can begin to make a difference for oil and gas workers, for those in related industries, and for their families and communities. I urge my colleagues to vote for job creation by voting in favor of the rule to the conference report on S. 395. Congress must provide incentives for deepwater drilling in the central and western Gulf of Mexico. Deepwater incentives, which encourage oil and gas companies to risk their capital on new exploration and production, will create 20,000 new jobs for every $1 billion in private sector investment. These incentives will result in the creation of many new jobs in my State of Oklahoma, a State hundreds of miles from the gulf. There are 378 petroleum equipment supply facilities in my State alone. And nationally, there are 3,532 such facilities spread across 40 States. Deepwater incentives mean jobs not only for oil and gas workers. It means jobs in steel, in machine tools, in heavy equipment and in the high technology industries that support oil and gas recovery. Deepwater incentives will create new jobs in the gulf region, [[Page H 11860]] in my State, and throughout our country. We have been going the wrong way for too long. The United States has sent many oil industry jobs overseas. And we rely too much on foreign oil suppliers, who now deliver over half the oil we use. In just 15 years, the U.S. Department of Energy warns that we will rely on foreign sources for 60 percent of our oil. Mr. Speaker, we must invest in American workers. It is time to turn this situation around, and rely on our own abundant oil and gas resources. And we must create the job opportunities that go with domestic oil and gas exploration and production. Mr. Speaker, I urge my colleagues on both sides of the aisle to support the rule, and the conference report and say yes to jobs. Mr. McINNIS. Mr. Speaker, I yield 3 minutes to the gentleman from Mississippi [Mr. Wicker]. Mr. WICKER. Mr. Speaker, I thank my colleague for yielding me this time. Mr. Speaker, I rise in support of the rule, in support of the bill, and particularly in support of the Outer Continental Shelf deep-water incentives legislation; and I will be asking my colleagues later on to vote against the Miller motion to recommit. Mr. Speaker, I think this legislation is a good idea; and particularly, Mr. Speaker, I believe the OCS deep-water incentives provisions are good for business, they are good for job growth and, most importantly, they are good for the taxpayers. Let us look at the facts. Right now, restrictive royalties have effectively shut down deep-water drilling. Only 6 percent of the deep- water leases are in production. That is compared to 50 percent of leases which are in production in shallow waters. My colleagues should not be fooled by the opponents of this measure. I believe their goal is to shutdown deep-water drilling with restrictive taxes. While Americans have continually rejected this approach to governing for the nonsense that it is, opponents have decided to change their approach to the charge of corporate welfare. So let us look again at this charge of corporate welfare. The Congressional Budget Office, the office that we rely on for our estimates, has determined that this bill will generate $100 million over 5 years in tax revenues. Is that corporate welfare? The Congressional Budget Office says that this bill will reduce our national deficit. Is that corporate welfare? This bill will create jobs. That is not corporate welfare, Mr. Speaker. This bill makes sense for the taxpayers, for the Federal budget and for our national security. What our friends who oppose this bill are not saying is the fact that the taxpayer benefits only if deep-water oil and gas production occurs. If they do not drill, they do not pay taxes. The taxpayer and producers are business partners. They both benefit from deep-water drilling. So who is being taken advantage of by this provision? It is not the offshore workers who sit idle by the drills. It is not the taxpayer who stands to make $100 million over the next 5 years. The only people being taken advantage of in this bill are those who fall for the basic theory of corporate welfare by the opponents of the bill today. This bill will expand domestic energy resources, enhance our energy security, create jobs and reduce the national deficit. Mr. Speaker, this is a good rule, this is good legislation, and I urge its adoption. Mr. McINNIS. Mr. Speaker, I yield 3 minutes to the gentleman from Florida [Mr. Goss]. (Mr. GOSS asked and was given permission to revise and extend his remarks.) Mr. GOSS. Mr. Speaker, I thank my friend the honorable distinguished gentleman from Glenwood Springs, CO [Mr. McInnis], for yielding me this time and for his management of this rule. Mr. Speaker, I rise in support of this rule, and to thank the conferees on S. 395 for going the extra mile to address the concerns of the State of Florida with regard to the deep water drilling provisions contained in the conference report. I, along with many Members of the Florida Delegation, had reservations about the original Senate language that would have provided royalty relief for oil companies drilling in the deep waters of the Gulf of Mexico. The overwhelming majority of Floridians are opposed to taking risks with oil and gas exploration in our fragile coastal waters--risks that could jeopardize our tourism and housing industries. I am pleased that through the efforts of Mrs. Fowler and others on the conference committee, the report now spells out in no uncertain terms that ``nothing in this title shall be construed to affect any offshore pre-leasing, leasing, or development moratorium, including any moratorium applicable to the eastern planning area of the Gulf of Mexico located off the gulf coast of Florida.'' This clarification is consistent with our efforts to provide long-term protection for Florida's valuable coastline, and I support it's inclusion in this conference report. Mr. Speaker, I recognize there are many other issues in this particular report, and they have not all been attended to in exactly the way that is going to make everybody exactly happy. I have never seen a piece of legislation that I can recall that has made everybody happy in this body, and I do not think I will live that long. I think that everybody fees they can improve on it. But for the rule that we have here, I think that is a good rule; and I think it is important to point out that there has been a change and an improvement for the Florida interests that involve the protection of the Florida coastal waters; and I think those involved. Mr. McINNIS. Mr. Speaker, I yield I minute to the gentleman from Florida [Mr. Scarborough]. Mr. SCARBOROUGH. Mr. Speaker, I thank the gentleman for yielding time to me. Mr. Speaker, I am from Florida. This bill does not affect the State of Florida, does not affect drilling off of Florida. This does affect the taxpayers. When I hear people get up and say that CBO has scored this one way or the other, that it is actually going to be $100 million plus, that is doublespeak that I have been hearing Democrats saying on the other side of the aisle, and how Republicans are saying this now for their own purposes shocks me. The fact of the matter is, CBO has scored this, and in their scoring they said it would cost us $450 million. Now, how anybody can stand up after defending CBO numbers for a year and then stand up and say, ``OK, CBO is right on everything but this one,'' absolutely strains any credibility any speaker has. CBO says it. It costs the American taxpayer $450 million. When you take to the microphone and say that you are helping the American taxpayers by shoveling more corporate welfare to big oil, you are lying to the American people. Mr. McINNIS. Mr. Speaker, I yield myself such time as I may consume. Mr. Speaker, I would hope the gentleman from Florida [Mr. Scarborough] stays on the floor long enough to hear some rebuttal, because the gentleman from Florida has very little basis, especially using the kind of strong language that he has used. I think we may have an honest disagreement here. I do not think either side in this situation is lying, as the gentleman from Florida might put it, or telling an untruth. In fact, the CBO has been I think fairly clear on its scoring of this. This will add to the Federal Treasury. Mr. Speaker, I yield 2 minutes to the gentleman from Louisiana [Mr. Tauzin]. Mr. TAUZIN. Mr. Speaker, I thank the gentleman for yielding time to me. As a matter of fact, CBO did say this would yield $100 million to the Treasury in the next 5 years. Confusion has come up when CBO tried to go 25 years out and estimate income and revenue as opposed to losses under the program, and CBO did a classic economic mistake in that analysis. They failed to count the present value of money. Minerals Management has done an analysis as well. Minerals Management, under the Secretary of Energy, has concluded that this bill will produce at least 630 additional leases which would be sold for a total increase in bonuses of $485 million over the next 5 years. Their analysis over the 25-year period is it not only reduces the deficit but it also adds, they believe, about $200 million to the Treasury. [[Page H 11861]] Now, we can debate. Economists are arguing about what is going to happen 25 years from now. But one thing we cannot deny is that the 25- year outlook by CBO originally done, which has been corrected by Minerals Management and the Department of the Interior, failed to take into account a very simple economic principle, the present value of money. When you do that, this is a net gainer for the Treasury. It is a net gainer for the Treasury in the first 5 years. It is a net gainer over the 25-year period, if the bill were extended beyond the first 5 years. In fact, this is good for the Treasury. This produces jobs, economy. It produces income for Americans, and it does something even more vital than that. It produces oil and gas in regions that would not otherwise be produced in the Gulf of Mexico, only in an area where, in fact, economies of scale and deep-water drilling would not permit those drills to occur. This is good for the country. Too many of our young men and women have gone to battle to defend oil products in somebody else's land. It is about time we produce on the leases we have authorized to be produced here in the Gulf of Mexico. I would urge support for this

Summary:

All articles in House section

CONFERENCE REPORT ON S. 395, ALASKA POWER ADMINISTRATION ASSET SALE AND TERMINATION ACT
(House of Representatives - November 08, 1995)

Text of this article available as: TXT PDF [Pages H11854-H11881] [[Page H 11854]] CONFERENCE REPORT ON S. 395, ALASKA POWER ADMINISTRATION ASSET SALE AND TERMINATION ACT Mr. McINNIS. Mr. Speaker, by direction of the Committee on Rules, I call up House Resolution 256 and ask for its immediate consideration. The clerk read the resolution, as follows: h. res. 256 Resolved, That upon adoption of this resolution it shall be in order to consider the conference report to accompany the bill (S. 395) to authorize and direct the Secretary of Energy to sell the Alaska Power Administration and to authorize the export of Alaska North Slope crude oil, and for other purposes. All points of order against the conference report and against its consideration are waived. The conference report shall be considered as read. The SPEAKER pro tempore (Mr. Goodlatte). The gentleman from Colorado [Mr. McInnis] is recognized for 1 hour. Mr. McINNIS. Mr. Speaker, for the purpose of debate only, I yield the customary 30 minutes to the gentleman from Texas [Mr. Frost], pending which I yield myself such time as I may consume. During consideration of this resolution, all time yielded is for the purpose of debate only. Mr. Speaker, House Resolution 256 is a simple resolution. The rule simply makes it in order to consider the conference report to accompany the bill S. 395 which authorizes and directs the Secretary of Energy to sell the Alaska Power Administration, and to authorize the export of Alaska North Slope crude oil. All points of order against the conference report and against its consideration shall be waived. This resolution was reported out of the Committee on Rules by an unanimous voice vote. The purpose of the underlying legislation, S. 395, is to lift the ban on the export of crude oil produced on Alaska's North Slope and to provide for the sale of the assets of the Alaska Power Administration. Additionally, the conference report contains a targeted royalty relief provision which, according to the Secretary of Energy Hazel O'Leary, will ``lead to and expansion of domestic energy resources, enhance national security, and reduce the deficit''. This legislation has broad bipartisan support, including the support of the Clinton administration. By lifting the ban on exports we will create thousands of new jobs in this decade, and we will generate millions in receipts to the Federal Government. Mr. Speaker, I reserve the balance of my time. Mr. FROST. Mr. Speaker, I yield myself such time as I may consume. Mr. Speaker, I rise in support of the rule. This rule, as the gentleman from Colorado has explained, waives points of order against the consideration of the conference report on S. 395, a bill to lift the ban on exports of Alaskan oil and to privatize the Alaska Power Administration. Mr. Speaker, this conference report also contains a provision which was not in the House-passed version of this legislation. This provision exempts oil and gas companies drilling under Federal oil and gas leases in deep waters offshore in the Gulf of Mexico, from paying royalties to the Federal Government. The inclusion of this provision is controversial in light of the instructions to conferees adopted by the House last July. That motion, offered by the gentleman from California [Mr. Miller], instructed conferees to insist on the House position on this issue. The House bill, of course, deleted these provisions. The conferees have, however, wisely included these provisions in the bill. Mr. Speaker, these exemptions will encourage exploration and drilling which will in turn increase the amount of available crude oil to U.S. markets. Mr. Speaker, increasing energy production in something our government should encourage and the provisions in this conference report do just that. I would encourage my colleagues to support the conference report and to oppose the Miller motion to recommit this conference report. Mr. Speaker, I reserve the balance of my time. Mr. McINNIS. Mr. Speaker, I yield 4 minutes to the gentleman from Louisiana [Mr. Livingston], chairman of the Committee on Appropriations. (Mr. LIVINGSTON asked and was given permission to revise and extend his remarks.) Mr. LIVINGSTON. Mr. Speaker, I thank the gentleman from Colorado for yielding time to me, and I rise in support of the rule and in support of the bill. Mr. Speaker, I am pleased to support this effort. Mr. FROST. Mr. Speaker, I yield 1 minute to the gentleman from Massachusetts [Mr. Studds]. (Mr. STUDDS asked and was given permission to revise and extend his remarks.) Mr. STUDDS. Mr. Speaker, I rise in support of this rule and of the substance of the conference report, although I shall support the efforts of the gentleman from California [Mr. Miller] to strike an extraneous and controversial provision. This legislation is important because it is vital to preserving the independent tanker fleet and the cadre of skilled men and women who proudly sail today under our flag. Mr. Speaker, I rise in support of the rule and the conference report on S. 395, legislation that authorizes exports of Alaskan oil carried in American-flag vessels. This bill will help enhance our national security by spurring energy production and by helping to preserve our domestic merchant marine. I urge my colleagues to vote in favor of the rule and to overwhelmingly support this legislation, as you did when it was on the floor in July. According to recent press reports, a number of foreign governments continue to complain that the U.S.-flag requirement somehow violates our international obligations. As my colleagues may know, the U.S. Trade Representative has assured Congress that the bill does not violate our GATT obligations. To my knowledge, none of these governments complained when Congress enacted a comparable provision as part of the United States-Canada Free-Trade Agreement. In any event, for the benefit of those who persist in arguing without foundation that the bill poses a problem, let me lay out the case here. This legislation is important because it is vital to preserving the independent tanker fleet and the cadre of skilled men and women who proudly sail today under the American flag. There can be little doubt that our Government has a compelling interest in preserving a fleet essential to national security, especially one transporting an important natural resource. Specifically, section 201 of the conference report requires that, other than in specified exceptional circumstances, Alaskan crude exports must be transported by a vessel documented under the laws of the United States and owned by a U.S. citizen. As my colleagues know, current law already requires Alaskan oil to move to the lower 48, Hawaii, and Canada on so-called Jones Act vessels. When Congress authorized construction of the Trans-Alaska Pipeline system, it established export restrictions that had the effect of ensuring that North Slope crude would move to the lower 48 and Hawaii on U.S.-built, U.S.-owned, and U.S.-crewed vessels. Although the export restrictions have changed over time, there has been no change with respect to the requirement to use Jones Act vessels. In 1988, when Congress passed legislation to implement the United States-Canada Free-Trade Agreement, it agreed to allow up to 50,000 barrels per day of ANS crude to be exported for consumption in Canada, subject to the explicit requirement that ``any ocean transportation of such oil shall be by vessels documented under [46 U.S.C.] section 12106.'' By insisting that exports to Canada move on Jones Act tankers--even though not required by the specific terms of the agreement--Congress established the principle that exports must move on U.S.-flag vessels. Consider also that in negotiating the North American Free-Trade Agreement, the Mexi- can Government reserved to itself the ``transportation . . . [of] crude oil.'' The U.S. Government specifically agreed to this reservation in adopting article 602(3) of NAFTA. Additionally, in two major areas of commercial movements in foreign trade, the U.S. Government has long enforced preference for American vessels. Since 1934, the U.S. Export-Import Bank has reserved for American carriers 100 percent of all cargo the export of which it finances under various programs. The Cargo Preference Act of 1954 also reserves certain government-financed cargo to ``privately owned United States-flag commercial vessels, to the extent such vessels are available at fair and reasonable rates.'' There are plenty of other examples of cargo reservation world wide. Our Government has entered into bilateral treaties with Latin American countries that preserve ``government controlled'' cargoes for national lines. These intergovernmental agreements are supported by [[Page H 11855]] pooling agreements among the lines that effectively divide all cargo-- not merely controlled cargo--on the UNCTAD 40-40-20 basis, with the 20 percent being accorded to such third-flag lines as are admitted to the pools. Similarly, the French Government reserves for French-flag vessels substantial cargoes. The act of March 30, 1928, for example, requires that, unless waived, two-thirds of France's crude oil needs be carried on French-flag vessels. Mr. Speaker, it is quite clear that longstanding precedent supports the U.S.-flag requirement in this bill. Now let me address specific U.S. international obligations and explain why the legislation does not violate the GATS ``Standstill Agreement,'' the General Agreement on Tariffs and Trade, or other of our international obligations. GATS Standstill Agreement.--At the conclusion of the Uruguay Round of multilateral trade negotiations, the United States and other countries for the first time agreed to cover services, as embodied in the General Agreement on Trade in Services [GATS]. Maritime services were effectively excluded, however, because no commitments of any kind were made by the United States. Although a U.S. offer had been briefly tabled, it was withdrawn. Thus, the U.S. Government did not in any way restrain or limit its authority to maintain or promote an American-flag fleet. The only commitment made by the U.S. Government was to continue negotiations until June 1996, with a view to determining whether to make any binding commitments at that time. The ``Ministerial Decision on Negotiations on Maritime Transport Services'' imposed this ``standstill'' commitment or ``peace clause'' for the period during which the negotiations would occur: ``[I]t is understood that participants shall not apply any measure affecting trade in maritime transport services except in response to measures applied by other countries and with a view to maintaining freedom of provision of maritime transport services, nor in such a manner as would improve their negotiating position and leverage.'' Some foreign governments are now arguing that the enactment of the proposed legislation would violate this commitment. They are incorrect. In a letter to me at the time, the U.S. Trade Representative stated that the ``peace clause'' is: Strictly a political commitment by the Parties to the negotiations not to take measures to ``improve their negotiation position or leverage.'' In a worst case scenario, if one of the Parties to this negotiation were to conclude that the United States had taken a measure that contravenes the peace clause, their only remedy would be to leave the negotiating table. Let me assure you that there is nothing in the negotiations that would interfere with maritime reform legislation. . . . Discussion of promotional programs, including government subsidies, would, by no stretch of the imagination, be viewed as undermining these negotiations. This understanding was confirmed by the Presidential Advisory Committee on Trade Policy and Negotiations. In filing its report at the conclusion of the Uruguay Round negotiations, the Committee said: ``[A]ll existing maritime promotional and support laws, programs and policies continue in full force and effect. The United States also may enact or adopt such new measures as it wishes including pending legislation to revitalize the maritime industry.'' GATT.--The General Agreement on Tariffs and Trade covers goods, not services. Under longstanding precedent, vessels in international commerce are not themselves ``products'' or ``goods'' subject to GATT. For purposes of GATT, the relevant ``product'' is ANS crude, which would be transported on American-flag vessels. Requiring that this product be carried on these vessels, as currently required under the implementing legislation for the United States-Canada Free-Trade Agreement, does not conflict with GATT. Article XI of GATT proscribes ``prohibitions or restrictions other than duties, taxes or other charges whether made effective through quotas, import or export licenses or other measures'' by a contracting party ``on the importation of any product'' or ``on the exportation . . . of any product.'' These requirements apply to ``products,'' which do not include vessels in transit between nations. Moreover, these requirements are limited to ``products'' and not to their transportation. This is made clear by the exceptions listed in para. 2, such as (a) measures to prevent or relieve ``critical shortages of food stuffs or other [essential] products'' and (b) restrictions to facilitate ``classification, grading or marketing of commodities.'' Such exceptional restrictions are to be accompanied by public notice ``of the total quantity or value of the product permitted to be imported.'' Thus, the transportation requirements of the committee print are not ``prohibitions or restrictions other than duties'' on goods proscribed under article XI. Article III, the national treatment article, forbids internal taxes or other charges or regulations, affecting, inter alia, the transportation of goods, that discriminate in favor of domestic production. Requiring U.S.-flag vessels for the carriage of certain cargoes in international trade is not an internal regulation of transportation that discriminates against foreign goods. As I said earlier, vessels are not considered goods. Moreover, by operation of the Jones Act, foreign-flag vessels may not today carry ANS crude oil to the lower 48 or Hawaii. Having no claim to carry this crude today, foreign governments can not claim under article III that they somehow will be denied opportunities tomorrow as a result of a change in current law. Article V, the freedom of transit article, requires that member nations permit goods, and also vessels, of other member nations ``freedom of transit through the territory of each contracting party'' of traffic in transit between third countries. The proposed bill, however, is not an inhibition of such movement of foreign goods or vessels within the United States. Article V thus does not apply. GATT Grandfather Clause.--GATT 1994 contains an explicit exemption for the Jones Act. Annex 1A to the agreement establishing the World Trade Organization contains an exception relating specifically to national flag preferences for shipping ``between points in national waters'' enacted before a member became a contracting party to GATT 1947. The exception becomes inoperative if ``such legislation is subsequently modified to decrease its conformity with Part II of the GATT 1994.'' On its face, however, the proposed bill would not operate in commercial applications ``between points in national waters,'' since it concerns the foreign trade. The proposed legislation would not amend the Jones Act and thus does not jeopardize the grandfathering of the Jones Act by Annex 1A. The conformity of the bill with international obligations of the United States does not depend on this exception, but on the terms of those obligations themselves. As I indicated earlier, the proposed bill does not conflict with articles III, V or XI of GATT. OECD Code.--The OECD's Code of Liberalisation of Current Invisible Operations generally requires OECD member countries to liberalize trade in services, with certain specified exceptions. Note 1 to annex A, in defining invisible operations in the maritime sector, states in its first sentence that the purpose of the provision is ``to give residents of one Member State the unrestricted opportunity to avail themselves of, and pay for, all services in connection with international maritime transport which are offered by residents of any other Member States.'' The second sentence of the Note lists ``legislative provisions in favour of the national flag * * * '' as among measures that might hamper the enjoyment of those rights. The Note concludes, however, unambiguously: ``The second sentence of this Note does not apply to the United States.'' Whatever its applicability to the law of other nations, it would not apply with respect to the proposed legislation, which cannot therefore be contrary to it. Thus, while some OECD members have subscribed to equating national flag requirements with disapproved ``invisible operations,'' it is clear that the United States has not. FCN Treaties.--Some foreign governments have raised questions about the propriety of flag reservation in light of various treaties of Friendship, Commerce and Navigation. The treaty clause invoked is this: ``Vessels of either party shall be accorded national treatment and most-favored-nation treatment by the other party with respect to the right to carry all products that may be carried by vessel to or from the territories of such other party. * * *'' Whatever this clause may appear to convey literally, its application in practice has allowed numerous national flag preferences identical with or otherwise indistinguishable in principle from the proposed measure. As I indicated earlier, the most prominent instance is embodied in the United States-Canada Free-Trade Agreement. But there are many other examples. In the 1960's and 1970's, for example, the United States concluded with the former Soviet Union agreements for the sale of grain that, initially, reserved all carriage to American ships so far as available, and later not less than 30 percent. Against protests filed by a number of maritime powers having either national-treatment or most-favored-nation treaties, the United States responded in congressional testimony that, although the fact that the Soviet Union as a government was the purchaser did not alter the character of the transaction as purely commercial, ``[t]he shipping arrangement worked out for the Russian wheat sale is a form of cargo preference involving a unique bilateral agreement between the U.S. and U.S.S.R. establishing a new trade where none existed before.'' This is the same reason the Department of State has advanced in defending preferences for government-financed cargo. So far as this may be considered a controlling factor, it is certainly applicable here, because the bill [[Page H 11856]] is clearly ``establishing a new trade where none existed before.'' In 1973, the President, by proclamation, instituted a system of licensing fees on imports of oil excess to prescribed quotas. Subsequently, however, the President in effect exempted products refined in American Samoa, Guam, the Virgin Islands or a foreign trade zone, if transported to the mainland on American-flag vessels. Like the present bill, the fee waiver was said not to reflect ``a general administration position on reducing licensing fees when U.S.-flag ships are used''. Although the stated purpose was to equalize refinery costs as between territories not subject to the Jones Act and the mainland, the administration suggested in congressional testimony that ``a positive incentive has been provided by the administration for the construction and use of additional U.S.-flag tankers.'' In recent testimony before the Resources Committee on which I sit, the Deputy Secretary of Energy similarly emphasized the importance of the U.S.- flag requirement of the pending legislation in preserving U.S.-flag tankers and the skilled mariners who operate them. In summary, Mr. Speaker, the U.S.-flag requirement of this bill is supported by ample domestic and foreign precedent, does not represent an extension of cargo preference into a new area, and does not violate our international obligations. There is no reasonable basis for a challenge to the legislation before the World Trade Organization or in other international forums. I urge my colleagues to join me in supporting this legislation, which is so vital to preserving a fleet essential to national defense. Mr. McINNIS. Mr. Speaker, I yield 3 minutes and 56 seconds to the gentleman from Louisiana [Mr. Livingston], chairman of the Committee on Appropriations. (Mr. LIVINGSTON asked and was given permission to revise and extend his remarks.) Mr. LIVINGSTON. Mr. Speaker, the United States is now importing 50 percent of our energy needs. The Department of Energy projects 60 percent import level by 2010. The United States has lost 450,000 jobs in the oil and gas industry. The temporary royalty relief in S. 395 will enable the private sector to risk its own funds to find and produce domestic oil and gas to enhance national energy security and create jobs. CBO scored the deep water Gulf of Mexico royalty provisions as a revenue gain of $100 million over 5 years. The Minerals Management Service estimates even greater revenue gains. The administration's Sustainable Energy Strategy stated: The Administration supports targeted royalty relief to encourage the production of domestic oil and natural gas resources in deep water in the Gulf of Mexico. This step will help unlock the estimated 15 billion barrels of oil- equivalent in the deepwater Gulf of Mexico, providing new energy supplies for the future, spurring the development of new technologies, and supporting thousands of jobs in the gas and oil industry and affiliated industries. A letter from Hazel O'leary stated, ``The royalty relief provisions in S. 395 as adopted by the conference committee is a targeted deepwater royalty relief provision that the Administration supports.'' The letter concludes, ``The ability to lower costs of domestic production in the central and western Gulf of Mexico by providing appropriate fiscal incentives will lead to an expansion of domestic energy resources, enhance national security, and reduce the deficit. Therefore, the Administration supports the deepwater royalty relief provision of S. 395.'' The language in the conference report was changed in two important ways: First, it clarifies that the royalty incentives are applicable only to the western and central Gulf of Mexico west of the Alabama/ Florida border. Second, the legislation has been amended to make it clear that it will not affect an OSC area that is under a pre-leasing, leasing, or development moratorium, including any moratorium applicable to the eastern planning area of the Gulf of Mexico located off the Gulf Coast of Florida. The Minerals Management Service determined that the deepwater incentives will result in a minimum net benefit to the Treasury of $200 million by the year 2000. These provisions will create thousands of jobs, enhance national security by reducing dependence on imported oil, and reduce the deficit. I urge my colleagues to support the conference report. {time} 1345 Mr. Speaker, I intend to vote for it, and I hope my colleagues will likewise vote for the rule, which I do support as well. Mr. FROST. Mr. Speaker, I yield 2 minutes to the gentleman from California [Mr. Dooley]. (Mr. DOOLEY asked and was given permission to revise and extend his remarks.) Mr. DOOLEY. Mr. Speaker, as an original cosponsor of the underlying Alaskan oil export legislation, which passed the House on July 24 by a 324 to 77 margin, I rise in strong support of the rule and also the conference report for S. 395. With enactment of this historic legislation we will have a chance to benefit small, independent oil producers throughout this country. Current law may have made a great deal of sense in 1973. But like any other laws, it is having unintended consequences that were not foreseen by our colleagues. We therefore should repeal the Alaskan oil export ban and authorities exports carried in U.S.-flag vessels. What this will allow is to free up oil refining capacity on the west coast of the United States, which will help to encourage oil production and oil exploration in the west coast of the United States, much of that done by the independent oil producers. The California independent oil producers state a compelling case. Like them I was pleased that the Department of Energy similarly concluded last year that the export ban was depressing production and, if lifted, would benefit California and the Nation as a whole. The Department of Energy's comprehensive June 1994 study provides a strong factual basis to support this legislation. Among others, the following study concluded production will increase by 100,000 barrels per day, up to 25,000 additional jobs will be created, State and Federal revenues will increase by hundreds and millions of dollars, and these benefits will be achieved with little, if any, effect on consumer prices. We now have a unique opportunity in this Congress to spur additional energy production and to create jobs. With imports meeting over 50 percent of our domestic consumption because of falling production, we must do something quickly to increase energy production in this country. This legislation, this conference report, will achieve those objectives, and I urge my colleagues to support the rule and the report. Mr. McINNIS. Mr. Speaker, I yield 2 minutes to the gentleman from California [Mr. Rohrabacher]. Mr. ROHRABACHER. Mr. Speaker, I rise today and urge the support of the conference report which is of immense importance to California and to our Nation's economic and national security, as well as our well- being. This legislation will increase our domestic exploration and production of crude oil. It will mean that our reduced balance-of- payments deficit, the deficit in our balance of payments, will be reduced, and everyone agrees that the United States today is too reliant on the import of crude oil. This legislation will spur domestic production, thereby enhancing our national security. As I have just said, it will also affect in a positive way our balance of payments. Mr. Speaker, this legislation lifts the ban on the export of Alaskan crude. This will contribute to reducing our trade deficit, and this legislation thus is good for job creation in the United States, and it is good for our economy in general. My colleagues should not be swayed by side issues. This bill is not about side issues. It is about things that are fundamental to our economy. The legislation is about enhancing our economy and our national security. These things must be the overriding issues of importance, and we should not be sidetracked by some kind of fight over royalty holidays, holidays and other issues, that may be of importance in and of themselves, but coupled with this there is just no comparison. So today I suggest that we keep our eyes on the prize and we do not defeat this conference report on a side issue, and I would say that we should have a vote today for jobs, a vote for national security and thus I would suggest that we vote ``yes'' on the conference report and ``yes'' on the rule. [[Page H 11857]] Mr. FROST. Mr. Speaker, I yield 2 minutes to the gentleman from Texas [Mr. Bentsen]. (Mr. BENTSEN asked and was given permission to revise and extend his remarks.) Mr. BENTSEN. Mr. Speaker, I rise in strong support of this conference report, which will create jobs and help American energy companies compete in the global marketplace. Investment in domestic energy exploration and production is vital to America's economic stability and national security. This conference report encourages such investment by lifting the ban on exports of Alaskan oil and providing royalty relief for energy companies that risk exploration in the deep waters of the Gulf of Mexico. These provisions will create jobs in the energy industry and further limit our reliance on foreign oil, which continues to rise as a percentage of our balance- of-payments deficit. We know the Gulf of Mexico contains large oil reserves. Royalty relief will help uncover the 15 billion potential barrels of oil in the gulf and will also spur the development of new offshore technologies and provide thousands of new jobs in the industry. Our energy industry needs these incentives to compete against innovative technologies and an increasingly skilled work force abroad. This policy is supported by Members of both parties in Congress and the Clinton administration. I want to underscore that royalty relief is not the free ride as some in Congress have portrayed it--the energy industry still must pay a substantial upfront bonus and they must also pay royalties when production exceeds the royalty relief period. In essence, this targeted royalty relief will provide the financial incentives to increase domestic energy exploration and production and to protect our national security. In the long run, by spurring exploration and development, this bill will generate more tax revenues for the Federal Government, not less. This conference report is sound economic policy and smart energy policy, and I urge my colleagues to support it. Mr. FROST. Mr. Speaker, I yield 3 minutes to the gentleman from California [Mr. Beilenson]. Mr. BEILENSON. Mr. Speaker, I must say I think this is really offensive that we are being asked to consider this rule waiving points of order for this controversial conference report that will have a significant effect on our Nation's energy and fiscal policy. There is no good reason at all for taking up this type of rule that waives, as it does, the very rules of the House that should be preventing the consideration of this controversial conference report in the first place. We listened for years to arguments from our colleagues, harangues perhaps one could properly call them, who now constitute the majority about how irresponsible and reckless we Democrats were when we provided waivers of rules for even the most minor provisions or rules violations. Yet here we are today being asked to waive a rule that should have prevented the conferees from including in their agreement a very controversial provision that not only is not germane to the House- passed bill, but which in fact the House voted not to include in the conference report. I remind my colleagues that the bill passed by the House has one main purpose, to lift the ban on the export of Alaskan oil. One can properly question, I suppose, the wisdom of lifting that ban. It does mark a major change in the direction of our energy policy. I personally think it is probably a wise change for us to enact. But the House approved that change in our energy policy, and, as I said, I am not here to argue that point. What the House did not approve--in fact, what the House voted 261-161 to prohibit--is granting royalty relief to U.S. petroleum producers operating in waters in the Gulf of Mexico. This controversial provision ought not to be a part of the conference report before us; we ought not to waive the rule requiring germaneness so that this controversial exemption for oil and gas producers--a provision the house voted to oppose--can become law attached to a much less controversial bill. This royalty exemption is a giveaway that we will live to regret. We should not be taking actions that reduce the Government's revenues from large profitable industries especially at a time of great budgetary constraints, and for the leadership to permit the conferees to get away with including this exemption for certain oil producers in this conference report on an entirely different piece of legislation is, many of us believe, totally irresponsible. Mr. Speaker, I urge our colleagues to join me in opposing this rule and in supporting the motion to recommit the conference report that will be ordered, I believe, by the gentleman from California [Mr. Miller]. Mr. FROST. Mr. Speaker, I yield 5 minutes to the gentleman from California [Mr. Miller]. (Mr. MILLER of California asked and was given permission to revise and extend his remarks.) Mr. MILLER of California. Mr. Speaker, Members of the House, after we consider the rule on this legislation, we will get into general debate on a conference report, a conference report that comes back to us on the Alaska oil export bill of which there is relatively little controversy, but that bill has now been hijacked in the conference by a very controversial provision for a royalty holiday for the oil companies in this country that go into the Gulf of Mexico and drill in what this legislation calls deep water. Although I must tell my colleagues in the industry today and with the technology today where we give a royalty holiday under this bill it is no longer deep water. The technology, the investment, the risks, and the oil have all gone past this legislation. This legislation, the provision that is hijacking the Alaska oil export bill, was originally thought of around 1988 when the Gulf of Mexico was in an oil depression. Since that time the Gulf of Mexico has come roaring back. The oil companies are submitting record high bids in that region to compete for the right to drill out there, and it is, in fact, probably the hottest oil place in the world today. {time} 1400 That is not because I say so, that is because every oil and energy and gas periodical in the country says that, and all of the oil companies say this is where they are going. They have set forth their 5-year plan. They have set forth their 10-year plan. This is where they are going to make their investments, along with their other decisions. What we do here is not going to change that. We are just going to decide whether or not we are going to give away the taxpayers' dollars to a lot of oil companies that do not need it, have not particularly asked for it, and understand that it is not going to change their decisions. They are going to the Gulf of Mexico because that is where the oil is. That is where the profitable oil is. What you have here is you have, today you can be at the creation of corporate welfare because this does not exist today, but should you vote against the motion to recommit this conference report, you will be voting to create corporate welfare that CBO says will cost us $500 million. Weigh that against the other decisions you are going to be asked to make later today: to increase Medicare premiums, to do all the things you are going to be asked to do in budget reconciliation, you will be asked to do in the continuing resolution, all the decisions this Congress has made about children's nutrition programs, about education, about science, about technology, about transportation; and in the middle of that, you are going to provide a royalty holiday to the oil industry of this country. I do not think that is what you want to tell your constituents. There is no need for this. The problem with this is, it is mandatory. It is not that the oil company makes a showing that, but for this, they would have drilled the well, or that they need it. It is mandatory. When they sink the well, they get up to 72 million barrels of oil, royalty free, for simply being there, doing what they were already going to do. As I said, they have already bid on the lands. They have already made the investment calculations. They have already leased the rigs, they have already contracted to build new ones, all absent the royalty oil holiday. This Congress should not be larding up, should not be larding up the budget [[Page H 11858]] of the United States with this kind of special privilege. That is what the motion to recommit is about. The motion to recommit is about, in the middle of when we are making the most difficult budget decisions on both sides of the aisle, we find here a provision that CBO says will net out a $150 million loss to the Treasury of the United States, and $500 million between the year 2000 and 2020. We should not be doing that to the taxpayers, we should not be doing that to people who are asking us to put some balance in the balanced budget provision. The last time we had this provision before us, 100 Republicans and 161 Democrats joined to instruct the conferees not to take this provision. The conferees decided otherwise. That is why this rule waives all points of order, because this is a nongermane provision. This is simply a highjacking of a bill that many of this Congress believe is very important, very important, to do that. For those who think if they vote for the motion to recommit they will be bringing down the bill, let me inform them that there is a conference committee scheduled today on the assumption that the motion to recommit will pass so that we can go back to conference, redo this bill, and send it out here. I have told the sponsor of this bill I would let it go on unanimous consent, so they can have the bill and they can stop the creation of new corporate welfare that just in no way can be justified. Mr. McINNIS. Mr. Speaker, I yield myself such time as I may consume. Mr. Speaker, I would like to point out to the gentleman from California that I was in the chair when we last heard these arguments. Frankly, I was convinced by what the gentleman said. In fact, I supported the gentleman from California, because, and I quote the gentleman's statement, he said it was simply a raid on the Treasury by the Senate and major oil companies. Again today I hear the gentleman from California, and, in fact, I think he used the figure $500 million. After that vote, I had time to further examine the issue. In addition to that, I looked at what the CBO score did. I went through that accounting. I can tell the Members that the representation by the gentleman is not the way that I interpret that particular statement. In fact, according to the Secretary of Energy, who has also assessed the CBO score, the deep water language will actually put the Federal Treasury $200 million ahead. Let me repeat that language: The Minerals Management Service has estimated that the revenue impacts of the new leasing under section 304 of Senate 395 for lease sales in the central and western Gulf of Mexico between 1996 and 2000, the deep water royalty relief provisions would result in an increased bonus of $485 million, $113.5 million in additional bonuses on tracts that would have been leased without relief, and $350 million in bonuses from tracts that would not have been leased until after the year 2000, if at all, without relief. This translates to a present value of $420 million if the time and value of money is taken into account. However, the Treasury would forego, and I think this is the number that the gentleman from California is using, ``an estimated $5.53 million in royalties that would otherwise have been collected through the year 2018.'' But you have to complete the formula. But again, taking into account the time value of the money, this offset in today's dollars is only $220 million. Comparing this loss with the gain from the bonus bids on a net present value basis, the Federal Government would be ahead by $200 million. Mr. Speaker, I think we have to look at the CBO score. I intend to support that today. I think the rule is fair, but I think we have to look at that score accurately. We have to disclose all the numbers. Mr. Speaker, I reserve the balance of my time. Mr. FROST. Mr. Speaker, I yield 2 minutes to the gentleman from California [Mr. Miller]. Mr. MILLER of California. Mr. Speaker, I appreciate everything the gentleman from Colorado stated. CBO went through that exact analysis of the Department of Energy, of Mineral Management Services, and rejected that. I find it rather interesting that we now see the proponents of this royalty holiday relying on an agency that they do not trust to give them estimates in Alaska on reserves and costs, and on the Department of Energy, which they think should be abolished. But they do not want to now look at what CBO, the agency they are relying on and we are all relying on to help us balance the budget, when they reject it and say flat out it is going to cost a net $150 million to the taxpayers. When you get through all of the offsets and you get through the leases that are going to be moved forward and the leases that are going to be moved backwards, what you have in fact is a $150 million net cost, $500 million gross costs in the years 2000 and 2020. So CBO, the agency we are relying on, that you are relying on, that we have given credibility to, that has rejected the administration arguments in many, many instances, now says, ``This is a net cost to the taxpayers of this country.'' That is why we should not be providing a royalty holiday to companies that do not need it. I thank the gentleman for yielding to me. Mr. McINNIS. Mr. Speaker, I yield myself such time as I may consume. Mr. Speaker, clearly the gentleman from California and I disagree as to the value to the Treasury, but I would stand by my comments, as I think the majority of the people on both sides of the aisle will stand by, and that is that this is a positive. This puts money into the Treasury. At a time when we are facing this deficit, I think we need to look at that. It encourages jobs. It is a win-win deal. We have got jobs, we have money for the Treasury. I think we are going to have support from both sides of the aisle, in addition, of course, to the support from the Clinton administration. The Clinton administration has come out and endorsed this theory, this issue, and the way it has been put on this bill. Mr. Speaker, I reserve the balance of my time. Mr. FROST. Mr. Speaker, I yield 2 minutes to the gentleman from Texas, Mr. Gene Green. Mr. GENE GREEN of Texas. Mr. Speaker, I thank my colleague, the gentleman from Texas, for yielding me the time. Mr. Speaker, I rise in support of the conference committee report in its entirety of Senate bill 395, based on three reasons. One, it is safe for offshore drilling. We are only dealing with new leases or expanded leases, and also the jobs and economic growth that my colleague, the gentleman from Colorado, talked about. Let me explain. We are talking about the impact on the current budget and this resolution will help balance our budget. The agreement requires the Department of the Interior to exempt from royalties only new leases, or expanded production; it is production that may not be utilized. We may not receive one penny in royalty, but if they do expand it, if they do have new leases, we will see additional revenue. That is where I see the plus for our Treasury. This resolution also talks about expanded production under existing leases, but it mandates some of the royalty exemptions if the Interior Secretary determines this production will not be economic without royalty relief. We are giving the Department of the Interior the ability to say, ``If you will do it, then we will give you that benefit.'' We are really just letting them say, ``OK, depend on the market, and if it will work, it will help the Treasury and also help in the creation of jobs.'' Let me talk about offshore drilling, because in Texas we do that a lot. I go to Galveston, TX, and see the wells out there and I am concerned, like everyone else, about the pollution in our waters. But, in the latest study I have, it shows that offshore oil production is responsible for only 2 percent of spills, whereas transportation is 45 percent of whatever pollution may be, and waste and runoff is 36 percent. We can solve a lot of problems with pollution of our waterways and our bodies of water if we just clean up what we put into the sewers, but the offshore production is one of the safest, ways to produce energy. We have had production off our coasts, successful production. Again, this would benefit not only those of us who live along the Gulf Coast, but would also benefit the economic security of our Nation. That is why, Mr. Speaker, I encourage the adoption of the conference committee report. Mr. McINNIS. Mr. Speaker, I yield myself such time as I may consume. [[Page H 11859]] Mr. Speaker, I would like to quote from a letter that we have just received from Citizens for a Sound Economy, and as we all know on both sides of the aisle, that is a very economically conservative organization. It watches very carefully for any type of legislation that would be a drain on the Federal Treasury. Their position on this, and I quote: Providing some degree of royalty relief creates economic incentives to make such risky undertakings more feasible, while increasing the supply of a vital natural resource and providing increased employment opportunities. Moreover, the royalty relief is not corporate welfare. It does not place a burden on taxpayers or contribute to the deficit. Mr. Speaker, I yield 3 minutes to the gentleman from Texas [Mr. Archer], chairman of the Committee on Ways and Means. (Mr. ARCHER asked and was given permission to revise and extend his remarks.) Mr. ARCHER. Mr. Speaker, I thank the gentleman for yielding time to me. Mr. Speaker, I rise today in support of the rule and in opposition to the motion to recommit offered by the gentleman from California. Enactment of the OCS Deep Water Royalty Relief Act will generate substantial revenues over the next 7 years as companies bid more for deep water leases and risk investing in leases that are currently too marginal to even consider. The revenues received by the Treasury for oil and gas leases are the combination of bonus bids received at the time of lease sales and royalties paid in the event a lease is developed and brought into production. Since the Federal leasing program began in 1954, $56 billion in bonus payments have been generated versus $47 billion in royalty revenues. In other words, we have received more money from producers paying for the option to produce leases than from actual production royalties. This is especially true in deep waters where only one out of 16 leases ever produce and pay royalties. The Congressional Budget Office has officially stated that this provision will not reduce the receipts to the Federal Government under the pay-as-you-go procedures. The only revenues scored for the provision have been in the context of budget reconciliation where revenues from non-routine asset sales are being counted for deficit reduction purposes. The bottom line is that CBO has conservatively estimated this provision would generate additional revenues of $130 million over seven years. I urge you to vote again the Miller motion to recommit. Mr. FROST. Mr. Speaker, I yield 3 minutes to the gentleman from Minnesota [Mr. Vento]. (Mr. VENTO asked and was given permission to revise and extend his remarks.) Mr. VENTO. Mr. Speaker, I rise in strong opposition to the rule, and believe it should be defeated. It is needed to circumvent the thorough consideration of this special interest's--oil interest's--benefits being placed into law. Mr. Speaker, the Miller motion is our avenue to send this back to conference, as we did in August, or in July, by a vote of 261 to 155. We instructed conferees to reject the Senate language providing royalty holidays to companies drilling for oil and gas in federally controlled deep waters in the Gulf of Mexico. The House voted against the Senate proposal because House Members saw this royalty holiday correctly for what it is. This policy is an unjustified giveaway, a tax break for big corporations at the expense of the American taxpayer. Unfortunately, House conferees completely ignored the wishes of the majority of the House and supported the corporate welfare approved by the Senate. This measure has not passed the House, but was slipped into the Senate measure and is being foisted upon the House through this conference measure, and facilitated by this rule, which I oppose. The deep water royalty fails in terms of process and economics. Royalty holiday legislation has not been introduced in the House, and the committee process has been circumvented by those who want to push this giveaway through without complete consideration. If this is such good legislation, why not subject it to hearings and full debate? Why are we being asked to settle for a nongermane amendment to Alaskan oil export legislation? The reason is simple: that a royalty holiday will not stand up to the light of day. {time} 1415 Today, the big oil companies pay only a 17-percent tax rate, and the small independent companies pay almost nothing after deductions. That beats the rates paid by most American taxpayers and hardly suggests the need for further cutbacks. Moreover, there is ample evidence that new technology has prompted a rush of bids in deep-water tracts in the gulf. The lease auction held last May was the fourth largest in gulf history, under the current tax and lease policies, and the American public would have lost an estimated $2 billion in future royalties if the proposed holiday had been in place then. Over the long haul, CBO estimates the royalty holiday will cost the taxpayers $420 million. The claim that this measure is justified for economic growth should not be the basis for giveaway tax breaks. The fact is that when someone else gets a break in terms of the Tax Code or in terms of royalty, other taxpayers have to make it up. They have to pay for it. So the fact is that if we give this away fast enough, if we can burn dollar bills, that we can heat the house is not a very good justification for a tax policy or for an energy policy. So I would suggest to my colleagues that we quit burning the dollar bills, we start dealing with the deficit by closing and not opening new loopholes, and that is what has happened throughout this Congress. The House tax bill that passed provided 75 percent of the benefits in 10 years went to corporations and to investors--to corporations and investors--not to individual taxpayers. Mr. Speaker, I urge defeat of the rule and passage of the motion of the gentleman from California [Mr. Miller] to recommit to conference this report. Mr. McINNIS. Mr. Speaker, I yield 3\1/2\ minutes to the gentleman from Oklahoma [Mr. Brewster]. (Mr. BREWSTER asked and was given permission to revise and extend his remarks.) Mr. BREWSTER. Mr. Speaker, I rise this afternoon to support this important rule. This afternoon we will have an opportunity to cast a vote that will create jobs, increase domestic production of crude oil and natural gas, decrease our dependence on foreign oil, and raise at least $100 million for the Federal Government over 5 years. Almost every day news stories report more layoffs, more downsizing, more jobs destroyed as companies cut their payrolls. The men and women of the Nation's oil and natural gas industry know those stories too well, because they have lived them. Oil and gas workers have experienced more job losses than workers in any other American industry. Since 1982, 450,000 jobs were lost in just the exploration sector of the U.S. petroleum industry. That is almost half the number of jobs lost in the entire domestic manufacturing sector. More than one out of every two workers who searched for oil and natural gas, or helped recover it, lost their job. But today, Mr. Speaker we can begin to make a difference for oil and gas workers, for those in related industries, and for their families and communities. I urge my colleagues to vote for job creation by voting in favor of the rule to the conference report on S. 395. Congress must provide incentives for deepwater drilling in the central and western Gulf of Mexico. Deepwater incentives, which encourage oil and gas companies to risk their capital on new exploration and production, will create 20,000 new jobs for every $1 billion in private sector investment. These incentives will result in the creation of many new jobs in my State of Oklahoma, a State hundreds of miles from the gulf. There are 378 petroleum equipment supply facilities in my State alone. And nationally, there are 3,532 such facilities spread across 40 States. Deepwater incentives mean jobs not only for oil and gas workers. It means jobs in steel, in machine tools, in heavy equipment and in the high technology industries that support oil and gas recovery. Deepwater incentives will create new jobs in the gulf region, [[Page H 11860]] in my State, and throughout our country. We have been going the wrong way for too long. The United States has sent many oil industry jobs overseas. And we rely too much on foreign oil suppliers, who now deliver over half the oil we use. In just 15 years, the U.S. Department of Energy warns that we will rely on foreign sources for 60 percent of our oil. Mr. Speaker, we must invest in American workers. It is time to turn this situation around, and rely on our own abundant oil and gas resources. And we must create the job opportunities that go with domestic oil and gas exploration and production. Mr. Speaker, I urge my colleagues on both sides of the aisle to support the rule, and the conference report and say yes to jobs. Mr. McINNIS. Mr. Speaker, I yield 3 minutes to the gentleman from Mississippi [Mr. Wicker]. Mr. WICKER. Mr. Speaker, I thank my colleague for yielding me this time. Mr. Speaker, I rise in support of the rule, in support of the bill, and particularly in support of the Outer Continental Shelf deep-water incentives legislation; and I will be asking my colleagues later on to vote against the Miller motion to recommit. Mr. Speaker, I think this legislation is a good idea; and particularly, Mr. Speaker, I believe the OCS deep-water incentives provisions are good for business, they are good for job growth and, most importantly, they are good for the taxpayers. Let us look at the facts. Right now, restrictive royalties have effectively shut down deep-water drilling. Only 6 percent of the deep- water leases are in production. That is compared to 50 percent of leases which are in production in shallow waters. My colleagues should not be fooled by the opponents of this measure. I believe their goal is to shutdown deep-water drilling with restrictive taxes. While Americans have continually rejected this approach to governing for the nonsense that it is, opponents have decided to change their approach to the charge of corporate welfare. So let us look again at this charge of corporate welfare. The Congressional Budget Office, the office that we rely on for our estimates, has determined that this bill will generate $100 million over 5 years in tax revenues. Is that corporate welfare? The Congressional Budget Office says that this bill will reduce our national deficit. Is that corporate welfare? This bill will create jobs. That is not corporate welfare, Mr. Speaker. This bill makes sense for the taxpayers, for the Federal budget and for our national security. What our friends who oppose this bill are not saying is the fact that the taxpayer benefits only if deep-water oil and gas production occurs. If they do not drill, they do not pay taxes. The taxpayer and producers are business partners. They both benefit from deep-water drilling. So who is being taken advantage of by this provision? It is not the offshore workers who sit idle by the drills. It is not the taxpayer who stands to make $100 million over the next 5 years. The only people being taken advantage of in this bill are those who fall for the basic theory of corporate welfare by the opponents of the bill today. This bill will expand domestic energy resources, enhance our energy security, create jobs and reduce the national deficit. Mr. Speaker, this is a good rule, this is good legislation, and I urge its adoption. Mr. McINNIS. Mr. Speaker, I yield 3 minutes to the gentleman from Florida [Mr. Goss]. (Mr. GOSS asked and was given permission to revise and extend his remarks.) Mr. GOSS. Mr. Speaker, I thank my friend the honorable distinguished gentleman from Glenwood Springs, CO [Mr. McInnis], for yielding me this time and for his management of this rule. Mr. Speaker, I rise in support of this rule, and to thank the conferees on S. 395 for going the extra mile to address the concerns of the State of Florida with regard to the deep water drilling provisions contained in the conference report. I, along with many Members of the Florida Delegation, had reservations about the original Senate language that would have provided royalty relief for oil companies drilling in the deep waters of the Gulf of Mexico. The overwhelming majority of Floridians are opposed to taking risks with oil and gas exploration in our fragile coastal waters--risks that could jeopardize our tourism and housing industries. I am pleased that through the efforts of Mrs. Fowler and others on the conference committee, the report now spells out in no uncertain terms that ``nothing in this title shall be construed to affect any offshore pre-leasing, leasing, or development moratorium, including any moratorium applicable to the eastern planning area of the Gulf of Mexico located off the gulf coast of Florida.'' This clarification is consistent with our efforts to provide long-term protection for Florida's valuable coastline, and I support it's inclusion in this conference report. Mr. Speaker, I recognize there are many other issues in this particular report, and they have not all been attended to in exactly the way that is going to make everybody exactly happy. I have never seen a piece of legislation that I can recall that has made everybody happy in this body, and I do not think I will live that long. I think that everybody fees they can improve on it. But for the rule that we have here, I think that is a good rule; and I think it is important to point out that there has been a change and an improvement for the Florida interests that involve the protection of the Florida coastal waters; and I think those involved. Mr. McINNIS. Mr. Speaker, I yield I minute to the gentleman from Florida [Mr. Scarborough]. Mr. SCARBOROUGH. Mr. Speaker, I thank the gentleman for yielding time to me. Mr. Speaker, I am from Florida. This bill does not affect the State of Florida, does not affect drilling off of Florida. This does affect the taxpayers. When I hear people get up and say that CBO has scored this one way or the other, that it is actually going to be $100 million plus, that is doublespeak that I have been hearing Democrats saying on the other side of the aisle, and how Republicans are saying this now for their own purposes shocks me. The fact of the matter is, CBO has scored this, and in their scoring they said it would cost us $450 million. Now, how anybody can stand up after defending CBO numbers for a year and then stand up and say, ``OK, CBO is right on everything but this one,'' absolutely strains any credibility any speaker has. CBO says it. It costs the American taxpayer $450 million. When you take to the microphone and say that you are helping the American taxpayers by shoveling more corporate welfare to big oil, you are lying to the American people. Mr. McINNIS. Mr. Speaker, I yield myself such time as I may consume. Mr. Speaker, I would hope the gentleman from Florida [Mr. Scarborough] stays on the floor long enough to hear some rebuttal, because the gentleman from Florida has very little basis, especially using the kind of strong language that he has used. I think we may have an honest disagreement here. I do not think either side in this situation is lying, as the gentleman from Florida might put it, or telling an untruth. In fact, the CBO has been I think fairly clear on its scoring of this. This will add to the Federal Treasury. Mr. Speaker, I yield 2 minutes to the gentleman from Louisiana [Mr. Tauzin]. Mr. TAUZIN. Mr. Speaker, I thank the gentleman for yielding time to me. As a matter of fact, CBO did say this would yield $100 million to the Treasury in the next 5 years. Confusion has come up when CBO tried to go 25 years out and estimate income and revenue as opposed to losses under the program, and CBO did a classic economic mistake in that analysis. They failed to count the present value of money. Minerals Management has done an analysis as well. Minerals Management, under the Secretary of Energy, has concluded that this bill will produce at least 630 additional leases which would be sold for a total increase in bonuses of $485 million over the next 5 years. Their analysis over the 25-year period is it not only reduces the deficit but it also adds, they believe, about $200 million to the Treasury. [[Page H 11861]] Now, we can debate. Economists are arguing about what is going to happen 25 years from now. But one thing we cannot deny is that the 25- year outlook by CBO originally done, which has been corrected by Minerals Management and the Department of the Interior, failed to take into account a very simple economic principle, the present value of money. When you do that, this is a net gainer for the Treasury. It is a net gainer for the Treasury in the first 5 years. It is a net gainer over the 25-year period, if the bill were extended beyond the first 5 years. In fact, this is good for the Treasury. This produces jobs, economy. It produces income for Americans, and it does something even more vital than that. It produces oil and gas in regions that would not otherwise be produced in the Gulf of Mexico, only in an area where, in fact, economies of scale and deep-water drilling would not permit those drills to occur. This is good for the country. Too many of our young men and women have gone to battle to defend oil products in somebody else's land. It is about time we produce on the leases we have authorized to be produced here in the Gulf of Mexico. I would urge support for this rule and

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CONFERENCE REPORT ON S. 395, ALASKA POWER ADMINISTRATION ASSET SALE AND TERMINATION ACT
(House of Representatives - November 08, 1995)

Text of this article available as: TXT PDF [Pages H11854-H11881] [[Page H 11854]] CONFERENCE REPORT ON S. 395, ALASKA POWER ADMINISTRATION ASSET SALE AND TERMINATION ACT Mr. McINNIS. Mr. Speaker, by direction of the Committee on Rules, I call up House Resolution 256 and ask for its immediate consideration. The clerk read the resolution, as follows: h. res. 256 Resolved, That upon adoption of this resolution it shall be in order to consider the conference report to accompany the bill (S. 395) to authorize and direct the Secretary of Energy to sell the Alaska Power Administration and to authorize the export of Alaska North Slope crude oil, and for other purposes. All points of order against the conference report and against its consideration are waived. The conference report shall be considered as read. The SPEAKER pro tempore (Mr. Goodlatte). The gentleman from Colorado [Mr. McInnis] is recognized for 1 hour. Mr. McINNIS. Mr. Speaker, for the purpose of debate only, I yield the customary 30 minutes to the gentleman from Texas [Mr. Frost], pending which I yield myself such time as I may consume. During consideration of this resolution, all time yielded is for the purpose of debate only. Mr. Speaker, House Resolution 256 is a simple resolution. The rule simply makes it in order to consider the conference report to accompany the bill S. 395 which authorizes and directs the Secretary of Energy to sell the Alaska Power Administration, and to authorize the export of Alaska North Slope crude oil. All points of order against the conference report and against its consideration shall be waived. This resolution was reported out of the Committee on Rules by an unanimous voice vote. The purpose of the underlying legislation, S. 395, is to lift the ban on the export of crude oil produced on Alaska's North Slope and to provide for the sale of the assets of the Alaska Power Administration. Additionally, the conference report contains a targeted royalty relief provision which, according to the Secretary of Energy Hazel O'Leary, will ``lead to and expansion of domestic energy resources, enhance national security, and reduce the deficit''. This legislation has broad bipartisan support, including the support of the Clinton administration. By lifting the ban on exports we will create thousands of new jobs in this decade, and we will generate millions in receipts to the Federal Government. Mr. Speaker, I reserve the balance of my time. Mr. FROST. Mr. Speaker, I yield myself such time as I may consume. Mr. Speaker, I rise in support of the rule. This rule, as the gentleman from Colorado has explained, waives points of order against the consideration of the conference report on S. 395, a bill to lift the ban on exports of Alaskan oil and to privatize the Alaska Power Administration. Mr. Speaker, this conference report also contains a provision which was not in the House-passed version of this legislation. This provision exempts oil and gas companies drilling under Federal oil and gas leases in deep waters offshore in the Gulf of Mexico, from paying royalties to the Federal Government. The inclusion of this provision is controversial in light of the instructions to conferees adopted by the House last July. That motion, offered by the gentleman from California [Mr. Miller], instructed conferees to insist on the House position on this issue. The House bill, of course, deleted these provisions. The conferees have, however, wisely included these provisions in the bill. Mr. Speaker, these exemptions will encourage exploration and drilling which will in turn increase the amount of available crude oil to U.S. markets. Mr. Speaker, increasing energy production in something our government should encourage and the provisions in this conference report do just that. I would encourage my colleagues to support the conference report and to oppose the Miller motion to recommit this conference report. Mr. Speaker, I reserve the balance of my time. Mr. McINNIS. Mr. Speaker, I yield 4 minutes to the gentleman from Louisiana [Mr. Livingston], chairman of the Committee on Appropriations. (Mr. LIVINGSTON asked and was given permission to revise and extend his remarks.) Mr. LIVINGSTON. Mr. Speaker, I thank the gentleman from Colorado for yielding time to me, and I rise in support of the rule and in support of the bill. Mr. Speaker, I am pleased to support this effort. Mr. FROST. Mr. Speaker, I yield 1 minute to the gentleman from Massachusetts [Mr. Studds]. (Mr. STUDDS asked and was given permission to revise and extend his remarks.) Mr. STUDDS. Mr. Speaker, I rise in support of this rule and of the substance of the conference report, although I shall support the efforts of the gentleman from California [Mr. Miller] to strike an extraneous and controversial provision. This legislation is important because it is vital to preserving the independent tanker fleet and the cadre of skilled men and women who proudly sail today under our flag. Mr. Speaker, I rise in support of the rule and the conference report on S. 395, legislation that authorizes exports of Alaskan oil carried in American-flag vessels. This bill will help enhance our national security by spurring energy production and by helping to preserve our domestic merchant marine. I urge my colleagues to vote in favor of the rule and to overwhelmingly support this legislation, as you did when it was on the floor in July. According to recent press reports, a number of foreign governments continue to complain that the U.S.-flag requirement somehow violates our international obligations. As my colleagues may know, the U.S. Trade Representative has assured Congress that the bill does not violate our GATT obligations. To my knowledge, none of these governments complained when Congress enacted a comparable provision as part of the United States-Canada Free-Trade Agreement. In any event, for the benefit of those who persist in arguing without foundation that the bill poses a problem, let me lay out the case here. This legislation is important because it is vital to preserving the independent tanker fleet and the cadre of skilled men and women who proudly sail today under the American flag. There can be little doubt that our Government has a compelling interest in preserving a fleet essential to national security, especially one transporting an important natural resource. Specifically, section 201 of the conference report requires that, other than in specified exceptional circumstances, Alaskan crude exports must be transported by a vessel documented under the laws of the United States and owned by a U.S. citizen. As my colleagues know, current law already requires Alaskan oil to move to the lower 48, Hawaii, and Canada on so-called Jones Act vessels. When Congress authorized construction of the Trans-Alaska Pipeline system, it established export restrictions that had the effect of ensuring that North Slope crude would move to the lower 48 and Hawaii on U.S.-built, U.S.-owned, and U.S.-crewed vessels. Although the export restrictions have changed over time, there has been no change with respect to the requirement to use Jones Act vessels. In 1988, when Congress passed legislation to implement the United States-Canada Free-Trade Agreement, it agreed to allow up to 50,000 barrels per day of ANS crude to be exported for consumption in Canada, subject to the explicit requirement that ``any ocean transportation of such oil shall be by vessels documented under [46 U.S.C.] section 12106.'' By insisting that exports to Canada move on Jones Act tankers--even though not required by the specific terms of the agreement--Congress established the principle that exports must move on U.S.-flag vessels. Consider also that in negotiating the North American Free-Trade Agreement, the Mexi- can Government reserved to itself the ``transportation . . . [of] crude oil.'' The U.S. Government specifically agreed to this reservation in adopting article 602(3) of NAFTA. Additionally, in two major areas of commercial movements in foreign trade, the U.S. Government has long enforced preference for American vessels. Since 1934, the U.S. Export-Import Bank has reserved for American carriers 100 percent of all cargo the export of which it finances under various programs. The Cargo Preference Act of 1954 also reserves certain government-financed cargo to ``privately owned United States-flag commercial vessels, to the extent such vessels are available at fair and reasonable rates.'' There are plenty of other examples of cargo reservation world wide. Our Government has entered into bilateral treaties with Latin American countries that preserve ``government controlled'' cargoes for national lines. These intergovernmental agreements are supported by [[Page H 11855]] pooling agreements among the lines that effectively divide all cargo-- not merely controlled cargo--on the UNCTAD 40-40-20 basis, with the 20 percent being accorded to such third-flag lines as are admitted to the pools. Similarly, the French Government reserves for French-flag vessels substantial cargoes. The act of March 30, 1928, for example, requires that, unless waived, two-thirds of France's crude oil needs be carried on French-flag vessels. Mr. Speaker, it is quite clear that longstanding precedent supports the U.S.-flag requirement in this bill. Now let me address specific U.S. international obligations and explain why the legislation does not violate the GATS ``Standstill Agreement,'' the General Agreement on Tariffs and Trade, or other of our international obligations. GATS Standstill Agreement.--At the conclusion of the Uruguay Round of multilateral trade negotiations, the United States and other countries for the first time agreed to cover services, as embodied in the General Agreement on Trade in Services [GATS]. Maritime services were effectively excluded, however, because no commitments of any kind were made by the United States. Although a U.S. offer had been briefly tabled, it was withdrawn. Thus, the U.S. Government did not in any way restrain or limit its authority to maintain or promote an American-flag fleet. The only commitment made by the U.S. Government was to continue negotiations until June 1996, with a view to determining whether to make any binding commitments at that time. The ``Ministerial Decision on Negotiations on Maritime Transport Services'' imposed this ``standstill'' commitment or ``peace clause'' for the period during which the negotiations would occur: ``[I]t is understood that participants shall not apply any measure affecting trade in maritime transport services except in response to measures applied by other countries and with a view to maintaining freedom of provision of maritime transport services, nor in such a manner as would improve their negotiating position and leverage.'' Some foreign governments are now arguing that the enactment of the proposed legislation would violate this commitment. They are incorrect. In a letter to me at the time, the U.S. Trade Representative stated that the ``peace clause'' is: Strictly a political commitment by the Parties to the negotiations not to take measures to ``improve their negotiation position or leverage.'' In a worst case scenario, if one of the Parties to this negotiation were to conclude that the United States had taken a measure that contravenes the peace clause, their only remedy would be to leave the negotiating table. Let me assure you that there is nothing in the negotiations that would interfere with maritime reform legislation. . . . Discussion of promotional programs, including government subsidies, would, by no stretch of the imagination, be viewed as undermining these negotiations. This understanding was confirmed by the Presidential Advisory Committee on Trade Policy and Negotiations. In filing its report at the conclusion of the Uruguay Round negotiations, the Committee said: ``[A]ll existing maritime promotional and support laws, programs and policies continue in full force and effect. The United States also may enact or adopt such new measures as it wishes including pending legislation to revitalize the maritime industry.'' GATT.--The General Agreement on Tariffs and Trade covers goods, not services. Under longstanding precedent, vessels in international commerce are not themselves ``products'' or ``goods'' subject to GATT. For purposes of GATT, the relevant ``product'' is ANS crude, which would be transported on American-flag vessels. Requiring that this product be carried on these vessels, as currently required under the implementing legislation for the United States-Canada Free-Trade Agreement, does not conflict with GATT. Article XI of GATT proscribes ``prohibitions or restrictions other than duties, taxes or other charges whether made effective through quotas, import or export licenses or other measures'' by a contracting party ``on the importation of any product'' or ``on the exportation . . . of any product.'' These requirements apply to ``products,'' which do not include vessels in transit between nations. Moreover, these requirements are limited to ``products'' and not to their transportation. This is made clear by the exceptions listed in para. 2, such as (a) measures to prevent or relieve ``critical shortages of food stuffs or other [essential] products'' and (b) restrictions to facilitate ``classification, grading or marketing of commodities.'' Such exceptional restrictions are to be accompanied by public notice ``of the total quantity or value of the product permitted to be imported.'' Thus, the transportation requirements of the committee print are not ``prohibitions or restrictions other than duties'' on goods proscribed under article XI. Article III, the national treatment article, forbids internal taxes or other charges or regulations, affecting, inter alia, the transportation of goods, that discriminate in favor of domestic production. Requiring U.S.-flag vessels for the carriage of certain cargoes in international trade is not an internal regulation of transportation that discriminates against foreign goods. As I said earlier, vessels are not considered goods. Moreover, by operation of the Jones Act, foreign-flag vessels may not today carry ANS crude oil to the lower 48 or Hawaii. Having no claim to carry this crude today, foreign governments can not claim under article III that they somehow will be denied opportunities tomorrow as a result of a change in current law. Article V, the freedom of transit article, requires that member nations permit goods, and also vessels, of other member nations ``freedom of transit through the territory of each contracting party'' of traffic in transit between third countries. The proposed bill, however, is not an inhibition of such movement of foreign goods or vessels within the United States. Article V thus does not apply. GATT Grandfather Clause.--GATT 1994 contains an explicit exemption for the Jones Act. Annex 1A to the agreement establishing the World Trade Organization contains an exception relating specifically to national flag preferences for shipping ``between points in national waters'' enacted before a member became a contracting party to GATT 1947. The exception becomes inoperative if ``such legislation is subsequently modified to decrease its conformity with Part II of the GATT 1994.'' On its face, however, the proposed bill would not operate in commercial applications ``between points in national waters,'' since it concerns the foreign trade. The proposed legislation would not amend the Jones Act and thus does not jeopardize the grandfathering of the Jones Act by Annex 1A. The conformity of the bill with international obligations of the United States does not depend on this exception, but on the terms of those obligations themselves. As I indicated earlier, the proposed bill does not conflict with articles III, V or XI of GATT. OECD Code.--The OECD's Code of Liberalisation of Current Invisible Operations generally requires OECD member countries to liberalize trade in services, with certain specified exceptions. Note 1 to annex A, in defining invisible operations in the maritime sector, states in its first sentence that the purpose of the provision is ``to give residents of one Member State the unrestricted opportunity to avail themselves of, and pay for, all services in connection with international maritime transport which are offered by residents of any other Member States.'' The second sentence of the Note lists ``legislative provisions in favour of the national flag * * * '' as among measures that might hamper the enjoyment of those rights. The Note concludes, however, unambiguously: ``The second sentence of this Note does not apply to the United States.'' Whatever its applicability to the law of other nations, it would not apply with respect to the proposed legislation, which cannot therefore be contrary to it. Thus, while some OECD members have subscribed to equating national flag requirements with disapproved ``invisible operations,'' it is clear that the United States has not. FCN Treaties.--Some foreign governments have raised questions about the propriety of flag reservation in light of various treaties of Friendship, Commerce and Navigation. The treaty clause invoked is this: ``Vessels of either party shall be accorded national treatment and most-favored-nation treatment by the other party with respect to the right to carry all products that may be carried by vessel to or from the territories of such other party. * * *'' Whatever this clause may appear to convey literally, its application in practice has allowed numerous national flag preferences identical with or otherwise indistinguishable in principle from the proposed measure. As I indicated earlier, the most prominent instance is embodied in the United States-Canada Free-Trade Agreement. But there are many other examples. In the 1960's and 1970's, for example, the United States concluded with the former Soviet Union agreements for the sale of grain that, initially, reserved all carriage to American ships so far as available, and later not less than 30 percent. Against protests filed by a number of maritime powers having either national-treatment or most-favored-nation treaties, the United States responded in congressional testimony that, although the fact that the Soviet Union as a government was the purchaser did not alter the character of the transaction as purely commercial, ``[t]he shipping arrangement worked out for the Russian wheat sale is a form of cargo preference involving a unique bilateral agreement between the U.S. and U.S.S.R. establishing a new trade where none existed before.'' This is the same reason the Department of State has advanced in defending preferences for government-financed cargo. So far as this may be considered a controlling factor, it is certainly applicable here, because the bill [[Page H 11856]] is clearly ``establishing a new trade where none existed before.'' In 1973, the President, by proclamation, instituted a system of licensing fees on imports of oil excess to prescribed quotas. Subsequently, however, the President in effect exempted products refined in American Samoa, Guam, the Virgin Islands or a foreign trade zone, if transported to the mainland on American-flag vessels. Like the present bill, the fee waiver was said not to reflect ``a general administration position on reducing licensing fees when U.S.-flag ships are used''. Although the stated purpose was to equalize refinery costs as between territories not subject to the Jones Act and the mainland, the administration suggested in congressional testimony that ``a positive incentive has been provided by the administration for the construction and use of additional U.S.-flag tankers.'' In recent testimony before the Resources Committee on which I sit, the Deputy Secretary of Energy similarly emphasized the importance of the U.S.- flag requirement of the pending legislation in preserving U.S.-flag tankers and the skilled mariners who operate them. In summary, Mr. Speaker, the U.S.-flag requirement of this bill is supported by ample domestic and foreign precedent, does not represent an extension of cargo preference into a new area, and does not violate our international obligations. There is no reasonable basis for a challenge to the legislation before the World Trade Organization or in other international forums. I urge my colleagues to join me in supporting this legislation, which is so vital to preserving a fleet essential to national defense. Mr. McINNIS. Mr. Speaker, I yield 3 minutes and 56 seconds to the gentleman from Louisiana [Mr. Livingston], chairman of the Committee on Appropriations. (Mr. LIVINGSTON asked and was given permission to revise and extend his remarks.) Mr. LIVINGSTON. Mr. Speaker, the United States is now importing 50 percent of our energy needs. The Department of Energy projects 60 percent import level by 2010. The United States has lost 450,000 jobs in the oil and gas industry. The temporary royalty relief in S. 395 will enable the private sector to risk its own funds to find and produce domestic oil and gas to enhance national energy security and create jobs. CBO scored the deep water Gulf of Mexico royalty provisions as a revenue gain of $100 million over 5 years. The Minerals Management Service estimates even greater revenue gains. The administration's Sustainable Energy Strategy stated: The Administration supports targeted royalty relief to encourage the production of domestic oil and natural gas resources in deep water in the Gulf of Mexico. This step will help unlock the estimated 15 billion barrels of oil- equivalent in the deepwater Gulf of Mexico, providing new energy supplies for the future, spurring the development of new technologies, and supporting thousands of jobs in the gas and oil industry and affiliated industries. A letter from Hazel O'leary stated, ``The royalty relief provisions in S. 395 as adopted by the conference committee is a targeted deepwater royalty relief provision that the Administration supports.'' The letter concludes, ``The ability to lower costs of domestic production in the central and western Gulf of Mexico by providing appropriate fiscal incentives will lead to an expansion of domestic energy resources, enhance national security, and reduce the deficit. Therefore, the Administration supports the deepwater royalty relief provision of S. 395.'' The language in the conference report was changed in two important ways: First, it clarifies that the royalty incentives are applicable only to the western and central Gulf of Mexico west of the Alabama/ Florida border. Second, the legislation has been amended to make it clear that it will not affect an OSC area that is under a pre-leasing, leasing, or development moratorium, including any moratorium applicable to the eastern planning area of the Gulf of Mexico located off the Gulf Coast of Florida. The Minerals Management Service determined that the deepwater incentives will result in a minimum net benefit to the Treasury of $200 million by the year 2000. These provisions will create thousands of jobs, enhance national security by reducing dependence on imported oil, and reduce the deficit. I urge my colleagues to support the conference report. {time} 1345 Mr. Speaker, I intend to vote for it, and I hope my colleagues will likewise vote for the rule, which I do support as well. Mr. FROST. Mr. Speaker, I yield 2 minutes to the gentleman from California [Mr. Dooley]. (Mr. DOOLEY asked and was given permission to revise and extend his remarks.) Mr. DOOLEY. Mr. Speaker, as an original cosponsor of the underlying Alaskan oil export legislation, which passed the House on July 24 by a 324 to 77 margin, I rise in strong support of the rule and also the conference report for S. 395. With enactment of this historic legislation we will have a chance to benefit small, independent oil producers throughout this country. Current law may have made a great deal of sense in 1973. But like any other laws, it is having unintended consequences that were not foreseen by our colleagues. We therefore should repeal the Alaskan oil export ban and authorities exports carried in U.S.-flag vessels. What this will allow is to free up oil refining capacity on the west coast of the United States, which will help to encourage oil production and oil exploration in the west coast of the United States, much of that done by the independent oil producers. The California independent oil producers state a compelling case. Like them I was pleased that the Department of Energy similarly concluded last year that the export ban was depressing production and, if lifted, would benefit California and the Nation as a whole. The Department of Energy's comprehensive June 1994 study provides a strong factual basis to support this legislation. Among others, the following study concluded production will increase by 100,000 barrels per day, up to 25,000 additional jobs will be created, State and Federal revenues will increase by hundreds and millions of dollars, and these benefits will be achieved with little, if any, effect on consumer prices. We now have a unique opportunity in this Congress to spur additional energy production and to create jobs. With imports meeting over 50 percent of our domestic consumption because of falling production, we must do something quickly to increase energy production in this country. This legislation, this conference report, will achieve those objectives, and I urge my colleagues to support the rule and the report. Mr. McINNIS. Mr. Speaker, I yield 2 minutes to the gentleman from California [Mr. Rohrabacher]. Mr. ROHRABACHER. Mr. Speaker, I rise today and urge the support of the conference report which is of immense importance to California and to our Nation's economic and national security, as well as our well- being. This legislation will increase our domestic exploration and production of crude oil. It will mean that our reduced balance-of- payments deficit, the deficit in our balance of payments, will be reduced, and everyone agrees that the United States today is too reliant on the import of crude oil. This legislation will spur domestic production, thereby enhancing our national security. As I have just said, it will also affect in a positive way our balance of payments. Mr. Speaker, this legislation lifts the ban on the export of Alaskan crude. This will contribute to reducing our trade deficit, and this legislation thus is good for job creation in the United States, and it is good for our economy in general. My colleagues should not be swayed by side issues. This bill is not about side issues. It is about things that are fundamental to our economy. The legislation is about enhancing our economy and our national security. These things must be the overriding issues of importance, and we should not be sidetracked by some kind of fight over royalty holidays, holidays and other issues, that may be of importance in and of themselves, but coupled with this there is just no comparison. So today I suggest that we keep our eyes on the prize and we do not defeat this conference report on a side issue, and I would say that we should have a vote today for jobs, a vote for national security and thus I would suggest that we vote ``yes'' on the conference report and ``yes'' on the rule. [[Page H 11857]] Mr. FROST. Mr. Speaker, I yield 2 minutes to the gentleman from Texas [Mr. Bentsen]. (Mr. BENTSEN asked and was given permission to revise and extend his remarks.) Mr. BENTSEN. Mr. Speaker, I rise in strong support of this conference report, which will create jobs and help American energy companies compete in the global marketplace. Investment in domestic energy exploration and production is vital to America's economic stability and national security. This conference report encourages such investment by lifting the ban on exports of Alaskan oil and providing royalty relief for energy companies that risk exploration in the deep waters of the Gulf of Mexico. These provisions will create jobs in the energy industry and further limit our reliance on foreign oil, which continues to rise as a percentage of our balance- of-payments deficit. We know the Gulf of Mexico contains large oil reserves. Royalty relief will help uncover the 15 billion potential barrels of oil in the gulf and will also spur the development of new offshore technologies and provide thousands of new jobs in the industry. Our energy industry needs these incentives to compete against innovative technologies and an increasingly skilled work force abroad. This policy is supported by Members of both parties in Congress and the Clinton administration. I want to underscore that royalty relief is not the free ride as some in Congress have portrayed it--the energy industry still must pay a substantial upfront bonus and they must also pay royalties when production exceeds the royalty relief period. In essence, this targeted royalty relief will provide the financial incentives to increase domestic energy exploration and production and to protect our national security. In the long run, by spurring exploration and development, this bill will generate more tax revenues for the Federal Government, not less. This conference report is sound economic policy and smart energy policy, and I urge my colleagues to support it. Mr. FROST. Mr. Speaker, I yield 3 minutes to the gentleman from California [Mr. Beilenson]. Mr. BEILENSON. Mr. Speaker, I must say I think this is really offensive that we are being asked to consider this rule waiving points of order for this controversial conference report that will have a significant effect on our Nation's energy and fiscal policy. There is no good reason at all for taking up this type of rule that waives, as it does, the very rules of the House that should be preventing the consideration of this controversial conference report in the first place. We listened for years to arguments from our colleagues, harangues perhaps one could properly call them, who now constitute the majority about how irresponsible and reckless we Democrats were when we provided waivers of rules for even the most minor provisions or rules violations. Yet here we are today being asked to waive a rule that should have prevented the conferees from including in their agreement a very controversial provision that not only is not germane to the House- passed bill, but which in fact the House voted not to include in the conference report. I remind my colleagues that the bill passed by the House has one main purpose, to lift the ban on the export of Alaskan oil. One can properly question, I suppose, the wisdom of lifting that ban. It does mark a major change in the direction of our energy policy. I personally think it is probably a wise change for us to enact. But the House approved that change in our energy policy, and, as I said, I am not here to argue that point. What the House did not approve--in fact, what the House voted 261-161 to prohibit--is granting royalty relief to U.S. petroleum producers operating in waters in the Gulf of Mexico. This controversial provision ought not to be a part of the conference report before us; we ought not to waive the rule requiring germaneness so that this controversial exemption for oil and gas producers--a provision the house voted to oppose--can become law attached to a much less controversial bill. This royalty exemption is a giveaway that we will live to regret. We should not be taking actions that reduce the Government's revenues from large profitable industries especially at a time of great budgetary constraints, and for the leadership to permit the conferees to get away with including this exemption for certain oil producers in this conference report on an entirely different piece of legislation is, many of us believe, totally irresponsible. Mr. Speaker, I urge our colleagues to join me in opposing this rule and in supporting the motion to recommit the conference report that will be ordered, I believe, by the gentleman from California [Mr. Miller]. Mr. FROST. Mr. Speaker, I yield 5 minutes to the gentleman from California [Mr. Miller]. (Mr. MILLER of California asked and was given permission to revise and extend his remarks.) Mr. MILLER of California. Mr. Speaker, Members of the House, after we consider the rule on this legislation, we will get into general debate on a conference report, a conference report that comes back to us on the Alaska oil export bill of which there is relatively little controversy, but that bill has now been hijacked in the conference by a very controversial provision for a royalty holiday for the oil companies in this country that go into the Gulf of Mexico and drill in what this legislation calls deep water. Although I must tell my colleagues in the industry today and with the technology today where we give a royalty holiday under this bill it is no longer deep water. The technology, the investment, the risks, and the oil have all gone past this legislation. This legislation, the provision that is hijacking the Alaska oil export bill, was originally thought of around 1988 when the Gulf of Mexico was in an oil depression. Since that time the Gulf of Mexico has come roaring back. The oil companies are submitting record high bids in that region to compete for the right to drill out there, and it is, in fact, probably the hottest oil place in the world today. {time} 1400 That is not because I say so, that is because every oil and energy and gas periodical in the country says that, and all of the oil companies say this is where they are going. They have set forth their 5-year plan. They have set forth their 10-year plan. This is where they are going to make their investments, along with their other decisions. What we do here is not going to change that. We are just going to decide whether or not we are going to give away the taxpayers' dollars to a lot of oil companies that do not need it, have not particularly asked for it, and understand that it is not going to change their decisions. They are going to the Gulf of Mexico because that is where the oil is. That is where the profitable oil is. What you have here is you have, today you can be at the creation of corporate welfare because this does not exist today, but should you vote against the motion to recommit this conference report, you will be voting to create corporate welfare that CBO says will cost us $500 million. Weigh that against the other decisions you are going to be asked to make later today: to increase Medicare premiums, to do all the things you are going to be asked to do in budget reconciliation, you will be asked to do in the continuing resolution, all the decisions this Congress has made about children's nutrition programs, about education, about science, about technology, about transportation; and in the middle of that, you are going to provide a royalty holiday to the oil industry of this country. I do not think that is what you want to tell your constituents. There is no need for this. The problem with this is, it is mandatory. It is not that the oil company makes a showing that, but for this, they would have drilled the well, or that they need it. It is mandatory. When they sink the well, they get up to 72 million barrels of oil, royalty free, for simply being there, doing what they were already going to do. As I said, they have already bid on the lands. They have already made the investment calculations. They have already leased the rigs, they have already contracted to build new ones, all absent the royalty oil holiday. This Congress should not be larding up, should not be larding up the budget [[Page H 11858]] of the United States with this kind of special privilege. That is what the motion to recommit is about. The motion to recommit is about, in the middle of when we are making the most difficult budget decisions on both sides of the aisle, we find here a provision that CBO says will net out a $150 million loss to the Treasury of the United States, and $500 million between the year 2000 and 2020. We should not be doing that to the taxpayers, we should not be doing that to people who are asking us to put some balance in the balanced budget provision. The last time we had this provision before us, 100 Republicans and 161 Democrats joined to instruct the conferees not to take this provision. The conferees decided otherwise. That is why this rule waives all points of order, because this is a nongermane provision. This is simply a highjacking of a bill that many of this Congress believe is very important, very important, to do that. For those who think if they vote for the motion to recommit they will be bringing down the bill, let me inform them that there is a conference committee scheduled today on the assumption that the motion to recommit will pass so that we can go back to conference, redo this bill, and send it out here. I have told the sponsor of this bill I would let it go on unanimous consent, so they can have the bill and they can stop the creation of new corporate welfare that just in no way can be justified. Mr. McINNIS. Mr. Speaker, I yield myself such time as I may consume. Mr. Speaker, I would like to point out to the gentleman from California that I was in the chair when we last heard these arguments. Frankly, I was convinced by what the gentleman said. In fact, I supported the gentleman from California, because, and I quote the gentleman's statement, he said it was simply a raid on the Treasury by the Senate and major oil companies. Again today I hear the gentleman from California, and, in fact, I think he used the figure $500 million. After that vote, I had time to further examine the issue. In addition to that, I looked at what the CBO score did. I went through that accounting. I can tell the Members that the representation by the gentleman is not the way that I interpret that particular statement. In fact, according to the Secretary of Energy, who has also assessed the CBO score, the deep water language will actually put the Federal Treasury $200 million ahead. Let me repeat that language: The Minerals Management Service has estimated that the revenue impacts of the new leasing under section 304 of Senate 395 for lease sales in the central and western Gulf of Mexico between 1996 and 2000, the deep water royalty relief provisions would result in an increased bonus of $485 million, $113.5 million in additional bonuses on tracts that would have been leased without relief, and $350 million in bonuses from tracts that would not have been leased until after the year 2000, if at all, without relief. This translates to a present value of $420 million if the time and value of money is taken into account. However, the Treasury would forego, and I think this is the number that the gentleman from California is using, ``an estimated $5.53 million in royalties that would otherwise have been collected through the year 2018.'' But you have to complete the formula. But again, taking into account the time value of the money, this offset in today's dollars is only $220 million. Comparing this loss with the gain from the bonus bids on a net present value basis, the Federal Government would be ahead by $200 million. Mr. Speaker, I think we have to look at the CBO score. I intend to support that today. I think the rule is fair, but I think we have to look at that score accurately. We have to disclose all the numbers. Mr. Speaker, I reserve the balance of my time. Mr. FROST. Mr. Speaker, I yield 2 minutes to the gentleman from California [Mr. Miller]. Mr. MILLER of California. Mr. Speaker, I appreciate everything the gentleman from Colorado stated. CBO went through that exact analysis of the Department of Energy, of Mineral Management Services, and rejected that. I find it rather interesting that we now see the proponents of this royalty holiday relying on an agency that they do not trust to give them estimates in Alaska on reserves and costs, and on the Department of Energy, which they think should be abolished. But they do not want to now look at what CBO, the agency they are relying on and we are all relying on to help us balance the budget, when they reject it and say flat out it is going to cost a net $150 million to the taxpayers. When you get through all of the offsets and you get through the leases that are going to be moved forward and the leases that are going to be moved backwards, what you have in fact is a $150 million net cost, $500 million gross costs in the years 2000 and 2020. So CBO, the agency we are relying on, that you are relying on, that we have given credibility to, that has rejected the administration arguments in many, many instances, now says, ``This is a net cost to the taxpayers of this country.'' That is why we should not be providing a royalty holiday to companies that do not need it. I thank the gentleman for yielding to me. Mr. McINNIS. Mr. Speaker, I yield myself such time as I may consume. Mr. Speaker, clearly the gentleman from California and I disagree as to the value to the Treasury, but I would stand by my comments, as I think the majority of the people on both sides of the aisle will stand by, and that is that this is a positive. This puts money into the Treasury. At a time when we are facing this deficit, I think we need to look at that. It encourages jobs. It is a win-win deal. We have got jobs, we have money for the Treasury. I think we are going to have support from both sides of the aisle, in addition, of course, to the support from the Clinton administration. The Clinton administration has come out and endorsed this theory, this issue, and the way it has been put on this bill. Mr. Speaker, I reserve the balance of my time. Mr. FROST. Mr. Speaker, I yield 2 minutes to the gentleman from Texas, Mr. Gene Green. Mr. GENE GREEN of Texas. Mr. Speaker, I thank my colleague, the gentleman from Texas, for yielding me the time. Mr. Speaker, I rise in support of the conference committee report in its entirety of Senate bill 395, based on three reasons. One, it is safe for offshore drilling. We are only dealing with new leases or expanded leases, and also the jobs and economic growth that my colleague, the gentleman from Colorado, talked about. Let me explain. We are talking about the impact on the current budget and this resolution will help balance our budget. The agreement requires the Department of the Interior to exempt from royalties only new leases, or expanded production; it is production that may not be utilized. We may not receive one penny in royalty, but if they do expand it, if they do have new leases, we will see additional revenue. That is where I see the plus for our Treasury. This resolution also talks about expanded production under existing leases, but it mandates some of the royalty exemptions if the Interior Secretary determines this production will not be economic without royalty relief. We are giving the Department of the Interior the ability to say, ``If you will do it, then we will give you that benefit.'' We are really just letting them say, ``OK, depend on the market, and if it will work, it will help the Treasury and also help in the creation of jobs.'' Let me talk about offshore drilling, because in Texas we do that a lot. I go to Galveston, TX, and see the wells out there and I am concerned, like everyone else, about the pollution in our waters. But, in the latest study I have, it shows that offshore oil production is responsible for only 2 percent of spills, whereas transportation is 45 percent of whatever pollution may be, and waste and runoff is 36 percent. We can solve a lot of problems with pollution of our waterways and our bodies of water if we just clean up what we put into the sewers, but the offshore production is one of the safest, ways to produce energy. We have had production off our coasts, successful production. Again, this would benefit not only those of us who live along the Gulf Coast, but would also benefit the economic security of our Nation. That is why, Mr. Speaker, I encourage the adoption of the conference committee report. Mr. McINNIS. Mr. Speaker, I yield myself such time as I may consume. [[Page H 11859]] Mr. Speaker, I would like to quote from a letter that we have just received from Citizens for a Sound Economy, and as we all know on both sides of the aisle, that is a very economically conservative organization. It watches very carefully for any type of legislation that would be a drain on the Federal Treasury. Their position on this, and I quote: Providing some degree of royalty relief creates economic incentives to make such risky undertakings more feasible, while increasing the supply of a vital natural resource and providing increased employment opportunities. Moreover, the royalty relief is not corporate welfare. It does not place a burden on taxpayers or contribute to the deficit. Mr. Speaker, I yield 3 minutes to the gentleman from Texas [Mr. Archer], chairman of the Committee on Ways and Means. (Mr. ARCHER asked and was given permission to revise and extend his remarks.) Mr. ARCHER. Mr. Speaker, I thank the gentleman for yielding time to me. Mr. Speaker, I rise today in support of the rule and in opposition to the motion to recommit offered by the gentleman from California. Enactment of the OCS Deep Water Royalty Relief Act will generate substantial revenues over the next 7 years as companies bid more for deep water leases and risk investing in leases that are currently too marginal to even consider. The revenues received by the Treasury for oil and gas leases are the combination of bonus bids received at the time of lease sales and royalties paid in the event a lease is developed and brought into production. Since the Federal leasing program began in 1954, $56 billion in bonus payments have been generated versus $47 billion in royalty revenues. In other words, we have received more money from producers paying for the option to produce leases than from actual production royalties. This is especially true in deep waters where only one out of 16 leases ever produce and pay royalties. The Congressional Budget Office has officially stated that this provision will not reduce the receipts to the Federal Government under the pay-as-you-go procedures. The only revenues scored for the provision have been in the context of budget reconciliation where revenues from non-routine asset sales are being counted for deficit reduction purposes. The bottom line is that CBO has conservatively estimated this provision would generate additional revenues of $130 million over seven years. I urge you to vote again the Miller motion to recommit. Mr. FROST. Mr. Speaker, I yield 3 minutes to the gentleman from Minnesota [Mr. Vento]. (Mr. VENTO asked and was given permission to revise and extend his remarks.) Mr. VENTO. Mr. Speaker, I rise in strong opposition to the rule, and believe it should be defeated. It is needed to circumvent the thorough consideration of this special interest's--oil interest's--benefits being placed into law. Mr. Speaker, the Miller motion is our avenue to send this back to conference, as we did in August, or in July, by a vote of 261 to 155. We instructed conferees to reject the Senate language providing royalty holidays to companies drilling for oil and gas in federally controlled deep waters in the Gulf of Mexico. The House voted against the Senate proposal because House Members saw this royalty holiday correctly for what it is. This policy is an unjustified giveaway, a tax break for big corporations at the expense of the American taxpayer. Unfortunately, House conferees completely ignored the wishes of the majority of the House and supported the corporate welfare approved by the Senate. This measure has not passed the House, but was slipped into the Senate measure and is being foisted upon the House through this conference measure, and facilitated by this rule, which I oppose. The deep water royalty fails in terms of process and economics. Royalty holiday legislation has not been introduced in the House, and the committee process has been circumvented by those who want to push this giveaway through without complete consideration. If this is such good legislation, why not subject it to hearings and full debate? Why are we being asked to settle for a nongermane amendment to Alaskan oil export legislation? The reason is simple: that a royalty holiday will not stand up to the light of day. {time} 1415 Today, the big oil companies pay only a 17-percent tax rate, and the small independent companies pay almost nothing after deductions. That beats the rates paid by most American taxpayers and hardly suggests the need for further cutbacks. Moreover, there is ample evidence that new technology has prompted a rush of bids in deep-water tracts in the gulf. The lease auction held last May was the fourth largest in gulf history, under the current tax and lease policies, and the American public would have lost an estimated $2 billion in future royalties if the proposed holiday had been in place then. Over the long haul, CBO estimates the royalty holiday will cost the taxpayers $420 million. The claim that this measure is justified for economic growth should not be the basis for giveaway tax breaks. The fact is that when someone else gets a break in terms of the Tax Code or in terms of royalty, other taxpayers have to make it up. They have to pay for it. So the fact is that if we give this away fast enough, if we can burn dollar bills, that we can heat the house is not a very good justification for a tax policy or for an energy policy. So I would suggest to my colleagues that we quit burning the dollar bills, we start dealing with the deficit by closing and not opening new loopholes, and that is what has happened throughout this Congress. The House tax bill that passed provided 75 percent of the benefits in 10 years went to corporations and to investors--to corporations and investors--not to individual taxpayers. Mr. Speaker, I urge defeat of the rule and passage of the motion of the gentleman from California [Mr. Miller] to recommit to conference this report. Mr. McINNIS. Mr. Speaker, I yield 3\1/2\ minutes to the gentleman from Oklahoma [Mr. Brewster]. (Mr. BREWSTER asked and was given permission to revise and extend his remarks.) Mr. BREWSTER. Mr. Speaker, I rise this afternoon to support this important rule. This afternoon we will have an opportunity to cast a vote that will create jobs, increase domestic production of crude oil and natural gas, decrease our dependence on foreign oil, and raise at least $100 million for the Federal Government over 5 years. Almost every day news stories report more layoffs, more downsizing, more jobs destroyed as companies cut their payrolls. The men and women of the Nation's oil and natural gas industry know those stories too well, because they have lived them. Oil and gas workers have experienced more job losses than workers in any other American industry. Since 1982, 450,000 jobs were lost in just the exploration sector of the U.S. petroleum industry. That is almost half the number of jobs lost in the entire domestic manufacturing sector. More than one out of every two workers who searched for oil and natural gas, or helped recover it, lost their job. But today, Mr. Speaker we can begin to make a difference for oil and gas workers, for those in related industries, and for their families and communities. I urge my colleagues to vote for job creation by voting in favor of the rule to the conference report on S. 395. Congress must provide incentives for deepwater drilling in the central and western Gulf of Mexico. Deepwater incentives, which encourage oil and gas companies to risk their capital on new exploration and production, will create 20,000 new jobs for every $1 billion in private sector investment. These incentives will result in the creation of many new jobs in my State of Oklahoma, a State hundreds of miles from the gulf. There are 378 petroleum equipment supply facilities in my State alone. And nationally, there are 3,532 such facilities spread across 40 States. Deepwater incentives mean jobs not only for oil and gas workers. It means jobs in steel, in machine tools, in heavy equipment and in the high technology industries that support oil and gas recovery. Deepwater incentives will create new jobs in the gulf region, [[Page H 11860]] in my State, and throughout our country. We have been going the wrong way for too long. The United States has sent many oil industry jobs overseas. And we rely too much on foreign oil suppliers, who now deliver over half the oil we use. In just 15 years, the U.S. Department of Energy warns that we will rely on foreign sources for 60 percent of our oil. Mr. Speaker, we must invest in American workers. It is time to turn this situation around, and rely on our own abundant oil and gas resources. And we must create the job opportunities that go with domestic oil and gas exploration and production. Mr. Speaker, I urge my colleagues on both sides of the aisle to support the rule, and the conference report and say yes to jobs. Mr. McINNIS. Mr. Speaker, I yield 3 minutes to the gentleman from Mississippi [Mr. Wicker]. Mr. WICKER. Mr. Speaker, I thank my colleague for yielding me this time. Mr. Speaker, I rise in support of the rule, in support of the bill, and particularly in support of the Outer Continental Shelf deep-water incentives legislation; and I will be asking my colleagues later on to vote against the Miller motion to recommit. Mr. Speaker, I think this legislation is a good idea; and particularly, Mr. Speaker, I believe the OCS deep-water incentives provisions are good for business, they are good for job growth and, most importantly, they are good for the taxpayers. Let us look at the facts. Right now, restrictive royalties have effectively shut down deep-water drilling. Only 6 percent of the deep- water leases are in production. That is compared to 50 percent of leases which are in production in shallow waters. My colleagues should not be fooled by the opponents of this measure. I believe their goal is to shutdown deep-water drilling with restrictive taxes. While Americans have continually rejected this approach to governing for the nonsense that it is, opponents have decided to change their approach to the charge of corporate welfare. So let us look again at this charge of corporate welfare. The Congressional Budget Office, the office that we rely on for our estimates, has determined that this bill will generate $100 million over 5 years in tax revenues. Is that corporate welfare? The Congressional Budget Office says that this bill will reduce our national deficit. Is that corporate welfare? This bill will create jobs. That is not corporate welfare, Mr. Speaker. This bill makes sense for the taxpayers, for the Federal budget and for our national security. What our friends who oppose this bill are not saying is the fact that the taxpayer benefits only if deep-water oil and gas production occurs. If they do not drill, they do not pay taxes. The taxpayer and producers are business partners. They both benefit from deep-water drilling. So who is being taken advantage of by this provision? It is not the offshore workers who sit idle by the drills. It is not the taxpayer who stands to make $100 million over the next 5 years. The only people being taken advantage of in this bill are those who fall for the basic theory of corporate welfare by the opponents of the bill today. This bill will expand domestic energy resources, enhance our energy security, create jobs and reduce the national deficit. Mr. Speaker, this is a good rule, this is good legislation, and I urge its adoption. Mr. McINNIS. Mr. Speaker, I yield 3 minutes to the gentleman from Florida [Mr. Goss]. (Mr. GOSS asked and was given permission to revise and extend his remarks.) Mr. GOSS. Mr. Speaker, I thank my friend the honorable distinguished gentleman from Glenwood Springs, CO [Mr. McInnis], for yielding me this time and for his management of this rule. Mr. Speaker, I rise in support of this rule, and to thank the conferees on S. 395 for going the extra mile to address the concerns of the State of Florida with regard to the deep water drilling provisions contained in the conference report. I, along with many Members of the Florida Delegation, had reservations about the original Senate language that would have provided royalty relief for oil companies drilling in the deep waters of the Gulf of Mexico. The overwhelming majority of Floridians are opposed to taking risks with oil and gas exploration in our fragile coastal waters--risks that could jeopardize our tourism and housing industries. I am pleased that through the efforts of Mrs. Fowler and others on the conference committee, the report now spells out in no uncertain terms that ``nothing in this title shall be construed to affect any offshore pre-leasing, leasing, or development moratorium, including any moratorium applicable to the eastern planning area of the Gulf of Mexico located off the gulf coast of Florida.'' This clarification is consistent with our efforts to provide long-term protection for Florida's valuable coastline, and I support it's inclusion in this conference report. Mr. Speaker, I recognize there are many other issues in this particular report, and they have not all been attended to in exactly the way that is going to make everybody exactly happy. I have never seen a piece of legislation that I can recall that has made everybody happy in this body, and I do not think I will live that long. I think that everybody fees they can improve on it. But for the rule that we have here, I think that is a good rule; and I think it is important to point out that there has been a change and an improvement for the Florida interests that involve the protection of the Florida coastal waters; and I think those involved. Mr. McINNIS. Mr. Speaker, I yield I minute to the gentleman from Florida [Mr. Scarborough]. Mr. SCARBOROUGH. Mr. Speaker, I thank the gentleman for yielding time to me. Mr. Speaker, I am from Florida. This bill does not affect the State of Florida, does not affect drilling off of Florida. This does affect the taxpayers. When I hear people get up and say that CBO has scored this one way or the other, that it is actually going to be $100 million plus, that is doublespeak that I have been hearing Democrats saying on the other side of the aisle, and how Republicans are saying this now for their own purposes shocks me. The fact of the matter is, CBO has scored this, and in their scoring they said it would cost us $450 million. Now, how anybody can stand up after defending CBO numbers for a year and then stand up and say, ``OK, CBO is right on everything but this one,'' absolutely strains any credibility any speaker has. CBO says it. It costs the American taxpayer $450 million. When you take to the microphone and say that you are helping the American taxpayers by shoveling more corporate welfare to big oil, you are lying to the American people. Mr. McINNIS. Mr. Speaker, I yield myself such time as I may consume. Mr. Speaker, I would hope the gentleman from Florida [Mr. Scarborough] stays on the floor long enough to hear some rebuttal, because the gentleman from Florida has very little basis, especially using the kind of strong language that he has used. I think we may have an honest disagreement here. I do not think either side in this situation is lying, as the gentleman from Florida might put it, or telling an untruth. In fact, the CBO has been I think fairly clear on its scoring of this. This will add to the Federal Treasury. Mr. Speaker, I yield 2 minutes to the gentleman from Louisiana [Mr. Tauzin]. Mr. TAUZIN. Mr. Speaker, I thank the gentleman for yielding time to me. As a matter of fact, CBO did say this would yield $100 million to the Treasury in the next 5 years. Confusion has come up when CBO tried to go 25 years out and estimate income and revenue as opposed to losses under the program, and CBO did a classic economic mistake in that analysis. They failed to count the present value of money. Minerals Management has done an analysis as well. Minerals Management, under the Secretary of Energy, has concluded that this bill will produce at least 630 additional leases which would be sold for a total increase in bonuses of $485 million over the next 5 years. Their analysis over the 25-year period is it not only reduces the deficit but it also adds, they believe, about $200 million to the Treasury. [[Page H 11861]] Now, we can debate. Economists are arguing about what is going to happen 25 years from now. But one thing we cannot deny is that the 25- year outlook by CBO originally done, which has been corrected by Minerals Management and the Department of the Interior, failed to take into account a very simple economic principle, the present value of money. When you do that, this is a net gainer for the Treasury. It is a net gainer for the Treasury in the first 5 years. It is a net gainer over the 25-year period, if the bill were extended beyond the first 5 years. In fact, this is good for the Treasury. This produces jobs, economy. It produces income for Americans, and it does something even more vital than that. It produces oil and gas in regions that would not otherwise be produced in the Gulf of Mexico, only in an area where, in fact, economies of scale and deep-water drilling would not permit those drills to occur. This is good for the country. Too many of our young men and women have gone to battle to defend oil products in somebody else's land. It is about time we produce on the leases we have authorized to be produced here in the Gulf of Mexico. I would urge support for this