Domenici Critiques Democrats' "Production" Amendment

July 29, 2008
04:31 PM

On the Senate floor this afternoon, Senator Domenici offered a critique of Democrats’ “production” amendment to the underlying speculation bill.



Among Domenici’s chief concerns are:


-         provisions that create new bureaucratic requirements for “diligent development” (thereby delaying development)


-         increases in fees to produce onshore


-         tapping the Strategic Petroleum Reserve to attempt to affect pricing right before the hurricane season and during a time of turmoil in the Middle East


-         Halting a scheduled lease sale on the Roan Plateau and placing new restrictions on oil and gas development there



The prepared text of the Senator’s speech is below.



Senator Pete V. Domenici


July 29, 2008



Mr.President, I rise today to speak on the status of the debate on this bill, and on an amendment that the Majority has put forth under the pretext of increasing our energy supply.



The current energy crisis is derived from many factors, but the bill that the Majority Leader has called up attempts to deal with only one of them: speculation.



As I have said before, never in my 36 years in the Senate have I seen a problem so big met with a proposed solution that is so small.  Speculation is adding to the severity of our energy crisis, but without question, an imbalance between supply and demand is at the root of the problems we face.



The Republican caucus has proposed a number of solutions that measure up to the present challenge.  Despite this, as we begin the seventh day of debate on this bill, we have not had a single substantive vote on it.  The American people demand better than that, and that is why the Majority Leader has begun to come our way.



Mr President, for the past week, the other side of the aisle has told the American people believe that Republicans are up to no good, that we are obstructing progress.  The truth is that we merely want to complete the work that our constituents sent us here to do.



We know what the Republican amendments seek to do – my legislation was introduced more than 12 weeks ago, and the Republican Leader’s bill was filed nearly 5 weeks ago.  The Republican proposals clearly answer the question of how to produce more energy here at home while, at the same time, reducing the amount that we consume.  Our motto has been abundantly clear – “find more, use less” – and it is even making its way into the press releases of our Democratic colleagues. 



What has been less clear, outside of the Speculation-only bill now pending, is what exactly the Democrats are willing to do to reduce energy prices.  Despite stalling progress on a real energy bill, the other side has realized that they must at least appear to support greater production of domestic energy.  And so, late last week, 14 Democratic Senators introduced their own version of the Republican plan to find more, and use less.  


Now that the text of that amendment is public, however, we know it falls short of its own goals.  Gone are the windfall profits taxes, price-gouging, and NOPEC provisions that were soundly discredited by energy experts and editorial pages of all ideological stripes.    



In their place is an amendment that would still bring no new energy to market. It does not open any new areas to exploration.  By increasing the fees applied to leases and pre-production requirements, it could actually drive up the cost of energy and lengthen the time it takes to get that energy to market.  It would delay the development of one of ’s most abundant energy reserves, and increase our vulnerability to an interruption in the supply of oil.



In short, the Democrats' new "production" proposal contains far more problems than it does solutions.  It will not lower prices at the pump, it will not reduce our dependence on foreign oil, and it will not help resolve our energy crisis. 



It is worth taking the time on the floor to examine the substance of this proposal.  The amendment – number 5135 – claims to address a number of so-called ‘supply-side’ issues, including:


  • Lease Duration;


  • Lease Rentals;


  • Lease Sales;


  • Resource Estimates;


  • The Roan Plateau; and


  • The Strategic Petroleum Reserve.



I would like to take a few minutes to address each of these issues.  


On the duration of leases, the amendment shortens the amount of time available to complete all of the activities leading up to, and including, drilling for oil and natural gas.  This approach would fail to increase supply for several different reasons.  It ignores the reason why it takes so much time to get a lease into production in the first place, and it actually adds to the central cause of those delays by creating new bureaucratic requirements for writing “Diligent Development Plans.”  There are already as many as 39 permits, documents, and analyses that have to be done in the development of a lease.  It is unclear how adding a 40th step will move that process along any faster.



Next, the amendment seeks to increase the rental fees that leaseholders pay to occupy federal land.  The increased fees that have been proposed would discourage companies from bidding on, and subsequently exploring, leases that contain marginally-attractive lands.  Increasing the cost of doing business is not the answer.



The Democratic amendment also attempts to alter the frequency of lease sales.  This is appealing in principle, but as drafted, the amendment merely pretends to speed up the process for areas where lease sales are already scheduled to take place, or where lease sales have already been held without any interest from industry.  In effect, this amendment is attempting to take credit for something that was going to happen anyway, or, worse, has already occurred without success. 



What the amendment does not do is open any new areas to leasing, which is the fundamental change that is so desperately needed in our management of federal lands.  Energy companies should not be forced to drill when and where it is politically convenient – they should be allowed to drill where resources are most concentrated, and when conditions most warrant their development.



Mr. President, something of a pattern is becoming evident here.  And not surprisingly, it carries over to the so-called “Resource Estimate” called for by this amendment.  Predictably, the inventory contemplated by this amendment is only for areas that are already leased or are already opened for lease sale.    



Instead of conducting an estimate of the resources within already open areas and already existing leases, we should authorize a full inventory of this nation’s entire resource potential, including areas that have historically been kept off limits – only then can the Congress make an informed decision.  We must fully understand what our past energy policies have kept off-limits, and how those resources could be used to meet our future needs.  But again, the Democratic amendment avoids this very pressing task.



Another troublesome provision is the amendment’s proposed swap of oil in the Strategic Petroleum Reserve.  The Sponsors would have some 70 million barrels of light sweet crude released within 180 days and not replace that fuel until after as many as 5 years have gone by. 



Had the Energy Committee not cancelled a hearing on this very topic last week, we might know if this proposal makes any sense at all.  I suspect it does not.  Having watched the price of oil climb by $20 per barrel, from around $127 to as high as $147.27 after deliveries to the SPR were suspended, it is highly unlikely that a short-term release of oil will reduce oil prices over any sort of time horizon. 



I urge my colleagues to remember the purpose of the SPR – to provide oil in the event of a supply disruption, not in the event of a price increase.  In the event of an emergency, enactment of this provision would reduce our ability to cover import losses from 58 days down to 52.  To do so at the beginning of hurricane season is extraordinarily unwise, and to do so at a time when the relies on foreign nations for nearly two-thirds of the oil we consume makes no sense at all. 



This amendment has many more shortcomings.  The most damaging provision to our energy security, however, deals with the Roan Plateau in Colorado



The way in which the language is drafted speaks for itself:



  • On page 26: “the Secretary shall include in any mineral lease… a stipulation prohibiting surface occupancy or surface disturbance for purposes of exploration for or development of oil or natural gas”;


  • On page 29: “The Secretary may not permit through a lease or other means any exploration for or development of oil shale resources”; and then


  • On page 30: “The Secretary may not at any time issue mineral leases for public land within more than 1 of the phased development areas.”.



These restrictions are somehow fit for inclusion, even after a ‘Finding’ on page 20, which asserts that “the Roan Plateau Planning Area likely contains significant energy resources.”



Why are these provisions included in a title called “OIL SUPPLY AND MANAGEMENT?”  A plain reading of this language clearly demonstrates that it is the sponsors’ desire to “manage” the Roan Plateau in such a way that its abundant energy resources will never be produced.  In short, this is a “production” amendment, which prohibits production.



What my colleagues across the aisle don’t want you to know is that a lease sale including parcels on the Roan Plateau is scheduled for August 14th, a little over two weeks from now.  If this section were enacted into law, it would likely require the Land Use Plan for the entire area to be re-done – a process that generally takes two years or more. 



Let us not forget that the current plan for the Roan Plateau took nine years to develop, and that this provision could require that process to begin again, from scratch, and would eliminate any revenue from the coming August 14th lease sale, which is already assumed in the budget at $100 million.



For all of the shortcomings in this amendment, Mr. President, most revealing are the measures not included in it:



  • There is no repeal of the restriction on regulations for commercial oil shale leasing – the other side has decided to stand by a ban that they imposed last year on that resource;


  • There is no lifting of the Congressional moratorium on the development of our deep sea energy resources, despite the President already taking action to do so; 


  • There is no mention of our nation’s vast domestic coal reserves, which could be used to provide secure, affordable energy for decades to come; and


  • There is no repeal of Section 526, which impairs the Defense Department’s efforts to develop sources of alternative, domestic fuel.



Taken together, this amendment and the underlying Speculation-only bill that is before the Senate suggest that the Majority is content to move on without having done anything to address the energy crisis.  We were faced with an effort to proceed to another matter this past weekend, and the Senate rightly voted to reject it. 



Yesterday afternoon, we were again faced with another attempt by the Majority to change the topic.  Again, the Senate rightly defeated that effort.  I hope we continue to defeat efforts to move away from the number one domestic issue facing the American people. 



Mr. President, this issue deserves our undivided attention.  There is nothing to be afraid of here.  We have ample time to write a good bill that makes real progress and provides real relief at the pump for the American people.



I yield the floor.