5:03 PM EST

Nick Rahall II, D-WV 3rd

Mr. RAHALL. Madam Speaker, in response to the declaration of the gentleman from Louisiana that this is a tax increase on the oil and gas industry, this bill is not a tax increase, I say to my colleagues. What we are doing is repealing subsidies, repealing royalties, and asking the oil and gas industry to pay their fair share. There is no tax increase whatsoever in this bill.

The meat and potatoes of this legislation, H.R. 6, came through our Natural Resources Committee. It was drafted by our committee in consultation with the leadership. This committee is the same committee chaired in a previous Congress by our former colleague, Chairman Richard Pombo. Much of the legislation in this bill, H.R. 6, has been debated, has had hearings held therein, and has even been voted upon by the House of Representatives in the previous Congress.

So I would suggest to my colleagues on the other side of the aisle to go back and look at those votes that were held in a previous Congress in order to be consistent today.

For example, the new conservation fee of $9 per barrel that is set up in this bill if the companies choose to pay no royalties. That was set up in the Jindal-Pombo bill of the last session of Congress and supported by a number of my colleagues on the other side of the aisle.

Reference has been made to these notorious leases of 1998 and 1999, where the American taxpayers got socked the most; that these were instituted and allowed to take place under the Clinton administration. True, President Clinton was President of the United States at that time. But I would also remind my colleagues who make this charge that in 2000 we elected President George Bush as President of the United States, and the last time I looked at the calendar, this is 2007. Six years with no action

by the current Department of the Interior to correct these abuses. And, I might say, until December 31 of this year, Republicans controlled the Congress as well, yet no action was taken.

So what we are doing here is an attempt to correct mistakes, correct bungling by the Department of the Interior, mismanagement, whatever word you want to call it, on these 1998-1999 leases where there were no royalties collected, where the price of oil has certainly gone above the threshold that was established in the 1995 Deep Royalty Relief Act, again passed by a Republican Congress, and which was overlooked in the implementation and collection on these 1998-1999 leases.

To those who charge that we are breaching contracts today, there is ample precedent and reservation of power in the U.S. to impose fees for the conservation of resources both in the [Page: H727]

statute in the Outer Continental Lands Act, and reserved specifically in the leases that are issued in the Gulf of Mexico. Again, these leases issued in 1998 and 1999 are royalty free regardless of market, and that is when we impose this conservation fee passed by the Republican

Congress in the past but failed to be enacted into law. So we have set ample precedent here.

As I conclude, let me say that I urge my colleagues on both sides of the aisle, in a bipartisan fashion, as we have voted before on this legislation, to pass H.R. 6 for the sake of the American taxpayers.

Madam Speaker, I yield to the gentleman from Washington, a member of the Ways and Means Committee, Mr. McDermott.

5:07 PM EST

Jim McDermott, D-WA 7th

Mr. McDERMOTT. Madam Speaker, I urge people to vote down this motion to recommit. Mr. McCrery sat in the other day when we had a forum in the Ways and Means Committee and we discussed this bill. We went over it fairly carefully with experts from two sources at least. And, clearly, we are making very modest changes. That was clear from the testimony we had, that these were modest changes to the law.

When we make the bigger changes, which we will have to do to give us a real source of money for this, and decide how we are going to allocate it in the most effective way for the country, there will be full hearings in the Ways and Means Committee, and I look forward to having your participation. You have been a real wonderful change in the Ways and Means Committee for us, and we are looking forward to working with you on the Tax Code to make this truly the first step, the first teeny step, and

then we are going to make a lot of other big steps.

5:36 PM EST

Roy Blunt, R-MO 7th

Mr. BLUNT. Madam Speaker, I do intend to request a recorded vote. However, I first want to make a point of order that the Chair just failed to properly announce the result of the question of passage by the requisite three-fifths pursuant to clause 5(b) of rule XXI, which requires a three-fifths vote to increase tax rates.

Section 102 of H.R. 6 proposes to deny a deduction under section 199 of the Internal Revenue Code of 1986 for an income attributable to domestic production of oil, natural gas or primary products thereof. [Page: H728]

Section 199 of the Internal Revenue Code provides for up to a 9 percent deduction in the amount of corporate income that is taxable under section 11(b) of the Code.

As described in the joint statement of managers accompanying H.R. 4520, which created section 199, when enacted section 199 effectively created a lower percentage rate of tax and therefore reduced the amount of tax proposed by such section. Once fully phased in in 2010, section 199 reduces the tax rate under section 11(b) by 3 points.

Section 102 of the pending bill proposes to disallow this deduction for certain taxpayers, thus imposing a new, higher percentage of tax, and thereby increasing the amount of tax imposed on a taxpayer under section 11(b).

The Joint Committee on Taxation has indicated that section 102 will increase tax receipts by $7.6 billion between 2007 and 2017.

Therefore, Madam Speaker, since this bill increases taxes, and since that tax burden will ultimately be passed on to every American consumer who owns or operates an automobile, I insist on my point of order and demand that H.R. 6 not be considered as passed unless agreed to by three-fifths of those Members present and voting.

5:39 PM EST

Jim McCrery, R-LA 4th

Mr. McCRERY. Madam Speaker, I ask to be heard on the point of order.

This bill should require a three-fifths majority for passage. Madam Speaker, it is important to point out that section 199(d)(6), the subject in this bill, incorporates by reference section 55 of the Internal Revenue Code. Section 55 is specifically identified as a provision subject to the point of order found in clause 5(b) of House rule XXI. By amending section 199, the bill is increasing the applicable rate under section 55 as applied to oil and gas manufacturers.

Recognizing the connection between section 199 and section 55 is critical to the interpretation of House rule XXI. All of the sections identified in House rule XXI deal with the imposition of taxes, and those sections, in turn, are referenced throughout the Internal Revenue Code.

For example, Internal Revenue Code section 2(a)(1) defines the term ``surviving spouse'' for purposes of section 1 as a person whose spouse died up to 2 years before the current tax year. Amending section 2 of the Code to change the definition of a spouse to someone who died only 1 year ago would have the direct effect of increasing the tax rate on widows that is set by section 1 of the Internal Revenue Code.

By way of further example, one computation method for farm income is found in section 1301 of the Internal Revenue Code. That section of the Code also explicitly references section 1. By changing the methods for computing farm income in section 1301, you can directly raise the tax rate of a farmer that is set by section 1.

Madam Speaker, here comes the denouement. Madam Speaker, certainly the intent of rule XXI is for the House to clear a higher hurdle, a three-fifths majority, before it increases taxes on farmers or widows. That intent would be just as relevant in this case where a bill effectively raises the tax rate on some American manufacturers.