THE WHITE HOUSE
Office of the Press Secretary (Jackson Hole, Wyoming)
PRESS BRIEFING BY MARY ELLEN GLYNN AND SPECIAL ASSISTANT TO THE PRESIDENT FOR ECONOMIC POLICY ELGIE HOLSTEIN
Filing Center Jackson Hole, Wyoming
1:10 P.M. MDT
MS. GLYNN: To answer a few questions about the bill signing that just took place Elgie Holstein, Special Assistant to the President for Economic Policy from the National Economic Council, will answer a few questions.
MR. HOLSTEIN: Thanks. As you know, the President signed this bill a little earlier today and it was the result of -- it's really the outgrowth of a discussion he had a year ago in which they talked about a variety of different things, and one of the benefits of this kind of meeting is it gives an opportunity to talk about some of the arcane things that go on in the -- buried deep in the rules and regulation books of the Department of Interior and Department of Energy and so forth that have to do with sort of the ins and outs and the complexities of the leasing process -- in particular, the process under which the U.S. government assesses and then collects royalties from oil and gas production on federal lands.
And so this bill a year later is really the outgrowth of that meeting a year ago and really represented a bipartisan effort. I think you have summaries of it already, so I won't go into detail about the bill, but just right away take your questions.
Q Well, could you do a quick summary and just try to put this background sheet into a little bit of English? I mean how much land are we talking about; how much money are we talking about; how quickly can companies jump in, that type of stuff.
MR. HOLSTEIN: This is not a process of opening up new land. It has nothing to do with that. For example, it has nothing to do with opening up ANWR or the Continental Shelf. This just has to do with the rules of the road of how companies deal with the federal government when they're producing mineral resources -- in this case, oil and gas -- on federal property. So you're already familiar with the fact that that's a leasing process.
But then you get into the arcane business that only a handful of people understand, and I probably understand it only partly, which is figuring out just how much is owed, how much was produced, over what period of time, how extensive are the records that have to be kept, how far back do they have to be kept, and what are the rights of the federal government and the states, which also have a role in this and digging back into it. If you want I can sort of summarize the main points of the bill.
Q The effect of it is to make things easier, more expensive, more money, less money -- what?
MR. HOLSTEIN: There's actually something in here for everybody, and I'll just tick those things off. For the oil industry it makes things easier for the industry because they don't have to keep their records back -- their books and records for 20 years back the way they have had to do under current law. There's a seven-year statute of limitations on any suggestion or charge by the federal government that they've underpaid their royalties. So that's something in it definitely for them.
What's in it for the federal government? The taxpayers gain, according to CBO, a little over $50 million, and that basically comes about through an acceleration of payments that would otherwise have occurred, but would have cost the government much time and effort in court, which has really been the way this program has been characterized -- a long series of court fights with conflicting opinions about what the books and records have to show.
There's also something in it for the states. The states play a role in this program; they're allowed to assume, to seek delegation of certain authorities. And one of the things the bill does is -- certain authorities to help share the management of this program. So one of the things that this program does, or this particular bill does, is to give an opportunity for the states to apply to the federal government for an expanded list of activities if they feel they'd like to carry them out. It requires the Secretary of Interior to respond very quickly to a state's application for this delegation. And what the states believe --
Q What's an activity?
MR. HOLSTEIN: For example, the auditing process, the books and records kinds of things, the inspections -- there's an inspection component to it. It's really the nitty-gritty of figuring out, as I said a moment ago, how much did you produce, when did you produce it, over what period of time.
Q -- responsibility, not activity?
MR. HOLSTEIN: These are activities that are part of an overall responsibility -- I don't want to mince words here, but basically I think it's part of the delegation process that you see in some programs in which states over a period of years have expressed a growing interest in taking over more aspects. Not all states do this. Some states have had an interest and, indeed, under the previous law, under the current law that we had up until today, states could apply for and have applied for delegation of certain very limited authorities. This bill expands that list.
Q What's the benefit for states getting involved in more of the activities?
MR. HOLSTEIN: Because the states get to keep 50 percent of the royalties on federal lands if those federal lands are located within the state's borders. So they have a financial interest in it. Now, why might a state get involved? Is that what you're asking?
Q Yes, what's the benefit -- so they can more closely watch the money, basically?
MR. HOLSTEIN: The states that have a keen interest in this -- and by the way, Wyoming is one of them -- believe that they can do a more efficient job than the Feds at doing it. And what this bill says is if you think you can, apply for it, we'll give you the authority to do some of these activities. The ultimate authority will still remain with the federal government because these are federal lands, there's the federal property rights. So if a state messes it up the Secretary of Interior can step in and take back authority for the program.
Q Another question if I could. Back on your earlier point, on the benefits to the federal government, taxpayers gaining $50 million in faster payments -- does this simply mean that basically fewer payments are in dispute, fewer areas in dispute? Do you agree basically with the industry not to dispute certain --
MR. HOLSTEIN: It's not an agreement not to dispute. And I'm just giving you CBO's very conservative approach to this as sort of the marker on this thing. What CBO said was, look, the Feds might collect this money, but it might take them 10, 15, 20 years to do it because these court cases literally drag on for that long. And in the meantime, the value of that money to the Feds and, of course, to the states, as I outlined before, declines over time. And so what CBO said and what the administration believes and the states and the companies involved is, this will, by establishing clear rules of the road with this statute of limitations on how far we can go back, the Feds know they have to do their accounting and their auditing, and they have to do it in a set period of time. But there are some things in there for the Feds as well.
For example, suppose the federal government audits your oil company and says, well, we think you've miscalculated what you owe us. And you say, no. And we say, well, we're issuing you an order to come back and tell us -- to redo your accounting. We're ordering you to redo your accounting. What can happen under current law is that process again can drag out for many years. This seven-year statute of limitations is told if, in fact, there is that kind of breakdown in communications. In other words, the bill is written in such a way that if a oil company purposely drags its feet in order to get passed the seven years, the clock stops and doesn't start going again until there's been a substantive response to the government's request for new figures.
Q What about royalty disputes that date back over seven years, like a 20-year dispute? What happens to all of those?
MR. HOLSTEIN: The bill doesn't affect disputes up to this point. So this is a looking forward kind of proposition.
Q So those current disputes can continue on for another seven years and if they go on for another seven, they're excused?
MR. HOLSTEIN: No, actually, those disputes -- I'm sorry -- those disputes could theoretically go on -- this seven-year statute of limitations I described is purely prospective, so any cases or arguments that have taken place prior to this time essentially can still be dragged out. We hope, though, that, frankly, these new rules of the road will lead to a little bit more cooperation.
Q I've got two questions. One, who originally sponsored the bill?
MR. HOLSTEIN: Well, there were a number of sponsors. On the House side, Congressman Calvert is the subcommittee chairman, but there were many Democrats as well who were interested in it. Congressman Cooley was very interested and supportive of it as well.
Over on the Senate side, there was strong support from Senator Bingaman, and the sponsor of the bill I think was actually Senator Murkowski technically -- Nichols actually was the sponsor. But there were many governors -- everybody from Roy Romer to Governor Geringer here in Wyoming. Both sides of the fence were represented on this thing.
Q Can I ask you another question? Who is that met with the President last year, company executives, versus who met with him this year?
MR. HOLSTEIN: I think we have a list that we can give you that can show you -- I'd say it was about one-third of the people who were there today were there last year. I wasn't here last year for the meeting, so I'm not sure I can be --
Q Who opposed this bill, if anyone, and did it in any way grow out of lawsuits filed --
MR. HOLSTEIN: The environment groups did not oppose it. The wildlife groups did not oppose it. To my knowledge, there was no organized opposition to this. There was a great deal of concern as the bill worked its way along about, for example, would the federal government delegate too much responsibility. And that was a fine line we had to work. That's one of the reasons it took so long to get this bill done, just the negotiating.
Q Does it in any way grow out of the suits in recent years against underpaid royalties?
MR. HOLSTEIN: It grows out of the suits, those highly visible -- increasingly visible suits I think lent impetus to the feeling on both sides that if we could establish some rules of the road here so that both sides would know what to expect -- how long they had to keep the records, how long the government had to bring a case or to do the auditing. Another aspect of this is to pay interest to the industry if they over-pay because they're charged interest if they under-pay. So the whole process here was trying to establish some balance. And that's why the bill passed unanimously in both chambers.
Q Why would there not continue to be an incentive to under-pay? Why won't the incentive still be there to under-pay?
MR. HOLSTEIN: Well, because you will still be subject to a penalty, an interest penalty, if you're caught under-paying. But it is -- so you're still subject to that penalty.
Q I'm not even sure if you're the person to answer this question, but this is a relatively low-profile bill, not a whole lot of money we're talking about here -- why was it deemed so important that he was willing to interrupt this otherwise nonsubstantive vacation to sign it?
M R. HOLSTEIN: Well, I think I'll give you the little picture and Mary Ellen will give you the big picture. The little picture was I think there was a certain poetic symmetry to having been here a year ago and the fact the bill just passed right on the last day that the Congress was in session. And the President surprised a lot of people within the administration by saying I know we weren't going to do any real business out there in terms of bill signings, but this is one I wanted to do. And it just worked out that way on the calendar, to tell you the truth.
Q So it came from him?
MR. HOLSTEIN: Yes, really -- my understanding was it was very much his desire to do it.
Q I'm still trying to track down the $50 million. Does that represent legal fees that you figure will not be paid for 15 years --
MR. HOLSTEIN: I'll tell you what, after I do this why don't I show you -- I've got in my briefcase, I'll show you the numbers and so forth. Then we don't have to drag it out here for everybody else.
Q I want to get back to the bigger question of whether or not there's more oil drilling going on, or not. Because Clinton says they're not taking full advantage of the resources.
MR. HOLSTEIN: In this respect -- one of the things -- I'm trying not to give you every last detail of this bill, but one of the things the bill does that affects the issue you're asking about is that it has -- it does some regulatory reform for really small producers. And the result of that is -- they're not off the hook, they have to pay royalties, but, for example, if they want to -- and again, this is up to them -- they can come to the government and say, look, what we'd like to do is to prepay you some royalties. And for a lot of smaller independents, what that really does is give them the opportunity not to do anywhere near the paperwork that they'd have to do if it were a yearly kind of process.
I don't know the details any -- much more than that, but what that does for them is it reduces their workload substantially, their paperwork. It reduces their uncertainty. But it doesn't open up more land in that sense. So in the sense of freeing up their capital and also, of course, giving them -- paying them interest if they are in an overpayment situation in good faith, that gives more money in their pocket to drill.
Q So there will be new drilling?
MR. HOLSTEIN: Yes. But I interpreted your earlier question to mean were we opening up new federal lands, and I wanted to make clear that this had nothing to do with this.
Q So what is -- do you anticipate more drilling, and where is that drilling?
MR. HOLSTEIN: It allows greater drilling to the extent that it leaves more money in the pocket of the oil industry that would otherwise have been spent on lawyers fighting 15 and 20-year court cases, and in paperwork.
I'll tell you what, I have a -- in your briefing paper it lists all the states where these lands are, and I can also show you in rank order the states which are currently -- how much they pay. And it will give you an idea of where most of that activity is. Again, if you want to do that afterwards.
Q I'm just trying to get a clue here. Like Chevron, let's say they drill in this area in Wyoming. Do they now -- they could drill more in that area?
MR. HOLSTEIN: In terms of the lease opening up land, no, they couldn't drill more. But could they put more money into the exploratory effort for areas that they have received permission to drill on? Yes.
Q I think I'm hearing this right. You tell me if I'm right. There is more money in this for the oil companies; there is more money in this for the taxpayers; there is more money in this for the states -- everybody getting more here. Is this because there is a bigger package somehow?
MR. HOLSTEIN: Because somebody, as usual, is getting less. And in this case the people who are getting less are, frankly, the lawyers and the bookkeepers. Now, as the gentleman pointed out, it's not billions of dollars. It's modest, and it is collected sooner with a lot less hassle.
Q What was the nature of the political discussion between the President and these oil representatives?
MR. HOLSTEIN: Well, I think it was just -- and I'm probably -- since it was kind of a closed meeting, I suppose I shouldn't go into too much detail. But basically, it was them expressing their appreciation for a track record that's probably not very well understood that involves doing some things that have been helpful to the industry while protecting the environment, simultaneously creating jobs for people in this industry which for so many years not only was beleaguered, but lagged the rest of the country and other sectors of the economy in its recovery.
So a lot of this had to do -- a lot of the discussion, which was very informal, it was of minimal of prepared remarks from anybody -- it was just sort of sitting around the table with guys saying, well, up in Wyoming we had such-and-such a situation, and here's what happened to us. And the President was just doing a lot of listening and seemed to be -- I mean, I think the value of this was in an informal setting without a lot of rushing and pushing, there was an opportunity to kind of talk about both the track record and talk about some of the things, kind of real-life, day-to-day experience that the industry has in their dealings with the federal bureaucracy.
Q Besides the Alaska lifting of the embargo, what's --
MR. HOLSTEIN: I think you have a piece of paper on that, but basically it includes things like the deep water royalty relief that was provided. And we had in April of this year, immediately following the passage of that bill, record-setting lease sale in the Gulf of Mexico. Now, you can't -- the economy gets some of the credit for that and some of the technology partnerships that we have had between the national labs and the oil industry have helped to make drilling in the United States much more attractive than it has been in recent years. But the deep water royalty relief bill unquestionably added to the incentives. And I think, as I say, you have a piece of paper or we can get you one that details that.
Q -- deal in any way with legislative concerns in the future of the industry? Did they express to the President what they wanted?
MR. HOLSTEIN: Only in the most general terms of, I thought, a very kind of thoughtful discussion about the national energy policy of the country and the country's position relative to the rest of the world, because we do have international energy markets. And so to the extent that all of these measures collectively help reduce our reliance on foreign oil, that was a positive part of the discussion.
But the discussion did, in its informal way and without a whole lot of structure, get into areas about where is the energy future of the country headed and indeed of the world and some of the uncertainties that all recognize will remain with us in the Middle East and so forth.
Q Did the President have a view what the future was?
MR HOLSTEIN: Yes, I think the President's view was that we are now recognizing that we're facing a situation in the world where there is great sensitivity to political/economic repercussions as they affect our energy future, because it's truly a world business. Part of what the President talked about in terms of getting to your question about the future was he communicated his very strong enthusiasm for what the U.S. oil industry has been able to do as part of the overall development -- first stages, but the first stages of developing a solid economy in the former Soviet Union, which has tremendous oil resources but which has had terribly antiquated, horrendous management practices.
And the President was talking about how this has --energy, oil and gas, has become a real high-tech business. It's one of the reasons why one part of the President's energy plan has been having the national labs take some of their expertise, like this 3-D and now 4-D seismic technology -- this used to be all top secret stuff -- and sharing that jointly with the industry. It's putting the American oil industry in the forefront of technology and productivity.
And what he was saying, to answer your question, was that the assistance, the leadership that this industry can provide through that expertise, is helping make places like the former Soviet Union more stable and we'll make what he said was a long-term commitment. I think he said, 20 years from now people will look back on this period of time and the kind of work that your industry is doing in these areas -- and other industries --
Q I'm not sure I understand what the incentive is for the low-producing wells. They have to pay money up front, which is usually a low producer's hardship -- these aren't usually the big-money people. How do they advance any money up front while they still have to file reports, it would seem, to justify what they produced?
MR. HOLSTEIN: You don't have to file a report that's anywhere near as extensive. You don't have to keep paperwork that's anywhere near as extensive as, let's say, a major oil company might have, or even a large independent. And the point here was to acknowledge the fact that it isn't worth it to the government to pursue companies like this to, you know, push them to the wall.
For example -- and I've tried not to get into too much of the nitty-gritty here -- but one element of the bill is just a little provision in the bill that was -- everybody supported as far as I know, that said, look, if the government is going to -- even under this seven-year statue of limitations, if the government is going to spend more money going after somebody's books and records than they're going to recover, even with the seven-year statue of limitations, then don't bother to do it.
But what the prepayment opportunity does for you, if your a small business, is it enables you to -- you come out -- now, this is going to be business by business, which is why this is up to the business to decide whether they want to come forward and do this, or do it the other way -- but the opportunity is there to save this bookkeeping expense. But it's going to be up to them to decide whether it's in their benefit -- to their benefit or not.
Q Can I just ask how long the conversation was this morning with the CEOs?
MR. HOLSTEIN: I kind of lost track at about an hour and 10 minutes -- 10, 15 minutes, something like that.
Q Thank you.
MR. HOLSTEIN: Thanks.
Q Mary Ellen, may I find out from you anything about the President's schedule?
MS. GLYNN: The President's schedule -- the President is playing golf right now, as most of you know. He has no plans to go out tonight, so we might be able to put a lid on as soon as he gets back from golf.
Tomorrow it looks like we are going to have an event, which I will let you know about tomorrow since I cannot say on the record.
Q Business or recreation?
MS. GLYNN: Recreation. I'll let you know what it is later.
Q Is it wet?
MS. GLYNN: I cannot specify what the recreation is. I think you understand.
Q The day part? What part of day, time of day, roughly?
MS. GLYNN: Afternoon. We're taking a 10-mile hike and then we're going para-sailing. Just kidding. (Laughter.)
Q And Purdum's pool. (Laughter.)
Q Do you expect any other news events tomorrow?
MS. GLYNN: I don't expect any news events tomorrow, no. And I don't expect -- I don't think there will be any news events on Thursday, either.
Q Do we know for sure tomorrow?
MS. GLYNN: Yes, I should know for sure tomorrow.
Q Do you think you guys are going to spending it all on Dole, or will that all come out in San Diego?
MS. GLYNN: That will all come out of San Diego.
Q So your sense is there wouldn't be, probably, news events for the remainder of the week, but it's not --
MS. GLYNN: Right, that is my sense, but I just don't want to give you a full lid for the week until the week is over.
Q But if something were to happen it would be after Thursday?
MS. GLYNN: Yes. I'm not anticipating anything, I just want to put you on notice that --
Q Has the President expressed any interest in watching the convention festivity yet?
MS. GLYNN: He has not. The President scooped me, I guess, by telling you all that he did not watch the convention last night. We got home about 10:00 p.m., and he said --
Q There is C-SPAN.
MS. GLYNN: I guess he was tired. He was supposed to stay up and watch the meteor shower with Chelsea.
Q Did he?
MS. GLYNN: He did not.
Q Well, he said that he looked for it, he couldn't find it.
MS. GLYNN: Well, Chelsea told me that it was going to run from 12:00 a.m. until 2:00 a.m. last night.
Q Which course is he playing?
MS. GLYNN: I believe he's at the country club.
Q Is he going out tonight?
MS. GLYNN: He has no plans to go out. I don't want to rule it out, though, just in case.
I think Thursday -- we're going to have something to announce for you Thursday. There's going to be a press party --we're not sure where yet, but keep that night open.
Q Thursday night?
MS. GLYNN: Thursday night.
Q What time are we leaving Saturday, do you know?
MS. GLYNN: I'm not sure what time we're leaving Saturday, but it will probably be sometime in the morning so that we can be home early.
Rita was just asking about the train trip.
Q I was asking Bill, though, since I thought he'd be --
MS. GLYNN: Right. As I erroneously said two days ago -- I'll just repeat myself -- the campaign should have something on that today and we'll make it available here.
Q Are they disorganized? Are things out of control?
MS. GLYNN: Absolutely not. They're razor sharp. There's a crack staff there.
Q Mary Ellen, will the press party event have monitors there so we can all watch Dole's acceptance speech?
MS. GLYNN: You guys are --
Q Actually, can we find out what time --
Q Can we watch Dole's acceptance speech with the President? Can we do that?
Q Just pass that on.
MS. GLYNN: To watch with us? I'll pass it on.
Q Does he plan to watch Dole's acceptance speech?
MS. GLYNN: I don't know that he has plans to do so. He has not expressed any plans to me, other than the recreational ones -- the para-sailing.
Q Do you mean this party would be Thursday, or that you would announce it on Thursday?
MS. GLYNN: The party will be Thursday and we'll get details to you later.
Q In the late afternoon or not? I need to know for fishing purposes.
MS. GLYNN: It will probably be around hors d'oeuvres time.
Q Like 5:00 p.m. or so?
MS. GLYNN: We'll let you know.
Q Will this party have a prominent guest of presidential stature visiting?
MS. GLYNN: Me. (Laughter.) Perhaps.
Q Any comments on the Turkey-Iran deal?
MS. GLYNN: No. I think, actually, David Johnson commented on that yesterday. We had a statement out on it.
Q Is the golf game with any others? Is there a foursome?
MS. GLYNN: There are a couple people. I think Governor Sullivan was going to play with him, and a couple other people. I will get the names to you.
Q If this is a recreational event tomorrow afternoon, will that be for everybody or just the pool?
MS. GLYNN: I think just the pool.
Q The tight pool?
MS. GLYNN: Probably.
Q Mary Ellen, I've been told to ask -- and not in any way to be argumentative in the question, so don't hear it that way -- last year in Yellowstone the print pooler actually walked with the Clintons all day long, producing, I think everyone would agree, one of the most colorful and interesting pool reports of the administration -- highly to the First Family's credit. Apparently, yesterday the pool was shooed on ahead and did not have really so much --
MS. GLYNN: You were briefed on that two days ago. The Clintons just wanted to have a hike. They had a great time listening to the park ranger --
Q So, in other words, that was their decision, not overzealous interpretation by White House aides about what they would wish?
MS. GLYNN: Oh, certainly White House aides are always predisposed to be overzealous --
Q Mary Ellen, this is kind of something about his travel schedule. You said that either you or the campaign was going to put out a travel schedule after the convention or --
MS. GLYNN: Right. The campaign will put that out. As soon as we have details, though, we will provide them as well. Act as a conduit.
Q Not unless you've got any more of the political discussion from the oil and gas meeting.
MS. GLYNN: No, he actually -- that was pretty much -- I sat through most of it and that was pretty much what they discussed. If you want, I can look over my notes and go over it with you.
Q That would be great.
MS. GLYNN: All right?
THE PRESS: Thank you.
END 1:39 P.M. MDT