I would like to thank Senator Boren for his hard work on this proposal. I think it is the first step in providing some relief. There is another proposal that provides for a 10-barrel-per-day exemption for royalty owners. Senator Boren and I along with 28 of our colleagues, have supported this proposal.

In addition, I have reintroduced my bill which will exempt royalty owners from the windfall profit tax and exempt the first 1,000 barrels per day of production for independent producers. [Applause.]

So the purpose of this hearing is to take testimony from some of the

individual Americans of modest means who have learned what it means to be taxed like Exxon.

We also want to examine the various proposals designed to provide relief to America's royalty owners by exempting them from the punishment of the windfall profit tax. [Applause.]

Let me say to you this morning that I have attended a lot of committee hearings. I have never seen this kind of a turnout before. [Applause.]

UNIDENTIFIED SPEAKER. We are just getting warmed up.

Senator BENTSEN. Yeah, there we go and let me tell you we are going to take the message back to Washington for you too. [Applause.]

Let me also say that we have been flooded with applications to testify. It is far beyond what we anticipated. I was told last night that one gentleman in his seventies rode all night on a bus from Gilmore to get here. He is here and there are many others with similar stories. I wish we could hear them all. We are going to hear an unprecedented number of witnesses this morning. We are going to have to limit you to 5 minutes under the Senate Finance Committee rules, but we will take your entire written testimony for the record. We will get to as many of you as we can.

Those who do not get to testify, we will take your statements for

the record.

I would like now to turn to my colleague, Senator David Boren from Oklahoma. [Applause.]

STATEMENT OF SENATOR DAVID L. BOREN

Senator BOREN. Thank you.

It is a real privilege for me to be here and to participate in these hearings today and I want to begin and I think I would be remiss if I did not, in expressing to you, on behalf of the people that I represent, the citizens of the State of Oklahoma, our appreciation for your leadership and for your efforts in the Congress, particularly to protect the royalty owners.

You have been our principal spokesman. You have been our leader, and it has certainly been appreciated by all the people of our State. I wanted to express that to you.

We have just been able to sustain the great effort which you made in the Senate, passing the 1,000-barrel exemption.

And to tell you that whatever we get accomplished this year, I'm going to regard it just as a start toward getting the eventual passage of the Bentsen amendment for the 4,000-barrel exemption. I hope we can accomplish that.

People often associate the windfall profit tax with the effect which it will have on the major international oil companies. They are beginning to realize that the bill does not tax profits.

In short, the tax is a fraud which was sold to the American people under false colors. [Applause.]

Senator BOREN. It simply taxes oil produced inside the United States, and all Americans will end up footing the bill. Small domestic independent producers will be especially hard hit.

For every additional $1 per gallon paid for gasoline at the pumps by the American motorist, almost 90 cents will end up going to the Government in tax collections. Only 10 cents will be used and available to private enterprise to produce more energy.

The results for this Nation will be tragic. Instead of more energy, which this country badly needs, we are going to get just higher taxes and more Government spending and more bureaucracy, all of which we certainly don't need. [Applause.]

I have often felt that the that the signs posted on the gas pumps all across the country saying that, "Congratulations, you just paid $1 or more for gasoline. We thought that you'd like to know as a result of the windfall profit tax we are going to be sending more than 90 cents of that to the Government in the form of higher taxes."

Then I think they should print the names of all those who voted for it in the Congress so that the American people know who is responsible for it. [Strong applause.]

The group which will suffer most of all is the small royalty owners, those who own the minerals that are being produced.

Many of these royalty owners are farmers and ranchers who are already in serious economic trouble. Others are retired persons for whom their royalty checks represent an important supplement to social security. Many have purchased royalty interests as a part of their savings for retirement.

The vast majority of royalty owners have small incomes from that source. many under $100 per month. A study which we just conducted in selected counties in Oklahoma indicated that 52 percent of all the royalty owners receive checks of $200 a month or less.

A study by one oil company recently found that only 21 out of 31,000-I repeat. only 21 out of 31,000-royalty owners had more than 50 barrels per day in royalty production.

The royalty owners could certainly not be classified by any thinking person as any kind of powerful or well-organized special interest group. [Applause.]

As far as I can determine, there is not even a comprehensive composite list of royalty owners existing in the United States.

Many of the small royalty owners do not even realize that their interests were to be included in the tax. In fact, the royalty owners will end up bearing the very large burden of the tax, perhaps as much as $30 billion over the next 10 years. We are dedicated to preventing that from happening. [Applause.]

No other groups have suffered such a gratuitous attack on the value of their investments as the royalty owners and independent producers. There is no equitable reason for imposing such excessive tax especially on the small royalty owners and producers. For example, this

tax will represent a transfer of $750 million from Oklahomans alone to the Northeast part of the United States.

This transfer will increase in our State to $2 billion per year by the year 1981.

Congress has made a serious and a tragic mistake in passing the windfall profit tax. [Applause.]

It has inflicted a serious blow against the interests of our own Nation, not just those who live in Oklahoma or in Texas or Kansas or Louisiana, but the entire Nation by making us even more dependent on other reliable foreign sources for oil, and that dependence has threatened our very national security.

Mr. Chairman, I am proud to join with you in urging our colleagues in the Congress to correct some of the more serious inequities of this tax, particularly the effect that it has upon royalty owners and small producers.

Again I want to tell you that you will have my full support in your efforts. [Applause.]

Senator BENTSEN. Let me tell you how David Boren got here.

He went until 1 in the morning in Oklahoma making visits across

STATEMENT OF CONGRESSMAN J. J. PICKLE

his State and then he got up at 5 this morning to come to our hearing. We are very pleased for him to be here. [Applause.]

I would like to call as our first witness a very able Congressman, representing this the 10th Congressional District, a very dear friend of mine, who has helped lead the fight for royalty owners and independent producers, Congressman J. J. "Jake" Pickle.

Congressman PICKLE. Senator Bentsen, Senator Boren, from down here on the convention floor I want to welcome both of you to capital city, Austin, Tex.

We particularly welcome you, Senator Boren, though at times we don't welcome all Oklahomans in Austin.

I am very pleased to have you here in this congressional district. I want to thank both of you for providing the leadership in the effort to make our colleagues in Congress aware of the harsh consequences of the windfall profit tax, particularly to small royalty owners.

The tax is harsh, it is unfair, it is unnecessary and it ought to be repealed. [Applause.]

The alleged purpose behind the windfall profit tax was to prevent large oil companies from making excess profits. It was not meant to single out small royalty owners, but that is exactly what has happened.

These small folks are being taxed proportionately more than Shell, Texaco, Exxon, and the other big boys. [Applause.]

I hope this hearing will help demonstrate the difference between the large companies, and small royalty owners, and show why we ought to give the small owners more protection.

Many of the royalty owners were not aware that they were being included in the windfall profit tax until they received their monthly royalty check and discovered a substantial reduction.

Shortly thereafter. I began to receive postcards and letters, hundreds of them, and I'm sure that my colleagues in Congress are having the same response.

Let me share the reaction of one small royalty owner in San Marcos. She writes in,

I have just had one of the biggest jolts of my life when I received my oil payment check this month. I thought the windfall profits tax was going to just the big oil companies. What a tax! I was receiving $460 a month on the average. Today it was $160. How far will that go at the grocery store? I was depending on that check. I have three children and a lot of bills.

This pretty well sums up the reaction of most of my constituents, but I might add that I have also heard from many retirees and widows who are living on fixed incomes.

They have been using their small royalty checks to help offset inflation and are worried about how they are going to make ends meet now that their checks are substantially reduced.

I voted against the windfall profit tax, not only in the Ways and Means Committee, but also on the House floor. I was a member of the conference committee on the bill and would like to say that I particularly appreciate the work that Senator Bentsen did. Senator Bentsen, I would like these royalty owners to know that you led the fight in the Senate.

Without your help in the Senate, we could not have gone to the conference with as much advantage as we had and without your leadership in the conference we would not have been able to get the special tax rate on the first 1.000 barrels per day for independents. [Applause.]

So Senator I want to thank you as one of the conferees. I particularly want to express my appreciation to you and I am sincerely indebted to you for that. [Applause.]

Congressman PICKLE. Heavy taxation of small royalty owners is a situation that we ought to correct. I have introduced legislation that would exempt the first 10 barrels a day for royalty owners.

Others have introduced legislation that would go from 100 barrels to 1,000 barrels a day.

I also want to commend the efforts of the Senate Finance Committee to give royalty owners a $1,000 tax credit against their 1980 windfall profit tax liability.

As the Senator said, the tax credit will not be given until 1981, but will be on the 1980 tax return. It's not the only relief that we hope to get, but it's a beginning. If you are successful in the Senate, we'll certainly support that in the bill before the House.

These are good efforts. I know that it's late in the session and may be difficult to advance legislation, but I think that we need to try. After all, without the participation of the landowners, drilling for oil would never come about. [Applause.]

If we don't provide some relief to these people, why should they be willing to permit more drilling or any drilling on their lands? [Strong applause.]

You can't have an oilwell or even a dry hole unless you've got the land to drill on. That comes first.

So, in closing, I thank you Senators for holding this hearing, and for coming to our capital city.

We are grateful to you. I'd also like to acknowledge the large crowd we have here. It's not surprising that many are from central Texas

because we have a great deal of production in various counties in that

area.

A good third of the owners might be from central Texas. So we all know how much we owe to them and we thank you for coming. [Applause.]

[The prepared statement of Mr. Pickle follows:]

STATEMENT OF J. J. PICKLE, MEMBER OF CONGRESS

Senator Bentsen and Senator Boren, I welcome you to Austin and thank you both for providing the leadership to make the public and our colleagues in Congress aware of the harsh consequences of the Windfall Profit Tax to small Royalty owners.

The alleged purpose behind that law was to prevent large oil companies from making excess profits. It was not meant to single out the small royalty owners, but this is exactly what is happening. These small folks are being taxed proportionately more than Shell, Texaco and other "Big Boys." I hope this hearing will help demonstrate the difference between large companies and small royalty owners and show why we ought to give the small owners some protection.

Many of the royalty owners were not aware that they were being included in the Windfall Profit Tax until they received their monthly royalty check and discovered a substantial reduction. Shortly thereafter, I began receiving postcards and letters from confused and upset constitutents. I have received hundreds of these protesting letters.

I'd like to share with you the reaction of one small royalty owner from San Marcos. She writes: "I have just had one of the biggest jolts of my life when I received my oil payment check this month. I thought the Windfall Profit Tax was going to the big oil companies. What a tax! I was receiving $460.00 a month on the average. Today it was $160.00. How far will that go at the grocery store? I was depending on that check. I have three children and lots of bills." This pretty well sums up the reaction of most of my constituents, although I might add that I have also heard from many retirees and widows who are living on fixed incomes. They have been using their small royalty checks to help offset inflation and are worried about how they are going to make ends meet now that their checks are substantially reduced.

Senators. as you know, I voted against the Windfall Profit Tax bill. I know both of you did, too. I appreciate the hard work and help that you provided when we went to Conference on the bill, but unfortunately we just did not have the votes to defeat the bill or get an exclusion or exemption for the royalty owners.

Heavy taxation of the small royalty owners is a situation that we ought to correct. I have introduced legislation that would exempt the first ten barrels a day from the tax. Others have introduced similar legislation from 100 barrels to 1000 barrels per day. I also commend the efforts of the Senate Finance Committee to give royalty owners a $1000 tax credit against their 1980 windfall profit tax liability. All of these efforts are good ones. I know that it is late in the session and that any legislation, regardless of its nature, will have a tough time advancing, but we must try. After all, without the participation of the landowners, drilling for oil would never come about. If we don't provide some relief to these people, why should they be willing to permit more drilling or any drillingon their land? You can't have an oil well, or even a dry hole, unless you have the land to drill on. That comes first!

I want to thank you again, Senator Bentsen and Senator Boren. You are outstanding leaders in the Senate fighting for the protection of the small royalty owner and for a more sensible energy package than what Congress has already passed.

Senator BENTSEN. Our next witness will be the attorney general from the State of Texas, Mark White, who has fought long and hard to try to help Texas royalty owners. In addition, he is doing everything he can to help us on the railroad rate hauling case. As you know, the transportation costs of coal are increasing the price of coal in Austin. San Antonio. Corpus Christi, and many other places.

We are delighted to have you.