Certainly Senate bill 2521 would provide much needed relief for those small royalty owners who are currently taxed at a 60-percent rate on the difference between the base price and market price. I believe S. 2521 will help to ease the onerous burden placed on those small royalty owners who are retired and living on a fixed income in a time when the cost of living and the cost of quality medical care is doubling every 6 years. This bill would provide some measure of relief for those farmers who are struggling to survive in the face of depressed farm commodity prices brought on at least in part by a Government imposed grain embargo.

It has been estimated that the Federal Government will collect at least $400 milllion in windfall profit tax within Kansas. This sum is staggering when you consider that this is over one-sixth of the total expenditures for the State of Kansas for fiscal year 1980, and equal to the amount spent for development of oil and/or gas within this State.

The 10-barrel-per-day exemption for small royalty owners contained in Senate bill 2521 certainly will have minimal impact on the income received by the Federal Government, however, it will go a long way toward the furtherance of justice and equity as far as the small royalty owners are concerned.

Gentlemen, on behalf of my clients, I ask you to wholeheartedly support Senate bill 2521 and work for its early passage. Thank you for this opportunity.

[The exhibit to Mr. McClure's statement follows:]

1 Rest home room increased from $525 per month in July 1979 to $950 per month in August 1979.

Senator BOREN. I want to thank you for a very good statement, and the specifics that you get into are these two case studies, and I think they are very very valuable, I believe, to us in the record, and some examples that I certainly want to call to the attention of our colleagues as Senator Dole and I go around and talk to the members of the committee individually. They will be very helpful and we appreciate the time you spent putting this together.

Senator DOLE. I think it's an excellent statement and the kind of testimony we need to persuade our colleagues that everybody in the oil business is not wealthy, with a yacht and Cadillac and four or five summer homes. We appreciate it very much.

The next witness is Duane Chrisler from Winfield. I might say while Duane is coming up, that I do not see these two gentlemen on the witness list, but they are a couple of men I know very well, Norman Brandeberry and Cliff Holland from Russell, Kans., and they did come to Washington a number of times. They joined the people of Oklahoma, I might add, Bud Stewart, and others, in a last-ditch effort to defeat the windfall profit tax. They were not successful. Anyway, I think I should recognize that there have been a number of Kansans alerted to the problem before the bill finally passed. Duane.

STATEMENT OF DUANE CHRISLER, WINFIELD, KANS.

Mr. CHRISLER. Senator Dole and Senator Boren, I appreciate the opportunity to testify here today. I am a Cowley County, Kans., farmer-rancher and royalty owner. There are four stripper wells producing on my land at this time.

Cowley County has had some oil production for many years but had not been extensively developed until the energy shortage developed and oil prices increased to the point where it became economically feasible. With higher prices came more drilling rigs and opportunities to lease land for oil. Most of these new wells become stripper within a few months to 1 year after they are drilled. In spite of this, they collectively make a significant contribution to the supply of energy.

Land prices in this county have long been higher because of the possibility that oil might be found. When I bought my land I paid more than might have been justified for farming or pasture purposes alone. Therefore, I maintain that I have an investment in the oil rights that I should be permitted to recover and to receive a return on. Windfall profit tax has been deducted from my last oil checks amounting to about one-third of the total. At a time when a Government embargo on exports has reduced prices about 50 or 60 cents per bushel, I was counting on what oil income I had to keep the farm business in operation. Then the windfall profit tax was enacted and knocked a big hole in that. In my opinion, this amounts to confiscation of one-third of my royalty by the Government. I think this is the most socialistic thing that has ever happened in the United States. It is also unfair that royalty owners should be paid more than the producers.

Another effect of the windfall profit tax will be to reduce the property tax base for local units of Government. I visited with my county appraiser yesterday and found that the valuation placed on oil will be reduced in proportion to the windfall tax. I am a member of my local

board of education. We have been able to meet a lot of the increasing costs of education through increases in valuation rather than making drastic increases in the mill levy.

The actual value of land offered for sale has already been demonstrated to be lowered by the imposition of the windfall profit tax in

our area.

The President has told the American people that the windfall profit tax is taking money from the huge oil companies who are making enormous profits to do all kinds of good things. Actually royalty owners and independent producers are paying a great amount of tax.

I see several things happening as a result of this. I know of several instances in my county where landowners have refused to lease their land since this went into effect. I fear that producers will abandon some small strippers and that some new wells might be plugged which could produce some oil. We must all work together to produce all the oil we can here to reduce dependence on foreign oil.

My parents, who are in their middle seventies, still operate their farm in Ellis County. They have some farm income, some social security, and have a very small stripper oilwell on their land; the income from which goes to reduce the mortgage on the land. They are certainly not oil profiteers.

I feel that there are great inequities and discrimination in the windfall profit tax. I will wholeheartedly support your efforts to correct these problems. I also think that oil producers must be treated fairly or development of new production will also slow down or cease. Thank you.

Senator BOREN. Thank you very much, your statement was very helpful.

Senator DOLE. I was trying to get the applicable percentage of the amount paid by independents and royalty owners. I believe that royalty owners and independent producers pay a good chunk of the $227 billion to be raised by the windfall tax. We'll furnish the exact amount for the record. Thank you. Irene Shirer.

STATEMENT OF IRENE SHIRER, HOISINGTON, KANS.

MS. SHIRER. Senate Finance Committee, Hon. Senator Robert Dole, Hon. Senator David Boren, this is my statement regarding windfall profit tax on royalty.

My name is Irene Shirer. I am the daughter of Anna Dietz, who is presently residing in the Cherry Village Nursing Home of Great Bend. My mother's health will not allow her to testify. I would like to relate the story of my father and mother, Joe and Anna Dietz.

As a boy of 8 years old, Joe Dietz left home and made his way in the world. From that time until his death, dad worked as a laborer and tenant farmer, until 30 years old, when he and mother married. He continued as a tenant farmer and later he and mom were able to buy 320 acres of land in the Cheyenne Bottoms, which they finally paid off during World War II.

In 1946, dad suffered a coronary and had to retire from farming, which did not allow time to accumulate any wealth. The farm was rented. As you know, one-third of the crop after taxes et cetera, does not leave much to subsist on.

Dad died in 1964, leaving the farm to mom. Shortly after his death, she was fortunate in having two oil wells drilled on the farm, both of which are strippers, producing very little oil.

The oil check and farm rent are mother's only means of support. Now the Government takes 60 percent of everything over $16 per barrel of her oil and calls it a windfall profit.

If all of dad and mom's work to buy the farm and pay for it is a windfall, then I think there is something wrong with the President and most of the Congress of the United States. I do not believe the writers of the Constitution ever envisioned any such confiscation as is being perpetrated by the Carter administration. I thank you for your consideration.

Senator DOLE. Thank you very much, Irene. Again, this testimony is another indication of what a hardship this tax is working on a number of people, particularly people like your mother.

Charlie Steincamp.

STATEMENT OF CHARLES W. STEINCAMP, GREAT BEND, KANS.

Mr. STEINCAMP. Senator Dole and Senator Boren, first I would like to compliment both of you on your intelligence, vision, and statesmanship opposing the windfall profit tax in its inception and right now until we were faced with it.

The windfall profit tax is an excise tax; it's discriminatory, unconstitutional, against majors, independents, royalty owners alike, and is a confiscation of property by the Federal Government.

To quote William Simon, "where there's no economic freedom, there's no political freedom." I'm sad to say we're losing both in this our country.

This is an excise tax that will be paid by the consumer of petroleum products and disguised by the administration as a tax on profits. Not so; this tax has no relationship whatsoever to profits. The royalty owners and independents have no way to pass this tax on. The majors can and should pass it on to the consumer. We're the only ones that can bring the Government the tax it's imposed.

This tax should be repealed in its entirety.

I would like to address the overriding royalty interest along with the landowners' royalty which has been pretty well covered which I thoroughly agree with.

The overriding royalty interest is not a true royalty inasmuch as it is carved out of the working interest-nothing to do with the oneeighth royalty interest. An example is one-thirty-second overriding royalty of seven-eighths working interest, which is over and above the landowner royalty. The overriding royalty should, at worst, be treated at the independent rate if the owner qualifies as such.

The overriding royalty in Kansas and the midcontinent area is usually owned by the independent oil operator, geologist, and petroleum engineer. These are the people that are the oil finders, and most geologists in Kansas, or a great number of them, work for a reduced salary over what their counterparts in a major company receive, but part of their compensation has historically been a retention of overriding royalty. Suddenly, the Federal Government takes away 35, 60, 70 per

cent of these oil finder's salaries which certainly goes without saying tends to destroy incentive. The Government has already done enough to destroy incentive by the stretch of income tax, regulations, and so forth.

I believe the windfall profit tax should be repealed. I thank you for the opportunity to testify.

Senator DOLE. Charlie, I think we have another misconception about the oil business. There are a lot of people, I think probably some even in Congress, who think you just go out and punch a hole in the ground. Do you find oil every time you look for it?

Mr. STEINCAMP. Senator Dole, I was spotting maps in Hodgeman County the other day and since I'd spotted them, there have been nine wells drilled. Of those nine wells, eight were dry holes, 1 produced 7 barrels of oil per day and 32 barrels of water. Now, that's not too whoopy.

Senator DOLE. Well, that has been adequately discussed. I think it should be part of the record. I know Senator Boren is familiar with it. Again, I think this problem was caused by a lack of information and misunderstanding. People just think oil is flowing on the ground and if you just go out with a bucket or barrel, you can go into the oil business. We made the case for the overriding royalty holders in the conference but there weren't many votes there. Again, they had to find the revenue and they just taxed everything in sight.

Mr. STEINCAMP. Senator Dole and Senator Boren, I'm well aware of the good fight you two put up and certainly all of my constituents are aware of it and we appreciate it.

Senator BOREN. Bob, you talk about the risk of undertaking a number of dry holes. I actually had a Member of Congress ask me this question. This indicates the frustrating situations we deal with. He said, how do we know there's not some progress? What kind of form do they file when they ask the Government to pay them for the dry holes they drill? This is actually a question I was asked.

Senator DOLE. There are a lot of dry holes in Congress, I think. Thank you.

Mr. STEINCAMP. Thank you, Senator.

Senator DOLE. Ralfe Reber is the president of KIOGA-Kansas Independent Oil & Gas Association-accompanied by Don Schnacke, the executive director. KIOGA was very helpful, as I'm certain the Oklahoma independents were helpful to Senator Boren, throughout the 11-month period that we considered the windfall profit tax. We appreciate very much your attendance today.

STATEMENT OF RALFE D. REBER, PRESIDENT OF THE KANSAS INDEPENDENT OIL & GAS ASSOCIATION

Mr. REBER. Thank you, Senator Dole, Senator Boren. My name is Ralfe D. Reber. I reside in Wichita, Kans. I am president of my own independent oil producing company, Petroleum Management, Inc., with operations in Kansas, Nebraska, and Illinois. I am currently serving as president of the Kansas Independent Oil & Gas Association, a 41-year-old association of independent oil and gas producers and supporting industries in Kansas. KIOGA is commonly recognized