[Congressional Record Volume 156, Number 98 (Monday, June 28, 2010)]
[Senate]
[Pages S5492-S5493]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

      By Mrs. FEINSTEIN:
  S. 3541. A bill to prohibit royalty incentives for deepwater 
drilling, and for other purposes; to the Committee on Energy and 
Natural Resources.
  Mrs. FEINSTEIN. Mr. President, I rise today to introduce the 
Deepwater Drilling Royalty Prohibition Act.
  The purpose of this bill is to ensure that taxpayer dollars are not 
used to incentivize the dangerous and often dirty business of offshore 
drilling in deep waters.
  Over the past decades, Congress has established a number of royalty-
relief programs to encourage domestic exploration and production in 
deep waters. This may have made sense in times when oil prices were too 
low to provide energy companies with an incentive to drill in difficult 
places, and before we were ready to deploy large-scale renewable energy 
production.
  But that is no longer the case. The events of the last weeks have 
shown that safety and response technologies are not sufficient in deep 
waters. I believe taxpayer-funded incentives should go to clean, 
renewable energy, not deepwater drilling for oil.
  The disastrous impacts of the leak from the Deepwater Horizon have 
shown that offshore drilling has enormous environmental and safety 
risks--particularly in deep waters. Eleven people died and 17 others 
were injured when the Deepwater Horizon caught fire. All these weeks 
later, we continue to watch in horror as the scope of the disaster 
keeps expanding:
  Oil slicks spread inexorably across the Gulf of Mexico;
  Pelicans and other wildlife struggle to free themselves from crude 
oil; tar balls spoil the pristine white sand beaches of Florida; 
Wetlands are coated with toxic sludge; More than 1/3 of Federal waters 
in the Gulf have been closed to fishing; The plumes of oil under water 
may create zones of toxicity or low oxygen for aquatic life; The oil 
may spread into the Atlantic Ocean via the Loop Current; The response 
techniques, such as the use of dispersants, may have their own toxic 
consequences; and
  Upcoming storms may delay or prevent continued containment and 
response efforts.
  The impacts of an oil spill are so dramatic and devastating, it seems 
clear to me that regulation, oversight and prevention technologies 
should be rigorous. But that is clearly not the case.
  Regulators failed to ensure appropriate safety and response 
technologies were in place.
  MMS gave BP a categorical exclusion from an environmental impact 
analysis that in my opinion should never have been allowed.
  MMS allowed BP to run a drilling operation without the demonstrated 
ability to shut off the flow of gas and oil in an emergency.
  MMS allowed BP to operate without remote shutoff capability in case 
the drilling rig became disabled.
  MMS did not have an inspector on the rig to settle the heated 
argument between the BP, Transocean, and Halliburton officials on how 
they would stop drilling and plug the well.
  MMS did not have--and did not require the industry to have--emergency 
equipment stationed in the Gulf of Mexico that could respond 
immediately to an emergency.
  MMS did not have a plan for responding to disasters.
  MMS did not, in fact, have a real inspection and compliance program. 
It relied on the expertise and advice of the industry on how and how 
much they should be inspected.
  This is not how things should be done. We expect more from our 
government.
  Prevention and response technologies show similar unacceptable 
deficits: they are not good enough.
  These have not improved much since the oil spill in 1969 off the 
California coast near Santa Barbara. That too was caused by a natural 
gas blowout when pressure in the drill hole fluctuated. It was 
successfully plugged with mud and cement after 11 and a half days, but 
oil and gas continued to seep for months. The Santa Barbara spill was 
devastating, but it was a tiny fraction of the size of the Deepwater 
Horizon spill.
  The old technology was not good enough, but now it appears that even 
the newest safety technology fails to prevent wellhead blowouts.
  The Deepwater Horizon drill rig was just completed in 2001.
  The drill rig that caused the 2009 spill in the Montara oil and gas 
field in the Timor Sea--one of the worst in Australia's history--was 
designed and built in 2007. That spill continued unchecked for 74 days.
  The New York Times reports that the blind shear rams in the blowout 
preventers--the last line of defense to prevent wellhead leaks are 
``surprisingly vulnerable'' to failure. One study found that blowout 
preventers have a failure rate of 45 percent.
  These technologies are insufficient, and they are particularly 
vulnerable in deep waters.
  Methane hydrate crystals form when methane gas mixes with pressurized 
cold ocean waters--and the likelihood of these crystals forming 
increases dramatically at about 400 meters depth. These crystals 
interfere with response and containment technologies. They formed in 
the cofferdam dome that was lowered onto the gushing oil in the Gulf, 
and prevented it from working. When a remotely operated underwater 
vehicle bumped the valves in the ``top hat'' device, the containment 
cap had to be removed and slowly replaced to prevent formation of these 
crystals again.
  Other risks increase too, as explained by the Wall Street Journal:

       Drilling in deeper water doesn't change the fundamental 
     process, but it makes virtually everything harder. Rigs must 
     be bigger so they can hold more drilling pipe to stretch vast 
     distances. The pipes themselves must be stronger to withstand 
     ocean currents. Equipment on the sea floor must be sturdier 
     to face extreme pressures at depth. Drill bits must be 
     tougher so they don't melt in the 400-degree temperatures 
     they encounter deep in the earth. And it is harder for 
     drillers to exert just the right amount of pressure down the 
     well bore, enough to keep oil and gas from spurting upwards--
     a blowout--but not so much that they crack open the rocks 
     beneath the surface, which could also lead to a blowout.

  It is clear that prevention, containment, and clean-up measures are 
not sufficient to handle oil leaks, particularly in deep waters.
  American taxpayers should not forego revenue to incentivize offshore 
drilling. It is not good environmental policy, and it is not good 
energy policy either.
  We need to move to clearer renewable fuels.
  I believe that global warming is the biggest environmental crisis we 
face--and the biggest culprit of global warming is manmade emissions 
produced by the combustion of fossil fuels, like oil and coal.
  Taxpayer funded incentives should not finance production of fossil 
fuels--particularly in places where the production itself poses 
potential devastation, but rather should be used to develop and deploy 
clean energy technologies like wind and solar. I very much believe 
this.
  That is why I have worked with my colleagues on a number of 
legislative initiatives designed to reduce greenhouse gas emissions, 
increase energy efficiency and incentivize the use of renewable energy.
  One of our biggest victories was the enactment of the aggressive fuel 
economy law, called the Ten in Ten Fuel Economy Act, which was passed 
by Congress and signed into law by then-President Bush in the 110th 
Congress. This law, which I authored with Senator Snowe, will improve 
fuel economy

[[Page S5493]]

standards for passenger vehicles at the maximum feasible rate. The good 
news is that the administration has taken the framework of this law and 
implemented aggressive standards that require raising fleetwide fuel 
economy to 35.5 mpg in 2016--a 40 percent increase above today's 
standard.
  The other positive development is that the domestic renewable energy 
industry has grown dramatically over the last few years. Last year, the 
United States added more new capacity to produce renewable electricity 
than it did to produce electricity from natural gas, or oil, or coal. A 
great deal of this growth can be attributed to government renewable 
energy incentives. That is where public investment in energy 
development should go.
  It is clear that the clean energy sector is the next frontier in jobs 
creation.
  We need to ensure that developers can access financing to launch 
wind, solar and geothermal projects, so that they can put people to 
work. Programs like The Recovery Act grant program run by the Treasury 
Department have been very successful in encouraging private investment 
in this sector. So far, the program has helped to bring 4,250 megawatts 
of clean power online and is expected to generate more than 143,000 
green jobs by the end of the year, according to the Lawrence Berkeley 
National Laboratory. The program, however, is set to expire at the end 
of year if we don't act. So, I'm working on legislation that will 
extend this successful program for an additional 2 years.
  All told, these types of measures are helping to foster the 
incentives that will push the United States to adopt a cleaner energy 
future, and to move away from fossil fuels.
  Let me make one final point clear, I don't believe the oil companies 
need taxpayer dollars to help them out. They are already reaping record 
profits.
  Last year, the top 10 U.S. oil companies' combined revenues were 
almost $850 billion. Yet we continue to use money that should come to 
the U.S. Treasury, to add to their bottom line. This is unacceptable.
  Oil reserves are a public resource. When a private company profits 
from those public resources, American taxpayers should benefit too.
  I urge my colleagues to support this legislation and ensure that 
royalties owed to the taxpayers are not waived to incentivize risky 
off-shore drilling. In these critical economic times, every cent of the 
people's money should be spent wisely, on clean, efficient and safe 
technologies.
  Mr. President, I ask unanimous consent that the text of the bill be 
printed in the Record.
  There being no objection, the text of the bill was ordered to be 
printed in the Record, as follows:

                                S. 3541

       Be it enacted by the Senate and House of Representatives of 
     the United States of America in Congress assembled,

     SECTION 1. SHORT TITLE.

       This Act may be cited as the ``Deepwater Drilling Royalty 
     Prohibition Act''.

     SEC. 2. PROHIBITION ON ROYALTY INCENTIVES FOR DEEPWATER 
                   DRILLING.

       (a) In General.--Notwithstanding any other provision of 
     law, the Secretary of the Interior shall not issue any oil or 
     gas lease sale under the Outer Continental Shelf Lands Act 
     (43 U.S.C. 1331 et seq.) with royalty-based incentives in any 
     tract located in water depths of 400 meters or more on the 
     outer Continental Shelf.
       (b) Royalty Relief for Deep Water Production.--Section 345 
     of the Energy Policy Act of 2005 (42 U.S.C. 15905) is 
     repealed.
       (c) Royalty Relief.--Section 8(a)(3) of the Outer 
     Continental Shelf Lands Act (43 U.S.C. 1337(a)(3)) is amended 
     by adding at the end the following:
       ``(D) Prohibition.--Notwithstanding subparagraphs (A) 
     through (C) or any other provision of law, the Secretary 
     shall not reduce or eliminate any royalty or net profit share 
     for any lease or unit located in water depths of 400 meters 
     or more on the outer Continental Shelf.''.
       (d) Application.--This section and the amendments made by 
     this section--
       (1) apply beginning with the first lease sale held on or 
     after the date of enactment of this Act for which a final 
     notice of sale has not been published as of that date; and
       (2) do not apply to a lease in effect on the date of 
     enactment of this Act.

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