[Congressional Record Volume 157, Number 23 (Monday, February 14, 2011)]
[Senate]
[Pages S685-S686]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

      By Mrs. FEINSTEIN (for herself and Mr. Nelson of Florida):
  S. 338. 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 Relief 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 two 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. It may have made sense before we were ready 
to deploy large scale renewable energy production.
  But it no longer makes sense today.
  The Deepwater Horizon catastrophe showed that safety and response 
technologies are not sufficient in deep waters. The President's 
National Oil Spill Commission pointed out that while offshore oil and 
gas will remain part of the nation's energy portfolio for years to 
come, we need to ``begin a transition to a cleaner, more energy-
efficient future.'' I agree.
  I believe that taxpayer-funded incentives should go to clean, 
renewable energy, not deepwater oil drilling. It's time that we roll-
back incentives for the riskiest, least environmentally friendly non-
renewable energy production.
  The disastrous impacts of the Deepwater Horizon explosion illustrate 
the enormous environmental and safety risks of offshore drilling--
particularly in deep waters. 11 people died and 17 others were injured 
when the Deepwater Horizon caught fire. Oil and gas rushed into the 
Gulf of Mexico for 87 days before the well was finally plugged. The 
scope of the disaster was tremendous.
  Oil slicks spread across the Gulf of Mexico, pelicans and other 
wildlife struggled to free themselves from crude oil, tar balls spoiled 
the pristine white sand beaches of Florida, wetlands were coated with 
toxic sludge, more than \1/3\ of Federal waters in the Gulf were closed 
to fishing, and oyster beds could take years to recover, the plumes of 
underwater oil may have created zones of toxicity or low oxygen for 
aquatic life, and the response techniques, such as the use of 
dispersants, may have their own toxic consequences to both wildlife and 
the spill response workers.
  The impacts of an oil spill are so dramatic and devastating, it seems 
clear to me that this is not an area in which we should be subsidizing 
development.
  Things have not improved much since the oil spill in 1969 off the 
California Coast near Santa Barbara. Like the Deepwater Horizon 
disaster, the Santa Barbara spill 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.
  Technology 40 years ago was not good enough to prevent a disaster. We 
discovered last summer that today's technology is no better at 
preventing well-head blowouts.
  The Deepwater Horizon drill rig was less than 10 years old when it 
exploded. A similar accident 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 even newer, designed and built in 2007. That spill 
continued unchecked for 74 days.
  The failures that led to these catastrophes were human and 
technological. While measures are being put in place to remedy these 
deficiencies, the risks remain high and the potential damage immense. 
In deep waters, the risks are higher and the scope of the damage even 
greater.
  Drilling in deep waters is not the type of activity that tax-payer 
dollars should subsidize.
  Drilling in deep water presents even more challenges than drilling in 
shallow water or on shore. This was demonstrated during the Deepwater 
Horizon disaster.
  Methane hydrate crystals form when methane gas mixes with pressurized 
cold ocean waters--and the likelihood of these crystals forming 
increases dramatically at a depth of about 400 meters.
  These crystals interfere with response and containment technologies. 
They formed in the cofferdam dome that was lowered onto the gushing oil 
in the Gulf, which failed to stop the oil in the early days of the 
spill. And 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.
  In order to drill at deeper depths, many technical difficulties must 
be overcome.
  The ocean currents on the surface and in the water column exert 
torque pressure on the pipes and cables, which are longer and heavier.
  The water temperature decreases closer to the sea floor, but the 
earth's core temperature increases the deeper the well--sometimes 
reaching temperatures in excess of 350 degrees Fahrenheit.
  The ocean pressure increases dramatically at depth, but the pressure 
in a well can exceed 10,000 pounds per square inch.
  Drills must be able to pass through tar and salts, and the well bores 
must remain intact.
  The volume of drilling mud and fluids is greater, the weight of the 
cables heavier, and many technical procedures can only be accomplished 
with the use of remotely operated vehicles thousands of feet below the 
surface.

[[Page S686]]

  American taxpayers should not forego revenue in order to incentivize 
offshore drilling. It is not good environmental policy, and it's not 
good energy policy either.
  We need to move to cleaner 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. Instead, incentives should be used to develop 
and deploy clean energy technologies like wind and solar.
  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 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. In 2009, the 
United States added more new capacity to produce renewable electricity 
than it did to produce electricity from natural gas, oil, and coal 
combined. 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 Treasury Grant Program have been very successful in 
encouraging private investment in this sector. So far, the program has 
helped to bring more than 1,880 renewable energy projects online.
  The program, however, is set to expire at the end of this year if we 
don't act. I'm working on legislation that will extend and expand this 
successful program.
  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 very clear: I don't believe oil companies 
need taxpayer dollars to help them out. They are already reaping record 
profits.
  In 2009, the top 10 U.S. oil companies' combined revenues were almost 
$850 billion. And while all results are not yet in on 2010, it is clear 
that oil companies did even better last year.
  Exxon Mobil reported $30 billion in profit, up 57 percent from 2009.
  Shell reported $19 billion in profit, up 90 percent from 2009.
  Conoco Phillips raked in $11.4 billion in profit during 2010, a 
whopping 159 percent increase over its 2009 profits.
  Yet we continue to use taxpayer dollars 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 also benefit.
  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.
  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. 338

       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 
     Relief 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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