Gulf of Mexico Energy Security Act of 2006 - Motion to Proceed - Continued
GULF OF MEXICO ENERGY SECURITY ACT OF 2006--MOTION TO PROCEED--Continued -- (Senate - July 26, 2006)
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Mr. REED. Mr. President, the Senate today is considering the Gulf of Mexico Energy Security Act. I believe this legislation is not appropriate energy legislation and also not responsible fiscal policy for the United States, as we face a Federal deficit of $8.4 trillion and looming cuts to many vital programs that the Federal Government must support. Next week we will begin to take up the Defense appropriations bill for this year. As we consider that bill, we will discover huge unmet needs to finance the current operations of our military. If we diminish the Federal Treasury, our ability to respond to that issue and a host of other issues will be contemporaneously diminished.
This legislation would mandate that almost 38 percent of revenue from Federal resources generated by new leases in new areas of production made available by this bill will be given to four Gulf Coast States. Revenues that currently would be provided to the Treasury for the benefit of the Nation as a whole will be diverted to four States. This bill, if passed, will cost the Federal Treasury billions of dollars over time. I am not alone in my opposition to this legislation. Taxpayer advocates and environmentalists share my concerns. I ask unanimous consent that the text of several letters be printed in the RECORD expressing these concerns.
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Mr. REED. In 1952, President Truman, speaking about proposals to give coastal States Federal offshore oil and gas revenue said:
If we back down on our determination to hold these rights for all the people, we will act to rob them of this great national asset. That is just what the oil lobby wants. They want us to turn the vast treasure over to a handful of States where the powerful private oil interests hope to exploit it to suit themselves.
Those sentiments are not far off from today. In 1953, Congress enacted the Submerged Land Act. This law provided that each coastal State would have a seaward boundary of at least 3 miles and that the Federal Government would relinquish to the States the interests of the United States in lands beneath the navigable waters within the State boundaries. Importantly, the law affirmed the Federal Government's ownership in lands seaward of the State boundary. Revenues from Outer Continental Shelf drilling belong to the American people in all 50 States. The legislation the Senate is considering today violates this pact with the American people, and it denies the Federal Treasury and the American people essential revenue to address the needs of our Nation.
Again, to quote President Truman, since his comments still ring true today:
I can see how Members of Congress from [affected areas] might like to have all the offshore oil for their States. But I certainly can't understand how Members of Congress from the other 45 States can vote to give away the interest the people of their own States have in this tremendous asset. It is just over my head and beyond me how any interior Senator or Congressman could vote to give that asset away. I am still puzzled about it. As far as I am concerned, I intend to stand up and fight to protect the people's interest in this matter.
Proponents of this bill argue that their coastal States deserve to share in the Federal revenues because they have tremendous costs and environmental challenges arising from energy development and production that benefits the whole Nation. They argue, with some validity, that they bear costs, although the benefits are shared by the entire Nation. I acknowledge that. I fully acknowledge that energy development is harming our coastal zones, leading to habitat loss and erosion. For this reason, in 2001 Congress authorized a coastal impact assistance program that provided Federal funding to States and local communities for mitigating the impacts of OCS oil and gas development and production. It is also the reason why I supported an amendment to the Energy Policy Act of 2005 that mandated $1 billion over 4 years in direct Federal spending to gulf coast States and other producing States for the purposes of remediating environmental problems caused by the extraction and production of energy. That is the right approach, to appropriate Federal resources, directed to help States address a problem that is caused in large part by production activity.
What I object to is a permanent entitlement that does not state specific eligible uses to mitigate the environmental harm of OCS production. For example, the bill before us today would allow the States to decide to fund a category described as ``mitigation of the impacts of Outer Continental Shelf activities through the funding of onshore infrastructure projects.'' This could cover any appropriate bricks and mortar project in any State along the gulf coast, from schools to highways to community centers, all of which I think could and would be legitimately argued by a State official as somehow mitigating the impacts of outer Continental Shelf activities.
So in a sense what we have opened up here is a general revenue sharing, not a targeted approach to mitigating the specific harms caused by the extraction and production of petroleum and natural gas products.
Nothing in this bill requires the States and communities to report back to taxpayers and the Federal Government how the funds are being used. I don't think there is any appropriate mechanism of routine reporting. I suppose that if you objected to a particular project, you might sue in Federal Court saying they violated the act, but that is hardly an appropriate and routine and rational way to ensure that the spending is appropriate.
Again, reading the very general language in the bill, I would think that you could make a case that a school, community center, and a range of other projects would be infrastructure that would mitigate in some way the broad effects of production of energy in these States. An argument may be made that a vote against the bill is a vote against the communities and people harmed by Hurricanes Katrina and Rita. I don't think that is true. This debate has to be about responsible national energy and responsible fiscal policy.
We in this body have voted to provide $123 billion to help the gulf coast recover. That money, because of our difficult financial situation, is literally being borrowed. The interest on that debt and the principal of that debt will be paid by all Americans. It is an example of why we need Federal resources in difficult times, because there will be other occasions where other Americans will see the same kind of suffering, the same kind of destruction that was visited upon the gulf coast, and we as a Congress have to be able to stand up, not just with words but resources, to help these people. As we diminish the Federal resources by a very narrow revenue-sharing plan for four States, we diminish our capacity to respond.
We have also directed and voted recently for a $2 billion authorization for Louisiana's coastal restoration program as part of the Water Resources Development Act. If more money is necessary to restore the gulf coast, then more money should be provided, and that is not the sentiment of just the people who live there, that is the sentiment of the American people because, frankly, if any part of our country was similarly devastated, we would all be here asking our friends and colleagues to help us, and I think they would respond. What they may not be able to do, if we pass this bill, is respond with the same kind of financial clout because we will have already given Federal resources for the benefit of only four states.
There are other aspects of funding that inure to the benefit of these coastal communities. Section 8(g) of the Outer Continental Shelf Lands Act provides coastal States with a share of the revenues received by the Federal Government from leases on Federal tracts that are adjacent to and within 3 miles of a State's seaward boundary. That is a specialized source of revenue which goes to coastal States. Between 1986 and 2003, Alabama, Louisiana, Mississippi, and Texas received nearly $2 billion in revenues from the Federal Government under section 8(g). This funding is precisely the type of funding that could be used to mitigate the impacts of OCS production.
Further, the Coastal Zone Management Act's ``Federal consistency'' provision ensures that Federal actions, such as OCS leases for energy production, that are likely to affect any land or water use or natural resources of the coastal zone must be consistent with a coastal State's approved coastal zone management programs. That means that if Gulf Coast States put into place strong coastal zone management plans to protect against erosion and the loss of wetlands and environmental complications, the law would require a Federal OCS lease to be consistent with these plans and make these States less vulnerable to storms. So not only is this an issue of funding, it is an issue of States taking action to ensure that they have strong environmental protections, and these plans, in turn, according to the law, will be imposed upon the OCS leases.
Now, we understand that energy production is a burden to the States, but it is also, in many situations, an economic benefit to these very same States.
The oil and gas industry is central to Louisiana's economy, with an estimated $93 billion impact in 2001. Over $1.3 billion worth of oil and gas is produced annually in Alabama. The State receives direct benefits of approximately $285 million annually in the form of lease bonuses, royalties, trust fund investments, and severance taxes. In 2005, Texas petroleum and coal were valued at $8.89 billion. All of these revenues provide a strong and powerful force of economic progress for all of these communities. I daresay that, as much as a burden is imposed, there would be great reluctance for any of these States to try to curtail this economic production because it benefits the community.
Now, what is also troubling about the legislation is not only the fiscal implications, but also it is proposing a permanent entitlement that is unnecessary to generate new domestic natural gas and oil supplies. There are over 40 million acres of Federal Outer Continental Shelf under lease, but the oil and gas industry is sitting on over 33 million acres of undeveloped leases. They have less than 7 million acres in production, and there is 328 trillion cubic feet of recoverable natural gas in the nonmoratoria areas.
The United States consumes 25 percent of the world's energy, and yet we have less than 3 percent of the world's oil supplies. We cannot drill our way to energy security; yet this bill essentially provides only one way forward--to drill in the Gulf of Mexico. We deserve an energy bill that will reduce our dependency on fossil fuels and strengthen our economy.
On July 20, I joined 40 of my colleagues in sending a letter to the majority leader asking that we consider energy legislation that sets national goals to reduce our overall national dependence on petroleum by increasing fuel efficiency and alternative vehicle technologies, that protects Americans from price-gouging and market manipulation, and that levels the playing field for new renewable and energy efficiency technology and, more specifically to this debate we are having, ensures that new energy proposals that affect spending or revenues must be fiscally responsible and take into account the true long-term impact of these proposals. That is not the bill we are considering today.
I am left wondering why, as the Senate finally takes up energy legislation, we are not debating and voting on a bill to increase fuel efficiency in cars and trucks. Why are we not voting on oil savings provisions? Where are the provisions in our energy legislation to protect consumers from price-gouging or restore lost royalties to the Federal Treasury from oil and natural gas companies making record profits? Where is the mandated Federal funding dedicated to fully funding energy efficiency and renewable energy?
I hope the Senate will get to vote on an increase in fuel efficiency standards. Gasoline consumption in the transportation sector represents about 44 percent of total oil consumption in the United States each year. Including diesel fuel, the number jumps to 57 percent. To bring about any serious reduction in our dependence on foreign oil, we must increase the fuel efficiency of our cars and light trucks, as well as promote the use of hybrids and vehicles that use alternative fuels.
I also hope we will have a chance to amend this bill. I hope we have a chance to have a debate on an energy bill that will include not only supply-side considerations but also demand-side considerations. All of this legislation is important to consider, but I fear we will be constrained to this bill.
Finally, I am concerned that whatever we do in the Senate would open up a conference with the other body. Their legislation, H.R. 4761, the Deep Ocean Energy Resources Act, would lift the moratorium on offshore drilling for all of our coastlines, not just the gulf coast. I believe this would be a serious step, putting in jeopardy fisheries and marine sanctuaries, further depleting the Treasury, further eroding States' current positions with respect to drilling, and undermining environmental mitigation for energy development and production. My Rhode Island coastline, like the coastline of every State, is something we want to preserve and protect, and there is a fear that if the House version prevails, these coastlines will be jeopardized.
We are in a situation where we have a burgeoning energy crisis. We just have to go to the gasoline pump to figure that one out. This burgeoning energy crisis impacts our foreign relations. We have scores of troops across the globe today because of our dependency on oil. But this should not be the occasion to entertain legislation that is unwise in terms of energy policy and potentially very damaging to the fiscal integrity of the United States.
Before we open new lands to development, we need to ensure that the oil and gas industries are putting undeveloped leases into production, and we need to take meaningful action to reduce our consumption and increase renewable energy supplies. We need to be more independent with respect to energy, reduce our consumption of fossil fuels overall. This is an energy policy which we should pursue, and as a fiscal policy, we have to maintain Federal resources for Federal responsibilities.
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