Press Releases

Washington, DC – In response to the Deepwater Horizon oil spill disaster, U.S. Senator Dianne Feinstein (D-Calif.) has introduced a measure to end federal incentives for deep sea oil and natural gas drilling.

Specifically, the legislation would repeal mandatory and discretionary royalty-based incentives for all future leases to drill in federal waters at depths of 400 meters or more.

“The BP spill catastrophe in the Gulf of Mexico proves that offshore drilling in deep waters is extremely risky and that safety, prevention and response technologies are totally insufficient,” Senator Feinstein said. “Yet energy companies have long benefitted from federal incentives that encourage drilling at increasingly greater and greater depths. This to me makes no sense.  I believe that taxpayer-funded incentives should go to the development of clean, renewable energy sources like wind, solar, geothermal and advanced biofuels, rather than the dirty business of deepwater drilling – particularly in these tough budgetary times when every dollar counts.”


Over the past few decades, Congress has established a number of royalty-relief programs to encourage domestic exploration and production in deep waters.  

For example, in 1995, Congress passed the Deep Water Royalty Relief Act, which granted a royalty “holiday” to oil and gas companies drilling in deep waters for leases sold between 1996 and 2000. The measure reduced the amount of royalties that companies had to pay for drilling in American waters in the Gulf of Mexico.  

In 2005, Congress passed the Energy Policy Act of 2005, which mandated royalty relief for wells in waters deeper than 400 meters.  These provisions were intended as an incentive to get petroleum companies to drill for oil and natural gas in the deepest waters of the United States.

A 2009 study released by the Environmental Law Institute, a nonpartisan research and policy organization, shows that the federal government has provided substantially larger subsidies to fossil fuels than to renewable energy. Subsidies to fossil fuels totaled approximately $72 billion over the seven-year study period (2002-2008), while subsidies for renewable energy totaled $12 billion over the same period, when corn ethanol subsidies are excluded.