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Dianne Feinstein & Bill Nelson get tough on Big Oil

Federal subsidies would be reduced for oil companies that conduct spill-prone, deep-water drilling under a pair of bills introduced Monday by U.S. Sen. Dianne Feinstein, D-Calif., and U.S. Sen. Bill Nelson, D-Fla.

Feinstein’s Deepwater Drilling Royalty Relief Prohibition Act ends federal incentives for deep-sea oil and natural gas drilling, barring the Interior Department from waiving royalty payments that oil companies would otherwise pay when drilling in waters deeper than 400 meters.

“The BP spill illustrated just how devastating oil spills in deep water can be. But even though we understand the great risks and lack the technology to drill safely, unwise incentives that push oil companies to drill deeper and deeper remain in place,” Feinstein said in a news release.

“While oil companies continue to collect record profits, the government should not lose out on royalties that could fund clean energy deployment,” she said. “This is especially egregious at a time when federal budgets continue to contract — it’s time to end this practice and collect reasonable royalty payments from large oil companies for exploitation of public resources.”

Feinstein noted five of the largest oil companies — BP, Chevron, ConocoPhillips, ExxonMobil and Shell — made a combined $118 billion in profits in 2012, but the big three American oil companies (ExxonMobil, Chevron and ConocoPhillips) paid effective federal tax rates in 2011 of only 13 percent, 19 percent and 18 percent respectively.

Nelson’s Oil Spill Tax Fairness Act changes the tax code to deny tax deductions for oil spill-related expenses including legal, clean-up and other costs. Current law lets a company responsible for causing an oil spill is also responsible for the cost associated with cleaning that spill up, and Nelson’s bill would keep such a company from them turning around and writing those costs off as a tax deduction.

This bill was spurred by BP’s efforts to write off its clean-up expenses after the 2010 Deepwater Horizon explosion in the Gulf of Mexico created one of the largest oil spills in U.S. history. The legislation would apply to those responsible for an oil spill in U.S. territorial waters, but not to expenses caused by a natural disaster or an act of war.

“Given the record profits of the big oil companies, I don’t think they need any more help from taxpayers,” Nelson said in a news release.

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McNerney’s tax amendment nixed in House

As the House voted 314-112 today to repeal a part of last year’s health care reform requiring businesses to report far more of their business transactions to the Internal Revenue Service, an East Bay lawmaker tried to attach an amendment providing a middle-class tax cut paid for by closing tax loopholes exploited by oil and gas companies.

“As a former small business owner, I know firsthand what it’s like to make ends meet when times are tough,” Rep. Jerry McNerney, D-Pleasanton, said in a news release. “It’s more important than ever now that we provide small businesses with the tools to succeed. I support repealing the 1099 provision, but we can improve the Republican proposal and help middle class families.”

“That’s why I offered an alternative,” he continued. “My amendment repeals the 1099 requirement and also provides a middle class tax cut paid for by closing tax loopholes exploited by big oil and gas companies. Oil companies have earned record profits over the last few years, and it’s just not right for them to take advantage of special loopholes when the middle class is struggling.”

Consideration of McNerney’s amendment was blocked by a vote of 243 to 181; all Bay Area House members – except Jackie Speier, who didn’t vote – voted in favor of considering his amendment.

Last year’s Patient Protection and Affordable Care Act included a provision requiring corporations that aren’t tax-exempt to report to the IRS all payments of $600 or more. This was meant to raise about $21.9 billion more in tax revenue over the next decade, to help pay other parts of the health-care reform bill.

H.R. 4, the Small Business Paperwork Mandate Elimination Act to would repeal the 1099 reporting requirement, was offered by House Republicans. Although Democrats and President Barack Obama agree the provision should be repealed, some opposed this bill because it makes up for the lost money by accelerating repayment of health insurance subsidies for families above certain income thresholds – something they say would hurt working, middle-class families. McNerney was the only Bay Area member to vote for the bill today; all others opposed it except Speier, who didn’t vote.

The U.S. Senate passed its own Democratic-backed version of the repeal last month, and now the two chambers must reconcile their language on the issue before it can move forward.

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AB 32 rollback measure qualifies for Nov. ballot

An initiative funded in large part by two Texas-based oil companies to roll back California’s landmark greenhouse gas emissions law has qualified to appear on November’s ballot, Secretary of State Debra Bowen has just announced.

AB 32, the state’s global warming law, requires that California’s greenhouse-gas emission levels be cut to 1990 levels by 2020, a cut of about 15 percent from current levels; to that end, state authorities are working on formulating a “cap and trade” system in which California businesses would be able to choose between installing new equipment to clean up their emissions or buying emissions credits from those who do.

This “California Jobs Initiative” would suspend AB 32 until California’s unemployment rate – now at 12.6 percent – drops to 5.5 percent or below for four consecutive quarters; the measure’s proponents claim leaving the law in place will cost the state jobs it can’t currently afford to lose, while opponents claim leaving the law in place will actually create jobs in the burgeoning green technology sector.

San Francisco Mayor Gavin Newsom, the Democratic nominee for lieutenant governor, is joining Sierra Club Chairman Carl Pope, San Francisco Baykeeper Executive Director Deb Self, Natural Resources Defense Council Senior Scientist Gina Solomon and Environmental Defense Fund West Coast Political Director Wade Crowfoot for a news conference tomorrow afternoon on San Francisco’s Pier 7 to decry the measure.

They’re holding their event by the Bay to remind voters of the Cosco Busan oil tanker accident of 2007, in which 53,000 gallons of bunker fuel spilled; the measure’s opponents have made much of the fact that oil companies have continued to bankroll this measure even as the Gulf of Mexico oil disaster continues to unfold.

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Global warming ballot battle comes to Oakland

About 50 protestors converged upon a Valero gas station in Oakland’s Uptown section this morning to call attention to a proposed ballot measure backed by oil companies to roll back California’s landmark greenhouse gas emissions law.

Activists from CREDO Action, the Courage Campaign, the Ella Baker Center for Human Rights, the Environmental Defense Fund, the National Resources Defense Council and the Sierra Club were among the crowd, bearing signs with slogans such as “Texas oil $ go home,” “Don’t mess with California, Texas,” “Stop killing the solution to pollution,” and “Clean air now.”

Valero protest 4-22-10 -- photo by Josh Richman

AB 32, the state’s global warming law, requires that California’s greenhouse-gas emission levels be cut to 1990 levels by 2020, a cut of about 15 percent from current levels; to that end, state authorities are working on formulating a “cap and trade” system in which California businesses would be able to choose between installing new equipment to clean up their emissions or buying emissions credits from those who do.

The “California Jobs Initiative” would suspend AB 32 until California’s unemployment rate – now at 12.6 percent – drops to 5.5 percent or below for four consecutive quarters; the measure’s proponents claim leaving the law in place will cost the state jobs it can’t currently afford to lose, while opponents claim leaving the law in place will actually create jobs in the burgeoning green technology sector. The proponents have until July 19 to gather valid signatures from at least 433,971 registered California voters in order to place the measure on November’s ballot.

At least about two thirds of the proposed measure’s major funding so far has come from oil companies, the latest including $300,000 last week from Los Angeles-based Occidental Petroleum Corp. and $100,000 from Texas-based Tesoro. Texas-based Valero put in $500,000 last month, hence the site of today’s protest.

“Most people have not heard about the dirty energy proposition, which is why we wanted to do this on Earth Day,” said Ian Kim, Green-Collar Jobs Campaign Director at the Ella Baker Center, adding California has taken a national lead on addressing global warming and “these Texas oil companies want to take that away to save their bottom line.”

“This is going to be probably one of the most expensive campaigns of the year,” Kim predicted, saying activists will need to aggressively raise money and stage grassroots events such as today’s to counter an advertising blitz by deep-pocketed big oil.

Anita Mangels, spokeswoman for the measure’s proponents, called the protest “absurd,” noting the activists picketed a taxpaying business that employs and serves Californians and already is subject to the nation’s strictest environmental laws. She also e-mailed a statement arguing that AB 32’s implementation will hit low-income communities hardest, as they spend a larger percentage of their household income on gas and utilities, while jeopardizing more than a million jobs without significantly impacting global warming. “That’s the dirtiest secret of all. The organizers of these protests should come clean and admit it.”

More, after the jump…
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Berkeley, Oakland urge oil money transparency

Berkeley City Council last night approved a resolution urging the U.S. Senate to approve S.1700, the “Energy Security Through Transparency Act” by U.S. Sen. Richard Lugar, R-Ind., which would urge the Obama Administration to require that companies disclose payments to foreign governments for oil, gas and mineral rights. Oakland City Council passed a similar resolution last week.

“Good governance in extractive industries contribute to a better domestic investment climate for U.S. businesses, increase the reliability of commodity supplies, promote greater U.S. energy security and thereby strengthen our national security,” says the summary on Lugar’s Web site.

San Francisco-based Justice in Nigeria Now hails the cities’ actions as a moral victory.

“I was tortured and imprisoned by the Nigerian military for my peaceful protests against Shell Oil’s destruction of our land,” Suanu Kingston Bere, a Nigerian activist who spoke at the Berkeley City Council meeting, said in JINN’s news release. “I believe the City’s support sends a strong message that communities in the U.S are concerned about the human rights abuses and environmental damage associated with oil extraction. I do not want to see my people continue to go through what I went through.”

Berkeley’s resolution also calls on the State Department to support third-party peace talks in the Delta to address environmental destruction and lack of investment in the oil producing region. The resolution was co-sponsored by Councilmembers Jesse Arreguin, Darryl Moore and Max Anderson and was introduced to the council through the Berkeley Peace and Justice Commission, which worked with JINN to draft it.

JINN says 50 years of oil exploitation in the Niger Delta has produced over $700 billion in oil revenues shared between the Nigerian government and oil giants like San Ramon-based Chevron as well as Exxon Mobil and Shell. More than 40 percent of Nigeria’s oil is exported to the U.S. Yet despite the corporate oil wealth, local residents’ quality of life has deteriorated – their drinking polluted, their food fisheries poisoned, their access to education, health care and even electricity limited.

“Oil companies in Nigeria have had long a relationship with the notoriously corrupt and historically brutal Nigerian government where rampant corruption, fraudulent elections and violent suppression of peaceful protests are the norm in the Delta,” Nigerian writer and activist Omoyele Sowore said in JINN’s news release. “The proposed ESTT Act in the Senate is an important step toward holding oil companies accountable for their collusion with the Nigerian government, which protects their profits while killing and injuring innocent local people and destroying the Delta’s fragile environment.”