Energy Policy:

Sen. Mary Landrieu discusses OCS drilling, coastal conservation, energy bill

Should states be allowed to decide whether to drill for oil and gas off their own coasts? How much drilling revenue should go to states? And how much to coastal conservation? Joining OnPoint is Democratic Sen. Mary Landrieu of Louisiana, a major oil and gas producing state, to talk about expanding offshore drilling, the states' role in it, the energy bill and the search for a Senate compromise to avoid the "nuclear option."

Transcript

Colin Sullivan: Hello and welcome back to OnPoint. I'm Colin Sullivan. Our guest today is Senator Mary Landrieu, Democrat from Louisiana and a key player on the Senate Energy Committee. Also with us is Mary O'Driscoll, senior energy reporter for E&E Daily and Greenwire. Senator thank you for being here.

Mary Landrieu: Thank you Colin.

Colin Sullivan: Let's start out really fast with the energy bill. Right now we're in the middle of the markup process in the Senate. We're surprised to see that Chairman Domenici's draft bill does not include outer continental shelf drilling language. Were you surprised to see that and what are your efforts going to be going forward to get that language in the bill?

Mary Landrieu: Well, the good news is Senator Domenici is well aware of the contributions that Louisiana and the Gulf Coast states make to energy. In fact, we've generated $145 billion in taxes, royalties and revenues to the federal government on the drilling off of our coast. And in fact, if it wasn't for Louisiana, Texas, Mississippi and Alabama there would virtually be no source of oil and gas coming from the outer continental shelf because our states serve as platforms. So while it's not in the mark, mostly because of Senator Bingaman's objections, which I think are unfounded, but Senator Domenici is well aware of the contribution and will be supporting an amendment to this week to help us to capture some of those revenues, which would put us in par, or on par, with the interior states of which theirs is one, New Mexico, Wyoming, Colorado or interior states that have drilling on their, in their states on federal land. They get to share 50 percent of those revenues. So Senator Domenici is a new fan, if you will, and a great supporter and he's a great leader on this issue and I have confidence of his support --

Colin Sullivan: Now are you bringing up this amendment and what specifically will it say?

Mary Landrieu: Yes. The amendment will be brought up on Wednesday when we take the offshore oil and gas provisions of the oil and gas provision and it will divide those revenues 50 percent by the traditional states that produce as well as give the option for any new state that wants to produce. You understand, the state of the Virginia has recently expressed an interest, while some states like Florida and California are still very opposed, and others, to drilling off their shore. There's states like Virginia that are recognizing that this outer continental shelf, which is a band of land basically 200 miles wide around the whole continent, that represents 1.67 billion acres of new frontier, could hold tremendous opportunity for jobs, for wealth, for prosperity, for national security. So states like Virginia under the leadership of one of the local state senators, I think Frank Wagner, is saying, "Why not keep taxes low in Virginia? Why not take some of this money and invest in our environment and build a partnership to explore opportunities on that outer continental shelf?" Now we've been doing that a long time in Louisiana, so we're going to give options to other states.

Mary O'Driscoll: Is this how you plan to address the OCS moratoria? Instead of, there were a couple of prescriptive ways that in your legislation and in Senator Alexander's legislation to lift the moratoria off the outer continental shelf. So this is the way you will address it in the bill then?

Mary Landrieu: Well basically, we want to be, and I want to be, very respectful of states that do not want drilling off their coasts. But I do want to leave an option and I think it's in the benefit of the entire country to leave an option open for states that might want to drill off their shore, not only for what benefits it could bring to their states, but the contribution it could make to energy independence. We want to be less dependent on Mideast oil, less dependent on oil from places that are arguably unstable, Venezuela for instance, less dependent on oil from African nations that have very minimal and really suspect environmental rules and regulations. So by drilling right here at home where we can protect and preserve the environment, where we have the strictest environmental regulations in the world, where last year Shell Oil said, "All the oil spill on offshore oil platforms could fit in one barrel, because our technology has improved." I think it's smart and balanced energy policy to drill right here off the continental shelf. So that's what we want to do and that's what the amendment will provide, but again, not forcing any state, but giving an option.

Mary O'Driscoll: I think it's an interesting juxtaposition where you, what you would like to do is allow the states to make a decision on lifting the moratoria off in their waters, yet at the same time, the Congress really seems to be focusing on the LNG licensing, LNG import terminal licensing aspect, to taking away some of the state prerogatives in that. So that what you're giving states with one hand, you're pretty much taking away with the other.

Mary Landrieu: Well, I'm going to express some reservations about that tomorrow. Our governor has gone on record, and I think rightly so, saying that we want to be very cautious and very careful before we provide any more permits to LNG facilities that would require an open loop system. There is some real question as to whether it affects the fisheries and the integrity of marine life in the Gulf of Mexico. Now that word from our governor should signal, should be a strong signal to the industry, because we are a friendly state to the oil and gas industry. We want to produce more energy for the nation. We think it's the patriotic thing to do and frankly, we think that states should be called on the carpet for only wanting to consume and not wanting to produce, but that's an argument for another day. Louisiana produces, not only everything we consume, but we also have a great industrial base that we provide energy for, but the citing of liquefied natural gas terminals, I think we have to be very careful before we supersede state's rights in that regard until we're sure of the environmental impacts.

Colin Sullivan: Isn't the reality though that OCS language, especially in the House, is a non-starter. There was a vote last week that would have applied only to the natural gas development within the Interior appropriations bill. I mean isn't OCS a dead issue, given strong opposition from coastal lawmakers in California and Florida especially? It's a pretty strong coalition.

Mary Landrieu: I don't think so. I don't think it's a dead issue. I think with Americans dying in Iraq, I think with the growing fear of the American people of being energy dependent on the Mideast, I think with the need for more domestic production, that as Americans learn the truth and get away from the propaganda and the rhetoric, this is not your grandfather's oil industry. This resembles more like the space program, you know, then the old-fashioned gushers that you would see in the grainy 1940 or 1950 films when, you know, the rigs blow out and black gold spills everywhere. I mean this industry really resembles the space industry. It's highly computerized, highly driven by technology, there's some extraordinary science that's being discovered and it is safe and clean for the environment. In fact, we laugh in Louisiana, the best fishing we have is around the rigs. Now in my amendment it'll be local option only, there'll be a view shed of 20 miles so there'll be no visual aesthetic issues, because I am aware that there's more sunbathing on the beaches of Florida than there would be in Louisiana, although we love our beaches and our marsh land. There's a lot of fishing, boating, recreation and general swimming, but I don't think its dead. I think it's a matter of education. This issue is getting a lot more attention now than it did 10 years ago because people are waking up to the truth.

Colin Sullivan: You brought up your beaches, Louisiana coastal restoration is also a big issue. Can you talk about why it's so vital to you to bring in your, you're basically asking for billions of dollars of federal money to come in and restore Louisiana's coastline. Where do you think that money should come from first of all and secondly, why is that important?

Mary Landrieu: Well first of all, we believe that we are producing for the federal government, not believe, we know, that we have produced billions and billions dollars for the American taxpayer and every taxpayer in America has been benefited by the fact that four states have stepped up to the plate to drill, Texas, Louisiana, Mississippi and Alabama. And because we have said, "Yes, you can drill off of our shore," taxes have been kept low, highways have been built, the redwood forests have been saved, the Chesapeake is being saved, the Everglades is being improved, so finally the people of Louisiana said, "Hello? How about us? Could we get a portion of that money that we have been sending to you year after year, $5 billion, $6 billion?" The industry would not exist if Texas, Louisiana, Mississippi and Alabama didn't allow it. So No. 1, it's not the federal government's money. We think that at least half of it's ours, we'd like it back. We'd like some of it back to restore our coast, because we have a $14 billion price tag to restore our coast, not caused by the energy industry, but caused by the fact that the Mississippi River was levied years ago to provide commercial shipping for the whole nation. In addition we are at the end of the drain, if you don't mind me saying, we're at the end of the floodplain, so we drain two thirds of the continental United States. As a result, those levies have to be tight so that all of Louisiana's not flooded. As a result, we aren't building up our marsh. So we think the money is ours. We deserve it and it's not Louisiana's wetlands, it's America's wetlands.

Colin Sullivan: I have one more question. I know that Mary's anxious to move onto electricity, but one more question. The freshman senator from Louisiana, David Vitter, brought up some language in the Water Resources Development Act reauthorization that would essentially allow logging of some cypress. Controversial language is that governors are against it, some environmentalists are against it. A lot of people in Louisiana are saying, "This is putting coastal restoration dollars at risk." Are you against the language? Should it be removed from WRDA and are you in the process of talking with Senator Vitter to do something about that language?

Mary Landrieu: Well first of all, I don't if that particularly language puts our coastal dollars at risk and secondly, I'd like to say that the efforts to put money in WRDA started well before Senator Vitter got into the Senate. It was started really by Billy Tauzin, in the House, and myself several years ago to build a new section of that bill, sort of an authorization section for coastal. Senator Vitter's position on that committee really enhances that and is going to enable us to really secure it. I am aware of the provision that he put in. I don't necessarily agree with it. I understand that he's considering a modification of that language to make sure that we give people the right to remove logs from their private property. You know, lots of places in Louisiana the backyards back up to a bayou or a lake or a river or a stream and we don't want to prevent people from having access to their private property when its non-navigable waters. But I think what I'm hearing from environmentalists and others, that perhaps his original amendment reached too far and I'm sure he'll be willing to modify it or I would hope so.

Mary O'Driscoll: OK. I wanted to change the subject a little bit or I guess a lot really and talk about back to the energy bill and the electricity title, which traditionally is always a very hard fought and controversial portion of the energy bill, a little bit less so this year because I think over the past couple of years that a lot of this debate has kind of run its course. Yet, you're still running into problems in the committee trying to find out a way to repeal the Public Utility Holding Company Act, yet satisfy the needs of some of your fellow committee members who want to see the Federal Energy Regulatory Commission be able to protect consumers or to be able to have oversight of the industry. So there's a real tug-of-war here. I know that you are a cosponsor of a bill that takes FERC out of, you know, out of merger approval altogether, which seems to kind of go in the other direction from where they want to go. Where are you on this whole debate? I mean, would you like, you'd like to see PUCCA repealed, I know that's your position, but where are you on providing extra authority for FERC to be able to oversee mergers when you've cosponsored a bill that would take them out of that altogether?

Mary Landrieu: Well generally, maybe it would be helpful if I answer in a general question about whether it should be state, regional or federal. I support more of a regional approach, I think, and as a transition between a generally state-by-state regulatory scheme that we've had for so many years and then not exactly a complete federal takeover, because as you know, energy rates, utility companies, where the power lines went, how much was generated, who got access to what was regulated by 50 different states when energy markets were a monopoly and greatly regulated. Now, as we're trying to slowly move to deregulation, now Enron set us back a decade or more with the debacle and fraud that went on in that company, but still the concept of more deregulation in the right way, region by region, is something that I most certainly support and are trying to move to.

Mary O'Driscoll: OK.

Mary Landrieu: Now in doing that FERC has some role to play, but again, it's going to take a while for us to move to this new system. You know, America was greatly blessed by having the monopoly that we had, take gave power to anyone, whether you were 100 miles out in the woods and you were the only house, you had a wire brought to your home for electricity and we lit up America. I mean there's still places in this world where millions and millions of people are without electricity. So we can be happy with the system we had, but in 2005 it's, you know, we need change, we need update and modernization. It's very difficult though because you've got all sorts of regional fights going on so it's gonna take some working.

Mary O'Driscoll: Your part of the country, in the South, is particularly opposed to what FERC has been trying to do with the regional markets and that kind of thing. Do you see a lot of this going away once FERC Chairman Pat Wood leaves the commission at the end of next month? I mean will these concerns go away at that time or are you still going to be worried about FERC and its attempts to try to form these markets around the country?

Mary Landrieu: Well no doubt his has been a controversial, you know, term, but I also think he's had some very good ideas about some things in terms of deregulation. Now I think they should have stepped in more on the Enron situation, which we talked about, I thought Maria Cantwell had an excellent amendment. When there is fraud, when there's criminal activity, when it's not just the regular market adjusting, but scandal associated or rigging, if you will, of the market then FERC should step in so that ratepayers and taxpayers are protected. So it's going to be a very difficult issue to maneuver, but I'll say, if anybody can do it, Pete Domenici can. He is a very skilled legislator, very skilled negotiator. He's mindful of the different regions and we don't think the electricity title is ultimately going to hold this bill up.

Mary O'Driscoll: OK.

Colin Sullivan: Another bill you introduced with Senator Alexander is the Americans Outdoors Act, which would devote almost $1.4 billion to federal conservation efforts. Now Chairman Pombo, over in the House, is adamantly opposed to that language. It's very similar to something that, you know, was around a couple years ago called the Conservation and Reinvestment Act, kind of a smaller version of that bill. What makes you think it's time for this bill to move forward? Are you talking with the House side? Do you think there's any way Pombo's going to be able to accept some sort of bill along those lines?

Mary Landrieu: Well first about, there's a great deal of support in the House, set apart from the chairman that you just mentioned, to invest some of that money, particularly in the preservation of wildlife, in a trust fund to help governors with the state side of land and water conservation. There's a support to invest some of those funds in urban parks, but primarily, as Lamar Alexander said, he and I feel very strongly and are convinced that there is the conservation majority in this country and they, a majority of Republicans and a majority of Democrats, would like this Congress to get out of the margins and the edges and invest some of those dollars into quality of life issues to create parks and green space and open space and bike trails and walking trails. I can't tell you the number of Americans that talk with me about it, people from Louisiana, the polls that I've seen. So any congressmen or senators that are not advocating to take a portion of those taxes already paid that we're getting from our minerals and our natural resources and investing them back, I think is out of step with the American public and out of step with their own district.

Colin Sullivan: Does Domenici support your bill?

Mary Landrieu: Yes, he does. Well he supports the general concept of a conservation royalty, but he's not committed to a certain number or to the certain programs. I think he generally understands the, you know, the worthiness if you will of that kind of concept. I mean you can't keep taking. I don't know why Congress doesn't understand this. The American people understand it. You just can't keep taking from nature and not give something back. These natural resources are going to run out. They're finite. One day the gas is going to be gone. The oil is going to be gone. I don't care how advanced technology is, it's a finite resource. So we want to make sure that we're not just taking and giving a portion, the argument may be whether we want to support federal side or state side of land and water.

Mary O'Driscoll: OK. I wanted to get to kind of the big picture of the energy bill about oil and oil prices and that kind of thing. The committees incorporated a proposal into the draft bill that mirrors what you proposed a couple of years ago, that directs the president to take actions that would reduce oil demand by, I guess, it's a billion barrels a day? How precisely would that happen? I mean is there anything ironclad in this or is this just something that kind of makes you feel a little bit better knowing that maybe we'd like to try to reduce our oil consumption?

Mary Landrieu: Well first of all, no. It's a serious amendment with serious ramifications and conservation results because it's not a "if you might", "would you try", it's a direct. So we've got to save a million barrels a day and it directs the president to look at all the ways in the United States that that could be accomplished, maybe it's through transportation sector, maybe it's through the refining sector, maybe it's through the electricity generation sector, but it doesn't direct those savings to be achieved, let's say, with, by Senator Feinstein's proposal through regulating the miles that cars can, have to get per gallon. I find that very prescriptive and I also find it harmful, if you will, to our domestic automakers. Now others will disagree, but my amendment, and Senator Alexander and I sponsored this as a compromise between doing CAFTA and doing nothing. We said, "Let's save a billion dollars, but let's not say you've got to do it by adjusting the miles per gallon per vehicle. Let's just give the president flexibility." So by giving flexibility, but tight timelines and tight goals we expect there'll be conservation. Which brings me Mary to this overall theme of the bill, is to be more balanced, to produce more oil and gas and coal and nuclear and alternative fuels and then to save as much as we can in all sectors and to help this country become more energy literate. I think it's very hard to explain to Americans where electricity comes from. You know, you just don't snap your fingers and it appears. I mean you've got to produce it in some way and the demand for it is growing exponentially.

Colin Sullivan: We're just about out of time, but I wanted to ask you one last issue. There's a big fight brewing this week over judicial nominations. Now if Senator Frist is able to put the nuclear option through, does that put you in an awkward position if then the minority leader, Harry Reid, does as promised and stalls everything on the Senate floor? If he comes out says, "OK, we're going to block the energy bill." Will you go along with your party or will you say, "No, the energy bill's too important, not gonna do that"?

Mary Landrieu: Well first of all, Senator Reid is not going to say, "We're going to block the energy bill." What's going to happen is if the Republicans insist on taking away a 214 year tradition of the minority to get their voice heard on any number of issues then Harry Reid will slow the Senate down and everything will be slowed down except things relative to appropriations and national defense and I support slowing things down. We're going to continue to get as much other business as we can get done, because we are spending a billion dollars a week in Iraq, writing a constitution that guarantees the rights of minorities in Iraq, meanwhile the same leadership is taking away the rights of the minority right here in America. It is unconstitutional. It is against the, not unconstitutional, but it is against the framer, the intent of the framers of the Constitution and in the long run it will be a great violation of the principles of democracy.

Colin Sullivan: OK. Senator Landreiu thanks for coming. I hope you come back.

Mary Landrieu: Thank you.

Colin Sullivan: Join us tomorrow for another edition of OnPoint. Until then, I'm Colin Sullivan for E&ETV.

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