Energy Policy

California Rep. Lois Capps talks offshore drilling, natural gas, MTBE and more ...

The House-passed energy bill covers a lot of bases. Many of them are controversial -- from who decides where to put LNG terminals to protecting MTBE makers from legal liability. In this OnPoint interview ... E&E Daily's Mary O'Driscoll and moderator Colin Sullivan ask House Energy and Commerce Committee member Lois Capps (D-Calif.) about the energy bill and what the Democrats hope to change as it moves through Congress.


Colin Sullivan: Welcome to OnPoint. I'm Colin Sullivan. With us today is Representative Lois Capps, Democrat from California who sits on the House Energy and Commerce Committee, and Mary O'Driscoll, senior energy reporter for E&E Daily and Greenwire. Representative Capps, thank you for being here.

Rep. Lois Capps: Thank you.

Colin Sullivan: You've been very involved in the energy bill process in the House of Representatives, and you've been one of the foremost opponents of offshore drilling language. Senator Lamar Alexander has a bill in the Senate that would essentially cede to states the right to determine whether or not you want to drill off your own shore. Do you think that's a good idea, a bad idea?

Rep. Lois Capps: That tips the whole issue on its head. You know, we've had all kinds of moratoria against drilling in the outer continental shelf, and this is something that has now been a legacy of George Bush, the first President Bush, and President Clinton, and the current president have all supported it. Congress has in a bicameral, bipartisan way, has supported a moratorium, and I think it's one that we want to continue.

Colin Sullivan: So you think it's -- why not give California the right to say, "OK, we don't want to drill off our coast, and if Virginia wants to drill off its coast, give them the right to do that." Why is that a bad idea?

Rep. Lois Capps: Because it's international waters we're talking about. It's federal waters we're talking about, and it's something that we need to do to protect our interests around the entire coastline.

Colin Sullivan: So we should keep the authority with the federal authorities.

Rep. Lois Capps: I believe so.

Colin Sullivan: Now, on liquefied natural gas, would you argue the same thing? Because there's some sort of contradictory language that would give federal authorities more authority over siting LNG facilities. I know you oppose an LNG facility off the coast of California in Long Beach. Do you think that's a bad idea?

Rep. Lois Capps: I'm not saying we oppose it. We want, in this case where the impact is so local, we want the local communities and the states to have a say in it. There's still a lot of deciding that goes on by the federal government, but I'm objecting to the weakening of the provisions in this energy bill that take away the opportunities for my constituents and for the state to have a say in where the site will be, not necessarily whether to have one or not in the state. California wants more energy and needs more energy.

Mary O'Driscoll: Well, I'd like to kind of explore that a little bit, this whole LNG fight; because it all started with California, with California wanting some oversight of the proposed LNG facility in Long Beach. What is the problem with having FERC, giving FERC the ultimate say over whether an LNG facility is built or not? I mean isn't that encoded in the Natural Gas Act already? Isn't that already part of federal law, and that the states get some advisory authority through the Coastal Zone Management Act and through, you know, any local provisions, but that the ultimate decision actually does rest with FERC.

Rep. Lois Capps: And here's where my background as a nurse is going to come out. But I think also on behalf of constituents. Health and safety issues must be considered. Who has more interest in their own health and safety than local folks over what happens right in their backyard or off their shore? And that's why we've got to have that priority there. There's no way that FERC is going to have the same concerns about local health and safety issues as the people who live there.

Mary O'Driscoll: Well, then who makes the final decision then if -- if FERC comes in and says all the environmental applications are right. The need for the energy is there. You know, that the application, everything looks like it's in order. Can someone come in and say, "Oh, well, I don't know, you know, that we have a little bit of an evacuation problem here, because --"

Rep. Lois Capps: That's -- you're speaking right to something that's very important. The way the regulations are now, there is an appeal process, and the federal government, through the secretary, does have the final say in the history of how we've done this. That's why the need to change it. There have only been a handful of appeals, and those have been evenly divided between some siding on behalf of the local and some siding with the oil company. So there is a fair process that's already there.

Mary O'Driscoll: Oh, I want to ask one more question about that, because the language in the House energy bill, Chairman Barton seemed to kind of really try to accommodate the concerns of the states and local governments. I'm talking about allowing for inspection of the facilities and being able to appeal some decisions on some court appeals and have court interpretations. But he really seemed to go so far to be able to give the states and the local government some say in it, that the Federal Energy Regulatory Commission doesn't like the language. The industry itself doesn't like the language, and that they were looking at what President Bush did earlier this week in calling for FERC authority as a stronger call for stronger language giving FERC authority, so --

Rep. Lois Capps: Well, the --

Mary O'Driscoll: I mean can't -- is the House energy language, you know, why isn't that suitable for you?

Rep. Lois Capps: Just the words that you said, advise. The final say does go with FERC. FERC doesn't have the capability to consider. They're energy oriented. They want to please the oil companies. They're in the business of leasing. They're in the business of regulating energy. They're not in the business of health and safety. That's not under their jurisdiction. That's why it's got to be stronger language than advise.

Colin Sullivan: If we can move onto the next energy acronym, from LNG and OCS to MTBE.

Rep. Lois Capps: Yes.

Colin Sullivan: And issue that you're intimately involved in.

Rep. Lois Capps: I'm glad you're not asking me to say the word.


Rep. Lois Capps: I've done it, but it's a mouthful.

Colin Sullivan: Well, it's a fuel additive that you put in gasoline to --

Rep. Lois Capps: Yes, it is.

Colin Sullivan: Make it cleaner burning, but it also allegedly pollutes groundwater. Now you did something really interesting on the House floor last week. You came out with an amendment that said the MTBE liability protection is essentially an unfunded mandate that almost worked, but the MTBE liability language stayed in the bill. Do you think this is going to be your strategy going forward? Can you explain why you believe it's an unfunded mandate?

Rep. Lois Capps: Well, the provision is there. The rule was made by the Republicans when they took over the House in 1995, and it is a motion to strike, because there is an agreement that it is an unfunded mandate, and I didn't -- we won by having a debate on the floor. We lost the vote. It was a very close vote, but my goal was to have this fully debated and have people on record as to how they wanted to vote on this issue.

Colin Sullivan: Now, how do you think this issue's going to be resolved? They pretty much scuttled the bill last year. Would you -- I mean do you want to see MTBE taken out altogether?

Rep. Lois Capps: Oh.

Colin Sullivan: To scuttle the -- or would you like to see it actually kill the energy bill like it did last year?

Rep. Lois Capps: Well, I didn't vote for the energy bill, so you can imagine what I'd like to see done with it. There are so many egregious parts of the energy bill. However, this one is so off the wall, if you will, in terms of what it does and gives to the companies that polluted our ground water, and it gives them even the ability to keep doing it for nine more years. We should get rid of this provision in the energy bill. It should never come up. We've got -- many states are outlying it already and have and should, and we can keep our air clean with a cleaner burning gasoline without using MTBE.

Colin Sullivan: Isn't the federal government, on some level, at least culpable for having directed the MTBE use in the first place?

Rep. Lois Capps: No, they didn't direct it, and that's something that the energy companies would like you to believe; but we have documented that this, as soon as lead was gone out of the gasoline, they started marketing MTBE in the '80s; and they knew it was -- that it was toxic. They knew that it was very water soluble, that it would destroy the groundwater in places where it could leak out, and it leaks out very easily; and they knowingly sold this to water companies and that's what the courts have found; because the courts have found them liable; and that's why it is an unfunded mandate.

Mary O'Driscoll: Have there actually been any court findings? I thought they were all pretty much settlements -- that there hasn't really been a court finding.

Rep. Lois Capps: Well, Southlake Tahoe was a court finding.

Mary O'Driscoll: Was a court finding, OK.

Rep. Lois Capps: And Santa Monica was a court finding. Now, my little town in my district, that's one of my reasons for the interest in here. It's very personal, because my constituents lost their whole secondary water supply permanently, and they've had to go to a desalinization plant. They collected $9 million from Chevron without going to court, just with that threat there. That's what we need to keep there.

Mary O'Driscoll: But isn't some of the fault also with the operators of the storage facilities that, you know, that they may not be operating them in the correct way? I know that there were a lot of amendments added to the energy bill during the committee markup process that kind of strengthens somewhat the oversight of the training and the oversight of the storage facilities, the storage tanks that are underground themselves to help prevent spills.

Rep. Lois Capps: That needs to be there, too. We want to make sure that there isn't any leakage and that we have remediation when there is. But that -- the amount of money in that fund, you're talking about the LUST fund, another --


Rep. Lois Capps: Shorthand phrase. That money there is there for communities to use when there is no known source of contamination. In this case, there is. Compare the difference, too. $2 billion are in that fund that we pay into when we fill our gas tanks. $29 billion of cost to local water districts, municipalities that these oil companies have perpetrated and now are going to go off scot-free should this bill be enacted into law.

Mary O'Driscoll: What about some provisions where they would have a cleanup fund very much like the leaking underground storage tank fund that they would collect money to be able to have the cleanup for that. I mean is that something that you would want to see in the legislation? I mean is that doable? There's been some question as to whether that violates polluter pays rules and that kind of thing.

Rep. Lois Capps: Yeah.

Mary O'Driscoll: But I mean is that some sort of a way you can get at this?

Rep. Lois Capps: Well, that was sort of put forth as kind of a compromise. But I don't see any teeth in it, and I just had this personal experience with my little town of Cambria that was able to use that lawsuit possibility there. We've got to have something that really holds these companies accountable. They knew what they were doing when they started peddling MTBE in the '80s, and they kept doing it, and they're doing it even as we speak, and they're going to get $2 billion worth of transition funds to phase out of it nine years from now. I can't think of a worse scenario than what we're allowing to be in this energy bill.

Mary O'Driscoll: OK. I wanted to ask another question.

Rep. Lois Capps: Do I feel strongly about this?


Rep. Lois Capps: Yeah, we can change the topic.

Mary O'Driscoll: Oh, that's OK. No, that's fine. I wanted to get to offshore drilling, the offshore issue again. You have gone through and just recently talked about an amendment that was added to the energy bill that gives some insurance to the offshore -- I guess the holders of leases of offshore leases.

Rep. Lois Capps: Yes.

Mary O'Driscoll: That if they cannot develop those leases, that they will get some sort of insurance recompense from the federal government. Why is this a problem? I mean is this -- if they own it, if they thought they were going to be able to explore and to develop that offshore lease, shouldn't they -- and then policies change and they're not allowed to it. Why shouldn't they be able to get some sort of recompense from the federal government for that?

Rep. Lois Capps: You're bringing up another topic that comes close to home on the central coast of California. And, in the dead of night, really, this bill -- this is an energy bill that we keep discovering new things. The Resource Committee put in this language that takes away the -- any kind of risk that any energy company would have in going into an agreement with the federal government. You know, they're not hurting. They make the largest profits of any industry in our country right now; and, in this bill, they would be given another payback, if you will, for attempting to develop in an area. And then if they find that they don't get what they want, then they can ask for their money back? I mean that is egregious, and that, off the central coast, right out off the shores of the three counties that I'm privileged to represent, are 36 leases that these companies would just love to see this bill enacted, so they could come with their hand out to the federal government, to taxpayers, and say, "You know, we thought we might want to drill here, and now we're finding out that it's not very profitable. So give us our money back for the efforts that we've put into place." Nobody does that for the private sector, for the marketplace. The marketplace is supposed to take care of that.

Colin Sullivan: You mentioned the Resources Committee process putting provision in there in the dead of night, as you said. Now, you sit in the Energy and Commerce Committee. I'm sort of wondering. Chairman Barton seems to have made a great effort to include Democrats in the process this year. Do you think that he's done a good enough job? I mean as a Democrat on that committee? Or do you feel like Democrats haven't had enough of a say?

Rep. Lois Capps: We have. I have to say this chairman was very fair-minded in the way that he conducted our committee markup, if you will, the process of bringing the bill to ready to the floor, and we had many amendments that we were allowed to offer, we saw them voted down on party lines all too often, and, yet, I have to give him credit for being fair in that way.

Colin Sullivan: And, yet, you still say it's an unbalanced energy bill, that you think this bill is bad?

Rep. Lois Capps: Oh, yes.

Colin Sullivan: I mean --

Rep. Lois Capps: It's a bad bill.

Colin Sullivan: Environmentalists have said this is a bad bill. I'm sort of wondering, I mean, where the middle ground is. I mean, is there an energy policy that you can support that supports nuclear power, supports natural gas, supports coal? I mean how do you sustain the U.S. economy without those things? I mean, it's not realistic to say, "Let's rely on solar and wind power exclusively, is it?"

Rep. Lois Capps: We are going to be using fossil fuels for some time to come, and we came, all came here to work or to do this today probably taking advantage of oil and gasoline to power us here. We, though, in this country, think about an energy policy that we need for our country where we produce 3 percent of the world's resources. We consume -- or we produce. And we consume a quarter of the world's resources in our country. We have such an imbalance. This energy bill should address demand. It gives everything to the supply side. Do you know that the tax breaks are 97 percent in behalf of the oil and gas industry? Three percent for renewables. I'm, you know, couldn't we at least go further in that equation? That's what we should be thinking about. We've got to have in the mix more renewable energy sources, and there is technology available to develop them. Let's talk about how much we are doing to make our automobiles and our vehicles more efficient. That's what we could be doing with the technology that exists today. But we, in the Congress, have the responsibility to insist on the industry stepping up to the mark. Did we do that in this bill? Not even one penny.

Colin Sullivan: Now, do you disagree with the model? For years, they've been trying to pass a comprehensive bill. Why not take some things that can pass on their own and move them through Congress? I mean following the California power crisis, for example, there's all kinds of electric market reforms that you'd like to have seen passed, I'm sure. But they're caught up with all these different regional conflicts --

Rep. Lois Capps: That's right.

Colin Sullivan: In the comprehensive energy bill.

Rep. Lois Capps: That's right.

Colin Sullivan: Why not scrap that idea, the comprehensive effort, and do these things individually? Is that unrealistic?

Rep. Lois Capps: The ranking member of our committee, Mr. Dingell, with long years of experience with this, asked and tried with legislation to get the electricity portion removed from the rest of it. They don't -- that's -- they want the whole package, because then they'll get the trinkets and the goodies for the industry. We should be dealing with some of these issues on their own, and the whole issue with ANWR, drilling in the wildlife refuge, what -- you know, people say what the big deal about that. Well, I went there last summer, and it is a very big deal for it's own sake, for that pristine wilderness. But it's also a big deal because of the symbol that it is. It would mean the opening up protected areas, which is what the industry would love to see happen everywhere.

Mary O'Driscoll: I wanted to kind of shift a little bit. President Bush, this week, announced some kind of, I guess, tinkering with some of the energy policies that are in the energy bill. But he did that after the House already voted on the energy bill.

Rep. Lois Capps: Yes.

Mary O'Driscoll: So if any of these things are added, they would be added to the Senate and then be discussed in conference. And some of them I would think that you might have some strong feelings about, particularly encouraging the siting of refineries on abandoned military bases.

Rep. Lois Capps: Yes.

Mary O'Driscoll: And the nuclear power plant insurance provision for after construction on the nuclear power plant, between that and the time when it gets --

Rep. Lois Capps: Yes.

Mary O'Driscoll: You know, when they flip the switch, that there would be insurance if something happens in between. Are you concerned about the fact that maybe you won't be able to participate in the debate in this or ask any questions?

Rep. Lois Capps: Very concerned. The things you're bringing up are all issues that I have local constituents very concerned about, as well, and the factor of the refineries on closed military bases is a problem -- a solution in search of a problem. I mean there's nobody lined up waiting to open new refineries, and, actually, one was threatened with shutting down right near my area, in Bakersfield. That's not in my district, but nearby. And it was only the insistence that it be kept open, because our gasoline prices are so much more expensive in California than anywhere else. We have a bottleneck of getting out. But the oil companies are not asking for that. So I don't know why the big rush to do that. The other issue of giving so much more power to FERC. You know, we have not the best experience with that agency in terms of California. Right now, our PUC has a lawsuit going against them with issues that have never been resolved since our energy crisis of three years ago. We need to have a more forward thinking energy bill than the one we have with us, even -- and particularly with the president's late added initiatives.

Colin Sullivan: If I could ask one last question. We're just about out of time. Do you think the controversy surrounding Tom DeLay might affect the energy bill at all? I mean he's intimately involved in MTBE negotiations. I'm wondering if it's possible that he won't be as involved if he's spending the summer fending off investigations.

Rep. Lois Capps: You know, I just have to say with respect -- he's not on the committee, but the leadership's backing under -- and particularly his backing of the MTBE issue, for example, goes directly to where that product is produced, which is in his state and Mr. Barton's district and the other areas around there. And it is an oil and gas administration. It's an oil and gas leadership in the House, and it's right to where he sits as majority leader.

Colin Sullivan: But you don't see the controversy affecting -- in terms of process, in terms of whether or not we get a bill.

Rep. Lois Capps: Well, I think the bill has other -- many, many problems with it, and I, you know, for the sake of good thinking forward, we, again, back to your initial question, this is a bad bill. We should really scrap this bill and do something appropriate for the folks that we represent and for our nation, particularly in this time. Think of where we are getting our sources of oil -- from the most conflicted and difficult parts of the world. And there we have our troops over in Iraq, and we should be addressing -- there's an urgency about a good policy for energy.

Colin Sullivan: OK, Representative Capps, thank you for being here. We appreciate it.

Rep. Lois Capps: My pleasure.

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

[End of Audio]



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