Dan Morain

Dan Morain: How oil won the battle for SB 350

Assemblyman Adam Gray, D-Merced
Assemblyman Adam Gray, D-Merced The Associated Press

Before he would commit to voting for landmark legislation to cut petroleum use by 50 percent, Assemblyman Adam Gray had a few requests.

Actually, it was more than a few. The term sheet runs three pages. The quid for the quo is something to behold.

In one of his more remarkably bold suggestions, the Merced Democrat sought $550 million a year in cap-and-trade revenue to pay for more water storage. Additional water storage is a great idea. But cap-and-trade money must be used to reduce greenhouse gas emissions, not provide water in perpetuity for Central Valley farmers.

And then there were the three pages of amendments offered by the Western States Petroleum Association. Its demands would have gutted the California Air Resources Board, the agency directly responsible for reducing air pollution created by the oil industry.

Faced with demands made by industry and well-greased Assembly members from his own Democratic Party, Senate President Pro Tem Kevin de León concluded last week that he had no choice but to gut the most significant part of his Senate Bill 350, the sections that sought to force a 50 percent reduction in oil use.

Not having been in the room when negotiations were going on, I don’t know who said what. But the wish lists offer some insights into the pulls and tugs that led to the decision to limit SB 350. Though it won’t cut oil use, it will reduce electricity use and increase wind and solar power.

Gray was quick to say “we have to take aggressive action on climate change.” He also defended his proposals by saying he wants to “make sure the Valley is not put at a disadvantage,” while people in “Palo Alto are driving around in Teslas.”

Gray is one of 20 or so Assembly Democrats who call themselves moderates, and held out against the petroleum reduction in SB 350. As near as I can tell, being a moderate has little to do with their stands on social issues, or their willingness to challenge the core of Democratic support, public employee unions; they aren’t.

Rather, the definition seems to revolve around a willingness to accept campaign money from oil, tobacco or anyone else, and their malleability when donors come calling. Certainly, the reflections of some of Gray’s donors can be seen in some of the amendments he suggested.

One $2,000 donor, Covanta Energy, operates a garbage incinerator in Stanislaus County that generates electricity. In 2002, the Legislature agreed to count it as a renewable energy, a designation that is worth millions to the company.

De León initially sought to delete Covanta’s special deal. Although it may be a clean-burning incinerator, Covanta’s facility hardly amounts to renewable energy, certainly not in the same way as solar arrays or wind turbines are. The company responded to SB 350 by hiring fancy lobbyists, who turned to the Central Valley delegation.

Gray’s amendments include one that would allow Covanta’s incinerator to retain its special status. That, in turn, would allow Covanta to sell electricity at a premium to utilities which, under SB 350, will need to get half their electricity from renewable sources by 2030.

By my count, Gray has accepted $160,000 since his first Assembly campaign in 2011 from entities that lobbied against the petroleum reduction sections of SB 350.

The California Trucking Association is one of Gray’s donors. One of Gray’s amendments was, word for word, the same as what the truckers proposed. The amendment would have limited the power of the Air Resources Board to regulate trucks.

Gray contends his amendments were a starting point. De León saw them as nonstarters.

Then there were the three pages offered by the oil industry, through its trade group, the Western States Petroleum Association. The language would have tied the air board in knots and subjected the state to repeated lawsuits. Worst of all, any plan developed by the ARB to reduce petroleum use wouldn’t take effect until the Legislature approved it.

Legislators can, of course, pass laws to roll back any board’s authority. But under the oil industry amendment, the ARB would have become nothing more than an advisory board. The Legislature would accept its notions or not, subject to the whims and clout of various lobby forces.

Perhaps de León overreached, though there’s nothing wrong with aiming high. Certainly, he made tactical errors. He didn’t make clear early how Californians, who depend on cars, would cut oil use by 50 percent in 15 years.

That allowed oil industry consultants to define the issue. Using millions of dollars, the consultants warned people in misleading television ads and mailers that there would be rationing, and that minivans could be banned.

“This was a fight worth having,” de León said in an interview. “I knew it was going to be difficult. I didn’t anticipate the tens of millions of dollars, the distortions.”

Maybe the bill lost in November’s elections. The oil industry spent no less than $17.2 million on California state campaigns in the 2013-14 election cycle. That kind of money guarantees a great deal.

Sitting in his office the morning after he broke off negotiations, de León went down the list of people who had spoken favorably about SB 350 or endorsed it: Pope Francis, President Barack Obama, U.S. Sen. Dianne Feinstein, U.S. Sen. Barbara Boxer, Rep. Nancy Pelosi, Gov. Jerry Brown, past Assembly speakers and leaders of the state Senate, California Democratic Party Chairman John Burton. They didn’t matter, not compared to the power of oil.