State Lands Commission Denies PXP-EDC Offshore Oil Drilling Proposal

• Malibu Opponents Addressed Issues of Precedent, Enforceability, Transparency and Safety

BY ANNE SOBLE

Despite a hearing room packed with Santa Barbara supporters, many of them focused on local budgetary needs rather than environmental issues, the California State Lands Commission voted 2–1 last Thursday to oppose a proposal for two offshore subsurface oil leases that would have allowed Plains Exploration & Production, known as PXP, to slant drill 17 new oil wells into state tidelands from a federal platform currently in operation.
The oil-drilling proposal, the Tranquillon Ridge Oil and Gas Project, was brokered by the Environmental Defense Center for two Santa Barbara civic groups, Get Oil Out! and the Citizens Planning Association. The complete text of the proposal was not available for public review during the approval process because of a confidentiality agreement between the parties.
EDC chief counsel Linda Krop described the package that could have resulted in the cessation of oil drilling at up to four oil platforms off Santa Barbara and provided land donations and funding grants to the immediate area as “an air-tight agreement” that could provide important benefits and “end oil drilling,” even as she said its largely sub rosa drafting was “a long, strange trip.”
Although EDC had pieced together a coalition of 25 environmental organizations, most of them in the Santa Barbara area, the State Lands staff’s recommendation that the project be rejected because of unenforceability, transparency and safety issues was beginning to prompt some of the larger enviro groups to reconsider their level of support.
The SLC staff held steadfast to its concern that the lynchpin of the EDC-brokered package—the setting of the date 2022 for termination of production by up to four Santa Barbara oil rigs (three of which involved partnerships that were not clearly spelled out in the agreement)—was not enforceable, which testimony by Ellen Aronson of the Minerals Management Service of the Department of Interior indirectly confirmed, but the proposal’s supporters at the hearing appeared to disregard.
The disregard lent credence to testimony by Penny Alia of Orange County that “there’s people in this room who are supporting this [proposal] who have never seen it.”
The State Lands staff concerns were dismissed by Steven Rusch, PXP vice president of environmental, health, safety and government affairs, who trivialized them with “I’m sure the sky could fall in [too].” Rusch described the staff criticisms as “hypothetical speculation” and said negative scenarios postulated in the staff report were “far-fetched.” On the transparency issue, he said, “PXP has released what’s appropriate.”
But a sizable contingent of Malibu opponents to the deal testified to the contrary at the hearing in Santa Barbara, reinforcing the concerns in the staff report.
Echoing the views of many local environmentalists, the Malibu City Council and the Malibu Coastal Lands Conservancy were Sara Wan, Steve Uhring, Judy Fogel, Larry Wan and Remy O’Neill, part of a late-hour mobilization effort that hammered away at the issues of precedent, enforceability, transparency and safety.
Sara Wan, a member of the California Coastal Commission who was speaking as an individual, told the panel, “This deal will not end drilling. It is not enforceable, [and the secret] confidentiality agreement allows the painting of a picture that is not true. ”
Wan added that, notwithstanding the testimony on behalf of the proposal by the cash-strapped Santa Barbara fire department, law enforcement agencies and other special interests that would follow, “Our resources are priceless. You cannot put a cash value on that, and you shouldn’t.”
Steve Uhring, speaking for the Malibu Coastal Lands Conservancy, which had hired EDC to lobby against the BHP Billiton Cabrillo Port liquefied natural gas project that was turned down by State Lands on a 2-1 vote in 2007, emphasized MCLC’s concerns on the transparency issue, saying, “Sunlight is the best disinfectant.”
Larry Wan, who is actively involved with two land conservancies, said the land conveyances held out as carrots in the PXP proposal have serious title issues, and he questioned financial compensation for transactions that might be inappropriate but, because of “the lack of transparency,” couldn’t be adequately examined.
Concern about increased danger of oil spills and the precedent-setting nature of a decision to allow the first new drilling on the California coast in 40 years and how that would have the potential to open up the rest of the coast to drilling was reiterated repeatedly by the Malibu critics.
When the project’s supporters took over the podium, although a few of them stressed the hope that the project would take up to four of the 23 oil platforms off their shores out of production (but not necessarily removed), most of the speakers from Santa Barbara repeated a variant of the refrain, “We need the money” that was proffered by the project, including upfront fees, ad valorem taxes and royalties to the state.
But after several hours of public testimony, while acknowledging the state’s financial problems, Lt. Gov. John Garamendi, resuming the post of chair of the three-member State Lands panel at this meeting, and state Controller John Chiang voted against the leases.
Thomas Sheehy, sitting in for his boss, state Director of Finance Michael Genest, who usually sends a surrogate to SLC meetings, voted in favor of the motion he made to approve the proposal.
Sheehy had openly lobbied for the PXP package throughout the meeting. He said, “In our state’s cash crisis, we cannot turn a blind eye to the financial benefits.”
The deputy finance director appeared to be spinning so intently for the project that, at one point, Garamendi chided him with, “I notice the governor [now] supports offshore oil drilling, “ which Sheehy ignored.
When casting his no vote, Garamendi said the proposal is “not in the best interests of the state,” which is the commission’s charge when assessing public policy. He said, “This issue is important to the entire state...and the nation [because] it would provide a precedent for ‘drill, baby, drill’ proponents to urge Congress and the White House to resume offshore oil drilling.”
Paraphrasing Genesis 25:29-34 from the Old Testament, the lieutenant governor said, “I am not about to sell the California birthright—the most fabulous coast anywhere in this world—for an immediate meal.”
Nagging concerns about full disclosure were never allayed. Controller John Chiang stressed that the confidentiality clause in the agreement precluded all of it from being made public until the last minute. “On anything to do with public lands,” Chiang said, “The public should be able to review all documents.” He cast his no vote without further comment.
After months of agency requests to make the agreement public, PXP agreed during the meeting to make all documentation available, instead of the “substantive” elements not covered by their confidentiality agreement with EDC.
But most observers agreed this was too late to alleviate critics’ suspicions. And it was not clear at the meeting whether EDC had agreed to disclosure of the terms related to its compensation.
Midway through the five-hour hearing, Garamendi had offered Texas-based PXP the option of continuing the matter “so some of the [contested] issues could be explored further,” but CEO James Flores responded, “We could continue to learn about this project for the rest of our lives. We want action taken today.”
Flores said, “This agreement is for political support...If things change, people get sued,” and he added that “people in this room are depending on this capital,” without elaborating on who and which capital.
Garamendi told Flores, “Then it will be up and down on the project,” and on the day after the 40th anniversary of the disastrous Santa Barbara oil spill that spurred the state policy against offshore oil drilling for four decades, the majority voted down.
POSTMORTEM
After the meeting, EDC chief counsel Linda Krop told the Malibu Surfside News, “The project is dead. No public agencies can override this…unless there is some sort of political change.” She did not rule out the possibility that PXP might decide to come back to the State Lands Commission with a revised proposal. PXP officials did not respond to MSN requests for comment.
Krop said she was “caught by surprise” by the strong opposition from Malibu, because “everyone in Santa Barbara was thrilled with this.” She said, “Whatever we tried to do…we did not realize there was so much concern.”
The attorney said the EDC “took the case on contingency” but because the financial arrangements between the advocacy group and PXP have not been made public yet, it is not known how much money might have changed hands if the project had been approved.
However, some of the project’s critics are now asking whether a financial agreement of this nature involving an environmental advocacy group can result in unqualified bias for a project, and if the monetary stake and the potential conflict of interest can result in bad public policy decisions.
As for the enforceability issue and the possibility that the oil rig owners could have been forced to continue production by the federal Minerals Management Service, Krop said that was a “minor risk” when compared to the benefits as she perceived them. “We tried to be creative...it didn’t work out.”
However, Coastal Commission member and environmental activist Sara Wan, speaking to The News after the hearing, said, “All of the concerns were expressed to Krop by State Lands staff and others.” She said EDC’s downfall may have been thinking “that it had the political clout to override the objections” to the proposal.
Wan said she is deeply troubled by the possibility of conflict of interest issues because of the undisclosed terms of the contract. “We don’t know, was EDC getting legal expenses, or lobbying fees, or?” Answers to these questions are important to the environmental community, she said.
Of the State Lands Commission’s action itself, Wan said, “I have great admiration for Garamendi and Chiang. In the face of strong pressure, they stood up for principles. They did what’s right.”