Commission opposes governor's plan to revive oil project

By ERIC LINDBERG — June 2, 2009

In response to Gov. Schwarzenegger’s proposal to revisit the Tranquillon Ridge oil-drilling project off the coast of Lompoc, members of the State Lands Commission called it an “end run” around their authority and fired off a resolution yesterday in opposition.

The commission had killed the project earlier this year, effectively undoing an unusual partnership that would have allowed a Texas-based oil company to slant drill into an oil-rich area known as Tranquillon Ridge in exchange for a series of environmental concessions.

However, the governor is proposing to revive the project in his May budget revision — namely by handing over the authority for approving the project to the Department of Finance, which is undoubtedly intrigued by the estimated $1.8 billion in royalties the project would bring to the state over 14 years.

“At a time that the state of California has a $23 billion budget deficit, the Department of Finance doesn’t believe it’s time for business as usual,” said Tom Sheehy, the state’s deputy director of finance who also sits on the commission. He later added, “We felt we couldn’t turn a blind eye to the fiscal benefits of this type of project.”

Perhaps the strongest opposition to the proposal came from the chair of the commission, Lt. Gov. John Garamendi, who noted that the authority to approve leases was given to the independent agency due to corruption involving the state’s finance director.

“You have taken the position of destroying several decades of work that this commission has done,” he told Sheehy. “Never before has this commission’s decision on an oil lease been overridden, or proposed to be overridden, by the governor… What we have here is a naked end run around the authority of this commission.”

Garamendi and State Controller John Chiang ultimately voted 2-0 in favor of sending the resolution — Sheehy left the hearing early after receiving the unfortunate news that his father-in-law had been killed in a vehicle accident.

Chiang, who had voted with Garamendi against the project in January, said he still has concerns about the enforceability of several aspects of the proposed deal.

“I’m concerned that we may be one win short of a win-win,” he said.

Brokered by the Environmental Defense Center, Citizens Planning Association and Get Oil Out!, the deal involved a complex tradeoff.

The project would have allowed Plains Exploration and Production to drill new wells from Platform Irene into state waters.

In exchange, the company agreed to end production at Platform Irene by 2022 and three other rigs off Point Arguello by 2017, shut down two onshore facilities in Lompoc and on the Gaviota Coast, and donate thousands of acres of land to the public.

Plains also agreed to mitigate all greenhouse gas emissions created by the project and donate $1.5 million to the county to further reduce pollution.

However, Garamendi and Chiang had questioned the negative precedent that would be set by approving the first oil leases in state waters in 40 years, as well as the enforceability of the shutdown dates.

“There is not a guaranteed premise that we in fact will terminate those terminals,” Chiang said yesterday. “That is an open question.”

Susan Jordan, director of the California Coastal Protection Network and candidate for the 35th State Assembly seat, also questioned the enforceability of the project’s conditions and decried the governor’s attempt to shift authority to the finance department.

“I have never seen such a blatant power grab by a governor to override an independent commission’s authority…” she said during her impassioned testimony. “It’s very hard to watch someone who is supposed to have the trust of the people of the state deliberately mislead them and distort the facts.”

In contrast, Sheehy said the proposal is limited in scope and would only apply to this particular project. He argued that it would not circumvent the State Lands Commission or change its process of review.

Instead, Sheehy said, it would offer the opportunity for the state legislature to review the project and proposed authority shift. He was unequivocal, however, in his opinion on the oil-drilling proposal itself.

“The Department of Finance believes this body made the wrong decision,” he said, adding later, “The project that was rejected on a 1-2 vote is in the best interest of the state.”

The governor also defended his proposal in a news release that listed a series of “myths” and “facts” related to the Tranquillon Ridge Project.

Among them, he outlined the process by which the project might eventually be approved — a two-thirds majority of the legislature would have to give the authority to the director of finance, who would reconsider the project after additional public hearings.

The project would still be subject to public review by the California Coastal Commission and approval by the federal Mineral Management Service.

“Governor Schwarzenegger’s proposal to use Tranquillon Ridge as a vehicle to bring new revenues into the state and end oil drilling off Santa Barbara’s coast has been strongly supported by environmental groups, will benefit California now and will speed up the permanent removal of drilling platforms from the Santa Barbara coastline,” according to the statement from the governor’s office.

The governor also stated that he is maintaining his opposition to new oil drilling off the coast, noting that the project would be carried out from an existing oil platform in federal waters by taking advantage of a specific exemption in a state act that allows for new leases if state-owned oil is draining into an active federal field.

He also acknowledged, as did Sheehy, that the project’s royalties won’t solve the state’s budget, but said the overall benefits of the project are “substantial.”

“The governor’s proposal would ensure that four oil platforms, which would otherwise remain off the coast of Santa Barbara indefinitely, and two oil processing facilities will be permanently removed in 14 years and bring $1.8 billion in new revenue to the state over the same period,” according to the news release. “If approved, the proposal will result in a reduction in greenhouse gas emissions and the protection of nearly 4,000 acres of significant lands in Santa Barbara County.”

Linda Krop, chief counsel for the Environmental Defense Center, agreed with that assessment and said the EDC still supports the underlying project. However, she expressed grave concerns about overriding the State Lands Commission decision.

“We’re concerned about the precedent; we’re concerned about the integrity of the process,” she said after the hearing.

Krop said she believes questions about the enforceability of the platform and process facility shutdown dates can and will be addressed, adding that she believes the commission is the proper venue to take another look at the project.

In acknowledging the two-thirds majority needed for the legislature to pass the authority to the finance director, Krop said she would be surprised if that effort succeeded but is nonetheless unsure where state legislators fall on the issue.

“I have no idea what the legislature is going to do,” she said. “I’ve been trying to find out what people think, and no one seems to have a clue.”

Assemblymember Pedro Nava made his stance on the issue patently clear in a statement released yesterday afternoon, calling on legislators to continue to fight for environmental protections that have safeguarded the coastline.

“By including this proposal in his May Revision, the governor has set a dangerous precedent: declaring that money should be the primary factor in the development of environmental policy,” Nava said.

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: 6/2/2009

Go away Nava

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: 7/23/2009

The discretion granted to the State Lands Commission is conditioned upon acting in the best interests of the State. So...their descretion ends when they fail to act in the best interests of the State...the whole State. The Terminator is well within his authority to terminate them if they get too cozy with the Greenies.

nuffalready

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