Davis Urges U.S. to End Fight on Oil Drilling

Gov. Gray Davis and environmental activists urged the Bush administration on Friday to drop its legal fight with California over the state’s right to review offshore drilling plans in federal waters along the coast of Ventura, Santa Barbara and San Luis Obispo counties.

Meanwhile, the Republican-controlled U.S. Senate is considering legislation that would give the Interior Department a chance to reevaluate oil reserves beneath coastal waters, including the areas Congress has decreed off-limits to oil exploration.

State officials and activists made their public plea Friday because federal officials, who have suffered two defeats in the case, must decide by Tuesday whether to take the case to the U.S. Supreme Court.

“The law is on our side and the courts have sided with us,” Davis said. “Unfortunately, the Bush administration has fought us every step of the way. Now the administration has a choice. They can appeal to the Supreme Court, or they can end the costly legal battle and back our right to protect our coasts.”

Mark Pfeifle, a spokesman for Interior Secretary Gale A. Norton, said a decision on the appeal would be announced Monday. “It’s unfortunate that the governor of California saw fit to hold another misguided press conference instead of working collaboratively with us to resolve the matter,” Pfeifle said.

Last month the administration sought from the Supreme Court, and was granted, a 30-day extension on the filing deadline so it could try to reach a settlement with oil companies that want either to drill in the 36 offshore tracts they leased years ago or to be reimbursed for their costs. The tracts, leased between 1968 and 1985, are clustered between the Channel Islands and the coastline from Oxnard to San Luis Obispo.

Lawyers representing the oil firms have been meeting with administration officials to come up with a buyout plan similar to one that President Bush approved to retire leases off Florida’s coast last year for $235 million.

Talks about a buyout in California have bogged down over the price, according to sources close to the negotiations. Oil companies paid nearly $1.25 billion for the leases and several hundred million dollars more to sink exploratory wells and for other preproduction costs.

Yet most of the original owners have since resold those leases to a new group of oil companies at reduced prices. Sources say the new owners want the buyout to cover the higher price tags of the original investments, not the reduced prices they paid for the leases. The administration has balked at the higher figures, and at least once has asked California to help foot the bill.

Davis said Friday that federal officials have not sought state officials’ help with any buyout in recent weeks. Aides to Davis dismissed initial overtures because the administration wanted to structure only a partial buyout, allowing some drilling to continue on a few of the tracts.

The governor has been adamant that he wants no new drilling off the coastline. State officials contend that the 36 leases that were supposed to expire more than a dozen years ago have been extended by the Interior Department over the state’s objections.

A court fight erupted in 1999, when Davis and environmental groups sued the Clinton administration, insisting that the California Coastal Commission had the right to review the extensions of the 36 leases to make sure they are consistent with state coastal protection laws.

A U.S. District Court judge in Oakland and the U.S. 9th Circuit Court of Appeals sided with the state, saying the Coastal Commission is entitled to review these leases for environmental hazards.

This case involves 36 undeveloped offshore tracts clustered in the Santa Barbara Channel. Forty-three offshore tracts in federal waters, and a few in state waters, remain in production off Huntington Beach and Long Beach and along the Ventura and Santa Barbara county coastlines.

The rest of the waters off California, and several other states, have been placed off-limits to oil exploration by congressional and presidential orders for more than two decades.

But an energy bill scheduled to be considered in the U.S. Senate next week would direct the Interior Department to evaluate untapped offshore oil and gas reserves and then report back to Congress on any impediments to exploiting those reserves to increase the domestic oil supply.