Interior’s Hodel Considers Scaling Back Controversial Offshore Oil, Gas Program

The Interior Department, hoping to ease a bitter dispute with coastal states over its offshore oil and gas exploration policies, is “leaning toward” curbs on both the speed and scope of its offshore leasing program, Secretary of the Interior Donald P. Hodel said Friday.

In an interview, Hodel said the rapid leasing of broad swaths of ocean bottom to petroleum exploration companies--a policy begun under former Interior Secretary James G. Watt--had proven “not productive” and needed to be changed.

He said he probably will propose scaling back the leasing program in a five-year plan to be issued for public comment this spring and scheduled to take effect in the fall of 1986.

“I’m leaning toward a system where . . . we focus our attention on the most promising acreage,” Hodel said. “At the beginning, let’s delete the environmentally sensitive tracts and the militarily sensitive tracts, and let’s we and the states focus on those areas where we might get a bid.”

Policy Drew Criticism

Watt’s “areawide leasing” policy, which opened vast expanses of untested and ecologically sensitive acreage to bidding, drew strong criticism from many political and environmental interests.

The attacks mounted last year after the Supreme Court ruled that the Interior Department did not have to consider states’ environmental concerns when leasing federally owned offshore tracts. Congress has banned exploration in millions of acres where states have complained that their objections were being ignored.

More recently, oil company interest in bidding on the huge leasing areas has dwindled as petroleum prices have fallen and lawsuits have pushed up the cost of exploring in sensitive areas.

Hodel said he hopes to minimize the legal and political battles that have plagued the leasing program during the Reagan Administration’s years in office.

Slower Pace

“We’re not talking about area-wide leasing any longer,” he said. Moreover, he said, the department likely will slow the pace of leasing in areas like California and Alaska to allow states more time to evaluate the tracts being offered for sale.

Hodel said his proposals differ little from the policy informally followed by the Interior Department in the last year. But coastal state officials were warily optimistic Friday that the changes would end many of their objections.

“It sounds like a tune we can dance to, if it comes about,” said Art J. Rocque, chairman emeritus of the Coastal States Organization. “We need to be partners on these issues, and if this is a first step in that direction, I welcome it. But I’m not sure we’ve seen a lot of concrete evidence in the past.”

Follows Recommendations

“Those changes appear to be consistent with recommendations the Interior Department has gotten from a number of groups, including from here,” said Bill Sessa, a spokesman for Gordon Duffy, California secretary of environmental affairs. “But there are still a lot of very complex issues associated with offshore drilling.”

Sessa noted that a slowdown in the leasing program does not ensure that states’ environmental objections--which include concerns about air and water pollution and onshore development associated with oil exploration--will be given any more attention than in the past.

A slowing of offshore leasing could be justified by the oil companies’ lack of interest alone, Sessa noted. In September, a lease sale off New England drew no bids from petroleum firms, and the average price bid has steadily declined in recent years.

Industry’s Complaints

The oil industry has repeatedly complained that environmental restrictions on drilling, forced in part by states’ political and legal pressures, have made exploration unprofitable. Hodel said the department hopes to convince the states that it can protect their interests while opening up new acreage for exploration.

However, that would require a lifting of the congressional bans on exploration in some of the most promising offshore tracts, something Hodel said he hopes Congress will agree to this year.

But Rocque and others said Congress is likely to wait for “concrete evidence”--such as a formal policy on drilling--before expanding the tracts available for leasing.