6 States Split Ranks With California on Oil Lease Revenues

In an apparent rebuff to California Gov. George Deukmejian, governors of six major oil-producing states have made a separate offer to the Interior Department to split more than $5.7 billion in revenues from offshore oil leases in disputed federal and state waters.

The offer, delivered to Interior Secretary Donald P. Hodel late Tuesday, appears to end efforts by the six states and California to present a united front in a bitter, seven-year battle over the oil money. California is contesting more than $1.3 billion of the revenues, which come from oil- and gas-producing tracts that overlap federal and state property.

In a letter to Hodel, the governors of Alaska, Alabama, Florida, Louisiana, Mississippi and Texas proposed Tuesday that their states receive a 37.5% share of lease bonuses, rentals, royalties and federal taxes from the disputed offshore tracts.

The proposal would net the six states at least $1.65 million in bonus money, plus hundreds of millions more from rentals and other lease revenues.

The Interior Department, which last August offered the states 16.7% in bonuses only, is likely to reject that deal. Interior officials have previously scorned the idea of sharing federal taxes from oil production with states.

In Sacramento, a spokesman for California Environmental Affairs Secretary Gordon Duffy called the six states’ offer “a breach of protocol” and said it had been devised without Deukmejian’s knowledge. The aide, Bill Sessa, said the action violates an agreement among the states to study technical issues in the oil dispute before meeting with Hodel on money matters.

“We’re prepared, if we have to, to negotiate on our own,” Sessa said. “But we would prefer that the states have a unified approach.”

But an official from a Southern state who is close to the negotiations, speaking on the condition that he not be identified, called that position “inexplicable.” He noted that Deukmejian had been invited to join in the offer to Hodel but had refused. The official denied that the six states had violated any agreement to allow staff aides to study technical matters in the dispute.

“The other six governors are not the kinds of personalities who are spoon-fed by their staffs,” he said. “Any suggestion to the contrary fails to recognize the realities of being a chief executive officer.”

Although officials in the other six states have encouraged joint talks on the oil issue, there are indications that the governors may favor a harder line in negotiations with federal officials than is advocated by California.

Deukmejian, the only Republican among the seven governors, also was the only one who had not publicly rejected Hodel’s 16.7% offer until Tuesday, when he turned the proposal down in a letter to the Interior secretary.

The governor also has been criticized by state Democrats for what they call a lack of aggressiveness in seeking California’s fair share of the disputed oil money.

Sessa denied that charge Wednesday, saying it is “common knowledge” that Deukmejian did not favor the Interior Department’s proposal to split oil revenues.

“We think we’re being very aggressive. We also think we’re being very realistic,” Sessa said.