State Flouts Laws, U.S. Claims in Oil Drilling Fight

The Reagan Administration on Tuesday opened a new round in its battle with the California Coastal Commission, angering state officials who had expected a truce in the long-running fight over California’s stringent environmental regulations.

Hopes for a truce were dashed with Tuesday’s release of a Commerce Department report accusing the commission of flouting state and federal laws in its regulation of offshore oil and gas drilling and exploration.

The report stopped short of recommending decertification of the commission, which would result in a cutoff of $1.9 million that the state receives annually from the federal government and would eliminate the commission’s ability to regulate offshore drilling in federal waters.

However, California officials said the report also failed to live up to an assertion by Commerce Secretary C. William Verity Jr. earlier this month that “all the participants will be happy” with the final report.

“We’re very disappointed in this report,” said Coastal Commission spokesman Jack Liebster. The Commerce Department’s accusations are “just wrong” and have “no basis in fact or law,” he said.

A spokesman for the Commerce Department defended the agency’s report. “Our guiding principle has been to be as fair as possible,” said spokesman Jack LaCovey. “We think our recommendations are reasonable and doable.”

Earlier this month, after meeting with Verity, members of California’s congressional delegation had thought that the squabbling between state and federal officials had been settled. They reacted angrily Tuesday.

“This Administration has a knack for going back on its word,” charged Rep. Leon Panetta (D-Monterey), a leading critic of the Administration’s offshore drilling policies.

“The federal government should not be able to dictate policy decisions for California,” Sen. Pete Wilson (R-Calif) said.

Wilson and Sen. Alan Cranston (D-Calif.) already have steered through the Senate legislation that would prevent federal officials from taking action against the Coastal Commission. The House likely will consider the legislation, tied to a catchall government money bill, next month.

The main weapon that the Administration can threaten to use in the dispute is the cutoff of a $1.9-million annual federal grant that covers roughly a quarter of the Coastal Commission’s administrative budget. Last summer, federal officials threatened to cut off the money unless the Coastal Commission changed policies that have been the targets of oil industry criticism.

No Threats This Time

This time, however, Administration officials issued no such threats and instead called for further negotiations.

In a letter to Peter Douglas, executive director of the Coastal Commission, Peter L. Tweedt, who heads the Commerce Department’s Ocean and Coastal Resource Management Office, offered to travel early in December to San Francisco, where the commission is headquartered, to meet with state officials and “negotiate the details” of a settlement.

But the Administration did not change its extensive criticisms of California’s policies, and commission officials said that the threat of cutting off their money, while veiled, still remains.

At the heart of the controversy is the Administration’s demand that the state commission adopt a set of fixed environmental standards that oil companies would have to meet in developing offshore oil projects. These new standards would have to be reviewed by federal regulators, who could veto their imposition, Liebster said.

Currently the state commission regulates the environmental impact of offshore oil development on a case-by-case basis. The state’s flexible approach sets tougher standards than those imposed by the federal government.

“Their demand for fixed standards could strip our program of its teeth on offshore oil,” Liebster said. Already, the dispute over the federal grant, Liebster said, “is severely hampering our program. . . . Each day we are being hurt by this.”

Conditions Proposed

The demand for adherence to fixed standards is the key to a 20-point set of conditions that the Commerce Department has proposed that the state meet to continue to receive the $1.9 million annually. Those conditions would be the subject of the meeting in San Francisco next month.

Interior Secretary Donald P. Hodel, who has been the Administration’s main advocate of greater offshore drilling, has been particularly critical of California’s policies. Last May, he wrote a memo to Verity’s predecessor, the late Malcolm Baldrige, accusing the state commission of “usurping” federal power over coastal regulation. That memo set off the original threat to cut off the Coastal Commission’s money.

Under a 1972 law, states have the power to regulate oil exploration and drilling off their coasts provided their regulations are as least as tough as federal standards. The federal government pays the states for doing the regulating but retains authority to oversee how the states are doing the job.