‘We are very satisfied,’ says Coastal Commission chief : Offshore Drilling Suit Settled

U.S. Commerce Department officials have dropped their controversial effort to restrict the California Coastal Commission’s authority over offshore oil drilling in federal waters, state officials reported Wednesday.

The agreement came in an out-of-court settlement of the commission’s lawsuit against the Commerce Department.

According to Deputy Atty. Gen. Molly Holt, who represented the commission, the state agreed to withdraw the lawsuit and the federal government dropped its demands that the commission change its offshore review rules. The government also released $225,000 in operating funds it had withheld from the commission.

“We are very satisfied,” Commission Chairman Michael Wornum said. “This agreement recognizes the commission’s right to require stringent environmental controls over offshore oil drilling to protect California’s coast. The settlement gives us what we wanted.”

Settlement of the suit was announced late Wednesday by the commission. Efforts to reach Commerce Department officials for comment were unsuccessful.

Announcement of the settlement came as a “complete surprise” to the Western Oil and Gas Assn., according to WOGA Executive Director Douglas Henderson. “We met with (Commerce officials) and others just last week and nothing was said about anything like this,” Henderson said.

“We are very disappointed (by the announcement) because we are a party to the suit,” Henderson said. “We don’t understand the framework that would be used for this kind of settlement. . . . It is difficult to say what may happen until we can read the (agreement) and better understand our options.”

The Department of Interior has control over oil and gas drilling in federal waters on the Outer Continental Shelf. However, under the federal Coastal Zone Management Act, states are granted the right to regulate the environmental impact of such offshore development, under the eye of the Commerce Department’s National Oceanic and Atmospheric Administration. NOAA annually must certify the state is meeting minimum standards set by the federal law.

California’s Coastal Management Program, approved by NOAA in 1977, exceeds the federal minimum protections. In June, 1987, Interior Secretary Donald P. Hodel accused the state of “usurping” federal authority.

Last August, the Office of Coastal Resource Management--a branch of the National Oceanic and Atmospheric Administration--gave the state commission an unfavorable review, alleging that the state had “deviated substantially” from its approved plan and ordered $407,000 in federal operating funds withheld from the commission. Federal officials demanded that the state adopt standardized, but weaker, environmental mitigation standards for offshore projects, rather than setting tougher restrictions on a case-by-case basis, state officials said.

After weeks of unsuccessful negotiations, the state filed suit in federal court and Judge Eugene F. Lynch issued a preliminary injunction barring the federal government from attempting to weaken the commission’s power.

“The preliminary injunction was a strong signal that the court believed the federal government had acted far beyond its authority,” said state Atty. Gen. John K. Van de Kamp, whose office represented the commission in the suit.

Commission Executive Director Peter Douglas called the settlement “a total win for California. . . . We will still be able to review offshore oil projects on a case-by-case basis as we have in the past.”

Earlier, the government had released $182,000 in previously withheld operating funds. That money was earmarked for commission activities not contested in the lawsuit.