Calif. Likely Site for New Offshore Oil Drilling : Environment: Bush seems to have ruled out Florida. Lujan is dangling the bait of a share of federal lease revenues.

It seemed a splendid idea at the time.

Three weeks in office, bent on becoming the “Environmental President,” George Bush spiked the Ronald Reagan Administration’s plans for oil drilling on the outer continental shelf off California.

Huge lease sales planned off Northern and Southern California and Southern Florida would remain on hold, the new President told Congress, until “the conclusion of a special task force set up to measure the potential for environmental damage.”

On both coasts, environmentalists cheered. It was Bush’s first test on the environment. So far, so good.

It has now been 14 months since the speech and three months since the task force report laying out his options was put on his desk.

Although the contents have been guarded as carefully as military secrets, the 200-page document is understood to present choices ranging from leasing one of the three areas within a year to delays of as much as 10 years.

Knowledgeable sources have steadily speculated that Bush will wind up banning for the foreseeable future any exploration and drilling in Lease Sale 116 southwest of the Everglades because of acute concern over the survival of already threatened coral reefs.

Last Friday, the President seemed to confirm as much. In answering questions at the annual meeting of the American Society of Newspaper Editors’ convention, he reiterated his pledge to protect environmentally sensitive areas. “I know enough about the Everglades and have been briefed enough on the environment of the Everglades,” he said, “to know that that ecological balance is highly sensitive.”

But, he reiterated also that “we’re not going to ban offshore drilling.” That leaves California.

Of the choices between the two California areas, Lease Sale 95, extending from the Mexican border north to Monterey County, has been considered the most likely to be opened for development. Lease Sale 91 extends from Sonoma County to the Oregon border.

There has already been drilling in the state’s southern waters within three miles of the shoreline. The oil industry’s pipelines, docks and refineries are already in place.

At first, it was expected that the President would disclose in his State of the Union address whether, when and where the three areas would be opened to exploration and drilling. But the speech came and went, as did the budget message, and two trips to California.

Now comes Earth Day on April 22, when Bush will be on a fishing expedition to Islamorado in the Florida Keys. That outing might provide the chosen backdrop to finally announce the big decision--particularly if it is good news for Florida.

So far, the only reason given for the long delay has been that the President is still asking for more information. But there is obviously more to it than that. If there is any issue on which he knows more than any of the people advising him, it is oil drilling.

But Bush is caught between furious environmental opposition to drilling and steadily increasing dependence on foreign oil.

Interior Secretary Manuel Lujan Jr., who headed the inter-agency presidential task force and decided to give Bush options rather than specific recommendations, has begun dropping hints of what the White House has in mind.

He first suggested that the time has come for the federal government to consider sharing the revenue from lease sales and royalties from oil produced on the outer continental shelf.

Appearing before the annual meeting of the National Ocean Industries Assn., he acknowledged a “need to develop new ideas on ways of making offshore drilling more attractive to coastal communities.”

“Sharing a portion of (the outer continental shelf) revenues with these local jurisdictions,” he said, “is one idea worth exploring.”

The next day, at a meeting sponsored by the natural gas industry, he suggested another.

When the Interior Department and its Minerals Management Service adopt a five-year plan for oil and gas development on the outer continental shelf, he said, it will designate very specific sites for leasing rather than continuing the practice of leasing huge areas.

His remarks were obvious overtures to California and Florida, where anti-drilling sentiment is fierce and gubernatorial campaigns have cranked up while the task force report has languished on the President’s desk.

The GOP desperately needs to preserve its hold on the governorships of the two states because the 1990 census is expected to give California seven new seats and Florida three or four new seats in the U.S. House of Representatives. If they control the governor’s offices in the two states, Republicans stand a chance of creating new congressional districts that whittle down the Democrats’ margin in the House.

But two Republican candidates, Sen. Pete Wilson, hoping to replace Gov. George Deukmejian, and Gov. Bob Martinez, running for reelection in Florida, have both lined up with environmentalists in opposing offshore drilling, privately pressing the Administration not to open the areas to development.

Lujan’s suggestion of revenue sharing--floated with White House approval, a source said--was designed to dampen opposition in California after sentiment against offshore development was inflamed anew by a large oil spill off Orange County.

The mere suggestion of revenue sharing from oil and gas development was enough to invoke images of potentially huge sums of money for state and local governments.

The last federal lease sale on March 21, for example, brought a bid of $427 million for an area in the Gulf of Mexico where there had already been extensive drilling.

According to officials of the Minerals Management Service, the area off Southern California could bring the federal Treasury billions of dollars over a period of years.

Events since Bush’s bullish environmental speech seem to demonstrate that even the President, who made his fortune in oil, underestimated the collision between environmental and energy interests offshore.

While the task force was at work, the White House let its members know that it preferred a series of options rather than pointed recommendations in order for the President to be unrestrained in making his decision. The panel accommodated him.

As a result, Bush is left without any political cover or recommendations from experts to fall back on.

Rep. George Miller (D-Martinez), whose Interior and Insular Affairs subcommittee on water and offshore energy policy has been conducting a review of the issue, called Lujan’s revenue-sharing suggestion “cynical” and “perverse.”

“Throughout the 1980s, the Administration has ignored state concerns about offshore oil development while cutting back funds to states in revenue sharing, mass transit, highways and social services,” he said. “Now, the cash-strapped coastal states are being told that, if they will only remove their opposition to offshore drilling, the money pipeline will open up. This is perverse public policy.”