Nature, Industry Try to Coexist : Environment: Pact that set up a wildlife preserve in exchange for land use rights is hailed by some as a prototype. But others call it a flawed deal.

Southwestern Kern County is not the kind of land that inspires poets, at least not during the day at the end of a dry summer. It is flatland scrub with six-foot-tall saltbushes and stunted grass. The mighty Kern River, far from its source, is dry bed. About the only thing moving is the water in the concrete sluice of the nearby California Aqueduct.

But within this region lies a 6,000-acre patch between Interstate 5 and Elk Hills that is prime habitat for wildlife, including several endangered species. Moreover, it is the site of a unique example of how endangered species and business--in this case the oil industry--can coexist and even flourish.

In a landmark 1992 agreement with the state, Arco Western Energy agreed to set aside the land and create a wildlife area, called Coles Levee Ecosystem Preserve. In exchange, the company received the right to explore for oil and gas on other land.

Arco and the state have been highly praised for the arrangement. Last week, the Coles Levee preserve received a 1994 Innovations in State and Local Government Award from the Ford Foundation and Harvard University--one of the nation’s most prestigious public service prizes. And the project has been singled out by the Clinton Administration as a novel approach to implementing a law that has become increasingly controversial.

Others, however, including some environmentalists, have criticized it as a flawed deal that may set a bad precedent for future environmental efforts.

Kern County is no stranger to the Endangered Species Act. This is, after all, the place where a Chinese-bamboo farmer got his $50,000 tractor seized by the U.S. government for killing five kangaroo rats.

It is the same rat--the Tipton kangaroo rat--as well as the blunt-nosed leopard lizard, San Joaquin kit fox and a dozen other endangered animals and plants that figure to benefit from the state’s deal with Arco.

“Neither the state nor the feds have the resources to police all the activities of Arco and other companies when it comes to endangered species,” said Ron Rempel, a conservation planner with the state Department of Fish and Game. “So we’ve come up with a framework that meets the needs of both the environment and business.”

Although the Coles Levee preserve is a welcome end, environmental groups say, the state cut a weak deal with Arco.

“Any time land is set aside for wildlife we’re pleased,” said Mark Palmer, of the Mountain Lion Foundation, an environmental group. “But as far as Arco is concerned, it’s business as usual on that land.”

It was a New York transplant who was instrumental in getting the state and Arco to move on the idea of a preserve back in 1987. Alison Sheehey Cunningham said her activism was spawned one night while fishing in the Coles Levee area with her son.

“I had gone out there to clear my mind and all of a sudden there were these kangaroo rats with big bushy tails and big eyes hopping all over my feet. Then an opossum came up and stared right at me and then a raccoon came up and leaned on me. It was a magical experience.”

During one of her daytime visits, Cunningham stumbled upon two hawks shot dead. Over the next month, she found more than two dozen dead or wounded raptor birds. The handiwork of humans was everywhere, she said. The dry stream beds had been damaged by off-road motorcyclists. Mesquite and cottonwood trees had been felled, one with a great blue heron nest.

“The more I got to know the land, the madder and madder I became,” Cunningham said.

She joined the local Audubon Society and organized a meeting between state and federal regulators. Then she called Arco. “I told them they’ve got this great land here and they’ve got to save it. They were open and receptive to the idea.”

Rempel, a 22-year veteran with the state Fish and Game, took over negotiations from there. He reminded Arco officials that their oil and gas production activities likely violated state and federal endangered species laws. At the same time, Rempel realized that his department--lacking policing resources--was hardly in a position to guarantee that future harm was not going to be done.

To reconcile these two realities, Rempel came up with the idea of a “mitigation bank” or credit system, a staple of air pollution regulation. Arco would assign its 6,000-acre Coles Levee land to the state and establish a wildlife preserve, which the company would be in charge of monitoring.

In exchange, the company would be allowed to continue existing operations on the land as long as it remained sensitive to the environment. In addition, Arco would receive 6,600 acres of mitigation credits, which could be applied to habitat elsewhere in the region that the company wanted to drill, bypassing the usual red tape. And if it wanted, Arco could sell the credits to builders or developers whose projects in the region would result in the destruction of endangered species habitat.

Environmentalists argue that too much was given to Arco and that the deal sets an unhealthy precedent for Chevron USA and others negotiating their own mitigation deals with the government. And they worry that the credits could be sold to a developer wanting to take land rich in another species. Each habitat, they point out, is unique.

“I’m afraid this is the government’s easy way of getting out of the endangered species business,” said Mary Griffen of the Kern County Audubon Society.

Douglas Wheeler, head of the state resources agency, disagrees. “This is a pioneering effort that integrates environmental and economic interests. It’s been so well received that we’re looking to apply the model statewide.”