How Bolsa Chica Purchase Almost Fell Apart

On the shores of Bolsa Chica last week, the policymakers were declaring victory.

This was a great new day for California’s coastline, they proclaimed to the swarm of reporters recording the seeming closure to 20 years of strife over the famous wetlands.

But at the fringes of the crowd, outside of the reach of television cameras, key players still paced stern-faced with cellular phones glued to their ears, fighting to save a $91-million project that appeared perilously close to collapse.

Just days before, the state purchase of 880 acres of Bolsa Chica had seemed so tangible that government officials scheduled a celebratory news conference. But when reporters arrived on this sunny morning, as the cell-phone diplomats knew too well, the deal was not yet done.

A white-knuckle drama paved the way for last week’s state purchase of the Orange County wetlands, one that illuminates just why a Bolsa Chica solution was two decades in the making--and why government ventures to save environmentally fragile landscapes so often falter in 11th-hour clashes over money and liability.

The deal almost “cratered,” as negotiators put it, because of a disagreement between two giant oil companies that in turn jeopardized a cleanup pact considered crucial for the state purchase. That pact was needed to ensure that the oil companies--not taxpayers--would pay to remove contaminants left behind by years of Bolsa Chica oil operations.

In the end, the deal came together. Sleepless and somewhat incredulous, negotiators pulled off a St. Valentine’s Day state purchase many thought would never happen. Long held by Koll Real Estate Group and slated for development, the wetlands are now destined to become a major public wildlife preserve.

Still, interviews with key players reveal that the project nearly unraveled during a final roller-coaster week of snafus and last-minute saves.

As one federal official recalled: “It was peaks and valleys. One moment we’re home free, and the next moment, the world is crashing down.”

The story of how that deal was clinched encompasses an unlikely crew of biologists, lawyers, developers, oil-company managers, politicians and environmental activists.

It pulled together state and federal agencies, an Orange County developer, two major oil companies and two of the nation’s largest seaports--all trying to figure out an environmental puzzle, a Rubik’s Cube that had defied solution for a generation.

During the crucial final days, they jousted, bargained and compromised, working from hotel rooms in Seal Beach and Huntington Beach, from oil company offices in Oklahoma and in Bakersfield, from government headquarters in Washington and Sacramento, from car phones on the San Diego Freeway.

They even negotiated in the Bolsa Chica parking lot during the Feb. 11 news conference where the deal was supposed to be announced.

But there was no deal.

Something was going wrong between the oil companies, some negotiators reported. And without CalResources’ signature on the all-important cleanup agreement, one official said, “The whole deal would have cratered.”

It certainly wouldn’t be the first time that a Bolsa Chica deal went sour.

Time and time again over the years, developers had sought to build on this parcel of wetlands sandwiched between suburbia and the sea.

Then, over the last three years, the notion of a public purchase gained momentum.

The new project is a massive one, involving $91 million in funds and an army of state and federal agencies. It called for the state to pay $25 million for 880 acres of Koll-owned land.

Fully $79 million of the funds came from the ports of Los Angeles and Long Beach, some earmarked to buy the land and the rest to restore it. In exchange, the ports received the go-ahead to build over marine habitat in the two cities.

But last year’s discovery of oil-field contamination at Bolsa Chica raised the specter of taxpayer liability and threatened to undermine a public purchase.

In time, two major oil corporations came to the table--Shell Oil Co. affiliate CalResources, oil operator at the wetlands since 1986, and Phillips Petroleum, its predecessor.

The issue: how to conduct a cleanup costing an estimated $7 million to $17 million without taxpayer funds.

The project took a nose dive a few days before Christmas, when a deal could not be struck in time for a state Lands Commission meeting. In early January came a significant breakthrough.

Meeting in Sacramento, government officials offered the private parties some new approaches--for instance, allowing CalResources to conduct the cleanup, rather than an outside contractor, under the oversight of the Santa Ana Regional Water Quality Control Board.

From that meeting sprang the basic tenets of the cleanup agreement that allowed the deal to succeed, said Bill McDonald, 50, a staff attorney in the U.S. Department of the Interior regional solicitor’s office in Sacramento, who worked on Bolsa Chica full time from September until last week.

McDonald is one of four attorneys whom many credit for helping saving that deal.

Another is Hugh Barroll, 39, assistant regional counsel with the U.S. Environmental Protection Agency, who helped craft the cleanup agreement. Barroll, who works out of San Francisco and started working on Bolsa Chica a decade ago, saw the wetlands for the first time last week.

A third is Robert Hight, 51-year-old executive officer of the State Lands Commission, the little-known state agency that actually bought Bolsa Chica. Hight is said to have “moved mountains” during the final weeks, his cell phone constantly at his side.

The fourth attorney is Lucy Dunn, 44, senior vice president of Koll Real Estate Group, the landowner whose financial future is closely linked with the development of 2,400 homes on a Koll-owned mesa north of the wetlands. With the state purchase of the wetlands, another 900 homes planned for that area are now scrapped.

Those four and dozens of others rushed to finish the project by mid-February amid a host of time pressures, including the port of Los Angeles’ expansion timetable and the impending departure of George T. Frampton Jr., U.S. assistant secretary of the Interior for fish, wildlife and parks. Frampton, who took a personal interest in Bolsa Chica, left the Clinton administration on Valentine’s Day.

By Feb. 5, the major pieces of the deal appeared--finally--to be in place.

“We basically had a handshake deal,” McDonald recalled.

At a meeting in Los Angeles, a Koll attorney broke out the beer.

“Solid enough for beer, but not quite good enough for champagne,” the attorney told Dunn.

But within days, pieces of the plan began to unravel.

First a misunderstanding surfaced Feb. 7 over how certain cleanup responsibilities had been divided up.

Late Sunday and early Monday--Feb. 9 and 10--some government officials say, they began hearing that a disagreement between CalResources and Phillips had emerged over the terms of a 10-year-old agreement between the two over oil rights--which could have jeopardized the sale of Bolsa Chica.

Details were scarce.

“We were not privy to private discussions,” McDonald said. “I had no way to judge what sort of pickle we were into.”

The Tuesday, Feb. 11, news conference was already set, with appearances by Frampton and state Resources Secretary Douglas Wheeler. So a whole entourage of state and federal officials converged on Orange County on Monday evening, still unsure if a deal was pending because of the conflict between CalResources and Phillips.

Amid the uncertainty, an Interior Department spokeswoman rushed to a Kinko’s copying center in Long Beach on the rainy night of Feb. 10 to change a federal press release, softening the language, changing the words “will” to “would,” noting that the agreement would be effective “if signed by all private parties.”

The media event went on, with an announcement that state and federal officials had reached agreement on the Bolsa Chica plan, but that a few final issues remained. Even during the news conference, Hight and Dunn continued to work their cell phones.

Urgent calls crisscrossed the country into the night.

Now the key players were stationed at hotel-room phones throughout Orange County. Wheeler had brought independent mediator Sandra Rennie into the talks in December, and she worked the phones until 11 p.m. at the Hyatt Newporter in Newport Beach, starting again at 7 a.m.

Frampton flew back from Orange County to Washington, then called a Phillips official at home in Oklahoma late Tuesday night.

But even when the morning of Feb. 12 arrived, no one knew exactly what would play out at the State Lands Commission meeting at Huntington Beach City Hall--which was supposed to be a pro forma approval of a deal.

“When I was lying in bed on Wednesday morning, I really wasn’t very confident that this would happen,” said R.J. Pautsch, senior attorney with CalResources.

The suspense turned the Wednesday meeting into a cliffhanger--climaxing when a CalResources official announced his firm had reached a verbal agreement with Phillips. The audience applauded and cheered.

Most of the key players, however, did not relax until Friday morning, Feb. 14, when they received faxes of the stamped deed.

Finally, they could turn off their cell phones.