Bolsa Chica Deal Was a Nail-Biter Right to the End

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 reporters recording the seeming closure to 20 years of strife over a famous wetlands.

But at the fringes of the crowd, outside 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 the 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 eleventh-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 eventually came together. Sleepless and somewhat incredulous, negotiators pulled off a St. Valentine’s Day state purchase many thought would never happen.

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 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 at which 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 the signature of CalResources--oil operator at the wetlands since 1986--on the all-important cleanup agreement, one official said, “The whole deal would have cratered.”

It certainly wouldn’t have been the first time that a Bolsa deal went sour.

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

The new project is a massive one, involving $91 million and an army of state and federal agencies. It called for the state to pay $25 million for 880 acres owned by Koll Real Estate Group.

Fully $79 million of 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.

Then, last year’s discovery of oil-field contamination at Bolsa Chica would in time propel two major oil corporations to the table--CalResources and Phillips Petroleum, its predecessor at the wetlands.

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

In early January came a significant breakthrough.

Meeting in Northern California, 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 Interior Department’s regional solicitor’s office in Sacramento, one of four lawyers whom many credit for helping save that deal.

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.

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

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

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

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

The Feb. 11 news conference was already set, and an entourage of state and federal officials converged on Orange County the evening before, still uncertain if a deal was pending because of the conflict between CalResources and Phillips.

Urgent calls crisscrossed the country. 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.

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

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

Finally, they could turn off their cell phones.