State to Scrutinize Offshore Oil Leases, Expansion Plan

The California Coastal Commission will send a letter to federal officials asserting the state’s authority to begin an immediate review of plans to dramatically expand oil drilling off the state’s Central Coast, officials said Thursday.

Members of the coastal panel said a change in federal law gives them the right to review offshore oil drilling leases that skirted state scrutiny when they were first approved nearly 20 years ago. At that time, the U.S. Supreme Court ruled that the Coastal Commission did not have jurisdiction over the leases.

Following the wishes of Gov. Gray Davis and environmentalists, the commission voted Thursday to make California the first state to attempt to intercede in an arena normally controlled by the U.S. Minerals Management Service. “We are looking at whether the leases should have been granted in the first place, whether they were appropriate or not,” said commission Chairwoman Sara Wan of Malibu. “We are saying nothing should move ahead until we have a chance to review this.”

The controversy centers on 40 undeveloped oil leases along the coast from San Luis Obispo to Port Hueneme. Most of the tracts are concentrated in waters near northern Santa Barbara County. Oil companies paid at least $1.2 billion as much as 31 years ago for the right to drill in federal waters off the coast.

Oil companies hope to obtain the Department of the Interior’s approval to pump about 1 billion barrels of low-grade crude from the tracts--as much oil as has been removed from the entire California coast over the past century. The undeveloped leases are not covered by drilling moratoriums imposed by lawmakers in Sacramento and Washington.

But the quality of the oil is so poor it would probably be used to make asphalt rather than gasoline. Perhaps five new drilling rigs would have to be installed to extract the oil, although much of the crude is reachable from existing platforms via long-reach drilling technology.

The federal minerals management agency has suggested in the past that the state become involved in reviewing the expanded drilling proposals only after specific new exploration and development plans are submitted by the oil companies. Some of those plans are already in and others are expected this fall.

John Romero, spokesman for the Minerals Management Service, said California has authority to subject offshore oil drilling and other coastal activities to a “consistency review” under the Coastal Zone Management Act, which grants certain states authority to regulate federal activities along their shores.

“Any development and production plan submitted by an individual company has to be reviewed for consistency by the Coastal Commission,” Romero said.

But Frank Holmes, spokesman for the Western States Petroleum Assn., said states are limited in the extent of review they can conduct.

The Coastal Commission tried to conduct such a review in the early 1980s, but the Supreme Court decision blocked it. But in its 1990 renewal of the coastal zone law, Congress changed the law to permit states to become involved in reviewing such leases.

Environmentalists praised the commission’s action.

“What is so important about this is that it gives the first real opportunity, because of the Supreme Court decision, for the state to review these leases,” said Susan Jordan, a board member of the League for Coastal Protection. “It’s an assertion of California’s right to protect its coast.”

In other action Thursday, the commission agreed to allow commercial farming of abalone in Half Moon Bay by entrepreneurs who hope to raise as many as 2.2 million red abalone in floating cages at Pillar Point Harbor and put the shellfish back on California tables.

The proposal, approved in a 7-1 vote, drew concern from fishermen and environmentalists. Fishermen who attended the hearing argued that the farms would eliminate some spaces where boats currently dock. Environmentalists were concerned that the expensive mollusk would harm native species and eat too much kelp.

The state halted commercial harvesting of abalone in the wild two years ago.