New Coastal Drilling Blocked

A federal appeals court on Monday effectively blocked new oil drilling off the California coast in the near future by upholding a lower court decision that state officials must first scrutinize drilling plans for environmental hazards.

The ruling by the U.S. 9th Circuit Court of Appeals does not prevent new ocean drilling. But it continues to freeze all drilling plans on undeveloped tracts in federal waters off the state’s coastline until the California Coastal Commission reviews their impact on the ocean, the shoreline and marine life.

Ruling unanimously, a three-judge panel rejected arguments by the Bush administration that state officials lack authority to review oil leases in areas of the ocean that are under federal jurisdiction.

The 33-page ruling graphically described the dying seabirds and 30 miles of blackened beaches that resulted from a 1969 oil platform blowout off Santa Barbara which, the judges wrote, “might have been avoided but for a failure of federal oversight.”

The state’s ability to review and influence federal decisions on offshore oil development in federal waters was designed to prevent these failures, the judges wrote.

Gov. Gray Davis called the decision a victory for states’ rights and compared it to “a big stop sign” to leaders in Washington. “They should take the hint and halt further attempts to exploit California’s spectacular coastal resources.”

The U.S. Department of Interior said its lawyers were reviewing the ruling and had not yet decided if it will ask a larger nine-member panel of the court to re-examine the case or appeal it to the Supreme Court.

“This litigation is very narrow, focusing on process,” said Interior spokesman Hugh Vickery. “This case, per se, does not deal with putting up platforms or putting a drill into the seabed.”

At issue in the case is the fate of 36 undeveloped oil and gas tracts in federal waters off the coast of Ventura, Santa Barbara and San Luis Obispo counties.

Oil companies paid nearly $1.25 billion to lease these tracts between 1968 and 1984. They drilled 38 exploratory wells, made 17 oil and gas discoveries, but never began producing oil from the tracts.

All of the leases were set to expire more than a dozen years ago. But the Interior Department’s Minerals Management Service extended the leases repeatedly over the objections of state officials.

So the state of California sued, arguing that the federal Coastal Zone Management Act gives the Coastal Commission the authority to review the latest round of lease extensions to ensure that they are consistent with state coastal protection laws.

The Bush administration has argued that the state has no right to review these decisions.

Last year, U.S. District Judge Claudia Wilken in Oakland sided with state officials, ruling that the Coastal Commission can weigh the potential impact of developing each lease on water quality, marine life, air quality and even scenic views.

The 9th Circuit Court upheld Wilken’s ruling Monday, saying that the state’s ability to review and influence these extensions, or “suspensions” as they are known, are important ecologically and a matter of law.

“These lease suspensions represent a significant decision to extend the life of oil exploration and production off of California’s coast, with all of the far-reaching effects and perils that go with it,” the appeals court ruled.

The opinion was written by Judge Dorothy W. Nelson and joined by the 9th Circuit Chief Judge Mary M. Schroeder and Judge Stephen Reinhart. All three were appointed by President Jimmy Carter.

“I hope the Interior Department decides to comply with the decision instead of prolonging the agony,” said California Resources Secretary Mary Nichols.

“We all know that the position of the governor and the Coastal Commission is to oppose further offshore drilling because of the risk to the environment. But we have to review these leases on a case-by-case basis.”

She said it is possible that some of the leases extensions -- and future drilling -- will be approved if oil companies and federal officials present a compelling case that oil can be extracted in an environmentally safe manner.

Jeff Eshelman of the Independent Petroleum Assn. of America declined to comment Monday on the court ruling, saying he had not had time to review it.

More than 1 billion barrels of crude oil lie untapped beneath undeveloped tracts along the California coast. Much of it is oil that is often used to produce asphalt and does not command the same prices as the lighter oil used to make gasoline.

Most of the major oil companies have abandoned oil development off California because of environmental hurdles and anti-oil sentiment.

Large companies sold their interests to smaller ones, which, in turn, have sued the federal government to recoup hundreds of millions of dollars invested in undersea fields that have not produced a drop of oil. The breach-of-contract lawsuit charges that ever-changing rules and delays have thwarted their ability to produce oil on these tracts.

State officials have urged the Bush administration to pay these oil companies, essentially buying back the leases the way it did earlier this year for undeveloped oil tracts off Florida.

“We are certainly willing to sit down and talk,” said Vickery, of the Interior Department. “So far, the state has rejected our request to negotiate.”

The problem with the negotiations, Nichols said, is that the Bush administration only wants to buy back some of the leases. California officials wants all of the leases to be purchased.

In another plan, Democratic U.S. Sens. Barbara Boxer and Dianne Feinstein joined with members of Congress in Louisiana to try to swap California’s tracts with equivalent tracts off the coast of Louisiana. The Bush administration, so far, has not supported the legislation.

The fight over offshore oil drilling isn’t new in California. But it has been limited to these 36 tracts because the rest of the state’s coastline is protected by a moratorium on offshore oil drilling imposed by Congress and presidential order.

An additional 43 offshore tracts remain in active oil production in federal waters and a few more in state waters. The platforms of these working wells dot the coastline off Huntington Beach, Long Beach, Ventura and Santa Barbara counties. State waters are within three miles of shore. Federal waters begin three miles out and extend seaward from there.

The Bush administration is pushing to increase domestic oil and gas production. It wants to drill in the Arctic National Wildlife Refuge in Alaska and in new areas of the Gulf of Mexico and the Rocky Mountains.

Monday’s ruling puts Bush administration officials in a awkward position because they usually champion states’ rights over federal authority, said Drew Caputo, an attorney with the Natural Resources Defense Council.

“These guys over and over again talk about respecting state authority for drilling in the arctic and increasing timber cutting in some states,” he said. “Here’s a state that is adamantly opposed to drilling. I don’t understand how they can respect state authority only when the state agrees with the oil industry.”