U.S. Refuses to Buy Back Oil Leases

The Bush administration on Friday rejected Gov. Gray Davis’ request that it buy back offshore drilling rights, as it did last week in Florida, arguing that circumstances in the two states are quite different and that “Florida opposes coastal drilling and California does not.”

That statement, which seems sharply at odds with prevailing sentiment in California, was among a list of reasons cited by Interior Secretary Gale A. Norton for dismissing Davis’ request, made in a May 30 letter, for federal funds to buy out three dozen oil leases and protect the state’s “beautiful coastal waters.”

In her response, Norton said that two lawsuits, one filed by California and another by oil companies, preclude the administration from cutting a deal as was done in Florida, where Bush pledged $235 million to buy back offshore oil and gas leases.

“Third,” Norton wrote, “a major difference between Florida and California is that Florida opposes coastal drilling and California does not.”

According to aides, the observation surprised and delighted the Democratic governor on Friday. Davis for years has appealed to voters with a shared opposition to offshore oil drilling.

“Ever since the spill off Santa Barbara in 1969, Californians have vehemently opposed new offshore drilling,” Davis said in a statement Friday.

“With all due respect, [Norton] fundamentally misunderstands ... California’s long fight about offshore oil drilling,” the governor said.

The 1969 blowout of an oil platform did more than solidify California’s opposition to offshore drilling. Heart-wrenching images of dying, oil-soaked birds and goo-covered beaches inspired the nation’s first Earth Day and helped launch the environmental movement.

Norton’s letter startled environmentalists.

“California’s opposition to oil drilling dates back 43 years,” said Carl Pope, executive director of the Sierra Club. “It’s fair to say that Secretary Norton is a half-century behind the times.”

“California sent a message first to Ronald Reagan, second to George Herbert Walker Bush and third to Bill Clinton and, if we have to, to George Bush: ‘Don’t drill our coast,’ ” Pope said.

Richard Charter, a longtime offshore oil activist, said Norton should visit the state soon for a lesson in California politics. “This is the state where opposition to oil drilling began. She needs to do some homework.”

To buttress her argument, Norton outlined the history of oil drilling in Florida and California. “No oil or gas has ever been commercially produced from state or federal leases offshore Florida,” she wrote.

In contrast, she cited drilling activity on leases in California waters that oil companies began developing before Congress and state officials imposed a ban on new leasing. State officials, she pointed out, have allowed 150 wells to be drilled in state waters since 1990 on 34 active leases. State waters extend three miles from shore.

An additional 43 leased tracts exist off California in federal waters, those which are at least three miles offshore. These tracts--each three miles square--are the site of 114 wells drilled since 1990.

Mark Pfeifle, a spokesman for Norton, said Davis, either as governor or lieutenant governor helped oversee such drilling.

“Since 1990, in various capacities, Mr. Davis has overseen more oil pumping than the Beverly Hillbillies,” Pfeifle said.

“That’s kind of ridiculous,” said Garry South, the governor’s top political strategist. “Gray [Davis] has fashioned his career around the environment and offshore drilling.”

Mary Nichols, secretary of the California Resources Agency, said the letter shows how Norton is grasping for reasons why the administration is treating California differently from Florida.

Many Democrats claim that the buyback program in Florida was designed to boost the reelection chances of, first, the president’s brother, Republican Gov. Jeb Bush who will likely face former U.S. Atty. Gen. Janet Reno in November, and, second, President Bush himself in 2004.

Moreover, Nichols said, the Bush administration fails to understand the difference between drilling additional wells in developed areas and opening up unspoiled patches of the ocean to development.

“California has been an oil-drilling state and we are proud of our contribution to the nation’s energy needs,” Nichols said. “But that doesn’t mean we don’t want to protect the pristine areas of our coastline.”

For nearly two decades, California and the federal government have been tussling over undeveloped oil leases off the coast of Ventura, Santa Barbara and San Luis Obispo counties.

The number of these tracts of sea floor, which were leased to oil companies between 1969 and 1984, has been whittled down over the years.

Currently, 36 tracts remain in place. They could be developed if oil companies manage to clear all federal and state environmental hurdles.

But state and federal officials disagree on what those hurdles should be--resulting in a lawsuit.

California officials maintain that federal law gives them the right to review new oil-drilling plans in federal waters off the state’s coastline to make sure they conform with state regulations protecting air and water quality, sea life and scenic views.

A U.S. District Court judge last June agreed, effectively blocking new oil-drilling plans until they pass muster with the California Coastal Commission.

Earlier this year, lawyers for Norton and the Interior Department’s Minerals Management Service appealed the decision. Attorneys are scheduled to present their arguments before the U.S. 9th Circuit Court of Appeals on Monday.

Norton referred to this suit in her letter to Davis, noting that its outcome will have significant implications for energy needs beyond California’s borders.

She also mentioned a lawsuit brought in January by oil companies.

Nuevo Energy Co. of Houston and several other firms accused the federal government of breaching contracts with delays and ever-changing rules that have thwarted their ability to produce oil from these tracts.

A similar lawsuit was filed by oil firms in Florida two years ago, Norton said, giving federal officials ample time to figure out how much these companies should be paid to settle the lawsuit and buy back the leases.

Her letter indicated that the California lawsuit needs more time to progress to evaluate oil company claims and to structure any settlement.

Pfeifle, Norton’s spokesman, said no one has ruled out a future settlement that would include buying back or swapping the leases.

“In due time, a cooperative agreement may be available, much like the one in Florida,” he said.