Offshore oil drilling debate adds intrigue to Lt. Gov. appointment

Governor Schwarzenegger likes to boast how he is "protecting" California's ocean. But will he use this opportunity to appoint a new Lieutenant Governor to open the gate to new off-shore oil drilling - something most environmental groups and sympathetic legislators oppose?

Will he conclude he is compensating for damage to the ocean that would occur from an oil leak by stopping fishing in Marine Protected Areas - thereby "protecting" the ocean? After all that's what he and enviromental groups claim MPAs are doing.

-Vern Goehring


By Malcolm Maclachlan, Capitol Weekly
9/10/09

Lieutenant Governor may be the Rodney Dangerfield office of California politics, but there is one key area of policy where that post has shown itself to be quite important this year: offshore oil drilling.

In January, Lt. Gov. John Garamendi cast the deciding vote against a major new offshore project in his role as one of three voting members of the State Lands Commission. With Garamendi almost certainly heading to Congress in November, Gov. Arnold Schwarzenegger will have the task of appointing a replacement.

The oil drilling debate could add more intrigue to an appointment that is rife with potential danger for the governor. Political watchers have widely speculated that he might use the pick to reward an ally or remove a threat—or use it to help push some part of his agenda for his last year in office.

Schwarzenegger had traditionally been an opponent of offshore drilling. But as the budget crisis reached a higher pitch this year, he changed his position and specifically endorsed the project at the heart of this debate: the Tranquillon Ridge proposal by Texas-based Plains Exploration & Production Company, or PXP.

PXP’s has proposed taking an existing platform named Irene and use 17 of its remaining well slots to tap newly-discovered oil deposits. At 4.7 miles off the coast of Santa Maria, the platform actually sits in federal waters, and its current wells are under federal control. But the fields PXP hopes to tap are further towards shore, within the three-mile limit that gives the state jurisdiction.

These deposits include between 170 million and 200 million barrels of oil and 40 billion to 50 billion cubic feet of natural gas, worth more than $25 billion at current prices—according to the environmental impact report for the project. A large spill from a leaking bore hole from a rig off the Australian coast on Aug. 21 may have made this PR task harder, even though PXP had nothing to do with that project.

Theoretically, a lieutenant governor appointment could use a vote on the Lands Commission to approve this project, without the need to go through the Legislature. But Schwarzenegger would first need to get that pick approved by majority votes in both houses of the Legislature, where Democrats hold over 60 percent of the seats. For this reason, Garamendi doesn’t think Schwarzenegger would be able to get a drilling advocate through.

“I’m concerned about who the governor might appoint,” Garamendi said. “I’m very concerned. But I’m also aware the Legislature has the control here. The governor does not.”

But some environmentalists who oppose drilling are not so confident. There are two factors that worry Mike Endicott, the resources sustainability advocate with the Sierra Club of California. First, the Senate already approved a budget bill trailer bill in July that would have allowed the “T-Ridge” project, though the Assembly stripped out those provisions. Second, proposals can be brought back in front of the State Lands Commission repeatedly, without the six month delay required by the California Coastal Commission.

“You could keep coming back at them again and again and again,” Endicott said.

So far, the governor isn’t saying what he’ll do. “It’s still premature to comment on his options,” said Mike Naple, a spokesman for the administration.

Many of the names that have come for the appointment have been Republicans, notably Sen. Abel Maldonado, R-Santa Maria, probably the most moderate Republican currently in the Legislature, or former Los Angeles mayor Richard Riordan. State Democratic Party chairman John Burton has reportedly told Schwarzenegger that Democrats could accept a Republican who had no further aspirations for the office after Garamendi’s term would have ended at the close of next year—though Burton is also a noted opponent of offshore drilling.

“I do not believe he is going to appoint a Democrat,” Burton said, explaining his position. He also noted that any appointee would need to be confirmed by both houses. “I think both would ask very serious questions about where anybody would be on the lands issue.”

As the de facto “landlord” of state property, the State Lands Commission has veto power over projects on state lands—a classification that covers coastal waters out to the three mile limit. Thus, companies must take any kind of coastal project to the Commission, whether it’s building a small marina or tapping a huge oil reserve.

PXP had been doing groundwork for months before the Jan 29 Lands Commission meeting, even lining up the support of some environmental groups that have long fought offshore drilling. But that their T-Ridge proposal hit a wall, in the form of former University of California offensive lineman Garamendi. He and controller John Chiang, another automatic member of the commission, voted down the proposal. The third commissioner, Schwarzenegger finance director Mike Genest, voted to approve the project.

A key factor in that hearing was a report from the Attorney General’s office stating that many of the provisions in the proposed project were not enforceable—an opinion PXP disputes.

But PXP didn’t give up. The company has also been engaged in a media blitz to get their side of the story out, including bringing journalists on guided tours of Platform Irene (disclosure: I took one of these trips on Sept. 2). Part of the deal they have set up includes closing several wells ahead of schedule, and donating 3,900 acres along the coast for “protected public use.”

“We’ve got a need to continue to get the facts out about the project,” said Steve Martini, manager of governmental affairs for PXP. “There has been a tremendous amount of misinformation spread about this project, primarily for people’s political interests. Regardless of whether it’s Mr. Garamendi or another Lieutenant Governor, the onus is on us to get the truth out.”

Part of the ammunition the company has been using is a statewide poll commissioned by PXP that shows two-thirds of state voters approved of the project when it was described to them. While PXP said they provided both arguments for and against the project, Assemblyman Pedro Nava, D-Santa Barbara, isn’t buying it.

“The fact of the matter is that you can ask a poll question in any number of ways to get the result you’re looking for,” said Nava, a major opponent of offshore drilling who has also been pushing hard to a severance tax on oil production in California. “We’re not going to know if that happened until PXP releases the entire poll. Until then, I think people have the fight to be very skeptical of the results.”

The Lands Commission is only part of a large process. Any approved oil drilling project would then have to go before the California Coastal Commission and then the federal Mineral Management Service (MMS).

However, the Coastal Commission could only reject a project on technical grounds, not on policy, the way Garamendi and Chiang did. Mainly, their role would be to look at the impact on the coastal zone—in this case, a series of bore holes on the sea floor—and to review any lease for being consistent with the state Coastal Act. The MMS, meanwhile, is seen as far more sympathetic to drilling projects—meaning the Lands Commission is likely the main bureaucratic hurdle to T-Ridge or any other drilling project.

Staunch opposition from Garamendi and Chiang is one reason the company and drilling supporters in general have been trying to circumvent the standard process. The trailer bill would have effectively created an alternative approval process.

This is also the approach taken by AB 1536, a bill from Assembly GOP Leader Sam Blakeslesse, R-San Luis Obispo. This bill would replace the current process with an “Interim Resources Management Board, consisting of the Secretary of the Natural Resources Agency, the Secretary for Environmental Protection, and the Controller.”

In other words, it would leave Chiang, but substitute the Finance Director and Lt. Gov. with a pair of Schwarzenegger’s environmental appointees, Mike Chrisman with Resources and Linda Adams of Cal-EPA.

The bill also includes provisions that would have the company paying an early deposit of $100 million on royalties, though opponents dispute how much of this “up to” money would actually make it to the state. This money is earmarked to particular programs, something opponents claim is intended to mislead.

“Part of the bill is that it’s dangling money for state parks, AIDS, preventing domestic violence, adolescent family life, and black infant health,” said Gina Goodhill of Environment California. “All great things, but there’s actually no requirement that money be used for any of these programs that suffered budget cuts.”