OFFSHORE DRILLING:

Schwarzenegger pushes plan to issue first Calif. lease since '69

California Gov. Arnold Schwarzenegger (R) is promoting plans to issue the state's first new offshore drilling lease in 40 years, over the opposition of state regulators and environmental groups.

The state imposed a moratorium on new offshore drilling after a 1969 spill off Santa Barbara. In January, the State Lands Commission denied Plains Exploration & Production Co.'s (PXP) application to expand an existing lease in the Tranquillon Ridge, saying it would set a bad precedent.

Since then, statewide opposition to drilling has stiffened as the Obama administration has proposed opening federal waters off California to drilling (Greenwire, May 22).

But Schwarzenegger maintains that the state's $23 billion budget deficit requires a re-examination of drilling policies. Last month, he proposed overriding the Lands Commission's PXP decision by putting it to the Legislature, where the matter resides in a conference committee that is scheduled to meet today on budget issues. Extending PXP's lease through 2022 would generate $1.8 billion over the next 14 years, the state has estimated.

At a State Lands Commission hearing in Santa Monica yesterday, the state's lieutenant governor blasted Schwarzenegger's proposal.

"This would destroy several decades of work that this commission has done," Lt. Gov. John Garamendi (D) said. "Never before has this commission's decision on an oil lease been overturned by a governor. What we have here is a naked end run around the commission for the first time since the power was removed from the Department of Finance" in 1930.

Environmentalists who supported PXP's application in January also lined up to oppose Schwarzenegger's proposal, saying it would undermine the commission's authority on future decisions.

"If you really want the money that bad, this project should go back to the State Lands Commission," said Susan Jordan, executive director of the California Coastal Protection Network. "You don't have the right to unilaterally take control."

"The Department of Finance believes this body just made the wrong decision on January 29," said deputy finance director Tom Sheehy, Schwarzenegger's representative on the commission. "There's a $23 billion budget deficit, and the Department of Finance believes this isn't time for business as usual."

Several other state officials opposed it, saying it would send a signal to the federal government, which is currently considering four areas of California as locations for new offshore drilling leases.

"If the state wants the funds, why not the feds?" asked state Coastal Commissioner Sara Wan. "And if the state believes it won't have adverse environmental effects, why shouldn't the feds lease here?"

The commission also passed a resolution opposing Schwarzenegger's budget proposal.

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