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Archive for 2009



Arnold Aide: Gov’s Offshore Plan Not An End Run

Friday, May 15th, 2009

oilrigGovernor Schwarzenegger’s bid to capture $1.8 billion by resurrecting a controversial deal to expand offshore oil production near Santa Barbara is not a backdoor attempt to short-circuit anti-drilling policies in state coastal waters, a top administration official said Friday.

“This is not an attempt to circumvent the California Sanctuary Act,” protecting coastal waters, Thomas Sheehy, chief deputy director for policy of the Department of Finance, told Calbuzz. “This is in no way a camel’s nose event.”

As new details emerged about the governor’s plan to authorize a new offshore oil lease, unveiled in his latest budget proposals, leaders of a key environmental group that earlier favored the disputed deal over the drilling area reacted cautiously to Schwarzenegger’s move.

“We’re still processing,” said Linda Krop, lead attorney for the Santa Barbara-based Environmental Defense Center told us, moments after finishing a conference call with Sheehy in which he briefed her on the proposal. “My first reaction was ‘What? You’re going to take this action without full public (participation)?’

“They’re addressing some of our concerns,” she added. “It’s still unfolding.”

As a political matter, the support of Krop and her group is crucial to Schwarzenegger’s hope of renewing the deal on offshore drilling, long a third-rail issue in California politics.

At issue is what is known as the Tranquillon Ridge project. Earlier this year, the Environmental Defense Center (EDC), representing a broad coalition of coastal protection groups, and the Houston-based Plains Exploration & Production oil company (PXP) hammered out an agreement that would allow the company to drill in state waters at Platform Irene, located off the coast near Vandenberg Air Force Base.

The company now drills in federal waters on one side of the ridge, and there is no end date for them to stop doing so. At the same time, the California Sanctuary Act of 1994 has blocked the company from drilling in state waters, which extend three miles out from the coastline.

In exchange for a state lease to expand drilling for oil and gas, which drain from federal into state waters at Tranquillon Ridge, the company agreed to a series of environmental concessions sought by EDC.

Chief among these was an agreement to permanently shut down Platform Irene in 2022, ending all drilling in both federal and state waters. PXP also promised funds to permanently protect thousands of acres of onshore lands, about $350 million of tax revenue for local government, plus $1.8 billion in royalty payments to the state over the next 14 years.

Despite support from both the company and most local coastal protection groups, the deal was rejected by the State Lands Commission in January by a vote of 2-to-1. Lieutenant Governor John Garamendi and Controller John Chiang opposed it while Sheehy, the Department of Finance representative on the panel, voted in favor.

With the state now facing a budget deficit of $15-21 billion, depending on the outcome of next week’s election, Schwarzenegger is now trying to breathe new life in the proposal, through legislation that would overcome the State Lands Commission’s disapproval of it. His new plan for addressing the budget crisis counts $100 million in new revenue for the coming fiscal year, an advance on the royalties from PXP.

In a prepared statement, PXP said that, “We are encouraged that the governor recognizes the merits of the project, which includes substantial monetary value to the state.

“PXP is ready to move forward with this project following its approval by the governor and the California state legislature,” the statement said.

Krop said that her first thought after hearing of the proposal Thursday was that the governor was trying to end run the normal, comprehensive public hearing and multi-agency processes involved in such an environmentally sensitive project, which could establish a precedent for doing so. After hearing from Sheehy, however, she said she felt somewhat reassured.

“Is it really a precedent?” she told us. “This is the only place in the state” that would be affected.

(Wonk Alert! Next section goes deep into policy and process weeds).

Department of Finance officials said the governor’s plan included these elements:

  • A budget trailer bill that would allow the Director of Finance to “reconsider” an offshore deal that conformed with legislative language defining six specific circumstances which apply only to the PXP deal; the most important is that oil and gas are draining into state waters at the site, and Tranquillon is the only project that meets that criteria.
  • A process by which the Department of Finance would hold a public hearing in Santa Barbara, the Coastal Commission would also have hearings, and federal Minerals Management Service would review the deal in a manner that officials said would be “fully transparent.” The State Lands Commission would not get another opportunity to vote on it, although finance department officials would consult with staff about its environmental concerns.
  • A provision to sunset in January 2011 the legislation giving special authority to the Director of Finance to review offshore projects that meet special conditions.

“Tranquillon is the only project that fits” the narrow criteria in the legislation, Sheehy said. “This project has tremendous environmental benefits for California, and we can’t turn a blind eye to the financial benefits.”

But Susan Jordan, a longtime advocate for coastal protection, who broke with her longtime allies at EDC and opposed the PXP deal back in January, was not persuaded.

“They’re giving special treatment to this project,” she said. “The most important issue is, they’re not following existing legal process and (they’re) taking away existing legal protections” that govern offshore projects.

Key Schwarzenegger Aide: Governor’s Offshore Plan Not An End Run

Friday, May 15th, 2009

Governor Schwarzenegger’s bid to capture $1.8 billion by resurrecting a controversial deal to expand offshore oil production near Santa Barbara is not a backdoor attempt to short-circuit anti-drilling policies in state coastal waters, a top administration official said Friday.

“This is not an attempt to circumvent the California Sanctuary Act,” protecting coastal waters, Thomas Sheehy, chief deputy director for policy of the Department of Finance, told Calbuzz. “This is in no way a camel’s nose event.”

As new details emerged about the governor’s plan to authorize a new offshore oil lease, unveiled in his latest budget proposals, leaders of a key environmental group that earlier favored the disputed deal over the drilling area reacted cautiously to Schwarzenegger’s move.

“We’re still processing,” said Linda Krop, lead attorney for the Santa Barbara-based Environmental Defense Center told us, moments after finishing a conference call with Sheehy in which he briefed her on the proposal. “My first reaction was ‘What? You’re going to take this action without full public (participation)?’

“They’re addressing some of our concerns,” she added. “It’s still unfolding.”

As a political matter, the support of Krop and her group is crucial to Schwarzenegger’s hope of renewing the deal on offshore drilling, long a third-rail issue in California politics.

At issue is what is known as the Tranquillon Ridge project. Earlier this year, the Environmental Defense Center (EDC), representing a broad coalition of coastal protection groups, and the Houston-based Plains Exploration & Production oil company (PXP) hammered out an agreement that would allow the company to drill in state waters at Platform Irene, located off the coast near Vandenberg Air Force Base.

The company now drills in federal waters on one side of the ridge, and there is no end date for them to stop doing so. At the same time, the California Sanctuary Act of 1994 has blocked the company from drilling in state waters, which extend three miles out from the coastline.

In exchange for a state lease to expand drilling for oil and gas, which drain from federal into state waters at Tranquillon Ridge, the company agreed to a series of environmental concessions sought by EDC.

Chief among these was an agreement to permanently shut down Platform Irene in 2022, ending all drilling in both federal and state waters. PXP also promised funds to permanently protect thousands of acres of onshore lands, about $350 million of tax revenue for local government, plus $1.8 billion in royalty payments to the state over the next 14 years.

Despite support from both the company and most local coastal protection groups, the deal was rejected by the State Lands Commission in January by a vote of 2-to-1. Lieutenant Governor John Garamendi and Controller John Chiang opposed it while Sheehy, the Department of Finance representative on the panel, voted in favor.

With the state now facing a budget deficit of $15-21 billion, depending on the outcome of next week’s election, Schwarzenegger is now trying to breathe new life in the proposal, through legislation that would overcome the State Lands Commission’s disapproval of it. His new plan for addressing the budget crisis counts $100 million in new revenue for the coming fiscal year, an advance on the royalties from PXP.

In a prepared statement, PXP said that, “We are encouraged that the governor recognizes the merits of the project, which includes substantial monetary value to the state.

“PXP is ready to move forward with this project following its approval by the governor and the California state legislature,” the statement said.

Krop said that her first thought after hearing of the proposal Thursday was that the governor was trying to end run the normal, comprehensive public hearing and multi-agency processes involved in such an environmentally sensitive project, which could establish a precedent for doing so. After hearing from Sheehy, however, she said she felt somewhat reassured.

“Is it really a precedent?” she told us. “This is the only place in the state” that would be affected.

(Wonk Alert! Next section goes deep into policy and process weeds).

Department of Finance officials said the governor’s plan included these elements:

– A budget trailer bill that would allow the Director of Finance to “reconsider” an offshore deal that conformed with legislative language defining six specific circumstances which apply only to the PXP deal; the most important is that oil and gas are draining into state waters at the site, and Tranquillon is the only project that meets that criteria.

– A process by which the Department of Finance would hold a public hearing in Santa Barbara, the Coastal Commission would also have hearings, and federal Minerals Management Service would review the deal in a manner that officials said would be “fully transparent.” The State Lands Commission would not get another opportunity to vote on it, although finance department officials would consult with staff about its environmental concerns.

– A provision to sunset in January 2011 the legislation giving special authority to the Director of Finance to review offshore projects that meet special conditions.

“Tranquillon is the only project that fits” the narrow criteria in the legislation, Sheehy said. “This project has tremendous environmental benefits for California, and we can’t turn a blind eye to the financial benefits.”

But Susan Jordan, a longtime advocate for coastal protection, who broke with her longtime allies at EDC and opposed the PXP deal back in January, was not persuaded.

“They’re giving special treatment to this project,” she said. “The most important issue is, they’re not following existing legal process and (they’re) taking away existing legal protections” that govern offshore projects.

Fishwrap: CA Firesale, Chinese Wine & Cheese, Central Coast Fratricide

Friday, May 15th, 2009

Governor Arnold says California should sell off some of its iconic real estate assets like San Quentin, the Cow Palace and the Los Angeles Coliseum, to help balance the budget.

While this may not help much in the short run – it would likely take two to five years to close deals this big – Calbuzz has some ideas on 10 other properties the state can auctihearstcastle-712894on off, along with some possible buyers, to keep the fire sale revenue stream flowing for years.

1- Hearst Castle: Media News mogul Dean Singleton, an unscrupulous news business titan just like the original owner, could throw lavish parties to entertain all the Bay Area journalists he’s put out of work.

2-The Golden Gate Bridge: Dianne Feinstein and Dick Blum, who already own a swell place in nearby Presidio Terrace, could buy the bridge and close it from 9 pm-9 am to help keep the neighborhood quiet.

3- The Historic Governor’s Mansion: Jerry Brown is already eyeing it, while waxing nostalgic for his old bedroom on the second floor; best to get some up front cash now, before he gets a chance to move in for free.

4-Asilomar: Clint Eastwood, the former mayor of nearby Carmel-by-the Sea, would have plenty of room in the spacious Monterey Peninsula conference center to exercise his core political belief: “Everyone leaves everyone else alone.”

5-Fort Tejon: Flush with cash, the Agua Caliente Band of Cahuilla Indians or the Morongo Band of Mission Indians might snap up the historic Army fort, originally used to wage war on Native Americans, in a nice bit of historic payback.

6-Old Town San Diego: The Federation for Immigration Reform could celebrate the Bear Flag Revolt every day in the historic district, an ideal base for furthering their nativist views about Mexico.

7-The State Capitol: Ipoh Ltd, redevelopers of the famed Queen Victoria Building in Sydney, have a lot of experience converting historic buildings into shopping centers. Besides, the governor and legislature aren’t really using it for much.

8-Angel Island: Just think what Steve Wynn, world’s most imaginative casino developer, could build on all that wasted open space in this little slice of heaven in San Francisco Bay. Laissez les bons temps rouler!

9-Will Rogers State Park: On their way out the door, the governor and First Lady Maria Shriver could do their small part to erase the budget deficit by retiring in splendor, and keeping the show biz vibe alive, at this Santa Monica showplace.

10-La Brea Tar Pits: Okay, the state doesn’t officially own the pits, but General Services could seize it by eminent domain and sell it to the senate Republican caucus; those guys are all free enterprise fans and, anyway, what more appropriate site for party headquarters?

Today’s sign the end of civilization is near: With great pride and enthusiasm, Lt. Gov. John Garamendi, in his role as (all rise) chairman of the California Commission for Economic Development, this week announced “the formation of the California Wine and Cheese Expo in Shanghai Pudong’s Wai Gaoqiao Free Trade Zone.”

Now there’s something you don’t see everyday.

“At the Commission for Economic Development, we craft strategies to help improve California ’s economy and business climate, and beneficial international trade relationships are an essential part of that equation,” said Garamendi. “China ’s white collar population is expanding rapidly, and demand for quality wines and cheeses is on the rise. ” Who knew?

Memo to Arnold: In cutting the budget, maybe start by eliminating the lieutenant governor’s office altogether.

No tranquility at Tranquillon: The Terminator’s bid to overturn the State Lands Commission’s veto of a new offshore oil drilling lease at Tranquillon Ridge off Santa Barbara County has added fuel to an already heated Democratic legislative primary.

The commission’s January vote, which torpedoed a deal negotiated between coastal advocates and oil company PXP, bitterly divided local environmentalists, and led to to the contested primary. Longtime enviro Susan Jordan, who’s running to succeed husband Pedro Nava in the 35th AD, staked out a lonely stance opposing the deal, while most of her erstwhile allies, including city councilman Das Williams, backed it.

Williams who had earlier pledged to support Jordan, cited her position on Tranquillon as his key reason for making an about-face entry into the race. The issue had finally died down when Schwarzenegger resurrected the lease deal as part of his May revise budget plan.

Governor Seeks Cash from Defeated Offshore Drilling Deal

Thursday, May 14th, 2009

oil_platformOur friend Greg Lucas was first to report, over at California’s Capitol, that Gov. Schwarzenegger’s May revise plans call for resurrecting a controversial deal to allow a new lease for offshore oil drilling off the coast in Santa Barbara County.

In exchange for the lease, the oil company Plains Exploration & Production (PXP) had agreed to a series of environmental concessions. The proposal had the backing of most local coastal protection groups, but the State Lands Commission voted it down in January.

Under terms of the deal, the state stood to receive about $1.8 billion in oil royalties over the next 14 years for allowing PXP expanded drilling rights on the existing Platform Irene at Tranquillon Ridge, off the coast from Vandenberg Air Force Base. The governor’s new budget plan proposes legislation to authorize the lease, despite the earlier commission vote, and includes $100 million in revenue for the upcoming fiscal year from awarding it.

In exchange for expanded drilling rights, the company offered a mandatory shutdown date of 2022, thousands of acres of permanently protected onshore lands, approximately $350 million of tax revenue for local government, plus the royalty payments to the state.

Arnold’s Final Bid for Budget Ballot Props

Thursday, May 14th, 2009

heilarnoldArnold’s drop-by at his big press avail on the May budget revision was a case of the elephant giving birth to the mouse.

The administration has been putting out details of its worst-case/worser case scenarios for almost a week: more cuts for schools, early release of thousands of state prisoners, selling off everything but the Golden Gate Bridge. So there wasn’t a whole lot new in terms of the numbers, and the governor’s plaintive plea on behalf of his ballot props next Tuesday was definitely déjà vu all over again.

(The Department of Finance report on the two alternatives for addressing the deficit for the fiscal year that begins July 1 — $15.4 B if the props pass, $21.3 B if they don’t — is here.

That said, his Arnoldship did make at least a few interesting statements, starting with his introduction of Finance Director Mike Genest – “this man is on suicide watch” – that will frame yet another budget brawl, which will erupt next week as soon the election formalities are finished:

1-“To look for new revenues is out of the question.” It’s true that in negotiating this year’s budget deal, Schwarzenegger kept insisting that he’d never go for tax increases, right up until he did. But his position at this point is basically irrelevant; with the six Republican legislators who signed on to new taxes in February all being punished – by losing their leadership posts, facing recalls, or being shunned by the GOP caucus – it’s a safe bet that the death grip Reps hold on budget matters because of the 2/3rds requirement will now be tighter than ever. So look for lots of anti-tax triumphalism by the party of Grover Norquist, er, um, Lincoln.

2-“I absolutely despise taking money away from local government.” Besides looming battles over more cuts for education and cutting prisoners loose, the loudest fight will be over Schwarzenegger’s grab for $2 billion from local governments, in direct violation of his earlier promise not to do just that. With cities and counties scrambling to pay cops and firefighters while facing the same recession-level revenue problems as Sacramento, taking an extra hit so the Capitol Clown Show can pretend to balance the budget won’t be popular.

3-“You hope the economy is coming back.” That’s a bottom line underlying assumption of Schwarzenegger’s fiscal strategy at this point, whether the May 19 props pass or not. In addition to squeezing the locals by “borrowing” $2 billion, both his fixes also call for $6 billion in new borrowing through Revenue Anticipation Warrants and scheming to use federal stimulus money to backfill state cuts; in other words, kicking the can down the road, one more time.