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Posts Tagged ‘EDC’



New Secret Offshore Deal, AB32 Rollback Brawl

Thursday, February 11th, 2010

In the latest twist in the Tranquillon Ridge saga, Calbuzz has learned that PXP oil company and its environmental allies have submitted a new proposed agreement to the State Lands Commission aimed at authorizing expanded drilling off the coast of Santa Barbara.

Our efforts to learn how the new proposal differs from an earlier version, which the commission rejected last year, were unsuccessful, however, because neither the parties nor the commission would release a copy, saying the document is a draft, and the deal is still under review. (Our all-you-need-to-know primer on T-Ridge is here).

“We signed a confidentiality agreement,” Paul Thayer, Executive Officer of the Lands Commission, told us. “They want to get our reaction to it. It’s being reviewed at a staff level, and we’ve also asked the (Attorney General’s) office to look at it.”

The previous PXP-EDC agreement, reached in 2008, was kept secret until Calbuzz obtained a copy and published the document. At a time when controversy is still simmering over elements of the first agreement, key opponents of the project are unhappy with the news that an amended version of the proposed deal is, at least for now, being kept confidential.

“I’m disappointed that PXP and EDC are going down the same failed road,” said Democratic Assemblyman Pedro Nava, whose district adjoins the proposed new drilling. “Whatever the new agreement says, apparently both PXP and EDC believe it can’t stand public scrutiny and so they are hiding it.”

“PXP likes to claim some kind of oil company executive privilege,” he added.

As a political matter, the secrecy of the first agreement played a key role, both in its defeat before the commission, and in the widespread opposition to the T-Ridge deal generated among other environmental groups.

When Calbuzz disclosed the text of that agreement, representatives of both PXP and the Santa Barbara-based Environmental Defense Center told us they were working on a second version, aimed at addressing various concerns that commissioners expressed in voting against the plan last year. Both organizations said that the amended agreement would be made public.

“No, it is not final yet,” Linda Krop, chief counsel for the EDC, emailed us when we asked for a copy of the new agreement.

“We have nothing to hide,” said Scott Winters, a spokesman for PXP. “Once the agreement is final, we will release to the public.”

“Substantial amendments have been added to clarify the enforceability concerns raised by the State Lands Commission (SLC) staff and members of the environmental community,” Winters added in email responses to our questions.

Thayer said the Commission’s review of the proposal was conditioned on keeping its contents confidential.

Nava said the Commission’s willingness to enter into a confidentiality agreement with an applicant “certainly piques my interest.”

“I’ll be inquiring into the terms and conditions under which (SLC) entered into such an agreement.”

Weed whacker alert: PXP’s Winters said that release of the new agreement depended entirely on when the lands commission scheduled another hearing on the project.

“As of right now, the SLC has not calendared this matter for a re-hearing. PXP’s hope is that the SLC will move expeditiously to hold a re-hearing,” he said. “The sooner the SLC schedules a hearing, the sooner the public will have another chance to consider the benefits offered by the project to discuss whether approval is in fact in the best interest of the state.”

We asked Thayer when PXP might get a new hearing in front of the commission. He said it depended on whether they filed a new application for the project, or requested a rehearing on their previous application. A new application would require staff to review it within 30 days, and commissioners to act in 180 or fewer days, he said. But PXP has asked for a faster method to gain approval, such as a rehearing. “We’ve never done one,” Thayer said, adding that the staff is investigating the possibility of such a procedure.

Jerry Blasted on AB32: The folks behind the movement to suspend AB32, California’s historic climate-change legislation, are furious at Attorney General Jerry Brown for the ballot title he has assigned to what they were hoping to sell as the “California Jobs Initiative.”

Crusty’s title:

Suspends air pollution control laws requiring major polluters to report and reduce greenhouse gas emissions that cause global warming until unemployment drops below specified level for full year.

(Which is a little like titling the initiative to legalize marijuana as follows: Ushers in an era of human kindness and peace on earth through availability of non-toxic and eco-friendly natural substances).

The anti-AB32 initiative is backed by Assemblyman Dan Logue of Chico and U.S. Rep. Tom McClintock,  Ted Costa and others who argue the legislation is a job killer – as Meg Whitman and Steve Poizner also contend.

Score round one for Californians for Clean Energy and Jobs, who has hired our old pal Steve Maviglio to manage the opposition.

As a political matter, Brown has hardly been neutral about AB32. In fact, when he was on KGO Radio last week he referred to people opposing the measure as “Neanderthals . . . who want to turn the clock backwards.”

Here’s the dilemma for business interests who’d like to chip in to kill AB32:

1) this is likely the only legacy achievement Gov. Schwarzmuscle has going for him and he’s not going to be happy with people who try to kill it and 2) with a ballot summary like that, who’s going to vote to give a break to “major polluters”?

You never know. Maybe eMeg or the Commish will toss in a few million to the effort and campaign for it. Of course, we think it will backfire in a general election, but hey, stranger things have happened in California politics.

GOP ratfuck update: As close readers will recall, an online firefight broke out last December between Chip Hanlon, proprietor of the Red County web sites, and Aaron Park (formerly known as Sgt. York),  who was one of his bloggers. When Hanlon fired Park/York for secretly being on Steve Poizner’s payroll, we gave Hanlon a hat tip for “canning Sgt. York and disclosing the matter to his readers.”

Given what we knew then, it made sense to note that, “At a time when ethical blogging is too often an oxymoron, it’s nice to see somebody step up to defend his credibility.”

Since then, we’ve learned more, which colors our HT just a bit: It seems that buried deep in eMeg’s campaign finance report is a $20,000 disbursement to Green Faucet LLC, which is an investment firm owned by Chip Hanlon and also the parent company of his Red County web sites. The payment was made about a week after Hanlon fired Park, the erstwhile, paid Poizner sock puppet.

Hanlon tells us this was a straight-up business exchange: eMeg bought advertising on his web sites. And sure enough, her ads are there. But we spoke with another advertiser on Red County who’s paying about $300 a month – closer to the going rate for small political sites – for equivalent exposure on Red County sites. Which suggests the $20K from eMeg could be a big, fat subsidy to Hanlon – not much different than the $2,500 a month Park was getting from Poizner (and which, he says, eMeg’s people tried to match).

All of which raises questions about the use of web site commentary by MSM media, like when the Mercury News recently called on Matt Cunningham, a featured Red County blogger, to comment on Poizner’s charge that eMeg’s consultant had tried to bribe him out of the governor’s race. If you really want to get into the internecine Orange County GOP rat-fucking, you can catch up to the action here and here and here.

(Memo to eMeg Marketing Dept: Our New York-based, commission-paid advertising staff would be well pleased to get $20K for ads on Calbuzz. Hell, they’d even take $300 a month like Poizner is paying for his ad on the page. Plenty of free parking.)

Boston Massacre Has Implications for California

Wednesday, January 20th, 2010

060-238Whatever the loss of Ted Kennedy’s U.S. Senate seat means for the Democrats nationally and for President Obama – and they have no one to blame but themselves — this historic and politically crippling massacre  (see Jon Stewart’s takedown, the best political analysis out there) carries huge potential implications for California.

While no one expects U.S. Sen. Barbara Boxer to make the kind of rookie, dumbass, arrogant mistakes that Massachusetts Attorney Gen. Martha Coakley made (she’d better not suggest, for example, that Willie Mays played for the Dodgers)*, the election of Republican state legislator Scott Brown in a true-blue state like Massachusetts, suggests that anyone who looks or smells like an incumbent could be in trouble in 2010.

Scott-Brown_Hubba_copy

Senator Elect Scott Brown

No doubt, Republicans Hurricane Carly Fiorina and Caveman Chuck DeVore would have a harder time against the Democrat Boxer because as pro-life conservatives they’d have more trouble connecting to California independents.

But Tom Campbell is a horse of a different color. If he were to somehow pull out a victory in the GOP primary, the pro-choice, pro-gay rights, somewhat green, social moderate and fiscal conservative would be a genuine threat to Boxer – especially in light of the pitchfork-bearing quality of the Massachusetts vote.

Taking nothing for granted, Boxer has been raising money at a record pace for her: she brought in $1.8 million in the last three months of 2009, the campaign announced Tuesday, leaving Babs with $7.2 million in the bank at the end of the year.

The dynamics of the Massachusetts race have some potential implications for the California’s governor’s race as well. Whoever emerges from the Republican side – eMeg Whitman or Steve Commish Poisner – their goal will be to portray Attorney Gen. Jerry Brown as the insider who must be thrown out. Of course Jerry, the incumbent attorney general and former two-term governor, will do everything he can to portray himself as an outsider, newcomer and insurgent.barbara-boxer

And in both the Senate and governor’s race, we expect the Democrats to sound a lot like one of the roving 1886 lecturers cited in “The Populist Movement” by Duke historian Larry Goodwyn:

We have an overproduction of poverty, barefooted women, political thieves and many liars. There is no difference between legalized robbery and highway robbery . . . If you listen to other classes, you will have only three rights . . . to work, to starve and to die.

Boxer and Brown — we predict — will run against the banks, the corporations and the oil companies — all of which will be lashed to their GOP opponents.  Whether voters will buy it is anyone’s guess. The Coakley defeat will be massively overinterpreted by the national media (the best evidence is that it was mostly a case of a truly crappy Democratic campaign). But still, the Boston Massacre should be a cautionary tale for California Democrats.

061-460Here’s the secret agreement: Some of the sharpest react we heard from Monday’s story about the behind-the-scenes maneuvering over the Tranquillon Ridge project came over the Environmental Defense Center’s agreement to advocate for the PXP oil company project, while receiving a $100,000 payment for reimbursement of legal fees from the firm.

“I’ve never heard of any environmental non-profit doing anything remotely like this,” said Mark Massara, a former longtime attorney-advocate for the Sierra Club.

By popular demand, we’re posting the text in pdf of the April 2008 EDC-PXP agreement here, for those who want even more detail than we gave you in Monday’s 3,000-word opus.

conanMeanwhile, Back at the Ranch: While the rest of the world was pondering the fate of Haiti and the future of the Democratic Party and health reform, the folks over at Jerry Brown headquarters were consumed by the great debate that’s ragiing from Hollywood to Brentwood: Conan vs. Jay . . . And Steve the Commish Poizner popped a bit of good news: He’s won the endorsement of former Gov. George Deukmejian, who is much preferred among GOP conservatives to former Gov. Pete Wilson, who has endorsed eMeg.  Said Deukmejian: “Steve is the only candidate in this race with the right mix of experience, leadership, and vision to lead California back to economic prosperity.”. . . Minorities Need Apply: Good piece by Pete Carrillo and Orson Aguilar in the Mercury News noting that while “California reform-minded voters gave themselves the power to redraw legislative lines in California when they passed Proposition 11, the Voters First Act . . . an alarmingly low percentage of people of color is included in the pool of applicants from whom the 14 commissioners ultimately will be chosen. Less than 20 percent of that pool now is people of color, even though they make up 60 percent of California’s population.” . . . Condolences: We note with sadness the passing of Margaret Whitman, 89, of Lexington, Mass., mother of Meg Whitman.

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* Some of Coakley’s mistakes: She said the Taliban were gone from Afghanistan. She said Red Sox hero Curt Schilling was a Yankee fan. And when asked why she was not spending more time with voters (Brown had stood outside Fenway Park greeting hockey fans who attended a special outdoor game between the Boston Bruins and the Philadelphia Flyers) Coakley said, “As opposed to standing outside Fenway Park? In the cold? Shaking hands?”

Excloo: Secret Agreement on T-Ridge Revealed

Monday, January 18th, 2010

platformnewA secret agreement between PXP oil company and a Santa Barbara environmental group sheds new light on aspects of the controversial Tranquillon Ridge offshore oil plan that are central to Governor Schwarzenegger’s latest bid to win approval for the project.

A hard copy (now available in pdf) of the previously undisclosed agreement provided to Calbuzz offers an inside look at the terms of the pact that gained the Houston-based PXP the key political support of the influential Environmental Defense Center, which has been prominent in the decades-long fight against offshore drilling in California.

The group’s endorsement of PXP’s application for a lease to slant drill into state waters, from an  existing platform under federal jurisdiction, more than three miles offshore, has bitterly divided California’s environmental community.

Financially at stake are billions of dollars in new revenue for PXP, plus as much as several billion more for the state treasury from royalties on the lease, which the governor insists are needed to address the state’s budget mess.

Despite Schwarzenegger’s aggressive push for the lease last year, the State Lands Commission rejected PXP’s lease application. After a raucous battle, the Assembly later defeated a bill to overturn that decision. Now, Schwarzenegger is pushing for the lands commission to rehear the lease deal, which is framed by the confidential PXP-EDC agreement.

As a political matter, the environmental issue boils down to this: the EDC and its allies argue that trade-offs made by PXP in the confidential agreement in exchange for environmental support ultimately will end some offshore oil drilling; environmental foes of the deal say it is absurd to attempt to end offshore drilling by allowing more of it, and say the deal inevitably will advance oil industry efforts to expand the practice.

PXP and EDC representatives told Calbuzz they have recently amended their original agreement, reached in April 2008, in order to beat back major arguments used to defeat the deal twice before. A spokesman for PXP and an attorney for EDC both said the revised agreement would be made public if PXP gets a new hearing.

krop_lg

Linda Krop

Our own review of the original agreement, which was obtained from sources who requested anonymity because of concerns about retribution, meanwhile provides the first definitive look at a host of issues that, for nearly two years, have been the focus of political gossip, rumor, speculation, charges and counter-charges.

Today we’re publishing a post of unusual length and detail because we think the PXP matter, along with the AB32 climate change controversy, represent the most important environmental issues facing California.

Our research for this piece includes the previously secret document, a face-to-face about its terms with Linda Krop, chief counsel for the Environmental Defense Center, who negotiated it, and an email exchange with Scott Winters, PXP spokesman and vice president of corporate communications. Here is a look at key issues, with a major Weed Whacker Alert:

I-Secrecy: “Negotiated behind closed doors” secrecy

PXP and EDC have declined to make their agreement public, saying it contains proprietary information that could aid the company’s competitors. Their insistence on confidentiality was a major factor in the twin defeats of the deal last year.

If granted, the requested lease would be the first by the state since Union Oil’s disastrous 1969 Santa Barbara oil spill, and opponents of the deal successfully argued that it is outrageous even to consider such a change without a full public airing of its conditions.

“The fate of public lands cannot be decided in contracts negotiated behind closed doors,” Controller John Chiang, a lands commission member, said in explaining his vote against it last year.

Our review of the document showed there is no formal confidentiality clause to legally prevent its release to the public. Linda Krop, lead attorney for EDC, who negotiated the agreement, told us in an interview:

PXP asked if the agreement could be confidential because it explains how they do business with their partners and such, and they didn’t want the rest of the industry to see that. We said, ‘sure, that’s not a problem’…That was just the agreement going in (to negotiations).

PXP and EDC said they recently incorporated amendments to the agreement to address criticisms raised at the initial State Lands Commission hearing by strengthening written assurances that the promised benefits of the agreement will materialize.

PXP spokesman Winters said, “We recognize the concern the confidential nature of the agreement generated” and pledged that the revised agreement will be made public — if and when the lands commission schedules a new T-Ridge hearing.

Krop said she was surprised by the vociferousness of the criticism about the lack of transparency, claiming it is not unusual for environmental groups to keep private the legal agreements or settlements it makes with corporations applying for permits or leases before public agencies. Said Krop:

It caught us off guard. The reason we did not think that was an issue (was) because the project was going to be decided at public hearings before the county, the State Lands Commission and the Coastal Commission…Had we known it was going to be an issue, we would have talked about it up front, but it caught us by surprise…If we get a second chance, it will be a public agreement, and we will never have a private agreement again.

II-Money: Who gets what

EDC legally repmoneyresents in the matter two other Santa Barbara non-profits, Citizens Planning Association (CPA) and Get Oil Out! (GOO). Amid the bitter debate within California’s environmental community, one of the charges leveled by T-Ridge foes is the suggestion that the non-profit EDC benefits financially from the agreement, and from its public support of PXP.

On this point, Section 1.6 of the agreement (“Reimbursement of Expenses of Environmental Parties”) states that:

Upon all Parties’ execution of this Agreement, PXP shall pay $50,000, and upon the State Lands Commission’ approval and PXP’s written acceptance of all the leases necessary for the Tranquillon Ridge Project, PXP shall pay an additional $50,000, for a total of $100,000, to the Environmental Defense Center, as reasonable compensation for work performed by EDC on behalf of GOO! and CPA pertaining to the environmental and permitting review for the Tranquillon Ridge Project, and the negotiations leading up to and implementation of this Agreement.

The oil company also made other financial commitments, in addition to the terms about oil drilling, which are discussed below.

These include ceding for conservation nearly 4,000 acres of onshore lands in Santa Barbara County now used for production and processing of oil yielded by offshore operations. These land transactions, per the agreement, are to be managed primarily through the non-profit Trust for Public Land. The agreement does not state the value of the land.

The company further agreed to a pay a maximum of $298,507, at a rate of $20 per ton, to offset any new greenhouse gas commissions from the T-Ridge project, to the Santa Barbara County Air Pollution Control District. PXP also promised to pay the air quality district $1.5 million, over 14 years, to “administer a transit bus technology program” within the county to help reduce greenhouse emissions.

PXP’s potential royalty payments to the state are estimated at several billion dollars, according to Winters, who said the county of Santa Barbara could receive several hundred million in property tax revenue on oil produced from new T-Ridge operations.

In exchange for these commitments, among others, EDC and its clients made promises of public support for PXP’s efforts to obtain the lease and all necessary approvals, saying they would:

…in a timely manner communicate…support for the granting of all approvals required for the Tranquillon Ridge Project pursuant to the agreement. These communications shall be in writing (with copies contemporaneously delivered to PXP), and include oral testimony at public hearings of Santa Barbara County, the State Lands Commission, and California Coastal Commission…

In the event PXP requests the Environmental Parties to communicate their support…to any other governmental agencies with entitlement jurisdiction, EDC shall do so on behalf of (CPA and GOO!), in which event PXP shall pay EDC’s reasonable fees, together with reimbursement for any of EDC’s reasonable and actual out-of-pocket costs incurred.

Krop termed “ridiculous” the notion that this contractual arrangement could support the perception that EDC was due a $50,000 bonus payment once PXP secured approval from the lands commission. Noting that “every settlement has a reimbursement,” she stated that PXP has now paid the full $100,000 to EDC, which she said actually “shortchanged” the many hours she and her staff devoted to the project. Krop:

For environmentalists, it’s never been about the money, it really has been about ending current oil production and stopping future oil production…We did get paid the full $100,000…because we put twice that (amount of time) by the time we were done…The reason we advocated for this is because we want the end dates (for offshore oil drilling). We want the benefits of the agreement.

As for PXP’s profit, Winters claimed “the state stands to gain as much, or more in all price scenarios, than PXP.” He characterized speculative reports that the company stands to gain upwards of $20 billion from the deal “not even remotely realistic” but declined to say how much increased income the project could mean for PXP.

III-An End to Drilling: How, When, Whether

santa-barbara-view-from-riviera-resize

As a policy matter, the most important issue raised by the PXP agreement is whether or not the negotiated “end dates” — when the company promises to stop drilling both at Tranquillon Ridge and from three other platforms located in coastal waters under federal jurisdiction — can be legally enforced.

(A bit of complicated, but unfortunately relevant, waaay in-the-weeds history:

Coastal waters up to three miles from shore are formally known as “California State Tidelands.

Since 1938, oil leases in them have been under the jurisdiction of the State Lands Commission. The three-member body includes the Lieutenant Governor, the state Controller and a representative of the governor’s Department of Finance.

Until the 1969 Santa Barbara oil spill, which galvanized the start of the global environmental movement, the state had granted 35 leases for tidelands. Since then it has granted none.

In 1994, former state legislator, and current state schools chief, Jack O’Connell of Santa Barbara, successfully passed the California Coastal Sanctuary Act, which allows new state leases only under a few conditions. Two of these include: a) areas where oil in state waters drains into federal waters and b) cases in which the lands commission determines it is “in the best interest of the state” to allow such a lease.

The U.S. government has authority over oil leases in Outer Continental Shelf waters beyond three miles from shore. Starting in 1981, there was a federal moratorium on new leases off the California coast, which expired in 2008.

Under an pre-existing federal lease, PXP now operates Platform Irene, just outside the three-mile limit. That operation sucks oil out of the sea at a point near an underwater geological formation known as Tranquillon Ridge, where oil drains from state into federal waters).

Because PXP’s state lease application apparently meets condition a), the key question for the lands commission, in deciding whether to grant a state lease at T-Ridge, is whether the project meets condition b), by being “in the best interest of the state.”

Schwarzenegger says it does, because the state needs the money; project opponents say it does not, because it would set a dangerous political and environmental precedent. The State Lands Commission backed the latter view last year, when it turned down the project, 2-to-1.

PXP first applied for a state lease in 2004; during the EIR process, EDC opposed that effort. At the suggestion of then-Lieutenant Governor John Garamendi, according to attorney Krop, the company came to EDC in 2007 seeking a compromise.

Within a few months, Krop said, they had offered to include in a possible deal three other platform operations now under federal lease, in an area known as the Pt. Arguello Project, south of T-Ridge (if you’re still with us, remember this name). The result of those negotiations was the confidential pact signed in April 2008, under which EDC now supports PXP’s application to the lands commission.

IV- What are “end dates”?

The no-longer confidential agreement calls for PXP, if granted the state lease, to end operations in both federal and state waters near Tranquillon Ridge by the end of 2022. The company also promises to shut down its onshore production facilities connected to those operations, ceding the land for public use. PXP also agrees to remove permanently, not just decommission, the infrastructure known as Platform Irene.

Recall the aforementioned Pt. Arguello Project. PXP operates it through a majority partnership it has with other oil companies.

The EDC pact says PXP will ensure the end of drilling operations from three platforms — known as Harvest, Hermosa and Hidalgo — in that federal project area, within nine years of the company receiving the T-Ridge state lease. The PXP-EDC agreement also calls for turnover for public use of onshore lands where Pt. Arguello-related production facilities now operate.

Caveat: the agreement states that unnamed “third parties are responsible for the abandonment of the three Pt. Arguello platforms.” While PXP promises not to oppose any effort to remove the actual platforms, it does not promise or guarantee they would be removed.

Will it ever end?

The so-called “end dates” for drilling are described in the agreement, variously, as “irrevocable and non-modifiable,” and “pre-determined and absolute.”

As a legal and political matter, however, the key question in the T-Ridge debate is whether these dates would be enforceable. Both the lands commission staff and the attorney general’s office reported to commissioners last year that they were not, a crucial factor in the defeat of the lease application.

Opponents of the deal say there are simply too many future unknowns and unknowables -– market conditions, the price and availability of oil and who controls the state and federal governments, for example — to assure that the promised end dates would be honored.

One key factor here is that federal leases -– including those for platforms Harvest, Hermosa and Hidalgo — are under authority of the Department of Interior’s Minerals Management Service (MMS), which ensures that federal leases generate income for the U.S. government.

In explaining his opposition to a state lease for PXP, Controller Chiang wrote this in a post for the California Progress Report:

My concerns also include the enforceability of ending the Tranquillon Ridge oil drilling operations in 2022 and the Point Arguello operations in 2017. The support of environmentalists for this project would not exist without dates certain on which drilling would stop, but neither the proposed State Lands Commission lease nor the PXP agreement can provide certainty about these end dates.

The federal Minerals Management Service receives royalties from the oil production in federal waters and is compelled by law to encourage drilling until it is no longer economically viable.

The state cannot interfere with the contracts between PXP and MMS. Because the MMS will not agree to the proposed end dates, and because we are continuing to experience severe volatility in the energy market, there is likelihood that market forces in 2022 would dictate whether or not the federal government would continue seeking revenue from this project.

V. The ultimate leverage

leverageBut Krop told Calbuzz the Controller is “not correct” in his statements about the position of the federal government.

She said she met in Washington last fall with federal officials. At that time, MMS officials told her, she said, “we want to make this happen” She added that if and when state lands commissioners rehear PXP’s application, she will present evidence the federal issue should be “off the table.”

“When we met with MMS folks back in D.C. in September, they said, ‘that’s a viable option,’” Krop told us.

Winters said the the scenarios about difficulty enforcing end dates are not realistic, because the onshore facilities to support future drilling at the sites would be removed. He also said the new agreement would make California’ attorney general a party to the pact, to give specific authority over the deal to the state. He also told Calbuzz that in the amended agreement:

…a new provision has been added that requires PXP to forfeit 100% of any profits the project generates if it operates beyond 14 years for any reason.  In addition, the agreement includes a clause that requires PXP to waive its rights to apply for any extension at the end of the life of the project.

As for the other enforceability issues, Krop strenuously argued that the original agreement she negotiated was ironclad:

Under our agreement, those (onshore) facilities cannot be used for production of oil and gas after the end dates…

By everybody’s prediction there’s going to be hardly any oil and gas left in these fields. If (MMS) were to lease them, all the new platforms, pipelines, processing facilities would have to be built. It’s just not going to happen…

You’ve got a .0000001 percent chance, (of offshore drilling taking place on the sites after the end dates). Right now you have a 100 percent chance they’re going to keep producing. That’s what’s frustrating to me, is that people in Sacramento don’t get that…We’re not supporting a new project, we’re supporting a project that is going to shut down production.

In this exchange during the interview, however, Krop acknowledged that if unforeseen circumstances led to leasing arrangements and drilling past the end dates, enforcement of the EDC-PXP essentially would be left to her group, by filing a lawsuit:

Calbuzz: So what you’re saying is, the enforceability is ultimately the legal leverage that you would have as one of the parties to this agreement.
Krop: Right.
Calbuzz: In other words, if they violated this agreement, you would have to go to court to sue to enforce it.
Krop: Right. We would go to court, (Trust for Public Lands) would go to court…

As for the political argument by opponents that granting PXP a state lease would send a powerful political message that California’s long-held consensus opposing offshore drilling is crumbling, the EDC attorney claimed that any such perception “is based on people telling untruths.”

The politics is the truth. If everyone would stick to the facts, I’m saying, if everyone would quit twisting the truth, the perception would be the truth. The truth is, the drilling’s happening and we’re shutting it down.

VI. And Now, a Word from Your Sponsors

wagging-finger

We’ve done our best to present the facts of this as fairly as possible, but figuring out who’s right among environmentalists on this one requires an ability to foresee and forecast the future — about the oil market and shifts in government leadership, among other things — which we admit we lack.

Amid the passion and strained relationships within the environmental community,  it seems to us that some people on both sides of this complicated issue share the same policy goal — to protect California’s precious coastal environment. It’s sad to watch them attack each other’s motives.

That said, as innovative, perhaps visionary, as the EDC proposal may be as an environmental policy matter, the group’s appreciation for hardball politics in Sacramento and Washington seems to us at times naive. Moreover, four decades of principled opposition to new offshore oil drilling is precedent we’d be loathe to see California forfeit on a risky bet that oil companies would willingly stop drilling for oil.

Environmentalists: Why T-Ridge is a Bad Deal

Wednesday, December 23rd, 2009

oilrigsunsetToday Calbuzz posts a piece by three leading California environmentalists making their case against the Tranquillon Ridge offshore oil drilling project. The project, about which you can find some of our reporting and analysis here, here and here, has emerged as one of the most contentious environmental issues in the state, and is expected to remain the center of controversy next year. Environmental leaders Penny Elia, an Orange County coastal advocate; Fran Gibson, board president of Coastwalk California; and Mark Massara, director of the Sierra Club’s coastal programs, respond to Tuesday’s piece by attorney Linda Krop, who negotiated the proposed agreement with the Houston-based PXP oil company.

By Penny Elia, Fran Gibson and Mark Massara
Special to Calbuzz

The proposal by PXP for the first new off shore oil drilling in State waters in over 40 years has been touted as “an end to drilling off Santa Barbara”. Unfortunately, the hype is misleading and disingenuous at best.

The proposal will not end drilling because the so-called deal is not only not enforceable, it will set a precedent for new federal off shore oil drilling off Mendocino, and from Santa Barbara through the Southern California coast to La Jolla.  One reason this sounds so tempting is that the Environmental Defense Center, which signed a secret agreement with PXP, makes claims that are untrue.  The funds promised to the state over the next 14 years are not worth the risks. Here are the facts:

This project would set a precedent for new federal drilling

Allowing new drilling in state waters makes a statement it is okay to drill in federal waters because California considers financial contributions to its general fund a benefit that outweighs the risk to its coastline.  Lawmakers have said that approval of  new drilling in state waters will make it difficult to prevent new drilling in federal waters.

Allowing new drilling does not end drilling

It is perverse logic to say that allowing new drilling in T-Ridge will end drilling at T-Ridge early.  If this proposal is denied, NO drilling into T-Ridge will occur.  Other oil companies, with existing operations in state waters, are seeking to make PXP-like deals so they can expand their drilling.

Promised end dates on the project are  not enforceable

The State Attorney General and the State Lands Commission attorneys concluded the terms of the agreement that relate to the cessation of oil production were offshoreunenforceable.  The ability to enforce the end dates is hampered by such things as the ability of the federal government to exercise eminent domain, interference with the federal government’s right to use pipelines in interstate commerce and interference by the state with the contract between PXP and Minerals Management Service (MMS).  The state and Santa Barbara County could also opt out.

MMS has final say over the end date

Federal law requires MMS to extract all available oil.  MMS may agree to a termination of the PXP lease if PXP agrees to pay the federal government for any oil not extracted.  Such a requirement serves as an incentive for PXP to break its commitment.  Equally important, the ability to buy out of its lease does not prevent MMS from reselling the lease to another oil company.

EDC-PXP agreement is confidential and is NOT a settlement of a lawsuit

The confidetemp_logontial agreement between PXP and EDC is between private parties. If PXP decided to continue to drill it might, at best, result in the payment of damages to EDC but would be very unlikely to result in a requirement for PXP to cease operations, particularly if the State agreed it could continue.

There is no  requirement to remove the platforms

PXP/EDC claim this will result in shutting down operations from four platforms.  Even if the end dates were enforceable, PXP does not own three of the four platforms and there is no evidence their partners will cease operations (and pay the government penalties) as claimed.

The land deal is questionable

PXP’s submission to the lands commission says some of the land may have “insurmountable title issues”.  Because the agreement is confidential there is no ability to review the terms and conditions that run with the land or any  benefits of this. Who will hold title, how and when will the lands be conveyed,  what restrictions will be placed on the use of or future sale of the land how and by whom might it beoilspillsign managed?

More than 100 environmental groups oppose this project

In spite of what the oil industry would have you believe, offshore oil drilling is not safe.  A major spill could destroy our ocean, beaches, and coastal economy.  Spills happen on a regular basis. One-quarter of all oil spills in the past 44 years have occurred in the last decade.  Most recently, a spill in Australian waters  lasted 72 days, in spite of using the latest technology.  This spill had devastating impacts on marine life.

EDC claims that the overall risk for the PXP project is low because it will end drilling in 14 years.  This ignores that the greater the amount of oil being removed, the greater the likelihood of a spill with the chances of a spill  greatest in the early years.  These claims are contrary to every position EDC has taken in the past.  Innovation is good but it must be designed to work.

Fran Gibson

Fran Gibson

Mark Massara

Mark Massara