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Posts Tagged ‘Linda Krop’



Measuring Goldman Taint; More on Arnold Flip Flop

Wednesday, May 5th, 2010

Alert readers might have noted that Calbuzz has, in recent weeks, paid a lot of attention to billionaire Meg Whitman’s links to Goldman Sachs.  They may also have gleaned that we kinda, sorta think that the stock spinning made possible by Goldman when eMeg was CEO of eBay, was, well, pretty darn unethical.

So when Steve Poizner pounced on eMeg’s Goldman taint, we gave The Commish a pretty good ride. But let’s be honest: Poizner’s not some poor schmo with a tin cup begging for nickels so he can run for governor. A zillionaire himself, he is certainly no Goldman Virgin.

In fact, back in 2004 when he was running for the Assembly, (as a Republican, btw when eMeg wasn’t even a registered voter, let alone a Republican – but we digress)* Poizner got himself a $500,000 loan on VERY favorable, preferential, best-customer terms (the federal funds rate + 60 basis points ) from Goldman Sachs. He repaid the loan about six months later, but he got use of the money at practically no cost – terms he was afforded because the loan was backed by his personal assets in a Goldman brokerage account (as noted in his 12/03 FPPC Form 700).

The whole loan and other complex Poizner/Goldman details are spelled out over at Whitman’s favorite conservative blog (at least she pays them huge amounts for her ads over there) Red County. The loan has also been noted here, here, here and here. Point being, the Whitman folks have shopped this one around, trying to suggest, “Hey, Poizner’s got just as much of a problem with Goldman Sachs as Meg does.”

But an exclusive Calbuzz analysis of the Goldman Sachs Taint of Scandal accruing to each of the candidates for governor – let’s not forget Attorney General Jerry Brown’s sister works there and the city where he was mayor had a credit deal with Goldman – demonstrates that the GSTS Factor for Whitman is 80%, compared to 15% for Poizner and 5% for Brown. (See chart above)

Bottom line: This is how smart, New Media Age guys and news gatherers avoid falling prey to the dreaded False Equivalence Syndrome – by scientifically analyzing the metrics and measurables of any given scandal – taking into account, of course, a margin or error of plus or minus 2.5 percentage points.

Terminator terminates T-Ridge: Gov. Schwarzmuscle’s stunning, 180-degree flip flop on offshore drilling near Santa Barbara astonished us for many reasons – not least of which was the utter lack of political grace he displayed towards his erstwhile environmental allies, whom he totally hung out to dry.

“Arnold loves to do that – it’s part of his control issues,” said former Assembly member and T-Ridge environmental  booster Hannah Beth Jackson. “Consistency and rationality have never bothered him in the least.”

In delivering a sudden and unexpected coup de grace to the fiercely debated Tranquillon Ridge project on Monday, Arnold totally blindsided the embattled coalition of Santa Barbara environmental activists who had put reputations, credibility and personal friendships on the line in fighting for the plan for the last two years.

Having appropriated for his own purposes a complex legal agreement over leasing arrangements that Santa Barbara’s Environmental Defense Center had reached with the Houston-based PXP oil company, Schwarzenegger couldn’t be bothered giving the enviros a heads-up before airily dismissing the painstakingly negotiated deal as if he were dispatching a fly, during the course of a press conference he’d called on an entirely different issue.

“We had absolutely no idea this was coming,” said Linda Krop, general counsel for the EDC, who spent nearly three years working on the PXP agreement, and who’d been enlisted by Schwarzenegger’s Department of Finance in his own, budget driven efforts to gain approval for it. “We were completely surprised.”

Krop only learned that Schwarzenegger had switched his position more than an hour after his press conference, when reporters started to call. The architect of the EDC-PXP deal,  she has long argued that giving the company  a short-term lease to drill into state waters, from a platform it already operates in federal waters, is a worthwhile trade off for its promise to end permanently most of its federally leased drilling in the region.

Whatever you think, as a policy matter, of the agreement she crafted – and environmentalist opinion was bitterly polarized on the issue – Krop is a smart, determined and passionate coastal protection advocate who’s paid her dues and deserves better than being dissed by a muscle-bound, metrosexual movie actor without a principled bone in his sagging body.

Whaddya mean you work for me? Of course, enviros don’t seem to be the only ones who failed to see Schwarzenegger’s switcheroo coming.

Last Saturday, Chronicler Marisa Lagos did a good piece probing whether the Deepwater Horizon catastrophe had triggered any rethinking within the Administration about its full-square support of the T-Ridge project. No effin’ way, one of Conan’s army of mouthpieces insisted to her:

As oil spewed Friday from a blown out well in the Gulf of Mexico and spread into Louisiana’s sensitive wetlands and rich fishing grounds, Gov. Arnold Schwarzenegger’s administration defended a plan to allow new drilling off California’s Central Coast.

A spokesman for Schwarzenegger said the proposed Tranquillon Ridge project off Santa Barbara County is attractive because the oil company behind the project has agreed to end drilling off the coast in exchange for a permit to do so for the next 14 years…

“This doesn’t really change anything, because we’re looking at a platform that’s already in operation,” said Jeff Macedo, the governor’s spokesman. “If anything this makes the T-Ridge project that much more important, because it would put a sunset date on when it shuts down.”

Oh, never mind.

Two days later, Schwarzenegger stood before reporters and sounded exactly the opposite opinion.

Without the simple courtesy of telling someone to pick up the phone and let the pro-T-Ridge environmentalists know what he was about to do, Arnold instantly and categorically rejected the entire environmental argument in favor of the project.

He not only turned his back on his previously stated certainty that the PXP deal, by aiming to close out currently open-ended federal offshore leases, would actually make an oil spill near Santa Barbara less likely; he also shrugged off the importance of the $100 million the project would have brought to the state annually – after more than a year of thundering about the crucial importance of that money to California’s fiscal condition.

Not surprisingly, he said he changed his mind after watching TV.

* correction

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.)

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.

Why Some Enviros Back T-Ridge Oil Project

Tuesday, December 22nd, 2009

krop_lgToday and tomorrow, Calbuzz is posting pro and con arguments written by leading California environmentalists about 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, along with AB32, as one of the two most contentious environmental issues in the state.  Expected to remain the focus of political controversy next year. the proposal has generated conflicts among some longtime allies in the environmental movement. Today’s piece is by Linda Krop, chief counsel for the Environmental Defense Center in Santa Barbara, who negotiated the proposed agreement with the Houston-based PXP oil company.

By Linda Krop
Special to Calbuzz

For over 30 years, the Environmental Defense Center has been among the state’s leading advocates in the battle to end oil drilling along our magnificent coast.  That’s why we’re so excited about the landmark agreement we negotiated on behalf of environmental groups in Santa Barbara County to phase out offshore oil production.

Like so many other issues misrepresented in today’s highly charged political climate, the Tranquillon Ridge proposal has been co-opted by some who seek to use it for their own political gain. That’s too bad because this agreement will finally bring an end to California offshore oil drilling.

Despite our efforts and successes along the way, there are still too many platforms drilling for oil off our coast. Pressure for more leasing abounds. In the 21st Century, we need to find new and innovative ways to solve old problems. With the Tranquillon Ridge agreement, we have found the way to do just that. That’s why this agreement is supported by a broad spectrum of groups — for whom coming together is a rare occurrence.

We recognize that there are nay-sayers and those who are nervous about any approach that falls short of removing all offshore oil drilling NOW.   But the reality is that no matter how much we want to pull these rigs from the ocean, we don’t have the legal authority or the support of any administration — Democrat or Republican — to achieve that goal.

So, we’ve found a way to get something through a negotiated agreement that we could not achieve in any other forum: an agreed termination date for four of the major oil rigs drilling off our shores. Currently these platforms operate without any end date, and can continue drilling for several more decades.

oil_platform

Under the agreement, three of the platforms would be shut down in nine years. The fourth platform would follow five years later. All related onshore processing facilities would be removed. In addition, hundreds of acres of onshore oil wells would be shut down.   And as a further bonus, the agreement requires PXP to reduce and offset all of its greenhouse gas emissions and provide approximately 4,000 acres of land to the public for permanent conservation. No new construction or facilities would be permitted.

This agreement is a total win-win for the environment. It will not only put an end to existing drilling operations, but will also provide the greatest protection against new federal leasing in California. The four platforms that will be shut down pose the biggest threat for new leasing along our coast because they can be used to access known reserves and are supported by existing infrastructure, making new drilling both attractive and economically profitable. Shutting down these platforms and removing the onshore facilities assures that they are not available for future oil leasing and development.

The signal this agreement will send is that California is serious about getting rid of offshore oil and willing to go the extra mile to make it happen. That’s why this agreement is endorsed by 20 major environmental groups in Santa Barbara County as well as our pro-environment County Supervisors, City Council members and Congresswoman Lois Capps.

The claim that such an agreement is not enforceable is misguided and wrong. While the Feds (through the Minerals Management Service, known as MMS) can fine a company for failing to continue production when there is still “profitable” oil in the ground (and thus royalties available to the government), a contract to end drilling (guaranteed under this agreement) is an enforceable contract.

It is not often that we have an opportunity to be creative and progressive in dealing with such a pressing issue facing the people of California. Rhetoric that suggests that we who support this agreement are somehow in favor of oil development is cynical and untrue, and does nothing to address the real issue of continued drilling off our shores.

goo_logo_3This agreement is an example of what we can do when people work together in an innovative way. While we on the environmental protection side have been able to win most of our battles, this approach gives us a way to end the war.

This is not an either-or situation to be pursued at the exclusion of additional approaches. An oil extraction tax, for example, is one way to help solve California’s budget woes, but it will do nothing to end offshore oil production. We need to have a variety of approaches to addressing our economic needs while protecting our environment. The proposal for an oil extraction tax can, and should, go hand in hand with a plan to stop oil drilling offshore.

We look forward to the opportunity to explain the benefits of this unique proposal, and address any concerns, should this matter be reconsidered by the State Lands Commission.

Linda Krop is Chief  Counsel of the Environmental Defense Center, a public interest law firm.  The EDC has led the fight against off-shore oil drilling for over 30 years. For more information about the Tranquillon Ridge plan,  you may visit the EDC website at www.EDCnet.org.

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.