The MENDOCINO COUNTRY Independent
Web Posted July 23
CALIFORNIA BUDGET DEAL INCLUDES OIL DRILLING
On July 20, state Democratic
legislators caved in to demands by governor Schwarzenneger and
Republicans to raise no new taxes in a deal to close California's $26.
3 billion budget deficit. If approved by 2/3 of the Assembly and
Senate, the deal will cut $15 billion from government programs,
slashing spending on schools, universities, health care, welfare and
in-home support for the disabled and frail. It will take some $4
billion from local governments and use a variety of accounting
techniques to make up the difference.
The League of California Cities has promised to sue
if the deal becomes law. Cities and counties are legally mandated to
provide services such as police, fire, water, sewer, health and
education. If funding is inadequate to provide these services, they
could be sued by taxpayers and consumers.
Drill, Baby, Drill
As part of the deal, Democrats agreed to Republican
Gov. Arnold Schwarzenegger's request to expand drilling from an
existing oil platform off Santa Barbara to generate a one-time $100
million advance royalty payment this fiscal year. It would be the first
new offshore oil drilling on state lands in four decades since a
blowout on a platform off Santa Barbara coated miles of ocean and
shoreline and galvanized opposition.
Oil producer Plains Exploration & Production Co.
(PXP) has proposed promptly expanding oil drilling off the coast of
Santa Barbara, then shutting down four oil platforms and two onshore
processing facilities in Santa Barbara by 2022.
The plan could generate an estimated $1.8
billion in royalties to the state over 14 years.
The company also agreed to donate 4,000 acres of
land for public use. The company would slant-drill into the state's
seafloor from a platform it operates in federal waters.
Some environmental and community groups in Santa
Barbara have hailed the project, called Tranquillon Ridge, as a major
milestone in their efforts to shut down the oil rigs off Santa
Barbara's coast. Current law allows offshore drilling operations that
were in place prior to a 1981 moratorium on new offshore drilling to
continue indefinitely.
Gov. Arnold Schwarzenegger has championed the
project as a new source of desperately needed cash to fill the state's
budget gap. The state would collect an up-front payment of $100 million
from Plains, followed by and as much as $2.3 billion in royalties over
the 13 years of the project.
The deal drew allegations that the fiscal crisis was
used for a backroom deal following rejection of the idea by state
regulators earlier this year. The framework involved taking authority
for approval of oil leases away from the State Lands Commission and
giving it to a newly created panel.
The governor's office said in a statement that the
platform involved is already drilling in federal waters adjacent to
state waters. It said the project maintains a moratorium on oil
drilling "but takes advantage of a specific exemption that allows for
new leases if oil is leaking from an existing state field into an
actively producing federal field."
The drilling proposal has been percolating since
2008 when Plains Exploration & Production Co. of Houston announced
a novel deal with three veteran environmental groups in Santa Barbara
County.
The groups, including Get Oil Out!, agreed to
promote the plan in exchange for money for the state, thousands of
acres of land and Plains' commitment to cease operations countywide by
2022.
Lieutenant governor John Garamendi said he opposed
the plan in January because provisions for ending operations could not
be enforced and because it would serve as a precedent for further
drilling, encouraging the federal government to issue new leases off
the California coast.
The $100 million would be a loan against royalties
and would be repaid by deductions from future royalty payments to the
state, he said.
Under the budget agreement, a panel made up the
state attorney general, the secretary of resources and the secretary of
environmental protection would make a final decision on the project.
Garamendi said a better alternative would be an oil
severance tax that other major producing states have. Their estimates
of such a tax ranged from $800 million to $1 billion a year.