Calbuzz has a holiday exclusive on the previously secret agreement reached between PXP, the company promoting the Tranquillon Ridge offshore drilling project, and Environmental Defense Center, which made the agreement with PXP in support of their drilling plan back in 2008. While the “exclusive” doesn’t reveal much more than we already knew about a year ago, and while it would be particularly useful if Calbuzz would post the agreement in its entirety for the rest of us to peruse, it does have some interesting elements, including the amount EDC is going to get paid by PXP as part of the deal:
EDC legally represents 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 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 this money, EDC promises to support the Tranquillon Ridge deal, and PXP promises to end drilling by the early 2020s. But is that promise legally enforceable? That’s been one of the key questions in this whole deal, and according to Calbuzz, the answer appears to be “not really”. John Chiang explained a year ago that the state can’t interfere in an agreement between PXP and the feds. While EDC claims that provisions in the deal with PXP that would have PXP forfeit 100% of post-2022 profits, and that onshore processing facilities would be undone, there would remain big loopholes. And ultimately, the only way this deal could be enforced is if EDC takes PXP to court over the terms of this deal.
Calbuzz’s article leaves me with more questions than answers. Why exactly did EDC cut this deal? It’s hard to escape the conclusion their support was bought, and there remains plenty of reason to believe the deal isn’t watertight. So why should Californians support it?
In particular, the timing is quite concerning. The right-wing “drill baby drill” push did not begin until the summer of 2008. Yet this deal was signed in April 2008, and was presumably being negotiated for some time before then. While EDC could defend itself by saying that offshore drilling was going to happen anyway any they were making the best of it, not only were they in fact ahead of the right-wing effort, but now face the fact that the Obama Administration has indicated it’s not interested in offshore drilling. “Drill baby drill” doesn’t have much political power these days.
So what justifies EDC’s deal? As far as I can tell, it’s money. EDC is implicitly saying to California that offshore drilling is OK, if it comes at the right price. In 2009 Arnold Schwarzenegger and Chuck DeVore drove a truck through that loophole, coming oh-so-close to getting Tranquillon Ridge approved, only to be blocked by Pedro Nava, Bill Monning, and others in the Assembly who refused to play along.
California is indeed hard up for money. But that doesn’t mean we should do stupid things to get that money. “Like a junkie looking for veins in his toes so he can get one last fix,” as Al Gore described it here in Monterey last year, offshore drilling is a reckless way to fund our schools and health care needs. We ought to instead levy an oil severance tax on the drilling already taking place in the state, but continue to resist opening the door to new drilling, especially offshore, where the environmental and economic costs of a spill would far outstrip whatever money PXP pays to state and local governments.
More importantly, EDC is setting a precedent that absolutely will lead to widespread drilling on the coast. Instead of maintaining a strict opposition to offshore drilling on the merits, they’ve indicated that such opposition has a price, and once met, opposition will go away. If Tranquillon Ridge is approved, what’s to stop others who want to drill to show up at county Board of Supervisors’ meetings and the state capitol with suitcases full of money – for public programs of course, not for politicians – and demand to get approval for their own projects?
Oil prices are going to rise above $100/bbl before long, and when they do, the wingnut “drill baby drill” chant will start again. We can beat that back again, as we did in 2008-9. But if they see that environmentalists are willing to sell their opposition, it discredits the entire effort and the entire coastal protection movement, and makes it much more difficult to maintain the longtime offshore drilling ban.
1. It’s reasonably common for enviro groups to negotiate attorney fees compensation when settling a lawsuit. The $100K wouldn’t bother me IF there was a lawsuit. However, IIRC there wasn’t one. I’m not an environmental litigator but I have never heard of an enviro group being paid just to negotiate an agreement that didn’t have to be negotiated.
2. Instead, it looks to me like PXP solicited, in advance, an enviro group’s approval as cover.
3. The end date concerns me as much as the fee. Any contract can be renegotiated. No matter how ironclad it’s set up now, any contract can be renegotiated with the parties’ consent, which means PXP has 12 years to get its people burrowing into EDC. Further, a clever lawyer can file a lawsuit, then settle it on terms permitting some further drilling.
I read the CalBuzz article in its entirety. The deal smells. Again, I’m a lawyer but not an environmental specialist.
Please take a look at pages 10-16 which have the important parts to read on this agreement. It makes it clear that we have all been lied to and that Krop is acting as a paid lobbyist.
1- Go to page 10- Reimbursement of Expenses- there is a 50,000 dollar payout if approval happens. There is nothing here about being paid the full 100,000 dollars prior to then. All we again have is Krop’s word that she has now been paid in full. Why should we believe her?
2- Even more important: Bottom of Page 10- last sentance “In the event PXP requests….” finishing on page 11-
This says that they will receive additional monies, unspecified in amount, but specifically for their support on behalf of PXP. How does this differ from a lobbying fee?
3-On page 13- final paragraph-
“Phase two shall, if feasible, consist of the conveyance of the Gaviota Processing Plant…. ”
This simply says PXP shall make their best effort to have this accomplished, which requires that the processing plant be closed, but then admits that PXP must seek the approval of the Pt Arguello parnerships and basically states that such approval may not be obtained. Therefore how can they have been making assurances that the facilites will be closed and turned over to TPL for conservation? PXP promises to vote consistent with the agreement but since we have no idea what those partnership agreements say and we have no way of knowing if this can be accomplished. Krop has been insisting that even if MMS did not approve of the end date that the processing faciity would be closed so no additional oil could be removed. Now it is clear that this is not true. There are no guarantees the facility will be closed or the lands transferred.
4- Page 16 under Abandonment
PXP specifically states under 3.5.1 that the facilities they are to abandon “do not include the 3 Pt. Arguello platforms, the subsea and onshore pipelines, or other associated facilities, the abandomnet responsibility for which rests with third parties”. Linda has been assuring us that all platforms will be abandoned but this says otherwise
Reading this agreement makes it clear that everyone has been lied to. Krop through EDC is being paid as a lobbyist and their absolute guarantee that the processing facilities will be closed and all 4 platforms abandoned is a flat out lie. There is no way she didn’t know this because it is in the agreement. Obiously, the monies being paid for their “representations” has to be a factor in why she would do this