U.S. Court Blocks Drilling Offshore California

The 9th California Circuit Court of Appeals upheld a ban on new exploration offshore California, ruling that future exploration cannot go forward without a state environmental review. The decision by a three-judge panel does not cover existing offshore production in state and federal tracts. This is a setback for the Bush Administration which had been seeking to open up 36 offshore leases for exploration. These tracts are estimated to hold one billion barrels of oil off the state's central coast. The move to extend the 36 leases was widely seen by environmental groups as a prelude to renewed oil prospecting in California, which has been halted since 1989.

"After losing twice in federal court it is time for the Bush administration to stop fighting for more oil drilling and to start protecting California's coast," said Drew Caputo, a lawyer with the Natural Resources Defense Council. A spokesman for the U.S. Department of Interior, which is named in the lawsuit, said lawyers were still reviewing whether to appeal the decision to the full court. The spokesman emphasized the case was about the government's right to extend the leases, and not about allowing drilling.

California sued to block the new exploration soon after President Clinton's Interior Secretary Bruce Babbitt extended the offshore leases in 1999 as they were set to expire while ordering a review of their impact on the environment. These tracts were exempt from the Clinton administration's 1998 ban on new oil drilling because the leases were so old.

The state, however, argued against the department, saying California had been illegally denied the right to review the leases for environmental issues before any action at the federal level. U.S. District Court Judge Claudia Wilken agreed and in June 2001 halted exploration and drilling in the 36 offshore tracts, pending environmental review and approval by the California Coastal Commission. While the state's suit did not explicitly seek cancellation of the leases, Davis has expressed reservations about offshore oil drilling and environmental groups have loudly condemned any move which could threaten the state's famous coastline.

Companies holding the leases include Aera Energy, ExxonMobil, Shell, ConocoPhillips, Nuevo Energy and Samedan Oil Corp.