The panel voted 2-1 against Plains Exploration & Production Co.'s request for approval of its bid to expand drilling off Platform Irene in the Santa Barbara Channel. Commission Executive Officer Paul Thayer said the project is effectively dead unless the oil company takes it to court or reapplies to the commission with a new proposal.
The proposal, which would have been worth billions of dollars, was announced last year with a landmark alliance between longtime anti-oil environmentalists and the oil company. The environmental groups signed a confidential agreement to lobby for the deal in exchange for a raft of promises from the Houston-based company, including billions in revenue for the state, thousands of acres of land and a commitment to end its local drilling by 2022.
"It's done. It's over," said Linda Krop, who negotiated the deal on behalf of the Environmental Defense Center, Get Oil Out! and the Citizens Planning Association of Santa Barbara County. "I'm going to be standing on our coast in nine years looking at these platforms and they're still going to be operating."
The commission's chairman, Lt. Gov. John Garamendi, voted against the proposal as did state Controller John Chiang, while Tom Sheehy, who represented state finance director Michael Genest, voted to approve the lease.
Garamendi said he determined the application was not in the best interests of the state.
"I'm not convinced the main benefit of this bargain is achievable and enforceable," he said.
The packed meeting was sharply divided, with supporters largely from Santa Barbara County arguing in favor of approving a project they said would end drilling in their area, benefit the region and help the cash-strapped state. Opponents who had come from elsewhere in the state, however, argued the plan was shortsighted.
"Our coast frankly is in your hands," said Sara Wan, who is on the Coastal Commission but said she was only speaking as a resident. "Please do not allow it to be destroyed."
While the proposal has enjoyed unprecedented support from about 25 environmental organizations statewide, lawmakers from California to Washington, D.C., recently challenged the plan. Many worried the proposal could invite more offshore drilling along the California coast and undermine efforts to reinstate a federal drilling moratorium that was lifted by the Bush administration.
Garamendi has said he has spoken with House Speaker Nancy Pelosi, D-Calif., and other members of the California congressional delegation who also expressed concern that approving a drilling proposal could undercut their efforts to reintroduce the federal moratorium.
Others such as Chiang raised concerns that the agreement between the environmentalists and oil company is confidential and the public had not been able to scrutinize the documents. PXP representatives relented at the meeting, saying they would be open to releasing the documents.
Supporters, including Rep. Lois Capps, a Democrat who represents Santa Barbara, have argued that the unique proposal would end drilling in Santa Barbara County and would not lead to more drilling statewide. Others such as Krop warned that if the project was not approved, the state would lose the many benefits the groups negotiated.
The commission's staff recommended rejection, saying there was no guarantee that the company, known as PXP, would shut down operations. The staff's finding prompted two major environmental backers of the plan - the Sierra Club and the Planning and Conservation League - to send a letter to the commission this week saying their support was contingent on the terms being fully enforced.
The vote came the day after the 40th anniversary of a massive oil spill off Santa Barbara that coated miles of beaches with oil and killed dolphins, seals and thousands of birds. The spill helped lead to the Clean Water Act and a moratorium on offshore drilling, galvanizing the modern environmental movement.
Plains Exploration has operations in California, Texas, Louisiana and Gulf of Mexico.