Statement of Administration Policy: H.R. 5178 - Providing Federal Oil and Gas Receipts to the State of California

(House)
(Lagomarsino (R) CA, Thomas (R) CA, and Matsui (D) CA)

The Administration opposes enactment of H.R. 5178. The bill would mandate the unjustified payment of as much as $45 million in 1990 and $400 million over the next decade to California from funds generated by the United States' Elk Hills Naval Petroleum Reserve. These funds are intended to compensate the State for certain school land grants which did not vest with the State as a result of the creation of the Elk Hills Reserve. The State has refused the Federal Government's offer, made under applicable law, of substitute lands of equal acreage — the same right afforded all other States awarded school land grants.

The Administration opposes H.R. 5178 because:

—  the State's right to compensation is questionable at best. Federal courts have twice ruled against the State's claim to the disputed lands;

—  the bill would settle a matter currently in litigation in a manner which is detrimental to the Federal Government;

—  the bill would establish an undesirable precedent for settling State school land grant claims; and

—  the bill would adversely affect the President's proposal to lease the Reserve and use the resulting revenues to create and fund a Defense Petroleum Inventory.

The Administration is willing to resolve this issue in the context of the proposal to lease the Reserve.

For these reasons, if H.R. 5178 is presented to the President in its present form, the Secretaries of Energy and Defense would recommend that he veto the bill.