The Regulation of Oil and Gas Development
on the Outer Continental Shelf:
Georges Bank
Energy Regulation
Summer, 1981
Professor Gary Ahrens
By
Steve Henry
•
TABLE OF CONTENTS
INTRODUCTION
1
I.
The Outer Continental Shelf Act Amendments of 1978
2
II.
Specific Powers of the Secretary of the Interior
Under the OCS Lands Act
8
III. Georges Bank
A.
11
OCS Jurisdiction of the Georges Bank and
similar problematic regions
13
B.
Recent OCS Litigation
16
c.
Future Directions of OCS Development
19
23
CONCLUSION
BIBLIOGRAPHY
:
__ _fOOTNOTES
•
001J.3
INTRODUCTION
The
regulation
of
oil
and
gas
development
States is premised on two primary concerns:
natural
resources
for
future
in
the
United
one, conservation of
necessity
and
present
econom1c
stability, and two, conservation of the environment.
As
the
United
States
petroleum
for
personal
aneously,
environmentally
becomes
and
increasingly
industrial
aware,
of
usage
greater
dependent
and,
contempor-
importance
linking petroleum and the environment become.
upon
1ssues
The dependence and
necessity upon and for petroleum and its derivatives continues to
A society diverse
be without question.
values
recognizes
both
while
exist among these related,
cern.
awaiting
in social
the
and
economic
possibilities
but often neutralizing,
which
areas of con-
However, such a society is without a general and conclusive
understanding of environmental factors and their intertwining with
society's need for petroleum products and production.
The OCS
has
been
called
"America's
best
hope
for
finding
additional oil and gas resources and reducing our dependence on
foreign oil." 1
continental
jurisdiction
Indeed,
shelf
and
beneath the
and
slope
control,
over
there
1. 3 mill ion square miles of
which
exists
the
an
United
enormous
States
quantity
has
of
Demonstrated reserves of offshore oil and gas
energy resources.
are approximately 3.5 billion barrels of oil and 36 trillion cubic
feet of gas, wfth prospective reserves of an additional
8 to 50
billion
feet
barrels
of
oil
and
28
001J.J
to
1
199
trillion
cubic
of
2
gas.2
Although
production
only
currently
17
percent
comes
from
of
the
domestic
oil
continental
and
shelf,
gas
some
studies estimate that offshore oil and gas may comprise as much as
u.
one-fourth to one-third of total
The
balance of
this
S. production by 1985.3
composition will
explore
the
immediate and future effects petroleum development on
Continental
She! f
might
have
on
the
Georges
Bank
possible
the Outer
area
of
the
United States' eastern seaboard.
I.
The Outer Continental Shelf Lands Act Amendments of 1978
The purpose of the Outer Continental Shelf Lands Act4 is to
regulate the granting of mineral leases on the OCS by the federal
government.
The Act authorizes the Secretary of the Interior to
grant mineral leases on the OCS and to prescribe regulations for
their administration.
The federal government's jurisdiction over
the OCS extends from the limits of state boundaries seaward to a
'
depth of 200 meters or, according to the 1958 Geneva Convention,
beyond that point "to where the depth of the super-adjacent waters
admits for the exploitation of the natural resources."5
The Outer Continental Shelf Lands Act of 1953,
document and basis of
today's
act,
called
for
a
the original
"carte blanche
delegation of authority to the Secretary of the Interior." 6
OCS
Lands Act Amendments
•
of
1978 7 represent
some
The
congressional
•
dissatisfaction with the Interior Department's administration of
('"":'\
001 .<.·V
3
the OCS Lands Act, but more importantly they reflect the growth in
power of several political pressure groups during the past quarter
century.
Analysis of the 1978 amendments reveals that they respond to
four general
area
of
areas
criticism,
of
critic ism of
expressed
by
the
1953
consumer
act. 8
The
activists,
first
asserted,
collectively, that the primary leasing method in use
(cash bonus
bidding
competitive
with
results, 9
value"
a
that
for
fixed
the
its
royalty)
government
leases,10
has
has
and
not
not
that
produced
received
big
oil
"fair
market
companies
have
enjoyed an unfair advantage 1n the lease-sale market.11
A second body of opinion, representing environmental groups,
land use planners, and critics of conventional market-based energy
decision making,
its
economic
wanted the federal government to expand greatly
planning
role
in
respect
to
OCS
energy
resour-
ces. 12
The third area of criticism, coastal state politicians (supported
by environmental
groups
and
state
planners)
argued
they should be given increased powers over decisions
that
concerning
the location, timing, and scope of energy exploration and production
activities
being
conducted
near
constituent
coastlines. 13
And the fourth area of criticism is that governors of coastal
states and private groups whose interests conflicted with offshore
energy
.
development
wanted
a
measure
of
financial
protection
against the risk of losses that the governors and private groups
might bear as a result of OCS mineral leasing.
4
The 1953 legislation provided for bonus, rental, and royalty
payments to be made to the federal government from OCS leasing but
gave no share of this revenue to coastal states, which nevertheless were expected to accept the risk of economic and environmental damage
opposed
the
resulting
proposed
states
affected
and
by
OCS
leasing
in
commercial
OCS
impact or damage
Barbara-type
from
adjacent
insurance
wanted
funds
in
Thus,
federal
fishermen
developments
incident,
development.
and
other
was
a
many
states
waters. 14
What
private
groups
source
econom~c
of
the event of another Santa
therefore avoiding
the
need
1953
OCS
for
lawsuits
for recovery of damages suffered. 15
Under guidelines
the
Interior
procedures
established
Department
for
its
has
OCS
by
the
established
leasing
a
Lands
well-defined
program. 17
When
Act, 16
set
of
followed,
these guidlines satisfy all legal and equitable requirements for
all parties involved.
The leasing process begins with a call for
tract . nominations and comments from industry and the public.
On
'
-the
basis
leasing
impact
of
these
responses,
are defined
studies
statement
are
drafts
by
then
become
the
geographic
Interior
identified
When
public
for
Environmental
Department.
initiated.
available,
areas
environmental
hearings
are
impact
held
~n
which industry, environmental groups, state and local governments,
and other interested groups are invited to comment.
of witness
.
testimony,
final
environmental
impact
On the basis
statements
are
then prepared and submitted to the President's Council on Environmental Quality.
The Secretary of
the
Interior makes
the
final
5
decisions
as
to whether
restrictions
are
to
to
be
hold
a
included
sale
in
and
the
what
environmental
lease-sale
terms. 18
Only two methods of bidding were authorized under the
act.
If
a
lease-sale
was
authorized,
interested
parties
invited to submit sealed bids on the basis of either
bonus bid with a fixed royalty or
1978
(2)
1953
were
( 1) a cash
a pure royalty bid.
amendments give more comprehensive regulatory and
The
planning
powers to various federal and state administrative agencies.
The
economic significance of ·certain provisions in the 1978 amendments
are
based
upon
distribution
their
probable
effects. 19
The
resource
1978
allocation
legislation
nificant expansion in economic planning.
is
required
to
revisions.20
provide
a
five-year
and
income
mandates
a
sig-
The Interior Secretary
leasing
The plan is to consist of a
plan
with
annual
schedule of proposed
lease· sales and requires management of the OCS in a manner which
considers
renewable
The
.
and
continues
environmental
resources
non-renewable
act
1978
and
social,
econom~c,
the
values
the
therein. 2 1
contained
requirement
of
that
leases
be
allocated on a competitive basis and authorizes the two methods of
bidding
addition,
specifically
it
authorizes
bidding systems:
(1)
for
called
the
by
adoption
the
of
any
1953
of
act. 22
the
In
following
a variable royalty bid with a fixed work
commitment based on a dollar amount for exploration, (2)
a cash
bonus bid' or work commitment bid with a fixed cash bonus' and a
diminishing or sliding royalty, (3)
a cash bonus bid with a fixed
share of the net profits at a rate of not less than 30 percent,
,.
001 ~)~
I
'.',
, .•
r.:.._;~
6
(4)
a net profits bid with a fixed cash bonus, (5)
a cash bonus
-bid with a fixed royalty and a net profits interest, and (6)
a
work commitment
alty. 23
bid
Moreover,
with
a
fixed
cash
the Secretary of
bonus
the
and
Interior
to adopt any other system of bid variables,
a
fixed
is
roy-
authorized
terms and conditions
which is determined to be useful to accomplish the act's purposes,
unless
disapproved
also requires
by
the
Senate
that bidding
or
House.24
systems other than
The
bonus
1978
act
bidding
be
applied to not less than 20 percent and not more than 60 percent
of the
years
total
area offered
following
the
for
act's
leasing during
passage.
This
each of
is
the
subject
to
five
the
Secretary of the Interior determining that such a requirement is
"inconsistent with the purposes and policies" of the act.25
As did the
1953 act,
the 1978 act authorizes
the
grant of
leases to "qualified" persons but contains no restrictions as to
citizenship.26
Proposed
regulations
Management seek to restrict
of
the
the holding of
Bureau
leases
to
of
Land
citizens,
--resident aliens, or corporations of the United States or of
states
or
Court
territories.27
challenges
to
this
its
inter-
agency policy variance have, for whatever reason, not surfaced to
any referrable degree.
Foreign corporations under the 1978 amend-
ments are allowed to use domestic subsidiaries.
Decisions
as
~
to
resource management.
who
may
hold
leases
Resource management
bears
is
directly
upon
the maintaining of
all the subject resources, i.e. oil, gas and fish, which are located within a given area and subject to statutory management.
001° ~..
-
The
7
purpose of efficient resource management appears to be served by
the existing system, which permits open competition but guarantees
the federal government legal jurisdiction over its Outer Continental Shelf lessees.
This purpose is also served by the absence
of any restrictions on the number of acres that any operator can
hold under lease.
The 1978 act continues the requirement of the 1953 act that
oil and gas leases endure for an initial period of five years "and
as long after such initial period as oil and gas is produced from
the
area
in
operations
on."28
paying
as
quantities,
approved
unlike the
by
the
1953 act,
or
drilling
Secretary
however,
the
or
are
well
reworking
conducted
1978
act
there-
allows
the
Secretary of the Interior to issue leases for an· initial period of
up to ten years where the longer period is necessary "to encourage exploration and development in areas because of unusually deep
water
or
other
unusually
conditions." 2 9
adverse
This
amendment should satisfy those who have suggested that a five-year
primary term for oil and gas leases may be too short with respect
to drilling on the continental slope and in areas such as Alaska
where ope rat ions must
be
conducted
on
a
short
season
bas is. 30
It remains to be seen what effect this particular amendment will
have on
the
development.
Georges
Bank due
to
that
area's
relatively
recent
8
II.
Specific Powers of the Secretary of the Interior
Under the OCS Lands Act
The OCS Lands Act authorizes the Secretary to "prescribe and
amend such rules and regulations as he determines to be necessary
and proper in order to provide for the prevention of waste
conservation of
Shelf ••• " 31
in
Gulf
Oil
the
resources
of
that
Morton3 2
v.
Corp.
the
Outer Continental
it had earlier decided
that
the
words,
"natural
1n the Act include all the natural resources of the
continental
ces. 33
natural
The court pointed out
resources,"
outer
the
and
Thus,
shelf
the
conservation
and
not
Secretary
of
the
may
merely
issue
marine
the
mineral
regulations
environment
and
resour-
to
promote
other
natural
resources in addition to oil and gas.
The Secretary would appear to have broad powers to regulate
lessees' activities after the lease has been granted.
the
authori ty34
statutory
granted
him,
the
Pursuant to
Secretary,
on
August 22, 1969, issued a regulation authorizing emergency suspension of
any
operation
which
irreparable harm or damage
property,
to
the
leased
"threatens
to
life,
deposits,
deposits or to the environment.
immediate,
serious,
including
aquatic
to
valuable
other
life,
or
to
mineral
Such emergency suspension shall
continue until in his judgment the threat or danger has terminated.35
emergency
Presumably,
in
suspension
•
Gulf
Oil,
authority
the
Secretary
provided
by
this
relied
on
regulation
the
in
•
refusing to allow. the
previously approved.36
installation of
a
platform that
had
been
9
In
Union
Oil
Co.
v.
Morton, 37
Union
Oil
argued
Secretary's action constituted a breach of
the
lease
that
the
agreement.
In the lease the Secretary granted Union "the right to construct
or erect ••• all
artificial
islands,
platforms,
fixed
or
floating
structures ••• necessary or convenient to the full enjoyment of the
rights granted by this
lease ...... 38
However,
in
addition,
the
lease provided that it was entered into "under, pursuant, and subject to the terms and provisions of the (Act), and to all lawful
and reasonable regulations of the
(Secretary) when not inconsis-
tent with any express and specific provisions herein, which are
made a part hereof •••• 11 39
The court
rejected
Union's
argument
and held that any terms of the lease which were inconsistent with
the
terms
of
the
statute
were
invalid. 40
The
court
reasoned
that the Secretary could alienate interests in land only to the
extent authorized by law, and that Congress had, in the OCS Lands
Act, authorized the Secretary to lease oil and gas rights with the
qualification that he retain the power to amend existing rules and
regulations or promulgate new ones whenever he deemed necessary to
do so for
the
conservation of
natural
Thus,
resources. 41
the
court determined that the action was taken by the Secretary was
not in violation of the lease agreement, as was alleged by Union.
The
court
Secretary's
then
action
considered
represented
ment's prohibitfon against
public
use
open-ended,
without
just
indefinite
the
the
a
questions
violation of
suspension
of
the
private
taking of
compensation.
of
The
the
court
right
whether
fifth
amend-
property
held
to
the
that
install
for
an
a
10
platform,
Act 42
even
the
and
amount to a
requiring
though
seemingly
authorized
regulations
cancellation of
compensation
under
lease
the
the
OCS
Lands
thereunder,43
issued
the
by
and,
fifth
therefore,
amendment. 44
would
a
taking
Addition-
ally, the court held that such a suspension requiring compensation
was
not
authorized
by
Congress
and
was
therefore
beyond
the
Secretary's power.45
Lessees are required to prepare and submit exploration plans
to
the
Secretary
for
approval. 46
The
Secretary
is
empowered
to require modifications of these plans as he deems necessary to
achieve
consistency
with
subsequently
regulations
the
provisions
issued
under
of
the
act
and
act.47
the
any
These
modifications are to be exercised after bidding has been completed
and
leases
have
been
After
issued.
exploration
begins,
the
Secretary is further empowered to order a suspension or temporary
prohibition or any exploration activities and require preparation
of
a
revised
exploration
plan. 4 8
,_Finally,
the
Secretary
may
require any lessee operating under an approved exploration plan to
obtain a permit prior to drilling.49
In response to demands from coastal states, the role of state
and
local
government
officials
in
exploration, and development has been
planning
for
lease
sales,
considerably expanded.
The
five-year leasing plan must be submitted to the governor of each
affected
request
state
a
•
for
review
and
modification require
comment. 50
a
written
0{)1 ().~
_,
•J
Any
reply
comments
by
the
which
Interior
11
secretary. 51
All
such
correspondence
must
to Congress with the proposed plan:s2
The
then
be
submitted
legislation
further
mandates· that "the Secretary shall accept recommendations of the
governor" if the Secretary determines that they provide a reasonable balance between the national interest and the well-being of
the
citizens
of
the
affected
state.53
Consultation
recommendations from officials of local government
with
and
jurisdictions
are also encouraged and solicited, and though the Secretary is not
constrained
to
accept
by
recommendations
desired.
such
recommendations,
governors,5 4
a
as
balance
in
the
is
case
of
nevertheless
For the newly required exploration and production plans,
the legislation specifies
that
the Secretary shall
not
grant
a
license or permit for any activity affecting land use or water use
in the coastal zone of a state unless the state concurs that the
activity
does
not
conflict
with
any
approved
coastal
zone
management plan.SS
Iri
remanding
the
case
to
the
trial
court,
the
court
of
appeals directed the lower court to determine whether the termination
of
the
Secretary's
suspension
order
was
sufficiently
"conditioned on the occurrence of events or the discovery of new
knowledge which can be anticipated within a reasonable amount of
time" to be a valid exercise of the Secretary's power and not a
fifth amendment taking beyond the Secretary's power. 56
•
III.
The
much
publicized
Georges Bank
Georges
001?8
Bank
region
exemplifies
the
12
counterforces
prevalent
where
industry
and
the
environment
seriously overlap.
Of particular interest is lease sale #42 which has been the
subject
of
litigation 57
is
and
being
considered
Commerce Department for a proposed marine sanctuary.
by
It
the
is now
the subject of public workshops.
In 1979, Secretary of the Interior Cecil Andrus told the New
England Business Council that "We have examined and re-examined,
reviewed
and
re-rev iewed
all of the pros
and
cons,
all
conflicts and consequences," on the proposed lease sale.
of
the
He said
"This North Atlantic area is the only promising frontier area off
the Lower 48 which has never had a lease sale."
Andrus said that
OCS oil and gas is a vital part of the answer to the energy future
of New England
and
the
U.s. 58
It
is
believed
that
lease
#42
has enough energy to keep Massachusetts in gasoline for over five
years.
Therefore, the balancing of interest becomes a necessity
heretofore thought to be perpetually delayable.
Andrus further said that the OCS Lands Act Amendments of 1978
provide him with additional authority to require the
use of the
best available and safest technologies economically achievable and
to suspend operations
harm to
the
and
environment
cancel
should
a
lease
develop.
if
unforeseen
Also,
under
risk or
the
Act,
funds are being established to compensate commercial fishermen for
damage to their ~ear and to finance the cleanup of any oil spills
on
the
funds.
Georges
Bank.59
The Act
creates
The
compensation
an Offshore
Oil
is
from
Pollution
earmarked
Compensation
13
Fund in an amount not to exceed $200 million.
This fund is to be
financed
per
by a
fee
of not more
than
3
cents
barrel
of
oil
produced from the Outer Continental Shelf, which is imposed on the
lessee
at
the
point
of
production.
The
fund
is
to
become
immediately available to compensate for oil spill removal costs,
the processing and settlement of claims,
and all
administrative
and personnel costs borne by the federal government arising out of
oil spills. 60
A.
On
OCS Jurisdiction of the Georges Bank
and similar problematic regions
February
1980,
4,
Massachusetts'
top
environmental
official said he would not grant licensing for offshore oil and
gas exploration in the Georges Bank unless all environmental safeUnder the federal Coastal Zone Management Act,
guards were met.
federal
activities
coastal
program.
particular,
drilling
the
be
consistent
Massachusetts
Massachusetts
1s deemed
traditional
must
fishing
grounds
has
CZM
consistent
with
plan
only
is
been
if
an
approved
so
approved.
provides
potential
"evaluated
that
In
offshore
damage
and
state
to
avoided"
the
and
"disposal of drilling muds and cuttings does not damage spawning
areas and fishing resources."61
The
right
resources
Act,62
as
is
to
assertively
.statutorily
amended,63
in
defend
g1ven
that
a
under
the
state's
the
Atlantic
own
Submerged
coastal
natural
Lands
states
or their municipalities own the coastal land mass, tidal regions,
0{)13_~
14
and seabeds of the marginal sea within three miles of their coastline. 64
Beyond
this
limit,
the
federal
has
government
jurisdiction over the territorial sea and submerged lands of the
OCS
to
whatever
Leasing,
are,
depth
exploration,
in theory,
seabed
resources
can
and production beyond
subject only to federal
be
the
exploited.65
three
mile
zone
regulation; nonetheless,
coastal states and municipal authorities retain proprietary power
over adjacent land areas critical to the siting of pipelines and
storage
and
processing
facilities.
Thus,
states
and
their
political subdivisions have the means to block the construction of
ancillary
facilities
largescale
commercial
necessary
to
the
development
Applicable
deposits.
federal
of
any
legislation
enhances this power.66
Where a company's proposed OCS activities will affect states
whose coastal zone management programs have been approved by the
National
Oceanic
and
Atmospheric
Administration
(NOAA)
of
the
Department of Commerce, the activities described in the company's
development plan must be certified as consistent with the affected
states' programs before they can be licensed by Interior.67
The underlying goal of the
Act68
is
to
encourage
a
Federal
strong
Coastal
management
governments
"in developing land and water
than
significance."69
local
incentives
..
to
•
develop
The
act
zone
coastal
Zone
role
Management
for
state
use decisions of more
offers
states
management
two
major
programs
in
conformity with federal guidelines:
money and increased leverage
over
the
federal
decisions
affecting
0{J)1,. ;
ry~
-'l
·.
\J'.
,
states'
coastal
zone.
15
Although the primary focus of the CZMA is upon local and regional
land use planning,
of national
planning for,
the act recognizes the need for accommodation
interests
including
"national
and in the siting of,
interest
facilities
involved
in
(including energy
facilities in, or which affect (the) state's coastal zone), which
are necessary to meet requirements which are other than local
nature." 70
state
to
This
provision
accommodate
has
not
national
siting of energy facilities
been
energy
in
read
needs
its coastal
as
by
compelling
permitting
zone.
in
The
state
a
the
is
simply admonished to "consider" this possibility in the course of
developing a coastal zone management program.
Recent amendments
expanding the grants available to states under the Coastal Energy
Impact Program (CEIP)
nevertheless encourage states to give such
sitings serious consideration.71
Outer continental shelf leasing is subject to the consistency
provisions of the CZMA even though the activity in question occurs
outside
the
affects
"any
state's
land
"coastal
use
or
zone,"
water
as
use
long
in
the
as
the
activity
coastal
zone." 72
OCS leasing activities are also subject to provisions of the CZMA
which have been interpreted as requiring that "all Federal license
and permit activities described in detail in OCS plans and which
significantly affect the coastal
zone
(be)
conducted in a manner
consistent with approved (state) programs.73
These provisions give coastal states leverage,
the degree of a
If
a
state
or
veto,
a
to
forestall
concerned
offshore leasing activities.
citizens
0()13J
though not to
group
objects
to
the
16
certification of
proposed OCS
activities,
the
license
applicant
must submit a new or amended plan unless the Secretary of Commerce
either
rides
makes
the
contrary
refusal
An aggrieved
to
state or
findings
certify
as
on
to
consistency74
national
local group can
security
elect
to
0
r
over-
grounds.75
contest
such
determination through the administrative process or challenge
a
it
in court; but even if an appeal is not taken, the power to delay
offshore
activities
states and
considerably
enhances
localities will henceforth be
leasing activity
in the OCS.
Although
the
able
the
influence
to
that
exercise
"national
over
security"
provisions of CZMA section 307(c)(3)(B) and liberal interpretation
of
the
commerce
Consitution 76
and
will
supremacy
permit
clauses
national
of
the
United
interests
to
be
States
given
preponderant weight, courts undoubtably will be left to determine
how the balance between these competing interests is to be struck.
Courts
will
also
be
left
to
resolve
difficult
constitutional
issues of preemption and interference with commerce.77
B.
Recent OCS Litigation
After a three-year legal battle,
General's office,
the U.S.
the Massachusetts Attorney
the Conservation Law Foundation of Boston, and
Interior and Commerce Departments reached
a
settlement
agreement to allow oil and gas exploration drilling to proceed on
~
the Georges Bank.78
The state and the conservation group said they were pleased
with the agreement,
although they plan to monitor environmental
tlul~~
17
permits and approval of exploration plans for the areas.79
The
McNaught
agreement,
in
the
Massachusetts,
approved
U.S.
settled
December
District
a
three
11,
Court
year
1980
for
court
by
the
fight
Judge
J.
District
of
by
the
state
attorney general's office and the Conservation Law Foundation to
block
offshore
Bank. 80
The
oil
and
lease
gas
sale
was
Lease
Sale
delayed
but
42
on
the
eventually
Georges
transpired
after the Interior Department agreed to environmental safeguards
to protect the fishing resources.81
The settlement agreement gave the state and the conservation
group access to federal studies already done, underway, or planned
in the future on Georges Bank.
"This (allows) us more convenient
access to scientific work before it
Douglas Foy,
executive director of
is formally released,"
said
the Conservation Law Founda-
tion.82
The agreement also committed the National Oceanic and Atmospheric Administration of
the Commerce Department
to
re-evaluate
the nomination of a proposed marine sanctuary for the area, with
recommendations due
proposal
was
by December
dropped
when
1,
Interior
The marine
1981.
and
Commerce
sanctuary
agreed
on
the
Georges Bank plan in 1979.83
As might be suspected,
the efforts of Interior and the NOAA
to carry out their disparate responsibilities under the foregoing
statutes have provoked judicial challenges.
Suffolk
County8 4
and
Massachusetts85
The suits brought by
to
prevent
Interior
from proceeding with the Baltimore Canyon and Georges Bank lease
0{1130
18
sales, and those brought on behalf of oil companies to enjoin the
NOAA's
approval
Coastal
Zone Management Programs are of particular
June
30,
of
1976,
California86
the
following
a
year
Massachusetts87
and
of
interest.
prelease
planning
On
and
review, the Secretary of the Interior announced his intention to
conduct the first Atlantic OCS lease sale
six weeks of that date.
Defense
Council
and
(Lease Sale 40) within
Almost immediately the Natural Resources
representatives
of
local
communities
and
citizens groups who feared the impact of adjacent OCS operations
on nearby fishing grounds and beaches joined with the Long Island
counties of Suffolk and Nassau to seek to enjoin Interior
proceeding
with
the
contemplated
injunction was granted and stayed,
sale.88
After
a
from
preliminary
the case proceeded to trial.
On February 17, 1977, following a lengthy hearing on the merits,
the United States District Court for the Eastern District of New
York declared
the exploratory leases granted by
Interior
to
be
void and enjoined Interior form permitting leaseholders to conduct
further
The
exploration.
court
found
that
the
Secretary
had
violated NEPA by preparing an EIS which failed to weigh the range
and
effect
production tation
being
of
potential
onshore
impacts
arising
from
future
in particular, the possibility of pipeline transporbarred
by
state
statutes
or
local
ordinances, 89
as well as the environmental risk associated with specific pipe1 ine routes.
.
Judge Weinstein's decision to enjoin was based on
the premise that allowing the companies to proceed with exploratory activities
under
the
terms of
their
lease
represented
an
19
irreversible commitment of resources.90
The
Court
of
Appeals
for
the
Second
Circuit
subsequently
reversed the District Court's decision, concluding that the lower
court's finding of material NEPA violations was in error, and the
Interior's sale of leases did not represent federal action which
"irrevocably committed specific public resources to
damage
from
the
outset."91
In
the
Second
Interior had acted reasonably in deferring
irreversible
Circuit's
view,
consideration of
the
impact of local land use controls upon pipeline routes until after
the discovery of oil:
was neither
"(P) rojection of specific pipeline routes
'meaningfully possible,'
under the circumstances."
nor
'reasonably necessary'
The Secretary will be in a much better
position to make a realistic and specific assessment of problems
relating to specific routes when, assuming oil is discovered, the
lessees submit development plans.92
c.
Future Directions of OCS Development
New OCS leasing on a massive scale raises fundamental policy
questions of how the United States should use and develop energy
Unfortunately,
in the next century.
functioned
well
on
OCS
issues
to
the federal
date,
largely
system has not
because
of
a
failure at the federal level to permit state participation in the
decision-making process •
At
least
•
two
.
maJor
structural
problems
control in the current political system.
pure
should
federalism
be
made
concern
of
what
between
federal
0,, r~.r l.cv
vi.-i
resource
The first of these is a
allocation
and
surround
state
of
responsibility
governments.
The
20
problems of federalism with respect to OCS policymaking have been
and
severe,
state
congressional
participation
enactment
of
the
Coastal Zone Management Act.
remains
consistency
inadequate
despite
provisions
of
the
The states must rely on threats to
deny permission for shore facilities
in order to have voice
in
federal planning for OCS development.
This tactic and protracted
litigation are the only available state tools with which to compel
access to the pol icy-making process when the federal level does
not voluntarily solicit or need state views.
The eventual success
of these devices, and consequent extent of state power, depend on
a constitutional clash before the Supreme Court where the results
are uncertain and state influence could be eliminated.
Both the
states and the federal government have vital interests at stake in
OCS development, yet rather than sharing power between federal and
state governments,
the present legal system at best allows
in the courts
states to block plans
instead of
original development of plans l.n the federal
-
system
is
litigation,
the courts will
state
if
Even
unfortunate.
joining
l.n the
agencies. 93
is
power
become politicized
the
This
upheld
in the
.
l.n
resource
field, because they will be the only avenue for the expression of
local interests involved 1.n resource decisions made in Washington.
Some
judicial
participation
in
resource
management
may
be
desirable, but reliance on the judiciary as a standard political
channel
and
as
the
sole
federal plans is unwise.
political
and
are
avenue
of
redress
for
opposition
to
These types of decisions are intensely
laden
with
value
judgments.
Judges
21
are undoubtably capable of making value judgments, but the tradeoffs between environmental concerns and energy considerations are
essentially legislative in nature.
They are policy choices which
will deeply affect the welfare of all Americans and, consequently,
are
not
well
suited
to
statutory
construction
or
case-by-case
development.9 4
In
popular
addition,
political
difficult.
creating
would
relying
input
Litigation
a
far
greater
the
judiciary
makes
tends
checkerboard
make
on
to
of
the
method
coherent
program
focus
individual
on
conflicting
sense
as
if
all
of
development
projects,
adjudications.95
concerned
parties
It
could
participate in a decision such as to rely on nuclear power
for
electrical needs, rather than forcing them to express opposition
to nuclear power as an energy source by bringing suit every time a
reactor is proposed for a particular town.
inconsistent results,
~s
This approach causes
very expensive and does nothing to create
access for members of the public to decisionmaking.
specific
statutory
enactments,
on
the
other
Proceeding by
hand,
would
shift
decisions from the courts into the legislature, where values can
be
balanced
more
freely
and
public
access
will
be
greater.96
Furthermore, enormous amounts of time may be expended in resolving
litigation,
facilities
thereby allowing
inflation to drive
that are eventually constructed.
up
the
Sharing of
cost
of
initial
~
decisionmaking between federal
and state governments would be
more economical and rational way to proceed. 97
0f)1 'lf'}
.
.
f.
a
22
The second major problem with -the present and the proposed
structure of resource
public
to
exercise
decisionmaking.
local
health,
officials,
control
a
is
political
Bureaucrats may
employment
especially
and
given
the
relative
check
have
on
a
resource
much
recreation
the
and
larger
than
inability
develop a long-range energy plan.
inability of
of
the
energy
impact
any
on
elected
legislators
to
Not only is direct guidance
from elected authorities largely absent, but there are few afterthe-fact political controls over many aspects of such bureaucratic
decisionmaking.
The problem of lack of pol icy guidance
is com-
pounded since many areas of resource exploitation are remote and
sparsely populated, if not uninhabited federal reserves.
areas,
there can be no
local
political
In such
check on agency action.
The decision to build a dam or to strip mine may be challenged 1n
the courts, but even if the decision is reversed as violative of
the law or as an abuse of discretion there is no direct sanction
He
for the bureaucrat.
over-exploitation
is
without
free
to err heavily on
risking
more
much
the
than
side of
judicial
challenge to the plan.98
In short,
the underlying problems with OCS development
not really legal or
political.
Their
jurisdictional
solution
at
depends
all,
upon
but
the
are
are
essentially
structuring
of
a
scheme of government for the coastal region that would operate by
political
compromise
rather
than
administrative
hit
and
miss.
23
CONCLUSION
It is too early to tell -whether recent legislative and reguchanges
latory
will
diminish
the
incidence
of
litigated
controversies and facilitate OCS lease administration.
Companies
and concerned
federal
agencies
are
limited
in
their
ability
to
prevent litigation, chiefly because perceptions about how and at
what
rate
the
area
should
difficult to reconcile.
be
developed
remain
disparate
and
Most are agreed that federal leasing of
the OCS requires a balancing of the interests of those seeking to
develop domestic oil and gas resources on an accelerated basis and
those anxious to protect coastal ecosystems and
local
from
Few
the
consequences
of
such
development.
economies
can
agree,
however, on what weight these competing interests should be given
Litigation
and where the balance between them should be struck.
is but
a
manifestation of
this
dichotomy of
Until
vision.
a
measure of consensus exists on these issues, there is no reason to
assume that Atlantic OCS development will proceed free of judicial
.controversy.99
The analysis above shows but one thing
sion which can be
formulated
at
this
time.
there 1s no concluBoth
the
need
for
petroleum and necessity of protecting the environment maintain too
valuable
a
part
between the two.
resulting
failu~e
of
today' s
world
for
this
composer
But if time has told us anything,
to
choose
it is that a
to protect the nation's aquatic frontier during
the current search for energy and
in the decades
tragically despoil the nation's final frontier.
END
001~:. ·
_.,
illo.
•
to
come could
BIBLIOGRAPHY
124 Congressional Record
Marine Mining of the Continental Shelf 1.
Management of Energy Resources on Federal Land 1.
Natural Resources Journal, No. 19.
Oklahoma Law Review, 1977.
Environment Reporter, Vol. 10' 1979.
Reporter, Vol. 12' 1978.
Environment
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Environment Reporter, Vol. 1 1 ' 1978.
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Ocean Development and International Law Journal, 1980.
Washington Law Review, 1977.
0011~
FOOTNOTES
1.
124 Cong. Rec. 813,994 (daily ed. Aug. 22, 1978) (remarks of
Sen. Jackson).
2.
Dep't of the Interior, Geological Survey, cited in H.R. Rep.
No. 590, 95th Cong., 1st Sess.
71
(1977).
3.
Id. at 74.
4.
43
5.
Convention on the Continental Shelf Article 1, U.N. Doc. A/C.
u.s.c.
13/L.
6.
§ § 1331-1341 (1976).
35 (1958).
Report of the Committee on Energy and Natural Resources on the
Outer Continental Shelf Lands Act Amendments of 1977,
s.
Rep.
No. 284, 95th Cong., 1st Sess. 43 (1977).
13 4 4 ( a )
( S u pp • 1 9 8 0 ) •
7•
43 U • S • C • §
8.
Jones, Mead and Sorenson, The Outer Continental Shelf Lands
Act Amendments of 1978, 19 Nautral Resources Journal 885
(1979).
9.
Executive Office of the President, The National Energy Plan
56 (1977).
10. Id.
1 1 • Id.
12. 19 Natural Resources Journal 886 (1979).
13. Id.
14. Id.
..
,
15. Id.
16. 43
u.s.c.
§
§
-
1334-1337 {1976).
17. 43 C.F.R. Part 3300 {1978).
18. 19 Natural Resources Journal 887 {1979).
19. Id. at 888.
20. 43
21 • Id.
22. 43
u.s.c.A. s
§
1 3 44
{a)
u.s.c.A.
§
1344{a) {Supp. 1979).
{
1) •
1337{a) {1) {Supp. 1979).
23. Id.
24. 43
u.s.c.A. s
1337{a){1){H) {Supp. 1979); 43
u.s.c.A. s
{a){4) {Supp. 1979).
25. Id.
26. Id.
§
1337{a) {Supp. 1979).
27. 19 Natural Resources Journal 918 {1979).
28. 43
u.s.c.A. s
1337 {b) {2) {Supp. 1979).
2 9 • 4 4 I d • § 1 3 3 7 { b ) { 2 ) { B ) { S u pp • 1 9 7 9 ) •
30. 19 Natural Resources Journal 919 {1979).
-31. 43
u.s.c.
1334 {1970).
§
32. Gulf Oil Corp. v. Morton, 493 F.2d 141 {9th Cir. 1973).
33. Union Oil Co. v. Morton, 512 F.2d 743 {9th Cir. 1975).
34. 30 C.F.R.
250.12{c) {1973).
§
35. Id.
36. 512 F.2d 743,
7 50.
-,
~
37. Id. at 7 43 •.
38. Id.
39. Id.
40. Id.
1337
41. Id.
42. 43
u.s.c.
S 1334(a)(1) (1970).
43. 30 C.F.R. S 250.12(2)(c) (1973).
44. The court held that such a taking by interference with private
property rights was within the constitutional power of Congress, subject to payment of compensation. 512 F.2d 743, 751
( 9 th C i r • 1 9 7 5 ) •
45. Id.
46. 43
u.s.c.
§
§
1331-1343 (1976), as amended by OCSLA Amend-
ments of 1978, Pub. No. 95-372, 92 Stat. 629.
47. Id.
§
1340 (c) ( 1 ) •
48. Id.
§
1340 (f) ( 1 ) •
49. Id.
§
1340 (d) •
so.
§
1344 9c) ( 2) •
§
1345 (c) •
Id.
51. Id.
52. Id.
53. Id.
54. Id.
55 • 1 6 U• S • C • A•
§
14 56 ( 3 ) ( S u pp • 1 9 8 0 ) ; 43 U• S • C • A•
§
13 5 1 ( d )
(Supp. 1980).
56. Note, Environmental Law:
Governmental Suspensions of Outer
Continental Shelf Oil Drilling Operations, 1977 Okla. L.
Rev • 9 3 0 , 911 ( 1 9 7 7 ) •
57. Environment Reporter, Volume 10 - Number 16, August 17, 1979,
pp. 1028-9.
58. Id. at 1029.
~ 1 .~,....
0{. I - {·- ... _.
I
59. Id.
60. 19 Natural Resources Journal 891-92 (1979).
61. Environment Reporter, Volume 10 - Number 42, February 15,
1980, p. 2006.
62. 43
u.s.c.
63. Id. at
§
§
§
1301-1315 (1876).
1331-1343.
§
64. United States v. Maine, 420 U.S. 515, 524-26 (1975).
65. Id. at 526-28.
See also Convention on the Continental Shelf
Art. 1, opened for signature April 29, 1953, entered into
force June 10, 1964, 15 U.S.T. 471, T.I.A.S. No. 5578, 499
U.N.T.S. 311.
66. Best, Oil and Gas Operations in the Atlantic Outer Cantinental Shelf:
An Overview of the Regulatory and Litigation -
Related Constraints to Development, 11 Conn. L. Rev. 459,
46 3- 6 4 ( 1 9 7 9 ) •
67. 11 Conn. L. Rev. 465.
68. 16
u.s.c.
§
1451 (h).
69. Id.
70. CZMA,
§
306(c)(8), 16 U.S.C.
1455 (c)(8).
§
71. 11 Conn. L. Rev. 469.
72. Shaffer, OCS Development and the Consistency Provisions of the
Coastal Zone Management Act - Legal and Policy Analysis, 4
OHIO N.U.L. Rev.
597, 601-2- (1977) •
.
73. 16
u.s.c.
•
§
1456(c)(1)-(2).
74. 11 Conn. L. Rev. 470-71.
75. Id.
0(~.1-·
•
)
I
""
:
~~~..)
76. U.S. CONST. art I,
§
8, cl. 3; id. art. VI, cl. 2.
11. 11 Conn. L. Rev. 470-71.
78. Environmental Reporter, Number 10, January 9, 1981.
79. Id.
80. Conservation Law Foundation v. Andrus, 13 ERC 1965.
81. Current Developments, September 28, 1979, p. 1242.
82. Environmental Reporter, Number 10, January 9, 1981.
83. Id.
84. County of Suffolk v. Secretary of the Interior, 562 F.2d 1368
(2d Cir. 1977), cert. denied, 434
u.s. 1064 (1978).
85. Massachusetts v. Andrus, 11 ENVIR. Rep. (BMA) 1138 (D. Mass.
Jan • 2 8 , 19 7 8 ) •
86. American Petroleum Inst. v. Knecht, 456 F. Supp. 889 (C.D.
Cal. 1978).
87. American Petroleum Inst. v. Knecht, 12 ENVIR. Rep. (BNA) 1226
(D.D.C. Sept. 6, 1978).
88. 11 Conn L. Rev. 472.
89. New York v. Kleppe, 9 ENVIR. Rep. (BNA) 1798 (E.D.N.Y. Feb.
17, 1977).
90. 11 Conn. L. Rev. 473.
91. 562 F.2d 1368, 1390.
92. Id. at 1382.
93. Breeden, Federalism and the Development of Outer Continental
•
Shelf Mineral Resources, 28 Stanford L. Rev. 1107, 1145-46
(1976).
94. 28 Stanford L. Rev. 1150-51.
(}f): ,11, ~.
.
"'
95. Id. at 1151.
96. Id. at footnote 198.
97. Id. at 11 51 •
98. Id. at 1152.
99. 11 Conn. L. Rev. 480-81.