Order Code RL33404
CRS Report for Congress
Received through the CRS Web
Offshore Oil and Gas Development:
Legal Framework
May 3, 2006
Aaron M. FlynnUpdated July 14, 2006
Jon O. Shimabukuro
Legislative Attorney
American Law Division
Congressional Research Service ˜ The Library of Congress
Offshore Oil and Gas Development:
Legal Framework
Summary
The development of offshore oil, gas, and other mineral resources in the United
States is impacted by a number of interrelated legal regimes, including international,
federal, and state laws. International law provides a framework for establishing
national ownership or control of offshore areas, and domestic federal law mirrors and
supplements these standards.
Governance of offshore minerals and regulation of development activities are
bifurcated between state and federal law. Generally, states are primary in the three
geographical mile area extending from their coasts. The federal government and its
comprehensive regulatory regime governs, on the other hand, those minerals located
in federal waters, which extend from the states’ offshore boundaries out to at least
200 nautical miles from the shore. The basis for most federal regulation is the Outer
Continental Shelf Lands Act (OCSLA), which provides a system for offshore oil and
gas development planning, leasing, exploration, and ultimate development.
Regulations run the gamut from health, safety, and environmental standards to
requirements for production based royalties and, when appropriate, royalty relief and
other development incentives.
Several contentious legal issues remain the subject of national debate and
legislative proposals. Bills that would open more areas to oil and gas leasing
compete with legislation that would permanently ban drilling in areas that are
currently under leasing moratoria. The role of the coastal states in deciding whether
to lease in areas adjacent to their shores is also an issue that has received recent
attention, with some legislative proposals granting significant decisional authority to
state governments while others would direct the Secretary of the Interior to lease
specific areas, limiting the state role to what is provided under existing statutes.
In addition to these legislative efforts, there has also been significant litigation
related to offshore oil and gas development. Cases handed down over a number of
years have clarified the extent of the Secretary’s discretion in deciding how leasing
and development are to be conducted. Also, pending litigation brought by the KerrMcGee Corporation is challenging the legal authority of the Secretary to suspend
royalty relief for certain deep water leases. The outcome of this litigation could result
in a substantial loss of royalty income for the United States with estimates ranging
from $18 to $28 billion over the next five years.
Contents
Ocean Resource Jurisdiction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Federal Jurisdiction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
State Jurisdiction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Coastal State Regulation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Federal Resources . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Moratoria . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Leasing and Development . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
The Five-Year Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 78
Leasing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 89
Exploration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1112
Development and Production . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Lease Suspension and Cancellation . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Legal Challenges to Offshore Leasing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1415
Suits Under the Outer Continental Shelf Lands Act . . . . . . . . . . . . . . 15
Suits Under the National Environmental Policy Act . . . . . . . . . . . . . . 2122
Appendix A . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2324
List of Figures
Figure 1. Federal Outer Continental Shelf Areas . . . . . . . . . . . . . . . . . . . . . . . . . 6
Offshore Oil and Gas Development:
Legal Framework
The development of offshore oil, gas, and other mineral resources in the United
States is impacted by a number of interrelated legal regimes, including international,
federal, and state laws. International law provides a framework for establishing
national ownership or control of offshore areas, and United States domestic law has,
in substance, adopted these internationally recognized principles. U.S. domestic law
further defines U.S. ocean resource jurisdiction and ownership of offshore minerals,
dividing regulatory authority and ownership between the states and the federal
government based on the resource’s proximity to the shore. This report explains the
nature of U.S. authority over offshore areas pursuant to international and domestic
law. It also describes the laws, at both the state and federal levels, governing the
development of offshore oil and gas and the litigation that has flowed from
development under the current legal regimes. Also included is an outline of the
recent changes to the authorities regulating offshore development wrought by the
Energy Policy Act of 2005 and a description of pending litigation. Finally, this report
discusses legislation under consideration by the 109th Congress that might also amend
existing law in this area.
Ocean Resource Jurisdiction
Under the United Nations Convention on the Law of the Sea (UNCLOS III),
coastal nations are entitled to exercise varying levels of authority over a series of
adjacent offshore zones. Nations may claim a twelve nautical mile territorial sea,
over which they may exercise rights comparable to, in most significant respects,
sovereignty. An additional area, termed the contiguous zone and extending 24
nautical miles from the coast (or baseline), may also be claimed. In this area, coastal
nations may regulate in so far as necessary to protect the territorial sea and to enforce
their customs, fiscal, immigration, and sanitary laws. Further, in the contiguous zone
and an additional area, the exclusive economic zone (EEZ), coastal nations have
sovereign rights to explore, exploit, conserve, and manage marine resources and
jurisdiction over
(I) the establishment and use of artificial islands, installations and structures;
(ii) marine scientific research;
(iii) the protection and preservation of the marine environment.1
1
United Nations Convention on the Law of the Sea, Dec. 10, 1982, art. 56.1, 21 I.L.M. 1261
(entered into force Nov. 16, 1994) (hereinafter UNCLOS III).
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The EEZ extends 200 nautical miles from a nation’s recognized coastline. This
area overlaps substantially with another offshore area designation, the continental
shelf. International law defines a nation’s continental shelf as the seabed and subsoil
of the submarine areas that extend beyond either “the natural prolongation of [a
coastal nation’s] land territory to the outer edge of the continental margin, or to a
distance of 200 nautical miles from the baselines from which the breadth of the
territorial sea is measured where the outer edge of the continental margin does not
extend up to that distance.”2 In general, however, a nation’s continental shelf cannot
extend beyond 350 nautical miles from its recognized coastline regardless of
submarine geology.3 In this area, as in the EEZ, a coastal nation may claim
“sovereign rights” for the purpose of exploring and exploiting the natural resources
of its continental shelf.4
Federal Jurisdiction. While a signatory to UNCLOS III, the United States
has not ratified the treaty. Regardless, many of its provisions are now generally
accepted principles of customary international law and, through a series of Executive
Orders, the United States has claimed offshore zones for itself that are virtually
identical to those described in the treaty.5 In a series of related cases, the U.S.
Supreme Court confirmed federal control of these offshore areas.6 Federal statutes
also regularly refer to these areas and, in some instances, define them as well. Of
particular relevance, the primary federal law governing offshore oil and gas
development indicates that it applies to the “outer Continental Shelf,” which it
defines as “all submerged lands lying seaward and outside of the areas ... [under state
control] and of which the subsoil and seabed appertain to the United States and are
subject to its jurisdiction and control ....”7 Thus, the U.S. Outer Continental Shelf
(OCS) would appear to comprise an area extending at least 200 nautical miles from
the official U.S. coastline and possibly further where the geological continental shelf
extends beyond that point. The federal government’s legal authority to provide for
and to regulate offshore oil and gas development therefore applies to seemingly all
2
UNCLOS Art. 76.1.
3
UNCLOS Art. 76.4-76.7.
4
UNCLOS Art. 77.1.
5
Policy of the United States with Respect to the Natural Resources of the Subsoil and Sea
Bed of the Continental Shelf, Proclamation No. 2667, 10 Fed. Reg. 12,303 (Sept. 28, 1945);
Exclusive Economic Zone of the United States of America, Proclamation No. 5030, 48 Fed.
Reg. 10,605 (Mar. 14, 1983); Territorial Sea of the United States of America, Proclamation
No. 5928, 54 Fed. Reg. 777 (Dec. 27, 1988); Contiguous Zone of the United States,
Proclamation No. 7219, 64 Fed. Reg. 48,701 (Aug. 2, 1999).
6
See United States v. Texas, 339 U.S. 707 (1950); United States v. Louisiana, 339 U.S. 699
(1950); United States v. California, 332 U.S. 19 (1947). In accordance with the Submerged
Lands Act, states generally own an offshore area extending three geographical miles from
the shore. Florida (Gulf coast) and Texas, by virtue of their offshore boundaries prior to
admission to the Union, have an extended three marine league offshore boundary. See
United States v. Louisiana, 363 U.S. 1, 36-64 (1960); United States v. Florida, 363 U.S. 121,
121-29 (1960).
7
43 U.S.C. § 1331(a).
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areas under U.S. control except where U.S. waters have been placed under the
primary jurisdiction of the states.
State Jurisdiction. In accordance with the federal Submerged Lands Act of
1953 (SLA),8 coastal states are generally entitled to an area extending three
geographical miles9 from their officially recognized coast (or baseline).10 In order
to accommodate the claims of certain states, the SLA provides for an extended three
marine league11 seaward boundary in the Gulf of Mexico if a state can show such a
boundary was provided for by the state’s “constitution or laws prior to or at the time
such State became a member of the Union, or if it has been heretofore approved by
Congress.”12 After enactment of the SLA, the Supreme Court of the United States
held that the Gulf coast boundaries of Florida and Texas do extend to the three
marine league limit; other Gulf coast states were unsuccessful in their challenges.13
Within their offshore boundaries, coastal states have “(1) title to and ownership
of the lands beneath navigable waters within the boundaries of the respective states,
and (2) the right and power to manage, administer, lease, develop and use the said
lands and natural resources ....”14 Accordingly, coastal states have the option of
developing offshore oil and gas within their waters; if they choose to develop, they
may regulate that development.
Coastal State Regulation. State laws governing oil and gas development
in state waters vary significantly from jurisdiction to jurisdiction. Some state laws
are limited to a single paragraph and do not differentiate between onshore and
offshore state resources; other states do not distinguish between oil and gas and other
types of minerals. In addition to regulation aimed specifically at oil and gas
development, it should be noted that a variety of other laws could impact offshore
development, such as environmental and wildlife protection laws and coastal zone
management regulation. Finally, in states that authorize offshore oil and gas leasing,
they decide which lands will be opened for development. Appendix A of this report
contains a table of state laws banning or otherwise regulating offshore mineral
development. The table indicates which state agency is primarily responsible for
8
43 U.S.C. §§ 1301 et seq.
9
A geographical or nautical mile is equal to 6,080.20 feet, as opposed to the typical land
mile, which is equal to 5,280 feet.
10
43 U.S.C. §1301(b).
11
A marine league is equal to 18,228.3 feet.
12
43 U.S.C. §§ 1312, 1301(b).
13
United States v. Louisiana, 363 U.S. 1, 66 (1960) (“[P]ursuant to the Annexation
Resolution of 1845, Texas’ maritime boundary was established at three leagues from its
coast for domestic purposes .... Accordingly, Texas is entitled to a grant of three leagues
from her coast under the Submerged Lands Act.”); United States v. Florida, 363 U.S. 121,
129 (1960) (“We hold that the Submerged Lands Act grants Florida a three-marine-league
belt of land under the Gulf, seaward from its coastline, as described in Florida’s 1868
Constitution.”).
14
43 U.S.C. § 1311.
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authorizing oil and gas development and if state oil and gas leasing is limited to
specific areas by statute.
Federal Resources
The primary federal law governing development of oil and gas in federal waters
is the Outer Continental Shelf Lands Act (OCSLA).15 As stated above, the OCSLA
codifies federal control of the OCS, declaring that the submerged lands seaward of
the state’s offshore boundaries appertain to the U.S. federal government. More than
simply declaring federal control, the OCSLA has as its primary purpose “expeditious
and orderly development [of OCS resources], subject to environmental safeguards,
in a manner which is consistent with the maintenance of competition and other
national needs ....”16 To effectuate this purpose, the OCSLA extends application of
federal laws to certain structures and devices located on the OCS,17 provides that the
law of adjacent states will apply to the OCS when it does not conflict with federal
law,18 and, significantly, provides a comprehensive leasing process for certain OCS
mineral resources and a system for collecting and distributing royalties from the sale
of these federal mineral resources.19 The OCSLA thus provides comprehensive
regulation of the development of OCS oil and gas resources.
Moratoria
Although in general, the OCSLA requires the federal government to prepare,
revise and maintain an oil and gas leasing program, certain offshore areas are
withdrawn from disposition under the OCSLA. There are currently two broad
categories of OCS moratoria, those imposed by the President under authority granted
by the Outer Continental Shelf Lands Act20 and those imposed directly by Congress,
15
43 U.S.C. §§ 1331-1356.
16
43 U.S.C. § 1332(3).
17
43 U.S.C. § 1333. The provision also expressly makes the Longshore and Harbor
Workers’ Compensation Act, the National Labor Relations Act, and the Rivers and Harbors
Act applicable on the OCS, although application is limited in some instances.
18
Id.
19
43 U.S.C. §§ 1331(a), 1332, 1333(a)(1).
20
43 U.S.C. § 1341(a) (“The President of the United States may, from time to time,
withdraw from disposition any of the unleased lands of the outer Continental Shelf.”). The
President’s Memorandum on Withdrawal asserts that the presidential authority for imposing
the OCS moratorium is contained in section 12(a) of the OCSLA. The statement also
indicates that withdrawal from leasing is also authorized under those portions of the Marine
Protection, Research, and Sanctuaries Act of 1972 authorizing the President, under certain
circumstances, to establish marine sanctuaries and to impose certain levels of environmental
protection within those sanctuaries. Notably, this presidential statement does not cite any
inherent, constitutionally-based executive authority for executive control of OCS resources,
and none is immediately apparent. In general, Congress, acting pursuant to its constitutional
authority over federal property and U.S. territories and its authority over foreign and
(continued...)
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which have most often taken the form of limitations on the use of appropriated
funds.21 Congressionally imposed moratoria have been imposed since the early
1980s and have been approved annually thereafter. In 1990, President Bush issued
a directive essentially paralleling the congressionally mandated moratoria, prohibiting
most oil and gas development outside of the offshore areas associated with (though
not belonging to) Texas, Louisiana, and Alabama.22 This presidential withdrawal
was to be effective until after the year 2000. In 1998, President Clinton issued a new
executive branch moratorium, lasting until June 30, 2012.23 The Clinton order refers
to the 1997 congressional moratorium and adopts the substance of that enactment
expressly, which itself included by reference those areas covered by the 1990
presidential withdrawal. The provisions of P.L. 105-83 state:
SEC. 108. No funds provided in this title may be expended by the Department
of the Interior for the conduct of offshore leasing and related activities placed
under restriction in the President’s moratorium statement of June 26, 1990, in the
areas of northern, central, and southern California; the North Atlantic;
Washington and Oregon; and the eastern Gulf of Mexico south of 26 degrees
north latitude and east of 86 degrees west longitude.
SEC. 109. No funds provided in this title may be expended by the Department
of the Interior for the conduct of offshore oil and natural gas preleasing, leasing,
and related activities, on lands within the North Aleutian Basin planning area.
SEC. 110. No funds provided in this title may be expended by the Department
of the Interior to conduct offshore oil and natural gas preleasing, leasing and
related activities in the eastern Gulf of Mexico planning area for any lands
located outside Sale 181, as identified in the final Outer Continental Shelf 5Year Oil and Gas Leasing Program, 1997-2002.
SEC. 111. No funds provided in this title may be expended by the Department
of the Interior to conduct oil and natural gas preleasing, leasing and related
activities in the Mid-Atlantic and South Atlantic planning areas.24
In addition, the President also withdrew from disposition by leasing all areas on
the OCS designated as Marine Sanctuaries at the time.
Since this presidential withdrawal has been in place, congressionally imposed
moratoria have closely paralleled the structure and the substance of the Clinton order.
One significant legal difference does exist however. The presidential withdrawal
only prevents the “disposition by leasing” of the OCS areas it references. Thus, other Areas under existing
moratoria are depicted in Figure 1.
20
(...continued)
interstate commerce, has sufficient constitutional authority to regulate OCS resources.
21
See, e.g., 118 Stat. 3064, P.L. 108-447 §§ 107-109 (Dec. 8, 2004).
22
Statement on Outer Continental Shelf Oil and Gas Development, 26 WEEKLY COMP. PRES.
DOC. 1006 (June 26, 1990).
23
Memorandum on Withdrawal of Certain Areas of the United States Outer Continental
Shelf from Leasing Disposition, 34 WEEKLY COMP. PRES. DOC. 1111 (June 12, 1998).
24
P.L. 105-83, 111 Stat. 1543 (Nov. 14, 1997).
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Figure 1. Federal Outer Continental Shelf Areas
Since this presidential withdrawal has been in place, congressionally imposed
moratoria have closely paralleled the structure and the substance of the Clinton order.
One significant legal difference does exist however. The presidential withdrawal
only prevents the “disposition by leasing” of the OCS areas it references. Thus, other
activities authorized by the OCSLA, such as planning for lease sales or initial oil and
gas exploration, might still be carried on in the absence of additional prohibitions.
The congressional moratoria have consistently contained broader restrictions. These
enactments typically preclude the expenditure of appropriated funds “for the conduct
of offshore leasing and related activities” or, even more specifically, “for the conduct
of offshore oil and natural gas preleasing, leasing, and related activities.”25 Thus,
congressionally imposed moratoria would generally appear to have the effect of
prohibiting leasing, exploration, planning for lease sales and other OCS oil and gas
related activities authorized by the OCSLA. The enactment of the Energy Policy Act
of 2005 does appear to alter this however. Section 357 of that law requires the
Secretary of the Interior to conduct an inventory and analysis of oil and natural gas
resources beneath all of the waters of the U.S. OCS.26 The law permits some forms
of exploration, including 3-D seismic technology, but prohibits drilling. The
inventory is to include analysis of the existing regulatory structure, including the
moratoria, and assess the extent to which relevant laws and policies “restrict or
25
See, e.g., P.L. 106-291, 114 Stat. 942 §§ 107-110 (Oct. 11, 2000).
26
42 U.S.C. § 15912.
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impede the development of identified resources and the extent that they affect
domestic supply ....”27
A number of bills introduced in the 109th Congress seeks to amend or alter the
existing prohibitions on OCS development. There have been bills introduced to
permanently prohibit oil and gas leasing off the coasts of California28 and Florida29
and in the Mid-Atlantic and North Atlantic areas.30 On the other hand, bills have also
been introduced to repeal the existing congressional and presidential limitations, in
whole or in part, on OCS oil and gas development.31 In at least one proposal,
Congress would adopt a more deferential position vis-a-vis the states by repealing or
limiting the effect of the existing moratoria and allowing states to request that leasing
be allowed or that withdrawals be extended before further action would be
authorized.32 To date, efforts to amend or repeal the OCS development moratoria
have been unsuccessful.
25
See, e.g., P.L. 106-291, 114 Stat. 942 §§ 107-110 (Oct. 11, 2000).
26
42 U.S.C. § 15912Leasing and Development
The Secretary of the Interior oversees OCS mineral leasing, with the leasing of
tracts and royalty collection performed by the Minerals Management Service within
the Department.33 In 1978, the OCSLA was significantly amended, so as to increase
the role of the affected coastal states in the leasing process.34 The amendments also
revised the bidding process and leasing procedures, set stricter criteria to guide the
Department of the Interior (DOI) environmental review process, and established new
safety and environmental standards to govern drilling operations. The following
paragraphs describe the current OCSLA leasing process.
27
Id.
28
S. 2294, 109th Cong. (Feb. 16, 2006); H.R. 4782, 109th Cong. (Feb. 16, 2006).
29
H.R. 3251, 109th Cong. (July 12, 2005).
30
S. 878, 109th Cong. (Apr. 12, 2005); S. 2316, 109th Cong. (Feb. 16, 2006); H.R. 1798,
109th Cong. (Apr. 21, 2005).
31
H.R. 4318, 109th Cong. (Nov. 15, 2005) (The bill would repeal prohibition on gas
development only, authorize gas only leases, and divert monies from the federal receipts
related to these leases to states adjacent to development.); H.R. 3918, 109th Cong. (Sept. 27,
2005) (substantially similar proposal to H.R. 4318); S. 2290, 109th Cong. (Feb. 15, 2006)
(The Bill would authorize gas only leases and would repeal the moratoria in certain portions
of the Gulf of Mexico.).
32
H.R. 4761, 109th Cong. (Feb. 15, 2006). On June 21, 2006, an amendment in the nature
of a substitute to H.R. 4761, the Deep Ocean Energy Resources Act of 2006, was reported
by the House Committee on Resources. On June 29, 2006, the House passed H.R. 4761 by
a vote of 232-187.
33
Id. §§ 1331(b), 1334; 30 C.F.R. § 250.101 (2005).
34
P.L. 95-372, 92 Stat 629 (1978).
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Leasing and Development
The Secretary of the Interior oversees OCS mineral leasing, with the leasing of
tracts and royalty collection performed by the Minerals Management Service within
the Department.33 In 1978, the OCSLA was significantly amended, so as to increase
the role of the affected coastal states in the leasing process.34 The amendments also
revised the bidding process and leasing procedures, set stricter criteria to guide the
Department of the Interior (DOI) environmental review process, and established new
safety and environmental standards to govern drilling operations. The following
paragraphs describe the current OCSLA leasing process.
The OCS leasing process consists of four distinct stages: (1) the five-year
planning program,35 (2) the lease sale,36 (3) exploration,37 and (4) development and
production.38
The Five-Year Plan. The Secretary of the Interior is required to prepare a
five-year leasing plan, subject to annual revisions, that governs any offshore leasing
that takes place during the period of plan coverage.39 Each five-year plan establishes
a schedule of proposed lease sales, providing the timing, size, and general location
of the leasing activities. This plan is to be based on multiple considerations,
including the Secretary’s determination as to what will best meet national energy
needs for the five-year period and the extent of potential economic, social, and
environmental impacts associated with development.40
During the development of the plan, the Secretary must solicit and consider
comments from the Governors of affected states, and at least sixty days prior to
publication of the plan in the Federal Register, the plan is to be submitted to the
Governor of each affected state for further comments.41 After publication, the
33
Id. §§ 1331(b), 1334; 30 C.F.R. § 250.101 (2005).
34
P.L. 95-372, 92 Stat 629 (1978).Attorney General is also authorized to submit comments regarding potential effects
35
43 U.S.C. § 1344.
36
Id. §§ 1337, 1345.
37
Id. § 1340.
38
Id. § 1351.
39
43 U.S.C. § 1344(a), (e).
40
Id.
41
“Affected state” is defined in the Act as any state:
(1) the laws of which are declared, pursuant to section 1333(a)(2) of this title, to
be the law of the United States for the portion of the outer Continental Shelf on
which such activity is, or is proposed to be, conducted;
(2) which is, or is proposed to be, directly connected by transportation facilities
to any artificial island or structure referred to in section 1333(a)(1) of this title;
(3) which is receiving, or in accordnace [sic] with the proposed activity will
receive, oil for processing, refining, or transshipment which was extracted from
the outer Continental Shelf and transported directly to such State by means of
(continued...)
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Attorney General is also authorized to submit comments regarding potential effectsvessels or by a combination of means including vessels;
(4) which is designated by the Secretary as a State in which there is a substantial
probability of significant impact on or damage to the coastal, marine, or human
environment, or a State in which there will be significant changes in the social,
governmental, or economic infrastructure, resulting from the exploration,
development, and production of oil and gas anywhere on the outer Continental
Shelf; or
(5) in which the Secretary finds that because of such activity there is, or will be,
a significant risk of serious damage, due to factors such as prevailing winds and
currents, to the marine or coastal environment in the event of any oilspill,
blowout, or release of oil or gas from vessels, pipelines, or other transshipment
facilities .... Id. § 1331(f).
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on competition.42 Subsequently, at least sixty days prior to its approval, the plan is
to be submitted to Congress and the President, along with any received comments
and an explanation for the rejection of any comment.43 Once the leasing plan is
approved, tracts included in the plan will be available for leasing, consistent with the
terms of the plan.44
The development of the five-year plan is considered a major federal action
significantly affecting the quality of the human environment and as such requires
preparation of an environmental impact statement (EIS) under the National
Environmental Policy Act (NEPA).45 Thus, the NEPA review process complements
and informs the preparation of a five-year plan under the OCSLA.46
Leasing. The lease sale process involves multiple steps as well. Leasing
decisions are impacted by a variety of federal laws; however, it is section 8 of the
41
(...continued)
vessels or by a combination of means including vessels;
(4) which is designated by the Secretary as a State in which there is a substantial
probability of significant impact on or damage to the coastal, marine, or human
environment, or a State in which there will be significant changes in the social,
governmental, or economic infrastructure, resulting from the exploration,
development, and production of oil and gas anywhere on the outer Continental
Shelf; or
(5) in which the Secretary finds that because of such activity there is, or will be,
a significant risk of serious damage, due to factors such as prevailing winds and
currents, to the marine or coastal environment in the event of any oilspill,
blowout, or release of oil or gas from vessels, pipelines, or other transshipment
facilities .... Id. § 1331(f).
OCSLA and its implementing regulations that establish the mechanics of the leasing
process.47
The process begins when the Director of MMS publishes a call for information
and nominations regarding potential lease areas. The Director is authorized to
receive and consider these various expressions of interest in lease areas and
comments on which areas should receive special concern and analysis.48 The
Director is then to consider all available information and perform environmental
analysis under NEPA in crafting both a list of areas recommended for leasing and any
42
Id. § 1344(d).
43
Id.; see also 30 C.F.R. §§ 256.16-.17.
44
43 U.S.C. §1344(d).
45
42 U.S.C. § 4332(2)(C). In general, NEPA and its CEQ regulations require various levels
of environmental analysis depending on the circumstances and the type of Federal action
contemplated. Certain actions that have been determined to have little or no environmental
effect are exempted from preparation of NEPA documents entirely and are commonly
referred to as “categorical exclusions.” In situations where a categorical exclusion does not
apply, an intermediate level of review, an environmental assessment (EA), may be required.
If, based on the EA, the agency finds that an action will not have a significant effect on the
environment, the agency issues a “finding of no significant impact” (FONSI), thus
terminating the NEPA review process. On the other hand, major Federal actions that are
found to significantly affect the environment require the preparation of an environmental
impact statement (EIS), a document offering detailed analysis of the project as proposed as
well as other options, including taking no action at all. NEPA does not direct an agency to
choose any particular course of action; the only purpose of an EIS is to ensure that
environmental consequences are considered. For additional information, see CRS Report
RL30798, Environmental Laws: Summaries of Statutes Administered by the Environmental
Protection Agency, by Susan Fletcher.
46
See Natural Resources Defense Council v. Hodel, 865 F.2d 288, 310 (D.C. Cir.1988).
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OCSLA and its implementing regulations that establish the mechanics of the leasing
process.47
The process begins when the Director of MMS publishes a call for information
and nominations regarding potential lease areas. The Director is authorized to
receive and consider these various expressions of interest in lease areas and
comments on which areas should receive special concern and analysis.48 The
Director is then to consider all available information and perform environmental
analysis under NEPA in crafting both a list of areas recommended for leasing and any
47
43 U.S.C. § 1337.
48
30 C.F.R. §§ 256.23, 256.25.
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proposed lease stipulations.49 This list is submitted to the Secretary of the Interior
and, upon the Secretary’s approval, published in the Federal Register and submitted
to the Governors of potentially affected states.50
At this point, the OCSLA and its regulations authorize the Governor of an
affected state and the executive of any local government within an affected state to
submit to the Secretary any recommendations concerning the size, time, or location51
of a proposed lease sale within sixty days after notice of the lease sale.52 The
Secretary must accept the Governor’s recommendations (and has discretion to accept
a local government executive’s recommendations) if the Secretary determines that
the recommendations reasonably balance the national interest and the well-being of
the citizens of an affected state.53
The sale of leases begins when the Director of MMS publishes the approved list
of lease sale offerings in the Federal Register (and other publications) at least thirty
days prior to the date of the sale.54 This notice must describe the areas subject to the
sale and any stipulations, terms, and conditions of the sale.55 The bidding is to occur
under conditions described in the notice and must be consistent with certain baseline
requirements established in the OCSLA.56
47
43 U.S.C. § 1337.
48
30 C.F.R. §§ 256.23, 256.25.
Although the statute establishes base requirements for the competitive bidding
process and sets forth a variety of bid formats,57 many of these requirements are
subject to significant modification at the discretion of the Secretary.58 Before the
acceptance of bids, the Attorney General is also authorized to review proposed lease
sales to analyze any potential effects on competition and may subsequently
recommend action to the Secretary of the Interior as may be necessary to prevent
49
Id. § 256.26.
50
Id. § 256.29.
51
It should be noted that the OCSLA establishes certain minimum requirements applicable
to these subjects. For instance, lease tracts are, in general, to be limited to 5,760 acres,
unless the Secretary determines that a larger area is necessary to comprise a “reasonable
economic production unit ....” Id. § 1337(b). The law and its implementing regulations also
set the range of initial lease terms and baseline conditions for lease renewal.
52
43 U.S.C. § 1345(a); see also 30 C.F.R. § 256.31.
53
43 U.S.C. § 1345(c).
54
Id. § 1337(l).
55
30 C.F.R. § 256.32(1).
56
43 U.S.C. § 1337.
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While the statute establishes base requirements for the competitive bidding
process and sets forth a variety of bid formats,57 many of these requirements are
subject to significant modification at the discretion of the Secretary.58 Before the
acceptance of bids, the Attorney General is also authorized to review proposed lease
sales to analyze any potential effects on competition and may subsequently
recommend action to the Secretary of the Interior as may be necessary to prevent
57
Id. § 1337(a)(1)(A)-(H). For example, bids may be on the basis of “cash bonus bid with
a royalty at not less than 12 ½ per centum fixed by the Secretary in amount or value of the
production saved, removed, or sold ....” See also 30 C.F.R. §§ 256.35 - 256.47.
58
Id. 1337(a)(1)-(3), (8)-(9). It should be noted that the OCSLA also provides for a
legislative veto of the bidding system selected by the Secretary and that a similar provision
was declared unconstitutional by the U.S. Supreme Court in Immigration and Naturalization
Service v. Chadha, 462 U.S. 919 (1983).
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violation of antitrust laws.59 The Secretary is not bound by the Attorney General’s
recommendation, and likewise, the antitrust review process does not affect private
rights of action under antitrust laws or otherwise restrict the powers of the Attorney
General or any other federal agency under other law. 60 Assuming compliance with
these bidding requirements, the Secretary may grant a lease to the highest bidder,
although deviation from this standard may occur under a variety of circumstances.61
In addition, the OCSLA prescribes many minimum conditions that all leases
must contain. The statute supplies generally applicable minimum royalty or net
profit share rates, as necessitated by the bidding format adopted, subject, under
certain conditions, to Secretarial modification.62 Similarly, the law generally requires
57
Id. § 1337(a)(1)(A)-(H). For example, bids may be on the basis of “cash bonus bid with
a royalty at not less than 12 ½ per centum fixed by the Secretary in amount or value of the
production saved, removed, or sold ....” See also 30 C.F.R. §§ 256.35 - 256.47.
58
Id. 1337(a)(1)-(3), (8)-(9). It should be noted that the OCSLA also provides for a
legislative veto of the bidding system selected by the Secretary and that a similar provision
was declared unconstitutional by the U.S. Supreme Court in Immigration and Naturalization
Service v. Chadha, 462 U.S. 919 (1983).
successful bidders to furnish a variety of up-front payments and performance bonds
upon being granted a lease.63 Additional provisions require that leases provide that
certain amounts of production be sold to small or independent refiners. Further,
leases must contain the conditions stated in the sale notice and provide for suspension
or cancellation of the lease pursuant to section 1334.64 Finally, the law indicates that
a lease entitles the lessee to explore, develop and produce oil and gas, conditioned
59
43 U.S.C. § 1337(c); 30 C.F.R. § 256.47(d).
60
Id. § 1337(c), (f).
61
Restrictions include a statutory prohibition on issuance of a new lease to a bidder that is
not meeting applicable due diligence requirements with respect to the bidder’s other leases.
Id. § 1337(d).
62
Several provisions authorize royalty reductions or suspensions. Royalty rates or net profit
shares may be reduced below the general minimums or eliminated to promote increased
production. Id. § 1337(a)(3). For leases located in “the Western and Central Planning
Areas of the Gulf of Mexico and the portion of the Eastern Planning Area of the Gulf of
Mexico encompassing whole lease blocks lying west of 87 degrees, 30 minutes West
longitude and in the Planning Areas offshore Alaska” a broader authority is also provided,
allowing the Secretary, with the lessee’s consent, to make “other modifications” to royalty
or profit share requirements to encourage increased production. Id. § 1337(a)(3)(B).
Additionally, the 2005 Energy Policy Act also authorizes royalty relief in the form of
reduced payments if 44 cents for every dollar owed to the federal government is paid to the
state of Louisiana instead. P.L. 109-58, 119 Stat. 738§ 383 (Aug. 8 2005); P.L. 101-380, 104
Stat. 484 § 6004(c) (Aug. 18, 1990) (codified at 43 U.S.C. § 1334 note). The lease
generating these royalty payments does not necessarily have to be located adjacent to
Louisiana waters. Indeed, all OCS leases are covered by the Energy policy Act provision.
However, in order to take advantage of the reduction, the lessee must have had “an
ownership interest in State of Louisiana leases SL10087, SL10088 or SL10187, or
ownership interests in the production or proceeds therefrom, as established by assignment,
contract or otherwise” as of August 18, 1990. 43 U.S.C. § 1334 note. Royalties may also
(continued...)
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successful bidders to furnish a variety of up-front payments and performance bonds
upon being granted a lease.63 Additional provisions require that leases provide that
certain amounts of production be sold to small or independent refiners. Further,
leases must contain the conditions stated in the sale notice and provide for suspension
or cancellation of the lease pursuant to section 1334.64 Finally, the law indicates that
a lease entitles the lessee to explore, develop and produce oil and gas, conditionedbe suspended pursuant to the Outer Continental Shelf Deep Water Royalty Relief Act,
discussed infra pp. 17-21.
63
64
Id. § 1337(a)(7); 30 C.F.R. 256.52 - 256.59.
Id. § 1337(b). Leases may also be cancelled at any time if obtained by fraud or
misrepresentation. Id. § 1337(o).
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on applicable due diligence requirements and the approval of a development and
production plan, discussed below.65
Exploration. Exploration for oil and gas pursuant to an OCSLA lease must
comply with an approved exploration plan.66 Detailed information and analysis must
accompany the submission of an exploration plan, and, upon receipt of a complete
proposed plan, the relevant MMS Regional Supervisor is required to submit the plan
to the Governor of an affected state and the state’s Coastal Zone Management
agency.67
Under the federal Coastal Zone Management Act (CZMA), federal actions and
federally permitted projects, even in federal waters, must be submitted for state
review.68 The purpose of this review is to ensure consistency with state Coastal Zone
Management Programs as contemplated by the federal law. When a state determines
that a lessee’s plan is inconsistent with its Coastal Zone Management Program, the
lessee must either reform its plan to accommodate those objections and resubmit it
for MMS and state approval or succeed in appealing the state’s determination to the
Secretary of Commerce.69 Simultaneously, the MMS Regional Supervisor is to
analyze the environmental impacts of the proposed exploration activities under
NEPA; however, it should be noted that regulations prescribe that MMS complete
its action on the plan review within thirty days. Hence, extensive environmental
review at this stage may be constrained or rely heavily upon previously prepared
NEPA documents.70 If the Regional Supervisor disapproves the proposed
exploration plan, the lessee is entitled to a list of necessary modifications and may
resubmit the plan to address those issues.71 Once a plan has been approved, drilling
associated with exploration remains subject to the relevant MMS District
62
(...continued)
be suspended pursuant to the Outer Continental Shelf Deep Water Royalty Relief Act,
discussed infra pp. 17-21.
63
Id. § 1337(a)(7); 30 C.F.R. 256.52 - 256.59.
64
Id. § 1337(b). Leases may also be cancelled at any time if obtained by fraud or
misrepresentation. Id. § 1337(o).
65
Id. § 1337(b)(4).
66
Id. § 1340(b), (c).
67
30 C.F.R. §§ 250.226, 250.227, 250.232, 250.235.
68
16 U.S.C. § 1456(c).
69
30 C.F.R. § 250.235.
70
Id. § 250.232(c).
71
Id. §§ 250.231 — 250.233.
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Supervisor’s approval of an Application for a Permit to Drill, which involves analysis
of even more specific drilling plans.
Development and Production. While exploration will regularly involve
drilling wells, the scale of such activities will significantly increase during the
development and production phase. Accordingly, additional regulatory review and
environmental analysis are required by the OCSLA before this stage begins.72
Operators are required to submit a Development and Production Plan for areas where
significant development has not before occurred,73 or a less extensive Development
Operations Coordination Document for those areas, such as certain portions of the
65
Id. § 1337(b)(4).
66
Id. § 1340(b), (c).
67
30 C.F.R. §§ 250.226, 250.227, 250.232, 250.235.
68
16 U.S.C. § 1456(c).
69
30 C.F.R. § 250.235.
70
Id. § 250.232(c).
71
Id. §§ 250.231 — 250.233.
72
43 U.S.C. § 1351.
73
30 C.F.R. § 250.201.
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Western Gulf of Mexico, where significant activities have already taken place.74 The
information required to accompany submission of these documents is similar to that
required at the exploration phase, but must address the larger scale of operations.75
As with the processes outlined above, the submission of these documents
complements the Department’s and MMS’s environmental analysis under NEPA.
As with the exploration plan review process, it may not always be necessary that a
new EIS be prepared at this stage, and environmental analysis may be tiered to
previously prepared NEPA documents.76 In addition, affected states are allowed,
under the OCSLA, to submit comments on proposed Development and Production
Plans and to review these plans for consistency with state Coastal Zone Management
Programs.77 Additionally, if the drilling project involves “non-conventional
production or completion technology, regardless of water depth” applicants must also
submit a Deepwater Operations Plan (DWOP) and a Conceptual Plan.78 These
additional documents allow MMS to adequately review the engineering, safety, and
environmental impacts associated with these technologies.79
As with the exploration stage, actual drilling cannot take place without approval
of an Application for Permit to Drill (APD).80 An APD focuses on the specifics of
particular wells and associated machinery. Thus, an application must include a plat
indicating the well’s proposed location, information regarding the various design
elements of the proposed well, and a drilling prognosis, among other things.81
72
43 U.S.C. § 1351.
73
30 C.F.R. § 250.201.
74
Id.
75
Id. §§ 250.241 — 250.262.
76
The regulations indicate that “at least once in each planning area (other than the western
and central Gulf of Mexico planning areas) we [MMS] will prepare an environmental impact
statement (EIS) ....” Id. § 250.269.
77
Id. § 250.267.
78
Id. §§ 250.286, 250.287.
79
Id. §§ 250.289, 250.292.
80
Id. §§ 250.410 - 250.469.
81
Id. § 250.411.
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Lease Suspension and Cancellation. The OCSLA authorizes the
Secretary of the Interior to promulgate regulations on lease suspension and
cancellation.82 In general, a suspension is a temporary prohibition on OCS activities
otherwise authorized under lease terms and associated permits. Cancellation, on the
other hand, permanently revokes a lease. The Secretary’s discretion over the use of
these authorities is specifically limited to a set number of circumstances established
by the OCSLA. These authorities are described below.
Suspension of otherwise authorized OCS activities may generally occur at the
request of a lessee or at the direction of the relevant MMS Regional Supervisor,
Lease Suspension and Cancellation. The OCSLA authorizes the
Secretary of the Interior to promulgate regulations on lease suspension and
cancellation.82 In general, a suspension is a temporary prohibition on OCS activities
otherwise authorized under lease terms and associated permits. Cancellation, on the
other hand, permanently revokes a lease. The Secretary’s discretion over the use of
these authorities is specifically limited to a set number of circumstances established
by the OCSLA. These authorities are described below.
Suspension of otherwise authorized OCS activities may generally occur at the
request of a lessee or at the direction of the relevant MMS Regional Supervisor,
74
Id.
75
Id. §§ 250.241 — 250.262.
76
The regulations indicate that “at least once in each planning area (other than the western
and central Gulf of Mexico planning areas) we [MMS] will prepare an environmental impact
statement (EIS) ....” Id. § 250.269.
77
Id. § 250.267.
78
Id. §§ 250.286, 250.287.
79
Id. §§ 250.289, 250.292.
80
Id. §§ 250.410 - 250.469.
81
Id. § 250.411.
82
43 U.S.C. § 1334; see also 30 C.F.R. §§ 250.168 — 250.185 (2004).
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given appropriate justification.83 Under the statute, a lease may be suspended (1)
when it is in the national interest, (2) to facilitate proper development of a lease, (3)
to allow for the construction or negotiation for use of transportation facilities, or (4)
when there is “a threat of serious, irreparable, or immediate harm or damage to life
(including fish and other aquatic life), to property, to any mineral deposits (in areas
leased or not leased), or to the marine, coastal, or human environment ....”84 The
regulations also indicate that leases may be suspended for other reasons, including
(1) when necessary to comply with judicial decrees, (2) to allow for the installation
of safety or environmental protection equipment, (3) to carry out NEPA or other
environmental review requirements, or (4) to allow for “inordinate delays
encountered in obtaining required permits or consents ....”85 Whenever suspension
occurs, the OCSLA generally requires that the term of an affected lease or permit be
extended by a length of time equal to the period of suspension.86 This extension
requirement does not apply when the suspension results from a lessee’s “gross
negligence or willful violation of such lease or permit, or of regulations issued with
respect to such lease or permit ....”87
After a suspension period of, in general, five years,88 the Secretary may cancel
a lease upon holding a hearing and finding that (1) continued activity pursuant to a
lease or permit would “probably cause serious harm or damage to life (including fish
and other aquatic life), to property, to any mineral (in areas leased or not leased), to
the national security or defense, or to the marine, coastal, or human environment” (2)
“the threat of harm or damage will not disappear or decrease to an acceptable extent
within a reasonable period of time” and (3) “the advantages of cancellation outweigh
the advantages of continuing such lease or permit in force ....”89
82
43 U.S.C. § 1334; see also 30 C.F.R. §§ 250.168 — 250.185 (2004).
Upon cancellation, the OCSLA entitles lessees to certain damages. The statute
calculates damages at the lesser of (1) the fair value of the canceled rights on the date
of cancellation90 or (2) the excess of the consideration paid for the lease, plus all of
83
30 C.F.R. §§ 250.168, 250.171-250.175.
84
43 U.S.C.§ 1334(a)(1).
85
30 C.F.R. § 250.173; see also id. §§250.173 — 250.175.
86
43 U.S.C.§ 1334(a)(1).
87
Id.
88
The requisite suspension period may be reduced upon the request of the lessee. Id. §
1334(a)(2)(B).
89
Id. § 1334(a)(2)(A)(i)-(iii). For regulations implementing the cancellation provisions, see
30 C.F.R. §§ 250.180 — 250.185.
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Upon cancellation, the OCSLA entitles lessees to certain damages. The statute
calculates damages at the lesser of (1) the fair value of the canceled rights on the date
of cancellation90 or (2) the excess of the consideration paid for the lease, plus all of
90
The statute requires “fair value” to take account of “anticipated revenues from the lease
and anticipated costs, including costs of compliance with all applicable regulations and
operating orders, liability for cleanup costs or damages, or both, in the case of an oilspill,
and all other costs reasonably anticipated on the lease ....” Id. § 1334(a)(2)(C).
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the lessee’s exploration- or development-related expenditures, plus interest, over the
lessee’s revenues from the lease.91
The OCSLA also indicates that the “continuance in effect” of any lease is
subject to a lessee’s compliance with the regulations issued pursuant to the OCSLA,
and failure to comply with the provisions of the OCSLA, an applicable lease, or the
regulations may authorize the Secretary to cancel a lease as well.92 Under these
circumstances, a nonproducing lease can be canceled if the Secretary sends notice by
registered mail to the lease owner and the noncompliance with the statute lease or
regulations continues for a period of thirty days after the mailing.93 Similar
noncompliance by the owner of a producing lease can result in cancellation after an
appropriate proceeding in any United States district court with jurisdiction as
provided for under the OCSLA.94
Legal Challenges to Offshore Leasing
Multiple statutes govern aspects of offshore oil and gas development and
therefore may give rise to legal challenges. Certainly, violations of the Clean Water
Act,95 Endangered Species Act,96 and other environmental laws have provided
mechanisms for challenging actions associated with offshore oil and gas production
in the past.97 Of primary interest here, however, are legal challenges to agency action
with respect to the planning, leasing, exploration, and development phases under the
procedures mandated by the OCSLA itself and the related environmental review
required by the National Environmental Policy Act. An overview of the relevant case
law follows.
90
The statute requires “fair value” to take account of “anticipated revenues from the lease
and anticipated costs, including costs of compliance with all applicable regulations and
operating orders, liability for cleanup costs or damages, or both, in the case of an oilspill,
and all other costs reasonably anticipated on the lease ....” Id. § 1334(a)(2)(C).
Suits Under the Outer Continental Shelf Lands Act. The OCSLA
provides for judicial review of agency action alleged to be in violation of federal law,
including the OCSLA, its implementing regulations, and the terms of any permit or
lease.98 Due to the complex nature of the permitting and development process, the
extent and nature of the relief available will necessarily be affected by the phase
associated with the challenged action. The following paragraphs provide an
91
Exceptions from this method of calculation are carved out for leases issued before
September 18, 1978 and for joint leases which are canceled due to the failure of one or more
partners to exercise due diligence. Id. § 1334(a)(2)(C)(ii)(I), (II); see also 30 C.F.R. §
250.184 — 250.185.
92
43 U.S.C. § 1334(b).
93
Id. § 1334(c).
94
Id. § 1334(d).
95
33 U.S.C. §§ 1251-1387.
96
16 U.S.C. §§ 1531-1544.
97
Village of Akutan v. Hodel, 869 F.2d 1185 (9th Cir.1988); Village of False Pass v. Clark,
733 F.2d 605 (9th Cir.1984); North Slope Borough v. Andrus, 642 F.2d 589 (D.C.
Cir.1980); Conservation Law Foundation v. Andrus, 623 F.2d 712 (1st Cir.1979).
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Suits Under the Outer Continental Shelf Lands Act. The OCSLA
provides for judicial review of agency action alleged to be in violation of federal law,
including the OCSLA, its implementing regulations, and the terms of any permit or
lease.98 Due to the complex nature of the permitting and development process, the
extent and nature of the relief available will necessarily be affected by the phase
associated with the challenged action. The following paragraphs provide an
98
43 U.S.C. § 1349.
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overview of the existing case law and address the limitations applicable to relief at
each phase of the leasing and development process.
Jurisdiction to review actions taken in approving the five-year plan is vested in
the U.S. Court of Appeals for the D.C. Circuit, subject to appellate review by writ of
certiorari to the U.S. Supreme Court.99 It appears that only three challenges to the
five-year plan have been brought to court. The first, California ex. rel. Brown v.
Watt,100 involved a variety of challenges to the 1980 — 1985 plan, and, while the
court ultimately found that the Secretary had failed to comply with certain procedural
requirements in making determinations, the court established a relatively deferential
standard of review, which it has continued to apply in later challenges. Thus, when
reviewing “findings of ascertainable fact made by the Secretary,” the court will
require the Secretary’s decisions to be supported by “substantial evidence.”101
However, the court noted that many of the decisions required in the formulation of
the five-year plan will involve the determination of policy in the face of disputed
facts, and that such determinations should be subject to a less searching standard. In
such instances, a court will examine agency action and determine whether “the
decision is based on a consideration of the relevant factors and whether there has
been a clear error of judgment.”102
The standards for review outlined in Watt have been upheld in subsequent
litigation related to the five-year plan.103 In these subsequent cases, the Court of
Appeals for the D.C. Circuit applied a deferential standard in reviewing the
Secretary’s decisions, particularly in reviewing the Secretary’s environmental impact
determinations, such that the Secretary could perform environmental analysis using
“any methodology so long as it is not irrational.”104 Further, these cases indicate that
the Secretary is vested with significant discretion in determining which areas are to
be offered for leasing and which areas will not. Thus, while the Secretary must
receive and consider comments related to excluding areas from leasing, the court has
clearly stated that the Secretary need only identify the legal or factual basis for
98
43 U.S.C. § 1349.
leasing determinations at this stage and explain those determinations; more searching
judicial review of the Secretary’s analysis is not required.105
Litigation under the OCSLA has also challenged actions taken during the
leasing phase. As described above, the OCSLA authorizes states to submit
comments during the notice of lease sale stage and directs the Secretary to accept a
state’s recommendations if they “provide for a reasonable balance between the
99
43 U.S.C. § 1349(c).
100
668 F.2d 1290 (D.C. Cir.1981).
101
Watt, 668 F.2d at 1302; see also 43 U.S.C. § 1349(c)(6).
102
Watt, 668 F.2d at 1301-1302 (quoting Citizens to Preserve Overton Park v. Volpe, 401
U.S. 402, 416 (1971) (internal quotations omitted)).
103
See California v. Watt, 712 F.2d 584 (D.C. Cir.1983); Natural Resources Defense
Council v. Hodel, 865 F.2d 288 (D.C. Cir.1988).
104
California, 715 F.2d at 96 (internal quotations omitted).
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leasing determinations at this stage and explain those determinations; more searching
judicial review of the Secretary’s analysis is not required.105
Litigation under the OCSLA has also challenged actions taken during the
leasing phase. As described above, the OCSLA authorizes states to submit
comments during the notice of lease sale stage and directs the Secretary to accept a
state’s recommendations if they “provide for a reasonable balance between the
105
Hodel, 865 F.2d at 305.
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national interest and the well-being of the citizens of the affected State.”106 Courts
have typically applied the deferential “arbitrary and capricious” standard to Secretary
decisions with regard to Secretary consideration of these recommendations.
According to the cases from the Ninth Circuit Court of Appeals, because the OCSLA
does not provide clear guidance as to how balancing of national interest and a state’s
considerations is to be performed, agency action will generally be upheld so long as
“some consideration of the relevant factors ...” takes place.107 Cases from the federal
courts in Massachusetts, including a decision affirmed by the First Circuit Court of
Appeals, have, while embracing the arbitrary and capricious standard, found the
Secretary’s balancing of interests insufficient.108 However, it should be noted that the
Massachusetts cases reviewed agency action that was not supported by explicit
analysis of the sort challenged in the Ninth Circuit. Thus, it is possible that, given
a more thorough record of the Secretary’s decision, these courts may afford more
significant deference to the Secretary’s determination.
It does not appear that a plan of exploration has been challenged.109 Similar
considerations would likely apply to challenges at this phase as there is no indication
that a different standard of review would be required by the statute. A search of the
case law has revealed one challenge to Secretary approval of a development and
production plan, but the challenge was not based upon the OCSLA.110 Again, it
seems likely that any OCSLA challenge at this phase would be subject to the same
standards of review applicable at earlier phases of review. For instance, state
comments on development plans are, as described above, provided for by the
OCSLA, and little would appear to differentiate them from the process for comments
applicable at the lease sale phase. Likewise, application of the substantial evidence
test and the arbitrary and capricious standard established in California ex. rel. Brown
v. Watt and applied consistently by the courts would also likely be applied to
decisions at these stages as well.
105
Hodel, 865 F.2d at 305.
Apart from matters relating primarily to the authority of the Secretary to
authorize the various stages of leasing, recent litigation has focused on the authority
of MMS to require royalty payments on certain offshore leases allegedly subject to
mandatory royalty relief provisions. In Kerr-McGee Oil & Gas Corp. v. Burton, filed
in federal district court on March 17, 2006, the plaintiff, an oil and gas company
operating offshore wells in the Gulf of Mexico pursuant to federal leases, is
challenging actions by the Department to collect royalties on deepwater oil and gas
106
43 U.S.C. § 1345(d).
107
California v. Watt, 683 F.2d 1253, 1269 (9th Cir.1982); see also Tribal Village of Akutan
v. Hodel, 869 F.2d 1185 (9th Cir.1988).
108
Conservation Law Foundation v. Watt, 560 F.Supp. 561 (D.Mass. 1983), aff’d sub nom.
Massachusetts v. Watt, 716 F.2d 946 (1st Cir.1983); Massachusetts v. Clark, 594 F.Supp.
1373 (D.Mass. 1984).
109
Such a challenge is required by statute to be filed with the Court of Appeals for the D.C.
Circuit. 43 U.S.C. § 1349(c)(2).
110
Edwardsen v. U.S. Department fo the Interior, 268 F.3d 781 (9th Cir. 2001).
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Apart from matters relating primarily to the authority of the Secretary to
authorize the various stages of leasing, recent litigation has focused on the authority
of MMS to require royalty payments on certain offshore leases allegedly subject to
mandatory royalty relief provisions. In Kerr-McGee Oil & Gas Corp. v. Burton, filed
in federal district court on March 17, 2006, the plaintiff, an oil and gas company
operating offshore wells in the Gulf of Mexico pursuant to federal leases, is
challenging actions by the Department to collect royalties on deepwater oil and gas18
production.111 The plaintiff alleges the Department does not have authority to assess
royalties based on an interpretation of the 1995 Outer Continental Shelf Deepwater
Royalty Relief Act (DWRRA) that the act requires royalty-free production until a
statutorily prescribed threshold volume of oil or gas production has been reached.112
The DWRRA separates leases into three categories based on date of issuance.
These categories are: (1) leases in existence on November 28, 1995, (2) leases issued
after the five year period, which ended on November 28, 2000, and (3) leases issued
in between those periods, during the first five years after the act’s enactment. The
third category of leases is the current source of controversy. According to KerrMcGee, its leases, which were issued during the initial five year period after the
DWRRA’s enactment, are subject to different legal requirements than those
applicable to the other two categories. Kerr-McGee argues that the Department has
a nondiscretionary duty under the DWRRA to provide royalty relief on its deepwater
leases, and that the statute does not provide a exception to this obligation based on
any preset price threshold. To the extent any price threshold has been included in
these leases, Kerr-McGee argues that such provisions are contrary to DOI’s statutory
authority and unenforceable. According to hearing testimony, if Kerr-McGee is
successful in its suit, the federal government would likely be required to refund
approximately $525 million in royalties paid by the industry and be precluded from
collecting between $18 and $28 billion over the next five years on leases eligible for
this category of royalty relief.113
Some assert provisions of the DWRRA, while not explicit, can be interpreted
to support the Kerr-McGee position. First, section 302 of the act clearly establishes
that deepwater leases114 existing on the date of the DWRRA’s enactment will pay no
royalties until either a specified volume of production has been produced by the
lessee;115 or the price of oil or gas reaching a statutorily prescribed price threshold.116
111
Kerr-McGee Oil & Gas Corp. v. Burton, No. CV06-0439 LC (W.D. La. Mar. 17, 2006).
112
P.L. 104-58, 109 Stat. 563 § 301 (Nov. 28, 1995).
113
Natural Gas Royalties: The Facts, The Remedies: Hearings Before the Subcomm. On
Energy and Resources of the House Comm. On Government Reform, 109th Cong. 2 (2006)
(briefing memorandum), available at [http://reform.house.gov/UploadedFiles/Natural%
20Gas%20Briefing%20Memorandum%20for%20distribution.pdf].
114
This includes those leases or units “located in water depths of 200 meters or greater in
the Western and Central Planning Areas of the Gulf of Mexico, including that portion of the
Eastern Planning Area of the Gulf of Mexico encompassing whole lease blocks lying west
of 87 degrees, 30 minutes West longitude....” 43 U.S.C. § 1337(a)(3)(C)(i).
115
43 U.S.C. § 1337(a)(3)(C). Generally, the Secretary must determine if additional
production would be economic absent royalty relief. If it would not, the Secretary may set
a threshold volume that may be produced royalty free. The statute provides certain
minimum volumes of oil production that is allowable for “new production,” increasing the
volume to correspond with increase lease depth. “New production” is defined as
(I) any production from a lease from which no royalties are due on production,
other than test production, prior to November 28, 1995; or
(continued...)
CRS-19(continued...)
CRS-18
Section 304 of the DWRRA, which addresses deepwater leases117 issued within
five years after the DWRRA’s enactment, directs that such leases use the bidding
system authorized in section 8(a)(1)(H) of the OCSLA, as amended by the DWRRA.
Thus, whether price thresholds could also be applied to leases issued during the five
year period post enactment of the DWRRA depends on the authority granted in
section 8(a)(1)(H). In general, section 8(a)(1) establishes that Secretary of the
Interior may grant OCS oil and gas leases to the highest bidder.118 It also establishes
several methods of bidding and the basis upon which bids are to be made. This
includes a variety of mechanisms, such a cash bonus bid plus a minimum royalty or
a variable royalty plus a fixed work commitment based on a dollar amount for
exploration.119 Subsection (H), referenced in the DWRRA, authorizes bidding by
cash bonus bid with royalty at no less than 12 and ½ per centum fixed by the
Secretary in amount or value of production saved, removed, or sold, and with
suspension of royalties for a period, volume, or value of production determined
by the Secretary, which suspension may vary based on the price of production
from the lease ....120
Thus, this provision generally requires subsection (H) leases to provide for
royalty payments but allows royalty suspensions for a specific time period, volume,
or value of production. Further, the Secretary, in general, appears to have discretion
to accept or reject bids based on the method of royalty suspension proposed and to
set the value threshold for suspension if such a suspension method were adopted.
Thus, for leases issued after the initial five year period, the Secretary would appear
to have some flexibility in imposing or conditioning royalty relief. However, it is not
clear from the text of this provision that more than one of these reasons for royalty
115
(...continued)
production would be economic absent royalty relief. If it would not, the Secretary may set
a threshold volume that may be produced royalty free. The statute provides certain
minimum volumes of oil production that is allowable for “new production,” increasing the
volume to correspond with increase lease depth. “New production” is defined as
(I) any production from a lease from which no royalties are due on production,
other than test production, prior to November 28, 1995; or
suspension may be used for the same lease under any circumstances, in that “or,”
often used in a disjunctive sense, could be interpreted to require that only one method
of royalty suspension be used per lease.121 On the other hand, it could be argued that
“or” is used in this instance to indicate that all suspension mechanisms are available
115
(...continued)
(II) any production resulting from lease development activities pursuant to a
Development Operations Coordination Document, or supplement thereto that
would expand production significantly beyond the level anticipated in the
Development Operations Coordination Document, approved by the Secretary
after November 28, 1995. Id.
116
Id. § 1337(a)(3)(C)(iii).
117
This term refers to “tracts located in water depths of 200 meters or greater in the Western
and Central Planning Area of the Gulf of Mexico, including that portion of the Eastern
Planning Area of the Gulf of Mexico encompassing whole lease blocks lying west of 87
degrees, 30 minutes West longitude ....” 43 U.S.C. § 1337 note.
118
43 U.S.C. § 1337(a)(1).
119
Id. § 1337(a)(1)(A), (B).
120
Id. § 1337(a)(1)(H).
CRS-19
suspension may be used for the same lease under any circumstances, in that “or,”
often used in a disjunctive sense, could be interpreted to require that only one method
of royalty suspension be used per lease.121 On the other hand, it could be argued that
“or” is used in this instance to indicate that all suspension mechanisms are available
121
See, e.g., Zorich v. Long Beach Fire and Ambulance Serv., 118 F.3d 682, 684 (9th Cir.
1997); United States v. O’Driscoll, 761 F.2d 589, 597-98 (10th Cir. 1985).
CRS-20
in any combination determined by the Secretary and that they are not intended to be
mutually exclusive.122
Whether multiple suspension mechanisms are authorized under subsection (H)
is important because the DWRRA stipulates that leases issued during the five-year
post-enactment time-frame must provide for royalty suspension on the basis of
volume. Specifically, section 304 states
[A]ny lease sale within five years of the date of enactment of this title, shall use
the bidding system authorized in section 8(a)(1)(H) of the Outer Continental
Shelf Lands Act, as amended by this title, except that the suspension of royalties
shall be set at a volume of not less than the following:
(1) 17.5 million barrels of oil equivalent for leases in water depths of 200
to 400 meters;
(2) 52.5 million barrels of oil equivalent for leases in 400 to 800 meters of
water; and
(3) 87.5 million barrels of oil equivalent for leases in water depths greater
than 800 meters.123
It is possible to interpret this provision as authorizing leases issued during the
five-year period to contain royalty suspension provisions, but only those based on
production volume with no allowance at all for a price-related threshold in addition.
Such an intent might be gleaned from the language of the quoted section alone;
indeed, in this provision, Congress provides for a specific royalty suspension method
and does not clearly authorize the Secretary to alter or supplement it. While perhaps
unnecessary to Kerr-McGee’s position, such an interpretation would be bolstered by
a reading of subsection (H) that prohibits multiple suspension mechanisms. Further,
while addressing a case that involved these same provisions, the Court of Appeals for
the Fifth Circuit appears to have substantially embraced this interpretation, stating
Section 304 requires the Interior to use the bidding system in Section 303 which
includes discretionary royalty suspension “for a period, volume, or value of
production determined by the Secretary.” That section, however, immediately
excepts and replaces Interior’s discretion with a fixed royalty suspension for
New Leases on a volume basis by providing, “except that the suspension of
royalties shall be set at a volume of not less than the following” (followed by
amounts which vary based on water depth).124
121
See, e.g., Zorich v. Long Beach Fire and Ambulance Serv., 118 F.3d 682, 684 (9th Cir.
1997); United States v. O’Driscoll, 761 F.2d 589, 597-98 (10th Cir. 1985).MMS regulations implementing the Department’s royalty relief programs do not
appear to interpret the DWRRA provisions at issue in the current litigation differently
from the Kerr-McGee position. These regulations indicate that pre-DWRRA leases
and those issued after November 2000 (i.e., the close of the five-year post-enactment
period) may have their royalty relief suspended if oil or gas prices rise above the
122
See, e.g., DeSylva v. Ballentine, 351 U.S. 570, 573 (1956); United States v. Moore, 613
F.2d 1029 (D.C. Cir. 1979).
123
124
P.L. 104-58 109 Stat. 565 § 304 (Nov. 28, 1995).
Santa Fe Snyder Corp. v. Norton 385 F.3d 884, 892 (5th Cir. 2004).
CRS-20
MMS regulations implementing the Department’s royalty relief programs do not
appear to interpret the DWRRA provisions at issue in the current litigation differently
from the Kerr-McGee position. These regulations indicate that pre-DWRRA leases
and those issued after November 2000 (i.e., the close of the five-year post-enactment
period) may have their royalty relief suspended if oil or gas prices rise above the21
thresholds contained in each lease.125 Further, those regulations that specifically
address leases issued during the five-year post-enactment period do not indicate that
a price threshold can be included in such leases or that termination of a royalty
suspension can occur due to changes in oil or gas prices.126 Thus, while it may be
possible for MMS to interpret its authority with respect to the five-year interim
period leases broadly by issuing clarifying regulations, there appears to be no
indication that it has done so.
Legislation has been introduced to address this litigation. The Deep Water
Royalty Jurisdiction Act, H.R. 5231, would strip the federal courts, including the
U.S. Supreme Court, of jurisdiction to hear any claim, other than one brought by the
U.S. government, addressing
(1) the application of a price threshold in determining the volume for which
suspension of royalties applies under section 8(a)(1)(H) of the Outer Continental
Shelf Lands Act ... and section 304 of Public Law 104-58 ... or
(2) the interpretation of, or the validity under the Constitution of, this section
[i.e., the substance of H.R. 5231].127
Thus, this bill would prevent any federal court from deciding the merits of a
claim that royalty relief is required for certain leases. Because the OCSLA otherwise
grants federal court exclusive jurisdiction to hear cases involving interpretation of the
OCSLA, if H.R. 5231 were enacted and upheld by the courts, no judicial relief would
appear to be available for a person alleging by government action at odds with
requirements of the OCSLA and the DWRRA referenced in the bill.
Such legislation may raise a series of constitutional questions. A thorough
analysis of these is beyond the scope of this report.128 Briefly though, attempts to
remove all judicial authority to hear, in particular, constitutional questions would
likely receive thorough review by the courts and could, based on analogous case law,
be deemed unconstitutional by a reviewing court.129 In the context of H.R. 5231,
which would remove the courts’ authority to determine the constitutionality of the
jurisdiction curtailment contemplated by the bill, individual plaintiffs might also have
constitutionally based claims to assert if the government seeks to exact royalty
payments that are not authorized by statute.130
125
33 C.F.R. §§ 203.78, 260.122.
126
Id. §§ 260.112 — 260.117.
127
H.R. 5231, 109th Cong. (2006).
128
For additional information, see CRS Report RL32171, Limiting Court Jurisdiction Over
Federal Constitutional Issues: “Court-Stripping,” by Kenneth R. Thomas.
129
See, e.g., Webster v. Doe, 486 U.S. 592 (1988); First English Evangelical Lutheran
Church of Glendale v. Los Angeles County, 482 U.S. 304 (1987).
CRS-21
constitutionally based claims to assert if the government seeks to exact royalty
payments that are not authorized by statute.130
130
See Reich v. Collins, 513 U.S. 106, 108 (1994); McKesson Corp. v. Division of ABT,
496 U.S. 18 (1990). While both of these are tax cases, they appear to indicate that the Due
Process Clause of the Fifth Amendment requires a remedy for the unlawful collection of
(continued...)
CRS-22
Suits Under the National Environmental Policy Act. In the context of
proposed OCS development, NEPA generally requires publication of notice of an
intent to prepare an Environmental Impact Statement (EIS), acceptance of comments
on what should be addressed in the EIS, agency preparation of a draft EIS, a
comment period on the draft EIS, and publication of a final EIS addressing all
comments at each stage of the leasing process where government action will
significantly affect the environment.131 Challenges to this NEPA-related activity are
also possible, although, again, the Court of Appeals for the D.C. Circuit has limited
potential challenges in some respects. As described above, NEPA figures heavily in
the OCS planning and leasing process and requires various levels of environmental
analysis prior to agency decisions at each phase in the leasing and development
process.132 Lawsuits brought under NEPA are thus indirect challenges to agency
decisions in that they typically question the adequacy of the environmental analysis
performed prior to a final decision.
There has only been one NEPA-based challenge to a five-year plan, Natural
Resources Defense Council v. Hodel.133 The plaintiff challenged the adequacy of the
alternatives examined in the EIS and the level of consideration paid to cumulative
effects of offshore drilling activities. The court held that not every possible
alternative needed to be examined, and that the determination as to adequacy was
subject to the “rule of reason.”134 This standard appears to afford some level of
deference to the Secretary, and his choice of alternatives were found to be sufficient
by the court in this instance.135 However, without significant explanation of the
standard of review to be applied, the court did find that the Secretary’s failure to
analyze certain cumulative impacts was a violation of NEPA.136 Thus, the Secretary
was required to include this analysis, although final decisions based on that analysis
remained subject to the Secretary’s discretion, with review only under the arbitrary
and capricious standard.137
130
See Reich v. Collins, 513 U.S. 106, 108 (1994); McKesson Corp. v. Division of ABT,
496 U.S. 18 (1990). While both of these are tax cases, they appear to indicate that the Due
Process Clause of the Fifth Amendment requires a remedy for the unlawful collection of
As described above, NEPA plays a role in the leasing phase as well. MMS often
uses NEPA and its tiering option to evaluate lease sales.138 The NEPA procedures
and standard of review remain the same at this phase; however, due to the structure
of the OCSLA process, additional, more specific information is generally required.139
Despite the need for more information than that required during the five year plan,
130
(...continued)
funds.
131
See 40 C.F.R. §§ 1501.7, 1503.1, 1503.4, 1506.10; see also, supra, note 21.
132
42 U.S.C. § 4332.
133
Natural Resources Defense Council, Inc. v. Hodel, 865 F.2d 288 (D.C. Cir. 1988).
134
Id. at 294.
135
Id. at 296.
136
Id. at 297-300.
137
See California ex. rel. Brown v. Watt, 668 F.2d 1290, 1301-1302 (D.C. Cir.1981).
CRS-22
As described above, NEPA plays a role in the leasing phase as well. MMS often
uses NEPA and its tiering option to evaluate lease sales.138 The NEPA procedures
and standard of review remain the same at this phase; however, due to the structure
of the OCSLA process, additional, more specific information is generally required.139
Despite the need for more information than that required during the five year plan,
138
See 30 C.F.R. § 256.26(b); 40 C.F.R. § 1508.28.
139
Tribal Village of Akutan v. Hodel, 869 F.2d 1185, 1191 (9th Cir.1988).
CRS-23
courts have remained deferential at the lease sale phase. In challenges to the
adequacy of environmental review, courts have stressed that inaccuracies and more
stringent NEPA analysis will be available at later phases.140 Thus, because there will
be an opportunity to cure any defects in the analysis as the OCSLA process
continues, challenges under NEPA at this phase are often unsuccessful.141
It also appears possible to challenge exploration and development plans under
NEPA, although a search of the relevant case law has revealed only one NEPA-based
challenge to a development and production plan and no challenges to exploration
plans.142 In Edwardsen v. U.S. Department of the Interior, the Ninth Circuit Court
of Appeals applied the typical “rule of reason” to determine if the EIS adequately
addressed the probable environmental consequences of the development and
production plan, and held that, despite certain omissions in the analysis and despite
an MMS decision to tier its NEPA analysis to an EIS prepared for a similar lease
sale, the requirements of NEPA were satisfied.143 Thus, while additional analysis
was required to account for the greater specificity of the plans and to accommodate
the “hard look” at environmental impacts NEPA mandates, the reasonableness
standard applied to what must be examined in an EIS did not allow for a successful
challenge to agency action.
138
See 30 C.F.R. § 256.26(b); 40 C.F.R. § 1508.28.
139
Tribal Village of Akutan v. Hodel, 869 F.2d 1185, 1191 (9th Cir.1988)
Note: This report was authored originally by Aaron M. Flynn.
140
Id. at 1192; Alaska v. Andrus, 580 F.2d 465, 473 (D.C. Cir.1978); Village of False Pass
v. Clark, 733 F.2d 605, 612-16 (9th Cir.1984); North Slope Borough v. Andrus, 642 F.2d
589, 594-905 (D.C. Cir.1980).
141
But see Conservation Law Foundation v. Clark, 560 F.Supp. 561 (D. Mass. 1983).
142
Edwardsen v. U.S. Department fo the Interior, 268 F.3d 781 (9th Cir. 2001).
143
Id. at 784-790.
CRS-2324
Appendix A
State
Policy
Statutes
AL
Drilling is authorized in Alabama’s state waters.
The State Lands Division of the Department of
Conservation & Land Resources is charged with
leasing offshore oil and gas in state waters. In
addition, the Alabama State Oil and Gas Board
regulates oil and gas production to ensure the
conservation and proper development of oil and gas
resources.
Authorization:
Ala. Code §§ 915-18; 9-17-1 et
seq.; 40-20-1 et
seq.
AK
The Alaska Department of Natural Resources is
responsible for leasing oil and gas on state lands,
including offshore areas. Certain areas are
specifically designated as off limits to oil and gas
leasing, and administrative decisions not to offer
leases in offshore areas may further restrict access.
Ban:
Alaska Stat. §§
38.05.140(f);
38.05.184.
The State Lands Commission is generally
responsible for oil and gas leasing. California
issued offshore oil and gas leases in the past, while
banning development in multiple areas within state
waters at both the statutory and administrative
levels. California currently has a general ban in
place restricting any state agency from issuing new
offshore leases, unless the President of the United
States determines that there is a “severe energy
supply interruption and has ordered distribution of
the Strategic Petroleum Reserve ..., the Governor
finds that the energy resources of the sanctuary will
contribute significantly to the alleviation of that
interruption, and the Legislature subsequently acts to
amend...[the law] to allow that extraction.” The ban
is limited to areas that are not currently subject to a
lease.
Ban:
Cal. Pub. Res.
Code §§
6871.1-.2
(repealed
1994); 6870
(Santa Barbara
limitations);
6243 (general
ban).
CA
CT
Connecticut does not appear to have laws addressing
oil and gas development in state waters.
Authorization:
Alaska Stat. §§
38.05.131 et
seq.; 38.05.135
et seq.
Authorization:
Cal. Pub. Res.
Code §§ 6870
et. seq.; 6240 et
seq.
CRS-2425
The Governor and the Secretary of the Department
of Natural Resources and Environmental Control are
authorized to lease oil and gas in state waters.
Lands “administered by the Department of Natural
Resources and Environmental Control” may not be
leased by the Secretary.
Ban: Del. Code
Ann. tit. 7 ch.
61 § 6102(e).
In general, the Department of Natural Resources is
vested with the authority to permit oil and gas
development on state lands and submerged lands;
however, in 1990 Florida enacted a broad ban on
offshore oil and gas development by prohibiting oil
and gas drilling structures in a variety of locations,
including Florida’s territorial waters. The
development ban provides an exception for valid
existing rights.
Ban:
Fla. Stat. Ann.
§377.242.
GA
The State Properties Commission is authorized to
issue leases for state owned oil and gas. The statute
does not distinguish between onshore and offshore
minerals.
Authorization:
Ga. Stat. § 5016-43.
HI
The Board of Land and Natural Resources is
authorized to lease oil and gas on state lands,
including submerged lands. There would not appear
to be a statutory ban in place.
Authorization:
Hawaii Rev.
Stat. §§ 182-1
et seq.
LA
The state Mineral Board is responsible for leasing
oil and gas in Louisiana and its offshore territory.
There does not appear to be a statutory ban on oil
and gas drilling in offshore areas, although
development is limited to areas offered by the Board
for leasing.
Authorization:
La. Rev. Stat.
§§ 30:121 et
seq.
ME
The Bureau of Geology and Natural Areas has
primary authority over oil and gas development on
state lands, including tidal and submerged lands.
The Bureau is authorized to issue exploration
permits and mineral leases.
Authorization:
Me. Rev. Stat.
tit. 12 §§ 549 et
seq.
MD
The Department of the Environment regulates oil
and gas development. The areas underlying
Chesapeake Bay, its tributaries, and the Chesapeake
Bay Critical Area are unavailable for oil and gas
development.
Ban:
Md. Code,
Envt. §14-107.
DE
FL
Authorization:
Del. Code.
Ann. tit. 7 ch.
61.
Authorization:
Fla. Stat. Ann.
§§ 377.01 et
seq.; 253.001 et
seq.
Authorization:
Md. Code,
Envt. §§ 14-101
et seq.
CRS-2526
MA
MS
The Division of Mineral Resources is charged with
administering the leasing of oil and gas on state
lands. The law requires a public hearing before any
license to explore or lease for extraction is issued for
mineral resources located in coastal waters. Further,
many of the state’s offshore areas are designated as
ocean sanctuaries in which oil and gas development
is prohibited.
Authorization:
Mass. Gen.
Laws Ann. Ch.
21 §§ 54 et seq.
The Mississippi Major Economic Impact Authority
is responsible for administering oil and gas leases on
state lands. Offshore oil and gas development is
generally permissible. However, specific areas are
not available for leasing. No development may
occur in areas north of the coastal barrier islands,
except in Blocks 40, 41, 42, 43, 63, 64 and 66
through 98. Further, “surface offshore drilling
operations” may not be conducted within one mile
of Cat Island.
Authorization:
Miss. Code.
Ann. §§ 29-7-1
et seq.
Ban:
Mass. Gen.
Laws Ann. Ch.
132A § 15.
Ban:
Miss. Code.
Ann. § 29-7-3.
NH
No statute appears to address offshore oil and gas
development.
NJ
State law authorizes the removal of sand and “other
materials” from lands under tidewaters and below
the high water mark if approved by the Tidelands
Resource Council. Offshore oil and gas
development is not expressly addressed.
Authorization:
N.J. Stat. Ann.
§§ 12:3-12-1 et
seq.
NY
Leases and permits for the right to use state owned
submerged lands for navigation, commerce, fishing,
bathing, and recreation are authorized for specified
submerged areas. General authority for issuing oil
and gas leases is vested in the Department of
Environmental Conservation. Certain submerged
lands underlying specified lakes are excluded from
exploration and leasing, but offshore areas would
not appear to be subject to a similar ban.
Authorization:
N.Y. Pub.
Lands. Law §
75; N.Y. Envt’l
& Conserv.
Law §§ 230101 et seq.
NC
State law authorizes the sale or lease of any state
owned mineral underlying the bottoms of any
sounds, rivers, creeks, or other waters of the State.
The state is authorized to dispose of oil and gas “at
the request of the Department of Environment and
Natural Resources.”
Authorization:
N.C. Gen. Stat.
§ 146-8.
CRS-2627
OR
The Department of State Lands is generally
responsible for leasing state owned minerals,
including oil and gas. Leasing of tidal and
submerged lands is governed by separate provisions
of law. There would not appear to be a ban in place.
Authorization:
Or. Rev. Stat.
§§ 274.705 et
seq.; 273.551
(for submerged
lands seaward
more than 10
miles easterly
of the 124th
West
Meridian).
RI
The Coastal Resources Management Council is
charged with identifying, evaluating, and
determining which uses are appropriate for the
state’s coastal resources and submerged lands.
Authorization:
R.I. Gen. Laws.
§§ 46-23-1 et
seq.
SC
The state Budget and Control Board is authorized to
“negotiate for leases of oil, gas and other mineral
rights upon all of the lands and waters of the State,
including offshore marginal and submerged lands.”
Authorization:
S.C. Code.
Ann. §§ 10-910 et seq.
TX
The School Land Board is authorized to lease those
portions of the Gulf of Mexico under the state’s
jurisdiction for oil and gas development.
Authorization:
Tex. Nat. Res.
Code §§ 52.011
et seq.
VA
The Marine Resources Commission is authorized to
grant easements or to lease “the beds of the waters
of the Commonwealth outside of the Baylor Survey”
for oil and gas development.
Authorization:
Va. Code Ann.
§ 28.2-1208.
WA
In general, the Department of Natural Resources is
responsible for mineral development on state lands.
State law prohibits leasing of tidal or submerged
lands “extending from mean high tide seaward three
miles along the Washington coast from Cape
Flattery south to Cape Disappointment, nor in Grays
Harbor, Willapa Bay, and the Columbia river
downstream from the Longview bridge, for purposes
of oil or gas exploration, development, or
production.”
Ban:
Wash. Rev.
Code Ann. §§
43.143.005 et
seq.
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