Order Code RL33404
Offshore Oil and Gas Development:
Legal Framework
Updated January 3September 21, 2007
Adam Vann
Legislative Attorney
American Law Division
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 have primary authority
in the three geographical mile area extending from their coasts. The federal
government and its comprehensive regulatory regime governs 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. Before adjournment, the 109th Congress passed a bill that
would allow new offshore drilling in the Gulf of Mexico in an area known as Lease
Area 181. This measure was incorporated into H.R. 6111, a broad bill passed in the
final days of the 109th Congress. President Bush signed the bill into law (P.L. 109432) on December 20, 2006.
At the same time, the role of the coastal states in deciding whether to lease in
areas adjacent to their shores has also 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, a number of Members of Congress have
recently raised concerns regarding leases issued to a number of gas and oil companies
in the late 1990s without the royalty provisions that generally appear in such leases.
Some type of action with respect to these leases, either in the courts or in Congress,
is possible in 2007.
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 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 87
Leasing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Exploration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Development and Production . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Lease Suspension and Cancellation . . . . . . . . . . . . . . . . . . . . . . . . . . . 1413
Legal Challenges to Offshore Leasing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
Suits Under the Outer Continental Shelf Lands Act . . . . . . . . . . . . . . 1615
Suits Under the National Environmental Policy Act . . . . . . . . . . . . . . 20
Appendix A. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
List of Figures
Figure 1. Federal Outer Continental Shelf Areas . . . . . . . . . . . . . . . . . . . . . . . . . 6
List of Tables
Table 1. State Laws That Ban or Regulate
Offshore Mineral Development . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
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 report1 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 subsequent legislation enacted by the 109th Congress
prior to adjournment. Finally, this report discusses legislation under consideration
by the 110th 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),
,2 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
(I) the establishment and use of artificial islands, installations and structures;
(ii) marine scientific research; and
(iii) the protection and preservation of the marine environment.2
1
23
1
This report was authored originally by Aaron M. Flynn.
2
United Nations Convention on the Law of the Sea, Dec. 10, 1982, art. 56.1, 21 I.L.M. 1261
III (entered into force Nov. 16, November 16,
1994) (hereinafter UNCLOS III).).
3
Id. at Art. 56.1
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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.”34 In general, however, a nation’s continental shelf cannot
extend beyond 350 nautical miles from its recognized coastline regardless of
submarine geology.45 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.56
Federal Jurisdiction. While a signatory to UNCLOS III, the United States
has has
not ratified the treaty. Regardless, many of its provisions are now generally
accepted 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.67 In a series of related cases, the U.S.
Supreme Court
confirmed federal control of these offshore areas.78 Federal statutes
also regularly
refer to these areas and, in some instances, define them as well. Of
particular particular
relevance, the primary federal law governing offshore oil and gas
development 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 ....”89 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 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
3
UNCLOS areas
4
Id. at Art. 76.1.
4
UNCLOS5
Id. at Art. 76.4-76.7.
5
UNCLOS6
Id. at Art. 77.1.
67
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);
September 28,
1945); Exclusive Economic Zone of the United States of America, Proclamation No. 5030,
48 Fed.
Reg. 10,605 (Mar.March 14, 1983); Territorial Sea of the United States of America, Proclamation
Proclamation No. 5928, 54 Fed. Reg. 777 (Dec.December 27, 1988); Contiguous Zone of the
United States,
Proclamation No. 7219, 64 Fed. Reg. 48,701 (Aug.August 2, 1999).
78
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).
89
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 primary
jurisdiction of the states.
State Jurisdiction. In accordance with the federal Submerged Lands Act of
1953 (SLA),910 coastal states are generally entitled to an area extending three
geographical miles10miles11 from their officially recognized coast (or baseline).1112 In order
to accommodate the claims of certain states, the SLA provides for an extended three
marine league12league13 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.”1314 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.1415
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 ....”1516 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
910
43 U.S.C. §§ 1301 et seq.
1011
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.
1112
43 U.S.C. §1301(b).
1213
A marine league is equal to 18,228.3 feet.
1314
43 U.S.C. §§ 1312, 1301(b).
1415
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.”).
1516
43 U.S.C. § 1311.
CRS-4
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).1617 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 ....”1718 To effectuate this purpose, the OCSLA extends application of
federal laws to certain structures and devices located on the OCS,1819 provides that the
law of adjacent states will apply to the OCS when it does not conflict with federal
law,1920 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.2021 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, many 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 Act21Act22 and those imposed directly by Congress,
1617
43 U.S.C. §§ 1331-1356.
1718
43 U.S.C. § 1332(3).
1819
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.
1920
Id.
2021
43 U.S.C. §§ 1331(a), 1332, 1333(a)(1).
2122
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.2223 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.2324 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, 2012.2425 The Clinton order refers
to the 1997 congressional moratoriummoratorium26 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 statethe moratorium state the following:
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.2527
In addition, the President also withdrew from disposition by leasing all areas on
the OCS designated as Marine Sanctuaries at the time. Areas under moratoria as of
March 2006 are depicted in Figure 1.26
2128
22
(...continued)
interstate commerce, has sufficient constitutional authority to regulate OCS resources.
2223
See, e.g., 118 Stat. 3064, P.L. 108-447, §§ 107-109 (Dec. 8, 2004).
23.
24
Statement on Outer Continental Shelf Oil and Gas Development, 26 WEEKLY COMP. PRES.
DOC. 1006 (June 26, 1990).
2425
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).
25
2626
27
28
P.L. 105-83, 111 Stat. 1543 (Nov. 14, 1997).
Id.
Figure 1 does not account for the recent legislation that made the so-called “181 Area”
in the Gulf of Mexico available for leasing. This legislation is discussed infra.
CRS-6
Figure 1. Federal Outer Continental Shelf Areas
Congressionally imposed moratoria have closely paralleled the structure and the
substance of the Clinton-era withdrawal order discussed above. However, one
significant legal difference does exist. 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.”2729 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 Actact 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.2830 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
2729
See, e.g., P.L. 106-291, 114 Stat. 942 §§ 107-110 (Oct. 11, 2000).
28.
30
42 U.S.C. § 15912.
CRS-7
moratoria, and assess the extent to which relevant laws and policies “restrict or
impede the development of identified resources and the extent that they affect
domestic supply ....”29
A number of other bills introduced in the 109th Congress sought....”31
Bills are often introduced to amend or
alter existing prohibitions on OCS development. Bills were introduced to
permanently prohibit oil and gas leasing off the coasts of California30 and Florida31
and in the Mid-Atlantic and North Atlantic areas.32 Bills were also introduced to
repeal the existing congressional and presidential limitations, in whole or in part, on
OCS oil and gas development.33 These efforts culminated in December of 2006
when Congress approved H.R. 6111, the Tax Relief and Health Care Act of 2006, a
far-reaching measure that was passed just prior to adjournment of the 109th Congress.
Among the many provisions of this legislation was the Gulf of Mexico Energy
Security Act of 2006, which provides for the
development. One such measure, the Gulf of Mexico Energy Security Act of 2006,
was enacted just before adjournment of the 109th Congress as part of H.R. 6111, the
omnibus Tax Relief and Health Care Act of 2006.32 This measure provides for the
oil and gas leasing in an area in the Gulf
of Mexico known as “181 Area.” Large
portions of this Area are to be offered for oil
or gas leasing pursuant to the leasing
terms of the OCSLA as soon as practicable after
enactment of the Act.34act.33 Leasing in
this area had been prohibited under P.L. 105-83.
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 (MMS),
a bureau of the Department of Interior (DOI).3534 In 1978, the OCSLA was
significantly amended so as to increase the role of the affected coastal states in the
leasing process.3635 The amendments also revised the bidding process and leasing
procedures, set stricter criteria to guide the DOI environmental review process, and
established new safety and environmental standards to govern drilling operations.
29
Id.
30
S. 2294, 109th Cong. (Feb. 16, 2006); H.R. 4782, 109th Cong. (Feb. 16, 2006).
31
H.R. 3251, 109th Cong. (July 12, 2005).
32
S. 878, 109th Cong. (Apr. 12, 2005); S. 2316, 109th Cong. (Feb. 16, 2006); H.R. 1798,
109th Cong. (Apr. 21, 2005).
33
H.R. 4318, 109th Cong. (Nov. 15, 2005) (The bill would have repealed a prohibition on
gas development only, authorized gas only leases, and diverted 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 have authorized gas only leases and would have repealed the
moratoria in certain portions of the Gulf of Mexico.).
34
H.R. 6111, Division C, § 103 (2006).
35
Id. §§ 1331(b), 1334; 30 C.F.R. § 250.101 (2005).
36
P.L. 95-372, 92 Stat 629 (1978).
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The OCS leasing process consists of four distinct stages: (1) the five-year
planning program,37 (2) the lease sale,38 (3) exploration,39
The OCS leasing process consists of four distinct stages: (1) the five-year
planning program,36 (2) the lease sale,37 (3) exploration,38 and (4) development and
production.4039
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.4140 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
31
Id.
32
P.L. 109-432.
33
Id. at Division C, § 103 .
34
43 U.S.C. §§ 1331(b), 1334; 30 C.F.R. § 250.101.
35
P.L. 95-372.
36
43 U.S.C. § 1344.
37
43 U.S.C. §§ 1337, 1345.
38
43 U.S.C. § 1340.
39
43 U.S.C. § 1351.
40
43 U.S.C. § 1344(a), (e).
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needs for the five-year period and the extent of potential economic, social, and
environmental impacts associated with development.4241
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.4342 After publication, the
Attorney General is also authorized to submit comments regarding potential effects
37
43 U.S.C. § 1344.
38
Id. §§ 1337, 1345.
39
Id. § 1340.
40
Id. § 1351.
41
43 U.S.C. § 1344(a), (e).
42
Id.
43
“Affected state” is defined in the Act
on competition.43 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.44 Once the leasing plan is
approved, tracts included in the plan will be available for leasing, consistent with the
terms of the plan.45
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
41
Id.
42
“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
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).
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on competition.44 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.45 Once the leasing plan is
approved, tracts included in the plan will be available for leasing, consistent with the
terms of the plan.46
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
43 U.S.C. § 1331(f).
43
43 U.S.C. § 1344(d).
44
Id.; see also 30 C.F.R. §§ 256.16-.17.
45
43 U.S.C. §1344(d).
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Environmental Policy Act (NEPA).4746 Thus, the NEPA review process complements
and informs the preparation of a five-year plan under the OCSLA.4847
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
OCSLA and its implementing regulations that establish the mechanics of the leasing
process.4948
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.5049 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
44
Id. § 1344(d).
45
Id.; see also 30 C.F.R. §§ 256.16-.17.
46
43 U.S.C. §1344(d).
47
proposed lease stipulations.50 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.51
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 location52 of a proposed
46
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, coordinated by Susan Fletcher.
48RS20621, Overview of NEPA Requirements, by Kristina Alexander.
47
See Natural Resources Defense Council v. Hodel, 865 F.2d 288, 310 (D.C. Cir.1988).
4948
43 U.S.C. § 1337.
50
30 C.F.R. §§ 256.23, 256.25.
CRS-10
proposed lease stipulations.51 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.52
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 location53
of a proposed lease sale within sixty days after notice of the lease sale.54 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.55
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.56 This notice must describe the areas subject to the
sale and any stipulations, terms, and conditions of the sale.57 The bidding is to occur
under conditions described in the notice and must be consistent with certain baseline
requirements established in the OCSLA.5849
30 C.F.R. §§ 256.23, 256.25.
50
30 C.F.R. § 256.26.
51
30 C.F.R. § 256.29.
52
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.
CRS-10
lease sale within sixty days after notice of the lease sale.53 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.54
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.55 This notice must describe the areas subject to the sale and any stipulations,
terms, and conditions of the sale.56 The bidding is to occur under conditions
described in the notice and must be consistent with certain baseline requirements
established in the OCSLA.57
Although the statute establishes base requirements for the competitive bidding
process and sets forth a variety of bid formats,5958 many of these requirements are
subject to significant modification at the discretion of the Secretary.6059 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
51
Id. § 256.26.
52
Id. § 256.29.
53
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.
54
43 U.S.C. § 1345(a); see also 30 C.F.R. § 256.31.
55
43 U.S.C. § 1345(c).
56
Id. § 1337(l).
57
30 C.F.R. § 256.32(1).
58
43 U.S.C. § 1337.
59
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.
60
Id.
violation of antitrust laws.60 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.61 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.62
In addition, the OCSLA prescribes many minimum conditions that all leases
must contain. The statute supplies generally applicable minimum royalty or net
53
43 U.S.C. § 1345(a); see also 30 C.F.R. § 256.31.
54
43 U.S.C. § 1345(c).
55
43 U.S.C. § 1337(l).
56
30 C.F.R. § 256.32(1).
57
43 U.S.C. § 1337.
58
43 U.S.C § 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.
59
43 U.S.C 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. See Immigration and Naturalization
Service v. Chadha, 462 U.S. 919 (1983).
CRS-11
violation of antitrust laws.61 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. 62 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.63
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.64 Similarly, the law generally requires
61
Naturalization Service v. Chadha, 462 U.S. 919 (1983).
60
43 U.S.C. § 1337(c); 30 C.F.R. § 256.47(d).
62
Id.61
43 U.S.C § 1337(c), (f).
6362
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).
64
Several provisions authorize See 43 U.S.C § 1337(d).
CRS-11
profit share rates, as necessitated by the bidding format adopted, subject, under
certain conditions, to Secretarial modification. Indeed, 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 production.63 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.64 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).
instead.65 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.66 Royalties
may also
be suspended pursuant to the Outer Continental Shelf Deep Water Royalty
Relief Act,
discussed infra pp. 17-2120.
Recently, there has been a great deal of controversy with respect to certain leases
issued by
MMS in 1998 and 1999 that did not contain price thresholds for royalties.
Most MMS
leases providing for royalty relief contain oil or natural gas price
thresholds: if the price of
oil or gas exceeds those thresholds, the federal government
is entitled to royalties for oil and
gas produced by the lessees. Some have argued that
the lack of such thresholds resulted in
excessive profits for oil and gas producers
holding leases from 1998 and 1999, because they
were not required to pay royalties
on their oil and gas income to the lessor, the federal
government. Several Members of Congress have expressed interest in amending the 1998
and 1999 leases. In a letter to Attorney General Alberto Gonzales dated December 14, 2006,
four members of the House Committee on Government Reform and Subcommittee on
Energy and Resources requested a Justice Department analysis of whether MMS has the
authority to terminate the 1998 and 1999 leases or take other action to correct this perceived
(continued...)
CRS-12
successful bidders to furnish a variety of up-front payments and performance bonds
upon being granted a lease.65 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 1334.66 Finally, the law indicates that
a lease entitles the lessee to explore, develop and produce oil and gas, conditioned
on applicable due diligence requirements and the approval of a development and
production plan, discussed below.67
Exploration. Exploration for oil and gas pursuant to an OCSLA lease must
comply with an approved exploration plan.68 government. H.R. 6, passed by
the House of Representatives on January 18, 2007, included a provision to address
this controversy. However, the Senate version of H.R. 6, passed on June 21, 2007,
did not contain this language. A subsequent energy bill passed by the House on
August 4, 2007, H.R. 3221, contained language addressing the controversy virtually
identical to the language in the original version of H.R. 6. It remains to be seen how
this issue will be resolved in conference.67
63
Id. § 1337(a)(3).
64
43 U.S.C. § 1337(a)(3)(B)
65
P.L. 109-58 (codified at 43 U.S.C. § 1334 note).
66
Id.
67
For further discussion of this controversy and proposed legislative resolution, see CRS
Report RL33974, Legal Issues Raised by Provision in House Energy Bill (H.R. 6) Creating
Incentives for Certain OCS Leaseholders to Accept Price Thresholds, by Robert Meltz and
Adam Vann.
CRS-12
The OCSLA also generally requires successful bidders to furnish a variety of
up-front payments and performance bonds upon being granted a lease.68 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 1334.69 Finally, the law indicates that a lease entitles the lessee to explore,
develop and produce oil and gas, conditioned on applicable due diligence
requirements and the approval of a development and production plan, discussed
below.70
Exploration. Exploration for oil and gas pursuant to an OCSLA lease must
comply with an approved exploration plan.71 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.6972
Under the federal Coastal Zone Management Act (CZMA), federal actions and
federally permitted projects, even in federal waters, must be submitted for state
review.7073 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.7174 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.7275 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.7376 Once a plan has been approved, drilling
associated with exploration remains subject to the relevant MMS District
64
(...continued)
problem.
65
Id. § 1337(a)(7); 30 C.F.R. 256.52 - 256.59.
66
Id.
Supervisor’s approval of an Application for a Permit to Drill, which involves analysis
of even more specific drilling plans.
68
43 U.S.C § 1337(a)(7); 30 C.F.R. §§ 256.52 - 256.59.
69
43 U.S.C § 1337(b). Leases may also be cancelled at any time if obtained by fraud or
misrepresentation. Id.43 U.S.C § 1337(o).
67
Id.
70
43 U.S.C § 1337(b)(4).
68
Id.71
43 U.S.C § 1340(b), (c).
6972
30 C.F.R. §§ 250.226, 250.227, 250.232, 250.235.
7073
16 U.S.C. § 1456(c).
7174
30 C.F.R. § 250.235.
72
Id75
30 C.F.R. § 250.232(c).
73
Id76
30 C.F.R. §§ 250.231 — 250.233.
CRS-13
Supervisor’s approval of an Application for a Permit to Drill, which involves analysis
of even more specific drilling plans.
- 250.233.
CRS-13
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.7477
Operators are required to submit a Development and Production Plan for areas where
significant development has not occurred before75before78 or a less extensive Development
Operations Coordination Document for those areas, such as certain portions of the
Western Gulf of Mexico, where significant activities have already taken place.7679 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.7780
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 tieredtied to
previously prepared NEPA documents.7881 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.7982 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.8083 These
additional documents allow MMS to adequately review the engineering, safety, and
environmental impacts associated with these technologies.8184
As with the exploration stage, actual drilling cannot take place without approval
of an Application for Permit to Drill (APD).8285 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.83
74
43 U.S.C. § 1351.
75
30 C.F.R. § 250.201.
76
Id.
77
Id. §§ 250.241 — 250.262.
7886
Lease Suspension and Cancellation. The OCSLA authorizes the
Secretary of the Interior to promulgate regulations on lease suspension and
77
43 U.S.C. § 1351.
78
30 C.F.R. § 250.201.
79
Id.
80
30 C.F.R. §§ 250.24 - 250.262.
81
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.
79
Id. § 250.267.
80
Id30 C.F.R.§ 250.269.
82
30 C.F.R. § 250.267.
83
30 C.F.R. §§ 250.286, 250.287.
81
Id. 84
30 C.F.R.§§ 250.289, 250.292.
82
Id85
30 C.F.R. §§ 250.410 - 250.469.
83
Id. § 250.411.
CRS-14
Lease Suspension and Cancellation. The OCSLA authorizes the
Secretary of the Interior to promulgate regulations on lease suspension and
cancellation.84 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.86
30 C.F.R. § 250.411.
CRS-14
cancellation.87 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,
given appropriate justification.8588 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 ....”8689 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 ....”8790 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.8891 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 ....”8992
After a suspension period of, in general, five years,9093 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 ....”91
8494
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
87
43 U.S.C. § 1334; see also 30 C.F.R. §§ 250.168 —- 250.185.
8588
30 C.F.R. §§ 250.168, 250.171-250.175.
8689
43 U.S.C.§ 1334(a)(1).
8790
30 C.F.R. § 250.173; see also id. §§250.173 — - 250.175.
8891
43 U.S.C.§ 1334(a)(1).
8992
Id.
9093
The requisite suspension period may be reduced upon the request of the lessee. Id. §
43 U.S.C.
§ 1334(a)(2)(B).
91
Id
94
43 U.S.C. § 1334(a)(2)(A)(i)-(iii). For regulations implementing the cancellation
provisions, see
30 C.F.R. §§ 250.180 — 250.185.
CRS-15
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 cancellation92- 250.185.
CRS-15
of cancellation95 or (2) the excess of the consideration paid for the lease, plus all of
the lessee’s exploration- or development-related expenditures, plus interest, over the
lessee’s revenues from the lease.9396
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.9497 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.9598 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.9699
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,97100 Endangered Species Act,98101 and other environmental laws have provided
mechanisms for challenging actions associated with offshore oil and gas production
in the past.99102 Of primary interest here, however, are legal challenges to agency action
action with respect to the planning, leasing, exploration, and development phases
under the
procedures mandated by the OCSLA itself and the related environmental review
review required by the National Environmental Policy Act. An overview of the
relevant case
law follows.
92
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
95
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 ....” Id43 U.S.C. § 1334(a)(2)(C).
93
96
Exceptions from this method of calculation are carved out for leases issued before
September 18, 1978, and for joint leases whichthat are canceled due to the failure of one or more
partners to exercise due diligence. Id43 U.S.C. § 1334(a)(2)(C)(ii)(I), (II); see also 30 C.F.R. §
§§ 250.184 —- 250.185.
9497
43 U.S.C. § 1334(b).
95
Id98
43 U.S.C. § 1334(c).
96
Id99
43 U.S.C. § 1334(d).
97100
33 U.S.C. §§ 1251-1387.
98101
16 U.S.C. §§ 1531-1544.
99102
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).
CRS-16
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.100lease.103 The following paragraphs provide an 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 agency 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.101104 It appears that only three
challenges to the
five-year plan have been brought to court. The first, California ex.
rel. Brown v.
Watt,102105 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
procedural requirements in making determinations, the court established a relatively deferential
deferential standard of review, which it has continued to apply in later challenges. Thus, when
When reviewing “findings of ascertainable fact made by the Secretary,” the court will
require the Secretary’s decisions to be supported by “substantial evidence.”103106
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.”104107
The standards for review outlined in Watt have been upheld in subsequent
litigation related to the five-year plan.105108 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.”106109 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
100
43 U.S.C. § 1349.
101
43 U.S.C. § 1349(c).
102
668 F.2d 1290 (D.C. Cir.1981).
103
leasing determinations at this stage and explain those determinations; more searching
judicial review of the Secretary’s analysis is not required.110
Litigation under the OCSLA has also challenged actions taken during the
leasing phase. As described above, the OCSLA authorizes states to submit
103
43 U.S.C. § 1349.
104
43 U.S.C. § 1349(c).
105
668 F.2d 1290 (D.C. Cir.1981).
106
Watt, 668 F.2d at 1302; see also 43 U.S.C. § 1349(c)(6).
104107
Watt, 668 F.2d at 1301-1302 (quoting Citizens to Preserve Overton Park v. Volpe, 401
U.S. 402, 416 (1971) (internal quotations omitted)).
105
108
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).
106
109
California, 715 F.2d at 96 (internal quotations omitted).
CRS-17
leasing determinations at this stage and explain those determinations; more searching
judicial review of the Secretary’s analysis is not required.107
Litigation under the OCSLA has also challenged actions taken during the
leasing phase. As described above, the OCSLA authorizes states to submit
110
Hodel, 865 F.2d at 305.
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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
national interest and the well-being of the citizens of the affected State.”108111 Courts
have typically applied the deferential “arbitrary and capricious” standard to Secretary
decisions with regard to the Secretary’s decisions with respect to 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.109
112 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.110113 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.
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
production.111114 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.112115
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
107
Hodel, 865 F.2d at 305.
108
43 U.S.C. § 1345(d).
109
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
111
43 U.S.C. § 1345(d).
112
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).
110113
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).
111114
Kerr-McGee Oil & Gas Corp. v. Burton, No. CV06-0439 LC (W.D. La. Mar.March 17, 2006).
112
P.L. 104-58, 109 Stat. 563 § 301 (Nov. 28, 1995).
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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 on115
P.L. 104-58.
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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.113
Some assert that 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 leases114leases116 existing on the date of the DWRRA’s enactment
will pay no royalties until either a specified volume of production is reached by the
lessee115lessee117 or the price of oil or gas has reached a statutorily prescribed price
threshold.116118
Section 304 of the DWRRA, which addresses deepwater leases117leases119 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
113
The parties in this matter have agreed to resolve their dispute in mediation. Efforts at
resolution are ongoing.
114
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.120 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.121 Subsection (H), referenced in the DWRRA, authorizes bidding by
116
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
117
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. The statute defines “new“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
(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
117
Id
118
43 U.S.C. § 1337(a)(3)(C)(iii).
119
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.
CRS-19
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
120
43 U.S.C. § 1337(a)(1).
121
43 U.S.C. § 1337(a)(1)(A), (B).
CRS-19
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 ....120122
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
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.121123 On the other hand, it could be argued that
“or” is used in this instance to indicate that all suspension mechanisms are available
in any combination determined by the Secretary and that they are not intended to be
mutually exclusive.122124
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;
118
43 U.S.C. § 1337(a)(1).
119
Id. § 1337(a)(1)(A), (B).
120
Id. § 1337(a)(1)(H).
121
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.125
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;
122
43 U.S.C. § 1337(a)(1)(H).
123
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).
122124
See, e.g., DeSylva v. Ballentine, 351 U.S. 570, 573 (1956); United States v. Moore, 613
F.2d 1029 (D.C. Cir. 1979).
CRS-20
(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;
125
P.L. 104-58.
CRS-20
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
Although
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).124126
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
thresholds contained in each lease.125127 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.126128 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.
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
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).
125
33 C.F.R. §§ 203.78, 260.122.
126
Id. §§ 260.112 — 260.117.
CRS-21
significantly affect the environment.127129 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.128130 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.
126
Santa Fe Snyder Corp. v. Norton 385 F.3d 884, 892 (5th Cir. 2004).
127
33 C.F.R. §§ 203.78, 260.122.
128
33 C.F.R. §§ 260.112 - 260.117.
129
40 C.F.R. §§ 1501.7, 1503.1, 1503.4, 1506.10.
130
42 U.S.C. § 4332.
CRS-21
There has only been one NEPA-based challenge to a five-year plan, Natural
Resources Defense Council v. Hodel.129131 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.”130132 This standard appears to afford some level of
deference to the Secretary, and his choice of alternatives werewas found to be sufficient
by the court in this instance.131133 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.132134 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.133
As described135
As mentioned above, NEPA plays a role in the leasing phase as well. MMS often
often uses NEPA and its tiering option to evaluate lease sales.134136 The NEPA procedures
procedures and standard of review remain the same at this phase; however, due to the structure
structure of the OCSLA process, additional, more specific information is generally required.135
Despite the need for more information than that required during the five year plan,
courts have remained137
Still, courts are deferential at the lease sale phase. In challenges to the
adequacy of
environmental review, courts have stressed that inaccuracies and more
stringent stringent
NEPA analysis will be available at later phases.136138 Thus, because there will
127
See 40 C.F.R. §§ 1501.7, 1503.1, 1503.4, 1506.10.
128
42 U.S.C. § 4332.
129
Natural Resources Defense Council, Inc. v. Hodel, 865 F.2d 288 (D.C. Cir. 1988).
130
Id. at 294.
131
Id. at 296.
132
Id. at 297-300.
133
See California ex. rel. Brown v. Watt, 668 F.2d 1290, 1301-1302 (D.C. Cir.1981).
134
See 30 C.F.R. § 256.26(b); 40 C.F.R. § 1508.28.
135
Tribal Village of Akutan v. Hodel, 869 F.2d 1185, 1191 (9th Cir.1988).
136 be an
opportunity to cure any defects in the analysis as the OCSLA process continues,
challenges under NEPA at this phase are often unsuccessful.139
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.140 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
131
Natural Resources Defense Council, Inc. v. Hodel, 865 F.2d 288 (D.C. Cir. 1988).
132
Id. at 294.
133
Id. at 296.
134
Id. at 297-300.
135
See California ex. rel. Brown v. Watt, 668 F.2d 1290, 1301-1302 (D.C. Cir.1981).
136
See 30 C.F.R. § 256.26(b); 40 C.F.R. § 1508.28.
137
Tribal Village of Akutan v. Hodel, 869 F.2d 1185, 1191 (9th Cir.1988).
138
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).
CRS-22
be an opportunity to cure any defects in the analysis as the OCSLA process
continues, challenges under NEPA at this phase are often unsuccessful.137
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.138 In
139
But see Conservation Law Foundation v. Clark, 560 F.Supp. 561 (D. Mass. 1983).
140
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 leasefo the Interior, 268 F.3d 781 (9th Cir. 2001).
CRS-22
sale, the requirements of NEPA were satisfied.139141 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.
137
But see Conservation Law Foundation v. Clark, 560 F.Supp. 561 (D. Mass. 1983).
138
Edwardsen v. U.S. Department fo the Interior, 268 F.3d 781 (9th Cir. 2001).
139
Id. at 784-790.
CRS-23
Appendix A
State
Policy
Statutes
141
Id. at 784-790.
CRS-23
Appendix.
Table 1. State Laws That Ban or Regulate
Offshore Mineral Development
State
Policy
AL
Drilling is authorized in Alabama’s state waters.
The The
State Lands Division of the Department of
Conservation 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 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
United States determines that there is a “severe energy
supply interruption and has ordered distribution of
the the
Strategic Petroleum Reserve ..., the Governor
finds that
the energy resources of the sanctuary will
contribute 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
.2 (repealed
1994); 6870
(Santa Barbara
limitations);
6243 (general
ban).
CA
CT
Connecticut does not appear to have laws addressing
oil 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-24
DE
The Governor and the Secretary of the Department
of of
Natural Resources and Environmental Control are
authorized to lease oil and gas in state waters.
Lands Lands
“administered by the Department of Natural
Resources Resources
and Environmental Control” may not be
leased by the Secretary
Secretary.
Statutes
Authorization:
Alaska Stat. §§
38.05.131 et
seq.; 38.05.135
et seq.
Authorization:
Cal. Pub. Res.
Code §§ 6870 et.
seq.; 6240 et seq.
Ban: Del. Code
Ann. tit. 7 ch.
61 § 6102(e). 61
§ 6102(e).
Authorization:
Del. Code. Ann.
tit. 7 ch. 61.
CRS-24
State
Policy
Statutes
FL
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 and
gas drilling structures in a variety of locations,
including 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 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 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 oil
and gas in Louisiana and its offshore territory.
There 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 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 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.
§14-107.
Authorization:
Fla. Stat. Ann.
§§ §§
377.01 et
seq.;
253.001 et
seq.
Authorization:
Md. Code,
Envt.
§§ 14-101
et seq.
CRS-25
MA
MS
MA
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 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 Laws
Ann. Ch.
21 §§ 54 et seq.
54 et seq.
Ban:
Mass. Gen. Laws
Ann. Ch. 132A §
15.
CRS-25
State
Policy
Statutes
MS
The Mississippi Major Economic Impact Authority
is is
responsible for administering oil and gas leases on
state state
lands. Offshore oil and gas development is
generally 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
drilling operations” may not be conducted within one mile
mile of Cat Island.
Authorization:
Miss. Code.
Ann.
§§ 29-7-1
et seq.
Ban:
Mass. Gen.
Laws Ann. Ch.
132A § 15.
et seq.
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 the
high water mark if approved by the Tidelands
Resource 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 and
gas leases is vested in the Department of
Environmental 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
23-0101 et seq.
NC
State law authorizes the sale or lease of any state
owned 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-26
§
146-8.
OR
The Department of State Lands is generally
responsible 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
(for
submerged lands
seaward more
than 10 miles
easterly of the
124th West
Meridian).
RI
The Coastal Resources Management Council is
charged 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.
CRS-26
State
Policy
Statutes
SC
The state Budget and Control Board is authorized to
“negotiate for leases of oil, gas and other mineral
rights rights
upon all of the lands and waters of the State,
including including
offshore marginal and submerged lands.”
Authorization:
S.C. Code.
Ann.
§§ 10-910 et 9-10 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 State
law prohibits leasing of tidal or submerged
lands lands
“extending from mean high tide seaward three
miles 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 Code
Ann. §§
43.143.005 et
seq.
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