Order Code RL33404
Offshore Oil and Gas Development:
Legal Framework
Updated January 30, 2008
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. 109-
432) 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.

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 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Leasing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Exploration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Development and Production . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Lease Suspension and Cancellation . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Legal Challenges to Offshore Leasing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
Suits Under the Outer Continental Shelf Lands Act . . . . . . . . . . . . . . 15
Suits Under the National Environmental Policy Act . . . . . . . . . . . . . . 18
Appendix. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
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 . . . . 21

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,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) the establishment and use of artificial islands, installations and structures;
(ii) marine scientific research; and
(iii) the protection and preservation of the marine environment.3
1 This report was authored originally by Aaron M. Flynn.
2 United Nations Convention on the Law of the Sea III (entered into force November 16,
1994) (hereinafter UNCLOS).
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.”4 In general, however, a nation’s continental shelf cannot
extend beyond 350 nautical miles from its recognized coastline regardless of
submarine geology.5 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.6
Federal Jurisdiction. While a signatory to UNCLOS, 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.7 In a series of related cases, the U.S. Supreme Court
confirmed federal control of these offshore areas.8 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....”9 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 areas
4 Id. at Art. 76.1.
5 Id. at Art. 76.4-76.7.
6 Id. at Art. 77.1.
7 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 (September 28,
1945); Exclusive Economic Zone of the United States of America, Proclamation No. 5030,
48 Fed. Reg. 10,605 (March 14, 1983); Territorial Sea of the United States of America,
Proclamation No. 5928, 54 Fed. Reg. 777 (December 27, 1988); Contiguous Zone of the
United States, Proclamation No. 7219, 64 Fed. Reg. 48,701 (August 2, 1999).
8 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).
9 43 U.S.C. § 1331(a).

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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),10 coastal states are generally entitled to an area extending three
geographical miles11 from their officially recognized coast (or baseline).12 In order
to accommodate the claims of certain states, the SLA provides for an extended three
marine league13 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.”14 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.15
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....”16 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
10 43 U.S.C. §§ 1301 et seq.
11 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.
12 43 U.S.C. §1301(b).
13 A marine league is equal to 18,228.3 feet.
14 43 U.S.C. §§ 1312, 1301(b).
15 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.”).
16 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).17 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....”18 To effectuate this purpose, the OCSLA extends application of
federal laws to certain structures and devices located on the OCS,19 provides that the
law of adjacent states will apply to the OCS when it does not conflict with federal
law,20 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.21 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 Act22 and those imposed directly by Congress,
17 43 U.S.C. §§ 1331-1356.
18 43 U.S.C. § 1332(3).
19 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.
20 Id.
21 43 U.S.C. §§ 1331(a), 1332, 1333(a)(1).
22 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.23 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.24 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, 2012.25 The Clinton order refers
to the 1997 congressional moratorium26 and adopts the substance of that enactment
expressly, which itself included by reference those areas covered by the 1990
presidential withdrawal. The provisions of the 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 5-
Year 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.27
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 1.28
22 (...continued)
interstate commerce, has sufficient constitutional authority to regulate OCS resources.
23 See, e.g., P.L. 108-447, §§ 107-109.
24 Statement on Outer Continental Shelf Oil and Gas Development, 26 WEEKLY COMP. PRES.
DOC. 1006 (June 26, 1990).
25 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).
26 P.L. 105-83.
27 Id.
28 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.


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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.”29 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 act 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.30 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
29 See, e.g., P.L. 106-291.
30 42 U.S.C. § 15912.

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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....”31
Bills are often introduced to amend or alter existing prohibitions on OCS
development. For example, 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.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).34 In 1978, the OCSLA was
significantly amended so as to increase the role of the affected coastal states in the
leasing process.35 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.
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.39
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.40 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.41
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.42 After publication, the
Attorney General is also authorized to submit comments regarding potential effects
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....
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).46 Thus, the NEPA review process complements
and informs the preparation of a five-year plan under the OCSLA.47
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.48
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.49 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
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
RS20621, Overview of NEPA Requirements, by Kristina Alexander.
47 See Natural Resources Defense Council v. Hodel, 865 F.2d 288, 310 (D.C. Cir.1988).
48 43 U.S.C. § 1337.
49 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.

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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,58 many of these requirements are
subject to significant modification at the discretion of the Secretary.59 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
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. See Immigration and
Naturalization Service v. Chadha, 462 U.S. 919 (1983).
60 43 U.S.C. § 1337(c); 30 C.F.R. § 256.47(d).
61 43 U.S.C § 1337(c), (f).
62 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.
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.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 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.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
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, 1990.66 Royalties
may also be suspended pursuant to the Outer Continental Shelf Deep Water Royalty
Relief Act.
The OCSLA also generally requires successful bidders to furnish a variety of
up-front payments and performance bonds upon being granted a lease.67 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 1334.68 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.69
Exploration. Exploration for oil and gas pursuant to an OCSLA lease must
comply with an approved exploration plan.70 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
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 43 U.S.C § 1337(a)(7); 30 C.F.R. §§ 256.52 - 256.59.
68 43 U.S.C § 1337(b). Leases may also be cancelled at any time if obtained by fraud or
misrepresentation. 43 U.S.C § 1337(o).
69 43 U.S.C § 1337(b)(4).
70 43 U.S.C § 1340(b), (c).

CRS-12
to the Governor of an affected state and the state’s Coastal Zone Management
agency.71
Under the federal Coastal Zone Management Act (CZMA), federal actions and
federally permitted projects, even in federal waters, must be submitted for state
review.72 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.73 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.74 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.75 Once a plan has been approved, drilling
associated with exploration remains subject to the relevant MMS District
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.76
Operators are required to submit a Development and Production Plan for areas where
significant development has not occurred before77 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.78 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.79
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 tied to
71 30 C.F.R. §§ 250.226, 250.227, 250.232, 250.235.
72 16 U.S.C. § 1456(c).
73 30 C.F.R. § 250.235.
74 30 C.F.R. § 250.232(c).
75 30 C.F.R. §§ 250.231 - 250.233.
76 43 U.S.C. § 1351.
77 30 C.F.R. § 250.201.
78 Id.
79 30 C.F.R. §§ 250.24 - 250.262.

CRS-13
previously prepared NEPA documents.80 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.81 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.82 These
additional documents allow MMS to adequately review the engineering, safety, and
environmental impacts associated with these technologies.83
As with the exploration stage, actual drilling cannot take place without approval
of an Application for Permit to Drill (APD).84 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.85
Lease Suspension and Cancellation. The OCSLA authorizes the
Secretary of the Interior to promulgate regulations on lease suspension and
cancellation.86 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.87 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....”88 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
80 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) ....” 30 C.F.R.§ 250.269.
81 30 C.F.R. § 250.267.
82 30 C.F.R. §§ 250.286, 250.287.
83 30 C.F.R.§§ 250.289, 250.292.
84 30 C.F.R. §§ 250.410 - 250.469.
85 30 C.F.R. § 250.411.
86 43 U.S.C. § 1334; see also 30 C.F.R. §§ 250.168 - 250.185.
87 30 C.F.R. §§ 250.168, 250.171-250.175.
88 43 U.S.C.§ 1334(a)(1).

CRS-14
encountered in obtaining required permits or consents....”89 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.90 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....”91
After a suspension period of, in general, five years,92 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....”93
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 cancellation94 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.95
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.96 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
89 30 C.F.R. § 250.173 - 250.175.
90 43 U.S.C.§ 1334(a)(1).
91 Id.
92 The requisite suspension period may be reduced upon the request of the lessee. 43 U.S.C.
§ 1334(a)(2)(B).
93 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.
94 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 ....” 43 U.S.C. § 1334(a)(2)(C).
95 Exceptions from this method of calculation are carved out for leases issued before
September 18, 1978, and for joint leases that are canceled due to the failure of one or more
partners to exercise due diligence. 43 U.S.C. § 1334(a)(2)(C)(ii)(I), (II); see also 30 C.F.R.
§§ 250.184 - 250.185.
96 43 U.S.C. § 1334(b).

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regulations continues for a period of thirty days after the mailing.97 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.98
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,99 Endangered Species Act,100 and other environmental laws have provided
mechanisms for challenging actions associated with offshore oil and gas production
in the past.101 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.
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.102 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.103 It appears that only three
challenges to the five-year plan have been brought to court. The first, California ex.
rel. Brown v. Watt
,104 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.
When reviewing “findings of ascertainable fact made by the Secretary,” the court will
97 43 U.S.C. § 1334(c).
98 43 U.S.C. § 1334(d).
99 33 U.S.C. §§ 1251-1387.
100 16 U.S.C. §§ 1531-1544.
101 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).
102 43 U.S.C. § 1349.
103 43 U.S.C. § 1349(c).
104 668 F.2d 1290 (D.C. Cir.1981).

CRS-16
require the Secretary’s decisions to be supported by “substantial evidence.”105
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.”106
The standards for review outlined in Watt have been upheld in subsequent
litigation related to the five-year plan.107 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.”108 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
leasing determinations at this stage and explain those determinations; more searching
judicial review of the Secretary’s analysis is not required.109
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
national interest and the well-being of the citizens of the affected State.”110 Courts
have typically applied the deferential “arbitrary and capricious” standard to Secretary
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.111 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
105 Watt, 668 F.2d at 1302; see also 43 U.S.C. § 1349(c)(6).
106 Watt, 668 F.2d at 1301-1302 (quoting Citizens to Preserve Overton Park v. Volpe, 401
U.S. 402, 416 (1971) (internal quotations omitted)).
107 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).
108 California, 715 F.2d at 96 (internal quotations omitted).
109 Hodel, 865 F.2d at 305.
110 43 U.S.C. § 1345(d).
111 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).

CRS-17
balancing of interests insufficient.112 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, 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.113 The plaintiff alleged 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, and does not permit a price-based
threshold for this royalty relief.114
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 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 Kerr-McGee, 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 argued that such
provisions are contrary to DOI’s statutory authority and unenforceable.
Section 304 of the DWRRA, which addresses deepwater leases115 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.
Section 304 of the DWRRA also 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
112 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).
113 Kerr-McGee Oil & Gas Corp. v. Burton, No. CV06-0439 LC (W.D. La. March 17, 2006).
114 P.L. 104-58.
115 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-18
[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.116
It is possible to interpret this provision as authorizing leases issued during the
five-year period to contain only royalty suspension provisions that are 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. Kerr-McGee’s
challenge to the Secretary’s authority to impose price-based thresholds on royalty
suspension was based on this interpretation of the statutory language above.
The U.S. District Court for the Western District of Louisiana agreed with Kerr-
McGee’s interpretation of the language discussed above. The court found that the
DWRRA allowed only for volumetric thresholds on royalty suspension for leases
issued between 1996 and 2000, and that the Secretary did not have authority under
the DWRRA to attach price-based thresholds to royalty suspension for those
leases.117 The U.S. government has filed notice of appeal of this decision, and so this
decision may be reversed.
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.118 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.119 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.
116 P.L. 104-58.
117 CITE.
118 40 C.F.R. §§ 1501.7, 1503.1, 1503.4, 1506.10.
119 42 U.S.C. § 4332.

CRS-19
There has only been one NEPA-based challenge to a five-year plan, Natural
Resources Defense Council v. Hodel.120 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.”121 This standard appears to afford some level of
deference to the Secretary, and his choice of alternatives was found to be sufficient
by the court in this instance.122 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.123 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.124
As mentioned above, NEPA plays a role in the leasing phase as well. MMS
often uses NEPA and its tiering option to evaluate lease sales.125 The NEPA
procedures and standard of review remain the same at this phase; however, due to the
structure of the OCSLA process, more specific information is generally required.126
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
NEPA analysis will be available at later phases.127 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.128
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.129 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
120 Natural Resources Defense Council, Inc. v. Hodel, 865 F.2d 288 (D.C. Cir. 1988).
121 Id. at 294.
122 Id. at 296.
123 Id. at 297-300.
124 See California ex. rel. Brown v. Watt, 668 F.2d 1290, 1301-1302 (D.C. Cir.1981).
125 See 30 C.F.R. § 256.26(b); 40 C.F.R. § 1508.28.
126 Tribal Village of Akutan v. Hodel, 869 F.2d 1185, 1191 (9th Cir.1988).
127 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).
128 But see Conservation Law Foundation v. Clark, 560 F.Supp. 561 (D. Mass. 1983).
129 Edwardsen v. U.S. Department fo the Interior, 268 F.3d 781 (9th Cir. 2001).

CRS-20
sale, the requirements of NEPA were satisfied.130 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.
130 Id. at 784-790.

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Appendix.
Table 1. State Laws That Ban or Regulate
Offshore Mineral Development
State
Policy
Statutes
AL
Drilling is authorized in Alabama’s state waters. The
Authorization:
State Lands Division of the Department of Conservation
Ala. Code §§ 9-
& Land Resources is charged with leasing offshore oil
15-18; 9-17-1 et
and gas in state waters. In addition, the Alabama State
seq.; 40-20-1 et
Oil and Gas Board regulates oil and gas production to
seq.
ensure the conservation and proper development of oil
and gas resources.
AK
The Alaska Department of Natural Resources is
Ban:
responsible for leasing oil and gas on state lands,
Alaska Stat. §§
including offshore areas. Certain areas are specifically
38.05.140(f);
designated as off limits to oil and gas leasing, and
38.05.184.
administrative decisions not to offer leases in offshore
areas may further restrict access.
Authorization:
Alaska Stat. §§
38.05.131 et
seq
.; 38.05.135
et seq.
CA
The State Lands Commission is generally responsible for
Ban:
oil and gas leasing. California issued offshore oil and
Cal. Pub. Res.
gas leases in the past, while banning development in
Code §§ 6871.1-
multiple areas within state waters at both the statutory
.2 (repealed
and administrative levels. California currently has a
1994); 6870
general ban in place restricting any state agency from
(Santa Barbara
issuing new offshore leases, unless the President of the
limitations);
United States determines that there is a “severe energy
6243 (general
supply interruption and has ordered distribution of the
ban).
Strategic Petroleum Reserve ..., the Governor finds that
the energy resources of the sanctuary will contribute
significantly to the alleviation of that interruption, and
Authorization:
the Legislature subsequently acts to amend...[the law] to
Cal. Pub. Res.
allow that extraction.” The ban is limited to areas that
Code §§ 6870 et.
are not currently subject to a lease.
seq.; 6240 et seq.
CT
Connecticut does not appear to have laws addressing oil
and gas development in state waters.
DE
The Governor and the Secretary of the Department of
Ban: Del. Code
Natural Resources and Environmental Control are
Ann. tit. 7 ch. 61
authorized to lease oil and gas in state waters. Lands
§ 6102(e).
“administered by the Department of Natural Resources
and Environmental Control” may not be leased by the
Authorization:
Secretary.
Del. Code. Ann.
tit. 7 ch. 61.

CRS-22
State
Policy
Statutes
FL
In general, the Department of Natural Resources is
Ban:
vested with the authority to permit oil and gas
Fla. Stat. Ann.
development on state lands and submerged lands;
§377.242.
however, in 1990 Florida enacted a broad ban on
offshore oil and gas development by prohibiting oil and
Authorization:
gas drilling structures in a variety of locations, including
Fla. Stat. Ann. §§
Florida’s territorial waters. The development ban
377.01 et seq.;
provides an exception for valid existing rights.
253.001 et seq.
GA
The State Properties Commission is authorized to issue
Authorization:
leases for state owned oil and gas. The statute does not
Ga. Stat. § 50-
distinguish between onshore and offshore minerals.
16-43.
HI
The Board of Land and Natural Resources is authorized
Authorization:
to lease oil and gas on state lands, including submerged
Hawaii Rev. Stat.
lands. There would not appear to be a statutory ban in
§§ 182-1 et seq.
place.
LA
The state Mineral Board is responsible for leasing oil
Authorization:
and gas in Louisiana and its offshore territory. There
La. Rev. Stat. §§
does not appear to be a statutory ban on oil and gas
30:121 et seq.
drilling in offshore areas, although development is
limited to areas offered by the Board for leasing.
ME
The Bureau of Geology and Natural Areas has primary
Authorization:
authority over oil and gas development on state lands,
Me. Rev. Stat.
including tidal and submerged lands. The Bureau is
tit. 12 §§ 549 et
authorized to issue exploration permits and mineral
seq.
leases.
MD
The Department of the Environment regulates oil and
Ban:
gas development. The areas underlying Chesapeake Bay,
Md. Code, Envt.
its tributaries, and the Chesapeake Bay Critical Area are
§14-107.
unavailable for oil and gas development.
Authorization:
Md. Code, Envt.
§§ 14-101 et seq.
MA
The Division of Mineral Resources is charged with
Authorization:
administering the leasing of oil and gas on state lands.
Mass. Gen. Laws
The law requires a public hearing before any license to
Ann. Ch. 21 §§
explore or lease for extraction is issued for mineral
54 et seq.
resources located in coastal waters. Further, many of the
state’s offshore areas are designated as ocean sanctuaries
Ban:
in which oil and gas development is prohibited.
Mass. Gen. Laws
Ann. Ch. 132A §
15.

CRS-23
State
Policy
Statutes
MS
The Mississippi Major Economic Impact Authority is
Authorization:
responsible for administering oil and gas leases on state
Miss. Code. Ann.
lands. Offshore oil and gas development is generally
§§ 29-7-1 et seq.
permissible. However, specific areas are not available
for leasing. No development may occur in areas north of
Ban:
the coastal barrier islands, except in Blocks 40, 41, 42,
Miss. Code. Ann.
43, 63, 64 and 66 through 98. Further, “surface offshore
§ 29-7-3.
drilling operations” may not be conducted within one
mile of Cat Island.
NH
No statute appears to address offshore oil and gas
development.
NJ
State law authorizes the removal of sand and “other
Authorization:
materials” from lands under tidewaters and below the
N.J. Stat. Ann.
high water mark if approved by the Tidelands Resource
§§ 12:3-12-1 et
Council. Offshore oil and gas development is not
seq.
expressly addressed.
NY
Leases and permits for the right to use state owned
Authorization:
submerged lands for navigation, commerce, fishing,
N.Y. Pub. Lands.
bathing, and recreation are authorized for specified
Law § 75; N.Y.
submerged areas. General authority for issuing oil and
Envt’l &
gas leases is vested in the Department of Environmental
Conserv. Law §§
Conservation. Certain submerged lands underlying
23-0101 et seq.
specified lakes are excluded from exploration and
leasing, but offshore areas would not appear to be
subject to a similar ban.
NC
State law authorizes the sale or lease of any state owned
Authorization:
mineral underlying the bottoms of any sounds, rivers,
N.C. Gen. Stat. §
creeks, or other waters of the State. The state is
146-8.
authorized to dispose of oil and gas “at the request of the
Department of Environment and Natural Resources.”
OR
The Department of State Lands is generally responsible
Authorization:
for leasing state owned minerals, including oil and gas.
Or. Rev. Stat. §§
Leasing of tidal and submerged lands is governed by
274.705 et seq.;
separate provisions of law. There would not appear to
273.551 (for
be a ban in place.
submerged lands
seaward more
than 10 miles
easterly of the
124th West
Meridian).
RI
The Coastal Resources Management Council is charged
Authorization:
with identifying, evaluating, and determining which uses
R.I. Gen. Laws.
are appropriate for the state’s coastal resources and
§§ 46-23-1 et
submerged lands.
seq.

CRS-24
State
Policy
Statutes
SC
The state Budget and Control Board is authorized to
Authorization:
“negotiate for leases of oil, gas and other mineral rights
S.C. Code. Ann.
upon all of the lands and waters of the State, including
§§ 10-9-10 et
offshore marginal and submerged lands.”
seq.
TX
The School Land Board is authorized to lease those
Authorization:
portions of the Gulf of Mexico under the state’s
Tex. Nat. Res.
jurisdiction for oil and gas development.
Code §§ 52.011
et seq.
VA
The Marine Resources Commission is authorized to
Authorization:
grant easements or to lease “the beds of the waters of the
Va. Code Ann. §
Commonwealth outside of the Baylor Survey” for oil
28.2-1208.
and gas development.
WA
In general, the Department of Natural Resources is
Ban:
responsible for mineral development on state lands. State
Wash. Rev. Code
law prohibits leasing of tidal or submerged lands
Ann. §§
“extending from mean high tide seaward three miles
43.143.005 et
along the Washington coast from Cape Flattery south to
seq.
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.”