CHAPTER 1 The History, Status and Future of OCS Leasing
| Jurisdiction | United States |
(May 1989)
The History, Status and Future of OCS Leasing
Covington & Burling
Washington, D.C.
The Outer Continental Shelf (OCS) leasing program was conceived in controversy between the federal and state governments regarding ownership of offshore oil and gas. Thereafter, it has been carried out by the Department of the Interior (DOI) under litigation pursued by the states in which they have sought a larger role in OCS decision-making and by local governments, individuals or environmental groups opposed to OCS leasing and development. More recently, it has been tightly controlled by a Congress no longer content to allow DOI to make significant management decisions regarding OCS leasing. This paper will first discuss (1) the origins of federal OCS leasing, (2) the numerous litigation challenges to it, and (3) the efforts of Congress to lessen litigation. It will then deal with the current five-year leasing program and the litigation challenges that were made to it. Thereafter, the paper will report the efforts that have been made in recent Congresses to limit DOI's authority over the program. Next, it will discuss the President's December 27, 1988, Proclamation extending the U.S. Territorial Sea to 12 nautical miles and its implication for OCS activities. Finally, it will speculate about the Department's future approach toward OCS leasing.
I. THE HISTORY OF OCS LEASING
A. The Origins of the OCS Lands Act
In the late 1940s a series of cases between coastal states and the federal government regarding the ownership of offshore lands finally was decided by the United States Supreme Court. In doing so, the Court made clear that the United States had paramount authority over all submerged lands lying seaward of the mean high water mark.1
Having lost their claims in court, the States turned to the Congress. The result was the passage in 1953 of the Submerged Lands Act, 43 U.S.C. § 1301, which conveyed title to the states over oil and gas deposits, as well as other resources, on submerged lands within three geographic miles of
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their coast.2 43 U.S.C. § 1301(a). At about the same time, Congress enacted the original OCS Lands Act (OCSLA), 43 U.S.C. § 1331, which the Supreme Court subsequently characterized as an "emphatic[]" implementation by Congress of "its view that the United States has paramount rights to the seabed beyond the three-mile limit...."3 The so-called "1953 Compromise" embodied in the Submerged Lands Act and OCSLA left the States with no authority as to the selection of OCS tracts for leasing, nor did it give them any role in Interior's approval of exploration or development activities following the issuance of OCS leases.
The fact is, that Act, written when the United States' offshore industry was just beginning to explore waters that were more than a few miles off the coast and when environmental concerns were not in the forefront of the public's consciousness, gave very little guidance to DOI regarding the manner in which it should discharge its responsibilities over the OCS: The Act made clear that it was in the national interest for the United States to proceed vigorously with the exploitation of offshore oil and gas resources, but gave Interior virtual carte blanche to proceed in the manner it chose to accomplish this goal.
B. The Early History of Leasing Under the 1953 OCSLA
Between the passage of the 1953 OCSLA and January 1, 1969, 23 OCS lease sales were conducted, about 6,000,000 acres were leased, and over $3,000,000,000 was collected by the United States in bonus bids.4 Although the bulk of the leased lands was off Louisiana (and to a lesser extent Texas), DOI also conducted OCS lease sales off Florida, California (including the basins north of San Francisco), and
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Oregon/Washington. Notwithstanding the magnitude of the program during this era, there was not a single lawsuit challenging OCS leasing.
However, in January of 1969, a well being drilled in the Santa Barbara Channel off California blew out causing a 100,000-barrel oil spill. The Santa Barbara oil spill made the public aware of offshore oil and gas leasing and its potential impacts on the environment. Indeed, this incident led to a general heightening of public concern with the environment and helped precipitate the passage of the National Environmental Policy Act (NEPA), 42 U.S.C. § 4321, as well as other environmental laws.
It was not long before a plaintiff invoked NEPA to challenge an OCS lease sale. In Natural Resources Defense Council, Inc. v. Morton, 458 F.2d 827 (D.C. Cir. 1972), the court ruled that the 67-page environmental impact statement (EIS) prepared for a Louisiana OCS lease sale was inadequate because it ignored several alternatives to the project. Accordingly, the court enjoined the sale, and it was not conducted until about nine months later after the EIS was supplemented in this and other respects.
C. The 1974 "Acceleration" of OCS Leasing
The Santa Barbara Oil Spill, the passage of NEPA, and the courts' clarification of that Act's requirements came on the eve of a massive change in the federal OCS program. Between 1953 and 1973, the United States had been essentially self-sufficient in energy and concentrated OCS leasing largely in the Gulf of Mexico — where the activity was well understood and enjoyed significant public support — and the Santa Barbara Channel.5
However, after the nation experienced the disruptive effects of the first "Arab oil boycott," the OCS program was "accelerated" by Presidents Nixon and Ford to offer far more acreage and thereby make a greater contribution to national energy independence. The goals of the accelerated leasing program could be achieved only by opening up new "frontier" OCS areas off the Atlantic Coast, Alaska, and California, all of which, especially Alaska, were thought to have immense potential.
The first "frontier" lease sale on the new accelerated program involved tracts off Southern California, and both the program and that sale were challenged by the state.
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California ex. rel. Younger v. Morton, 404 F. Supp. 26 (C.D. Cal. 1975), appeal dismissed per curiam, 608 F.2d 1247 (9th Cir. 1979). California's challenge was rejected by the court under a rationale which suggested plaintiffs would have a difficult time in securing judicial relief against OCS sales in an era of acute energy shortage:
Plaintiffs do not attempt to argue that the United States does not face an energy crisis. Rather, theirs is an urging to use some other frontier for undersea experimentation and to come to California's shores only when a fail-safe process has emerged. This short-sightedness fails to take into account the great developmental strides that have brought to the oil industry practiced techniques in platform drilling and improved methods of oil capture.
404 F. Supp. at 30.
Despite this rebuff, virtually every effort to implement the accelerated program by leasing in frontier areas has resulted in litigation. Lawsuits were instituted for the first lease sale in all but three (South Atlantic, Navarin and Chukchi Sea) of the 13 frontier regions outside the Gulf of Mexico and Santa Barbara Channel.6
Even leasing in the Gulf of Mexico was challenged. Of the approximately 30 sales conducted there since 1972, five were attacked in litigation. Two suits raised NEPA issues (one of which involved frontier leasing in the Eastern Gulf of Mexico), while the other three sales were challenged by Texas and Louisiana in connection with their continuing dispute with DOI over the division of revenues on federal lands leased immediately offshore State submerged lands.
Additionally, there were six separate challenges to the leasing program as a whole. Secretaries Morton, Andrus, Watt and Hodel each had his programs attacked.7 Moreover, two separate injunctions were sought in 1979 and 1980 against all OCS lease sales based upon a challenge to the royalty provisions contained in OCS leases.8
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Since leasing accelerated in 1974, there have been nearly 30 lawsuits challenging either individual lease sales or various aspects of the leasing program. However, only one sale — No. 52 (North Atlantic, 1983) — has been canceled as a result of an injunction. In another — No. 68 (Southern California 1982) — about 25 tracts out of more than 100 were never leased. One sale — No. 92 (North Aleutian Basin 1988) — was postponed 34 months; another — Sale No. 42 (North Atlantic 1979) — for 22 months. All others were held on or within a month of their scheduled dates, although, in six instances there were delays, ranging from a few weeks to more than two years, in the actual award of leases as a result of litigation obstacles.9
D. Congress' Efforts to Structure The OCS Process to Avoid Litigation
The 1974 accelerated leasing program, coupled with heightened national concern with environmental issues, resulted in a reassessment by Congress of the adequacy of the OCSLA as a legislative framework for the OCS program. Moreover, in 1972 Congress had passed the Coastal Zone Management Act (CZMA), 16 U.S.C. § 1451, to encourage States to commence comprehensive planning with respect to activities in or affecting their coastal zones. By the mid-1970s, the States were on the verge of adopting CZMA programs. Accordingly, the Congress undertook a comprehensive review of the OCS program and of the CZMA, insofar as that Act might affect the program.
By this time, there had already been a number of litigation challenges to OCS leasing: The first Atlantic sale had been challenged in lawsuits which led to three opinions of a U.S. Court of Appeals, and two efforts to invoke Supreme Court review;10 the first Alaska OCS sale had been challenged;11 the first sale in the Eastern Gulf of Mexico had been sued upon;12 and California had initiated the
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challenge to...
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