(drilling) of exploration and delineation wells which directly affect the
Defendants argue that the grant of a lease suspension is not a federal
activity, as defined by the CZMA, and, therefore, the MMS is not required
to give the State a consistency determination. Defendants also respond
that the grant of the suspensions of the leases does not authorize any
activity that could affect California's coastal zone and, therefore, the
MMS is not required to determine that these suspensions are consistent
with the State's coastal management program.
Defendants assert that before any milestone, including the spudding of
new wells, the construction of new offshore platforms and onshore
facilities, oil transportation by tanker, and exploration, is
authorized, each lessee must file a new or revised EP or DPP early in the
lease suspension period.
Pursuant to the CZMA, if a lessee files a new EP or DPP, those plans
must be consistent with the CCMP. Further, Defendants state that if the
lessee files a revised EP or DPP, the MMS will determine whether the
revisions involve significant changes in environmental impacts from the
impacts evaluated when the original EP or DPP was filed. If the MMS finds
that the revisions do involve significant changes in environmental
impacts, the revisions must be determined to be consistent with the CCMP
before they can be approved. See 43 U.S.C. § 1304(e)(1);
30 C.F.R. § 250.203(n)(2). Therefore, Defendants argue that merely
granting the suspensions does not authorize any activities or affect the
coastal zone and thus that Plaintiffs' arguments are premature.
The Court finds that the MMS's grant of these suspensions is a federal
activity, as defined by the CZMA in 16 U.S.C. § 1456(c)(1). Title
15 C.F.R. § 930.31, enacted pursuant to the CZMA, defines "federal
activity" as "any functions performed by or on behalf of a Federal agency
in the exercise of its statutory responsibilities." The MMS's grant of
the suspensions is a federal activity which it carries out in the
exercise of its statutory duties.
As noted above, Congress, in the 1990 amendments to the CZMA, advanced
the time for review of oil and gas leases for consistency with a State's
coastal management program to the time of the sale of the leases. These
leases were not subject to consistency review when they were sold because
that occurred prior to the clarifying amendments to the CZMA. These lease
suspensions extend the primary term of the leases, which would have
otherwise expired. At the time these suspensions were granted, the leases
were fifteen to thirty years old, although they were entered into as five
year leases. The suspensions allowed the leases to continue for lengthy
additional terms, from one and half to four additional years. Because oil
and gas leases must now be found to be consistent with the State's
coastal management program at the time they are sold, the Court finds
that the granting of these lengthy lease suspensions, long after the
leases were sold and would otherwise have expired, must likewise be
subject to a consistency determination as a federal activity affecting
the coastal zone, as defined by the CZMA.
The Court's finding is bolstered by the fact that the lessees must
engage in certain milestone activities, including the spudding of
delineation and exploratory wells, in order to continue the suspensions.
Thus, by approving the suspensions, the MMS requires the lessees to
engage in activities that directly affect the coastal zone.
Defendants' claim that the future review of the EPs or DPPs that will
be submitted for the milestone activities obviates the need to review the
lease suspensions for consistency is not well taken. The CZMA,
amended, requires consistency review of leases when they are sold and
requires review again later when the EPs and DPPs are submitted. See
16 U.S.C. § 1456(c)(1), (c)(3)(A) and (c)(3)(B). Thus, under the
CZMA, as amended, the later review of the EPs or DPPs for consistency
with the CCMP does not obviate the MMS's responsibility to provide the
State with a consistency determination at the earlier stage when the
lease is sold. Neither does it obviate the need for a consistency
determination of the suspension of these leases, which were not reviewed
for consistency with the CCMP at the time of their sale.
Furthermore, there is no assurance that if the lessees submit revised,
rather than new, EPs and DPPs, those revised plans will be subject to
consistency certification. The CZMA does not require all revisions to EPs
or DPPs to be subject to consistency certification but rather allows the
MMS to decide whether such revisions should be subject to a consistency
certification. See 30 C.F.R. § 250.203(n)(2) and 250.204(q)(2); see
also 16 U.S.C. § 1456(c)(3)(B); 30 C.F.R. § 250.203(b)(18) and
Therefore, because of Congress's intent to require a federal agency to
give the State consistency determinations at the time of the sale of
leases, which did not occur in this case, and because the MMS's grant of
these suspensions requires activities that affect the coastal zone, the
Court finds that the MMS must provide the State with a determination that
the lease suspensions are consistent with the State's coastal management
program, pursuant to CZMA § 1456(c)(1).
Defendants argue that even if granting lease suspensions is a federal
activity as defined by the CZMA, 16 U.S.C. § 1456(c)(1), MMS has
already complied by sending a de facto negative determination in its
August 13, 1993 letter to the CCC from former Secretary of Interior
Title 15 C.F.R. § 930.35(d) indicates that if a federal agency
makes a "negative determination," it need not do a consistency
determination or allow consistency review. In a "negative determination,"
the federal agency notifies the State agency that it has determined that
the federal activity does not require consistency determination and
briefly states the reasons for its conclusions. See
15 C.F.R. § 930.35(d).
The August 13, 1999 letter was not a negative determination as defined
by 15 C.F.R. § 930.35(d). The letter did publish the MMS's findings
that the granted lease suspensions "will not provide the lessees with any
authority to conduct any activities that have the potential to affect the
land or water use or natural resources of the State's coastal zone." See
5 AR 0865 (August 13, 1999 Letter). However, the letter indicates that
the MMS directed suspensions of the leases in order to "maximize" the
missions of the State and authorities to have
a full opportunity to evaluate the appropriateness of
developing the leases under the full panoply of
Federal and State laws, including but not limited to
the Coastal Zone Management Act, the Clean Water Act,
the Clean Air Act, and the Commission's extensive
5 AR 864 (August 13, 1999 letter). Thus, the letter was merely notice to
the State authorities that the MMS was gathering information about
whether the passage of time and changed circumstances might require that
the leases be evaluated under a number of statutes, including the CZMA.
B. Private Activities Requiring A Federal License or Permit
Notwithstanding whether the MMS's grant of the lease suspensions is a
federal activity requiring consistency determination
16 U.S.C. § 1456(c)(1), Plaintiffs argue that the grant of the lease
suspensions is a federal license or permit for private activities that
affect the coastal zone, as defined by § 1456(c)(3)(A), which require
consistency certification. Because the Court has found that the MMS's
grant of these suspensions is a federal activity covered by CZMA §
1456(c)(1), the Court will not address whether the MMS's grant of the
lease suspensions is a federal license or permit for private activities
that affect the coastal zone.*fn5
III. National Environmental Policy Act
The National Environmental Policy Act (NEPA), 42 U.S.C. § 4331, et
seq., requires federal agencies to consider the environmental
consequences of their actions. Metcalf v. Daley, 214 F.3d 1135, 1141 (9th
Cir. 2000) (quoting Robertson v. Methow Valley Citizens Council,
490 U.S. 332, 348 (1989)). NEPA provides that federal agencies are to
identify and develop methods for implementing NEPA in consultation with
the Council on Environmental Quality (CEQ). See 42 U.S.C. § 4332(B);
see also, 40 C.F.R. § 1500 et seq. Title 40 C.F.R. § 1500 et
seq., enacted pursuant to NEPA, are the "action-forcing provisions to
make sure that the federal agencies act according to the Act."
40 C.F.R. § 1500.1(a).
NEPA requires federal agencies to prepare an environmental impact
statement (EIS) for any action that will significantly affect the
environment. See 42 U.S.C. § 4332(C). In determining whether an
action will significantly affect the environment, factors that should be
considered are "(1) the degree to which the proposed action affects
public health or safety, (2) the degree to which the effects will be
highly controversial, (3) whether the action establishes a precedent for
further action with significant effects, and (4) whether the action is
related to other action which has individually insignificant, but
cumulatively significant impacts." Alaska Center for the Environment v.
United States Forest Service, 189 F.3d 851, 859 (9th Cir. 1999); see also
40 C.F.R. § 1508.27(b).
Pursuant to 40 C.F.R. § 1508.9, when determining whether to prepare
an EIS, a federal agency may prepare an Environmental Assessment (EA) in
order to "provide sufficient evidence and analysis for determining
whether to prepare an environmental impact statement (EIS) or finding of
no significant impact." Pursuant to 40 C.F.R. § 1508.13, if the
agency finds that the proposed action would have no significant impact on
the environment, the agency may prepare a finding of no significant
impact (FONSI). When neither an EIS nor EA have been conducted, the
agency "must supply a convincing statement of reasons why potential
effects are insignificant." Alaska Center for Environment, 189 F.3d at
Pursuant to 40 C.F.R. § 1508.4, an agency may define categorical
exclusions from the requirement of preparing an EA or an EIS. See
40 C.F.R. § 1508.4; see also 40 C.F.R. § 1500.4(p). Actions may
be categorically excluded if they "do not individually or cumulatively
have a significant effect on the human environment. See id.; see also
Alaska Center for the Environment, 189 F.3d at 859. An agency adopting
categorical exclusions must provide for exceptions for extraordinary
circumstances in which a normally excluded action may have a significant
environmental effect that would require assessment
under NEPA. See
40 C.F.R. § 1508.4; Alaska Center for the Environment, 189 F.3d at
859; Jones v. Gordon, 792 F.2d 821, 827 (9th Cir. 1986).
The MMS's exceptions for extraordinary circumstances to actions listed
as categorically excluded are actions which may "(1) have "significant
effects on public health or safety," (2) have an adverse effect on
"unique geographical characteristics," (3) have "highly controversial
effects on the environment," (4) have "highly uncertain effects on the
environment," (5) establish a "precedent for future action with
significant effects on the environment," (6) be related to actions that
cumulatively have a significant effect on the environment, (7) have
"adverse effects on species listed or proposed to be listed on the List
of Endangered or Threatened Species or have adverse effects on designated
Critical Habitat for these species," or (8) "threaten to violate a
Federal, State, local or tribal law or requirement imposed for the
protection of the environment." 49 Fed. Reg. 21437, 21439.
Plaintiffs acknowledge that the MMS has categorically excluded the
grant of suspensions of leases from NEPA. See Pl.s' Motion for Summary
Judgment at 22; see also Environmental Intervenors' Brief for Summary
Judgment, Ex. 1 (DOI Departmental Manual 516, Appendix 10 §
10.4(C)(6)). Nonetheless, Plaintiffs argue that the MMS's reliance on a
categorical exclusion in granting the suspensions was in error because it
failed to provide explanatory findings to support its reliance on the
categorical exclusion or to support the inapplicability of the
extraordinary circumstances exceptions to the categorical exclusions.
Plaintiffs also argue that circumstances of this case bring it within
the MMS's extraordinary circumstances exceptions to the categorical
exclusions. In particular, Plaintiffs assert that these suspensions have
highly uncertain, highly controversial and potentially significant
environmental effects as evidenced in the administrative record. These
environmental effects include adverse impacts on the threatened sea
otter, whose territory has expanded in the direction of the leases, on
two marine sanctuaries which are ecologically significant, and on hard
bottom habitat, water quality, undersea noise and air quality, and
cumulative impacts. Plaintiffs also appear to argue that the MMS has
acknowledged that circumstances have changed since the approval of the
leases and, therefore, the MMS should have conducted an EA or EIS prior
to granting the lessees' requests for suspensions. However, Plaintiffs
provide no citation of authority in support of this argument.
Defendants counter that NEPA does not require the MMS to explain its
reliance on the categorical exclusions it has defined. Defendants assert
that Plaintiffs should have challenged the categorical exclusion at the
time it was defined. Defendants also assert that requiring the MMS to
document its reasons for categorical exclusions would create unnecessary
paperwork and negate the purpose of categorical exclusions under NEPA.
Defendants also argue that the lease suspensions do not fall under the
extraordinary circumstances exceptions to the categorical exclusions
because the suspensions do not have environmental effects. Defendants
assert that the suspensions do not authorize any activities that will
affect the environment because no activities, including the required
milestones, will occur until after the lessees file new or revised EPs or
Responding to one of Plaintiffs' arguments that the extraordinary
circumstances exceptions apply, Defendants assert that mere opposition to
the suspension is not enough to render an activity highly controversial
as defined by the extraordinary
circumstances exceptions to the
categorical exclusions. Rather, Defendants claim that a highly
controversial activity is one that generates dispute among scientists
about its environmental effects.
Although Defendants acknowledge that circumstances have changed, they
argue that nothing in NEPA requires them to provide an EA or an EIS, or
to supplement existing EISs.
The Court finds that the MMS should have provided some explanation for
its reliance on the categorical exclusion and its view that the
extraordinary circumstances exceptions do not apply before granting the
requested suspensions. In Jones, the National Marine Fisheries Service
issued a permit to Sea World, Inc. without conducting an EIS because the
permit was defined as a categorical exclusion. See 792 F.2d at 821, 823.
The district court ruled that the agency's action fell within an
exception to the categorical exclusion and that the agency failed "to
explain adequately its decision not to prepare an environmental impact
statement." Id. at 828. The district court ordered the agency to prepare
an EIS. The Ninth Circuit held that "the district court did not err in
concluding that the decision of the [National Marine Fisheries] Service
not to prepare an environmental impact statement was unreasonable." Id.
The Ninth Circuit pointed out that the agency "did not discuss whether an
exception to the categorical exclusions applied." See id. The Ninth
Circuit also noted, "An agency cannot avoid its statutory
responsibilities under NEPA merely by asserting that an activity it
wishes to pursue will have insignificant effect on the environment.
Instead an agency must provide a reasoned explanation for its decision."
Id. (internal quotations omitted). The Ninth Circuit reversed the
district court's order that the agency prepare an EIS, requiring instead
that it "provide a reasoned explanation of whatever course it elects to
pursue." Id. at 829.
In this case, the MMS did not issue any document discussing either its
reliance on the categorical exclusion for the lease suspensions or the
inapplicability of the extraordinary circumstances exceptions to the
Plaintiffs have made a sufficient showing that the suspensions may meet
an extraordinary circumstance exception to the categorical exclusion to
justify requiring an explanation from the agency. Therefore, the MMS must
provide a reasoned explanation for its reliance on the categorical
exclusion and explain the inapplicability of the extraordinary
circumstances exceptions. The MMS need not prepare an EIS or an EA at
this time, however.
Therefore, pursuant to the CZMA, 16 U.S.C. § 1456(c)(1), the MMS
must provide the State of California with a determination that its grant
of the lease suspensions at issue here is consistent with California's
coastal management program.
In addition, pursuant to NEPA, the MMS must provide a reasoned
explanation for its reliance on the categorical exclusion and the
inapplicability of the extraordinary circumstances exceptions.
Thus, Plaintiffs' Motion for Summary Judgment (Docket #82) and Request
for Judicial Notice (Docket #97) are GRANTED.
Defendants' Cross-Motion for Summary Judgment (Docket #88) and
Defendant Operator Intervenors' Motion for Summary Judgment (Docket #85)
are DENIED. Accordingly, the MMS shall set aside its approval of the
requested suspensions, and shall direct suspensions of the thirty-six
leases, including all milestone activities, for a time sufficient for it
to provide the State of California with a consistency determination in
with CZMA § 1456(c)(1) and its implementing regulations.
Furthermore, before again granting these lease suspensions, the MMS
shall provide a reasoned explanation for its reliance on the categorical
exclusion and the inapplicability of the extraordinary circumstances
exceptions. Judgment for Plaintiffs shall enter in accordance with this
order. Each party shall bear its own costs.
IT IS SO ORDERED.