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STATE OF CALIFORNIA v. NORTON

June 20, 2001

THE STATE OF CALIFORNIA EX REL., THE CALIFORNIA COASTAL COMMISSION; GRAY DAVIS, GOVERNOR OF CALIFORNIA; AND BILL LOCKYER, ATTORNEY GENERAL OF THE STATE OF CALIFORNIA, ET AL., PLAINTIFFS,
V.
GALE A. NORTON, SECRETARY OF THE INTERIOR; UNITED STATES DEPARTMENT OF INTERIOR, MINERALS MANAGEMENT SERVICE, REGIONAL SUPERVISOR OF THE MINERALS MANAGEMENT SERVICE, ET AL., DEFENDANTS.



The opinion of the court was delivered by: Claudia Wilken, United States District Judge.

ORDER GRANTING PLAINTIFFS' MOTION FOR SUMMARY JUDGMENT AND DENYING DEFENDANTS' CROSS-MOTION FOR SUMMARY JUDGMENT

The central dispute in this case is whether Defendant Mineral Management Service (MMS) must make, and provide to Plaintiff California Coastal Commission (CCC), a determination that the MMS's grant of suspensions of certain oil and gas leases on the Outer Continental Shelf (OCS) off the coast of California is consistent with the State of California Coastal Management Program (CCMP). The Court finds that the MMS must do so. Also at issue is whether the MMS complied with the requirements of the National Environmental Policy Act (NEPA), 28 U.S.C. § 2201 et seq. in granting the lease suspensions.

Plaintiffs State of California, the CCC, Gray Davis, Governor of California, and Bill Lockyer, Attorney General of California, move for summary judgment that MMS did not comply with the Coastal Zone Management Act (CZMA) when it granted the requests of the lessees for suspension of the thirty-six leases at issue here without determining that the suspensions were consistent with the CCMP and providing the CCC the opportunity to review that determination. Plaintiffs also move for summary judgment that MMS did not comply with the requirements of NEPA when it granted the suspension requests. Defendants Gale A. Norton, Secretary of the Interior, the Department of the Interior, the MMS, and the Regional Supervisor of MMS oppose this motion and cross-move for summary judgment that Defendants' grant of the suspensions of these leases complies with the CZMA. Defendants also cross-move for summary judgment that they have complied with all of the requirements of NEPA. Defendant Operator Intervenors*fn1 also move for summary judgment that the MMS has complied with all of the requirements of the CZMA and NEPA. Some Plaintiff Intervenors*fn2 filed briefs in support of

Plaintiffs' motion for summary judgment.

Plaintiffs also filed, without opposition, a request for judicial notice of the Federal Register, volume 65, number 226 from pages 70361 to 70362. The matter was heard on December 1, 2000. Having considered all of the papers filed by the parties and oral argument on the motion, the Court GRANTS Plaintiffs' Motion for Summary Judgment (Docket #82) and Request for Judicial Notice (Docket #97) and DENIES Defendants' Cross-Motion for Summary Judgment (Docket #88) and Defendant Operator Intervenors' Motion for Summary Judgment (Docket #85).

BACKGROUND

I. Leases Governed By the Outer Continental Shelf Lands Act Oil and gas leases on the Outer Continental Shelf (OCS) are governed by the Outer Continental Shelf Lands Act (OSCLA), 43 U.S.C. § 1331 et seq., enacted in 1953. Pursuant to the OSCLA, the Department of the Interior may issue and administer leases for exploration for and production of oil and gas on the Outer Continental Shelf (OCS). See 43 U.S.C. § 1331 et seq.; see also 30 C.F.R. § 250 et seq. (regulations implementing the OSCLA). These leases may have a primary term of five to ten years, and may continue after the primary term for as long as there is production of oil or gas in paying quantities, approved drilling or well reworking operations. See 43 U.S.C. § 1337(b)(2).

The OSCLA prescribes a four stage process for the development of oil and gas leases for exploration and production. The first stage is the development and publication of schedules of proposed sales of leases. See 43 U.S.C. § 1337; 30 West Page 1049 C.F.R. § 256, subpart F (Lease Sales). The second stage is the sale of the leases. See 43 U.S.C. § 1337(a)(1); 30 C.F.R. § 256, subpart G (Issuance of Leases).

The third stage is the filing and review of the exploration plan (EP). See 43 U.S.C. § 1340; 30 C.F.R. § 250.203. At this stage, the lessee submits a proposed EP to the Regional Supervisor of the MMS for approval. The plan must include a description of the exploration activities, a description of the mobile drilling unit, a map of the proposed wells, and either a certificate of a consistency determination by the federal agency or a consistency certification by the State. See 43 U.S.C. § 1340(c); 30 C.F.R. § 250.203. The Regional Supervisor of the MMS must consult with the Governor of the affected State, or the Governor's designated representatives, and the Office of Ocean and Coastal Resource Management of the National Oceanic Atmospheric Administration before approving or disapproving the proposed EP. See 30 C.F.R. § 250.203. After the EP has been approved by the Regional Supervisor, any revisions to it must be submitted to the Regional Supervisor for approval. See 30 C.F.R. § 250.203(n).

If the Regional Supervisor determines that "a proposed revision could result in a significant change in the impacts previously identified and evaluated," 30 C.F.R. § 250.203(n)(2), the revisions are subject to the same approval process as the original EP. See 43 U.S.C. § 1340(e)(1).

Finally, the fourth stage is the filing and review of a development and production plan (DPP). See 43 U.S.C. § 1351; 5 C.F.R. § 250.204. The DPP must be submitted along with the lessee's certification that each activity is consistent with the State's coastal management program. See 43 U.S.C. § 1351(d); 30 C.F.R. § 250.204(b)(13). Development and production activities may be carried out only in accordance with the approved DPP. See 43 U.S.C. § 1351(b).

Pursuant to the OSCLA, 43 U.S.C. § 1334(a)(1), the MMS has the authority to grant suspensions of the primary term, or of an extended term, of the lease upon request of the lessee for reasons such as facilitating the development of the lease or making arrangements for transportation facilities. The MMS may also direct suspensions of the leases on its own initiative, for example, in the face of a threat of serious, irreparable, or immediate environmental harm. See 43 U.S.C. § 1337(b)(5); see also 30 C.F.R. § 250.168-180.

What is referred to as a suspension of the lease is actually a suspension of the running of the term of the lease, that is, in effect an extension of the lease.

II. The Leases At Issue

Between 1968 and 1984, the MMS, a division of the Department of the Interior, conducted four sales of oil and gas leases for the OCS off the coast of California, which resulted in forty leases being issued, each with a primary term of five years. Until October, 1992, the MMS, at the request of the lessees, had granted suspension of the leases, extending all of the primary terms of the leases. On October 15, 1992, MMS directed suspensions of the leases commencing on January 1, 1993. In May, 1999, when the directed suspensions were about to end, each of the lessees filed a request for a lease suspension.

In May and June, 1999, a number of elected officials of the State of California wrote letters to the Department of the Interior opposing the lessees' pending requests for lease suspensions, and asking the MMS to postpone its decision on those requests until the CCC made a determination about its own authority, under the CZMA, to review the pending lease suspensions for consistency with the State's CCMP.

On June 25, 1999, independent of these letters from the State's elected officials, MMS directed additional suspensions of all forty of the leases until August 16, 1999, in order to have additional time to review the lessees' suspension proposals. See 3 Administrative Record (AR) 719-744.

The CZMA, 16 U.S.C. § 1451 et seq., had been enacted in 1972. In it, Congress declared a national policy which "has as its main purpose the encouragement and assistance of States in preparing and implementing management programs to preserve, protect, develop and whenever possible restore the resources of the coastal zone of the United States." S. Rep. No. 92-753 (1972), reprinted in 1972 U.S.C.C.A.N., 92nd Congress, Volume 3, at 4776. The CZMA encourages the States' development of coastal zone management programs and cooperation between the federal and State agencies engaged in programs affecting the coastal zone. See Exxon Corporation v. Fischer, 807 F.2d 842, 844 (9th Cir. 1987) (explaining that the CZMA is "a mechanism for resolving conflicts between state coastal zone plans and federally approved activities"). The legislative history of the CZMA states, "There is no attempt to diminish state authority through federal preemption. The intent of this legislation is to enhance state authority by encouraging and assisting the states to assume planning and regulatory powers over their coastal zone." S. Rep. No. 92-753 (1972), reprinted in 1972 U.S.C.C.A.N., 92nd Congress, Volume 3, at 4776.

Since 1972, then, the CZMA has required that certain federal agency activities, and certain private activities done under the authority of a federal license or permit, that affect the coastal zone, be consistent with the State's coastal management program. See 16 U.S.C. § 1456(c). A federal agency carrying out an activity that affects the coastal zone must provide a consistency determination to the relevant State agency before final approval of the federal activity. See 16 U.S.C. § 1456(c)(1)(C). Any applicant for a required federal license or permit to conduct an activity, within or outside of the coastal zone, that affects any land or water use or natural resource of the coastal zone is required to furnish a certificate that its proposed activity is consistent with the State's coastal management program. See 16 U.S.C. § 1456(c)(3)(A). Title 15 C.F.R. § 930 et seq., enacted pursuant to the CZMA, "describes the obligations of all agencies, individuals and other parties who are required to comply with the Federal consistency provisions of the Coastal Zone Management Act."

On July 27, 1999, the CCC advised the MMS that, pursuant to the CZMA, 16 U.S.C. § 1456(c)(3), it was asserting its authority to review the requests for suspension of the leases for consistency with the State's coastal management plan. See 3 AR 745. The CCC set out a number of issues about which it was concerned, including the age of the leases, the poor quality of the oil, the proximity of the leases to marine sanctuaries, and changed environmental circumstances, such as the expansion of the territory of the threatened southern sea otter into the area. See 3 AR 745-47. The CCC also advised the MMS that the lessees were to provide the State with a certification of consistency and the MMS could not approve the requested suspensions unless the State concurred with the consistency certification. The CCC indicated that, therefore, the MMS should hold the lessees' requested suspensions in abeyance.

On August 13, 1999, former Secretary of the Interior Bruce Babbitt, responding to the CCC, indicated that the lessees' suspension requests did not trigger California's consistency review authority because the requested suspensions did not have any effect on California's coastal zone. See 3 AR 756-57.

On the same day, the MMS directed suspension of thirty-six of the forty leases for ninety days, in order to ensure that the lease development work complied with the CZMA.*fn3 See id.

On November 12, 1999, the MMS granted the lessees' requests for suspensions of the thirty-six leases at issue here, suspending the leases for nineteen to forty-five months. See 5 AR 0956. The MMS required that each lessee undertake certain "milestone" activities, including drilling a well, submitting a description of the ...


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