Offshore Oil and Gas Development: Legal Framework

Prepared for Members and Committees of Congress

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
govern those minerals located under 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 exploration, leasing, and ultimate development. Regulations run the gamut from health,
safety, resource conservation, and environmental standards to requirements for production based
royalties and, in some cases, royalty relief and other development incentives.
In 2008, both the President and the 110th Congress removed previously existing moratoria on th
offshore leasing on most areas of the outer continental shelf. The 111 Congress will likely have
to address this issue soon after it commences, as the continuing resolution that is currently
funding the Minerals Management Service (MMS) is set to expire at the end of March 2009.
Other recent legislative and regulatory activity also suggests an increased willingness to allow
offshore drilling in the U.S. Outer Continental Shelf. In 2006, Congress passed a measure that
would allow new offshore drilling in the Gulf of Mexico. This measure was incorporated into th
H.R. 6111, a broad bill passed in the final days of the 109 Congress. President Bush signed the
bill into law (P.L. 109-432) on December 20, 2006. Areas of the North Aleutian Basin off the
coast of Alaska have also been recently made available for leasing by executive order. The five-
year plan for offshore leasing for 2007-2012 adopted by the Minerals Management Service in
December of 2007 proposed further expansion of offshore leasing. In 2008, the Minerals
Management Service announced plans to adopt a new five-year plan for 2010-1015 that would
further expand offshore leasing. This proposed five-year plan would supersede the previously
adopted plan. 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.
In addition to these legislative and regulatory 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 of the Interior’s discretion in deciding how leasing and
development are to be conducted.

Ocean Resource Jurisdiction...........................................................................................................1
Federal Jurisdiction...................................................................................................................2
State Jurisdiction.......................................................................................................................2
Coastal State Regulation...........................................................................................................3
Federal Resources............................................................................................................................3
Moratoria ................................................................................................................................... 4
Leasing and Development.........................................................................................................5
The Five-Year Plan.............................................................................................................5
Leasing ........................................................................................................................ ........ 7
Exploration.......................................................................................................................... 9
Development and Production..............................................................................................9
Lease Suspension and Cancellation..................................................................................10
Legal Challenges to Offshore Leasing....................................................................................12
Suits Under the Outer Continental Shelf Lands Act.........................................................12
Suits Under the National Environmental Policy Act........................................................15
Table A-1.State Laws That Ban or Regulate Offshore Resource Development: Policy and
St atut es ....................................................................................................................................... 17
Appendix. State Laws That Ban or Regulate Offshore Resource Development...........................17
Author Contact Information..........................................................................................................19

he 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 T

control of offshore areas, and U.S. 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 report 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 these legal regimes. Also
included is an outline of the changes to the authorities regulating offshore development wrought
by the Energy Policy Act of 2005 and subsequent legislation and executive action, as well as a
discussion of recent executive action and legislative proposals that would allow for further
offshore exploration and production.

Under the United Nations Convention on the Law of the Sea,1 coastal nations are entitled to
exercise varying levels of authority over a series of adjacent offshore zones. Nations may claim a
12-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, 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.2
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 3
extend up to that distance.” In general, however, under the Convention a nation’s continental
shelf cannot extend beyond 350 nautical miles from its recognized coastline regardless of

1 United Nations Convention on the Law of the Sea III (entered into force November 16, 1994) (hereinafter UNCLOS).
2 Id. at Art. 56.1.
3 Id. at Art. 76.1.

submarine geology.4 In this area, as in the EEZ, a coastal nation may claim “sovereign rights” for 5
the purpose of exploring and exploiting the natural resources of its continental shelf.
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 that are virtually 6
identical to those described in the treaty. In a series of related cases, the U.S. Supreme Court 7
confirmed federal control of these offshore areas. Federal statutes also 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 8
jurisdiction and control....” 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 all areas under U.S. control except where U.S. waters have been placed under
the primary jurisdiction of the states.
In accordance with the federal Submerged Lands Act of 1953 (SLA),9 coastal states are generally 10
entitled to an area extending three geographical miles from their officially recognized coast (or 11
baseline). In order to accommodate the claims of certain states, the SLA provides for an 12
extended three-marine-league 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 13
became a member of the Union, or if it has been heretofore approved by Congress.” After

4 Id. at Art. 76.4-76.7.
5 Id. at Art. 77.1.
6 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).
7 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).
8 43 U.S.C. § 1331(a).
9 43 U.S.C. §§ 1301 et seq.
10 A geographical or nautical mile is equal to 6,080.20 feet, as opposed to the typical statute mile, which is equal to
5,280 feet.
11 43 U.S.C. §1301(b).
12 A marine league is equal to 18,228.3 feet.
13 43 U.S.C. §§ 1312, 1301(b).

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 14
unsuccessful in their challenges.
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 15
power to manage, administer, lease, develop and use the said lands and natural resources....”
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.
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. The Appendix of this report contains a table of state laws regulating and
sometimes banning offshore mineral development. The table indicates which state agency is
primarily responsible for authorizing oil and gas development and if state oil and gas leasing is
limited to specific areas by statute.

The primary federal law governing development of oil and gas in federal waters is the Outer 16
Continental Shelf Lands Act (OCSLA). 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 17
and other national needs....” To effectuate this purpose, the OCSLA extends application of 18
federal laws to certain structures and devices located on the OCS; provides that the law of 19
adjacent states will apply to the OCS when it does not conflict with federal law; and,

14 United States v. Louisiana, 363 U.S. 1, 66 ([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 Floridas 1868 Constitution.”).
15 43 U.S.C. § 1311.
16 43 U.S.C. §§ 1331-1356.
17 43 U.S.C. § 1332(3).
18 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.
19 Id.

significantly, provides a comprehensive leasing process for certain OCS mineral resources and a 20
system for collecting and distributing royalties from the sale of these federal mineral resources.
The OCSLA thus provides comprehensive regulation of the development of OCS oil and gas
In general, the OCSLA requires the federal government to prepare, revise, and maintain an oil and
gas leasing program. Until recently, however, many offshore areas were withdrawn from
disposition under the OCSLA pursuant to two broad categories of moratoria applicable to OCS oil 21
and gas leasing: those imposed by the President under authority granted by the OCSLA, and
those imposed directly by Congress, which have most often taken the form of limitations on the 22
use of appropriated funds.
Appropriations-based congressional moratoria first appeared in the appropriations legislation for
Fiscal Year 1982. The language of the appropriations legislation barred the expenditure of funds
by the Department of the Interior (DOI ) for leasing and related activities in certain areas in the 23
OCS. Similar language appeared in every DOI appropriations bill through FY2008.
As of the date of this report, Congress has not passed a DOI appropriations bill for FY2009.
Instead, it passed a “continuing resolution” that provides for continuation of funding of the 24
activities of the agency through March 30, 2009. Section 152 of that legislation provided that
much of the moratorium language found in the FY2008 appropriations legislation “shall not apply
to amounts provided by this joint resolution.” As a result, MMS is free to use appropriated funds
through March 9, 2009, to fund all leasing, preleasing, and related activities in most OCS areas
(where such activities are not prohibited by other legislation). Congress may choose to revisit this
issue when it addresses funding for DOI beyond the March 30, 2009, expiration of the continuing
resolution. The language used in the legislation that funds DOI after that expiration date will
determine whether, and in what form, budget-based restrictions on OCS leasing will exist.
In addition to the congressional moratoria, for most of the last 20 years there have been moratoria
issued by the executive branch on offshore drilling. The first of these was issued by President
George H. W. Bush on June 26, 1990. This memorandum, issued pursuant to the authority vested
in the President under Section 12(a) of the OCSLA, placed under presidential moratoria those
areas already under an appropriations-based moratorium pursuant to P.L. 105-83, the Interior
Appropriations legislation in place at that time. That appropriations-based moratorium prohibited
“leasing and related activities” in the areas off the coast of California, Oregon, and Washington,
and the North Atlantic and certain portions of the eastern Gulf of Mexico. The legislation further
prohibited leasing, preleasing, and related activities in the North Aleutian basin, other areas of the
eastern Gulf of Mexico, and the Mid- and South Atlantic. The Presidential moratorium was
extended by President Bill Clinton by memorandum dated June 12, 1998.

20 43 U.S.C. §§ 1331(a), 1332, 1333(a)(1).
21 43 U.S.C. § 1341(a).
22 See, e.g., P.L. 108-447, §§ 107-109.
23 P.L. 97-100, § 109. The Minerals Management Service (MMS), an agency that is part of DOI, administers the OCS
exploration and production program.
24 P.L. 110-32; Division A.

On July 14, 2008, President George W. Bush issued an executive memorandum that rescinded the
executive moratorium on offshore drilling created by the 1990 order of President George H. W.
Bush and renewed by President Bill Clinton in 1998. The memorandum revised the language of
the previous memorandum so that only areas designated as Marine sanctuaries are withdrawn
from disposition. The withdrawal has no expiration date.
The July 14, 2008, memorandum, taken together with the exclusion of the congressional
moratorium from the current continuing resolution, has the immediate effect of opening up new
areas of the OCS for consideration for exploration and production. OCS acreage not protected by
other statutory measures can now be considered by MMS for leasing, as described infra.
However, Congress will likely be enacting new DOI appropriations legislation at the start of the th

111 Congress, since the continuing resolution only funds the department through March of 2009.

It is important to note that other prohibitions and moratoria on development on exploration and
production in certain areas of the OCS exist. For example, the Gulf of Mexico Energy Security 25
Act of 2006, enacted as part of H.R. 6111, the Omnibus Tax Relief and Health Care Act of 2006,
created a new congressional moratorium over leasing in portions of the OCS that do not depend
on annual renewal in appropriations legislation. The 2006 legislation explicitly permits oil and 26
gas leasing in areas of the Gulf of Mexico, but also established a new moratorium on preleasing, 27
leasing, and related activity in the eastern Gulf of Mexico through June 30, 2022. This
moratorium is independent of the annual appropriations-based congressional moratorium, and
thus would continue even if Congress decided not to renew the annual appropriations-based
In 1978, the OCSLA was significantly amended so as to increase the role of the affected coastal 28
states in the leasing process. The amendments also revised the bidding process and leasing
procedures, set stricter criteria to guide the 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;29 (2) 303132
preleasing activity and the lease sale; (3) exploration; and (4) development and production.
The Secretary of the Interior is required to prepare a five-year leasing plan, subject to annual 33
revisions, that governs any offshore leasing that takes place during the period of plan coverage.

25 P.L. 109-432.
26 Id. at § 103.
27 P.L. 109-432, § 104(a).
28 P.L. 95-372.
29 43 U.S.C. § 1344.
30 43 U.S.C. §§ 1337, 1345.
31 43 U.S.C. § 1340.
32 43 U.S.C. § 1351.
33 43 U.S.C. § 1344(a), (e).

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 needs for the
five-year period and the extent of potential economic, social, and environmental impacts 34
associated with development.
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 35
Register, the plan is to be submitted to the Governor of each affected state for further comments.
After publication, the Attorney General is also authorized to submit comments regarding potential 36
effects on competition. 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 37
for the rejection of any comment. Once the leasing plan is approved, areas included in the plan 38
are to be available for leasing, consistent with the terms of the plan.
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 39
impact statement (EIS) under the National Environmental Policy Act (NEPA). Thus, the NEPA 40
review process complements and informs the preparation of a five-year plan under the OCSLA.

34 Id.
35 “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 accordance [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
(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 oil spill, blowout, or release of oil or gas from vessels, pipelines, or
other transshipment facilities....
43 U.S.C. § 1331(f).
36 43 U.S.C. § 1344(d).
37 Id.; see also 30 C.F.R. §§ 256.16-.17.
38 43 U.S.C. §1344(d).
39 42 U.S.C. § 4332(2)(C). In general, NEPA and the regulations that govern its administration 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.

The current Five-Year Plan was took effect on July 1, 2007.41 However, in response to calls to
expand offshore exploration and production leasing, in July of 2008 MMS took the
unprecedented step of initiating a new Five-Year Plan that is expected to commence before the
expiration of the previous plan. MMS published notice and a request for comments in the Federal
Register regarding a proposed new Five-Year Plan for mid-2010 to mid-2015 that would replace 42
the existing Plan. The notice sought “comments on areas that ... were removed from Presidential 43
Withdrawal on July 14, 2008.” The comment period expired on September 18, 2008. MMS
expects to issue a Draft Proposed Program in January of 2009.
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 44
that establish the mechanics of the leasing process.
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 45
concern and analysis. 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 46
any proposed lease stipulations. 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 47
potentially affected states.
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 48
concerning the size, time, or location of a proposed lease sale within sixty days after notice of 49
the lease sale. 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

NEPA does not direct an agency to choose any particular course of action; the primary purpose of an EIS is to ensure
that environmental consequences are considered. For additional information, see CRS Report RS20621, Overview of
National Environmental Policy Act (NEPA) Requirements, by Kristina Alexander.
40 See Natural Resources Defense Council v. Hodel, 865 F.2d 288, 310 (D.C. Cir.1988).
41 The Plan is available on MMS’s website at
42 73 Fed. Reg. 45065 (August 1, 2008).
43 Id.
44 43 U.S.C. § 1337.
45 30 C.F.R. §§ 256.23, 256.25.
46 30 C.F.R. § 256.26.
47 30 C.F.R. § 256.29.
48 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 areasonable 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.
49 43 U.S.C. § 1345(a); see also 30 C.F.R. § 256.31.

recommendations reasonably balance the national interest and the well-being of the citizens of an 50
affected state.
The Director of MMS publishes the approved list of lease sale offerings in the Federal Register 51
(and other publications) at least thirty days prior to the date of the sale. This notice must 52
describe the areas subject to the sale and any stipulations, terms, and conditions of the sale. The
bidding is to occur under conditions described in the notice and must be consistent with certain 53
baseline requirements established in the OCSLA.
Although the statute establishes base requirements for the competitive bidding process and sets 54
forth a variety possible of bid formats, some of these requirements are subject to modification at 55
the discretion of the Secretary. 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 56
prevent violation of antitrust laws. 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 57
agency under other law. Assuming compliance with these bidding requirements, the Secretary
may grant a lease to the highest bidder, although deviation from this standard may occur under 58
some circumstances.
In addition, the OCSLA prescribes many minimum conditions that all lease instruments must
contain. The statute supplies generally applicable minimum royalty or net profit share rates, as
necessitated by the bidding format adopted, subject, under certain conditions, to Secretarial
modification. 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 59
production. 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 60
increased production. Royalties may also be suspended under certain conditions by MMS
pursuant to the Outer Continental Shelf Deep Water Royalty Relief Act, discussed infra.

50 43 U.S.C. § 1345(c).
51 43 U.S.C. § 1337(l).
52 30 C.F.R. § 256.32(1).
53 43 U.S.C. § 1337.
54 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.
55 43 U.S.C 1337(a)(1)-(3), (8)-(9).
56 43 U.S.C. § 1337(c); 30 C.F.R. § 256.47(d).
57 43 U.S.C § 1337(c), (f).
58 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).
59 Id. § 1337(a)(3).
60 43 U.S.C. § 1337(a)(3)(B).

The OCSLA generally requires successful bidders to furnish a variety of up-front payments and 61
performance bonds upon being granted a lease. 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 62
lease in certain circumstances. Finally, the law indicates that a lease entitles the lessee to
explore, develop and produce oil and gas, conditioned on applicable due diligence requirements 63
and the approval of a development and production plan, discussed below.
Exploration for oil and gas pursuant to an OCSLA lease must comply with an approved 64
exploration plan. Detailed information and analysis must accompany the submission of an
exploration plan, and, upon receipt of a complete proposed plan, the relevant MMS Regional
Supervisor is required to submit the plan to the Governor of an affected state and the state’s 65
Coastal Zone Management agency.
Under the Coastal Zone Management Act (CZMA), federal actions and federally permitted 66
projects, including those in federal waters, must be submitted for state review. 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 67
determination to the Secretary of Commerce. Simultaneously, the MMS Regional Supervisor is
to analyze the environmental impacts of the proposed exploration activities under NEPA;
however, 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 68
upon previously prepared NEPA documents. If the Regional Supervisor disapproves the
proposed exploration plan, the lessee is entitled to a list of necessary modifications and may 69
resubmit the plan to address those issues. 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.
While exploration often will involve drilling wells, the scale of such activities will significantly
increase during the development and production phase. Accordingly, additional regulatory review 70
and environmental analysis are required by the OCSLA before this stage begins. Operators are

61 43 U.S.C § 1337(a)(7); 30 C.F.R. §§ 256.52 - 256.59.
62 43 U.S.C § 1337.
63 43 U.S.C § 1337(b)(4).
64 43 U.S.C § 1340(b), (c).
65 30 C.F.R. §§ 250.226, 250.227, 250.232, 250.235.
66 16 U.S.C. § 1456(c).
67 30 C.F.R. § 250.235.
68 30 C.F.R. § 250.232(c).
69 30 C.F.R. §§ 250.231 - 250.233.
70 43 U.S.C. § 1351.

required to submit a Development and Production Plan for areas where significant development 71
has not occurred before or a less extensive Development Operations Coordination Document for
those areas, such as certain portions of the Western Gulf of Mexico, where significant activities 72
have already taken place. 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 73
operations. 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 to prepare a new EIS at this 74
stage, and environmental analysis may be tied to previously prepared NEPA documents. 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 75
Zone Management Programs. Additionally, if the drilling project involves “non-conventional
production or completion technology, regardless of water depth” applicants must also submit a 76
Deepwater Operations Plan (DWOP) and a Conceptual Plan. These additional documents allow
MMS to adequately review the engineering, safety, and environmental impacts associated with 77
these technologies.
As with the exploration stage, actual drilling requires approval of an Application for Permit to 78
Drill (APD). 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 79
The OCSLA authorizes the Secretary of the Interior to promulgate regulations on lease 80
suspension and cancellation. The Secretary’s discretion over the use of these authorities is
specifically limited to a set number of circumstances established by the OCSLA. These
circumstances are described below.
Suspension of otherwise authorized OCS activities may generally occur at the request of a lessee 81
or at the direction of the relevant MMS Regional Supervisor, given appropriate justification.
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

71 30 C.F.R. § 250.201.
72 Id.
73 30 C.F.R. §§ 250.24 - 250.262.
74 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.
75 30 C.F.R. § 250.267.
76 30 C.F.R. §§ 250.286, 250.287.
77 30 C.F.R.§§ 250.289, 250.292.
78 30 C.F.R. §§ 250.410 - 250.469.
79 30 C.F.R. § 250.411.
80 43 U.S.C. § 1334; see also 30 C.F.R. §§ 250.168 - 250.185.
81 30 C.F.R. §§ 250.168, 250.171-250.175.

or damage to life (including fish and other aquatic life), to property, to any mineral deposits (in 82
areas leased or not leased), or to the marine, coastal, or human environment....” 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) 83
to allow for “inordinate delays encountered in obtaining required permits or consents....”
Whenever suspension occurs, the OCSLA generally requires that the term of an affected lease or 84
permit be extended by a length of time equal to the period of suspension. 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 85
If a suspension period reaches five years,86 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 87
cancellation outweigh the advantages of continuing such lease or permit in force....”
Upon cancellation, the OCSLA entitles lessees to certain damages. The statute calculates damages 88
at the lesser of (1) the fair value of the canceled rights on the date of cancellation or (2) the
excess of the consideration paid for the lease, plus all of the lessee’s exploration- or development-89
related expenditures, plus interest, over the lessee’s revenues from the lease.
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 90
cancel a lease as well. 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 lease 91
or regulations continues for a period of 30 days after the mailing. Similar noncompliance by the

82 43 U.S.C.§ 1334(a)(1).
83 30 C.F.R. § 250.173 - 250.175.
84 43 U.S.C.§ 1334(a)(1).
85 Id.
86 43 U.S.C. § 1334(a)(2)(B). The requisite suspension period may be reduced upon the request of the lessee.
87 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.
88 The statute requiresfair value to take account ofanticipated 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 oil spill, and all other costs reasonably anticipated on the lease .... 43 U.S.C. §
89 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.
90 43 U.S.C. § 1334(b).
91 43 U.S.C. § 1334(c).

owner of a producing lease can result in cancellation after an appropriate proceeding in any 92
United States district court with jurisdiction as provided for under the OCSLA.
Multiple statutes govern aspects of offshore oil and gas development, and therefore, may give rise 93
to legal challenges. Certainly, violations of the Marine Mammal Protection Act, Endangered 94
Species Act, and other environmental laws have provided mechanisms for challenging actions 95
associated with offshore oil and gas production in the past. 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.
The OCSLA provides for judicial review of agency action alleged to be in violation of federal 96
law, including the OCSLA, its implementing regulations, and the terms of any permit or lease.
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. 97
Supreme Court. A few challenges to five-year plans have been brought in federal courts. The 98
first, California ex. rel. Brown v. Watt, 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 require the Secretary’s decisions to be 99
supported by “substantial evidence.” 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 100
judgme nt.”

92 43 U.S.C. § 1334(d).
93 16 U.S.C. §§1361- 1423.
94 16 U.S.C. §§ 1531-1544.
95 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, st
623 F.2d 712 (1 Cir.1979).
96 43 U.S.C. § 1349.
97 43 U.S.C. § 1349(c).
98 668 F.2d 1290 (D.C. Cir.1981).
99 Watt, 668 F.2d at 1302; see also 43 U.S.C. § 1349(c)(6).
100 Watt, 668 F.2d at 1301-1302 (quoting Citizens to Preserve Overton Park v. Volpe, 401 U.S. 402, 416 (1971)
(internal quotations omitted)).

The standards for review outlined in Watt have been upheld in subsequent litigation related to the 101
five-year plan. 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 102
environmental analysis using “any methodology so long as it is not irrational.” 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 103
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 104
State.” Courts have typically applied the deferential “arbitrary and capricious” standard to the
Secretary’s decisions with respect to these recommendations. According to the cases from the
Ninth Circuit Court of Appeals, because the OCSLA does not provide clear guidance as to how
balancing of national interest and a state’s considerations is to be performed, agency action will 105
generally be upheld so long as “some consideration of the relevant factors ...” takes place.
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 106
Secretary’s balancing of interests insufficient. 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
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, challenged actions by the department to 107
collect royalties on deepwater oil and gas production. 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

101 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).
102 California, 715 F.2d at 96 (internal quotations omitted).
103 Hodel, 865 F.2d at 305.
104 43 U.S.C. § 1345(d).
105 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).
106 Conservation Law Foundation v. Watt, 560 F.Supp. 561 (D.Mass. 1983), affd sub nom. Massachusetts v. Watt, 716
F.2d 946 (1st Cir. 1983); Massachusetts v. Clark, 594 F.Supp. 1373 (D.Mass. 1984).
107 Kerr-McGee Oil & Gas Corp. v. Burton, No. CV06-0439 LC (W.D. La. March 17, 2006).

a statutorily prescribed threshold volume of oil or gas production has been reached, and does not 108
permit a price-based threshold for this royalty relief.
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 source of current 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 argued 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 an 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 leases109 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:
[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.110
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

108 P.L. 104-58.
109 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.
110 P.L. 104-58.

royalty suspension for those leases.111 The U.S. government has appealed this decision to the U.S.
Court of Appeals for the Fifth Circuit. Oral arguments have been tentatively scheduled for early
December 2008.
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 112
where government action will significantly affect the environment. 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 113
process. 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
There has only been one NEPA-based challenge to a five-year plan, Natural Resources Defense 114
Council v. Hodel. 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 115
adequacy was subject to the “rule of reason.” 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 116
this instance. However, without significant explanation of the standard of review to be applied,
the court found that the Secretary’s failure to analyze certain cumulative impacts was a violation 117
of NEPA. 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 118
arbitrary and capricious standard.
As mentioned above, NEPA plays a role in the leasing phase as well. MMS often uses NEPA and 119
its tiering option to evaluate lease sales. The NEPA procedures and standard of review remain
the same at this phase; however, due to the structure of the OCSLA process, more specific 120
information is generally required. Still, courts are deferential at the lease sale phase. In
challenges to the adequacy of environmental review, courts have stressed that inaccuracies and 121
more stringent NEPA analysis will be available at later phases. Thus, because there will be an

111 Kerr-McGee Oil & Gas Corp. v. Burton, slip. op. at 8-9.
112 40 C.F.R. §§ 1501.7, 1503.1, 1503.4, 1506.10.
113 42 U.S.C. § 4332.
114 Natural Resources Defense Council, Inc. v. Hodel, 865 F.2d 288 (D.C. Cir. 1988).
115 Id. at 294.
116 Id. at 296.
117 Id. at 297-300.
118 See California ex. rel. Brown v. Watt, 668 F.2d 1290, 1301-1302 (D.C. Cir.1981).
119 See 30 C.F.R. § 256.26(b); 40 C.F.R. § 1508.28.
120 Tribal Village of Akutan v. Hodel, 869 F.2d 1185, 1191 (9th Cir.1988).
121 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).

opportunity to cure any defects in the analysis as the OCSLA process continues, challenges under 122
NEPA at this phase are often unsuccessful.
It also appears possible to challenge exploration and development plans under NEPA. 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 123
similar lease sale, the requirements of NEPA were satisfied. 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.

122 But see Conservation Law Foundation v. Clark, 560 F.Supp. 561 (D. Mass. 1983).
123 Edwardsen v. U.S. Department of the Interior, 268 F.3d 781, 784-790 (9th Cir. 2001).

Table A-1.State Laws That Ban or Regulate
Offshore Resource Development: Policy and Statutes
State Policy Statutes
AL Drilling is authorized in Alabama’s state waters. The State Lands Division Authorization:
of the Department of Conservation & Land Resources is charged with Ala. Code §§ 9-15-18; 9-17-1 et
leasing offshore oil and gas in state waters. In addition, the Alabama State seq.; 40-20-1 et seq.
Oil and Gas Board regulates oil and gas production to ensure the
conservation and proper development of oil and gas resources.
AK The Alaska Department of Natural Resources is responsible for leasing Ban:
oil and gas on state lands, including offshore areas. Certain areas are Alaska Stat. §§ 38.05.140(f);
specifically designated as off limits to oil and gas leasing, and 38.05.184.
administrative decisions may further limit access. Authorization:
Alaska Stat. §§ 38.05.131 et seq.

CA The State Lands Commission is generally responsible for oil and gas Ban:
leasing. California currently has a general ban in place restricting any Cal. Pub. Res. Code §§ 6871.1-
state agency from issuing new offshore leases, unless the President of the .2 (repealed 1994); 6870 (Santa
United States determines that there is a “severe energy supply Barbara limitations); 6243
interruption and has ordered distribution of the Strategic Petroleum (general ban).
Reserve ..., the Governor finds that the energy resources of the Authorization:
sanctuary will contribute significantly to the alleviation of that Cal. Pub. Res. Code §§ 6870 et.
interruption, and the Legislature subsequently acts to amend...[the law] seq.; 6240 et seq.
to allow that extraction.” The ban is limited to areas that are not
currently subject to a lease.
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 Natural Ban:
Resources and Environmental Control are authorized to lease oil and gas Del. Code Ann. tit. 7 ch. 61 §
in state waters. Lands “administered by the Department of Natural 6102(e).
Resources and Environmental Control” may not be leased by the Authorization:
Secretary. Del. Code. Ann. tit. 7 ch. 61.
FL In general, the Department of Natural Resources is vested with the Ban:
authority to permit oil and gas development on state lands and Fla. Stat. Ann. §377.242.
submerged lands; in 1990 Florida enacted a broad ban on offshore oil and Authorization:
gas development by prohibiting oil and gas drilling structures in a variety Fla. Stat. Ann. §§ 377.01 et seq.;
of locations, including Florida’s territorial waters. The development ban 253.001 et seq.
provides an exception for valid existing rights.
GA The State Properties Commission is authorized to issue leases for state-Authorization:
owned oil and gas. The statute does not distinguish between onshore Ga. Stat. § 50-16-43.
and offshore minerals.
HI The Board of Land and Natural Resources is authorized to lease oil and Authorization:
gas on state lands, including submerged lands. There would not appear to Hawaii Rev. Stat. §§ 182-1 et
be a statutory ban in place. seq.
LA The state Mineral Board is responsible for leasing oil and gas in Louisiana Authorization:
and its offshore territory. Development is limited to areas offered by the La. Rev. Stat. §§ 30:121 et seq.

Board for leasing.

State Policy Statutes
ME The Bureau of Geology and Natural Areas has primary authority over oil Authorization:
and gas development on state lands, including tidal and submerged lands. Me. Rev. Stat. tit. 12 §§ 549 et
The Bureau is authorized to issue exploration permits and mineral leases. seq.
MD The Department of the Environment regulates oil and gas development. Ban:
The areas underlying Chesapeake Bay, its tributaries, and the Md. Code, Envt. §14-107.
Chesapeake Bay Critical Area are unavailable for oil and gas Authorization:
development. Md. Code, Envt. §§ 14-101 et
MA The Division of Mineral Resources is charged with administering the Authorization:
leasing of oil and gas on state lands. The law requires a public hearing Mass. Gen. Laws Ann. Ch. 21 §§
before any license to explore or lease for extraction is issued for mineral 54 et seq.
resources located in coastal waters. Many of the state’s offshore areas Ban:
are designated as ocean sanctuaries in which oil and gas development is Mass. Gen. Laws Ann. Ch. 132A
prohibited. § 15.

MS The Mississippi Major Economic Impact Authority is responsible for Authorization:
administering oil and gas leases on state lands. Offshore oil and gas Miss. Code. Ann. §§ 29-7-1 et
development is generally permissible. Specific areas are not available for seq.
leasing. No development may occur in areas north of the coastal barrier Ban:
islands, except in Blocks 40, 41, 42, 43, 63, 64 and 66 through 98. Miss. Code. Ann. § 29-7-3.
Further, “surface offshore 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 materials from lands Authorization:
under tidewaters and below the high water mark if approved by the N.J. Stat. Ann. §§ 12:3-12-1 et
Tidelands Resource Council. Offshore oil and gas development is not seq.
NY Leases and permits for the right to use state-owned submerged lands for Authorization:
navigation, commerce, fishing, bathing, and recreation are authorized for N.Y. Pub. Lands. Law § 75; N.Y.
specified submerged areas. General authority for issuing oil and gas Envt’l & Conserv. Law §§ 23-
leases is vested in the Department of Environmental Conservation. 0101 et seq.
Certain submerged lands underlying specified lakes are excluded from
exploration and leasing, but offshore areas would not appear to be
subject to a similar ban.
NC State law authorizes the sale or lease of any state-owned mineral Authorization:
underlying the bottoms of any sounds, rivers, creeks, or other waters of N.C. Gen. Stat. § 146-8.
the state. The state is authorized to sell, lease, or otherwise dispose of
oil and gas at the request of the Department of Environment and Natural
OR The Department of State Lands is generally responsible for leasing state Authorization:
owned minerals, including oil and gas. Leasing of tidal and submerged Or. Rev. Stat. §§ 274.705 et seq.;
lands is governed by separate provisions of law. There does not appear 273.551 (for submerged lands
to be a ban in place. seaward more than 10 miles th
easterly of the 124 West

RI The Coastal Resources Management Council is charged with identifying, Authorization:
evaluating, and determining which uses are appropriate for the state’s R.I. Gen. Laws. §§ 46-23-1 et
coastal resources and submerged lands. seq.

State Policy Statutes
SC The State Budget and Control Board is authorized to “negotiate for Authorization:
leases of oil, gas and other mineral rights upon all of the lands and waters S.C. Code. Ann. §§ 10-9-10 et
of the State, including offshore marginal and submerged lands.” seq.
TX The School Land Board is authorized to lease those portions of the Gulf Authorization:
of Mexico under the state’s jurisdiction for oil and gas development. Tex. Nat. Res. Code §§ 52.011
et seq.
VA The Marine Resources Commission is authorized to grant easements or Authorization:
to lease “the beds of the waters of the Commonwealth outside of the Va. Code Ann. § 28.2-1208.
Baylor Survey” for oil and gas development.
WA In general, the Department of Natural Resources is responsible for Ban:
mineral development on state lands. State law prohibits leasing of tidal or Wash. Rev. Code Ann. §§
submerged lands “extending from mean high tide seaward three miles 43.143.005 et seq.
along the Washington coast from Cape Flattery south to Cape
Disappointment, nor in Grays Harbor, Willapa Bay, and the Columbia
river downstream from the Longview bridge, for purposes of oil or gas
exploration, development, or production.”
Adam Vann
Legislative Attorney, 7-6978