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Exxon Corp. v. Fischer

Citation: 17 ELR 20286
No. No. 84-2362 PAR, (C.D. Cal., 10/11/1985)

The court holds that the California Coastal Commission lacks authority under the Coastal Zone Management Act (CZMA) to issue a consistency objection to proposed activity on the outer continental shelf (OCS) based on the activity's effect on marine resources located outside the coastal zone or its economic impact on the commercial fishing industry. The Commission objected to Exxon's certification under CZMA § 307 that its proposed oil and gas exploration plan in federal OCS waters off the shore of California is consistent with the California coastal management program (CMP). The Commission claimed that exploration in the area, unless confined to a seven-month "drilling window," is inconsistent with certain provisions of its CMP because the drilling would interfere with the harvest of thresher sharks. The court first holds that Exxon has standing to contest the Commission's objection to its consistency certification. Exxon has suffered injury in fact, since it has invested $84 million in the exploration and would be forced to pay $70,000 to $100,000 per day to retain the drilling ship it had hired if forced to wait until the drilling window began. Exxon's injury is also fairly traceable to the challenged action, since the Commission's denial of consistency certification was the direct cause of Exxon's inability to get a year-round drilling permit. Exxon has also established that its alleged injury is likely to be redressed by a favorable decision. The court rejects the Commission's argument that a decision for Exxon on the merits would not result inthe issuance of the drilling permits. The Commission contends that the Secretary of Commerce's refusal to override the Commission's consistency objection precludes the issuance of the permits under any circumstances. Under this construction, the court observes, a state's wholly invalid consistency objection would be insulated from judicial review so long as the applicant appealed to the Secretary, which would probably be mandatory under the exhaustion of administrative remedies requirement. A better reading of the regulatory scheme suggests that if a consistency objection is legally invalid, there is no longer any consistency determination for the Secretary to override. The court holds that Exxon has also satisfied the prudential requirements for standing, since its asserted interest in exploring for oil on the OCS unhindered by invalid consistency objections is arguably within the zone of interests regulated by the CZMA. The court observes that review of a state agency's CZMA consistency objection by a federal court is troublesome. The court may not review the Secretary's decision since he is not a party to this action, and the court is thrust into the middle of a dispute involving complex federalism issues presented by the CZMA's unique regulatory scheme. The court concludes, however, thatt it may reach the merits based on the Commission's concession that the state CMP is federal law for purposes of consistency review and on the anomaly in the CZMA's regulatory structure that would accord the Commission a veto not intended by the Act if judicial review is not granted.

The court next holds that the Commission's claim that Exxon's complaint should be dismissed for failure to exhaust its administrative remedies was mooted when the Secretary of Commerce issued his decision denying Exxon's appeal of the Commission's consistency objection. The court holds that the availability of judicial review of the Secretary's decision does not preclude review of the scope of the Commission's authority under the CZMA, since the Secretary's review is confined to a narrow set of issues that does not include the issue before the court. Moreover, the justifications for the exhaustion requirement do nto apply with the same force to the unique system established by the CZMA. The court holds that Pullman abstention is not appropriate because there are no federal constitutional or state law claims. The court holds that the Secretary's refusal to override the Commission's objection does not bar this action under principles of res judicata or collateral estoppel. The Secretary does not act in a wholly judicial capacity, but instead acts as a policymaker in balancing the national interest of the proposed activity against its adverse effects on the coastal zone. Further, the Secretary did not directly address the issue before the court. The court holds that this case is ripe for review because Exxon has indicated that it believes that it will drill if the court rules in its favor.

Reaching the merits, the court holds that the Commission is not authorized under CZMA § 307(c)(3)(B) to object to the harvesting of marine resources located outside the coastal zone. The language of the CZMA limits a state's jurisdiction to land and water uses in the coastal zone. This conclusion is also supported by congressional expressions of policy in CZMA §§ 301 and 302, which make clear that the CZMA applies only to natural resources located in the coastal zone. Since the thresher shark fishery is located outside the coastal zone on the OCS, the Commission was not authorized to base its objection on the exploration's effect on the fishery. Further, nothing in the legislative history suggests that § 307(c)(3)(B) was meant to apply to resources outside the coastal zone. The court next holds that the Commission also exceeded its authority by basing its objection on the adverse impact the drilling would have on the economic interests of the commercial fishing industry. The economic interests of a single industry do not constitute an effect upon land use in the coastal zone. The language and legislative history of the CZMA indicate that Congress used the phrase "land use" to allow the states to engage in conventional land use planning for the land in their coastal zones, but not to allow states to use the consistency review process to protect the economic interests of a single industry. The addition to the CZMA in 1976 of the Coastal Energy Impact Program, which provides funding to coastal states to ameliorate the effects of energy development in their coastal zones, does not support the conclusion thatt negative economic impacts of oil exploration were intended to be managed under CZMA § 307(c)(3)(B).

Counsel for Plaintiff
Donna R. Black
McCutchen, Black, Verleger & Shea
600 Wilshire Blvd., Los Angeles CA 90017
(213) 624-2400

Melinda F. Harmon
P.O. Box 2180, 1839 Exxon Bldg., Houston TX
(713) 656-1711

Counsel for Defendants
Peter H. Kaufman
Office of the Attorney General
110 W. A St., Suite 700, San Diego CA 92101
(619) 237-7513

Robert Venning
Heller, Ehrman, White & McAuliffe
333 Bush St., San Francisco CA 94104
(415) 772-6000