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Natural Resources Defense Council v. Hodel

Citation: 19 ELR 20386
No. Nos. 87-1432 et al., 865 F.2d 288/28 ERC 1729/(D.C. Cir., 12/30/1988)

The court generally upholds the Secretary of the Interior's five-year outer continental shelf (OCS) oil and gas leasing plan for 1987-92. The court initially denies petitioners' motion to supplement the record with data indicating that a lease sale offshore northern California would produce much more oil than indicated in the five-year plan; the Secretary reasonably adopted a cutoff time for consideration of new data. The court then turns to petitioners' National Environmental Policy Act (NEPA) claims and holds that the environmental impact statement (EIS) adequately discussed energy conservation alternatives. The court rejects the Secretary's argument that he need not consider conservation as a partial alternative to OCS leasing because energy conservation and full-scale OCS production cannot meet the nation's energy needs. Even alternatives that do not reduce the need for OCS leasing should be considered to fulfill NEPA's informational function, although a less searching analysis is required. The court holds that the EIS satisfied this standard by generally discussing energy conservation policies in an appendix, referring to a national plan that projects the nation's future energy demands, and including petitioners' comments on conservation alternatives. The court holds that the EIS violated NEPA by failing to consider the cumulative impact of simultaneous development in the Pacific and Alaskan regions on migratory species. The EIS generally considers the impact within each OCS planning area, but makes only conclusory remarks about the impact of simultaneous OCS development in different areas. The court notes that, on remand, the Secretary could examine the cumulative impacts of simultaneous inter-regional development in a single section of the EIS that identifies the range of the affected migratory species and describes the synergistic effect of OCS and non-OCS activities on these species.

Turning to petitioners' challenges under the Outer Continental Shelf Lands Act (OCSLA), the court holds that the administrative planning areas drawn by the Secretary are reasonable. The Secretary's decision to divide the OCS into large, contiguous rectangular areas does not violate the requirement in OCSLA § 18 that the Secretary schedule leasing among the "oil- and gas-bearing physiographic regions" of the OCS. This phrase is not defined in the statute and is not used in the legislative history, and thus the Secretary's interpretation is entitled to deference. The court holds that the Secretary's decisions to exclude areas from leasing are final agency actions subject to judicial review, since these decisions may materially affect the program-stage inter-area analysis. The court holds that petitioners have standing to challenge the exclusion decisions. The injury asserted by petitioners is no different from the uncontested injuries alleged by petitioners from other components of the leasing program. Further, although the Secretary on remand would be under no statutory duty to exclude any areas, the government improperly assumes that the Secretary would perversely refuse to adopt the product of his own reasoning process. The court holds that the Secretary's exclusion decisions need only be based on rational consideration of identified and relevant factors and that the Secretary has satisfied this standard. The OCSLA requires only that the Secretary establish procedures for receiving and considering exclusion nominations, but specifies no criteria for the Secretary to follow. The court holds that the Secretary's duty to explain his exclusion decisions was satisfied by his letters transmitting the proposed final program to governors of affected states pursuant to OCSLA § 18(c) and (d). The Act does not require the Secretary to prepare a comparative analysis of the areas nominated for exclusion. The court holds that the Secretary's consideration of political factors in excluding areas offshore California pursuant to § 111 of the 1987 Continuing Appropriations Act was not arbitrary and capricious. Section 111, which requires the Secretary to respond in detail to exclusion proposals from the governor of California or a congressional negotiating group, provides no basis for review and requires the Secretary to work toward a political consensus.

The court holds that the Secretary satisfied the requirement in OCSLA § 18(a)(3) to prepare a cost-benefit analysis for the five-year program. The court holds that the Secretary's decision not to account for the dramatic drop in world oil prices in calculating net economic value was reasonable. The Secretary reasonably recognized the uncertainties in his net economic value calculations and rationally decided to use them to compare the relative benefits among the various planning areas and not to determine absolute economic values of oil and gas reserves. The Secretary reasonably focused on higher long-term price projections and not on prices frozen on a particular date. Further, he legitimately chose to retain flexibility by including many areas at the program stage that are subject to deletion at a later stage. The court holds that the Secretary's calculation of social costs was reasonable. The Secretary's assumption that every barrel of OCS oil produced will replace oil that otherwise would be imported, and thus reduce oil spill costs, is reasonable. Although some OCS oil will be carried by tanker, it would still involve lower spill risks because all imported oil is carried by tanker and domestic tankers produce smaller spills than foreign tankers. The Secretary also reasonably valued OCS biological resources, assumed that social costs will be far greater if an oil spill comes ashore, and valued wetland losses.

The court holds that the program's provisions allowing the Secretary to reduce the standard minimum bid of $ 150 per acre on a sale-by-sale basis does not violate the requirement in OCSLA § 18(a)(4) that the government receive fair market value for leased lands. Fair market value is assured primarily by the competitive leasing process and post-bid evaluation procedures for tracts most [19 ELR 20387] susceptible to market failure. The minimum bid policy is a minor factor in meeting the requirements of § 18(a)(4). The court holds that the Secretary has satisfied any obligation under § 18(a)(4) to articulate criteria for setting the minimum bid price. The court holds that the Secretary did not arbitrarily reduce the minimum bid price to $ 25 per acre in response to a presidential directive. The Secretary continues to follow the program's $ 150 per acre minimum bid price, although he has exercised his discretion to lower bids to $ 25 on a sale-by-sale basis. While the Secretary admits that he will consider the presidential directive in setting minimum bid, he will consider the presidential directive in setting minimum bid, he will also consider other factors consistent with § 18(a)(4), and the program assures that the government will receive fair market value for leased lands.

The court holds that petitioners' claim that the Secretary violated § 111 of the 1987 Continuing Appropriations Act by failing to supply adequate explanations for his rejections of exclusion proposals is not subject to judicial review. Section 111 contains no factors for the Secretary or a court to consider and contains no provision for judicial review. No binding precedent has held that reporting provisions such as § 111 are judicially reviewable. Section 111 is not a supplement to the OCSLA and thus alleged § 111 violations are not reviewable pursuant to the OCSLA. The presumption of reviewability of agency action is inapplicable, since this is not a challenge to an agency action taken under authority delegated by Congress but to an agency reporting back to the source of its delegated power. An agency's compliance with such a reporting requirement is committed to congressional discretion. Further, § 111 does not provide standards by which to measure the Secretary's compliance with the "detailed" explanation requirement.

One judge would hold that the EIS adequately analyzed the cumulative impacts on migratory mammals.

[Petitions for review and briefs filed in this case are digested at ELR PEND. LIT. 65979 and 66007.]

Counsel for Petitioners
James Thornton
Natural Resources Defense Council
122 E. 42nd St., New York NY 10168
(212) 949-0049

John A. Saurenman, Deputy Attorney General
800 Tishman Bldg., 2480 Wilshire Blvd., Los Angeles CA 90010
(213) 736-2304

Counsel for Respondents
Rebecca A. Donnellan, Wells Burgess
Land and Natural Resources Division
U.S. Department of Justice, Washington DC 20530
(202) 633-2000