The Coastal Zone Management Act Amendments of 1976: Tailoring Coastal Zone Protection to Expanded Offshore Oil Production

[6 ELR 10193]

On July 26, 1976, President Ford signed into law the Coastal Zone Management Act (CZM Act) Amendments of 1976,¹ a measure designed to improve the ability of the nation's 30 coastal states to plan for and control the impact of energy facility and resource development in their coastal areas. The Amendments, which several executive departments had vainly urged the President to veto, augment the present system of federal financial assistance for state development and implementation of coastal zone management programs. They also introduce several new elements into the Act, including a "coastal energy impact program" supported by federal grants and loans, and they modify the CZM Act's "federal consistency" requirements concerning outer continental shelf activities, a change which may be of central importance to coastal states.

As originally passed in 1972, the Coastal Zone Management Act² was intended to establish a regulatory structure through which the nation's coastline, including the Great Lakes, would be protected from the adverse effects of haphazard commercial, residential, and recreational development. Because it pre-dated the 1973 oil embargo and ensuing "energy crisis," however, the Act did not reflect the new national policy of energy self-sufficiency, which depends to a large extent on expanded oil production from the nation's outer continental shelf (OCS). The statute did require state coastal zone management plans to provide for "adequate consideration of the national interest involved in the siting of facilities necessary to meet requirements which are other than local in nature."³ But the Atlantic states, off whose shores there had as yet been no OCS leasing, read this language as referring to the siting of electric power plants rather than onshore oil processing and storage facilities.

Thus by 1974 a number of these states were expressing alarm at the prospect of massive oil-related development — pipelines, refineries and tank farms — along their shores, and by the expensive secondary impacts — schools, roads, and other public facilities and services — which would be needed to cope with the consequent population increases in those areas.⁴ Other than federal financial assistance in planning for these impacts of federally-licensed activities, the 1972 Act gave the states no mechanism by which to manage such impacts except to exercise veto power through its "federal consistency" provisions.⁵ Under § 307(c)(3),⁶ once a state's coastal zone program was approved, federal licenses or permits for activities which affect that zone could be granted only after the state certified that the activity complied with its approved program. The Act also gave the Secretary of Commerce authority to override a state determination upon a finding that the activity is consistent with the Act's objectives or is otherwise necessary in the interest of "national security," a term which remained undefined. Because extensive use of this override authority was unlikely, however, the power granted to states to obstruct or delay necessary support facilities clearly could have served to frustrate the expanded federal OCS oil production program.

The 1976 Amendments were Congress' response to this possible problem. The Conference Committee explicitly stated the intent of the legislation — a conference committee substitute for both the Senate bill⁷ and the House amendments — as being

to encourage new or expanded oil and natural gas production in an orderly manner from the Nation's Outer Continental Shelf (OCS) by providing for financial assistance to meet state and local needs resulting from specified new or expanded energy activity in or affecting the coastal zone.⁸

The conferees believed that "there is a real possibility of delay or disruption in Federal plans for expanded OCS oil and gas production unless coastal states and coastal communities are assured of the means of coping with[6 ELR 10194] and ameliorating the impacts from such activities."⁹ Therefore, the federal government "should provide assurance of timely and practicable financial assistance related and tailored to these needs."¹⁰

In keeping with this view, the Amendments provide continued federal assistance, at 80 percent of costs (up from 67 percent under the 1972 Act), for both development and implementation of state coastal zone management programs. However, the requirement that these programs include consideration of the national interest involved in facility sitiing now refers specifically to energy facilities in, or which may significantly affect, the coastal zone.

The Coastal Energy Impact Program, established by § 7 of the conference substitute,¹¹ provides the carrot that Congress hopes will convince coastal states and localities to accept such facilities willingly rather than fighting them to the bitter end. As noted above, the 1972 Act provided the states with federal funds for the development and implementation of programs to plan for and regulate development within the coastal zone. The Act as originally passed did not, however, offer the coastal states and localities any federal assistance for the costs of expanded public facilities and services and repairing or mitigating the unavoidable adverse environmental impacts which would be caused by development associated with expanded OCS activity.

The Impact Program remedies this deficiency by instituting a revolving fund and various new mechanisms for channeling $1.2 billion in additional federal assistance to these states and localities for such purposes. This federal impact assistance will take two forms: loans and bond guarantees to state and local governments, and direct grants to these governmental units. A total of $800 million over ten years is authorized for loans and indebtedness guarantees. Of this, $50 million will be available for planning for the consequences of energy-related activity in the coastal zone and for mitigation or repair of unavoidable losses of "valuable" environmental and recreational resources. The other $750 million is allocated to financing of new or improved public facilities and services that are required as a result of new or expanded coastal energy activity. These monies can also be used as backup or adjustment grants when states and localities cannot meet their obligations under these loans and guarantees with ordinary tax revenues.

An additional $400 million is authorized over eight years as direct formula grants to coastal states and localities. These may be used for the same purposes as the loans, including repayment of loans and bond guarantees, if necessary. Each state's grant for a particular year will be determined by the ratio between newlyleased OCS acreage adjacent to its shore, OCS oil and gas both produced and newly landed, and the number of state residents newly employed as a result of new or expanded OCS energy activities for the preceeding year, and the totals of these same figures for all coastal states. While the Secretary of Commerce cannot disapprove the use of such funds for highways, docks, navigation aids, fire and police protection, water supply, waste collection and treatment, schools, or hospitals, the states must first attempt to fund such projects through the Act's loan and bond guarantee mechanisms.

The funding mechanisms of the Coastal Energy Impact Program are thus quite clearly designed to provide financial incentives to the coastal states to facilitate OCS oil and gas production off their shores. In fact, the charge has been raised in some quarters that the Amendments construct an elaborate system for bribing recalcitrant coastal states to abandon valid environmental objections to increased OCS activity. While this may overstate the case in view of the availability of funds for impact management planning and mitigation of environmental harm, Congress unabashedly conceded¹² that the statutory grant formula was constructed so as to encourage the states, in order to increase their share of the federal money, to do everything possible to aid increased OCS energy production.¹²

Some environmentalists have also voiced fears that the funding scheme will encourage siting in precious coastal areas of energy facilities such as refineries and tank farms, which could be located further inland. Although the Act's reliance on loans and bond guarantees as the primary funding mechanism for coastal zone infrastructural improvements provides somewhat less incentive for such siting than would a scheme of direct grants, residential and commercial overdevelopment of the coastal zone in response to expanded public facilities and services remains a threat to the environmental integrity of these areas.

Another noteworthy feature of the Amendments is what they do to the "federal consistency" provisions in § 307 of the Act.¹³ The only substantive change that the legislation makes is the addition of a fourth consistency requirement expressly directed at OCS activity. The new subsection¹⁴ provides that once a state's management program has been approved, no federal license or permit may be granted for any activity described in a plan for exploration, development, or production from any area leased under the Outer Continental Shelf Lands Act¹⁵ unless the state concurs in the applicant's single blanket certification that all the described activities comply with the state's approved program. The provision incorporates the same exception contained in the third consistency requirement of the 1972 Act: a permit or license may be issued despite refusal of state certification if the Secretary finds that each activity described in the plan is consistent with the objectives of the Act or is otherwise necessary in the interest of national security.

It is important to recognize that state certification is required only once — for the overall OCS plan and all activities described in it at the time the plan is submitted. Each individual activity may then be licensed or permitted at some future time without further state approval. Additional state certification is required, however, when and if an OCS exploration, development or [6 ELR 10195] production plan is amended. As the conference committee noted, this system will significantly expedite OCS oil and gas development as compared to the pre-existing consistency provision presumptively applicable to federal leases and permits whereby separate consistency determinations would have been required for each of the many federally-licensed activities involved in OCS energy production.

The Amendments also clarify the original procedure for resolving federal-state disagreements under the Act. As before, the Secretary of Commerce is given a general mandate to mediate such disputes, but now he must, in the case of a disagreement involving the administration of an approved state management program, conduct public hearings in the local area concerned as part of this open-ended mediation process.

Further innovations in the Amendments include congressional authorization¹⁶ for coastal states to form interstate compacts for coordinated coastal zone management, and the concomitant authorization for federal grants of up to 90 percent of the cost of coordinating and implementing such agreements. The Amendments also condition federal approval of state coastal zone programs on whether they plan for the protection of, and access to, public beaches and other public coastal areas. The Amendments authorize the Secretary to make grants to coastal states for up to 50 percent of the cost of acquiring beach and coastal area access, and include in such authorization grants for the preservation of islands.

In conclusion, the 1976 Amendments to the Coastal Zone Management Act give the coastal states added federal financial assistance for coping with as well as planning for the environmental and social impacts of expanded OCS oil and gas production. At the same time, however, the Amendments take away the leverage against particular OCS activities that these states possessed under the 1972 Act's requirement of separate state consistency certification for each federally licensed or permitted activity.

The Amendments clearly achieve their major goal — facilitating expanded OCS oil and gas production through the establishment of a streamlined federal-state regulatory scheme for managing the onshore impacts of OCS activity. Whether or not they will achieve their subsidiary purpose — avoidance of all unnecessary environmental impacts within the coastal zone from OCS energy production and the construction of OCS-related facilities — will depend on whether state coastal zone managers can maintain a balanced view of the state's dual purposes under the pressure of federal financial incentives to increase adjacent OCS energy production as quickly as possible.

1. P.L. 94-307, 90 Stat. 1013, 16 U.S.C. §§ 1451 et seq., ELR 41700:1.

2. P.L. 92-583, 86 Stat. 1280. For a thorough discussion of the Act, see Blumm & Noble, The Promise of Federal Consistency Under § 307 of the Coastal Zone Management Act, 6 ELR 50047 (July 1976).

3. Coastal Zone Management Act of 1972, § 306(c)(8), P.L. 92-583, 86 Stat. 1283.

4. See Comment, The Rush for Offshore Oil and Gas: Where Things Stand on the Outer Continental Shelf, 5 ELR 10026 (Feb. 1975).

5. § 307(c)(1)-(3), 16 U.S.C. § 1456(c)(1)-(3). For a detailed discussion of these provisions and their implications, see Blumm & Noble, supra note 2, at 50052-57.

6. 16 U.S.C. § 1456(c)(3).

7. S. 586, 94th Cong., 2d Sess. (1976).

8. H.R. Rep. No. 94-1298, 94th Cong., 2d Sess. 23 (1976).

9. Id. at 24.

10. Id.

11. § 308 of the Act as now amended, 16 U.S.C. § 1457.

12. H.R. Rep. No. 94-1298, supra note 7, at 25.

13. 16 U.S.C. § 1456. For a discussion of these provisions, see Blumm & Noble, supra note 2, at 50052-57.

14. § 307(c)(4), 16 U.S.C. § 1456(c)(4).

15. 43 U.S.C. §§ 1331 et seq., ELR 41437.

16. As required under U.S. Const. art. I, § 10.