17 ELR 20286 | Environmental Law Reporter | copyright © 1987 | All rights reserved

Exxon Corp. v. Fischer

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

[17 ELR 20287]

Rymer, J.:

Memorandum of Decision and Order

This action arises from Exxon Corporation's ("Exxon") attempt to secure a permit from the Department of the Interior to drill exploratory oil wells on the Outer Continental Shelf ("OCS") in the Santa Barbara channel. It raises a number of troublesome issues involving the interpretation of a co-ordinate federal-state program and the role of judicial review in the interpretation of such a scheme.

The Coastal Zone Management Act ("the CZMA"), 16 U.S.C. §§ 1451 et seq. established a cooperative federal-state program for the prudent management and conservation of coastal resources; among other things, it empowers states to establish coastal management programs which are to designate permissible land and water uses within the coastal zone. 16 U.S.C. § 1454(b)(2) (1984). As defined by the CZMA, a coastal zone is comprised of "the coastal waters (including the lands therein and thereunder) and the adjacent shorelands (including the waters therein and thereunder), strongly influenced by each other and in proximity to the shorelines of the several coastal states. . . ." 16 U.S.C. § 1453(1) (1984). The zone extends "seaward to the outer limit of the United States territorial sea" and "inland from the shoreline only to the extent necessary to control shorelands, the uses of which have a direct and significant impact on the coastal waters." 16 U.S.C. § 1453(1) (1984).

As part of a comprehensive scheme, the CZMA provides for consistency review by the state agencycharged with responsibility for implementing a state coastal management program, in this case the California Coastal Commission ("the Commission"). Under § 307(c)(3)(B) of the CZMA, "any person who submits to the Secretary of the Interior any plan for the exploration" of "any area which has been leased under the Outer Continental Shelf Lands Act, . . . with respect to any exploration . . . affecting any land use or water use in the coastal zone" must certify that the proposed activity complies with the state's management program and will be carried out in a manner consistent with it. 16 U.S.C. § 1456(c)(3)(B) (1984). If the state objects to an applicant's certification, the applicant may appeal to the Secretary of Commerce ("the Secretary") who may override the State's "veto" if he finds that the proposed "activity is consistent with the objectives of this chapter or is otherwise necessary in the interest of national security." 16 U.S.C. § 1456(c)(3)(B)(iii) (1984). Moreover, no federal agency may grant a license or permit for such activity until the state affirmatively concurs in the applicant's certification, fails to take action within six months of receipt of the certification or the Secretary of Commerce finds that the activity is consistent with the objectives of the CZMA or is necessary to national security. 16 U.S.C. §§ 1456(c)(3)(B)(i), (ii), (iii) (1984).

After complying with the requirements of the Department of the Interior for a drilling permit, Exxon filed a certificate of consistency. On February 8, 1984, the Commission objected to Exxon's development plan on the ground that it had an adverse impact on the harvest of thresher sharks, an activity which takes place on the OCS by commercial fishermen who are locally based. However, the Commission agreed that the plan would be consistent with California's management program so long as Exxon drilled during the period Thanksgiving through April 30 when such fishing activity does not occur. Exxon appealed to the Secretary of Commerce and brought this action seeking a declaratory judgment that the objection is invalid, and an injunction restraining the Commission from restricting operations on the OCS solely to protect the economic interests of local industries.

The matter is before the Court on cross-motions for summary judgment. Plaintiff's motion is based on the ground that the state, acting through the Commission, lacks authority under the CZMA to restrict activity on the OCS solely in order to protect the economic interests of California fishermen. Defendants move for summary judgment on the grounds that (1) Exxon has not exhausted its administrative remedies; (2) the court should abstain until state law issues are resolved; (3) the Secretary's decision collaterally estops Exxon from relitigating the construction of the CZMA in this Court; and (4) the suit will not be ripe for adjudication until Exxon is ready to drill its well.

Undisputed Facts

California was one of the first states to apply for and receive federal assistance under the CZMA. In November, 1972, voters approved the California Conservation Act which established the [17 ELR 20288] California Coastal Commission ("the CCC") and six regional commissions to prepare a comprehensive plan for the long-range development and conservation of the state's coastal zone resources. See American Petroleum Institute v. Knecht, 609 F.2d 1306, 1309 [10 ELR 20083] (9th Cir. 1979). The Commission is thestate agency responsible for implementation of the coastal management program. Cal. Pub. Res. Code § 30330 (1984). The California legislature established its coastal management program with the enactment of the California Coastal Act, Cal. Pub. Res. Code §§ 30000 et seq. See Cal. Pub. Res. Code § 30008. In 1977, California's coastal management program was approved by the National Oceanic and Atmospheric Administration ("NOAA"), the approving agency under the Secretary of Commerce. Knecht, 609 F.2d at 1309. In Knecht, the Ninth Circuit upheld the validity of the NOAA's approval against challenges that the program was not properly approved, lacked sufficient specificity, failed to include required elements, iandequately considered the national interest and did not protect against unreasonable restrictions on uses. Id.

The coastal management program establishes a broad set of policy criteria by which proposed activities in the coastal zone are to be judged. With the enactment of the Coastal Act, the California legislature declared thatt the state's basic goals for the coastal zone were the protection of the coastal zone environment and its resources and the orderly, balanced utilization of those resources for the social and economic needs of the state's citizens. Cal. Pub Res. Code § 30001.5(a), (b). The Coastal Act also gave the Commission responsibility for implementing the coastal management program. Cal. Pub. Res. Code §§ 30300, 30330. The Commission is comprised of 15 members: the Secretary of the Resources Agency, the Secretary of the Business and Transportation Agency, the Chairperson of the State Lands Commission, six representatives of the public and six representatives of the regional coastal commissions. Cal. Pub. Res. Code § 30301.

On January 24, 1983 Exxon acquired rights to explore for oil in the southwest quadrant of Lease OCS-P 0467. The quadrant is located in the Santa Barbara Channel approximately seven miles off the coast of California. Therefore, the quadrant is in federal OCS waters and outside of California's coastal zone. Exxon submitted an exploration plan for the lease to the Regional Office of the Minerals Management Service (MMS), an agency within the Department of the Interior responsible for regulating OCS oil and gas exploration. Exxon proposed to drill up to three wells within the quadrant, labelled A, B and C, in depths of water ranging from 820 to 945 feet. (Pl.'s Aff., Exh. A, p. 23.) Exxon sought to drill the first well with the drilling vessel Glomar Pacific. When drilling, the ship is moored with an eight point 30,000 pound anchor system and a dynamic positioning system. (Exh. A, 41, 44.) In the event that the Glomar Pacific was not available or that two wells were to be drilled simultaneously, Exxon planned to employ the Pennrod 73, a semi-submersible vessel. (Exh. B, 72.)

Pursuant to § 1456(c)(3)(B) of the CZMA, Exxon submitted a certification that their exploration would be conducted in a manner consistent with California's coastal management program. After completing its analysis and making its required findings, the MMS transmitted the exploration plan to the Commission for it to review the consistency certification. In accordance with § 1456(c)(3)(B)(i), the MMS withheld approval of the drilling permit pending the Commission's concurrence with Exxon's consistency certification.

At a public hearing held July 27, 1983, the Commission adopted by a vote of 11-1 the recommendation of its staff and objected to Exxon's consistency certification for the proposed drilling. In its objection, the Commission, citing Cal. Pub. Res. Code §§ 30230, 30231, 30250(a), and 30260, determined that Exxon's exploratory drilling proposal failed to comply with the enforceable policy requirements of the Coastal Act relating to the protection of marine resources and commercial fishing in the coastal zone.

The Commission concluded the plan was inconsistent with §§ 30230 (maintenance of marine resources and special protection for areas of special biologic or economic significance) and 30231 (maintenance of the biological productivity and quality of coastal waters) because the drilling "would adversely impact the commercial fishing industry." Specifically, the Commission expressed concern that the drilling would interfere with the harvest of thresher sharks. The Commission heard testimony from fishermen who described their fishing technique. Called drift gillnetting, the fishermen drift with the current pulling nets as much as 6,000 feet in length. Because the ships are not under power while fishing, they are not maneuverable and are vulnerable to obstructions such as drilling rigs and their anchoring system. Moreover, according to representatives of the fishing industry, the thresher shark fishing season is limited to the period of May to December. Their fishing technique is prohibited during other months because it would endanger the whale migration. The Commission indicated it would find the exploration plan consistent if drilling were limited to January through April, the time gillnetters are not fishing. (Exh. C, 168-69.) Exxon refused to accept the limitation because the Glomar Pacific would be available only in early October and Exxon could not justify the high cost of maintaining the idle ship while waiting for the opportunity to drill. (Exh. C, 169.)

The Commission also considered whether the plan was consistent with § 30260, which concerns the location and expansion of coastal-dependent industrial facilities. The Commission balanced the national interest in energy development with the interest of the state and local community in commercial fishing. It found that because the exploration would affect the shore-based industries dependent on commercial fishing, the plan was inconsistent with § 30260(2) and (3), (Exh. C., 172-73), unless Exxon agreed to drill only from January through April. (Exh. C, 173.) The Commission noted that other thresher shark fisheries had been closed due to exploratory drilling and that closing another fishing ground "would be unfair to the commercial fishermen and would significantly and adversely impact a portion of this coastal dependent industry." (Exh. C., 171.)

Pursuant to § 1456(c)(3)(B), Exxon appealed to the Secretary of Commerce and filed suit against the Commission in this Court. However, following mediation by the Department of Commerce in November, 1983, Exxon agreed to complete Well A during the "drilling window" of January to May and to dismiss its administrative and judicial challenges to the Commission's consistency objection. In exchange, the Commission agreed to concur as to Well A and to reconsider its decision on Wells B and C on or before February 8, 1984. (See Pl. Aff., Exh. F, 258.)

Well A was drilled in January and February of 1984. Exxon resubmitted its consistency certification for Well B which was considered by the Commission at a hearing held on February 8, 1984. The Commission objected to certification because Exxon refused to limit exploration to the "drilling window" which was expanded from Thanksgiving through April. The Commission's report identified the lease tract as lying within fishblock 667 which it found to be a significant thresher shark, rockcod and spot prawn fishery. The Commission cited fish catch data from the California Department of Fish and Game which showed that fishblock 667 ranked in the top 10% of all blocks contributing to the reported catch for the years 1981-1983. The Commission observed that as a result of oil exploration and development of the Santa Ynez Unit, a prime thresher shark fishing area had already been closed. (Exh. H, 273.) According to the Commission, Exxon's proposal "will not only pose severe individual impacts on the thresher shark industry, but it will also have a significant cumulative effect on the commercial fishing industry." (Exh. H, 272.) Consequently, the Commission found the proposed drilling "inconsistent with Sectionn 30230, 30231, and 30234 of the Coastal Act since drilling during the fishing season would adversely impact the commercial fishing industry." (Exh. H, 273.) The Commission also found Exxon's proposal inconsistent with § 30260(3) which governs the location or expansion of coastal-dependent industrial facilities.¹ (Exh. H, 274.)

[17 ELR 20289]

At the hearing, Exxon stated that it no longer wished to drill Well C. (Exh. I, 301, 303.) Additionally, Exxon agreed to certain mitigation measures which were designed to minimize the interference the drilling rig might present to drift gillnetters. (Exh. H, 273.) However, the Commission found that such mitigation measures did not meet the concerns of the commercial fishing industry and again proposed concurrence if Exxon would limit its drilling to the period from December through April. (Id.) The Commission found that "limiting drilling to these months [was] reasonable since this limitation allows use of the area by both industries." (Id.).

The Commission objected to Exxon's proposal to drill Wells B and C as long as Exxon refused to limit its exploration to the "drilling window" period. Except for the impact on the commercial fishing industry and the cumulative effects on the commercial thresher shark fishery, the Commission found the drilling proposal consistent with other aspects of the Coastal Act such as the discharge of pollutants [§ 30260], geologic hazards [§ 30253(1) and 30262(a)], air quality [§ 30253(3)], and vessel traffic safety [§§ 30260, 30262]. (Exh. H, 274.)

Pursuant to § 30260, the Commission's report also analyzed the proposed drilling in terms of its effect on the public welfare. The report recognized the public interest in the development of energy resources and weighed the importance of "the continued biological productivity of fisheries resources." The Commission noted that five other oil companies had accepted the "drilling window" restriction. Finally, the report pointed out the CCC's record of concurring in approximately 88 percent of the proposed oil exploration plans. (Exh. H, 276.) The Commission concluded that its objection would "protect other aspects of the public welfare, such as the commercial fishing industry" and therefore found the drilling project inconsistent with § 30260(2), (3). (Exh. H, 276-77.)

Following the February 8 decision by the Commission, Exxon appealed to the Secretary of Commerce pursuant to 15 C.F.R. § 930.125 for review of the Commission's objection to the consistency certification.² On November 14, 1984, the Secretary of Commerce found that Exxon had not satisfied the two grounds necessary for sustaining an appeal. The first ground requires a finding thattt the activity is "consistent with the objectives or purposes of the [CZMA]." To be consistent with the objectives or purposes of the CZMA, the activity must (a) further one or more of the competing national objectives or purposes contained in sections 302 and 303 of the Act [16 U.S.C. §§ 1451, 1452]; (b) not cause adverse effects on the natural resources of the coastal zone substantial enough to outweigh its contribution to the national interest; (c) not violate the Clean Air Act or FederalWater Pollution Control Act; and (d) not be subject to a more reasonable alternative. 15 C.F.R. § 930.121 (1984). To satisfy the second ground the activity must be "necessary in the interest of national security," i.e., a national defense or other national security interest would be significantly impaired if the activity were not permitted to go forward as proposed. 15 C.F.R. § 930.122 (1984).

After reviewing the entire record and considering the comments of interested parties and federal agencies, the Secretary made detailed findings on each of the relevant criteria. He found that the proposed drilling would further the national objective of energy self-sufficiency and that the projects' contribution to the national interest outweighed its adverse effects on the resources and land and water uses of the coastal zone. In addition, the Secretary concluded that the drilling would not violate the Clean Air Act and Clean Water Act. However, because the "drilling window" alternative was reasonable in light of the competing interests and the proposed drilling was not necessary to national security, the Secretary determined that Exxon's proposed exploration could not be permitted by Federal agencies.

Justiciability

Statutory structure of the CZMA and the procedural posture of this case raise difficult questions about the propriety of judicial review. Some were presented in the defendants' motion for summary judgment and in response to Exxon's motion for summary judgment; others were raised by the Court at oral argument.³

These concerns essentially involve whether plaintiff has standing to contest the Commission's objection to consistency certification and whether the Court's discretion to consider declaratory relief should be exercised.

The concept of standing includes both constitutional requirements and prudential considerations. To satisfy the constitutionally imposed standing requirements, the party invoking the court's authority must show that he personally has suffered some actual and threatened injury as a result of the putatively illegal conduct of the defendant, the injury can be fairly traced to the challenged action, and the injury is likely to be redressed by a favorable decision. Gladstone Realtors v. Village of Bellwood, 441 U.S. 91, 99, 99 S. Ct. 1601, 1607 (1979); Simon v. Eastern Kentucky Welfare Rights Organization, 426 U.S. 26, 38, 96 S. Ct. 1917, 1924 (1976). This standing requirement applies equally to actions brought under the Declaratory Judgment Act, 28 U.S.C. § 2201. Western Mining Council v. Watt, 643 F.2d 618 [11 ELR 20440] (9th Cir. 1981).

Establishing injury in fact requires the plaintiff to allege facts demonstrating a definable and discernible injury and an adequate connection between that injury and himself. Gladstone Realtors v. Village of Bellwood, 441 U.S. 91, 99 S. Ct. 1601 (1979). Here, Exxon's first amended complaint alleges thatt it has invested $84 million in the exploration of the Santa Rosa Unit. Exxon also asserts a vested right to the recovery of hydrocarbons from the area. These allegations alone suffice to establish the requisite injury needed to satisfy the first prong of the constitutionally imposed standing test. In addition, [17 ELR 20290] the record contains further evidence of the injury suffered by Exxon. The Commission's Consistency Certification and Staff Recommendation of February 8, 1984 notes that Exxon asserted that drilling during the "window period' of Novemberthrough May was not feasible because it had contracted with a particular drilling ship to drill exploratory wells in the months outside the window period. Exxon also indicated that it would be forced to incur costs between $70,000 and $100,000 per day in order to retain the ship until the drilling period began. Thus, despite the Commission's apparent contention that other drilling rigs were available, the record supports a finding of a particularized and discernible injury to plaintiff which is sufficient to establish injury in fact.

To satisfy the second prong of the standing requirement, plaintiff must show that the injury "fairly can be traced to the challenged action." Valley Forge Christian College v. Americans United for Separation of Church and State, 454 U.S. 464, 472, 102 S. Ct. 752 (1982). The "fairly traceable" causation requirement is generally based on the effect of the defendant's past or present actions. Thus, plaintiff must make only a reasonable showing that "but for" defendant's action the alleged injury would not have occurred. The Commission's denial of consistency certification directly caused Exxon's inability to receive a drilling permit for those months outside the "drilling window." Thus, the "fairly traceable' requirement is met.

Finally, plaintiff must establish that his alleged injury "is likely to be redressed by a favorable decision." The inquiry focuses on whether the court's grant of the requested relief would be likely to remedy plaintiff's injury. Although the degree of likelihood required is not clear, plaintiff need not prove to an absolute certainty that the harm will be removed. Gladstone Realtors v. Village of Bellwood, 441 U.S. 91, 99 S. Ct. 1601 (1979). Instead, the redressability requirement seeks to ensure that the court's remedial powers are not invoked in situations where an effective remedy is merely speculative. Greater Tampa Chamber of Commerce v. Goldschmidt, 627 F.2d 258, 263 (D.C. Cir. 1980).

The Commission argues that a decision in Exxon's favor on the merits would not result in the relief sought by Exxon, the issuance of drilling permits, because the effect of the Secretary's refusal to override the Commission's objection, when read in conjunction with 15 C.F.R. §§ 930.131 and 930.134, is to preclude the issuance of the permits under any circumstances. The Commission points to § 1456(c)(3)(B) which provides that no federal agency may grant a permit unless the state agency concurs in the consistency certification, the state agency fails to object within six months, or the Secretary finds that the activity is consistent with the objectives of the CZMA or is necessary in the interest of the national security. 16 U.S.C. § 1456(c)(3)(B) (1985). The applicable regulation, 15 C.F.R. § 930.131, reiterates this requirement. Sectionn 930.131(b) provides that "[i]f the Secretary does not make either of these findings [consistency with the objectives of the CZMA or necessity in the interest of the national security], the Federal agency shall not approve the activity." Also, under § 930.83 when the Secretary does not determine that the activity is consistent with the CZMA, the applicant shall submit a new plan to the Secretary of the Interior and to the state agency. The Commission contends that even if its objection were invalidated in this action, § 930.131 represents an independent bar to the issuance of the desired permits.⁴

Although the Commission correctly posits the conundrum, the problem is that a valid objection to the consistency certification, that is, one based on activities "affecting any land use or water use in the coastal zone" within the meaning of the CZMA, is a necessary predicate to an appeal to the Secretary under § 930.125. To adopt the Commission's construction of the regulatory scheme would insulate a State agency's wholly invalid objection from judicial review so long as the applicant appealed to the Secretary. Moreover, the requirement of exhaustion of administrative remedies would most likely make an appeal to the Secretary mandatory. See e.g., Weinberger v. Salfi, 422 U.S. 749, 765, 95 S. Ct. 2457 (1975); United States v. California Care Corp., 709 F.2d 1241, 1248 (9th Cir. 1983). There is nothing in the statutory or regulatory scheme which suggests that Congress meant to insulate consistency objection of the State agencies from judicial review or give the agencies absolute discretion to interpret the scope of their authority under the CZMA. Indications are to the contrary.⁵

Thus there do not appear to be causative factors other than the prohibition on issuance of a permit if the Secretary fails to override which would impede the Court's ability to grant plaintiff the relief that is sought. As to that impediment, § 930.131(b) read in conjunction with § 1456(c)(3)(B) suggests that if an objection is legally invalid there is no longer any consistency determination by a State agency upon which the Secretary's override decision may operate. (In this connection it is not without significance that the Secretary's appellate role is not that of affirmance or reversal with a life of its own, but rather overriding (which would obliterate the objection) or not overriding, which was the effect of leaving intact the State's objection.) Therefore, were I to grant plaintiff the declaratory and injunctive relief requested, it cannot be said that there is a substantial likelihood that Exxon would find itself in the identical position in which it finds itself now. See e.g., Warth v. Seldin, 422 U.S. 490, 95 S. Ct. 2197 (1975); Simon v. Eastern Kentucky Welfare Rights Organization, 426 U.S. 26, 96 S. Ct. 1917 (1976). Because defendants' action is the only effective barrier to accomplishment of plaintiff's objective, the requisite degree of likelihood is established. See Arlington Heights v. Metropolitan Housing Development Corp., 429 U.S. 252, 97 S. Ct. 555 (1977); Greater Tampa Chamber of Commerce, 627 F.2d at 264.

Nor do prudential considerations compel a conclusion thatt the Court's power is improperly invoked. In addition to the constitutionally imposed requirements, plaintiff must establish that its complaint falls "arguably within the zone of interests to be protected or regulated by the statute . . . in question." Gladstone Realtors, 441 U.S. at 100 n.6, 99 S. Ct. at 1608 n.6; Eastern Kentucky Welfare Rights, 426 U.S. at 39 n.19, 96 S. Ct. 1924 n.19. This requirement focuses on the connection between the alleged injury and the relevant statute and serves the purpose of "allowing courts to define those instances when it believes the exercise of its power at the instigation of a particular party is not congruent with the mandate of the legislative branch in a particular area." Tax Analysts and Advocates v. Blumenthal, 566 F.2d 130, 140 (D.C. Cir. 1977). The appropriate test is "whether the complaining party has stated an interest which is arguable from the face of the statute." Id. at 142. Here, Exxon has applied for a drilling permit from the Secretary of the Interior and is claiming an interest in exploring for oil on the OCS unhindered by the consistency certification requirements which do not comport with the CZMA. Sectionn 1456(c)(3)(B) of the CZMA requires "any person who submits to the Secretary of the Interior any plan for the exploration" of lands leased on the OCS to certify that such activity complies with the state's management program and will be carried out in a consistent manner. Exxon contends that it has done so; therefore its asserted interest is arguably within the zone of interests regulated by the CZMA.

Nevertheless, the advisability of granting declaratory relief is troublesome. This case presents a unique statutory and regulatory scheme which involves a grant of authority from the federal government [17 ELR 20291] to the states in an effort to harmonize the management of the coastal zone and the development of the OCS, separate yet related bodies of state and federal law, and an appeal procedure to the Secretary of Commerce as well as periodic review of the States' management programs by him.

Neither party cited, nor could I find, direct precedent governing the role or scope of federal court review of a State agency's consistency objection under the CZMA. Nowhere in the legislative or regulatory scheme is there a provision for review of the State agency's consistency objection by a federal district court. Nor does the CZMA or regulations promulgated thereunder suggest the standard of review to be employed by a district court considering a consistency objection.

The provision for appeal to the Secretary of a State agency's objection raises a number of problems regarding district court review. First, the Secretary is not a party to this action and the Court therefore may not review his decision. Second, requesting declaratory relief injects the Court into a dispute which implicates the distribution of power between state and federal governments. Superimposed on this arrangement is a provision for the Secretary to determine whether the objection should be overturned for policy reasons, that is, the national security or consistent with the objectives of the CZMA. In this context judicial review is cumbersome and potentially intrusive upon the decision-making processes of the Commission, federal regulatory agencies and the Secretary of Commerce. Despite these misgivings, the strong presumption of judicial review of administrative actions and the absence of any authority which suggests that declaratory relief is inappropriate in this context constrains a conclusion thatt the merits may be reached.

In the final analysis I am influenced by two factors: the first is defendants' concession that the California Coastal Management Program "is, for purposes of consistency review, federal law. (Chevron U.S.A., Inc. v. Hammond (9th Cir. 1984) 726 F.2d 483, 490-491 [14 ELR 20305]; Southern Pac. Transp. v. California Coastal Com'n (N.D. Cal. 1981), 520 F. Supp. 800, 804-805 [12 ELR 20047].)" Memorandum in Response to Exxon's Motion at 29. Although defendants strenuously urge that the only justiciable issue is the Commission's application of state law, their recognition that consistency review is in fact a hybrid is compelling. The other factor is the anamoly inherent in the regulatory structure. Because the Secretary's override assumes validity of the Commission's objection, not to declare the parties' rights would accord it a veto which the Act does not intend. See California v. Watt, 683 F.2d 1253, 1264 [12 ELR 21084] (1982), rev'd on other grounds sub nom., Secretary of the Interior v. California, __ U.S. __, 104 S. Ct. 656 [14 ELR 20129] (1984).

The Commission's Motion for Summary Judgment

Many of the grounds urged by the Commission in support of its motion for summary judgment revolve around the justiciability issues already discussed. However because all the concerns expressed cannot easily be addressed under one heading or another, I shall treat them in turn as they appear to bear on the major grounds of the motion.

Exhaustion of Administrative Remedies

The Commission filed its motion for summary judgment before the Secretary handed down his decision in which he declined to override the Commission's objection. In its moving papers, the Commission argued that Exxon's complaint should be dismissed because Exxon had failed to exhaust its administrative remedies. This ground for dismissal was mooted once the Secretary of Commerce issued his ruling denying Exxon's appeal.

The Commission also contends that under the Administrative Procedure Act ("the APA"), 5 U.S.C. § 551 et seq., Exxon must first seek judicial review of the Secretary's decision and that Exxon's opportunity for judicial review of the Secretary's decision is its exclusive source of relief in this matter. Thus, according to the Commission, Exxon's remedy lies in judicial review of the Secretary's decision and any decision rendered by this Court would be purely advisory. The Commission further argues that the instant action must be dismissed because the Secretary is not a party to this suit. However, no authority is cited for the proposition that the availability of judicial review of a final agency order renders a case brought on different grounds non-justiciable.

The regulations governing the Secretary's override review provide that "the decision of the Secretary shall constitute final agency action for the purposes of the Administrative Procedure Act." 15 C.F.R. § 930.130(d) (1984). Under the Administrative Procedure Act, "Agency action made reviewable by statute and final agency action for which there is no other adequate remedy in a court are subject to judicial review." 5 U.S.C. § 704 (1984). Thus, there is no question that Exxon may seek judicial review of the ruling by the Secretary of Commerce under applicable provisions of the APA. See 5 U.S.C. § 706 (1984). However, the mere availability of judicial review of the Secretary's decision does not necessarily preclude Exxon from litigating the appropriate scope of the Commission's authority under the CZMA. Cf. I.N.S. v. Chadha, __ U.S. __, 103 S. Ct. 2764, 2777 [13 ELR 20663] (1983), aff'g, 634 F.2d 408, 418 n.6 (9th Cir. 1980); El Paso Electric Co. v. F.E.R.C., 667 F.2d 462, 467 (5th Cir. 1982); Consumers Union v. Miller, 84 F.R.D. 240, 243 (D.D.C. 1979). See Exxon Corporation v. Fischer, __ F. Supp. __ (N.D. Cal. 1984); see also Southern Pacific Trans. Co. v. California Coastal Commission, 520 F. Supp. 800 [12 ELR 20047] (N.D. Cal. 1981).

Judicial review of the Secretary's decision would be conducted under the criteria set forth in § 706 of the APA which allows the Court to set aside the Secretary's decision if it is arbitrary or not in accordance with law, contrary to constitutional limits, in excess of his jurisdiction, procedurally incorrect, or unsupported by substantial evidence. 5 U.S.C. § 706 (1985). The Secretary's review of the Commission's objection is confined to a relatively narrow set of policy considerations which differ significantly from the issue presented in this action — whether the Commission acted within the scope of its authority under substantive provisions of the CZMA. Under the policy considerations set forth in §§ 930.121 and 930.122, the Secretary cannot directly confront the issue presented here. Thus, review of the Secretary's decision under the APA would not resolve the question of the proper scope of the Commission's authority.

Moreover the factors which usually argue for exhaustion of administrative remedies — the need for factual development, the importance of the agency's expertise, the probability that the agency will resolve the controversy without judicial review, protection of agency processes from interruption, and conservation of judicial resources — do nto apply with the same force to the unique statutory scheme at issue here. See Davis, Administrative Law Treatise, § 26:1 (1984).

(A) Although Exxon could challenge the determination of the Commission on the ground of its being unsupported by the record (the Secretary in effect so found, see Decision and Findings at 15), and the Secretary's decision on similarly traditional grounds, it does not do so. Rather Exxon raises an issue that is entirely legal, i.e., whether, assuming the adverse effect on the harvest of thresher sharks on the OCS, the Commission may validly object under the CZMA to the collateral impact on those whose fishing is thereby curtailed. All of the facts necessary to a ruling on that issue have been adduced and are agreed to; once the Commission objected on the ground of interference with thresher shark fishing, the issue for judicial review was joined.

(B) Despite the significance of the Agency's expertise on national energy policy, because the Secretary must assume validity of the objection and may only override, not affirm or reverse, the objection, nothing he is free to do is relevant or helpful in addressing the legal issue of the reach of the Commission's authority.

(C) Clearly in the abstract a controversy between an applicant and the Commission could be resolved by virtue of the Secretary's overriding an objection; however in this case, the Secretary cannot, and has not, made a decision to override on the ground that the objection is invalid ab initio. There appear to be only two ways in which administrative procedures might make a difference: one, by the process of mediation as occurred originally in this case [15 C.F.R. § 930.110-930.116]; the other, by the Secretary's generally reviewing the State's implementation of its consistency responsibilities for compliance with sections 305 and 306 [16 U.S.C. §§ 1458, 1456(h)]. However mediation is neither required nor binding nor a prerequisite for judicial review; and there is nothing in the administrative structure permitting the review of performance procedure to be invoked so as to operate directly on this particular application.

(D) Agency processes overall might be protected from interruption by deferring entirely to the administrative review procedure. I am concerned about the efficacy of court intervention mid-stream (indeed post-stream as it turns out in this case), directed at the first [17 ELR 20292] half of an interdependent and inter-jurisdictional process. It may be that there is a glitch in the statutory structure which ought to be legislatively or administratively addressed (by removing, for example, any barrier to the Secretary's considering invalidity and thereby affording an offortunity for a clean appeal from his decision). Meanwhile I am persuaded that Exxon has no effective way to challenge an objection it believes to be invalid except by way of direct judicial review.

(E) If Exxon's challenge to the objection pertained purely to the Commission's response to matters of fact or policy, judicial resources would clearly be conserved by declining to step into the process at the objection stage because the override could result in a dispositive, appealable decision. However there is no clear savings one way or the other when, as is the case here, the override cannot reach the basis of the challenge.⁶

Abstention

The Commission urges the Court to abstain under Railroad Comm'n of Texas v. Pullman Co., 312 U.S. 496, 61 S. Ct. 643 (1941), on grounds that Exxon is asserting state law claims and requesting a determination of the constitutionality of the Commission's actions. In Pullman, the Supreme Court held that a court should abstain in cases presenting a federal constitutional issue which might be mooted or presented in a different posture by a state court determination of pertinent state law. Pullman Co., supra; Colorado River Water Conservation District v. U.S., 424 U.S. 800, 814, 96 S. Ct. 1236 (1976); C-Y Development Co. v. City of Redlands, 703 F.2d 375, 377 (9th Cir. 1983). "Pullman abstention is an extraordinary and narrow exception to the duty of a district court to adjudicate a controversy properly before it." Cinema Arts Inc. v. County of Clark, 722 F.2d 579, 580 (9th Cir. 1983). Underlying the Pullman abstention doctrine are several policy considerations: "the desirability of avoiding unseemly conflict between two sovereignties, the unnecessary impairment of state functions, and the premature determination of constitutional questions." C-Y Development, 703 F.2d at 377.

Both prerequisites to Pullman abstention, the existence of a federal constitutional issue and a state law issue, are missing here. Exxon dismissed the state law claims alleged in Count II of the first amended complaint. (See Pl.'s Opp. to Def.'s Mtn., 2:19-22.) Although Exxon's first amended complaint asserts that the Commission's actions are contrary to the United States Constitution, Exxon concedes that its motion for summary judgment "does not claim that California has violated either the Supremacy Clause or the Commerce Clause in attempting to restrict OCS activities here." (Pl.'s Opp. to Def.'s Mtn., 3:20-23.) In view of Exxon's concession that it is not pursuing rights guaranteed by the federal Constitution in this motion, Pullman abstention would not be appropriate at this time. See Knudsen Corp. v. Nevada State Dairy Commission, 676 F.2d 374, 377 (9th Cir. 1982).

Additionally, Exxon concedes that its motion for summary judgment does not raise issues of state law. Specifically, Exxon disavows any claim that the Commission misconstrued Cal. Pub. Res. Code § 30234 in reaching its decision to object to the consistency certification.⁷ (Pl.'s Opp. to Def.'s Mtn., 4:14-24.) Exxon voluntarily dismissed the state law claims alleged in Count II of the first amended complaint. Thus, the Commission's application or interpretation of the California Coastal Act is not an issue in this case.

The Collateral Estoppel Effect of the Secretary's Decision

The Commission argues that principles of res judicata or collateral estoppel preclude Exxon from relitigating the question of the proper construction of the CZMA in this Court because the Secretary decided that issue. "Under the doctrine of res judicata, 'a final judgment on the merits bars further claims by parties or their privies based on the same cause of action.'" Montana v. United States, 440 U.S. 147, 153, 99 S. Ct. 970 (1979). Principles of collateral estoppel dictate that once an issue is actually litigated and necessarily determined, that determination is conclusive in subsequent suits based on a different cause of action but involving a party or privy to the prior litigation. Parklane Hosiery Co. v. Shore, 439 U.S. 322, 326 n.5, 99 S. Ct. 645 (1979). The purposes of these rules are to "conserve judicial resources, protect litigants from multiple lawsuits, and foster certainty and reliance in legal relations." United States v. ITT Rayonier, Inc., 627 F.2d 996, 1000 [10 ELR 20945] (9th Cir. 1980).

Although res judicata is usually applied only when there has been a prior judicial proceeding, the Supreme Court has approved of its application in administrative proceedings. "When an administrative agency is acting in a judicial capacity and resolves disputed issues of fact properly before it which the parties have had an adequate opportunity to litigate, the courts have not hesitated to apply res judicata to enforce repose." United States v. Utah Construction Co., 384 U.S. 394, 422, 86 S. Ct. 1545 (1960); Garner v. Giarusso, 571 F.2d 1330, 1336 (5th Cir. 1978); Lightsey v. Harding, Dahm & Co., Inc., 623 F.2d 1219, 1221 (7th Cir. 1980).

Although the res judicata and collateral estoppel effects of administrative decisions are generally recognized, "the doctrines are not to be applied to administrative decisions with the same rigidity as their judicial counterpart." United States v. Lasky, 600 F.2d 765, 768 (9th Cir. 1979). "[D]ue regard must be given in each case as to whether the application of the doctrine is appropriate in light of the particular prior administrative proceedings." Id. Thus, "in the administrative law context, the principles of collateral estoppel and res judicata are applied flexibly." Artukovic v. I.N.S., 693 F.2d 894, 898 (9th Cir. 1982); see also Western Oil & Gas Assn. v. E.P.A., 633 F.2d 803, 809 [10 ELR 20985] (9th Cir. 1980) ("Collateral estoppel is not to be applied mechanically . . . [t]he circumstances of each case must provide the touchstone for decision.")

Collateral estoppel applies fully when involving adjudications of "past facts, where the second proceeding involves the same claim or the same transaction." Stuckey v. Weinberger, 488 F.2d 904, 911 (9th Cir. 1973) (en banc). However, the Ninth Circuit has also indicated that, at least with respect to collateral estoppel, the preclusive effect "has never been applied to issues of law with the same rigor as to issues of fact." Western Oil & Gas, supra, 633 F.2d at 809, citing Segal v. AT&T, 606 F.2d 842, 845 (9th Cir. 1980). See also U.S. v. ITT Rayonier, Inc., 627 F.2d 996, 1000 [10 ELR 20945] (9th Cir. 1980).

Applying the factors articulated in Utah Construction leads to the conclusion thatt the Secretary's decision should not be accorded preclusive effect. First, the Secretary was not acting in a wholly judicial capacity. The regulations promulgated under the CZMA require the Secretary to assess and then balance costs and benefits as would a policy maker. For example, § 930.121(b) requires the Secretary to weigh the adverse effects of the proposed activity against its contribution to the national interest. Analyzing the adverse effects required the Secretary to evaluate the detriment to California's interests if Exxon's drilling were permitted. (Secretary's Decision and Findings, pp. 14-15.) Similarly, to assess the contribution to the national interest, the Secretary considered the comments of administrators of interested federal departments. (Secretary's Decision at 15.) He then decided as a matter of policy that the contribution to the the national interest outweighed the ascertainable adverse effects on the coastal zone. (Secretary's Decision at 16.)

Second, the Secretary did not actually decide the issue that is before this Court. Because he assumes validity of the objection and his analysis of the controversy was limited to the criteria set forth in the regulations, he did not explicitly consider whether the Commission may properly object to a proposed activity because of collateral effects on the local economy. The Secretary's decision indicates [17 ELR 20293] that Exxon asserted that the Commission exceeded the scope of its authority under the CZMA. The Secretary's decision states, "[Exxon] maintains that this element [§ 930.121(b)] comprises only the effects of its proposed activity on the 'natural resources' of the coastal zone." (Secretary's Decision and Findings at 12.) In the same section of the decision, the Secretary states, "[Exxon] argues that protection of OCS commercial fishing activities from space conflicts with other OCS activities is not a proper use of consistency because it does not affect a land use or water use in the coastal zone but only has a 'perceived economic impact.'" (Decision, 13.)

Notwithstanding the arguments made by Exxon to the Secretary, he did not directly address the scope of the Commission's authority. He did not examine the CZMA's purpose, statutory language, or legislative history and his decision does not represent an adjudication of the legal issue presently before the Court.

Similarly, it does not appear that the parties had an adequate opportunity to litigate the question of the Commission's construction of the CZMA. The importance of the issue when contrasted with the minimal consideration devoted to it by the Secretary's decision requires the Court to deny any preclusive effect.

Ripeness

The Commission argues that the Court should not rule on the merits because this controversy is not presently ripe for adjudication. Ripeness doctrine is based in part on the Article III requirement that courts decide only cases or controversies. Ripeness is required in order "to prevent courts from becoming enmeshed in abstract questions which have not concretely affected the parties." Pence v. Andrus, 586 F.2d 733, 737 (9th Cir. 1978). In deciding whether an issue is ripe for review, the court evaluates "both the fitness of the issues for judicial decision and the hardship to the parties of withholding court consideration." Pacific Legal Foundation v. State Energy Resources Conservation and Development Comm'n, 659 F.2d 903, 915 [11 ELR 21070] (9th Cir. 1981), citing Abbott Laboratories v. Gardner, 387 U.S. 136, 148-49, 87 S. Ct. 1507, 1515 (1967).

Originally, defendant contended that exhaustion of administrative remedies was necessary before the case was ripe, American Petroleum Institute v. Knecht, 456 F. Supp. 889 [8 ELR 20853] (C.D. Cal. 1978), an argument mooted by the ruling issued by the Secretary of Commerce. Based on interrogatories answered by Exxon, the Commission also maintains that the present case is not ripe because Exxon is not certain that it will drill even if this Court granted Exxon the relief sought. When asked whether the drilling of Well B would be required, Exxon responded, "Plaintiff is still in the process of evaluating the test results obtained from Well A, as well as other information concerning or relevant to the commerciality of the SRU [Santa Rosa Unit]. Presently, Plaintiff believes that the drilling of Well B will be required before Exxon can make a final decision concerning production or commercial development of the SRU." (Interrog. 11, Exh. A, Def.'s P & A in Support of Its Mtn.) Inasmuch as Exxon states that it believes drilling will be required, its response is not susceptible to an interpretation that drilling is so uncertain that it can be said that Exxon has not been adversely affected by the Commission's decision. Furthermore, Exxon was also asked by defendant when it intended to drill Well B. Exxon responded that the answer was unknown because its planning "has been held in abeyance . . . pending the outcome of this and related proceedings." (Interrog. 14, Exh. A.) Thus, any uncertainty about when Exxon will drill is in large part due to the uncertainty inherent in its legal challenge to the authority of the Commission.

In view of Exxon's belief that Well B is required, it is clear that Exxon is adversely affected by the Commission's ruling. In addition, the factual record and the legal issues are sufficiently clear and developed to be fit for adjudication. See Pacific Legal Foundation, 659 F.2d at 915.

Exxon's Motion for Summary Judgment

In its motion for summary judgment, Exxon does not dispute the factual findings made by the Commission and only contends that, as a matter of law, those findings are not the proper basis for an objection under the CZMA. (Exxon Memo. in Support, 4:6-10.) Thus, whether the Commission was correct in its assessment of the adverse impact of the proposed drilling, either as a question of fact or public policy, is not an issue before the Court.

Exxon's motion raises the following issue: Whether the Commission may properly object to proposed exploration of the OCS under § 307(c)(3)(B) when the Commission concludes that the exploration will affect the harvest of fish in the OCS and thus the commercial fishing industry. Exxon seeks a declaration that commercial fishing on the OCS does not "affect a land or water use in the coastal zone" that may be the basis under the CZMA for denying consistency for oil and gas operations on the OCS. Exxon contends that the competing economic interests of industries which may be shore-based but function on the federal OCS may not be considered by the Commission when assessing whether a proposed project is consistent with its coastal management plan.

Exxon urges an interpretation of § 307(c)(3)(B) which would limit the Commission to considering the effects of a proposed activity on the natural resources of the coastal zone (see Exxon's Memo. in Support, 18:7), and confine the scope of consistency review to the physical impacts of the proposed activity on the coastal waters and the adjacent land. (See Exxon's Memo., 1:10:17, 25:20-28.) Moreover, Exxon contends that effects on individual fishermen may not support a valid objection in this case because those effects are felt only on the OCS and are by definition outside the coastal zone.

The Commission's objection evinces concern over two effects on the coastal zone. First, the Commission cited the effect on the fishermen's ability to harvest thresher shark in the area of proposed exploration. In this regard, the Commission relied on Cal. Pub. Res. Code §§ 30230 and 30231 which govern the maintenance of marine resources and biological productivity in coastal waters. Second, the Commission cited the "significant cumulative effect on the commercial fishing industry." Although the record is not clear it would seem that the Commission was referring to adverse effects on the coastal-dependent fishing industry such as those businesses which process and transport the catch and service the fishing fleet. These concerns are apparently governed by Cal. Pub. Res. Code § 32060.

Effect on the maintenance or protection of marine resources

The CZMA's statutory language and purpose as well as its legislative history lead to the conclusion thatt § 1456(c)(3)(B) does not authorize the Commission to object to activities affecting the harvesting of marine resources which are located outside of the coastal zone.

Sectionn 1456(c)(3)(B) governs persons who submit any plan to the Secretary of the Interior for the exploration or development of the OCS. The section requires the applicant to certify that any such exploration or development "affecting any land use or water use in the coastal zone" complies with the state's coastal management program and will be carried out in a manner consistent with the program. Sectionn 1453 defines "land use" as "activities which are conducted in, or on the shorelands within, the coastal zone. . . ." 16 U.S.C. § 1453(10) (1985). As defined by the CZMA, "water use" means "activities which are conducted in or on the water." 16 U.S.C. § 1453(18) (1985). The "coastal zone" includes "state but not federal land near the shorelines of the several coastal states, as well as coastal water extending 'seaward to the outer limit of the United States territorial sea.'" Secretary of the Interior v. California, U.S. , 104 S. Ct. 656, 658 [14 ELR 20129] (1984) [hereinafter cited as Secretary of the Interior]; see 16 U.S.C. § 1453(l). The territorial sea for states bordering on the Pacific Ocean extends three geographical miles seaward from the coastline. Secretary of the Interior, 104 S. Ct. at 658; see also 43 U.S.C. §§ 1301(a)(2), 1331(a) (1984). Thus, by definition, affected land and water uses must occur in the coastal zone.

Congressional expressions of policy contained in the CZMA also limit the State's jurisdiction and management of natural resources to the coastal zone. Specifically, Congress made a number of findings which demonstrate that only the coastal zone was to be subject to the State's authority. For example with respect to the protection of marine resources, Congress stated, "The coastal zone, and the fish, shell fish, other living marine resources, and wildlife therein, are ecologically fragile and consequently extremely vulnerable to destruction by man's alterations." 16 U.S.C. § 1451(d) (emphasis added). Congress expressly found that "[t]he key to more effective protection and use of the land and water resources of the coastal zone is to encourage the states to exercise their full authority over the lands and waters in the coastal zone by assisting the states, in cooperation with Federal and local governments and other vitally [17 ELR 20294] affected interests, in developing land and water use programs for the coastal zone, including unified policies, criteria, standards, methods, and processes for dealing with land and water use decisions of more than local significance." 16 U.S.C. § 1451(i) (1985). Congress also found, "In light of competing demands and the urgent need to protect and to give high priority to natural systems in the coastal zone, present state and local institutional arrangements for planning and regulating land and water uses in such areas are iandequate." Nothing in the express findings listed in § 1451 suggest that areas outside of the coastal zone were to be subject to the state's authority.

The declaration of policy set forth in § 1452 also makes manifest that only natural resources actually located within the coastal zone were to be governed by the CZMA. Congress declared thatt it is the national policy to "preserve, protect, develop, and where possible, to restore and enhance, the resources of the Nation's coastal zone for this and succeeding generations" 16 U.S.C. § 1452(l) (1985). Similarly, the CZMA articulates a national policy "to encourage and assist the states to exercise their responsibilities in the coastal zone through the development and implementation of management programs to achieve wise use of the land and water resources of the coastal zone, giving full consideration to ecological, cultural, historic, and esthetic values as well as to needs for economic development, which programs should at least provide for the protection of natural resources, including wetlands, floodplains, estuaries, beaches, dunes, barrier islands, coral reefs, and fish and wildlife and their habitat, within the coastal zone." 16 U.S.C. § 1452(2)(A) (1985) (emphasis added).

Thus, by its terms, the CZMA expresses a concern for effects felt on natural resources which occur only in the coastal zone. Here, it is undisputed that the resource in question, the thresher shark fishery, is located outside the coastal zone. Accordingly, to the extent that the actual harvest of the thresher sharks or the management of that particular natural resource is implicated by the Commission's consistency objection, the proposed exploration does not affect land or water uses in the coastal zone. To allow the Commission to exercise a consistency objection based on the management of resources which are not found inside the coastal zone would extend the Commission's authority into waters which are the exclusive province of the federal government. See United States v. Maine, 420 U.S. 515, 95 S. Ct. 1155 (1975); 43 U.S.C. §§ 1302, 1332(a). As the Supreme Court observed in Secretary of the Interior, "Every time it faced the issue in the [1972] CZMA debates, Congress deliberately and systematically insisted that no part of the CZMA was to reach beyond the three mile territorial limit." Id. at 663. Thus, with respect to the Commission's objection based on effects on natural resources, the Commission's jurisdiction extends only to natural resources found within the coastal zone and not in the OCS.⁸

Where the language of a statute is as clear as that expressed in § 1456(c)(3)(B) it is unnecessary to consider other sources to discern Congress' intent. State of California v. Watt, 520 F. Supp. 1359, 1368-69 [11 ELR 20870] (C.D. Cal. 1981), aff'd, 683 F.2d 1253 [12 ELR 21084] (9th Cir. 1983), rev'd on other grounds, Secretary of the Interior, supra, 104 S. Ct. 656 (1984). However, nothing in the legislative history of the CZMA suggests that the Congress intended the consistency provision of § 1456(c)(3)(B) to extend to natural resources located outside of the coastal zone. The section in question, § 1456(c)(3)(B), was added by amendment in 1976. It was contained in neither the House nor the Senate bills considering certain amendments, but instead emerged in the bill reported out of the conference committee. Compare H.R. 3981, 94th Cong., 1st Sess. (1975); S. 586, 94th Cong., 1st Sess. (1975); Conference Report, H. Rep. No. 94-1298, 94th Cong., 2d Sess. 1 (1976), reprinted in Legislative History of the Coastal Zone Management Act of 1972 as Amended in 1974 and 1976 (1976), at 603, 799, 1051 [hereinafter referred to as Legislative History]. The section-by-section analysis contained in the Conference Report reveals only that the Conference Committee sought to apply "the consistency requirement to the basic steps in the OCS leasing process — namely, the exploration, development and production plans submitted to the Secretary of the Interior" and says nothing about the proper scope of the state's authority under § 1456(c)(3)(B). See Conference Report, H. Rep. No. 94-1298, 94th Cong., 2d Sess. 30-31 (1976), reprinted in Legislative History at 1080-81. Similarly, the legislative history to the consistency provisions enacted in 1972 does not support an in terpretation of the CZMA which would allow a state to object to federally regulated activities which occur on the OCS and affect natural resources located outside the coastal zone. See S. Rep. No. 92-753, 92d Cong., 2d Sess. 20 (1972); H.R. Rep. No. 92-1049, 92d Cong., 2d Sess. 20 (1972); Conference Report, H. Rep. No. 92-1544, 92d Cong., 2d Sess. 15 (1972), reprinted in Legislative History at 211, 323, 457.

Effect on economic resources

Having determined that the Commission may not properly object to the proposed activity because the drilling does not affect a water use in the coastal zone, it is necessary to determine whether the Commission objection may be sustained because the proposed exploration affects a land use in the coastal zone.

Although the basis for the Commission's objection is not entirely clear, it appears that the Commission objected to the proposed drilling because it would adversely affect the economic interests of individual fishermen and the commercial fishing industry as a whole.⁹ Exxon argues that the Commission exceeded its authority under the CZMA when it objected to the proposed exploration on the basis of economic effects on the commercial fishermen who harvest their catch on the OCS, or related shore-based industries. Exxon contends that such purely economic interests of industries located in the coastal zone may not be considered by the Commission when assessing whether a proposed drilling project is consistent with its coastal management program.

Thus, the issue presented here is whether, as defined by the CZMA, the proposed activity affects a land use in the coastal zone when the effect is an adverse impact on the economic interests of certain individuals or a particular industry. Consideration of the language of the CZMA, the related provisions of the statute and its legislative history, leads me to conclude that the economic interests of a single industry unrelated to the use of land do not constitute [17 ELR 20295] an effect upon a land use in the coastal zone for purposes of the consistency review procedure.

The CZMA defines "land use" as "activities which are conducted in, or on the shorelands within the coastal zone," subject to certain requirements not relevant here. 16 U.S.C. § 1453(10) (1985). Although the definition is not self-explanatory, the inclusion of "activities" in the definition as well as the literal meaning of "use" appear to represent a concept less intangible than purely economic interests.

Other sections of the CZMA suggest that Congress employed the phrase "land use" in its literal sense, i.e., physical utilization of the land within the coastal zone. The CZMA, read as a whole, suggests that Congress intended "land use" to encompass conventional notions of land use planning and management. For example, the term management program is defined as a statement "setting forth objectives, policies, and standards to guide public and private uses of lands and waters in the coastal zone." 16 U.S.C. § 1453(12) (1985). Sectionn 1454(b) sets forth the requirements of the state's management programs. Among other requirements, each program must include: a definition of what constitutes permissible land uses and water uses within the coastal zone, an inventory of areas of particular concern within the coastal zone, broad guidelines on priorities of uses in particular areas, and a planning process for siting energy facilities and lessening shoreline erosion. See 16 U.S.C. § 1454(b)(2), (3), (5), (8) and (9) (1985). Before approving a management program the Secretary must find that the program provides for coordination of other governmental plans for the coastal zone, adequate consideration of the national interest involved in planning for, and siting of, facilities and the designation of specific areas for preservation. 16 U.S.C. § 1455(c)(2), (8) and (9) (1985). None of these statements suggests that balancing conflicting economic interests is an appropriate part of the land use planning process envisioned by the CZMA. Instead, it appears that land use planning in its conventional sense was intended: harmonizing competing demands for the use of limited land area by the process of rational governmental decision-making.

Aspects of the Congressional declaration of policy contained in the CZMA also support the view thatt the concept of "land use" is limited to actual uses of the land rather than economic interests. According to the CZMA's declaration of policy, the statute was enacted "to encourage and assist the states to exercise effectively their responsibilities in the coastal zone through the development and implementation of management programs to achieve wise use of the land and water resources of the coastal zone, giving full consideration to ecological, cultural, historic, and esthetic values as well as to needs for economic development . . . ." 16 U.S.C. § 1452(2) (1985). Particularly instructive is § 1452(2)(C) which provides that the national policy is to give "priority consideration . . . to coastal-dependent uses and orderly processes for siting major facilities related to national defense, energy, fisheries development, recreation, ports and transportation, and the location, to the maximum extent practicable, ofnew commercial and industrial developments in or adjacent to areas where such development already exists." Similarly, the CZMA expresses a policy "encourag[ing] the preparation of special area management plans which provide for increased specificity in protecting significant natural resources, reasonable coastal-dependent economic growth, improved protection of life and property in hazardous areas, and improved predictability in governmental decision-making." 16 U.S.C. § 1452(3) (1985).

Moreover, in enacting the CZMA, Congress also made specific findings which bear on the issue before the Court. Congress found that "there is a national interest in the effective management, beneficial use, protection, and development of the coastal zone" and that "the coastal zone is rich in a variety of natural, commercial, recreational, ecological, industrial, and esthetic resources of immediate and potential value to the present and future well-being of the Nation." 16 U.S.C. § 1451(a), (b) (1985). Congress was aware that the coastal zone is subject to conflicting interests and found that "[t]he increasing and competing demands upon the lands and waters of our coastal zone occasioned by population growth and economic development, including requirements for industry, commerce, residential development, recreation, extraction of mineral resources and fossil fuels, transportation and navigation, waste disposal and harvesting of fish, shellfish, and other living marine resources" have burdened the natural environment. 16 U.S.C. § 1451(c). According to the Congressional findings, the coastal zone is the site of intense competition between groups competing to use the area. In § 1451(f), Congress cited the "new and expanding demands for food, energy, minerals, defense needs, recreation, waste disposal, transportation, and industrial activities" which "are creating the need for resolution of serious conflicts among important and competing uses and values in coastal and ocean waters." 16 U.S.C. § 1451(f). These same findings also reflect a belief that "the key" to managing the coastal zone wisely is "to encourage the states to exercise their full authority over the lands and waters in the coastal zone" in developing "unified policies, criteria, standards, methods, and processes for dealing with land and water use decisions of more than local significance." 16 U.S.C. § 1451(i). These express findings and declaration of the policy behind the CZMA reveal a Congressional awareness of the multiple uses to which the coastal zone is subject and the central role of the individual states in managing the coastal zone. However, notably absent is any indication that the states could use the consistency review process for the purpose of protecting economic interests of a single industry.

The legislative history of the CZMA also indicates that Congress intended the statute to allow the states to engage in long-range planning for utilization of the land contained in the coastal zone in order to protect the environment. The Report of the Senate Committee on Commerce accompanying the bill which eventually became the Coastal Zone Management Act of 1972 framed the problem to be solved by the CZMA as follows: "The problems of the coastal zone are characterized by burgeoning populations congregating in ever larger urban systems, creating growing demands for commercial, residential, recreational, and other development, often at the expense of natural values that include some of the most productive areas found anywhere on Earth." S. Rep. No. 92-753, 92d Cong., 2d Sess. 2 (1972), reprinted in Legislative History at 194. The Committee stated,

The uses of valuable coastal areas generate issues of intense State and local interest, but the effectiveness with which the resources of the coastal zone are used and protected often is a matter of national importance. Navigation and military uses of the coasts and waters off-shore clearly are direct Federal responsibilities: economic development, recreation, and conservation interests are shared by the Federal Government and the States. Rapidly intensifying use of coastal areas has already outrun the capabilities of local governments to plan their orderly development and to resolve conflict. The division of responsibilities among the several levels of government is unclear, and the knowledge and procedures for formulating sound decisions is lacking.

Id. at 2, Legislative History at 195. Having perceived the problem as one involving competing demands for the use of land in the coastal zone, the Committee intended the CZMA "to recognize the need for expanding State participation in the control of land and water use decisions in the coastal zone." Id. at 4, Legislative History at 197. The specific analysis of the Congressional findings reveals that the CZMA is oriented toward balancing competing uses of the land. "Because of the critical needs within the coastal zone, it is found that present coastal State and local institutions do not have sufficient authority to regulate utilization of the land and water use within the coastal zone." Id. at 8, Legislative History at 200.

The report of the House Committee on Merchant Marine and Fisheries also reflects an awareness that the states needed to choose between competing land uses, particularly in the siting of various facilities, in order to protect the environment. The Committee wrote, "As the demand for uses in the coastal zone has risen and continues to rise, and as population crushes continue to increase, the conflicting and competing use demands for this area will necessarily increase in terms of greater pressures for industrial sites, powerplants, housing, shipping facilities, harbors, and recreational needs." H. Rep. No. 92-1049, 92d Cong., 2d Sess. 10 (1972), reprinted in Legislative History at 315. In discussing the recommended components of a state's management program, the Committee demonstrated an awareness of the competing demands on the coastal zone land. The Committee expressed a desire that the states' management programs reflect concern for

recreation, transportation, housing, fishing, power, communication, industrial, and mineral resource needs; protective requirements for water quality, fish and wildlife habitats, [17 ELR 20296] open space and esthetic values; present and long-range use requirements which will not foreclose all options for future generations; flood control and shore line erosion prevention; and all other matters impinging upon coastal zone resource conservation.

Id. at 15, Legislative History at 320. Moreover, the Committee noted that before a state's management program would be approved, the Secretary must find that the state has "the power to administer use regulation to control development in order to insure compliance, to resolve conflicts among competing uses, and to acquire property interests in lands, water, and other property through condemnations or otherwise when necessary to achieve conformance with the program." Id. at 17, Legislative History at 322.

Remarks made by members of Congress during the floor debate of the CZMA also suggest that the aim of the statute is to allow states to develop programs to cope with the competing demands on the coastal zone land. For example, Senator Stevens read the following quote from an influential study:

Rapidly intensifying use of coastal areas already has outrun the capabilities of local governments to plan their orderly development and to resolve conflicts. The division of responsibilities among the several levels of government is unclear and the knowledge and procedures for formulating sound decisions is lacking. The key to more effective use of our coastland is the introduction of a management system permitting conscious and informed choices among the development alternatives, providing for proper planning, and encouraging recognitions of the long-term importance of maintaining the quality of this productive region in order to ensure its enjoyment and the sound utilization of its resources.

Senate Passage of S. 3507, April 25, 1972 reprinted in Legislative History at 251.¹⁰

Members of the House made similar comments. Representative Mosher catalogued the many competing uses of the coastal zone and stated, "Pressures of population and economic development threaten to overwhelm the balanced and best use of the invaluable and irreplaceable coastal resources in natural, economic, and esthetic terms. To resolve these pressures — an administrative and legal framework must be developed to promote balance and harmony among coastal zone activities based on scientific, economic, and social considerations. This is what the legislation will do." Debate and passage of H.R. 14146, August 2, 1972, reprinted in Legislative History at 370. Representative Pelly echoed these sentiments when he said, "The demand for coastal zone uses has and will continue to rise. Conflicting and competing use demands for this area will necessarily increase in terms of greater pressure for industrial sites, powerplants, housing, shipping facilities, harbors, wilderness areas, and recreational needs." Id. at 383.¹¹

The legislative history of the 1976 amendments is inconclusive with respect to whether adverse effects on the coastal zone economy are a valid basis for a consistency objection. Neither the House, Senate nor Conference Committee reports expresses an opinion that the economic effects on a particular industry unrelated to land use are a proper ground for objection. In short, the intent of Congress at the time of originally enacting the CZMA was to provide states with the authority to balance competing uses of land within the coastal zone and not to protect the economic interests of a particular industry.

In their briefs both parties devoted considerable attention to the significance of the Coastal Energy Impact Program (CEIP) which was added to the CZMA by amendment in 1976 and regulations promulgated thereunder. See 16 U.S.C. § 1456a (1985); 15 C.F.R. § 931.2 (1985). The program provides for grants, loans and guarantees to coastal states and their local governments to ameliorate the effects of energy development. Specifically, it makes available planning grants for the study of and planning for "any economic, social, or environmental consequence" which has occurred or may occur in the coastal zone "as a result of the siting, construction, expansion, or operation of such new or expanded energy facilities." 16 U.S.C. § 1456a(c)(1). The program also provides grants and loans to states to provide needed public facilities or services. See 16 U.S.C. § 1456a(d).¹²

The Commission argues that the enactment of the CEIP demonstrates Congress' concern over the adverse economic effects of offshore energy development at the time of the 1976 amendments. The Commission further contends that the Congressional purpose behind the CEIP manifests a desire to strengthen the consistency review procedure under § 1456(c)(3)(B) in order to allow the states to object to proposed OCS development on the basis of adverse economic effects.

In addition, the discussion of the adverse economic effects of energy development is cited as a rationale for the creation of the CEIP and not, as the Commission contends, in support of the amendment to the consistency provision represented by § 1456(c)(3)(B). The Committee report states, "It is to meet these two essential needs — for planning and for coping with impacts — that the Committee provides in S. 586 for the establishment of a Coastal Energy Facility Impact Fund." S. Rep. No. 94-277, 18 (1975), reprinted in Legislative History at 744. In order to alleviate the fiscal problems of local communities,the report concludes that "Federal fiscal support in the form of bonus and royalty revenue sharing or general or categorical impact funds is necessary. These funds should pay for both the additional capital requirements demanded, as well as the planning processes which determine their magnitude and allocation in time and space." S. Rep. No. 94-277, [17 ELR 20297] 15 (1975), reprinted in Legislative History at 741. Nothing in the discussion of the reasons for enacting the CEIP suggests that the goals of the CEIP were also to be accomplished through the consistency objection provision. Instead, it appears that the CEIP was intended to strengthen the states' ability to plan for the economic effects of rapid energy development and to provide funds for the construction of the infrastructure needed to handle the economic growth. In the absence of a more direct statement from Congress, the creation of the CEIP does not support a conclusion thatt negative economic effects resulting from offshore oil exploration were to be managed by the consistency provision set forth in § 1456(c)(3)(B).

For the reasons stated above, IT IS HEREBY ORDERED THAT

1. Plaintiff's motion for summary judgment is granted;

2. Defendant's motion for summary judgment is denied.

1. Cal. Pub. Res. Code § 30230 provides:

Marine resources shall be maintained, enhanced, and where feasible, restored. Special protection shall be given to areas and species of special biological or economic significance. Uses of the marine environment shall be carried out in a manner that will sustain the biological productivity of coastal waters and that will maintain healthy populations of all species of marine organisms adequate for long-term commercial, recreational, scientific and educational purposes.

Cal. Pub. Res. Code § 30231 states:

The biological productivity and the quality of coastal waters, streams, wetlands, estuaries, and lakes appropriate to maintain optimum populations of marine organisms and for the protection of human health shall be maintained and, where feasible, restored through, among other means, minimizing adverse effects of waste water discharges and entrainment, controlling runoff, preventing depletion of ground water supplies and substantial interference with surface water flow, encouraging waste water reclamation, maintaining natural vegetation buffer areas that protect riparian habitats and minimizing alteration of natural streams.

Cal. Pub. Res. Code § 30234 provides:

Facilities serving the commercial fishing and recreational boating industries shall be protected and, where feasible, upgraded. Existing commercial fishing and recreational boating harbor space shall not be reduced unless the demand for those facilities no longer exists or adequate substitute space has been provided. Proposed recreational boating facilities shall, where feasible, be designed and located in such a fashion as not to interfere with the needs of the commercial fishing industry.

Cal. Pub. Res. Code § 30260 states:

Coastal-dependent industrial facilities shall be encouraged to locate or expand within existing sites and shall be permitted reasonable long-term growth where consistent with this division. However, where new or expanded coastal-dependent industrial facilities cannot feasibly be accommodated consistent with other policies of this division, they may nonetheless be permitted in accordance with this section and Sectionn 30261 and 30262 if (1) alternative locations are infeasible or more environmentally damaging; (2) to do otherwise would adversely affect the public welfare; and (3) adverse environmental effects are mitigated to the maximum extent feasible.

2. The Secretary may approve an otherwise inconsistent activity if he determines the activity is (1) consistent with the objectives or purposes of the CZMA or (2) is necessary in the interests of national security. 15 C.F.R. 930.120 (1985).

To find an activity "consistent with the objectives or purposes of the Act," the Secretary must find that the following four requirements are met:

(a) the activity furthers one or more of the competing national objectives or purposes contained in section 302 or 303 of the Act, (b) when performed separately or when its cumulative effects are considered, it will not cause adverse effects on the natural resources of the coastal zone substantial enough to outweigh its contribution to the national interest; (c) the activity will not violate the Clean Air Act, as amended, or the Federal Water Pollution Control Act, as amended, and (d) there is no reasonable alternative available (e.g., location design, etc.) which would permit the activity to be conducted in a manner consistent with the management program.

15 C.F.R. 930.121 (1985).

To be "necessary in the interest of national security," the activity must be "found by the Secretary to be permissible because a national defense or other national security interest would be significantly impaired if the activity were not permitted to go forward as proposed." 15 C.F.R. 930.122 (1985).

3. Prior to the hearing on these motions I conferred by telephone with counsel for both sides and requested that they particularly focus argument on these concerns. Among other things I questioned whether an actual case or controversy existed and whether relief under the Declaratory Judgment Act should be available. See, e.g., Abbott Laboratories v. Gardner, 387 U.S. 136, 87 S. Ct. 1507 (1967). Because the consistency objection by the Commission which Exxon seeks to invalidate had already been acted on by the Secretary of Commerce (and Exxon had in fact been given permission to drill on terms which the Secretary believes are reasonable), I expressed serious reservations about whether there was any set of actual facts on which any judgment of this Court could operate.

Further, although the issue posed appears to be purely legal, and the bases of the Secretary's review are both limited and different from the precise issue raised in this proceeding, nevertheless he is required to determine that the project is consistent with the objectives of the CZMA — and that, in turn, includes a determination about reasonable alternatives consistent with the state's management program. Accordingly I invited particular comment on the characteristics of a consistency objection, which apparently is not in the nature of an administrative regulation that requires immediate and significant change in the conduct of Exxon's affairs, with serious penalties attached to noncompliance, or that leaves Exxon without remedy by way of (a) appeal to the Secretary and (b) appeal to the courts if the final determination is adverse or based on impermissible criteria.

Correspondingly to act without the presence of the Secretary raises a concern about effectiveness of remedy; and additionally, whether a declaration by this Court at this stage of the proceedings would be advisory only.

The parties addressed these points orally and in supplemental briefing.

4. By implication, § 1456(c)(3)(B) allows the relevant federal agencies to issue permits for exploration of the OCS if the Commission concurs, either expressly or by inaction, or the Secretary overrides the state agency's objection. If the state agency objects, an applicant for a permit may seek the Secretary's review under the criteria set forth in 15 C.F.R. §§ 930.121 and 930.122. See 15 C.F.R. § 930.125 (1985).

5. The National Oceanic & Atmospheric Administration (NOAA), the agency within the Department of Commerce which administers the CZMA, stated in proposing these regulations that "[t]he State agency's finding of inconsistency . . . is presumed to be correct and is not an issue on appeal." 41 Fed. Reg. 42,883 (1976). NOAA likened the provision for Secretarial override to a "variance" procedure. Id. It specifically refused to permit challenges to the validity of a consistency objection in Secretarial review proceedings, 42 Fed. Reg. 43,595 (1977), ultimately stating that an applicant may "seek[ ] judicial relief where otherwise available in the event a State agency fails to enforce properly management program requirements." 42 Fed. Reg. 43,586, 43,595 (August 29, 1977); 43 Fed. Reg. 10,516 (1978). In finally adopting the regulations in 1978 NOAA again rejected contentions that the scope of the Secretary's review authority should be broadened by stating:

A number of industry reviewers have renewed their arguments thatt appeals should not be dismissed in cases where an applicant maintains that the State agency has incorrectly declared an activity to be inconsistent with the management program. NOAA has, again, rejected this recommendation and, accordingly, the section has not been changed. . . . Furthermore, as noted in the previous preamble [of August 29, 1977], OCZM performance review efforts do not preclude an applicant from seeking judicial relief where otherwise available in the event a State agency fails to enforce properly management program requirements. . . ." 43 Fed. Reg. 10,510, 10,516 (March 13, 1978).

The legislative history is also sprinkled with suggestions of that judicial review will be necessary to fill in the contours of the unique structure being created. See generally, Legislative History of the Coastal Zone Management Act of 1972, As Amended in 1974 and 1976 (December, 1976).

6. In this connection it should be noted that the effect of a judicial ruling invalidating the Commission's objection is by no means certain. The Secretary's Decision is "on the books" and cannot directly be affected in his absence. Exxon argues that that does not matter, because if the underlying objection is without authority the Secretary's failure to override is academic. The Commission, on the other hand, argues that under the regulations, when the Secretary does not override no permit may be issued without a new consistency certification and review. This is indeed a Catch 22 when the basis for an applicant's challenge to the objection is invalidity. On balance, that an applicant can be so caught supports Exxon's position that it has no alternative remedy other than review in this Court and that its grievance is redressable. See discussion infra at 14-17.

7. That it could so contend and has elected not to raises a further question, whether this Court is being asked to render an essentially advisory opinion on a matter which could arguably be mooted by a different type of proceeding on different legal grounds. Arguably a state court, Pennhurst State School & Hosp. v. Halderman, U.S. , 104 S. Ct. 900 (1984) could be asked to rule that there is no basis in California law for the Commission's objection. Compare Rept. with §§ 30230, 30231, 30234, 30260. If that were to happen, the need to reach the question posed in this case as to the pending application would be obviated. At the same time this is not a constitutional issue on which it is of paramount importance to refrain from ruling except when clearly necessary. Further, Exxon urges that the controversy is broader than just this application and will be on-going unless resolved now by equitable relief. Given the track record as to Exxon on this lease, and the fact that this is Phase II of three contemplated phases, there is support in the record for this position.

8. There is no doubt that under § 1456(c)(3)(B) activities which take place outside the coastal zone but whose effects are felt inside the zone are subject to the state's consistency review. Sectionn 1456(c)(3)(B) governs activities which by definition take place on the OCS and which affect the coastal zone. With respect to § 1456(c)(3)(B), the Senate committee report states that the Federal consistency section "assures that once State coastal zone management programs are approved and a rational management system for protecting, preserving, and developing the State's coastal zone is in place (approved), the Federal departments, agencies, and instrumentalities will not violate such system but will, instead, conduct themselves in a manner consistent with the States' approved management program. This includes conducting or supporting activities in or out of the coastal zone which affect the area." S. Rep. No. 94-277, 37, reprinted in The Legislative History of the Coastal Zone Management Act of 1972 as Amended in 1974 and 1976 (1976) at 763. The Senate Committee on Commerce wrote, "[T]he provisions of section 307 for the consistency of Federal actions with the State coastal zone management programs has provided assurance to those concerned with the coastal zone that the law already provides an effective mechanism for guaranteeing that Federal activities, including those supported by, and those carried on pursuant to, Federal authority (license, lease, or permit) will accord with a rational management plan for protection, preservation and development of the coastal zone. One of the specific federally related energy problem areas for the coastal zone is, of course, the potential effects of federal activities on the Outer Continental Shelf beyond the State's coastal zones, including Federal authorizations for non-Federal activity, but under the act as it presently exists, as well as the S. 586 amendments [the 1976 CZMA amendments], if the activity may affect the State coastal zone and it has an approved management program, the consistency requirements do apply." Id.

9. From the record presented by the parties, it is difficult to tell with certainty upon what basis the Commission actually objected. The Commission stated that Exxon's proposal "is inconsistent with sections 30230, 30231, 30234 of the Coast Act since drilling would adversely impact the commercial fishing industry." (Exh. H, 273.) The Commission also stated that Exxon's proposal "will not only pose severe individual impacts on the thresher shark industry, but it will also have a significant cumulative effect on the commercial fishing industry. A prime thresher shark fishery area has been and will be closed off due to exploration and future development of the Santa Ynez Unit." (Id.) The Commission also provided the following rationale for its objection: "Since commercial fishing activities require the use of the ocean to function at all, it is a coastal-dependent industry and, therefore, is protected as a priority use of the coastal zone by the Coastal Act and the CCMP. Six enforceable policies provide development standards to assure that priority is given to commercial fishing. Implementation of these policies are dependent upon the continued biological productivity of fisheries resources. It would be meaningless to protect coastal zone fishing support facilities if the fishery resources cannot be harvested in OCS waters." (Id. at 276.) Accordingly, the Commission found the proposed drilling was inconsistent with sections 30260(2) and (3) of the California Coastal Act.

From these statements, Exxon contends that the Commission based its objection on the perceived economic interest of the individual fishermen and the fishing industry. The Commission does not offer a different version of the nature of its objection, and apparently agrees that its objection was founded on the economic impact on fishermen who would be prevented from harvesting the thresher shark because of the obstruction posed by the exploration.

10. See also Senate Passage of S. 3507, April 25, 1972, reprinted in Legislative History at 279 (remarks of Sen. Boggs) ("As stated in S. 3507 the purpose of the coastal zone management plan is primarily to regulate land and water uses in the interests of environmental quality."); id. at 291 (remarks of Sen. Tunney); id. at 292 (remarks of Sen. Tower) ("In the Nation as a whole, an even greater percentage of activity takes place in the coastal zone. The situation everywhere is becoming more acute. Pollution and land use problems are proliferating as the coastal zone becomes more congested. This bill is an attempt by the Government to assist the States in correcting pollution, and planning for the best use of limited land and water resources.")

11. See also Debate and Passage of H.R. 14146, August 2, 1972, reprinted in Legislative History at 372 (remarks of Rep. Garmatz) ("[W]hile the State of Maryland plans for its ports of tomorrow — together with the channel dredging and other harbor installations that will be needed, it will also be forced to respond to pressure for more industrial sites, for more powerplants and for more living space for its ever-expanding population. Let us not forget that while it is planning for all this, it must simultaneously plan to provide additional recreational space so that this increasing population can still enjoy the pleasures of the ever-shrinking coastal zones."); id. at 377 (remarks of Rep. Pickle); id. at 374 (remarks of Rep. Du Pont) ("Congress must immediately encourage each coastal State to develop a plan for orderly use and development of our coastal resources, consistent with long range social, economic and environmental goals); id. at 388 (remarks of Rep. Harrington) ("The crush of population growth further increases the pressure on the finite resources of the coastal areas. We have taken from the coastal zones in a helter-skelter pattern of development, without serious thought to the long range consequences of our actions. . . . The value of this bill is that it recognizes this reality, and places basic management in the hands of State and local authorities most familiar with the needs of their areas. Armed with the assistance of scientific, environmental, economic, and social advisers, these officials can develop the most feasible local plan for managing coastal lands and waters.")

12. The Commission relies heavily on portions of the Senate committee report to the 1976 amendments which it contends demonstrates Congress' concern for the social and economic costs attendant to rapid development of offshore energy resources. The report of the Senate Committee on Commerce accompanying the Senate bill cites several examples of communities that experienced significant adverse effects from energy development. For example, the Committee referred to housing shortages, "employee losses to indigenous agricultural and fishing activities" and tax revenues iandequate to cover needed public expenditures to cope with oil exploration in Virginia. S. Rep. No. 94-277, 12 (1975), reprinted in Legislative History at 738.

The experience of rural communities on the Alaskan coast is also discussed. The Senate report notes that "[t]he State of Alaska has officially expressed concern about the impact of oil- and gas-induced growth in Yakutat on the existing economic base, which includes fishing, timbering, tourism and recreation." S. Rep. No. 94-277, 12-15 (1975), reprinted in Legislative History at 738-41.

The case studies discussed in the Senate Committee report prompted Judge Mazzone to write in Conservation Law Foundation v. Watt, 560 F. Supp. 561, 575 [13 ELR 20445] (D. Mass. 1983), "[N]ot only the ecological but also the social and economic effects of a proposed Federal agency action are included in the scope of the Act. Example after example of socioeconomic effects of oil and gas exploration were discussed, evidencing a clear Congressional intent to lessen such impacts through coordinated planning between states and the Federal government. Concern was expressed over the effects of concentrated industrial development in Louisiana's coastal zone; over housing and school shortages and employee losses in the agricultural and fishing industries indigenous to coastal Virginia; and over disruptions in Native American communities in Alaska. Indeed, even the social and economic pressures felt in Scotland as a result were carefully analyzed by Congress in framing the 1976 amendments to the Coastal Zone Management Act." However, the references to economic dislocation from offshore oil development appear to relate only to the need for the CEIP and are not relevant to the scope of the Commission's authority under § 1456(c)(3)(B).

Although these statements in the legislative history can be fairly taken to represent Congress' concern for the economic effects on the coastal zone due to offshore oil exploration, there is no indication that the economic effects were to be ameliorated through the consistency objection process. Moreover, it appears that Congress intended to help the states cope with the adverse economic impact through the loans and grants made available to the states under the CEIP.

17 ELR 20286 | Environmental Law Reporter | copyright © 1987 | All rights reserved