Undeveloped Leases

Six of the 49 Federal oil and gas leases offshore California are undeveloped. The remaining undeveloped leases are under directed suspension due to ongoing litigation.

Undeveloped Leases Table (6)

(See Lease Status Informationfor ownership and units.)

Litigation Background

In the case of California, et al. v. Norton, the State of California joined with other parties to file a claim against the Secretary of the Interior alleging that suspensions requested by Pacific OCS Region operators could not be granted without first determining that the proposed activity was consistent with California Coastal Act (as per the Coastal Zone Management Act).  The suit also claimed that reliance on a categorical exclusion was not the proper environmental review (as per the National Environmental Policy Act).  The U.S. Court of Appeal for the 9th Circuit affirmed a decision from the U.S. District Court, Northern District of California that directed the Bureau to set aside the suspensions issued at the request of operators of the undeveloped leases and to provide California with a determination that granting of the suspensions is consistent with the California Coastal Act.  Additionally, the court directed the Bureau to provide a reasoned explanation for relying on the categorical exclusions in its environmental review.

As directed by the court, the Bureau prepared 10 Consistency Determinations² in compliance with the Coastal Zone Management Act (CZMA) and 10 Environmental Assessments³ in compliance with the National Environmental Policy Act (NEPA).

In the case of Amber Resources, et al. v. United States, which was filed shortly after the California v. Norton decision was appealed to the 9th Cir., several companies holding interests in the 36 undeveloped leases offshore California claimed that the passage of the Coastal Zone Act Reauthorization Amendments (CZARA) in 1990 created additional procedures not previously contemplated by the parties, thereby breaching their lease agreements.

On November 17, 2005, the U.S. Court of Federal Claims reissued an order holding that the Federal government breached the lease agreements for the undeveloped leases and ordered the government to repay the original bonus bid amounts, which totaled $1,104,227,348.  The decision was affirmed by the U.S. Court of Appeals for the Federal Circuit and the government has repaid the bonus bids. Currently, 30 of the 36 leases at issue have been relinquished. The remaining 6 still have issues that must be resolved prior to relinquishment.

In the case of League for Coastal Protection, et al. v. Kempthorne (previously Norton), several environmental groups challenged the adequacy of the Environmental Assessments prepared for the suspension requests and claimed that the Bureau should have prepared an Environmental Impact Statement instead.  In an order dated August 31, 2005, the U.S. District Court, Northern District of California held that the Bureau could not make a decision on the suspensions until it completed adequate environmental analysis pursuant to NEPA, including future exploration and development activities.  The substantive issues in this case have been mooted due to resolution of the Amber case.

For more information, please contact the Department of the Interior, Office of the Solicitor, Division on Mineral Resources at (202) 208-4036.

² Consistency Determinations and the Environmental Information Document are available at the California Coastal Commission (CCC) website under the heading “Documents related to the U.S. Outer Continental Shelf (OCS) Oil and Gas Lease Suspension Consistency Determinations submitted by the U.S. Minerals Management Service on April 7, 2005." The CCC homepage URL is www.coastal.ca.gov.

³ Although the court directed the Bureau to provide a “reasoned explanation,” the Bureau determined that the preparation Environmental Assessments would be a feasible and more comprehensive alternative.