California v. Norton
311 F.3d 1162, 2002 WL 31681515 (2002)
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Rule of Law:
A federal agency's suspension of offshore oil and gas leases that have never undergone state consistency review is a 'Federal agency activity' subject to state review under the Coastal Zone Management Act (CZMA). Additionally, under the National Environmental Policy Act (NEPA), an agency cannot rely on a categorical exclusion for such an action without contemporaneous documentation and a reasoned explanation for why exceptions to the exclusion do not apply, especially when there is evidence of potential environmental effects or public controversy.
Facts:
- Between 1968 and 1984, the United States issued thirty-six oil and gas leases to various oil companies for drilling in federal waters off the coast of central California.
- Most of these leases were issued before California's Coastal Management Program was federally approved, and thus had never been reviewed for consistency with it.
- The leases required production in paying quantities to continue beyond their initial terms, but the lessees had not yet begun such production.
- As the leases were set to expire in 1999, the oil companies requested 'suspensions' from the United States to extend the lease terms.
- California informed the United States that it intended to review the proposed lease suspensions for consistency with its Coastal Management Program.
- The United States denied California's authority to conduct a review, granted the suspensions, and did not prepare an Environmental Impact Statement (EIS), claiming the action was categorically excluded from NEPA review.
- Significant environmental circumstances had changed since the leases were issued, including the creation of two National Marine Sanctuaries near the leaseholds and the expansion of the threatened southern sea otter's range into the area.
Procedural Posture:
- California filed suit in the U.S. District Court for the Northern District of California against the United States to enjoin the lease suspensions.
- Ten environmental groups and two counties intervened as plaintiffs with California.
- The oil companies holding the leases intervened as defendants with the United States.
- The district court granted summary judgment for California, holding the suspensions were subject to CZMA consistency review and that the United States improperly relied on a NEPA categorical exclusion.
- The United States (appellant) and the Oil Companies (appellant) appealed the district court's decision to the U.S. Court of Appeals for the Ninth Circuit.
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Issue:
Does a federal agency's grant of suspensions for offshore oil leases constitute a 'Federal agency activity' affecting the coastal zone that is subject to state consistency review under the Coastal Zone Management Act, and must the agency justify its reliance on a categorical exclusion under the National Environmental Policy Act when substantial evidence suggests exceptions may apply?
Opinions:
Majority - D.W. Nelson
Yes. A federal agency's grant of suspensions for offshore oil leases is a 'Federal agency activity' affecting the coastal zone that is subject to state consistency review under the Coastal Zone Management Act, and the agency must justify its reliance on a categorical exclusion under the National Environmental Policy Act. The court reasoned that under the CZMA, the lease suspensions are a distinct federal agency activity affecting the coastal zone. Citing Congress's 1990 amendment to overturn Secretary of the Interior v. California, which subjected initial lease sales to consistency review, the court concluded that antecedent activities like lease suspensions are also reviewable and not duplicative of later reviews of exploration plans. Because these specific leases had never been reviewed and circumstances had changed significantly, state review was particularly appropriate. Regarding NEPA, the court held that an agency cannot rely on a categorical exclusion as a post-hoc rationalization. Because there was substantial evidence that exceptions to the exclusion might apply—due to potential impacts on threatened species, marine sanctuaries, and significant public controversy—the agency was required, at a minimum, to provide a contemporaneous, reasoned explanation for why the exceptions were inapplicable.
Analysis:
This decision significantly strengthens the role of coastal states in overseeing federal offshore energy development under the Coastal Zone Management Act. It establishes that extending the life of pre-existing leases is not a mere ministerial act but a substantive federal activity triggering the state's right to consistency review, especially for leases that predate modern environmental regulations. The ruling prevents federal agencies from using subsequent, more specific reviews (like for exploration plans) as a shield to avoid state oversight at earlier, critical decision points. Furthermore, the court's NEPA analysis reinforces procedural discipline, requiring agencies to create a contemporaneous administrative record justifying their reliance on categorical exclusions, thereby preventing their use as a litigation tactic in controversial cases.
