Watt I – The Interpretation Of The Statute

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NRS | Federal Lands | Mineral and Petroleum Resources | The Five-Year Program in the Courts

The first Five-Year Program, developed by Secretary Andrus for the years 1980-1985, was challenged by the States of California and Alaska, the North Slope Borough, and the Natural Resources Defense Council.   State of Cal. By and Through Brown v. Watt, 668 F.2d 1290 (D.C. Cir. 1981) (“Watt I”).  All of the challenged aspects of the program raised issues of first impression, and the Court gave exacting scrutiny to the Secretary’s interpretation of the Outer Continental Shelf Lands Act Amendments of 1978(“OCSLAA”).  It faulted his construction of the statute and consequent analysis in a number of major respects, generally rejecting his contention that the complexity of the resource either rendered comparative analysis impossible or required that it be deferred until a later stage in the process.  At the same time, precedents were established which proved very favorable to the Government in challenges to subsequent five year programs.

The Adverse Holdings

After clarifying that the Secretary was required to consider all of the factors designated by 43 U.S.C. § 1344(a)(2) in scheduling leasing and could not defer them to a later date, and that precision in location required more specificity than designating a proposed sale as “California”, Watt I, 668 F.2d at 1303-1307, the Court moved directly to the equity factors.  Against the Secretary’s contention that the risk of oil spill was uniform across all coastal regions, the Court, coupling the “equitable sharing” and “relative sensitivity” provisions, found this factual assertion severely flawed from two perspectives.

First, it failed to account for the differences in the amount of oil produced by the several regions.  Second, the Secretary had failed to assess the difference in the sensitivity of the resources to spill damage among the several regions.  Id. at 1307-08.  Further, the Court found that the record belied the Secretary’s claim that the non-comparability of resource values between one region and another rendered any inter-regional sensitivity comparison impossible. Id. at 1311-13.  The Secretary’s failure to address these factors not only doomed the schedule both as to “location” and “timing,” see Id. at 1313-15, it also invalidated the finding of “proper balance” specified in 43 U.S.C. § 1344(a)(3). Id. at 1318-19.

Favorable Precedents

Notwithstanding the Court’s adverse findings and remand, Watt I also contained favorable statutory construction that became bedrock for victories in defending later five-year programs.

The Standard of Review

The judicial review provisions of the OCSLAA at 43 U.S.C. § 1349(c) stipulated that review be “solely on the record made before the Secretary,” suggesting in this informal rulemaking proceeding that the “arbitrary and capricious” standard of review applied, for which the Government argued .  The same provision, however required that the Secretary’s findings be “supported by substantial evidence,” the more stringent standard applicable to adjudicatory administrative proceedings, which the plaintiffs supported.  The Court resolved the issue by construing the provision, on the basis of precedent,  as creating a “hybrid” standard of review where factual matters were subject to the “substantial evidence” standard and predictive judgments to the “arbitrary and capricious” standard.

In doing so, however, it set the stage for deferential review, for the critical administrative decisions in planning do not involve “evaluating the data and drawing conclusions from it,” Id. at 1301, quoting Industrial Union Department, AFL-CIO v. Hodgson, 499 F.2d 467 (D.C. Cir. 1974), but rather “ questions Â… on the frontiers of scientific knowledge”  which “depend Â… upon policy judgments.” Id.   As to these matters, which necessarily include projections into the future based upon existing data, the choice of which data to use, and the methodology chosen to make the projections, “the agency necessarily enjoys broad discretion to attempt to formulate a solution to the best of its ability on the basis of available information.” Id. fn. 18, citing Permian Basin Area Rate Cases, 360 U.S. 747, 811(1968).

The Court also confirmed that the OCSLAA grants the Secretary broad discretion to balance the Act’s goals of expeditious development and environmental conservation. Finally, the Government also achieved a significant ruling regarding the interpretation of section 18(d)(3) of the OCSLAA, 43 U.S.C. § 1344(d)(3), which provides in part: “… leasing shall be permitted to continue until (the leasing) program is approved and for so long thereafter as such program is under judicial or administrative review pursuant to the provisions of this subchapter.”  The issue was whether that language operated to permit leasing to go forward during a period of remand after judicial decision: petitioners sought an injunction against the one sale scheduled to proceed during that period.  Did the statutory language preclude injunctive relief?  The Court was emphatic that it did:

In our view, the plain meaning of this language is that leasing shall continue both during judicial review of the leasing schedule and during any administrative review occasioned by a remand from a reviewing court.



In summary, Watt I made clear that the OCSLAA imposed specific demands for a comprehensive comparative analysis before scheduling leasing, and that review of a statutorily compliant analysis would be given great deference.


Updated May 13, 2015

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