The Outer Continental Shelf:  Awash in a Sea of Controversy (11/00)

The following column by GAP Intern Michael Wagg is reprinted from the November 2000 issue of The Professional Geologist, a publication of the American Institute of Professional Geologists . It is reprinted with permission.

The nation’s outer continental shelves have long been sources of wealth and controversy – a source of income for the federal government and a source of litigation for oil and gas firms.  Similar to several other nations that have restricted access to the continental shelves, the United States established a moratorium on oil and gas drilling activity twelve years ago along nearly all the nation’s outer continental shelf, with the exception of the western section of the Gulf of Mexico and Alaska’s North Slope.  While numerous conservation groups support the moratorium, many oil and gas firms contend that they have been unjustly denied access to pre-existing leases to develop petroleum resources.

Supreme Court Decision
In a June 2000 decision on Mobil Oil Exploration & Producing Southeast, Inc. v. United States, the U.S. Supreme Court ruled that the federal government must pay $156 million to Mobil Oil and Marathon, Inc. for offshore oil and natural gas lease contracts that these companies purchased in 1981. The award was the amount that Mobil and Marathon paid for lease contracts giving them the right to explore and develop oil reserves off the North Carolina coast.  When Congress passed the Outer Banks Protection Act in 1990, however, the Department of the Interior was no longer able to give its environmental blessing to the two firms’ oil and gas exploration plans, preventing both Mobil and Marathon from developing their leases.

Encouraged by the high court’s decision, the production subsidiaries of Chevron U.S.A. Inc., Conoco Inc., and Murphy Exploration & Production Co. filed suit in July over a similar matter off the Florida coast.  These firms contend that federal regulatory agencies have unjustly denied them access to their natural gas leases on the Eastern Gulf’s Destin Dome off the Florida coast.  The suit claims that such “perverse” regulatory entanglements can be traced directly to President Clinton and Vice President Gore. Specifically, it argues that Gore “will do everything in his power to make sure there is no new drilling off Florida even in areas previously leased for drilling.”

Outer Continental Shelf Revenues
Even with its wide-ranging moratoria on outer continental shelf oil and gas exploration, the federal government still collects over $4 billion a year in royalties from this limited petroleum development.  While affected coastal states already receive a portion of these funds, Louisiana and Alaska have clamored for additional compensation during the 106th Congress.  Several bills were introduced that have tried to marry coastal state compensation with additional funding for nationwide conservation efforts.  One of the most active bills has been Rep. Don Young’s (R-AK) Conservation and Reinvestment Act of 2000 (CARA; H.R. 701), which has enjoyed wide-spread support.  Passed by the House in a 315-102 vote this May, CARA cleared the Senate Energy and Natural Resources Committee on July 25th in amended form.  Although the House and Senate funding mechanisms differ, both versions retain CARA’s redistributive aspects.

CARA divides nearly $3 billion in federal royalties among coastal states and conservation programs for each of the next fifteen years.  While Louisiana and Alaska benefit the most, every state receives something.  Approximately $900 million goes to the historically underfunded Land and Water Conservation Fund – half of which goes toward land acquisition – while hundreds of millions of dollars devolve to a host of other conservation programs, including urban parks, historic sites, Native American lands accounts, and wildlife preservation programs.

Although most legislators salute CARA’s goals, a number of Western Republicans fear its land acquisition provisions.  During a hearing before the Senate Environment and Public Works Committee, Rep. Helen Chenoweth-Hage (R-ID) warned that “while CARA is being established under the guise of ‘environment’ and ‘conservation,’ its true premise has more to do with who will own and control property in the United States of America.” Western senators echoed her concerns during CARA’s committee markup, asserting that the federal government should better manage its lands before it proposes to add additional acreage onto its already vast estate.  Still others worry about the House’s plan to establish CARA as an “off-budget” trust fund, thereby removing it from the annual appropriations process and congressional control.

Even as private property rights groups prepare to battle CARA on the Senate floor, environmental organizations continue to shower praise on the bill.  During the Senate Environment and Public Works Committee’s May 24th hearing, David Weller, President of the International Association of Fish and Wildlife Agencies, stated that the bill is “unquestionably the most significant legislative initiative for fish and wildlife (and other natural resources) conservation in the last several decades.”  The Wilderness Society’s Rindy O’Brien echoed Weller’s sentiments, exclaiming that “the legislation . . . is perhaps the most far-reaching and complex piece of environmental legislation to be considered by Congress in the past decade.”

With each passing day, the CARA debate becomes more politicized, driving a wedge between west and east as it makes its way toward the Senate floor.  A final compromise is not likely to emerge in this Congress, but the next Congress is sure to take it up. CARA showcases some central tensions in domestic environmental policy.  Debates over the relative merits of public and private land ownership are likely to join discussions on further outer continental shelf development as the nation decides how it will use its natural resources in the twenty-first century.

Michael Wagg recently graduated from Albion College in Michigan with a double major in geology and history. He began graduate school this fall at the University of Michigan.

This article is reprinted with permission from The Professional Geologist, published by the American Institute of Professional Geologists. AGI gratefully acknowledges that permission.

Please send any comments or requests for information to the AGI Government Affairs Program.

Posted December 4, 2000

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