SECRETARY OF INTERIOR v. CALIFORNIA

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ORAL ARGUMENT OF REX E. LEE, ESQ. ON BEHALF OF THE PETITIONERS

Chief Justice Warren E. Burger: We will hear arguments first this morning in Secretary of the Interior against California and others, and the consolidated cases.

Mr. Solicitor General, you may proceed whenever you are ready.

Rex E. Lee: Mr. Chief Justice, and may it please the Court:

Oil and gas leasing on the Outer Continental Shelf occurs in four distinct stages.

The first stage is the preparation by the Secretary of Interior of a five-year leasing plan.

It is followed by the lease sale, exploration, and finally production and development.

The statutes also provide for step-by-step decision making throughout these four stages in a process which has two major aspects.

The first aspect is that each decision is made at a time when an optimum amount of information needed to support that particular decision is available.

The second aspect is that the decision to proceed through any given stage of the total OCS process does not imply a commitment to any later stage.

The question in this case is one of statutory interpretation.

It is whether the substantive requirement of Section 307(c)(I) of the Coastal Zone Management Act that federal activities directly affecting a state's coastal zone be conducted in a manner that is consistent to the maximum extent practicable with approved state coastal zone management programs applies at the lease sale stage, the second of the four stages, in all instances.

The most helpful guide to what the statute means is what the statute says.

What brings the CZMA's substantive requirements into play is not a functional relationship or a link in a chain of events, it is rather a direct effect.

Out of the several accepted meanings, dictionary meanings, meanings approved by decisions of this Court of that word "direct", not one of them, not one, supports the Respondents' position in this case.

And, indeed, the Respondents have not even suggested any.

There are several meanings of the word that are directly helpful to the issue before this Court.

Among other things, it is language of proximity, of certainty, of immanence, language that says there will be no intervening agency or event.

Just last term in Bowsher versus Merck this Court, in construing the word "direct" in another context said, and I am quoting,

"That whether the reference that the word obviously. "

"It is plain from the face of the provisions that these are words of limitation requiring some close connection between the type of record sought and the particular contract. "

There is the requirement of some close connection between the thing directly affected and the directly affecting entity.

In any event, whether the reference is to this Court's ruling in Bowsher or whether it is to any ordinary dictionary definition, it is very clear that the words "directly affecting" are the complete antithesis of the remote and speculative circumstances that obtain at the lease sale stage of Outer Continental Shelf phase development.

At that stage, it is uncertain, for example, whether there will be any hydrocarbons found at all; whether if they are found, they will be oil or gas and how and where they will be brought ashore.

There may be effects on the coastal zone from what happens on the Outer Continental Shelf, but in this case and almost all cases those are effects from what may or may not happen years after the lease sale at the time of exploration or production and development.

Unidentified Justice: May I ask, Mr. Solicitor General, this has to be in the context of a coastal zone plan, does it?

Rex E. Lee: That is correct.

Unidentified Justice: And, how does one of those come into being?

Rex E. Lee: Drafted first by the relevant state then submitted to the Secretary of Commerce for approval, then after that that is the charter with which consistency must be determined.

Unidentified Justice: What does one of those look like?

Are there many of them?

Rex E. Lee: Well, there are a couple of dozen or so.

Unidentified Justice: There are?

Rex E. Lee: Yes.

And, they simply set up... They vary.

Some of them can be very general and in our view most of them are extremely general.

Some of them--

Unidentified Justice: Not very detailed then?

Rex E. Lee: --They can have a certain amount of detail, but in general they are quite general and that gives the state additional leadway.

Unidentified Justice: Can you suggest what they cover?

Rex E. Lee: Well, such things as the protection of the environment and the protection of animal life and so forth along the coastal zone which is from the shore and three miles out to the territorial sea.

Unidentified Justice: But, none of the four stages comes into play until there is such an agreement arrived at?

Rex E. Lee: That is correct.

Unidentified Justice: And, that has to be arrived at between whom?

Rex E. Lee: Of course, the four stages can come into play, but the CZMA would not come into play until there is such a--

Unidentified Justice: Yes.

Rex E. Lee: --It is a plan that is adopted by the state, submitted to the Secretary of Commerce and them approved by--

Unidentified Justice: Secretary of Commerce?

Rex E. Lee: --the Secretary of Commerce, that is correct.

In 1976 and 1978, Congress amended respectively the CZMA and the Outer Continental Shelf Lands Act.

Though the hearings for the amendments to the two statutes were held in tandem and certainly the two have to be considered in tandem, and it was in those amendments that specific provision was made for phased decision making.

The OSC leasing process is one which, by its very nature, lends itself to decision making by stages.

The total process takes years, and in some instances, even decades, but there are identifiable points along the line at which decisions have to be made whether to proceed further.

Now, as an integral part of this comprehensive change to phased decision making, Congress provided in Sections 11 and 25 of the OCSLA, added in 1978, and in Section 307(c)(3)(B) of the CZMA which is the only section that deals expressly with Outer Continental Shelf transactions.

That these consistency certifications with their substantive capacity to halt further development would be made at the exploration stage and at the production/development stage.

At the lease sale stage, the provision is different.

That is expressly dealt with by Section 19 of the OCSLA which provides for state input of information regarding the size, timing, and location, which, analogous to NEPA the Secretary of Interior must take into account and must give reasons for his rejection of the state's suggestion.

Unidentified Justice: At the lease stage, is anything contemplated except survey?

Rex E. Lee: At the lease sale stage, it is surveying, that is correct.

Unidentified Justice: That is all?

Rex E. Lee: That is correct.

Now, there can be some drilling in connection with that, but no one is contending that that has any environmental... Well, just because of the drilling itself.

Unidentified Justice: My next question was are there any effects at that stage from surveying?

Rex E. Lee: There could be.

In some isolated instances, you could have... It is basically a sonar, seismic type soundings and you could have, in some instances, a circumstance where the mere carrying on of those surveys and those sound waves going out could have some effect on animals in the area.

But, this is not that kind of case and will not be in the great majority of instances.

Unidentified Justice: Mr. Solicitor General, may I ask a question about the phased decision making?

As I understand it, the approval requirements for exploration, development, or production are found in 307(c)(3)(B), is that right, which was enacted in 1978, was it?

Rex E. Lee: '76.

Unidentified Justice: '76.

Now, during... I take it the critical language we are focusing on was enacted some years earlier?

Rex E. Lee: That is correct.

Unidentified Justice: Now, during the period between the enactment of 307(c)(1) and the later enactment of the phased decision making, during the five or six years when there was no phased decision making, would you say directly affecting meant the same thing?

Rex E. Lee: Yes, I would.

I certainly would.

That is definitely our position.

What it refers to are those instances, the kind of thing that I was referring to in my response to Justice Brennan whether, in fact, it would be direct affect.

Unidentified Justice: So, you would say the directly affecting requirement for your position doesn't depend at all on the successive phased decision making then?

Rex E. Lee: Well, except that it bears on... The decision making reflects the fact that Congress knew at the time it adopted it that that provision for a consistency determination was not already contained in the earlier language adopted in 307(c)(1).

Unidentified Justice: But, the language adopted in the later stages applies to what the lessee must do?

Rex E. Lee: That is correct.

That is correct.

Unidentified Justice: Is there any provision directing the government, the federal government, in its activity to comply with this consistency requirement?

Rex E. Lee: The answer is yes, and it is 307(c)(1), but it rarely applies.

It applies only in those instances in which there is, in fact, a direct effect; that is an effect that does not depend on any intervening agency coming into play.

Now, that becomes very apparent when you look at what, in fact--

Unidentified Justice: I still don't understand.

What language makes the government do anything in this regard, the federal government?

Rex E. Lee: --It is 307(c)(1).

Unidentified Justice: Where is 307(c)(1) in the petition?

Rex E. Lee: In the petition for certiorari it is at page 84a, about the middle of the page.

Unidentified Justice: Thank you.

Rex E. Lee: In 1976 and 19--

Unidentified Justice: Excuse me, may I ask one more question?

Rex E. Lee: --Yes.

Unidentified Justice: Under your reading of these Acts, would the state lose anything by waiting until the exploration stage for consistency--

Rex E. Lee: Absolutely nothing in our view.

That is correct.

Because the other thing that the Secretary has at that exploration stage is the authority to stop.

Up until that point, he must take into account the views, and if there is a direct effect, he stops it then.

That is the other essential feature of OSC phased development.

At the exploration stage, notwithstanding the fact that the oil companies have vast amounts of money involved, he can nevertheless say or nevertheless, if at that stage, the state determines that it is inconsistent, that, in and of itself, stops the development.

The state can do it all by itself.

Now, there is authority in the Secretary of Commerce to override in the event that he makes an overriding decision.

But, in our view, no, the state does not lose by waiting until the later stage.

What happened in '76 and '78 was that in the initial phases of the congressional consideration, the position that prevailed in both Houses was one which was identical to the positions favored by the Respondents here; that is that the consistency determination, the consistency certification, would have to be made at the lease sale stage.

In both Houses there were proposals to that effect that were introduced and, during the initial stages, they were the ones that prevailed.

However, they were never enacted into law.

There was... The word 307(c)(3)(B).

Unidentified Justice: --May I ask just this though?

If that had not been enacted, as you read 307(c)(1), the government nevertheless would have been under an obligation at that time to make the determination, would it not?

Rex E. Lee: Well, if there had never been the subsequent... the result still would have been the same.

Unidentified Justice: So, you really didn't need the subsequent history?

Rex E. Lee: That is correct.

My reliance on what happened in '76 and '78 simply... strengthens our view as to (c)(1).

During the course of the legislative debates, the Executive Branch expressed its concerned that at the lease sale stage we simply don't know enough.

And, if you will look at page 30 of our brief, you will see that Congress shared that view.

They shared that concern that the leases were being stopped at the lease sale stage and as a consequence they opted for the phased development.

The net result was that the original language, which included leases within its consistency certifications requirements, was dropped and in its place or instead rather Section 307(c)(3)(B) was added.

It was a new section.

It is the only part of the entire statute that deals with OCS transactions.

And, as a net result, the provisions of the CZMA which deal with CZMA applicability to OCS transactions are identical to the provisions of the OCSLA dealing with CZMA applicability to OCS transactions namely, that CZMA's substantive requirements apply only at the exploration and production and development stages and that is what expressly Section 307(c)(3)(B) says in the CZMA and that is what Sections 11, 19, and 25 of the OCSLA says.

And, any other view puts these two necessarily related statutes out of sync with each other.

At the lease sale stage what happens is it is a procedural requirement of coordination, involvement, cooperation that the Secretary is required to consider, but there is no substantive authority to stop the project.

Now, the Respondent's contention is that a CZMA obligation at the lease sale stage is imposed on the federal government by the directly affecting language and this gets to Justice Steven's question.

There are at least two flaws in that argument.

The first one is that it flies in the face of what the statute says for reasons already discussed, means direct.

It simply cannot mean something that may or may not come about depending on events which have not yet occurred.

That is an undisputed description of the lease sale circumstance and it fits no definition of the word "direct".

Second, if Congress... If the reason that Congress eliminated the blanket requirement of consistency determinations at the lease sale stage from the only part of the statute that expressly deals with OCS transactions after months of consideration of the issue was because of some sudden discovery that it was already contained in another part of the Act that was already in existence, Congress surely would have said so.

If Section 307(c)(1), which is the directly affecting section, already contained a CZMA lease sale requirement, why did Congress give such extensive consideration to whether that self same requirement should be written in the OCS subsection?

There is not one word in the legislative history that so much as hints that the reason that leasing was not included, indeed, was deleted from Section 307(c)(B) was redundancy.

It was rather impracticability, incompatibility with the phased development of the OCS that was the centerpiece.

Unidentified Justice: Isn't it also true that the (B)... these are long titles--

Rex E. Lee: Yes, I know.

Unidentified Justice: --The one added imposes an obligation on lessee with respect to land that has already been leased?

Rex E. Lee: That is correct.

Unidentified Justice: Whereas, the one that is in dispute here is the one that imposes the obligation on the federal government.

Rex E. Lee: That is correct.

Unidentified Justice: So, they have rather different spheres of operation.

Rex E. Lee: That is correct.

Unidentified Justice: Yes.

Rex E. Lee: If the Court has no further questions at this time, I would like to--

Unidentified Justice: What do you do with the contrary legislative history, just say that it is post-enactment legislative... What about the Senate and House reports?

Rex E. Lee: --Well, there is only one footnote prior to 1980 that really supports that proposition.

That is Footnote 52 in 1977.

And, that is consistent.

What we think that refers to is our view, as I have already explained it, that there will be some direct effects in some instances and in those cases it will apply to the leasing stage.

The 1980 legislative history, I think my answer is obvious.

Those were simply the views of some individual congressmen concerning their interpretation of what an earlier Congress meant.

That is not legislation.

That is not the proper function for Congress to play.

The only way that Congress can change the law is by passage by two Houses and signature by the President.

Unidentified Justice: I gather, Mr. Solicitor General, a lessee who has to wait until the exploration stage may lose his whole investment if there is a finding that stands up of inconsistency later, doesn't he.

Rex E. Lee: For the answer to that question, I now yield to the lessee.

Chief Justice Warren E. Burger: Mr. Bruce?

ORAL ARGUMENT OF E. EDWARD BRUCE, ESQ. ON BEHALF OF THE PETITIONERS

E. Edward Bruce: Chief Justice Burger, and may it please the Court:

I think I know the first question I must answer and the answer to the question, Justice Brennan, is that, indeed, the statute makes it quite clear that if an inconsistency determination is made later and if the Secretary of Commerce does not override it, as he has the power to do, then the lessees under the statute--

Unidentified Justice: Incidentally, may I ask you, what are the circumstances under which the Secretary may over-ride it?

E. Edward Bruce: --He may do so--

Unidentified Justice: What does national security mean, for example?

E. Edward Bruce: --What does it mean?

Unidentified Justice: Yes.

E. Edward Bruce: Well, the regulations define it hardly adding much to the language of the statute itself.

There is a regulatory definition within the Department of Commerce as to the policy matters the Secretary of Commerce may consider.

To my knowledge, no successful appeal has yet been invoked, but I should add that this statute still is rather new to us.

There is little experience under it.

I would like to also amplify, Justice Stevens, one of the answers that the Solicitor General gave to one of your questions.

At the later stages, under 307(c)(3)(B), it is not simply a matter of lessee compliance.

The Secretary of the Interior, under Section 11 and Section 25 of the Outer Continental Shelf Lands Act, is directed not to approve the requisite permits for exploration or production and development unless consistency is achieved.

So, he doesn't step out of the picture.

He is very much into the picture.

Congress explicitly put him into the picture.

Unidentified Justice: He was not in the picture in 1972, was he?

E. Edward Bruce: Well, in 1972, that part of the OCS Lands Act did not exist.

Unidentified Justice: That is my point.

E. Edward Bruce: But, our position--

Unidentified Justice: To look at the problem as of '72, we would have nothing but the language, directly affected, to deal with.

E. Edward Bruce: --I would go back even further.

I would go back to 1953 and consider what Congress did in reaction to this Court's decisions in the so-called tidelands oil controversy, look at that determination, and then ask the question whether the statutory language that they used in 1972 and the legislative history associated with the 1972... radically changed that.

The Plaintiffs say that it did, but the Plaintiffs offer no definition, as the Solicitor General has told us, of the term "directly affecting" that begins at all to comport with their position.

To the contrary, it is their position in their briefs... California's position that the meaning of these terms are unclear and they urge upon this Court what they themselves characterize as a broad, liberal, or expansive definition in order to suit their needs.

They not only ignore the language of Section 307(c)(1), they ignore the very specific arrangements of Section 19 of the Outer Continental Shelf Lands Act, where in 1978 Congress addressed this very question, what role shall we create for the states in the OCS tract selection process at the leasing stage and provided an arrangement quite different than the one that emerges from their interpretation.

They ignore 307(c)(3)(B) and what it says about the role of the CZMA in the OCS process and they ignore Sections 11 and 25 that interlock these two.

Now, how do they justify this?

They do it ultimately on a policy argument.

They say really that OCS leasing is simply so important that we simply must have this authority, we must have input at the leasing stage.

There are three, at least three dispositive answers to that argument.

In the first place, this Court has repeatedly held in recent years and in past years that we start with the language with which Congress expressed itself.

We don't ask the judges to delve into policy and create a different scheme.

A second answer is this: In 1978, when the OCS Lands Acts was completely revised, Congress addressed the very policy question upon which Plaintiffs stand here; that is the need for state input into the process.

That was defined as a major policy goal of the Outer Continental Shelf Lands Act.

When Congress did that it adopted Section 19.

Indeed, it adopted it at the urging of California, Massachusetts and other states who, notwithstanding the existence of the 1972 CZMA said, we need a role in the tract selection process and Congress gave them that role.

And, that role was for governors to make recommendations; that role was for the Secretary of the Interior to have final authority to assess a balance between state and national interests subject, of course, to judicial review in a well-defined means.

Indeed, even in 1976, when Congress was addressing policy under the CZMA, in making these major amendments to that Act, taking into account the need to have an aggressive OCS program, it addressed the policy question and it said we are giving the states a right to apply their programs at these later stages, at exploration and development.

And, the conference report said that this would satisfy state needs for complete information on a timely basis about the details of the oil industry's plans.

That is, by the way, in our brief at page 42.

Congress made this policy statement at exactly the time it was rejecting a proposal to make leases subject to consistency review.

Congress has rejected their policy argument.

Congress has found an expression or place for the policy to be achieved elsewhere.

A final answer to their policy argument, we submit, can be found in their steady resistance to offer to this Court or any court what would flow from adopting their directly affecting argument.

What consequences would we have?

In the lower court, certainly in the trial court, they said they would have final authority, recognizing the improbability, shall I say, of that position.

They now retreat to some undefined degree of deference that would have if (c)(1) applies as they say it applies.

The point to nothing in the CZMA, the OCS Lands Act, the Administrative Procedure Act, general principles of administrative law, that this Court or any court could consider in deciding how much deference they were due.

They would create, it seems to me, litigation over the years trying to make these case-by-case adjustments as the Ninth Circuit itself recognized.

Now, sometimes, indeed, all too often, this Court is confronted with statutory schemes where Congress hasn't been specific enough and litigation must be resorted to to solve these kinds of problems.

We submit in this case the confusion implicit in the Plaintiff's position could be achieved only be ignoring Congress' repeated statements time and time again as to how these two statutory schemes are to work.

We submit that the Court should hold that the leasing stage, the selection of tracts itself, does not directly affect the coastal zone.

The Court, in its opinion, should also recognize that Section 19 provides a ready means for state input into the process.

In so holding, the Court would harmonize the two statutes, the CZMA and the OCSLA.

It would recognize the basic policy position upon which the Plaintiffs stand, the need for state input, and it would channel disputes into a congressionally defined administrative mechanism with judicial review.

We submit that this is a far better way to resolve the issues in this case rather than to indulge Plaintiffs in their expansive and liberal approach to the legislation which raises far more problems than it settles.

If the Court has no questions, I will sit down.

Chief Justice Warren E. Burger: Very well.

E. Edward Bruce: Thank you.

Chief Justice Warren E. Burger: Ms. Berger?

ORAL ARGUMENT OF THEODORA BERGER ON BEHALF OF THE RESPONDENTS

Theodora Berger: Mr. Chief Justice, and may it please the Court:

I am going to try and explain this morning why it is important to apply state coastal zone management programs which are federally approved to the Department of Interior's Outer Continental Shelf leasing activities and how that process can, in fact, work.

But, before I get to that point, I am going to be addressing what Petitioners' definition of the directly affecting test is.

And, let me just say at the outset that they would like to have this Court define the phrase 307(c)(3) of the Coastal Zone Management Act solely be reference to the purposes and policies of an entirely different statute, the Outer Continental Shelf Lands Act amendment.

Now, as Justice Stevens pointed out earlier, those amendments were not passed until 1978.

This entire system of phased development that they are relying on for their definition of the directly affecting test was a subsequently enacted statute.

The words 1972 and that is the statute that is before the Court for construction.

Let me also emphasize that it is a phrase we are talking about, "directly affecting the coastal zone".

Petitioners would like to have the Court simply define the word "directly".

That is not the issue here.

It is legislative intent on that phrase in the Coastal Zone Management Act.

It is also important--

Unidentified Justice: When you say that the issue is not the meaning of the words "directly affecting", but instead it is the legislative intent in using those terms?

Theodora Berger: --It is the meaning of the phrase "directly affecting the coastal zone".

It is not one word "directly", as Petitioners would have it.

It is also important to focus on how Petitioners have suggested that that phrase be defined.

According to Petitioners, no federal activity directly affects the coastal zone unless it has immediate physical impacts on the coastal zone without subsequent governmental approvals.

You will find that test in the Solicitor's brief and in the letter to California refusing to do a consistency determination for Lease Sale 53.

Now, we have to ask ourselves where did that test come from?

You can't find it in the legislation history.

To the contrary, all of the legislative history contradicts that test.

It doesn't really foster the purposes of the Act because this was an Act that was designed for the long-term management of the coastal zone through a process of federal/state coordination and cooperation.

I submit that that process would not be fostered by a restrictive definition such as the one put forth by Petitioners.

The only thing they can site for this narrow definition is the dictionary.

Now, if you look... Again, the dictionary definition is only of the word "directly".

It doesn't give us any definition of the phrase.

But, if you look at the dictionary definition, you will not find the definition offered by Petitioners.

The dictionary doesn't say that you have to have physical impacts.

The dictionary doesn't say anything about subsequent governmental approvals.

The only thing... The closest thing that they can find in the dictionary is the notion of intervening cause.

And, the trial court analyzed that test and said even under that test Lease Sale 53 would directly affect the coastal zone because this is the activity that sets in motion the whole chain of events which lead to the coastal zone impacts with which we are concerned.

This is the key activity.

The other important thing to understand about Petitioners' definition is that it virtually exempts all of the Department of Interior's significant OCS decision making; that is tract selection and the imposition of lease stipulations.

Now, Mr. Bruce said this morning that under their definition tract selection is exempt.

You will that also in the Joint Appendix at page 72.

In the letter to California refusing to do the consistency determination, the Department of Interior explained that under their definition tract selection is not an activity that requires compliance with the Coastal Zone Management Act.

In fact, as I must admit, it is only in the rarest of cases under their definition that lease sales would ever come into this process of coastal zone management that was anticipated by Congress.

And, in fact, there has only been on instance in the entire history of OCS leasing since 1972 that I am aware of where they have ever actually applied consistency to a lease sale.

Unidentified Justice: Where was that?

Theodora Berger: That was an instance in Alaska, Your Honor, in 1977.

That was a particularly unusual situation where the Department of Interior imposed a stipulation requiring the lessee to immediately build gravel islands and the Department felt that the gravel islands themselves would cause impacts on the coastal zone.

Therefore, they did a consistency determination on the effect of building the gravel islands, but no consistency determination on the effect of the lease sale.

Now, One of the main arguments of the Department of Interior is that you simply cannot apply the consistency process to their OCS leasing activities.

It would be unworkable.

You would have a morass of litigation and the very important federal OCS leasing program would grind to a halt.

Well, I submit that that has been disproven, Your Honors, because as a result of litigation in this case, the Department of Interior has been forced to prepare consistency determinations all over the country for a great number of states.

I would like to bring to your attention the record--

Unidentified Justice: A great number is how many?

Theodora Berger: --Fifteen.

Unidentified Justice: Fifteen.

Where are they?

Theodora Berger: Would you like a list?

Unidentified Justice: No, no, not the whole... Are they east or west or what?

Theodora Berger: East and west.

Unidentified Justice: East and west.

Massachusetts would be--

Theodora Berger: Massachusetts is one, yes.

I would like to give you a brief summary of what has happened, because that certainly is very pertinent here.

As to six of those consistency determinations, and bear in mind that it is the Department of Interior that makes the consistency determination.

They send it to the state, the state has a right to agree or disagree.

If there is a disagreement, they try and work their differences out.

The Department of Interior in six instances sent their determination to the state.

They said we find that this lease sale is consistent with your coastal zone management program.

The state looked at the consistency determination and said, you are right, we agree with you, and there is no problem with holding this lease sale just as you have suggested.

In five instances, the state said, no, we think there are problems for coastal zone management if you go ahead exactly as you have said, but they sat down together and they tried to resolve the problem in a way that would allow the lease sale to proceed while still taking into account these coastal zone management concerns.

In each of those five instances, the Department of Interior reached a memorandum of understanding with the state which in no way interfered with the holding of the lease sale.

In only three instances to date, out of all of these consistency determinations, has litigation resulted.

So, we don't have the disastrous effects that had been predicted by the Department of Interior.

Unidentified Justice: --Are those three instances pending in litigation?

Theodora Berger: Two of them are pending and one was dismissed.

Unidentified Justice: Pending district courts or what?

Theodora Berger: Well, let's see, they are in the district court except the one in Massachusetts went up on appeal.

The court upheld an injunction that was issued on the grounds of NEPA and now it is back in the district court.

Now, Petitioners will try and tell you that this entire process, these agreements that were worked out, were solely as a result of the Outer Continental Shelf Lands Act amendments, that they can reach agreements with the states under the OCS Lands Act.

But, the fact of the matter is that four out of the five agreements that were reached expressly relied on the coastal zone management program for the state.

So, I submit to you that the process is workable, it can be done at the lease sale stage, notwithstanding all Petitioners' arguments to the contrary.

Unidentified Justice: Tell me, Ms. Berger, if your position is not accepted, what is the consequence?

Theodora Berger: I am just coming to that, Your Honor, because we don't think that this process is workable at the exploration and development stage.

It is simply too late and try to do coastal zone management--

Unidentified Justice: You are going to tell us why?

Theodora Berger: --Yes, I am going to that right now.

The reason is, the difference between Section 307(c)(1) and Section 307(c)(3), which some of the questions were directed to this morning.

Section 307(c)(1) is the only section in the CZMA that can cover the Department of Interior's OCS activities.

Those are the activities of the lease sale where they select tracts and they impose lease sale stipulations.

As one of the Justices pointed out this morning, a lot of money changes hand at this stage.

These are very expensive propositions when you hold a lease sale.

Lease Sale 53 alone, the total bids were over $2 billion, and Chevron bid $333 million for one tract in Lease Sale 53.

It gives you an idea of the importance of the lease sale stage.

The oil companies are not putting up that kind of money for the mere ability to apply for subsequent permits.

They are spending that kind of money for what they perceived to be the ability to develop the tract.

Otherwise, I submit, that nobody would expend these huge sums.

Now, let's take an example of why you can't work it out under Section 307(c)(3).

307(c)(3) is, as the Court pointed out earlier, at a subsequent stage.

The lease sale has already been held, the money has already changed hands.

The leases are not in the hands of the oil companies, the lessees of the tract.

The lessees come to the state for a consistency review under Section 307(c)(3) on a piecemeal, random basis, often one tract at a time.

There is no way at that point to address the coastal zone impacts, if you will, of the lease sale as a whole.

And, it is impossible to do anything more than piecemeal review.

Unidentified Justice: Who decides, Ms. Berger, whether or not there will be piecemeal submission or perhaps a more general submission?

Theodora Berger: Well, in this case, it is the Department of Interior, because if consistency review were applied at the lease sale stage, you could address these concerns on a broader basis.

But, if you cannot... If they refuse to do the consistency determination, then the state can only reach these concerns on a tract-by-tract basis which is, of course, not a very satisfactory way of proceeding.

Unidentified Justice: Why is it less satisfactory and why must the state proceed only on a tract-by-tract basis if it is done at the later stage?

Theodora Berger: Because the state has no ability to do anything at the lease sale stage unless the Department of Interior is subjected to consistency review.

The state's ability only comes in at the subsequent stages.

Unidentified Justice: Well, that would be 307(c)(3), wouldn't it?

Theodora Berger: Right.

Unidentified Justice: Why is the state's ability limited in the 307(c)(3) stage?

Theodora Berger: Well, let me give you an example.

One of the major parts of the Department of Interior's decisions at the lease sale stage is the question of tract selection.

That is the determination of where in a given area they are going to allow development through leasing and what areas they are going to exclude from development.

So, suppose you had a situation where the state was concerned about a coastal zone resource of national significance that was recognized under its coastal zone management program, and suppose also that the only way to protect that particular resource was to not lease and develop the immediately adjacent OCS tracts... and bear in mind one particular fact about Lease Sale 53.

The OCS tracts at issue in this case begin at the three-mile limit which is immediately adjacent to the coastal zone that the Coastal Zone Management Act is concerned with protecting and managing.

All right.

So, what can you do about tract selection?

Well, Petitioners say, well, we don't have enough information at this stage to address the coastal zone management program, but that certainly is incorrect because the lease sale stage--

Unidentified Justice: When you say 307(c)(3) stage?

Theodora Berger: --No, I am sorry, Your Honor, lease sale--

Unidentified Justice: I thought you were going to address the 307(c)(3) stage, why the states can't do anything about it at that stage.

Theodora Berger: --Because you can't do tract deletion at the 307(c)(3) stage.

Unidentified Justice: Why can't you?

Theodora Berger: Tract deletion is a leasing decision made by the Department of Interior.

Unidentified Justice: Okay.

You can't say we don't think that should be leased, but you can surely say at the 307(c)(3) we don't think it should be developed, we don't think you should drill for oil there, can't you?

Theodora Berger: You mean for a state to do that?

Unidentified Justice: Yes.

Theodora Berger: If a state... If Your Honors apply the statute in that way, then the state will have no recourse but to do that.

Unidentified Justice: But, I thought you were saying a minute ago the state couldn't do that and now you are saying it can.

Theodora Berger: As a practical matter, it is not a practical way to go about it because all of this money has now been expended.

The oil companies have acquired rights to develop the tract.

Unidentified Justice: Now, wait a minute.

You said the oil companies have acquired rights to develop the tract.

You are saying that either the Secretary couldn't say at that stage this is inconsistent with the state's coastal management plan to drill for oil here and do you think the oil company could simply say, well, gee, we have put a lot money in this thing, so let's forget about the consistency determination?

Theodora Berger: The Secretary has nothing to say about consistency under Section 307(c)(3).

Unidentified Justice: But, the state does.

The state does.

The state can say it if it wants to and the oil company takes the risk of being able to comply with the coastal management plan, doesn't it?

Theodora Berger: Well, Your Honor, you could look at it that way, but that is not a very practical way to go about things.

Unidentified Justice: Well, I don't know.

It seems to me awfully direct if the state says, sorry, you are out of business.

Theodora Berger: Well, I guess the other main problem with it, Your Honor, is that this is an Act that is designed for comprehensive, long-term planning and management and it is a little late to start that planning after the major planning decisions have been made by the Department of the Interior.

Unidentified Justice: Well, Ms. Berger, as I understood it at least, the first stage of offshore development and leasing would be the development of the five-year schedules by the Department of Interior of the OCS lease sales and during that interval of time, the Secretary of Interior, as I understand it, is required to solicit comments from both interested federal agencies as well as the governors of each state and has to respond in writing to all those state governors' comments.

So, that is the first stage when the state can participate, right?

Theodora Berger: Yes, Your Honor.

Unidentified Justice: Before you even get to this section we are dealing with.

Theodora Berger: Yes.

Unidentified Justice: Then, in addition, I thought the second stage, where the state had an opportunity, was in meeting the requirements of NEPA and the Endangered Species Act where the governor of every state affected is given a formal opportunity to submit recommendations on the size and the timing and the locations of the proposed leases.

So, we have already had two opportunities, have we not, for states as a whole to impact on the tract selection in effect?

Theodora Berger: Your Honor, but the answer to that is that Congress intended a different opportunity for the states under the Coastal Zone Management Act.

And, you can find that expressly stated in the legislative history of the OCS Lands Act.

The legislative history of Section 1345 of the Act... This was in Section 19 of the amendments... that is the very section of the OCS Lands Act that talks about OCS leasing and that legislative history expressly states that the Department of Interior's OCS lease sales are expected to comply with coastal zone management programs.

Now, Petitioners always skip over that piece of legislative history, but we submit that it is extremely telling.

Unidentified Justice: That is in '78?

Theodora Berger: That is in '78.

Unidentified Justice: That is the House report?

Theodora Berger: Yes, the final House report.

Unidentified Justice: Is there anything in the Senate about it?

Theodora Berger: No.

And, the Act followed the House report so that is the one that was entitled to weight.

Perhaps I can give you another example other than tract deletion and that is the imposition of lease stipulations at the lease sale stage.

This is a very important example, because frequently these agreements, recent agreements with the states that have been worked out illustrate.

Frequently leasing can be squared with coastal zone management programs simply by the imposition of stipulations.

You don't need tract deletion at all and that is a very important reason to start this process at the lease sale stage rather than waiting for later when you can look at the lease sale as a whole.

Unidentified Justice: By stipulate where, Ms. Berger?

Theodora Berger: Pardon me?

Unidentified Justice: By stipulation where?

Theodora Berger: A lease stipulation is a term of a contract between the Department of Interior and the lessee oil company.

And, that is an important point because when they issue the lease, all of the stipulations that the Department of Interior has determined will be part of this lease sale are then included in each of the contracts with the oil companies.

So, the companies know from the very outset what the rules of the game are going to be.

That is another important reason the coastal zone management program must be brought to bear at that point.

Let me give you an example.

The California Coastal Zone Management Program contains a policy which requires the consolidation of onshore support facilities for offshore oil and gas development.

Now, that is a sensible policy because otherwise you would have a proliferation of these support facilities all along the coast and it is in keeping with a requirement of the Coastal Zone Management Act that you have orderly siting of onshore support facilities for offshore oil development.

Now, how do you take care of this consolidation problem?

Consolidation is something that requires the oil companies to cooperate with one another to agree on a consolidated marine terminal or a consolidated supply base onshore.

They have to reach agreements, they have to plan for this over a period of time.

If you wait until the exploration and development stage, the oil is about to come on shore.

It has to get there some way.

The oil company is now four years into its lease and they have a five-year lease in which to get the oil out.

It is too late to be telling an oil company coming in for approval on one tract, we are sorry, but you have to build a consolidated facility.

The oil company will say we can't possibly do it at this point, we should have been told this earlier.

Now, we are not suggesting that all of the details of this consolidated facility should be worked out at the lease sale stage.

That certainly wouldn't be workable.

But, we are suggesting that unless you impose the requirement of a consolidated facility at the lease sale stage, it simply isn't going to happen as a practical matter.

Unidentified Justice: But, Ms. Berger, isn't it true in connection with many of the tracts at the lease sale stage the potential lessees don't eve know what the mineral contents of the tracts are?

They don't know whether they are going to find anything worth drilling for developing.

Theodora Berger: That is true, Your Honor, but--

Unidentified Justice: So, why would you be talking about a consolidated facility at that stage?

Theodora Berger: --Well, let me respond.

First of all, they do have a fairly good idea of what is out there because they have resource estimates that the Department of Interior itself relied on to determine whether the bids are adequate.

In fact, often times they have even more specific information on expected resources based upon development of adjacent tracts.

But, more importantly, this is the time when they decide whether the tracts will be developed or not.

In other words, it is possible you may not find oil in a given tract, but if you do find oil, the lease sale stage is the time when the Department of Interior has decided that development is going to go forward on that tract.

Unidentified Justice: But, under 307(c)(3), the state can object after that stage if it is inconsistent with its coastal management plan, can't it?

Theodora Berger: The state can object, but as we said, Your Honor, that is a little late to do the comprehensive planning that this statute requires.

Unidentified Justice: But, if Congress has said that is the time you object, why is it too late?

Theodora Berger: Well, Congress did not say that is the only time you object.

Section 307(c)(1) is a residual, catchall category according to the Department of Commerce regulations.

Unidentified Justice: For things that directly affect?

Theodora Berger: That is correct.

Perhaps a better answer to Your Honor's question is the legislative history.

Congress has said repeatedly in the legislative history of both statutes, the CZMA and the OCS Lands Act, that these decisions of the Department of Interior must comply with consistency requirements and that they wanted a broad definition of the directly affecting test, not a narrow definition.

Unidentified Justice: Ms. Berger, is it true that the original bills involved when this directly affected language was added to CZMA, under both the original House and Senate bills, it was reasonably clear, was it not, that the lease sale stage would not have required the CZMA consistency submission?

Theodora Berger: Your Honor, under... That is an interesting question, because under the original bills, the language in both versions was in the coastal zone.

Unidentified Justice: Right.

Theodora Berger: And they changed it to directly affecting.

Unidentified Justice: It was only this last-minute amendment that imposed the requirement that we are now dealing with.

Theodora Berger: However, there is some language in the reports that we have cited indicating... and perhaps this is the only explanation of the legislative history that tells you why Congress did change to the directly affecting test.

There are statements in the legislative history going back to 1971 that Congress always intended that federal activities, even if the were outside the coastal zone, would have to comply with consistency requirements if they had a functional interrelationship with coastal zone management.

And, the example that was given in the legislative reports was a situation between the channel islands offshore California and the mainland.

This is the OCS.

That is an area of the OCS.

And, the legislative history plainly states that that was supposed to be covered by consistency review.

So, I submit to the Court that is the only explanation we have of why Congress changed to this directly affecting test, because they wanted to get at those kinds of activities.

Unidentified Justice: May I ask a question that your reference to the prior bill affected was originally in the coastal zone language.

Are there situations in which there are lease sales within a coastal zone?

Theodora Berger: Yes, there are.

Unidentified Justice: Do they directly affect the coastal zone?

Theodora Berger: Well, within the coastal zone would not be leasing by the Department of Interior.

Unidentified Justice: It wouldn't be any federal activity connected with it?

Theodora Berger: That is right.

It was would be a state--

Unidentified Justice: There would be no federal supervision?

Theodora Berger: --That is correct.

Unidentified Justice: I see.

Theodora Berger: I might as well continue with the legislative history if I may.

In 1976, Congress amended the Coastal Zone Management Act and at that time it made a number of statements to the effect that the Department of Interior's OCS leasing activities were always covered by the Act as it existed in 1972 and as in the proposed amendments in 1976.

Now, Petitioners make much of the fact that in 1976, Section 307(c)(3)(B) was added specifically directed to the plans of exploration and development of oil companies.

But, the fact of the matter is the conference report makes clear that that was added in order to expedite the post-leasing process to benefit the oil company.

It had nothing to do with the pre-leasing decisions that were made by the Department of Interior.

Those can only be addressed under Section 307(c)(1).

In 1978, Congress amended the OCS Lands Act and established this phased development that the Petitioners rely on, but, again, the legislative history there specifically... On lease sales, they said lease sales must comply with coastal zone management programs.

They included a savings clause saying that nothing in the 1978 amendments was intended to modify in any way the requirements of the 1972 Coastal Zone Management Act.

In 1980, Congress again amended the Coastal Zone Management Act and made a number of statements of great import in this case indicating that they always intended Interior's pre-leasing activities to be covered and that they wanted a broad test of directly affecting.

Unidentified Justice: Who made these statements?

Theodora Berger: These statements, Your Honor, are in the committee reports.

And, I recognize that the Solicitor argues that we shouldn't pay any attention to those statements, but the fact of the matter is the very statements that we rely on Congress specifically linked to a change that was made in 1980, and that is the fact that they amended a section, a policy section of the Act in 1980 requiring the federal government to cooperate with the states on coastal zone management issues.

Unidentified Justice: Did they amend this section containing the words "directly affecting"?

Theodora Berger: No, Your Honor, they did not.

What they did do, however,... These reports were generated as a result of the year of oversight activity and in that activity Congress was now dealing for the first time with the implementation of these state programs.

Unidentified Justice: But, they are all post-enactment statements, aren't they?

Theodora Berger: They are post... Well, not insofar as they discuss this change that was made in 1980.

Unidentified Justice: No, but as to directly affecting.

Theodora Berger: Well, they said that the broad definition of directly affecting was consistent with the change that they made in 1980.

Unidentified Justice: We don't usually give too much weight to post-enactment statements, do we?

Theodora Berger: Well, Your Honor, this Court certainly has given weight to post-enactment statements where they are as relevant as these statements are.

Not only that, Congress did not simply come up with a new test in 1980.

They said that the functional interrelationship test, which I mentioned going back to 1972, was always the test.

It is not as though Congress is saying at a later date we have now discovered the test.

Instead, what they are doing is saying this was always the test.

We told you that many years ago and it still is the test.

But, another important point is that no coastal zone management programs were approved until 1977.

So, the 1980 legislative history is the first time that Congress was actually focusing on how the process worked and this is their explanation of how Section 307(c)(1) works and why they didn't amend the Act in 1980.

I might point out that the oil industry was lobbying heavily at that point asking that the consistency requirements be changed.

And, this was Congress' explanation of why they were not going to change Section.

307(c)(1).

Unidentified Justice: And the '78 amendments to the OCS Act, that legislative history is not post anything.

It is in connection with those amendments.

And, I understand the committee to have said that nothing in these amendments should indicate that you should rely on the Act, on those amendments or on the OCS Act for any inference that lease sales weren't covered.

Theodora Berger: That is absolutely correct, Your Honor.

I see that my time is up.

Thank you.

Chief Justice Warren E. Burger: Do you have anything further, Mr. Solicitor General?

ORAL ARGUMENT OF REX E. LEE, ESQ. ON BEHALF OF THE PETITIONERS -- Rebuttal

Rex E. Lee: I would like to call to the Court's attention, Chief Justice Burger, a public document clearly subject to judicial notice, which I think may be of help to the Court, staff recommendation to the California Coastal Commission, File No.

CC-783, which reviews recommendations at the production and development stages for Exxon.

The table of contents contains, among other things, references to cumulative impacts at the production stage.

Unidentified Justice: Does each of us have one of those?

Rex E. Lee: Excuse me?

Unidentified Justice: Does each of us have one of those?

Rex E. Lee: I will be happy to make it available to the Court.

Pages 53 through 56 deal with this subject citing Section 30250 of the Coastal Act which refers at the development stage to significant adverse effects, either individually or cumulatively, and then it goes on to talk for the next three pages about cumulative impacts at the development stage.

In fact, these--

Unidentified Justice: Mr. Solicitor General, you referred to this in your papers before?

Rex E. Lee: --No, I have not, Justice Blackmun, but it is... In fact, it just recently came to my attention, but it is a public document of the State of California and it is subject to judicial notice.

Unidentified Justice: Well, that isn't ordinarily something that counsel put in as a matter of rebuttal though.

Rex E. Lee: Well, it is in response to the assertion that cumulative impacts simply cannot... That it is too late at the development stage.

Unidentified Justice: How long have you had that document?

Rex E. Lee: How long have I had it?

Unidentified Justice: Well, how long has the government had it?

Rex E. Lee: I really don't know.

It was called to my attention just a couple of days ago.

Unidentified Justice: I, for one, would welcome any comment from your opposition in due course.

May I ask... I am not sure I understand the argument you are making based on the document.

You are saying, I gather, from the document that is possible to make cumulative impact analysis later.

Rex E. Lee: Yes.

Unidentified Justice: But, I guess it could also be more difficult, couldn't it?

Rex E. Lee: In the sense that you have this problem of the investment already having been made.

Unidentified Justice: Yes.

Rex E. Lee: But, I see no reason... I see no reason why it would be any more difficult at the development stage to say we now know, based on other facts that have developed during the interim that there are these cumulative impacts and we are going to take those into account.

Unidentified Justice: Well, isn't it possible that, say, you have a very large area that you must look at at the beginning of the lease sale and you then have to look at the total picture, but you could execute the leases and you might have development of ten percent of the tract the first year and nothing even looked at for awhile.

Now, if you only had ten percent to start with, how could you then do the whole cumulative impact?

Rex E. Lee: Because of the difference between the... what happens at the early stage, at the lease sale stage under Section 19, which provides for input, and the substantive requirement... the result of the substantive requirement once the determination of no consistency is issued by the relevant state.

At the early stage, it is a matter of coordination, of long-range planning.

That was provided for by Section 18 at the five-year plan stage and by Section 19 at the lease sale stage.

But, once you pass that, then you are out of simply cooperation, coordination, and then it is a question of the authority substantively to stop the project.

As Mr. Bruce indicated, there have been only two or three of these appeals for the Secretary of Commerce to override thus far, but the fact of the matter is that none of those have been successful.

And, with regard to 307(c)(1), significant we think, there is no authority of the Secretary of Commerce override.

One of the obvious reasons... The reason in my view is simply that it was not intended that the... The certification requirement was not intended to apply at that stage.

Unidentified Justice: Do you have any comment that you would care to make on the letter?

ORAL ARGUMENT OF THEODORA BERGER ON BEHALF OF THE RESPONDENTS -- Surrebuttal

Theodora Berger: I certainly do, Your Honor, and I thank you for giving me that opportunity.

I think that the table of contents of one document offered by Petitioners at the last moment is hardly very probative, but if the Court wishes to supplement the record in this fashion, I would like to be able to submit documents that would disprove Petitioners' statements if that--

Unidentified Justice: Do you have any documents that bear on this and tend to develop what you have just suggested?

Theodora Berger: --I certainly do.

Unidentified Justice: We will receive them.

Theodora Berger: All right.

Unidentified Justice: What happens if they want to answer those documents?

[Laughter]

Theodora Berger: I think, Your Honors, the better course of action would be to keep the record as we have it and just allow me to answer the point that was raised about cumulative impacts.

The fact of the matter is, as many of the questions have pointed out this morning, those impacts are best addressed at the lease sale stage.

If you are going to put the state in the position where they can only be addressed under Section 307(c)(3), then the state has no choice but to simply say we can't allow this to go forward, we can't have this tract developed because we didn't care of this earlier on.

If you took care of it at the lease sale stage, as I pointed out earlier, you could impose stipulations that would allow the leasing to proceed, that it is really too late to take care of these problems at the exploration and development stage.

Chief Justice Warren E. Burger: We have your point.

Thank you, counsel, the case is submitted.

We will hear arguments next in Dickman against the Commissioner of Internal Revenue.