Thirty-six of the 79* Federal oil and gas leases offshore California are undeveloped. While approximately 70,000 barrels of oil and 130 million cubic feet of gas are currently produced daily from the remaining 43 Federal Outer Continental Shelf (OCS) leases¹ in the area, roughly 1 billion barrels of unproved recoverable oil reserves and 500 billion cubic feet of gas reserves are estimated to underlie the undeveloped leases.

Undeveloped Leases Table (36)

The undeveloped leases are organized into nine units and one non-unitized lease. A unit is the number of leases grouped into a single management entity to prevent waste, conserve natural resources, and protect Federal royalty interests.

(See Lease Status Information for ownership and units.)

These units and the undeveloped lease are under directed suspension due to ongoing litigation.

Litigation Update

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 MMS 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 MMS to provide a reasoned explanation for relying on the categorical exclusions in its environmental review.

As directed by the court, MMS 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 9^th 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 is currently under appeal in the U.S. Court of Appeal for the Federal Circuit.

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 MMS 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 MMS could not make a decision on the suspensions until it completed adequate environmental analysis pursuant to NEPA, including future exploration and development activities.  This decision has been appealed to the 9^th Circuit and has been stayed pending 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.

* The Interior Board of Land Appeals (IBLA) determined on Nov. 14, 2007, that an additional four undeveloped leases lacked potential hydrocarbon accumulations necessary for continued inclusion in the units, thereby causing them to terminate upon expiration of the existing suspensions of operations. This decision could be appealed to the Federal District Court.

¹ Numbers are current through August, 2007.  Last update provided on November 28, 2007.

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 MMS to provide a “reasoned explanation,” MMS determined that the preparation Environmental Assessments would be a feasible and more comprehensive alternative.