Petition for Writ of Certiorari — Cowper v. Secretary of the Interior

Supreme Court brief1989

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Text

No.

SR- 2000 | , oa pin RS

In The

Supreme Court of the United States

October Term, 1988

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PETITION FOR A WRIT OF CERTIORARI TO THI

UNITED STATES COURT OF APPEALS FOR THI

NINTH CIRCUIT

—— a ——

D« YUGLAS B. B \

Attorney General

State Of Alaska

Gary I. AMENDOLA

Assistant Attorney Genera

Counsel of Record

Office of the Attorney

General

Department of Law

P.O. Box K

Juneau, Alaska 99811

(907) 465-3600

Attorneys for Petitioner

QUESTIONS PRESENTED

Section 19 of the Outer Continental Shelf Lands Act

was enacted to give the governor of an affected coastal

state a leading role in decisions relating to oil and gas

lease sales on the outer continental shelf. It requires the

Secretary of the Interior to accept the recommendations

of the Governor of Alaska about the size, timing, or

location of a proposed outer continental shelf oil and gas

lease sale off the coast of Alaska if those recommenda-

tions provide a reasonable balance between the national

interest and the well being of the citizens of Alaska. In

1985 the Governor of Alaska recommended that the Sec-

retary of the Interior delay Sale 92 (Bristol Bay) and

delete sensitive near shore tracts from the sale. Although

those recommendations were entitled to substantial def-

erence, the Secretary rejected both recommendations.

The questions presented are:

(1) Did the Secretary give the Governor’s recom-

mendations the deference to which they were entitled;

and

(2) Was the Secretary’s decision to reject the recom-

mendations arbitrary and capricious?

LIST OF PARTIES

Petitioners:

Steve Cowper, Governor of Alaska

Alaska Independent Fishermen’s Marketing

Association

Aleutians East Coastal Resource Service Area

Bering Sea Fishermen’s Association

Bristol Bay Borough

Bristol Bay Coastal Resource Service Area

Cenaliulriit

United Fishermen of Alaska

Trustees for Alaska

Natural Resources Defense Council, Inc.

Eskimo Walrus Commission

Northern Alaska Environmental Center

City-of Quinhagak

Nunam Kitlutsisti

Alaska Center for the Environment

Village of False Pass

Sierra Club

The Wilderness Society

Environmental Policy Institute

National Audubon Society

Defenders of Wildlife

Respondents:

The Secretary of the Interior

The United States Department of the Interior

AMOCO Production Company

ARCO Alaska, Inc.

Exxon Corporation

Mobil Exploration & Producing Services, Inc.

Murphy Oil Company

Shell Western E & P Inc.

Sohio Alaska Petroleum Company

Union Oil Company of California

International Association of Geophysical Contractors

lil

Plaintiffs/ Appellants in the Proceedings below:

The Tribal Village of Akutan

The Tribal Village of Togiak

[he Tribal Village of Nelson Lagoon

TABLE OF CONTENTS

Page

CSUEIOUS FUOUOUIEIE og oo ncn os oa ok bee ee ha eede cane i

Cie ae) Ce ne he ae ee er Cree tr Ot ns ii

ee ee I i Se ees ee eee iv

Ee SOR ok Sc ccc’ c be Oe CRaN Cee ee eek vi

SE NEE ore eek cage enue a cae ca cere eh 1

PIII 5 5g 44 ook ee Mayas 4 4 GA Lesa Bars 2

hatutes TAWOIWOG . . < k sss cac ssa ncavbevesackoadvawss 2

ees Oe SU Oe cn cos cmc kdd eeu eiee 4

i, LS co, ae ce. ae aeceneeccanaaon 4

i) SU sah eeu teens has coop cake aha e nes 6

C. Hazards to the Area from Oil and Gas Leasing 7

D. Administrative and Judicial Process............ 7

Reasons for Granting the Writ... .............cec050: 13

Pi) CIE sacs Ao vad Cons nna seen a cee ces ares 13

B. The Governor’s recommendations struck a proper

balance between the national interest and that of

ee Se ee ae eee re eee eee eee 15

C. The Secretary of the Interior failed to give the

recommendations of the Governor of Alaska the

deference to which they were entitled under sec-

tion 19 of the OCSLA .... 0... ccc ccc ccc cee 18

D. The Secretary’s refusal to delay Sale 92 until at

least 1994 or to delete the sensitive near shore

tracts from Sale 92 was arbitrary and capricious 23

CP ee ee ee ee ee 28

Appendix A: Order and Amended Opinion of the

United States Court of Appeals for the

Ninth Circuit (March 9, 1989) ....... A-1

TABLE

Appendix B:

Appendix .:

OF CONTENTS - Continued

Page

Judgment and Memorandum and

Order of the United States District

Court for the District of Alaska

(January 22, 1988) .......--.--++--

Judgment and Memorandum and

Order of the United States District

Court for the District of Alaska

(March 11, 1988)

TABLE OF AUTHORITIES

Page

CASES

Amoco Production Co. v. Tribal] Village of Akutan,

ae SAA, BIPO EEF Ss ce en ee 11

Amoco Production Co. v. Village of Gambell, 107

ks: SO CUP Re cis ckccaicch er. tate ee reas |

Commonwealth of Massachusetts v. Clark, 594

F.Supp 1373 (D. Mass. 1984)...............7.. vey!

Secretary of the Interior v. California, 464 U.S. 312,

104 S.Ct. 656 (1984) ie vu Abe SN KEES ARR Ce eee

lribal Village of Akutan, et al. v. Hodel, 792 F.2d

eee SPUN CO FRDG ccc cee ake nae 1]

Tribal Village of Akutan v. Hodel, 869 F.2d 1185

Rem SU TPO ic ais csccuage eee 12, 18

Union Oil Co. of California v. Morton, 512 F2d

PGS COR Ce USFS os race ee 20

Village of False Pass v. Clark, 733 F.2d 605 (9th Cir.

PUREE 550 vec S eee revokes een cae Tee 20

STATUTES

16 U.S.C. SS 1531 et PE Sak eee ea 6 ee koe ae ene 10

16 U.S.C. §§ 3101 ef ec, EEE Ee ee ee 10

28 U.S.C. § FET Mr ee

42 U.S.C. §§ 4321 et Bed cas oe ie eee 10

43 U.S.C. § 1337 20

Vil

Page

43 U.S.C. § 1344 20, 21

13 U.S.C. § 1345 2, 9, 10, 13, 21

13 U.S.C. § 1347 24

OTHER AUTHORITY

House Conf. Rep. 95-1474, 95th Congress, 2nd

Session, reprinted in (1978) U.S. Code Cong

and Admin. News at 1705

House Rep. 95-590, 95th Congress, 1st Session,

reprinted in (1978) U.S. Code Cong. and Admin.

News at 1461 ...... aed 19

No.

—

In The

Supreme Court of the United States

October Term, 1988

STEVE COWPER, GOVERNOR OF ALASKA, et al.,

Petitioners,

THE SECRETARY OF THE INTERIOR and THE UNITED

STATES DEPARTMENT OF THE INTERIOR, et al.,

Respondents.

PETITION FOR A WRIT OF CERTIORARI TO THE

UNITED STATES COURT OF APPEALS FOR THE

NINTH CIRCUIT

On behalf of the people of the State of Alaska, Steve

Cowper, Governor of Alaska, et al. respectfully petition

for a Writ of Certiorari to review the decision of the

United States Court of Appeals for the Ninth Circuit in

this case.

OPINIONS BELOW

The Ninth Circuit opinion is reperted at 869 F.2d 1185

(Appendix A, App. A-1). The January 22, 1988 Judgment

and Memorandum and Order of the United States District

Court for the District of Alaska is unpublished (Appendix

B, App. B-1). The March 11, 1988 Judgment and Mem-

orandum and Order of the United States District Court

for the District of Alaska is unpublished. (Appendix C,

App. C-1).

JURISDICTION

On October 5, 1988, the Ninth Circuit issued an opin-

ion affirming the decisions of the United States District

Court for the District of Alaska. The State of Alaska filed

a petition for rehearing and on March 9, 1989, the Ninth

Circuit issued an order and an amended opinion denying

the petition. The jurisdiction of this Court is invoked

under 28 U.S.C. § 1254(1).

»™ auiainigias

STATUTES INVOLVED

43 U.S.C. § 1345 states:

(a) Recommendations regarding size, time, or

location of proposed lease sales

Any Governor of any affected State or the execu-

tive of any affected local government in such State

may submit recommendations to the Secretary

regarding the size, timing, or location of a proposed

lease sale or with respect to a proposed development

and production plan. Prior to submitting recommen-

dations to the Secretary, the executive of any affected

local government in any affected State must forward

his recommendations to the Governor of such State.

(b) Time for submission of recommendations

Such recommendations shall be submitted within

sixty days after notice of such proposed lease sale or

after receipt of such development and production

plan.

The Secretary shall accept recommendations of

the Governor and may accept recommendations of

the executive of any affected local government if he

determines, after having provided the opportunity

for consultation, that they provide for a reasonable

balance between the national interest and the well-

being of the citizens of the affected State. For pur-

poses of this subsection, a determination of the

national interest shall be based on the desirability of

obtaining oil and gas supplies in a balanced manner

and on the findings, purposes, and policies of this

subchapter. The Secretary shall communicate to the

Governor, in writing, the reasons for his determina-

tion to accept or reject such Governor’s recommenda-

tions, or to implement any alternative means

identified in consultation with the Governor to pro-

vide for a reasonable balance between the national

interest and the well-being of the citizens of the

affected State.

(d) Finality of acceptance or rejection of

recommendations

The Secretary’s determination that recommenda-

tions provide, or do not provide, for a reasonable

balance between the national interest and the well-

being of the citizens of the affected State shall be

final and shall not, alone, be a basis for invalidation

of a proposed lease sale or a proposed development

and production plan in any suit or judicial review

pursuant to section 1349 of this title, unless found to

be arbitrary or capricious.

(e) Cooperative agreements

The Secretary is authorized to enter into coopera-

tive agreements with affected States for purposes

which are consistent with this subchapter and other

applicable Federai law. Such agreements may

include, but need not be limited to, the sharing of

information (in accordance with the provisions of

section 1352 of this title), the joint utilization of avail-

able expertise, the facilitating of permitting pro-

cedures, joint planning and review, and the

formation of joint surveillance and monitoring

arrangements to carry out applicable Federal and

State laws, regulations, and stipulations relevant to

outer Continental Shelf operations both onshore and

offshore.

STATEMENT OF THE CASE!

A. Introduction

This case concerns the proper balance between the

role of state and federal governments in the decision-

making process leading to outer continential shelf (OCS)

oil and gas leasing, development and production that

puts at risk the greatest concentration of birds, fish, and

marine mammals on the North American continent. The

locus of the case is Alaska’s Bristol Bay and the associ-

ated North Aleutian Basin of the OCS, an area of unpar-

alleled biological productivity.

The significance of the issues presented in this case

was emphasized by the recent grounding of the Exxon

Valdez in Prince William Sound, resulting in the largest

' Except for the references to the Exxon Valdez oil spill,

the information in this Petition is a part of the record on appeal

in the Ninth Circuit.

oil spill in American history and dramatically demon-

strating the devastating impact of oil on biological

resources. The Prince William Sound (the Sound) oil spill

occurred less than thirty miles from port, where there is

easy access to the area, when weather conditions were

favorable, and where the Sound is protected from the

open ocean by numerous islands. In spite of those factors

and oil industry assurances to the contrary, efforts to

clean up the spill have been largely unsuccessful, and the

spill continues to wreak ecological havoc both in the

Sound and elsewhere in Alaska more than two months

later.

Bristol Bay and the North Aleutian Basin are substan-

tially more remote and inaccessible than the Sound, the

weather is much more problematic, and there are no

islands to provide protection from the full fury of the

North Pacific; efforts to clean up an oil spill in this area

accordingly would be even less successful than in the

Sound. However, despite the Alaska Governor’s recom-

mendation that leasing of the area be deferred at least

until more experience is gained in oil and gas develop-

ment on the OCS in the harsh environment off Alaska’s

shores, and in the face of his own staff’s determination

that at least one or more major spills of at least 1,000

barrels of crude oil would be likely to occur if the area

was leased, the Secretary of the Interior (Secretary)

offered Bristol Bay for lease in the federal government's

OCS Sale 92.

The precise questions presented here are (1) whether

the Secretary gave the Governor’s recommendations the

deference to which they were entitled, and (2) whether

the Secretary’s decision to offer the area for lease was

arbitrary and capricious. The broader issue, however, is

that a proper balance was not struck between satisfying

the nation’s thirst for oil and gas and protecting of one of

the most biologically productive and important areas in

the world.

B. Bristol Bay

Bristol Bay and the North Aleutian Basin lie off the

southwestern coast of Alaska, north of the Alaska Penin-

sula. They possess the greatest concentration of birds,

fish, and marine mammals found anywhere in the North

American continent. According to the Department of the

Interior (Interior), “the fisheries of the North Aleutian

Basin are among the most productive in the world.” The

National Marine Fisheries Service (NMFS), which has

responsibility for the conservation of marine mammals,

the protection and management of fishery resources, and

the fostering of commercial fisheries for the benefit of the

nation, has concluded that the Bristol Bay area is the

single most important region of the United States OCS for

these resources.

This area also encompasses one of the world’s great

bird migration crossroads. The nutrient-rich lagoons and

bays on the north side of the Alaska Peninsula (adjacent

to Bristol Bay) support, in various seasons, major por-

tions of the North American and Pacific flyway popula-

tions of several species of waterfowl, including black

brant, emperor goose, and Steller’s eider.

At least 27 species of marine mammals are found in

the area. Virtually the entire eastern population of endan-

gered Pacific gray whales, estimated at 15,000 to 17,000,

and approximately 871,000 northern fur seals migrate

through Unimak Pass and through the Sale 92 area dur-

ing the spring and fail.

C. Hazards to the Area from Oil and Gas Leasing

Activities that would be undertaken pursuant to Sale

92 are a significant threat to the incredibly valuable

resources of Bristol Bay. Interior concluded that at least

one major spill of 1,000 or more barrels of oil is likely to

occur as a result of Sale 92.2 Interior also admitted that

Sale 92 can be expected to result in major or moderate

effects to the red king crab population and commercial

fishery, to marine and coastal birds, and to fur seals and

sea Otters.

NMFS, in its biological opinion issued pursuant to

the Endangered Species Act (ESA), concluded that a

major oil spill from Sale 92 when right whales are present

or during the peak of the gray whale migration is likely

to jeopardize the continued existence of these endangered

species. NMFS also concluded that open water geophysi-

cal seismic surveys would likely jeopardize the continued

existence of gray and right whales under certain

conditions.

D. Administrative and Judicial Process

On April 29, 1983 Interior issued a Call for Nomina-

tions and Comments for Sale 92. On July 21, 1983, Interior

2 The Prince William Sound oil spill experience makes this

prediction look conservative at best, especially since tanker

traffic is a part of the transportation scenario for Sale 92.

identified an area for this lease sale of some 32.5 million

acres. The Secretary later reduced the sale area by about

83 percent, to 5.6 million acres, by removing areas of low

hydrocarbon potential.

In January 1985, the Secretary released a draft envi-

ronmental impact statement (DEIS) for Sale 92. The State

of Alaska filed detailed comments calling for a delay‘in

the sale, at least until 1994, so that information and

research gaps regarding the impacts of oil spills could be

filled. The Environmental Protection Agency (EPA) noted

a variety of deficiencies in the DEIS, most notably with

the Oil Spill Risk Analysis (Risk Analysis). EPA felt the

Risk Analysis had the effect of seriously understating the

risks and overstating the benefits of oil and gas develop-

ment in Bristol Bay. The National Oceanic and Atmo-

spheric Administration (NOAA) also was critical of the

DEIS, identifying major information gaps and criticizing

the adequacy of the assessment of impacts. NOAA

attacked the Risk Analysis, a critical part of the assess-

ment of impacts.

Notwithstanding these objections, the Secretary

issued the final environmental impact statement (FEIS)

and Proposed Notice of Sale in September 1985. The FEIS

considered four alternatives for Sale 92.3 At that time the

Secretary also issued an Environmental Assessment

which examined the environmental impacts of lower (by

23 percent) estimates of hydrocarbon resources. Neither

3 Alternative I (the sale as it occurred); Alternative II (no

sale); Alternative III (delay of the sale); Alternative IV (deferral

of tracts close to the Alaska Peninsula).

——

the FEIS nor the Risk Analysis was modified in any

material way to account for the deficiencies identified in

the agency or public comments. Despite calls for a delay

in the sale, the Proposed Notice of Sale included the

entire 5.6 million acres analyzed in the FEIS. The Secre-

tary did not defer any tracts from the sale.

Neither the DEIS nor the FEIS contained any discus-

sion of a key assumption regarding Alternative IV, one of

the crucial alternatives to the proposed sale. This alterna-

tive would have deleted from the sale area all nearshore

tracts within 25 miles of the Alaska coast, an alternative

that was favored by the State of Alaska, NMFS, and

others. The key assumption concerned the amount of oil

underlying the nearshore tracts for purposes of the Risk

Analysis. The FEIS assumed that only a small portion of

the area’s oil resources were located in these nearshore

tracts, thereby creating the appearance that environmen-

tal benefits from the deletion of these tracts would be

minimal. This assumption rested on a mathematical error

that skewed the comparison of akernatives, leading the

Secretary to seriously underestimate the environmental

benefits of Alternative IV when making his leasing deci-

sion for Sale 92.

In November 1985 the Governor of Alaska* submit-

ted his recommendations to the Secretary pursuant to

Section 19 of the Outer Continental Shelf Lands Act

(OCSLA), 43 U.S.C. § 1345. The Governor requested a

4 In 1985 that Governor was Bill Sheffield. However, the

administrations from Governor Jay Hammond until now Gov-

ernor Steve Cowper have consistently opposed Sale 92.

delay in the sale until at least 1994, and made other

recommendations regarding tract deletions (including

Alternative IV) and mitigation measures.

On December i2, 1985, the Secretary announced the

decision to go forward with Sale 92, including the leasing

of the nearshore tracts which the Governor and NMFS

had recommended be deleted. On December 16, 1985, the

Final Notice of Sale was issued.

Thereafter, the Petitioners filed suit in the United

States District Court for the District of Alaska alleging

that, in the administrative process which culminated in

the issuance of the Final Notice of Sale for Lease Sale 92,

the Secretary violated section 19 of the OCSLA, 43 U.S.C.

§ 1345, and provisions of the National Environmental

Policy Act (NEPA), 42 U.S.C. §§ 4321 et seq., the ESA, 16

U.S.C. §§ 1531 et seqg., and the Alaska National Interest

Lands Conservation Act (ANILCA), 16 U.S.C. §§ 3101 et

seq. The case was consolidated with two other cases filed

in the United States District Court by Tribal Village of

Akutan, et al. and Trustees for Alaska, et al.

On January 13, 1986, the district court issued a pre-

liminary injunction and an order granting a partial stay of

the preliminary injunction which, taken together, autho-

rized the Secretary to receive the bids for Sale 92 but

prohibited him from opening the bids, issuing leases, or

otherwise proceeding with the lease sale. The injunction

and partial stay were based on a finding that the plain-

tiffs had a substantial likelihood of success on the claims

asserted under ANILCA. The Ninth Circuit affirmed the

issuance of the preliminary injunction and partial stay.

Tribal Village of Akutan, et al. v. Hodel, 792 F.2d 1376 (9th

Cir. 1986).

In Amoco Production Company v. Village of Gambell, 107

S.Ct. 1396 (1987), this Court held that Section 810 of

ANILCA did not apply to the OCS. This Court also

granted certiorari in this case and reversed and remanded

it to the Ninth Circuit. Amoco Production Company v. Tribal

Village of Akutan, 107 S.Ct. 1598 (1987). The Ninth Circuit

then remanded the case to the district court. 816 F.2d 685

(1987).

On January 22, 1988, the district court denied the

State of Alaska’s claims under Section 19 of the OCSLA

and granted partial summary judgment to the Respon-

dents. The State of Alaska appealed. On March 11, 1988,

the district court denied the claims under NEPA and the

ESA and dismissed those counts.> All other plaintiffs

appealed to the Ninth Circuit. In addition, the Petitioners

and the other plaintiffs requested the district court to

issue a stay pending appeal. On March 15, 1988, the

district court granted the stay. On May 2, 1988, the Ninth

Circuit affirmed the issuance of the stay. On May 20, 1988,

the Ninth Circuit consolidated the appeals.

On October 5, 1988, the Ninth Circuit panel affirmed

the district court decision and stayed the preliminary

> The district court did not dismiss one count of the

amended complaint filed by Tribal Village of Akutan, et al.

relating to aboriginal rights in the OCS. In remand proceedings

in Amoco Production Co. v. Village of Gambell, 107 S. Ct. 1396

(1987), the Ninth Circuit has now ruled that aboriginal rights

have not been extinguished. The claim continues to be held in

abeyance in district court pending a ruling on a petition for

rehearing filed in the Ninth Circuit.

injunction pending remand to the district court. The

effect of the October 5, 1988 stay was to permit the

Secretary to proceed with the lease sale.

On October 7, 1988, the Petitioners, along with Ninth

Circuit Appellants Tribal Village of Akutan, et al., filed an

Emergency Motion to Vacate Stay of Injunction Pending

Remand and for Injunction Pending Rehearing En Banc.

The Petitioners were informed that the Sale 92 bids

would be opened in Anchorage, Alaska on Tuesday, Octo-

ber 11, 1988 at 1:00 p.m. Eastern Time (9:00 a.m. Alaska

Time) and the results announced at 3:00 p.m. Eastern

Time (11:00 a.m. Alaska Time). As of October 11, 1988 at

9:00 a.m. Eastern Time, the Ninth Circuit had taken no

action on the Emergency Motion.

Therefore the State of Alaska filed an application for

a stay of the Ninth Circuit decision with Justice O’Con-

ner, Circuit Justice for the Ninth Circuit. The application

was denied. The bids were opened and leases subse-

quently issued.

On October 18, 1988, the Petitioners filed a Petition

for Rehearing and Suggestion for Rehearing En Banc with

the Ninth Circuit. On March 9, 1989 the Ninth Circuit

issued an amended opinion adopting its earlier opinion

except for minor amendments, otherwise denied the peti-

tion for rehearing, and rejected the suggestion for rehear-

ing en banc. Tribal Village of Akutan v. Hodel, 869 F.2d 1185

(9th Cir. 1989). This petition follows.

—

REASONS FOR GRANTING THE WRIT

A. Summary

Section 19 of the OCSLA, 43 U.S.C. § 1345, represents

an effort by Congress to incorporate fundamental princi-

ples of federalism into the process for making decisions

regarding oil and gas leasing on the OCS. The respon-

sibility for balancing the nation’s need for new sources of

oil and gas against the potential harm to renewable ocean

resources is allocated between the Secretary and the Gov-

ernor of the affected coastal state. Congress emphasized

the role of the Governor by expressly providing that

“t]he Secretary shall accept recommendations of the Gover-

nor... if he determines ... that they provide for a

reasonable balance between the national interest and the

well-being of the citizens of the affected State.” 43 U.S.C.

§ 1345(c)(in part; emphasis added).

The Ninth Circuit failed to recognize that Congress

consciously provided that the responsibility for striking

the proper balance is to be shared. Instead, it effectively

held that the Secretary has plenary decision-making

power and (as he did here) may with impunity ignore the

recommendations of an affected state’s Governor.

This specific issue - the sharing of responsibility for

decisions regarding the use of the nation’s ocean

resources — is of significant national importance standing

alone. It takes on substantially greater significance in the

broader context of federalism and state/federal relations

generally.

The principles of federalism that were recognized

even by the Framers of the United States Constitution

have retained their vitality over time. As recently as 1987,

then President Ronald Reagan renewed the commitment

to be guided by those principles by issuing Executive

Order 12612. 52 Fed. Register 41665 (October 30, 1987).

The Executive Order confirmed that “[i]n most areas of

governmentai concern, the States uniquely possess the

constitutional authority, the resources, and the compe-

tence to discern the sentiments of the people and to

govern accordingly.”

Congress acted on the principles of federalism when

it enacted section 19 of the OCSLA. The Ninth Circuit,

however, failed to recognize that the states remain viable

entities in our federalist form of government. In holding

that the Secretary’s authority is plenary and can be exer-

cised with no regard for the views of an affected state’s

Governor, the Ninth Circuit usurps the authority of Con-

gress and effectively takes away a state’s ability to partic-

ipate in the process, in violation of both the general

principles of cooperative federalism and the specific com-

mand of section 19.

The Courts should recognize that federalism princi-

ples require that in the application or administration of a

federal law, shared responsibility is presumed - it is the

rule, not the exception-— unless Congress expressly says

otherwise. Such a presumption is more than justified in

this case not only because of the obvious federal and state

interests involved, but also because in section 19 of the

OCSLA, Congress expressly provided for a significant

state role in oil and gas leasing decisions on the OCS.

For the foregoing reasons, review on writ of cer-

tiorari is called for under Supreme Court Rule 17.1(a)

because the Ninth Circuit “has sv far departed from the

accepted and usual course of judicial proceedings . . . as

to call for an exercise of this Court’s power of supervi-

sion.” It also is appropriate under Supreme Court Rule

17.1(c) because the Ninth Circuit “has decided an impor-

tant question of federal law which has not been, but

should be, settled by this Court.”

B. The Governor’s recommendations struck a proper

balance between the national interest and that of

the state.

The decision of the Ninth Circuit panel regarding the

amount of deference to be accorded a Governor under

Section 19 of the OCSLA has extremely important conse-

quences. Not only does it affect all of the coastal states in

the Ninth Circuit,6 but the decision also has substantial

precedential value to other coastal states.

The enactment of Section 19 of the OCSLA was sup-

posed to provide the Governor of an affected state with

an important role in the process leading to the decision

whether, where, and under what conditions oil and gas

leases on the OCS would be issued. In order to give a

coastal state real influence in determining the “size, tim-

ing and location” of the oil and gas lease sales off its

coast, Congress provided that

[t]he Secretary shall accept recommendations of

the Governor and may accept recommendations of

the executive of any affected local government if he

determines, after having provided the opportunity

for consultation, that they provide for a reasonable

6 Alaska, Washington, Oregon, California, and Hawaii.

balance between the national interest and the well-

being of the citizens of the affected State. 43 U.S.C.

§ 1345(c).

(Emphasis added.)

Congress recognized that a coastal state may experi-

ence financial, environmental, social, cultural, and other

societal effects as a result of OCS oil and gas activities.

Some effects may be adverse, while others may be benefi-

cial. Nonetheless, in the ordinary case, those conse-

quences can be substantial. In an extraordinary setting,

the adverse consequences could be catastrophic. Cata-

strophic risks certainly exist in this case.

The importance of this case (both to the State of

Alaska and the nation) is obvious simply because it

involves Bristol Bay, an area having incredible fisheries

and other renewable resources. The recommendations of

the Governor of Alaska in 1985 pointed out that

[t]he proposed Sale 92 area is unique among the

Nation’s OCS planning areas. In no other planning

area are such high biological values found in con-

junction with such low hydrocarbon potential.

As we have noted in previous correspondence,

the fisheries resource values of the Sale 92 area repre-

sent an annual economic first wholesale value which

can exceed one billion dollars and employ over

10,000 people. The marine mammals, waterfowl, and

seabirds seasonally concentrated in the North Aleu-

tian Basin also have a significant value to the people

of Alaska, the Nation, and in some cases the world,

that cannot be easily measured in monetary terms.

The Governor also noted the relatively slight contri-

bution Sale 92 might make to the,nation’s energy supply:

In contrast to the unparalleled biological values of

the North Aleutian Basin, MMS estimates that the

potential economic benefits of the North Aleutian

Basin hydrocarbon resources are among the lowest of

all the Nation’s OCS planning areas. The SID for the

current 5-year leasing program ranks the North Aleu-

tian Basin as 14 out of the Nation’s 18 OCS planning

areas in terms of the net economic value of recover-

able hydrocarbon resources.

The Governor then compared the potential benefit to

the nation from leasing with the potential adverse impact

to both the state and the nation, and made specific recom-

mendations regarding the size, timing, and location of the

proposed sale:

1. The timing of the lease sale in the North Aleutian

Basin should be delayed until at least 1994;

2. The size and location of any lease sale in the

North Aleutian Basin should not include the near

shore tracts identified in Enclosure I; and

3. The lease sale stipulations and Information to

Lessees for any lease sale in the North Aleutian

Basin should incorporate the most up-to-date

provisions regarding mitigation of potential envi-

ronmental damage as described in Enclosure II.

Section 19 was specifically intended to require the

Secretary to give substantial deference to the recommen-

dations from an affected coastal state’s Governor. That,

unfortunately, is not what happened. The Secretary effec-

tively ignored the Governor’s recommendations and

made his own independent decision regarding the size,

timing, and location of the sale as if the Governor’s role

in the process was the same as that of any other member

of the public who may comment on proposed federal

actions. This placed the Governor’s role and influence at

the pre-1978 OCSLA amendment level, a level the plain

wording and legislative history of the statute make clear

the amendments were supposed to increase. In affirming

the Secretary’s actions, the Ninth Circuit then sanctioned

his departure from the requirements of section 19.7

C. The Secretary of the Interior failed to give the rec-

ommendations of the Governor of Alaska the defer-

ence to which they were entitled under section 19 of

the OCSLA.

The statutory authority and responsibility provided

in section 19 for the Governor to influence OCS leasing

grew out of Congressional recognition that the pre-1978

OCSLA process was entirely inadequate for the states

because it left the decision-making process virtually to

the unrestrained discretion of the Secretary.

As Congress recognized, -

[f]ederal administration of the leasing program and

Federal regulation of offshore oil and gas develop-

ment have been essentially a closed process involv-

ing the Secretary of the Interior and the oil

industry. While the Secretary has on occasion

sought or heard outside views, he has done so by

rules established in his own discretion. Decision-

making for the development of offshore oil and gas

must be opened so that the coastal and other States

? The Ninth Circuit incorrectly ruled that

le]ven if we agreed that the Governor’s recommendations

were reasonable, we could not conclude the Secretary was

arbitrary or capricious simply because he chose to reject

them.

Iribal Village of Akutan v. Hodel, 869 F.2d at 1190.

affected by offshore oil and gas activities may partici-

pate in the process on a reguiar basis and so that

affected local communities and the public at large

may have an opportunity to be heard.

House Report 95-590, 95th Congress, Ist Session, at

page 54, reprinted in (1978) U.S. Code Cong. & Admin.

News at 1461.

Congress adopted section 19 “to insure that Gover-

nors of affected States ... have a leading role in OCS

decisions and particularly as to potential lease sales and

development and production plans.” House Conference

Report 95-1474, 95th Cong., 2d Sess. at 106, reprinted in

(1978) U.S. Code Cong. & Admin. News, at page 1705.

A Governor has only one meaningful opportunity to

influence the Secretary’s decision regarding the “size,

timing, or location of a proposed lease sale”

lar area of the OCS. That opportunity is the one provided

for in section 19 of the OCSLA and is available only

before a lease sale actually occurs. After the Secretary

ina pa rticu-

opens bids and awards leases the focus of attention shifts

to the exploration and development and production plans

for particular leases. There is an obvious and significant

difference between influencing the configuration of a

lease sale and the activities that will occur on a particular

lease.

In addition, now that the bids have been opened and

leases issued to particular companies, it is difficult and

expensive for the government to reacquire what will have

become vested property rights.§ Thus, section 19’s pre-

sale importance cannot be overstated.

Other legislative history relating to Section 19 also

clearly stated the intent of Congress:

Specific input is also required for certain key OCS

decisions. All recommendations by a Governor of an

affected State, and through Governors, heads of

affected local government units, with regard to a

proposed lease sale or a proposed development and

production plan, must be submitted within 60 days

and must be accepted by the Secretary if he determines

that they are consistent with the national interest.

(emphasis added)

H. Rep. 95-590, supra at page 50.

The legislative history is clear that the Secretary may

not simply substitute his judgment of the reasonable bal-

ance if the Governor’s recommendations do strike that

8 On October 11, 1988, the bids for Lease Sale 92 were

opened and publicly announced in Anchorage, Alaska. The

bids were then evaluated and accepted or rejected within 90

days of the opening of the bids. Thereafter, leases were exe-

cuted. At that point, a property interest was conveyed to the

successful bidders (now lessees), Union Oil Co. of California v.

Morton, 512 F.2d 743 (9th Cir. 1975), and the suspension and

cancellation provisions of 43 U.S.C. § 1334 and 30 C.F.R.

§ 250.12, which include the requirement of the payment of

compensation in most instances of cancellation, attached.

Thus, even though “by purchasing a lease, lessees acquire

no right to do anything more... ,” Secretary of the Interior v.

California, 104 S. Ct. 656, 671 (1984); Village of False Pass v.

Clark, 733 F.2d 605, 608 (9th Cir. 1984), substantial legal and

financial consequences now come into play, 43 U.S.C.

§ 1337(b)(4), making cancellation of leases financially and

legally difficult for the Secretary.

balance. He is obligated to accept those recommenda-

tions. House Conf. Rep. 95-1474 at page 107 stated that

“{bloth versions and the conference report require accep-

tance of a Governor’s recommendations if the Secretary

of the Interior determines that the recommendations pro-

vide a reasonable balance between the national interest

and the well-being of citizens of the affected State.”?

The plain wording of section 19 supports the argu-

ment that it was meant to require the Secretary to give a

significant amount of deference to the recommendations

of a Governor of an affected State. That significant

amount of deference includes, as the statute quite clearly

says, requiring the Secretary to “accept the recommenda-

tions of the Governor .. . if they provide for a reasonable

balance between the national interest and the well-being

of the citizens of the affected state.” 43 U.S.C. § 1345(c).

In other words, if a rational basis for the Governor’s

recommendations exists, the Secretary’s rejection of those

recommendations then would be arbitrary and capri-

cious. See 43 U.S.C. § 1345(d), supra.

A comparison of section 19 with section 18 of the

OCSLA provides added support for this analysis.!° To

interpret sections 18 and 19 as requiring the Secretary to

9 The Ninth Circuit failed to even discuss the legislative

history which supports the petitioner’s interpretation of sec-

tion 19.

10 Section 18 provides the Governor with the opportunity

to comment on a proposed 5-year leasing plan, stating in

relevant part:

(Continued on following page)

give the recommendations of the Governor the same con-

sideration in both situations is to ignore the obvious

differences in the language of each section.

Under section 18, although an affected coastal state’s

comments are to be specifically considered by the Secre-

tary, there is no requirement that the Secretary accept

them if they meet certain statutory requirements. The

Secretary need only deny, grant or modify a request

contained in the comments as “the Secretary considers

appropriate.” Section 19, on the other hand, requires the

Secretary to be at least “conditionally bound” by the

recommendations of the Governor when those recom-

mendations have struck a reasonable balance between the

national interest and the well-being of the citizens of

Alaska. Commonwealth of Massachusetts v. Clark, 594 F.

Supp. 1373, 1384 (D. Mass. 1984). Such a plain difference

in the meaning and impact of sections 18 and 19 must be

recognized as establishing different review standards for

the Secretary’s decisions under them.

Section 19 of the OCSLA requires the Secretary to

give substantial deference to the recommendations of the

Governor, for this is the only way to assure that the

Governor would have a “leading role in OCS decisions

(Continued from previous page)

During the preparation of any proposed leasing program

under this section, the Secretary shall invite and consider

suggestions for such program from any interested Federal

agency, including the Attorney General, in consultation

with the Federal Trade Commission, and from the Gover-

nor of any State which may become an affected State under

such proposed program.

43 U.S.C. § 1344(c)(1).

and particularly as to potential lease sales... .” H.R.

Report No. 95-1474, 95th Cong., 2d Sess., at 106 (1978). By

affirming the Secretary’s decision with respect to Sale 92,

however, the Ninth Circuit essentially ruled that the Gov-

ernor’s recommendations were entitled to no more

weight than those of any member of the general public.

The decision eviscerated the Governor’s special role

under section 19.

D. The Secretary’s refusal to delay Sale 92 until at

least 1994 or to delete the sensitive near shore tracts

from Sale 92 was arbitrary and capricious.

It is beyond dispute that the biological resources and

other values of Bristol Bay are vast. To describe Bristol

Bay as the crown jewel of Alaska’s renewable resources is

no overstatement. The importance of Bristol Bay and its

resources to the state — and to the nation and perhaps the

world — cannot be overlooked.

It is also beyond dispute that the State of Alaska

continues to support the prudent development of

Alaska’s oil and gas resources. The State of Alaska object-

ed to this sale because when balancing the risk to the

resources of Bristol Bay against a relatively low potential

for hydrocarbon recovery, it was clear to the Governor

that the Secretary should at least delay the sale and

remove sensitive nearshore tracts from the sale when it

was held.

The Governor categorically described how each rec-

ommendation fit well in advancing both the well-being of

the citizens of Alaska and the national interest.

And yet, the two most important recommendations were

rejected.'! That rejection was arbitrary and capricious.

Oil and gas leasing, exploration and development

proceed in stages, Secretary of the Interior v. California, 104

S.Ct. 656 (1984), and the Secretary will have the oppor-

tunity to refine his analysis as the stages progress. The

Ninth Circuit’s consideration of the Risk Analysis sug-

gests, however, that at the lease sale stage, the Risk

Analysis has little or no meaning in the process. That

made it relatively easy to ignore the impact of the flawed

Risk Analysis on the section 19 decision of the Secretary.

One of the essential purposes for the preparation of

an Risk Analysis is to provide a decision-maker with the

information necessary to make an informed decision

about the impacts from an oil spill. In this case that

information was needed to help make a decision as to

where, when, and under what conditions to proceed with

Lease Sale 92. The Risk Analysis was an important part of

that information. Since the Risk Analysis contained fun-

damental errors, it is axiomatic that the decision of the

Secretary on issues which rely on the Risk Analysis for

support is also fundamentally in error.

The whole idea of the Risk Analysis is to give the

Secretary accurate information about the lease sale area

and environment in order that he be able to make proper

'l See Governor’s recommendations at page 17, supra. The

measures identified by the Governor in recommendation #3

are for the most part mandated by 43 U.S.C. § 1347(b). Thus,

any argument that the Secretary in fact accepted most of the

Governor’s recommendations (because many of the stipula-

tions were accepted at least in part) would be at best

disingenuous.

decisions about the “size, timing or location” of the sale.

If the Risk Analysis is unreliable, it cannot be relied upon

so heavily by the Secretary in his decision. Because he did

so, however, the decision is arbitrary and capricious.

The most important error made by the Secretary in

the Risk Analysis involved the allocation of the amount

of oil in Alternatives I and IV, thus substantially under-

stating the environmental benefits of Alternative IV.!?

Even though the Governor pointed out this error and

explained why it caused a serious mistake in the Secre-

tary’s analysis of the risks and benefits of the different

Alternatives for Sale 92, the Secretary either ignored or

rejected that information. The Secretary then rejected the

section 19 recommendations of the Governor. By doing

so, the Secretary confirmed that although Congress meant

the section 19 process to give the Governor real influence

at the lease sale stage, in practice it did not

12 The Secretary assumed that the proposed sale area con-

tained 279 million barrels of oil, while Alternative IV contained

254 million barrels. The Secretary apparently assumed that

only a small portion of the oil (25 million barrels) was con-

tained in the nearshore tracts deferred from leasing in Alterna-

tive IV. He arrived at this figure by subtracting the conditional

resource estimate of Alternative IV from that of Alternative I.

In so doing, he made a significant error.

Conditional resource estimates (i.e., the amount of oil

expected to be found) like those used by the Secretary are not

absolute numbers. Instead, they are premised on a specific

probability that such oil will be found. The Secretary estimated

that there was a 20% chance of finding oil in the Alternative |

area, but only a 14% chance of finding oil in the Alternative IV

(Continued on following page)

happen. The Ninth Circuit then affirmed that view of

section 19.

The Secretary’s mistake with respect to the compari-

son of Alternative I and Alternative IV was not the only

mistake made in the Risk Analysis. Another significant

error made by the Secretary related to the oil spill trajec-

tories themselves. The EPA, based on its expert review of

the Risk Analysis, found that the Secretary had erro-

neously failed to take into account the seasonality of the

weather and the seasonal presence of fish and wildlife in

Bristol Bay:

EPA believes that a seasonal oil trajectory analysis

should be presented for [the North Aleutian Basin]

that evidences definite seasonal trends in weather

(wind direction), presence of biota, and the presence

of sensitive and vulnerable life stages. In the case of

the North Aleutian Basin EIS, the analysis is impor-

tant for two reasons. First, moderate to major impacts

are identified for many species based on their season-

al occurrence in the nearshore area. . . . Second, the

seasonal conditional probabilities are needed to iden-

tify which launch points pose a high seasonal risk to

various sea targets, biological resource areas, and

land segments.

(Continued from previous page)

area. One cannot subtract these two conditional resource esti-

mates without taking into account the difference in proba-

bilities any more than one can subtract the numerators in

fractions without accounting for the denominators. When the

difference in probabilities is properly taken into account, the

conditional resource estimate for the near shore tracts is a 7%

chance of finding 289 million barrels of oil. Thus the Secre-

tary’s estimate of 25 million barrels was incredibly low with

respect to the actual conditional resource estimate. For this

reason, the risks associated with leasing the near shore tracts

were also incredibly low.

.. . Using average annual probabilities as the basis

for impact assessment in an area that shows signifi-

cant seasonal trends in use of critical habitat, concen-

tration of individuals of various populations, and

presence of sensitive life stages may significantly

understate the potential for impacts.

The reference to wind direction is of particular

importance, for the prevailing winds in Bristol Bay blow

in different directions in the summer and winter. Accord-

ingly, averaging the trajectories over an entire year

obscures important seasonal differences in where the oil

might go (and hence which important resource areas

might be affected), and may have the effect of canceling

out higher probabilities of a spill contacting a certain area

at certain times of the year. This is especially significant

in light of the fact that many valuable species are present

in the area seasonally. Thus, a realistic assessment must

be based on the likelihood of a spill reaching these

resources under weather conditions which are present at

the times the species of concern are also present in Bristol

Bay. As NMBS stated:

We remain concerned that the oil spill risk analysis

does not realistically portray the likelihood of an

oilspill reaching coastal regions or other important

resource habitats. The methods used to calculate the

trajectory-target probabilities are not sensitive to the

high seasonality in use and concentrations in abun-

dance of many of the populations in the lease area.

Six-month averaging of trajectory results and 12-

month averaging of their probabilities do not identify

vulnerable locations during peak use periods nor do

they foretell particular seasonal weather conditions

that could result in especially critical oil spill trans-

port patterns.

The Secretary provided no real defense of his posi-

tion, resorting again to an unsubstantiated assertion that

he had proceeded correctly. This cannot suffice as an

explanation of a fallacy in the Secretary’s methodology.

EPA and NMFS were not presenting alternative meth-

odologies, but instead were pointing out that the Secre-

tary’s methodology was irrational - i.e., arbitrary and

capricious.

These flaws fundamentally affected the analysis of

impacts. By understating the risks of leasing, they

resulted in a more sanguine view of the potential impacts

of leasing. If the Secretary had recognized seasonal varia-

tions in weather and fish and wildlife use of the region,

he may well have concluded that Alternative IV, or even

no sale at all, was preferable to leasing the entire area.

In short, the Secretary’s rejection of the recommenda-

tions of the Governor of Alaska was arbitrary and

capricious.

CONCLUSION

For the past 11 years coastal states have faced an

uphill battle for the rights that they thought were secured

by the 1978 amendments to the OCSLA. Although deter-

mining when and where to lease on the OCS is no longer

a “a closed process,” it also is not one in which the states

have been accorded the role and influence to which they

are entitled. This was especially true for Alaska with

respect to Sale 92.

tor the foregoing reasons, the Ninth Circuit

sion should be reviewed and reversed by this Court

tition for a Writ of Certiorari should be granted

Kespe cttully submitted

ey. IICCLAS B B AIT Y

Attorney General

State Of Alaska

\ GARY I. AMENDOLA

Ass stant Attorney (,enera!

Counsel of Record

Office of the Attorney Genera

otate of laska

Department O

pe)

A-1

APPENDIX A

FOR PUBLICATION

UNITED STATES COURT OF APPEALS

FOR THE NINTH CIRCUIT

TRIBAL VILLAGE OF AKUTAN;

TRIBAL VILLAGE OF TOGIAK, a

federally recognized Tribe;

THE TRIBAL VILLAGE OF NELSON

Nos. 88-3610;

88-3703; 88-3729

LAGOON, a federally recog- D.C. Nos.

nized Tribe; Steve Cowper; CV-J-85-38

(GOVERNOR OF ALASKA, et al., CV-J85-37

Plaintiffs-Appellants, CV-85-701

V. ORDER AND

: AMENDED

DONALD HODEL, Secretary of OPINION

the Interior; and UNITED STATES

DEPARTMENT OF THE INTERIOR;

Defendants-Appellees,

AMOcO PRODUCTION COMPANY;

ARCO Ataska, INC.; CHEVRON

USA, INnc., et al.; INTERNA-

TIONAL ASSOCIATION OF GEO-

PHYSICAL CONTRACTORS,

Defendant-Intervenors/

Appellees.

Nm ee ee ee ee eee ee”

Appeal from the United States District Court

for the District of Alaska

James A. von der Heydt, Senior District Judge, Presiding

Argued and Submitted

August 4, 1988 —- Anchorage, Alaska

Filed October 5, 1988

Amended March 9, 1989

A-2

Before: Thomas Tang, Alex Kozinski and

David R. Thompson, Circuit Judges.

Opinion by Judge Kozinski

SUMMARY

Environmental Law

Affirming a judgment approving the Secretary’s deci-

sion to go forward with Outer Continental Shelf Sale 97

[sic: 92], the court held that under the Outer Continental

Shelf Lands Act segmented approach, the Secretary’s

actions met the standards applicable to each stage.

Appellant the Tribal Village of Akutan and others

concerned with the preservation of Alaska’s fisheries

(Alaska), appeal the district court’s grant of summary

judgment in favor of the appellee Secretary of the Inte-

rior. Appellants have sued to enjoin the Secretary from

conducting Lease Sale 92 in the North Aleutian Basin on

the grounds that the Secretary has failed to comply with

the National Environmental Policy Act (NEPA), The

Endangered Species Act (ESA), and the Outer Continental

Shelf Lands Act (OCSLA).

[1] Section 19 of OCSLA, 43 U.S.C. § 1345, entitles

the governor of an affected state to submit recommenda-

tions regarding the proposed lease sale to the Secretary.

The Secretary must accept these recommendations if he

determines that they provide for a reasonable balance

between the national interest and the well-being of the

citizens of the affected State. The Secretary's acceptance

or rejection of the recommendations are final unless

found to be arbitrary or capricious. [2] Alaska contends

that a reviewing court should determine whether the

A-3

governor’s recommendations fall within the range of rea-

son, not whether the Secretary was arbitrary of capricious

in rejecting them. (3] However, under section 19, the

court cannot substitute its judgment for that of the Secre-

tary. [4] Alaska’s arguments that the Secretary’s decision

was made without consideration of the Governor’s rec-

ommendations and in reliance on flawed data lack merit.

[5] The governor also had a fair opportunity to comment

on the original lease sale proposal, which was not altered

in any significant way. [6] NEPA is a procedural statute

designed to ensure that federal agencies are fully aware

of the impact of their decisions on the environment. Sec-

tion 102 of NEPA, 42 U.S.C. § 4332, requires in every

recommendation for major Federal actions significantly

affecting the quality of the human environment, an envi-

ronmental impact statement (EIS). [7] Appellants contend

that the EIS suffered from errors infecting the preparation

of the oil spill risk analysis. [8] The analysis of this

scenario was unnecessary at the lease sale stage. The

amount and specificity of information necessary to meet

NEPA requirements varies at each of OCSLA’s stages. [9]

Section 7(a)(2) of the ESA, 16 U.S.C. § 1536(a)(2), requires

federal agencies, with the assistance of the Secretary, to

insure that any action authorized is not likely to jeopard-

ize the continued existence of any endangered or threat-

ened species. The federal agency must consult the service

having jurisdiction over the relevant endangered species.

[10] Appellants contend that the Secretary failed to fulfill

his section 7(a)(2) responsibilities by rejecting one of the

National Marine Fisheries Service (NMFS) alternatives

for the protection of gray whales. [11] The Secretary’s

departure from the suggestions in NMFS’‘s biological

A-4

opinion does not by itself constitute a violation of ESA;

he satisfied section 7(a)(2) if he took alternative, reasona-

bly adequate steps to insure the continued existence of

any endangered or threatened species. This determina-

tion is made in light of OCSLA’s multi-stage structure.

[12] The steps taken by the Secretary were adequate and

his decision to reject some of NMRS’s alternatives was

neither arbitrary nor capricious. [13] Further, the Secre-

tary adopted other mitigating measures. [14] The risks to

endangered species during the lease sale stage are vir-

tually nonexistent.

COUNSEL

Carol H. Daniel, Alaska Legal Services Corporation,

Anchorage, Alaska; Eric Smith, Anchorage, Alaska; Gary

I. Amendola, Assistant Attorney General, State of Alaska,

for the plaintiffs-appellants.

Jacques B. Gelin, Attorney, Land & Natural Resources

Division, United States Department of Justice, for the

defendants-appellees.

E. Edward Bruce, Covington & Burling, Washington,

D.C.; Carl J. D. Bauman, Hughes, Thorsness, Gantz, Pow-

ell & Brundin, Anchorage, Alaska; Nathan S. Bergerbest,

Doyle & Savit, Washington, D.C.; Cathy Dobbs, Dobbs,

Berger, Molinari, Casalnuovo, Vannelli & Nadel, San

Francisco, California, for the intervenors-appellees.

John A. Saurenman, Deputy Attorney General, State of

California; Kathleen A. Weeks, Pacific Legal Foundation,

Sacramento, California, for the amici.

A-5

ORDER

The opinion, published at 859 F.2d 651 (9th Cir. 1988),

is amended as follows:

On page 658, column two, first complete paragraph,

replace the first sentence: “We are the least tioubled by

what may seem to be incomplete or speculative data at

the lease sale stage.”

On page 658, column two, first complete paragraph,

fifth sentence, replace “any errors in analysis” with “any

technical deficiencies.”

On page 659, column 1, first full paragraph, change

the third sentence to read:

We need not consider whether the oil spill risk anal-

ysis was in fact flawed by a deficiency in methodol-

ogy; we need only consider whether use of the

particular methodology employed in preparing the

oil risk spill analysis is reasonable. As we previously

stated, “NEPA does not require that we decide

whether an [environmental impact statement] is

based on the best scientific methodology available,

nor does NEPA require us to resolve disagree-

ments ... as to methodology.”

On page 659, column two, line two, add the following

footnote at the end of the first sentence:

'The omission of speculative information from

an environmental impact statement prepared at the

lease sale stage is permissible; however, an environ-

mental impact statement which is incomplete due to

the omission of ascertainable facts, or the inclusion of

erroneous information, violates the disclosure

requirement of 42 U.S.C. § 4332(2)(C).

On page 662, column 1, lire 3, change the first four

sentences of the first full paragraph to read:

A-6

Appellants make the additional claim that

NMEFS%’s biological opinion violated section 7(b)(4) of

the ESA, 16 U.S.C. § 1536(b){4), by failing to specify

the impact of any incidental takings of endangered

whales. The NMFS concluded that any incidental

taking would be prohibited under pertinent provi-

sions of the ESA and section 101(a)(3)(B) of the

MMPA. 16 U.S.C. § 1371(a)(3)(B), and therefore did

not include a statement specifying the impact of inci-

dental takings. See Biological Opinion at 26, 2 FEIS at

H-7. The NMFS’s interpretation of its obligation

under section 7(b)(4) was correct.

The petition for rehearing is otherwise denied. The

full court has been advised of the suggestion for rehear-

ing en banc and no judge having requested a vote

thereon, the suggestion is rejected. Fed. R. App. P. 35(b).

OPINION

KOZINSKI, Circuit Judge:

The Tribal Village of Akutan and two other tribal

villages, the Trustees for Alaska and twelve other envi-

ronmental organizations, and the State of Alaska and

seven organizations concerned with the preservation of

Alaska’s fisheries (Alaska), appeal the district court's

grant of summary judgment in favor of the Secretary of

the Interior, the Department of the Interior, the National

Marine Fisheries Service and nineteen intervenors (Secre-

tary). Appellants have sued to enjoin the Secretary from

conducting Lease Sale 92 in the North Aleutian Basin

(also referred to as Bristol Bay) on the grounds that the

Secretary has failed to comply with the National Environ-

mental Policy Act (NEPA), 42 U.S.C. §§ 4321-4361 (1982 &

Supp. IV 1986), the Endangered Species Act, (ESA), 16

| a

A-7

U.S.C. §§ 1531-1543 (1982 & Supp. IV 1986), and the Outer

Continental Shelf Lands Act, (OCSLA) 43 U.S.C.

§§ 1331-1356 (1982 & Supp. III 1985).

I. Facts

The development and operation of offshore oil wells

is controlled by OCSLA, which establishes a national

policy of making the outer continental shelf “available for

expeditious and orderly development, subject to environ-

mental safeguards, in a manner which is consistent with

the maintenance of competition and other national

needs.” 43 U.S.C. § 1332(3). The Act establishes four

distinct stages in the administrative process: (1) formula-

tion of a five-year leasing plan by the Secretary; (2) lease

sales; (3) exploration by the lessees; and (4) development

and production. Secretary of the Interior v. California, 464

U.S. 312, 337 (1984); Village of False Pass v. Clark, 733 F.2d

605, 608 (9th Cir. 1984). “Each stage involves separate

regulatory review that may, but need not, conclude in the

transfer to lease purchasers of rights to conduct addi-

tional activities on the OCS [outer continental shelf].”

Secretary of the Interior v. California, 464 U.S. at 337.

During the first stage of OCSLA, the Secretary pre-

pares a Five-Year OCS Oil and Gas Lease-Sale Schedule.

43 U.S.C. § 1344. The Secretary must request comments

from federal agencies and governors of affected states

before submitting the proposed program of lease sales to

the President and Congress. Id. at § 1344(c)-(d).

A-8

In the second stage, the Secretary conducts lease

sales of tracts on the outer continental shelf. Before solic-

iting bids and awarding leases, the Secretary must com-

ply with a detailed combination of investigating,

consulting and reporting requirements. Most signifi-

cantly, the Secretary’s review of environmental conse-

quences must meet both NEPA standards. Village of False

Pass, 733 F.2d at 609 (interpreting 43 U.S.C. § 1346(a)(1)),

and ESA requirements, Id. (while not mentioned in

OCSLA, ESA “applies of its own force and effect”). Under

OCSLA, the Secretary must also consult with the gover-

nor of any affected state, see, e.g., 43 U.S.C. §§ 1344(b)(3),

1345(a), and accept the governor’s recommendations if

the Secretary believes they strike a reasonable balance

between the national interest and the well-being of the

citizens of the affected state. Id. at § 1345(c).

After the lease sale has been completed, the highest

qualified bidder is granted a lease which entitles him to

conduct limited preliminary activities such as geophysi-

cal surveys. However, “by purchasing a lease, lessees

acquire no right to do anything more. Under the plain

language of OCSLA, the purchase of a lease entails no

right to proceed with full exploration, development, or

production . . . ; the lessee acquires only a priority in

submitting plans to conduct these activities.” Secretary of

the Interior v. California, 464 U.S. at 339.

Prior to embarking on the third stage of the OCSLA

process — exploration of the lease sale area — a lessee must

submit an exploration plan and an environmental report,

which are subject to further review. There is yet another

round of review before the lessor may enter into the final

A-9

stage — development and production of oil. “If [the les-

see’s] plans, when ultimately submitted, are disapproved,

no further exploration or development is permitted.” Id.

This four-level review process gives the Secretary a “con-

tinuing opportunity for making informed adjustments” to

the process of developing offshore oil wells in order to

ensure all activities are conducted in an environmentally

sound manner. Village of False Pass, 733 F.2d at 616 (quot-

ing Sierra Club v. Morton, 510 F.2d 813, 828 (5th Cir. 1975)).

In November 1974, the Secretary began studying the

possibility of leasing tracts for oil and gas production in

the North Aleutian Basin off the southwest coast of

Alaska. This region is important economically and eco-

logically. The fisheries of the North Aleutian Basin are

“among the most productive in the world,” Alaska Outer

Continental Shelf Region. Minerals Management Service,

U. S. Dep’t of the Interior, 1 Final Environmental Impact

Statement, North Aleutian Basin Sale 92 III-C-1 (1985) [here-

inafter cited as FEIS], important both for commercial and

sport fishing. The area is also the home of endangered

species of marine mammals and birds. Eighty percent of

the current eastern population of Pacific gray whales

migrates through the Bristol Bay’s Unimak Pass during

the spring and fall.

After twice canceling plans for lease sales in the bay

at Alaska’s request, the Secretary submitted a five-year

oil and gas leasing schedule in 1982 which proposed the

lease sale of all 32.5 million acres of the North Aleutian

Bay. This lease sale, denominated Lease Sale 92, was

scheduled for April 1985. In March 1984, in response to

concerns expressed by the Governor of Alaska, the Secre-

tary restricted leasing to the southwest corner of the

A-10

region by deleting nearly 83 percent of the acreage from

the sale.

The Secretary then proceeded to follow the statutory

prelease process: He solicited resource reports from fed-

eral and state agencies; solicited comments from the oi!

industry, governmental agencies, environmental groups

and the general public; prepared both a draft and final

environmental impact statement as required by NEPA;

obtained biological opinions from the Fish and Wildlife

Service and the National Marine Fisheries Service as

required by ESA; conducted public hearings; and consul-

ted at length with the Governor of Alaska and other state

officials.

In his formal recommendations to the Secretary, the

Governor objected to the timing, size, location and terms

of the proposed lease sale of the remaining 5.6 million

acres. He requested a number of changes, including an

additional eight-year delay in the sale and the deletion of

all tracts within twenty-five miles of the Alaska Penin-

sula. Letter from Booth Gardner [sic: Bill Sheffield], Gov-

ernor of the State of Alaska, to Donald Hodel, Secretary,

Department of the Interior (November 5, 1985) at 2,

Excerpts of Record (ER) at 33. The Secretary rejected both

recommendations, see U.S. Dep’t of the Interior. Statement

of the Reasons for the Decision on Sale 92 (Dec. 1985), ER at

35 [hereinafter cited as Statement of Reasons], although he

accepted the Governor’s other mitigating measures. On

December 16, 1985, the Secretary published a final notice

of sale in the Federal Register, 50 Fed. Reg. 51372-80

(1985).

Litigation began later that month, as appellants filed

three suits, later consolidated by the district court, to

A-11

enjoin the Secretary from proceeding with Lease Sale 92.

Appellants claimed the proposed sale violated OCSLA,

NEPA, ESA and the Alaska National Interest Lands Con-

servation Act (ANILCA), 16 U.S.C. §§ 3101-3233 (1982 &

Supp. IV 1986). Relying on our decision in Gambell v.

Hodel, 774 F.2d 1414 (9th Cir. 1985) [Gambell II], rev'd. in

part, vacated in part sub nom. Amoco Production Co. v.

Gambell, 480 U.S. 531 (1987), the district court concluded

that the Secretary had violated section 810 of ANILCA, 16

U.S.C. § 3120, and that such a violation automatically

entitled plaintiffs to injunctive relief.

Appellees immediately obtained a partial stay of the

district court’s preliminary injunction to prevent cancella-

tion of the sale pending appeal. In Tribal Village of Akutan

v. Hodel, 792 F.2d 1376 (9th Cir. 1986), vacated, 107 S. Ct.

1598 (1987), we upheld the preliminary injunction as

required by Gambell II. While a petition for certiorari in

Akutan was pending in the Supreme Court, the Court

reversed Gambell II, holding that section 810 of ANILCA,

16 U.S.C. § 3120, establishing procedures to protect Alas-

kan natives’ use of public lands, does not apply to land in

the outer continental shelf; and that violations of the Act

do not require an automatic injunction. Amoco Production

Co., 480 U.S. 531. The Court then granted certiorari in

Akutan, and remanded to this court. 107 S. Ct. 1598 (1987).

The Secretary did not seek to vacate the preliminary

injunction but instead, agreed to an expedited resolution

of the remaining issues. We remanded to the district

court, which granted summary judgment for the Secre-

tary on all counts, but enjoined the lease sale pending

appeal. We denied the Secretary’s motion to vacate the

injunction.

A-12

Appellants make three claims. First, they contend

that the Secretary’s rejection of the Governor’s key rec-

ommendations to delay and limit the area of the sale was

arbitrary and capricious, thus violating section 19 of

OCSLA, 43 U.S.C. § 1345. Second, they claim that the

environmental impact statement prepared for Lease Sale

92 was so flawed by methodological and procedural

errors that it did not satisfy the requirements of NEPA.

Finally, they claim that the Secretary violated ESA by

rejecting some of the reasonable and prudent alternatives

recommended by the National Marine Fisheries Service

(NMFS), and by relying on a biological opinion which

was itself fundamentally flawed. We consider each claim

in turn.

As the district court granted summary judgment on

all these claims, we stand in the district judge’s shoes in

reviewing his decision: “[W]e may affirm a summary

judgment only if, viewing the evidence in the light most

favorable to the party against whom it is granted, we find

no genuine issue of material fact, and we find that the

prevailing party is clearly entitled to judgment as a mat-

ter of law.” California v. Watt, 683 F.2d 1253, 1258 (9th Cir.

1982) (citations omitted), rev’d on other grounds sub nom.

Secretary of the Interior v. California, 464 U.S. 312 (1984).

il. The OCSLA Claim

{1] Section 19 of OCSLA, 43 U.S.C. § 1345, entitles the

governor of an affected state to submit recommendations

“regarding the size, timing, or location of a proposed

lease sale” to the Secretary. Id. as § 1345(a). The Secretary

must accept these recommendations “if he determines,

A-13

after having provided the opportunity for consultation,

that they provide for a reasonable balance between the

national interest and the well-being of the citizens of the

affected State.” Id. at § 1345(c). Section 1345(d) provides

that the Secretary’s acceptance or rejection of the recom-

mendations shall be final “unless found to be arbitrary or

capricious.”

As we noted in California v. Watt, the scope of our

review is limited: “In determining whether the Secre-

tary’s rejection of the governor’s recommendations was

arbitrary or capricious, we must consider whether the

decision was based on a consideration of the relevant

factors and whether there was a clear error of judgment.”

683 F.2d at 1268. The court must decide whether the

Secretary “articulate[d] a rational connection between the

facts found and the choice made,” id. at 1269 (citing

Bowman Transp., Inc. v. Arkansas-Best Freight System, Inc.,

419 U.S. 281, 285 (1974)), and “whether the Secretary

made the decision in accordance with his duty under

law,” id. (citing American Petroleum Inst. v. Knecht, 456 F.

Supp. 889, 904-05 (C.D. Cal. 1978), aff'd, 609 F.2d 1306 (9th

Cir. 1979)).

[2] Alaska contends that the district court made two

errors in determining that the Secretary’s rejection of the

governor’s recommendations was not arbitrary or capri-

cious. First, Alaska claims that the district court misin-

terpreted section 19 of OCSLA. Under Alaska’s reading of

the statute, if the governor has balanced the national

interest and the well-being of the citizens of the state in

an objectively reasonable way, the Secretary must defer to

the governor’s recommendations. A reviewing court

A-14

should therefore determine whether the governor’s rec-

ommendations fall within the range of reason, not

whether the Secretary was arbitrary or capricious in

rejecting them.

[3] This analysis is in accord with neither the statu-

tory language nor our precedents. The plain language of

section 19 limits the court to reviewing the rationality of

the Secretary’s determination; the court cannot “substi-

tute its judgment for that of the [Secretary].” California v.

Watt, 683 F.2d at 1269 (dismissing a similar argument that

the Secretary must accept the governor’s recommenda-

tions if they “provided for a reasonable balance between

national and state interests.” id. at 1268). Even if we

agreed that the Governor’s recommendations were rea-

sonable, we could not conclude the Secretary was arbi-

trary or capricious simply because he chose to reject

them.

[4] Alaska offers a second reason for reversing the

Secretary’s decision: It was made without due consider-

ation of the Governor’s recommendations and in reliance

on flawed data. Alaska alleges the Secretary made a

number of specific errors: He disregarded OCSLA’s

requirement to base the determination of national interest

“on the desirability of obtaining oil and gas supplies ina

balanced manner and on the findings, purposes, and

policies of this subchapter” as required by section 19(c) of

OCSLA, 43 U.S.C. § 1345(c); he failed to make sufficient

findings concerning the protection of fisheries; he relied

on.erroneous economic calculations in refusing to delay

the sale at least eight more years; and he based his refusal

to defer the sale of 137 near-shore tracts on a flawed oil

spill risk analysis.

A-15

None of these contentions has merit. As the district

court held, the Secretary adequately balanced the nation’s

interest in developing oil and gas supplies against its

policy of protecting the environment, see Statement of

Reasons at 2-35, and specifically discussed the importance

of preserving the bay’s fisheries. Id. at 17-20, 22-26. Con-

trary to appellant’s suggestion, the Secretary carefully

compared the costs and benefits of the proposed lease

sale with those of the governor’s plan. In making his

cost-benefit analysis, the Secretary relied on experts’

assessments of the net economic value of the lease sales

and the probability and impact of oil spills. In attacking

the accuracy of the experts’ calculations, Alaska uncovers

no fundamental flaws or irrationality; rather, Alaska only

succeeds in showing it prefers the results reached by a

different methodology.

[5] Finally, Alaska argues that the Secretary did not

give the Governor a meaningful opportunity to comment

on the net economic value calculations used in planning

Lease Sale 92. Although the Secretary formally solicited

the Governor’s comments on the original lease sale pro-

posal, the Secretary did not resubmit the proposal to the

Governor after making minor revisions in net economic

value calculations. However, as the Governor had a fair

opportunity to comment on the original lease sale pro-

posal, which was not altered in any significant way,

OCSLA does not require a second round of consultation.

Because the Secretary complied with the duties

imposed by statute, and “articulate[d] a rational connec-

tion between the facts found and the choice made.” Cali-

fornia v. Watt, 683 F.2d at 1269, we agree with the district

A-16

court that the Secretary’s decision to reject the Gover-

nor’s suggestions was not arbitrary or capricious.

Il, The NEPA Claim

[6] NEPA is a procedural statute designed to “ensure

that federal agencies are fully aware of the impact of their

decisions on the environment.” Oregon Envt’l Council v.

Kunzman, 817 F.2d 484, 492 (9th Cir. 1987). Section 102 of

NEPA, 42 U.S.C. § 4332, requires all agencies of the fed-

eral government to “include in every recommendation or

report on proposals for legislation and other major Fed-

eral actions significantly affecting the quality of the

-human environment, a detailed statement by the respon-

sible official on . . . the environmental impact of the

proposed action . . . [and] alternatives to the proposed

action.” 42 U.S.C. § 4332(2)(C)(i) and (iii). Before prepar-

ing an environmental impact statement, the responsible

federal official “shall consult with and obtain the com-

ments of any Federal agency which has jurisdiction by

law or special expertise with respect to any environmen-

tal impact involved.” 42 U.S.C. § 4332(2)(C).

Our review of an environmental impact statement is

governed by the Administrative Procedure Act, 5 U.S.C.

§ 706(2)(D), which empowers a court to strike down

agency actions taken “without observance of procedure

required by Law.” Kunzman, 817 F.2d at 492. In applying

this standard, the district court must determine whether

the environmental impact statement contains a “reasona-

bly thorough discussion of the significant aspects of the

probable environmental consequences,” and provides

information which is reasonably sufficient to encourage

_—<e—ss

A-17

informed public participation and to “enable the deci-

sionmaker to consider the environmental factors and

make a reasoned decision.” Id. at 492-93 (citations omit-

ted). A court may not strike down an environmental

impact statement because of minor technical deficiencies.

Id. Findings of fact underlying the district court’s deci-

sion may not be overturned unless they are clearly erro-

neous. Northwest Indian Cemetery Protective Ass’n v.

Peterson, 795 F.2d 688, 696 (9th Cir. 1986), rev’d on other

grounds, 108 S. Ct. 1319 (1988), while the legal adequacy

of an environmental impact statement is a question of

law, which we review de novo. Id.

[7] Appellants contend that the environmental impact

statement prepared for Lease Sale 92 suffered from three

fundamental errors, two methodological and one pro-

cedural. The alleged methodological errors infected the

preparation of the oil spill risk analysis. First, appellants

claim the Secretary’s analysis was based on a significant

underestimation of the amount of oil that might be

spilled in the environmentally sensitive near-shore tracts.

Because of this error, they argue, the Secretary was

unable to make an accurate assessment of the benefits

that would accrue from deleting these tracts from the

lease sale area. Second, appellants allege that the analysis

did not consider such variables as seasonal changes in the

weather and the movement of seasonal fish and wildlife.

Finally, appellants point to a procedural error: In failing

to disclose all of the underlying assumptions on which

the oil spill risk analysis was based, the Secretary vio-

lated his duty to “make available to the public, informa-

tion of the proposed project’s environmental impact and

encourage public participation in the development of that

A-18

information.” Trout Unlimited v. Morton, 509 F.2d 1276,

1282-83 (9th Cir. 1974).

The Secretary vigorously contests these claims. He

argues that the oil spill risk analysis was adequate given

the inherently speculative character of such analyses at

an early stage in the planning process; that there are

serious methodological flaws in appellant’s own meth-

odology; and that, in any event, the difference between

the Secretary’s results and those of the appellants is sta-

tistically insignificant.

[8] The question of whether the Secretary’s analysis

was adequate to meet the requirements of NEPA is

largely disposed of by our reasoning in Village of False

Pass v. Clark, 733 F.2d 605 (9th Cir. 1984). In that case,

appellants argued that the environmental impact state-

ment prepared for a proposed lease sale of offshore dril-

ling locations violated NEPA because it failed to consider

a worst case scenario of a 100,000-barrel oil spill. Holding

that such an analysis was unnecessary at the lease sale

stage, we announced the general principle that the

amount and specificity of information necessary to meet

NEPA requirements varies at each of OCSLA’s stages.

This principle has been adopted by other circuits, see, e.g.,

Suffolk v. Secretary of the Interior, 562 F.2d 1368, 1378 (2d

Cir. 1977), cert. denied, 434 U.S. 1064 (1978); Sierra Club v.

Morton, 510 F.2d 813, 828 (5th Cir. 1975), and approved

by the Supreme Court. Secretary of the Interior v. California,

464 U.S. 312 (1984).

Prior to exploration, it is difficult to make so much as

an educated guess as to the volume of oil likely to be

produced or the probable location of oil wells. Without

’

A-19

this information, an oil spill risk analysis can never be

more than speculative, regardless of what methodology is

used. More accurate information will be available at later

stages of the exploration process, and the Secretary can

make appropriate alterations in the oil development plan

at that time. Furthermore, any technical deficiencies at

the lease sale stage are unlikely to result in environmental

damage, as a lease sale “does not directly mandate fur-

ther activity that would raise an oil spill problem.” Village

of False Pass, 733 F.2d at 616, citing Secretary of the Interior

v. California, 464 U.S. at 317. We reached a similar conclu-

sion in California v. Watt, 683 F.2d at 1267, where we

approved an environmental impact statement even

though its oil spill risk analysis was based on a fifty

percent underestimation of oil reserves. We noted that

“additional Environmental Impact Statements will be

required at the later exploration, production, and devel-

opment stages, and these will, of course, be based on the

latest reserve estimates available at the time they are

prepared.” Id. at 1268.

Under the standard applicable to the lease sale stage,

we conclude that the Secretary’s environmental impact

statement for Lease Sale 922 [sic: 92] was adequate to

meet the requirements of NEPA. As the district court

observed, the Secretary provided “a reasoned analysis of

the evidence before [him].” Friends of Endangered Species v.

Jantzen, 760 F.2d 976, 986 (9th Cir. 1985), in compliance

with the statutory procedure. We need not consider

whether the oil spill risk analysis was in fact flawed by a

deficiency in methodology; we need only consider

whether use of the particular methodology employed in

preparing the oil risk spill analysis is reasonable. As we

A-20

previously stated, “NEPA does not require that we decide

whether an [environmental impact statement] is based on

the best scientific methodology available, nor does NEPA

require us to resolve disagreements . . . as to methodol-

ogy,” Kunzman, 817 F.2d at 496. The Secretary may refine

his analysis based on information learned during later

stages of exploration.

Appellants also make a procedural challenge, claim-

ing that the Secretary violated NEPA by failing to provide

the public with adequate information on oil spill risks.

The Secretary contends that the twelve-page discussion of

methodology in the environmental impact statement, 1

FEIS IV-A-8 to IV-A-19, adequately fulfilled his respon-

sibilities. We agree. NEPA does not require the environ-

mental impact statement to disclose all assumptions

underlying a particular methodology, see, e.g., 40 C.F.R.

§ 1502.24 (1987) (requiring an environmental impact

statement to “identify any methodologies used,” but

making the discussion of such methodology optional). In

light of the speculative nature of the oil spill risk analysis

at the lease sale stage, the omission of information

regarding the Secretary’s selection of the number and

location of oil spill points, and the amount of oil assumed

to have spilled from each point, is immaterial.!

1 The omission of speculative information from an envi-

ronmental impact statement prepared at the lease sale stage is

permissible; however, an environmental impact statement

which is incomplete due to the omission of ascertainable facts,

or the inclusion of erroneous information, violates the dis-

closure requirements of 42 U.S.C. § 4332(2)(C).

A-21

IV. The ESA Claims

[9] Section 7(a)(2) of the endangered Species Act, 16

U.S.C. § 1536(a)(2), requires federal agencies, with the

assistance of the Secretary, to “insure that any action

authorized, funded, or carried out by such agency .. . is

not likely to jeopardize the continued existence of any

endangered species or threatened species. .. .” The fed-

eral agency undertaking such an activity must consult the

service having jurisdiction over the relevant endangered

species;? the service then issues a biological opinion that

details how the proposed action “affects the species or its

critical habitat,” including the impact of “incidental tak-

ings” of the species. If a species might be endangered by

the agency action, the service suggests “reasonable and

prudent alternatives” to the agency’s proposal. Id. at

§ 1536(b)(3)(A). The agency is not required to adopt the

alternatives suggested in the biological opinion; however,

“li]f [the Secretary] deviates from them, he does so sub-

ject to the risk that he has not satisfied the standard of

section 7(a)(2).” Village of False Pass v. Watt, 565 F. Supp.

1123, 1160-61 (D. Alaska 1983), aff'd, 733 F.2d 605 (9th Cir.

1984).

2 The U.S. Fish and Wildlife Service (FWS) and the

National Marine Fisheries Service (NMFS), are jointly respons-

ible for administering the ESA; the scope of their respective

jurisdictions is set forth in 50 C.F.R. § 402.01(b) (1987).

3 An incidental taking “refers to takings that result from,

but are not the purpose of, carrying out an otherwise lawful

activity conducted by the Federal agency or applicant.” 50

C.FR. § 402.02 (1987).

A-22

Because ESA contains no internal standard or review,

our review is governed by the Administrative Procedure

Act, 5 U.S.C. § 706(2)(A) (1982). We may set aside the

actions of the Secretary or the NMFS only if they were

“arbitrary, capricious, an abuse of discretion, or other-

wise not in accordance with the law.” Village of False Pass,

733 F.2d at 610. The Secretary need not justify his deci-

sions by clear and convincing evidence, as the appellants

erroneously claim. We review the district court’s applica-

tion of this standard de novo. Id.

[10] Appellants contend that the Secretary failed to

fulfill his responsibilities under section 7(a)(2) by reject-

ing one of the NMFS%’s “reasonable and prudent alterna-

tives” for the protection of gray whales. In its biological

opinion, the NMFS determined that a “major oilspill in

the waters of the southeastern Bering Sea during peak

migration periods of gray whales is likely to jeopardize

the continued existence of the species.” Nat’l Marine

Fisheries Service, Nat’l Oceanic and Atmospheric

Admin., U. S. Dep’t of Commerce, Endangered Species Act

Section 7 Consultation — Biological Opinion 13 (March 21,

1984) [hereinafter Biological Opinion], reprinted in 2 FEIS

at H-4. to “reduce the risk of oilspills to gray whales,” the

NMFS recommended adoption of the Minerals Manage-

ment Service’s recommendation “of leasing deferrals

within a 50-mile radius of Unimak Pass and the Pribilof

Islands, and within 25 miles of shore along the Alaska

Peninsula.” Biological Opinion at 20, reprinted in 2 FEIS at

H-6. the Secretary did not fully adopt this proposal.

While he deleted “virtually all tracts within 50 miles of

Unimak Pass,” he did not provide the full 25 mile off-

shore buffer zone advised by NMFS. Instead, he deleted

A-23

all tracts within 11 miles of shore and adopted alternative

measures he considered sufficient to prevent preliminary

activities from endangering the whales. See Statement of

Reasons 66-68, ER at 35; Minerals Management Service, U.

S. Dep’t of the Interior, Sale 92, North Aleutian Basin,

Secretarial Issue Document (Aug. 1985) at 24-28 [hereinafter

SID].

[11] The Secretary’s departure from the suggestions

in the biological opinion does not by itself constitute a

violation of ESA; he satisfied section 7(a)(2) if he took

alternative, reasonably adequate steps to insure the con-

tinued existence of any endangered or threatened species.

We once again make this determination in light of

OCSLA’s multi-stage structure. As the D.C. Circuit noted

in North Slope Borough v. Andrus, 642 F.2d 589, 609 (D.C.

Cir. 1980), [m]Jandatory stage-by-stage review prevents

the telescoping of any and every projected hazard to

endangered life and to the environment into one over-

whelming statutory obstacle. .. . By ensuring graduated

compliance with environmental and endangered life stan-

dards, OCSLA makes ESA requirements more likely to be

satisfied both in an ultimate and a proximate sense.”

The Secretary’s responsibilities are not identical at

every step of the OCSLA process.

We must first determine, therefore, what actions ESA

requires at the lease sale stage. We discussed this in depth

in Village of False Pass v. Clark, where appellants raised an

ESA challenge to the Secretary’s proposed sale of oil

leases in the St. George Basin of the Bering Sea, a refuge

for rare gray and right whales. Because the NMFS had

’

A-24

phrased its “reasonable and prudent alternatives” in gen-

eral, rather than specific terms, the Secretary did not

explicitly reject the service’s recommendations. Appel-

lants nevertheless contended that the Secretary had vio-

lated ESA by failing “to adopt ‘concrete measures’ at the

lease sale stage, such as tract deletion or seasonal drilling

restrictions, to protect gray and right whales under ESA

from oil spills and seismic testing,” 733 F.2d at 608. We

disagreed. As “(t]he lease sale decision itself could not

directly place gray or right whales in jeopardy,” we con-

cluded that concrete steps were not necessary, and “the

Secretary could properly limit his action at the lease sale

stage to a plea for later implementation.” Id. at 611. In

Village of False Pass, the Secretary’s plan included an

agreement with NMFS for further monitoring after the

lease sale and the inclusion of special disclaimers in the

Final Notice of Sale specifying the Secretary’s “continu-

ing control of any post-sale drilling.” Id. We ruled that

such a plan was legally adequate, so long as the Secretary

recognized his continuing obligations to implement the

plan and to take other steps necessary to fulfill his ESA

responsibilities at each stage of the OCSLA process. 1d.;

see also Conner v. Burford, 848 F.2d 1441, 1455-56 (9th Cir.

1988).

[12] Applying the standards established by Village of

False Pass to appellants’ ESA claims, we conclude that the

steps taken by the Secretary to comply with ESA require-

ments were adequate, and his decision to reject some of

NMEFS’s “reasonable and prudent alternatives” was nei-

ther arbitrary nor capricious. We agree with the district

court that the Secretary’s explanation for declining to

delete 250 miles of offshore tracts was well reasoned and

A-25

supported by the record: The Secretary “pointed out that

exploration-stage spills are most unlikely, that deletion of

nearshore tracts would only marginally reduce the threat

to endangered whales from such spills, and that seasonal

or ad hoc drilling restrictions can provide adequate pro-

tection.” Tribal Village of Akutan v. Hodel, No. A85-701

(consolidated with J85-37 & J85-38) (D. Alaska Mar. 11,

1988) (memorandum and order granting summary judg-

ment to defendants on plaintiff's ESA and NEPA claims)

at 3, ER at 17.

[13] Instead of deleting all the offshore tracts recom-

mended by NMFS, the Secretary adopted other mitigating

measures, including several that had been approved in

Village of False Pass v. Clark. For example, he agreed to

consult informally with NMFS following the lease sale

and to initiate formal consultations once the development

and production stages began. He modified the Final

Notice of Sale to inform lessees that the Secretary might

limit or suspend drilling activities whenever migrating

whales were near enough to be subject to the risk of oil

spills. Finally, he minimized disturbances to the whales

by requiring operators and lessees to post whale lookouts

when conducting seismic tests. Statement of Reasons at 67.

The district court observed that “[t]hese steps and the

SID explanation appear to have satisfied NMFS’s parent

agency, NOAA [National Oceanic and Atmosphere

Administration] . . . for in its final ESA comments on the

sale NOAA did not reiterate those recommendations.”

Tribal Village of Akutan v. Hodel, No. A85-701 at 2-3, ER at

17.

A-26

[14] We once again note that the risks to endangered

species during the lease sale stage are virtually nonexi-

stent. Only limited preliminary activities are permitted

during this stage, such as geological, geophysical and

other surveys “which do not result in any physical pene-

tration of the seabed of greater than 500 feet and which

do not resylt in any significant adverse impact on the

natural resources of the Outer Continental Shelf [OCS].”

Final Rule, Oil and-Gas and Sulphur Operations in the

Outer Continental Shelf, 53 Fed. Reg. 10596, 10704 (April

1, 1988). Geophysical contractors conducting these sur-

veys are subject to regulation under the Marine Mammal

Protection Act {MMPA), 16 USC §§ 1361-1407 (1982 &

Supp. IV 1986), which flatly prohibits the taking of any

marine mammal on the high seas except under circum-

stances not applicable here. 16 U.S.C. § 1372 (a)(1).4

Nor does the Secretary’s rejection of some NMFS

recommendations at the lease sale stage create a risk of

oil spills at later stages. As with NEPA, the Secretary

must comply with ESA at every step of the oil develop-

ment process. Before the lessees can proceed to the explo-

ration stage, the Secretary must “implicitly conclude that

any approval does not affect an endangered species [and]

take appropriate steps to insure, on the basis of his pre-

vious consultation with the [NMFS], the absence of jeop-

ardy to an endangered species; or reinstate formal

consultation.” Village of False Pass, 733 F.2d at 611 (citation

omitted). Lessees must pass through the same approval

4 Section 17 of ESA, 16 U.S.C. § 1543, states that unless

otherwise provided, ESA shall be preempted by any more

restrictive applicable provision of MMPA.

A-27

and review process prior to the production and develop-

ment stage. While there may be “minor changes in the

Secretary’s discretion” at later stages in the OCSLA pro-

cess, such changes are relatively insignificant. Id. at 615.

In light of the protective steps implemented at the

lease sale stage, the improbability of an oil spill risk

arising at this stage and the opportunity for the Secretary

to take further action at later stages in the process, we

conclude that the Secretary has fulfilled his responsibility

to “insure that agency action . . . is not likely to jeopard-

ize the continued existence of any endangered species.”

16 U.S.C. § 1536(a)(2).

Appellants make the additional claim that NMFS’‘s

biological opinion violated section 7(b)(4) of the ESA, 16

U.S.C. § 1536(b)(4), by failing to specify the impact of any

incidental takings of endangered whales. The NMFS con-

cluded that any incidental taking would be prohibited

under pertinent provisions of the ESA and section

101(a)(3)(B) of the NMPA, 16 U.S.C. § 1371(a)(B), and

therefore did not include a statement specifying the

impact of incidental takings. See Biological! Opinion at 26, 2

FEIS at H-7. The NMFS’s interpretation of its obligation

under section 7(b)(4) was correct. Furthermore, despite

the omission of any formal statement about incidental

taking, the biological opinion does consider the effect of

such adverse impact on the whales. For example, in its

discussion of right whales, the opinion states that

“Ib]ecause this species is nearly extinct, we believe that

adverse impacts to small numbers . . . probably would

have severe adverse effects on the entire population.” Id.

at 17, 2 FEIS at H-5. Therefore, we conclude that the

ine aa

A-28

NMFS’s omission of a formal statement concerning inci-

dental takings of endangered species was not arbitrary or

capricious, and did not violate the ESA.

V. Conclusion

The development of gas and oil reserves in an envi-

ronmentally sound manner is a complex process: The

Secretary must consider vast amounts of oftei specula-

tive data and balance the demands of numere:'s inter-

ested parties in making plans that extent many years into

the future. Under OCSLA’s segmented approach, we

must uphold the Secretary’s actions so long as they meet

the standards applicable to each stage. As the Supreme

Court has noted, this approach was intended “to forestall

premature litigation regarding adverse environmental

effects that all agree will flow, if at all, only from the

latter stages of OCS exploration and production.” Secre-

tary of the Interior v. California, 464 U.S. 312, 341 (1984).

Applying this analytical framework, we approve the Sec-

retary’s decision to go forward with Outer Continental

Shelf Lease Sale 92, and affirm the district court’s

judgment.°

> By separate order, we grant appellees’ motion to stay the

injunction pending remand to the district court.

B-1

APPENDIX B

UNITED STATES DISTRICT COURT

DISTRICT OF ALASKA

THE TRIBAL VILLAGE OF AKUTAN, ET AL.,

Plaintiffs,

DONALD P. HODEL, ET AL.,

Defendants.

PARTIAL FINAL

JUDGMENT IN A CIVIL CASE

CASE NUMBER: A85-701 Civil

(Consolidated)

[ ] Jury Verdict. This action came before the Court for a

trial by jury. The issues have been tried and the jury

has rendered its verdict.

[x] Decision by Court. This action came to trial or hear-

ing before the Court. The issues have been tried or

heard and a decision has been rendered.

IT IS ORDERED AND ADJUDGED

THAT Counts 1 and 2 of the complaint of the State of

Alaska plaintiffs in Case No. J85-37 Civil are dismissed

with prejudice.

cc: Alaska Legal Service William Rozell (FBDH)

Carl Bauman (HUGHES) Stephen Ellis (DELANEY)

Patti Saunders Michael Frank (AAG-200)

Deborah Vogt (AAG-K) O & J 3265

U.S. Attorney

January 22, 1988 JoAnn Myres

APPROVED: Clerk

/s/ James A. von der Heydt /s/ Pamela R. Richter

United States District Judge (By) Deputy Clerk

B-2

IN THE UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF ALASKA

THE TRIBAL VILLAGE OF

AKUTAN, ET AL.,

Plaintiffs,

VS.

)

DONALD P. HODEL, ET ?

Ai.

Defendants. )

)

AMOCO PRODUCTION

COMPANY, ET AL.,

Intervenor-

Defendants. MEMORANDUM AND

ORDER

A85-701 Civil

THIS CAUSE comes before the court on the motions

for summary judgment filed by the State of Alaska and

by the federal and oil company defendants. This mem-

orandum will address the State’s challenge to Sale 92

under the Outer Continental Shelf Lands Act (OCSLA)

only. Plaintiffs’ other claims will be addressed in a sepa-

rate order to be prepared in the near future.!

1 If the court should ultimately rule in defendants’ favor, a

procedural difficulty will arise. The circuit court retains juris-

diction over the preliminary injunction, and this court is pow-

erless to vacate that injunction. although the circuit court may

(Continued on following page)

B-3

The focus of this ruling is the compliance of the

Secretary of the Interior with OCSLA § 19, 43 U.S.C.

§ 1345, requiring consultation between the state and fed-

eral governments prior to a lease sale and a reasoned

explanation for any rejection of the state’s views. The

court has found consultation adequate. The Secretary’s

explanation for rejecting Governor Sheffield’s recommen-

dations, while not perfect, was likewise adequate to with-

stand judicial review under the deferential standard set

forth in the Act.

I. EVIDENTIARY DISPUTES

The court finds nothing improper in plaintiffs’ sub-

mission of rebuttal evidence with their reply briefs. The

court has considered this evidence in ruling on the

instant motions.

Plaintiffs acknowledge that the Cook Inlet spill clip-

pings represent a new line of argument rather than rebut-

tal material. Since this evidence was unavailable at the

earlier stages of the briefing process, however, it was not

inappropriate to introduce it with the reply briefs.

Although the court will not strike the clippings, the court

notes that plaintiffs acknowledge that the relevance of

this material is slight. Joint Plaintiffs’ Response to...

Motion to Strike (Docket No. 165), at 13.

(Continued from previous page)

have intended to issue a remand order, see 816 F.2d at 685, it

has never sent such an order to this court and has not

responded to inquiries from these chambers. Defendants may

wish to address an appropriate motion to the Ninth Circuit.

B-4

II. OCSLA § 19

A. Secretary’s Obligations and Standard of Review

Section 19 requires the Secretary of the Interior to

provide notice of a proposed lease sale. The governor of

an affected state then has 60 days to submit recommenda-

tions regarding the sale’s “size, timing, or location.” Sec-

tion 19 provides that “[t]he Secretary shall accept the

recommendations of the governor” unless he “deter-

mines,” after an “opportunity for consultation,” that

those recommendations "do not provide. . . for a reason-

able balance between the national interest and the well-

being of the citizens of the affected State” (emphasis

added). The reasons for this determination must be

explained in writing. The statute expressly requires that

any judicial review of the determination be limited to the

highly deferential “arbitrary and capricious” standard.

The State reads the statute as setting up a two-tiered

structure of deferential review. While the court must

defer to the Secretary in his determination, the Secretary

must likewise defer to the governor. He must accept the

governor’s recommendation unless he can show it to be

outside the range — presumably a broad one - of “reason-

able” evaluations of the proper balance between state and

national interests.

The court might well take this approach if it were

writing on a clean slate. It is not. The Ninth Circuit

requires no deference from the Secretary when the Secre-

tary evaluates a governor’s recommendation. In California ,

v. Watt, 683 F.2d 1253 (9th Cir. 1982), rev’d in part on other

grounds, 464 U.S. 312 (1984), the State of Californias

B-5

advanced the two-tiered deference argument proposed

here. Brief of the State of California, California v. Watt,

Nos. 81-5699 et al. (Amoco SJ exhibit A), at 73. This

argument found no echo in the circuit court’s decision,

which upheld the Secretary’s § 19 determination simply

because “the Secretary gave some consideration to the

relevant factors,” 683 F.2d at 1269. There was no evalua-

tion of the range of reasonable balances or of whether the

secretary, beyond merely explaining an alternative bal-

ance, had shown the governor’s balance to be outside

such a range.? It was enough that the Secretary touched

on the relevant factors in setting forth his own, differing

view of the state and national interests.

B. Challenges to the Secretary’s Reasoning

1. Failure to Consider Findings and Purposes of Act

As part of his evaluation of the governor’s recom-

mendation, the Secretary must determine the national

interest. Section 19(c) of OCSLA provides that this deter-

mination “be based on the desirability of obtaining oil

and gas supplies in a balanced manner and on the find-

ings, purposes, and policies of this subchapter.” Accord-

ing to the State, the Secretary ignored the findings and

2 Presumably, a reviewing court using the two-tiered def-

erence approach to the statute would require the Secretary to

define, implicitly or explicitly, the boundary of a range of

“reasonable” views of the national and state interests. The

court would defer to the Secretary’s definition of this range,

but might reject as arbitrary and capricious a range so narrow

as to suggest that anyone disagreeing with the Secretary to any

degree was “unreasonable.”

B-6

purposes set forth at 43 U.S.C. §§ 1801(13) and (14) and

1802(2) and (7). All of these relate to the need to develop

oil and gas resources with due safeguards for the envi-

ronment and for renewable resources such as fisheries.

This argument is meritless. Putting aside the fact that

§§ 1801 and 1802 are not part of the “subchapter” refer-

enced in the above quotation from § 19, the issues refer-

enced by these findings and purposes are the theme of

the Secretary’s entire 30-page discussion of the national

interest. It is irrelevant that the Secretary did not quote or

cite the Congressional language.

2. Failure to Weigh Potential Loss of Fisheries Jobs

In weighing costs and benefits to determine the

national interest, the Secretary included as a benefit of

the sale the potential for job creation. Statement of Rea-

sons (SR) at 11. In evaluating costs, he neglected to weigh

the potential for destruction of jobs in the fishing indus-

try. This inconsistency is not logical, and if it were mate-

rial it could render the Secretzry’s overall determination

arbitrary and capricious.

The error clearly is not material. As the Secretary has

observed, it is extremely unlikely that a spill could occur

prior to the production phase; hence job loss is a concern

only if oil is found. If oil is found and a production phase

occurs, about 750 long-term jobs would be created. In the

event of a spill, a number of fishing industry workers

might be idled (the SR, EA and FEIS make it clear that a

given spill, even a large one, would probably affect only a

portion of the fishery). Before this number can be bal-

anced against the figure of 750 new jobs, however, it must

B-7

be discounted (1) by the strong likelihood that no major

spill will occur and spread in a manner capable of seri-

ously affecting fisheries, and (2) by the strong likelihood

that any loss of jobs would be largely temporary. After

carefully reviewing the SR, EA, and FEIS, the court is

confident that the discounted job-loss figure would be at

least an order of magnitude lower than the job-creation

figure.

3. Use of Net Economic Value as an Absolute Value

The Secretary calculated a range of discounted Net

Economic Values (NEVs) for the sale. He used the most

conservative NEV in his § 19 determination to represent

the economic benefit of proceeding with the sale as

planned.

According to the State and amici, Interior has

acknowledged that an NEV is only useful for purposes of

comparing relative values of sale proposals, and should

not be used as an absolute value to justify a particular

sale. This is not aecurate. The department has merely

acknowledged that NEV calculations are speculative and

are more useful as relative values than as absolute values.

Given that potential economic gain is an important factor

in determining the national interest, it was not arbitrary

and capricious for the Secretary to use an NEV calcula-

tion (indeed, a relatively conservative one) to estimate

the magnitude of that gain. Indeed, the State itself has

relied on its own NEV calculation in arguing ayainst the

sale. It is difficult to conceive of an alternative to reliance

on such a calculation, under one label or another, in

weighing the costs and benefits of a lease sale.

ee \

B-8

4. Refusal to Delete Near-Shore Tracts

The governor requested deletion of the 14 percent of

the sale area nearest the shore. The Secretary declined to

do so.

On page 38 of the SR, The Secretary alludes to the

fact that he had previously deleted a large area of Bristol

Bay from consideration. Contrary to the State’s assertion,

the SR does not claim this deletion was a response to the

governor’s request. The State is correct, however, in

observing that the prior deletion was, in fact, not a part of

the § 19 process. It is therefore puzzling that the State has

gone on to attack the prior deletion as an improper way

of responding to a governor’s recommendation for dele-

tion. The State’s analysis is irrelevant.?

The State also attacks the Secretary’s reasoning in

rejecting the governor’s nearshore tract recommendation.

The Secretary observed that deferral of these tracts would

halve the NEV of the sale. Although there would be some

additional protection of the environment, overall envi-

ronmental risk was similar and was “small under either

option.” For the offshore loading scenario, the probability

3 The analysis is also flawed. The State reads Massachusetts

v. Clark, 594 F. Supp. 1373 (D. Mass. 1984), as holding that the

only rational way to delete tracts from a sale in response to

environmental concerns is to begin by deleting tracts with high

industry interest. The case should not be read so broadly. It

merely observes that such deletions should reflect the potential

for environmental harm; on Georges Bank, this meant deletion

of high-interest tracts. In Bristol Bay, it may be that a medium-

interest tract located in a concentration of fish or wildlife

resources would present a greater threat than a high-interest

tract located in a less sensitive portion of the bay.

B-9

of a spill occurring and contacting land within 10 days

was 7% under the Secretary’s proposal and 6% under the

governor’s. The lost NEV was “too much for the nation to

give up fora slight reduction in risk to the environment.”

According to the State, the Secretary used inconsis-

tent assumptions in arriving at these probabilities. The

mathematical issues are complex, and the parties’ experts

disagree as to whether the calculations are flawed. It is

undisputed, however, that if the State’s expert is correct

the 7% figure would change to 6% and the 6% figure

would change to 4%.4 Neither change is statistically sig-

nificant. Under NEPA, where a more rigorous standard of

review is used, errors in the data base underlying a

decision are not viewed as material if they are not statis-

tically significant. Village of False Pass v. Watt, 565 F. Supp.

1123, 1147 (D. Alaska 1983). More importantly, it simply

is not credible that the Secretary’s balance — which he

apparently viewed as heavily weighted against deletion —

would have changed because of this alteration in the

probability figures. All of the Secretary’s characteriza-

tions of the relative risks would remain valid. Both risks

remain “small.” The two single-digit figures remain

“quite similar.” The benefit of deleting nearshore blocks

remains “small.” In conclusion, even if the Secretary’s

figures were erroneous, his mistake did not render his

overall decision arbitrary and capricious.

4 In other words, the Secretary believed the probabilities

that no spill of the type described would occur were 94 and 93

percent for the full-sale and nearshore-deferral alternatives,

respectively, whereas the State puts these probabilities at 92

and 96 percent.

B-10

5. Refusal to Delay Sale Until 1994

The governor suggested an 8-year delay in the sale to

permit development of improved environmental data, to

allow new cleanup technology to come on line, and to

profit from additional years of experience from other

drilling operations in the Bering Sea. In quite a thought-

ful analysis, the Secretary showed that each of these

benefits was not as important as the governor main-

tained. For example, he pointed out that while experience

in the Bering Sea is limited, experience in similar environ-

ments such as the North Sea is extensive. He then con-

cluded that the economic costs of delay outweighed the

marginal environmental benefit

The State maintains that there is no cost of delay. By

juggling certain figures, the State can convert the Secre-

tary’s $218 million NEV for the immediate sale into a

negative number. Of course, in doing so the State alters

none of the conservative assumptions underlying that

NEV figure.

Even if the State’s criticisms of figures underlying the

NEV were all persuasive — and they are not — the State

could not establish that the Secretary acted arbitrarily

simply by showing that the most conservative of a range

of NEV calculations would be sightly [sic: slightly] nega-

tive. The bulk of the NEV range would remain positive,

and there would still be a probability of substantial loss

in the event of delay.

ea a

B-11

6. Fatlure to Allude to Certain Department of Energy

Information

In weighing the nation’s need for domestic oil pro-

duction, the Secretary was not arbitrary and capricious in

relying in part on Congressional findings.

7. Assumption that Delay in Sale Would Cause Delay in

Production

It was not arbitrary and capricious for the Secretary

to assume that a substantial delay in the sale of leases

would translate into a substantial delay of production.

8. -Other Challenges

The State’s other challenges to the Secretary’s reason-

ing are meritless.

C. Alleged Failure to Consult

Section 19 requires the Secretary to provide “the

opportunity for consultation.” The State argues that the

governor was deprived of a meaningful opportunity to

comment on the NEV because he did not receive informa-

tion necessary to evaluate assumptions used in the eco-

nomic model until the day before the sale announcement.

OCSLA does not guarantee a right to comment on

such information. It merely obliges the Secretary to dis-

close the “size, timing, and location of a proposed lease

sale” sufficiently in advance to allow for a 60-day com-

ment period. While the State may offer economic anal-

ysis, it has no legal entitlement to the Secretary’s analysis

or other reasoning behind the sale until the Secretary’s

Ssiiieieeeieeiennieatiea

B-12

explanation of his reasons for accepting or rejecting the

governor’s recommendation, at the conclusion of the § 19

process. California v. Watt, 520 F. Supp. 1359 1385 (C.D.

Cal. 1981), aff’d in relevant part, 683 F.2d 1253 (9th Cir.

1982), rev'd in part on other grounds, 464 U.S. 312 (1984).°

Hence the Secretary actually went beyond mere compli-

ance with the statutory obligation for “consultation.”

II. PARTIAL FINAL JUDGMENT

The court finds that there is no just reason for delay

of entry of partial final judgment under Rule 54(b). The

court further notes that in reviewing this order, the appel-

late court will be required to address a few factual issues

“similar to those contained in the claims still pending

before the trial court.” Frank Briscoe Co. v. Morrison-

Knudsen Co., 776 F.2d 1414, 1416 (9th Cir. 1985), quoting

Morrison-Knudsen Co. v. Archer, 655 F.2d 962, 965 (9th Cir.

1981). This result is justified by the following facts. First,

delay in resolution of this action seems to entail substan-

tial costs to certain defendants. It is important to com-

mence the appeal process as early as possible. Second,

this court’s final judgment on all issues can be expected

in a few weeks. In the unlikely event that the Court of

5 A corollary of this principle is that in challenging a

statement of reasons a governor may address certain issues not

raised in the governor’s prior comments, provided those issues

first arose in connection with the Secretary’s rebuttal of the

governor’s recommendation. Village of False Pass, supra, 565 F.

Supp. at 1138-39, is not to the contrary. the “claims” the zgover-

nor had not raised in that case related to deficiencies in the

Secretarial Issue Document, not the Statement of Reasons.

B-13

Appeals has-ruled in the meantime, the overlapping fac-

tual issues will be fresh in the minds of the judges of the

panel hearing the case, and consideration of the second

appeal will involve little wasted effort.

Accordingly, IT IS ORDERED:

(1) THAT plaintiffs’ motion to file rebuttal affidavits

(Docket No. 155) is granted;

(2) THAT the motion of Amoco Production Com-

pany, et al. to strike certain materials (Docket No. 162) is

denied;

(3) THAT the motion of plaintiff State of Alaska for

summary judgment (Docket No. 138) is denied insofar as

it seeks relief under the Outer Continental Shelf Lands

Act;

(4) THAT the motions of federal defendants and of

Amoco Production Company, et al. for summary judg-

ment (Docket Nos. 131 and 133) are granted with respect

to plaintiffs’ claims under the Outer Continental Shelf

Lands Act;

(5) THAT Counts 1 and 2 of the complaint of the

State of Alaska plaintiffs in Case No. J85-37 Civil are

dismissed with prejudice;

(6) THAT, pursuant to the findings set forth in Part

III of this memorandum and order, partial final judgment

be entered restating item (5) above.

DATED at Anchorage, Alaska, this 22nd day of Janu-

ary, 1988.

B-14

/s/ James A. von der Heydt

United States District Judge

cc: Alaska Legal Service

Carl Bauman (HUGHES)

Patti Saunders

Deborah Vogt (AAG-K)

U.S. Attorney

William Rozell (FBDH)

Stephen Ellis (DELANEY)

C-1

APPENDIX C

UNITED STATES DISTRICT COURT

DISTRICT OF ALASKA

THE TRIBAL VILLAGE OF AKUTAN, ET AL.,

Plaintiffs,

DONALD P. HODEL, ET AL.,

Defendants.

PARTIAL FINAL

JUDGMENT IN A CIVIL CASE

CASE NUMBER: A85-701 Civil

(Consolidated)

[ ] Jury Verdict. This action came before the Court for a

trial by jury. The issues have been tried and the jury

has rendered its verdict.

[x] Decision by Court. This action came to trial or hear-

ing before the Court. The issues have been tried or

heard and a decision has been rendered.

IT IS ORDERED AND ADJUDGED

(1) THAT plaintiffs’ complaints in Shefield v. Hodel,

(J85-37 Civil) and Trustees for Alaska v. Hodel (J85-38 Civil)

are dismissed in their entirety;

(2) THAT the Second and Third Causes of Action of

the First Amended Complaint of the villages of Akutan,

Togiak, and Nelson Lagoon in Village of Akutan v. Hodel

(A85-701 Civil) are dismissed;

(3) THAT this court’s Order and Preliminary Injunc-

tion and its Order Granting Partial Stay of Preliminary

Injunction, both dated January 13, 1986, are hereby

vacated, except there shall remain in effect until the Sec-

retary opens the Sale No. 92 bids:

C-2

(A) Paragraph 2 of this Court’s January 13, 1986

Order Granting Partial Stay to the extent

that it tolled the effectiveness of 30 C.FR.

§ 256.47(a) and the notice published at 50

Fed. Reg. 51,372 (December 16, 1985); and

(8) Paragraph 3 of that Order.

March 11, 1988 JoAnn Myres

Date Clerk

APPROVED:

/s/ Heydt A. von der (By) Deputy Clerk

United States

District Judge

IN THE UNITED STATES DISTRICT COURT

FOR THE DISiRICT OF ALASKA

TRIBAL VILLAGE OF

AKUTAN, ET AL.,

Plaintiffs,

VS.

DONALD HODEL, ET AL.,

Defendants,

)

AMOCO PRODUCTION CO., ) MEMORANDUM AND

ET AL., ) ORDER

)

Intervenor-Defendants.

A85-701 Civil (Consolidated with

J85-37 Civil and J85-38 Civil)

THIS CAUSE comes before the court on the parties

cross-motions for summary judgment. This order

C-3

addresses all remaining issues in the three consolidated

cases except the village plaintiffs’ aboriginal title claim

(that claim has been stayed pending the outcome of fur-

ther proceedings in Amoco Production Co. v. Village of

Gambell, U.S. Sup. Ct. No. 85-1239).

This memorandum and order must be read in con-

junction with the parties’ briefs. It does not restate plain-

tiffs’ claims nor comprehensively review the facts. In

general, the court’s analysis is set forth only where the

court has departed in some measure from defendants’

reasoning.

A. Endangered Species Act

1. Failure to Adopt NMFS Alternatives

In the early planning stages of Sale 92, the National

Marine Fisheries Service recommended pursuant to the

Endangered Species Act (1) that certain near-shore tracts

be deleted from the sale to protect a seasonal migration

route of gray whales, and (2) that lessees be required to

suspend drilling when right whales were nearby. Notably,

the Biological Opinion containing these recommendations

was addressed solely to the leasing and exploration

stages of Sale 92.1 The recommendations sought to miti-

gate exploration stage oil spill risks to right and gray

whales.

The Secretary responded to these recommendations

in detail at pages 24-28 of the Secretarial Issue Document

(a passage ignored by all parties in their analysis of ESA

' A Biological Opinion on development and production

stage issues was not required at this juncture. See, e.g., Connor

v. Burford, 836 F.2d 1521, 1537 (9th Cir. 1988).

C-4

issues).2 He did not adopt either recommendation

entirely, but took a number of steps to protect endan-

gered whales. These steps and the SID explanation

appear to have satisfied NMFS’s parent agency, NOAA,

with respect to the two recommendations at issue, for in

its final ESA comments on the sale NOAA did not reite-

rate those recommendations.

While judicial decisions and ESA’s legislative history

indicate that the Secretary rejects NMFS recommenda-

tions “at his peril,” e.g., Village of False Pass v. Watt, 565 F.

Supp. 1123, 1162 (D. Alaska 1983), aff’d, 733 F.2d 605 (9th

Cir. 1984), it is not clear that this characterization applies

where the recommendations have been dropped after

further consultation. In any event, such a decision is

reviewable only for failure to provide a reasoned expla-

nation considering the relevant factors or for clear error

of judgment. North Slope Borough v. Watt, 20 ee 1457,

1462 (D. Alaska 1984). The decision, as explained in the

SID, easily passes this test. Briefly, the Secretary pointed

out that exploration-stage spills are most unlikely, that

deletion of nearshore tracts would only marginally

reduce the threat to endangered whales from such spills,

and that seasonal or ad hoc drilling restrictions can

2 Plaintiffs’ briefing reflects fundamental confusion as to

what portion of the SID relates to the NMFS recommendations

at issue. E.g. Pl. P.I. Memo at 73 (citing SID p. 46). Plaintiffs’

briefing is likewise confused with respect to the distinction

between exploration stage spill risk, at issue here, and devel-

opment/production stage spill risk. Pl. P/I/ Memo at 70.

C-5

provide adequate protection.? There is substantial sup-

port in the record for these observations.

2. Failure to Use Best Available Data

Plaintiffs appear to contend that Interior must under-

take and complete any study that has “relevance” to

possible future effects on endangered species. Pl. P.I.

Memo at 81. This is not the test. See False Pass, supra, 565

F. Supp. at 1154-55. Plaintiffs have not carried their bur-

den of showing that it is necessary that all further action

await these studies to prevent a violation of ESA, taking

into consideration the precautionary measures that have

been or may be adopted. Defendants are therefore enti-

tled to summary judgment on this issue. Celotex Corp. v.

Catrett, 477 U.S. 317 (1986).

3. “Takings” of Endangered Whales4

Plaintiffs’ assertion that the mere possibility that an

endangered whale might accidentally be killed renders

the entire sale illegal under ESA § 9 relies on a view of

Congressional intent that is not credible. See California v.

Watt, 520 F. Supp. 1359, 1387 (C.D. Cal. 1981).

3 Note that there will be a further opportunity to impose

such restrictions before an exploratory drilling takes place:

when permits are issued under 30 C.F.R. § 250.34-1.

4 Jurisdiction over this aspect of plaintiffs’ ESA claim may

be questionable. See Hallstrom v. Tillamook County, 831 F.2d 889

(9th Cir. 1987). Briefing has not been adequate to evaluate this

issue.

C-6

Plaintiffs’ argument that the NMFS Bioiogical Opin-

ion should have contained an incidental taking statement

presupposes that incidental takings are reasonably likely

to occur. In making this supposition, plaintiffs rely on

statements in the FEIS relating to the development and

production stage. But the Biological Opinion related only

to the leasing and exploration stages. Incidental takings

are very unlikely during those stages.° Hence, even if the

court were to accept plaintiffs’ analysis of ESA § 7(8), no

incidental taking statement would be required or useful

in the pre-lease Biological Opinion.

4. Effect of Flawed OSRA on ESA Determination

As the court explained in its January 22 order (at 8-9),

any defects in the Oil Spill Risk Analysis were not

material.

B. National Environmental Policy Act

1. Data Gaps

Plaintiffs have identified 14 “data gaps” in the infor-

mation underlying the Sale 92 decision. They contend

that each of these gaps must be filled by further study

before the sale and exploration stages can proceed.

5 Even a low probability of destruction of a species is a

matter of concern. Section 7(a)(2) of ESA therefore is triggered

when there is a likelihood merely of jeopardy to the species.

No parallel language mandates an incidental taking statement

when there is a likelihood only of jeopardy to individuals, as

opposed to a likelihood of actual takings.

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The court believes this argument is adequately

addressed in defendants’ briefing. See also 11/27/85 Deci-

sion Memo (State Ex. 11B), attachment B. With respect to

the black brant studies emphasized by plaintiffs, in par-

ticular, the court notes that no threat can develop until

exploratory drilling begins, and such drilling requires a

permit and an environmental assessment. It is conceded,

moreover, that threats to black brant can arise only in

spring and fall, when the birds are present in Izenbek

Lagoon; exploratory drilling may be proposed at time

when it could pose no threat at all. And given the delay

caused by this litigation, it is now likely that the

requested black brant study will be completed before

Interior is asked to approve an exploration plan. Hence,

the exploration plan EA is an appropriate time to further

analyze threats to black brant and to evaluate further the

adequacy of data for a decision.

2. Worst Case Analysis

To the extent that plaintiffs maintain that Interior did

not have the option of preparing worst case analyses to

compensate for data gaps, regarding gray and right

whales, Pl. P.I. Memo at 39, their interpretation of the law

appears to conflict with Oregon Natural Resources Council

v. Marsh, 832 F.2d 1489, 1496-97 (9th Cir. 1987). That case

holds that “[i]f information is lacking that is essential to a

reasoned choice and the cost of obtaining it is not exorbi-

tant, the agency must obtain the information and include

it in the statement or include a worst case analysis.” Id.

(emphasis added). Moreover, the only information on

whale impacts that can be deemed “essential” at this

Stage is information relating to effects in the pre-drilling

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portion of the exploration phase, i.e., information on the

impact of seismic testing. False Pass, 565 F. Supp. at

1152-53. These effects and the adequacy and availability

of information on these effects were evaluated in the

recent supplemental EIS for Lease Sale 70, later adjudi-

cated to be adequate. See False Pass, 733 F.2d at 612. The

Sale 70 supplement has been incorporated by reference

into the discussion of seismic impacts in the Sale 92 EIS.

FEIS IV-J-4, IV-J-6 to 7.

The main focus of plaintiff’s attack on the worst case

analyses is the portion of those analyses devoted to a

hypothetical catastrophic spill. Plaintiffs contend that the

hypothetical does not truly represent the worst possible

spill. Even if plaintiffs are correct, however, their criti-

cism cannot invalidate the Sale 92 EIS. In False Pass the

worst case spill would have been 100,000 barrels, but the

EIS evaluated only a 10,000-barrel spill. This defect was

not fatal to the EIS, however, because a true worst-case

analysis could be conducted later and still precede any

drilling. 733 F.2d at 614-16. Even accepting plaintiffs’

criticisms, the Sale 92 worst-case scenario comes closer to

simulating the worst possible spill then did the 10,000-

barrel scenario in the Sale 70 EIS.

Plaintiffs argue that a seismic-impacts worst case

analysis is necessary for all species, rather than for right

and gray whales only. This contention fails because the

Secretary reasonably concluded that data was adequate

for other species. SR 18-20, 53-54; SIN 21-22; FEIS IV-8-17

to 18; 11/27/85 Decision Memo, att. 8, 1-2.

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3. Adequacy of Oil Spill Risk Analysis

Plaintiffs’ argument that defects in the OSRA render

the FEIS inadequate are sufficiently refuted in federal

defendants’ briefs of January 6, 1986 and July 13, 1987

and in the portions of the administrative record cited

therein. Notably, “NEPA does not require that we decide

whether the [EIS] is based on the best scientific methodol-

ogy available, nor does NEPA require us to resolve dis-

agreements among various scientists as to methodology.”

Friends of Endangered Species v. Jantzen, 760 F.2d 976, 986

(9th Cir. 1985). Rather, courts must ensure that an agency

has provided “a reasoned analysis of the evidence before

it.” Id. Clearly, Interior has done so here. It should be

added that the most strongly-pressed objection to the

OSRA was shown in the January 22 ruling to fall below

the threshold of materiality. Moreover, it will be possible

to refine the OSRA once exploratory data shows the

location of oil, if any.

4. Opportunity for Public Comment/Failure to Respond to

Comment

Plaintiffs’ only substantial argument with respect to

the public participation process is the argument added in

their June 22, 1987 brief. Plaintiffs observe that the meth-

odology for selecting OSRA launch points and for allocat-

ing oil quantities to the various points was poorly

explained in the EIS. Because this methodology is funda-

mental to an understanding of the spill model, the failure

to explain it made it difficult for outsiders to comment on

an important aspect of this key element of the EIS.

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The court is inclined to agree with plaintiffs that the

explanation of the OSRA failed to meet NEPA standards.®

This lawsuit has provided a detailed airing of the unex-

plained methodology, however. It has become clear that

correction of any errors in the methodology at issue -

errors that public comment might have identified at the

DEIS stage - could not have brought about a material

change in the outcome of the OSRA.’ The defect therefore

fails in the class of “inconsequential” deficiencies toler-

ated in such cases as Oregon Environmental Council v.

Kunzman [Kunzman IV], 817 F.2d 484, 492, 495-96 & n.6

(9th Cir. 1987) and Northwest Coalition for Alternatives to

Pesticides v. Lyng, 673 F. Supp. 1019, 1023 (D. Or. 1987).

6 While it is troubling that plaintiffs did not complain of

the lack of explanation when they commented on the DEIS,

their failure to do so does not appear to give rise to any legally

cognizable defense to their claim.

7 The court would be unable to make a finding of this kind

were the unexplained process a nontechnical one. Here, the

missing explanation relates to a statistical analysis, and abso-

lute, mathematical truth is accessible to the court.

It is also essential to bear in mind that the absence of explana-

tion did not, in itself, detract from “disclosure of environmen-

tal impacts”; hence this case must not be confused with such

cases as Oregon Environmental Council v. Kunzman [Kunzman II],

614 F. Supp. 657, 665 (D. Oregon 1985). It merely atfected the

correction of errors in an essentially mathematical process.

Only if those errors were in fact significant would the more

fundamental “disclosure of environmental impacts” be ren-

dered inadequate. Cf. Oregon Environmental Council v. Kunzman

{Kunzman IV], 817 F.2d 484, 495-96 & n.6 (9th Cir. 1987).

C-11

5. Failure to Consider Separately a Nine-Year Delay Alterna-

tive and to Reconfigure Alternative IV as Suggested by EPA

Interior considered a reasonable range of alterna-_

tives. It provided a reasonable explanation for declining

to consider a nine-year delay (in addition to a five-year

delay) and in declining to redesign EIS Alternative IV in

the manner suggested by EPA.

Accordingly, IT IS ORDERED:

(1) THAT defendants’ and intervenors’ motions for

summary judgment (Docket Nos. 128, 131, 133) are

granted;

(2) THAT plaintiffs’ motions for summary judgment

(Docket Nos. 129, 138) are denied;

(3) THAT vlaintiffs’ complaints in Sheffield v. Hodel

(J85-37 Civil), and Trustees for Alaska v. Hodel (J85-38 Civil)

are dismissed in their entirety;

(4) THAT the Second and Third Causes of Action of

the First Amended Complaint of the villages of Akutan,

Togiak, and Nelson Lagoon in Village of Akutan v. Hodel

(A85-701 Civil) are dismissed:

(5) THAT this court’s Order and Preliminary Injunc-

tion and its Order Granting Partial Stay of Preliminary

Injunction, both dated January 13, 1986, are hereby

vacated, except there shall remain in effect until the Sec-

retary opens the Sale No. 92 bids:

(A) Paragraph 2 of this Court’s January 13, 1986

Order Granting Partial Stay to the extent that it tolled

the effectiveness of 30 C.ER. § 256.47(a) and the

notice published at 50 Fed. Reg. 51,372 (December 16,

1985); and

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(B) Paragraph 3 of that Order.

(6) THAT, the court having found that there is no

just reason for delay and that legal and factual issues on

appeal will be dissimilar from those contained in the

claim still pending before this court, the Clerk shall pre-

pare a form of partial final judgment restating items (3)

through (5) above.

DATED at Anchorage, Alaska, this 11th day of

March, 1988.

/s/ James A. von der Heydt |

United States District Judge

ce: Carol Daniel (AK LEGAL)

Carl Bauman (HUGHES)

Patti Saunders

Bruce Landon (AUSA)

William Rozell (FBDH)

Stephen Ellis (DELANEY)

Michael Frank (AAG-200)

This is a copy of a public record, reproduced as it was published. It is not legal advice, and it may not be the version a court would rely on. Check the official source before you cite it.