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

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## Record

- **Collection:** Supreme Court brief
- **Document type:** Petition for Writ of Certiorari
- **Published:** January 1, 1989
- **Citation:** 493 U.S. 873

## 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

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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

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PETITION FOR A WRIT OF CERTIORARI TO THE
UNITED STATES COURT OF APPEALS FOR THE
NINTH CIRCUIT

a
_

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

2

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).

a
:

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
a,

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.

(c) Acceptance or rejection of recommendations

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.

y
vr

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.

10

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.

1]

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.

12

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.

_

»
—

2

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

14

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)

15

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.

16

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:

17

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

18

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.

19

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

20

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.

21

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)

22

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).

23

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.

24

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.

25

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.

27

.. . 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.

28

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)
=
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,

V.

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,

V.

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.

C-7

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

C-8

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.

C-9

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.

C-10

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

C-12

(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)

---

Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40385002_1495%3A1. Public record. Not legal advice.