# Petition — County of Suffolk v. Secretary of the Interior

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## Record

- **Collection:** Supreme Court brief
- **Document type:** Petition
- **Published:** January 1, 1978
- **Citation:** 434 U.S. 1064

## Text

*~ Supreme Court, U. S,

“TH FiLVED

| NOV 14 1977

IN THE

Supreme Court of the United SETURL RODAK, JR., CLERK

OCTOBER TERM 1977

No.77- GRA

COUNTY OF SUFFOLK and CONCERNED CITIZENS
OF MONTAUK, INC.,

Petitioners,
We

SECRETARY OF THE INTERIOR,
Respondent,

NATIONAL OCEAN INDUSTRIES ASSOCIATION and
NEW YORK GAS GROUP,

Intervenor-Respondents.

PETITION OF COUNTY OF SUFFOLK AND CON.
CERNED CITIZENS OF MONTAUK, INC. FOR
WRIT OF CERTIORARI TO THE UNITED STATES
COURT OF APPEALS FOR THE SECOND CIRCUIT

IrvING LIKE

200 West Main Street

Babylon, New York 11702

Telephone: 516—669-3000

Special Counsel for Petitioner
County of Suffolk

Wiiuiam F. Dupin, JR.

Attorney for Petitioner Concerned
Citizens of Montauk, Inc.

405 Lexington Avenue

New York, New York 10017

Telephone: 212—OX 7-7660

Dated: November 11, 1977

TABLE OF CONTENTS

ES tg Fe ee

Ne ck aweudh ch bibdekkes

i sa sk seek be ones vekessea's

Nee ea Veale

ee sg. ace ececeeeeusctuece

1.

9

ane

Second Circuit Errors Regarding Tanker/
EN EE rd shad Rae:k stock n sb ese 604s

Second Cireuit Errors Regarding the Cost/
beso ised ya ANNS be wes bee sda

Reasons for Granting the Writ ...................

1.
2.

National Importance of the Case ...........

Conflict with Supreme Court and other Ap-
pellate Deesions regarding Standard of Re-
Wee NEE BD BO) ois cc inasavacecesss

Conflict with Decisions of the Supreme Court
and other Circuits on the Requisites of an
Adequate NEPA Administrative Record ....

Certiorari Granted in Pendng Case involving
Similar Questions Relating to Adequacy of
Administrative Record and Scope of Judi-
i ce. coc ccikvavenschbeeeerehaedes

Conflict with Decisions in other Circuit Courts
as to Environmental Divisibility of a Project
Subject to NEPA Review .................

19

21

ii TABLE OF AUTHORITIES

CN fo ak ae eee eee eka cuales ee 27

Appendix A—Second Cireuit’s Opinion, August
Op a ea ee erarieer werterariers argc a ck: ae

Appendix B—District Court’s Opinion, August
Pebraary 17, 1077 « .occ cscs cccccesecceccnses Adi

Appendix C—Second Circuit Judgment, August
i REED .45y cbaseWee sn veRRaS UNS AGRO LOR Awan s A124

Appendix D—Excerpts of George Donkin Testi-
IE 6 i ov cbc be ndes'ctucsnnte) coneeuneeesaes A126

TABLE OF AUTHORITIES

Cases:
Allied General Nuclear Services, et al. v. NRDC,

Docket No. 76-654; 76-762; 76-769; 76-744 ...... 27
Calvert Cliffs’ Coordinating Committee v. AEC, 449

Oe RP (I. Cae. TTA) sci ch kak cnseseies’ 22
Chelsea Neighborhood Association v. United States

Postal Service, 516 F.2d 378 (2d Cir. 1975) .... 22
Citizens to Preserve Overton Park v. Volpe, 401 U.S.

Oe CRITE 5a ckc wen wise eeee suns ceecceecen 3, 21, 22
Commissioner of Internal Revenue v. Duberstetn,

eit Be |) BAe re 20
Committee for Nuclear Responsibility v. Seaborg, 463

Oe THO CURE. GO TURD hic cos ceckeseceesss 22

Conservation Society of Southern Vermont, Ine. v.
Secretary of Transportation, 508 F. 2d 927 (2d
Ge SES On rok ee eens laae ks 26

Ely v. Velde, 451 F. 2d 1180 (4th Cir. 1971) ........ 23

TABLE OF AUTHORITIES iii

PAGE

Environmental Defense Fund v. Corps of Engineers
(Tombigee Dam), 492 F. 2d 1123 (5th Cir. 1974) 22

Environmental Defense Fund v. Froehlke, 473 F.2d

ee ey ia occ eG oe ae anaee 22
Environmental Defense Fund v. Tennessee Valley Aw

thority, 468 F.2d 1164 (6th Cir. 1972) .......... 26
International Harvester Company v. Ruckelshaus, 478

B. Sn Wee Rae. ae Be eek Sivcevcedbees svar 22, 23
Izaak Walton League of America v. Schlesinger, 337

Bee Sie TGs MPa edi eeiwekabeees 26
Kleppe v. Sierra Club, 427 U.S. 390 (1976) ......... 23
Natural Resources Defense Council v. Morton, 458

saan ee Ce Sk TEE ike oe a ccctentcnceees 22

National Resources Defense Council v. Nuclear Regu-
latory Commission, 539 F.2d 284 (2d Cir. 1976)
reer ee rere oh er er rey 26, 27

National Resources Defense Council v. Nuclear Reg-

ulatory Commission, 547 F.2d 633, 9 E.R.C. 1149
(D.C. Cir. July 21, 1976) (Cert. granted Feb.

aa, 1977, 97 B. Ct. 10GB) 2... cc nvccevcvecs 22, 23, 24, 26
New York v. NRC, 550 F.2d 745 (2d Cir. 1977) ....9, 21, 26
Scherr v. Volpe, 466 F.2d 1027 (7th Cir. 1972) ...... 26
Scientists’ Institute for Public Information v. AEC,

Bl F.2a 1079 (D.C. Cir. 1978) . 2... ccc eccess 26, 27
Silva v. Lynn, 482 F.2d 1282 (1st Cir. 1973) ........ 23

Union Oil Co. v. Morton, 512 F.2d 743 (9th Cir. 1975) 25
United States v. Singer Mfg. Co., 374 U.S. 174 (1963) 20

United States v. United States Gypsum Co., 333 U.S.
Se I 6 hse bade daducueeades cuss etic 20

iv TABLE OF AUTHORITIES

Statutes: PAGE
eC TID in bv nxcis do diths Be knsaadee sees esees 24
Se TS SCENES war s-e ccadwaseaunaeeeaseaes 4, 22
Gateway National Recreational Area (16 U.S.C. See.
NS ine sak os pan koe unwkik Geena eaaeke nen 11,12
National Environmental Policy Act of 1969 (NEPA),
ey an WO is OO OUR, bg ns kneed specu desns passim

Regulations and Other Authorities:
9 C. Wright & A. Miller, Federal Practice & Pro-

gee RE kL ere err eee 20
CEQ Guidelines, See. 1500.8(a)(4) and (8) ........ 5, 22
Federal Rules of Civil Procedure, 52(a) ...... 3, 9, 10, 14,

19, 20, 21

La Rue, Moore & Schafer, “Calculation of New Oil
Costs, United States, years 1959 through 1974.”
Dallas, Texas: Petroleum Consultants (May 1,
rr rer re es Sey ems 17

In THE

Supreme Court of the United States
OCTOBER TERM 1977

No. 77-

-
.

County oF SUFFOLK AND CONCERNED CITIZENS OF
Montauk, Inc.,
Petitioners,
v.

SECRETARY OF THE INTERIOR,
Respondent,

NaTionaL Ocean Insivsrries ASSOCIATION AND
New York Gas Grovp,

Intervenor-Respondents.

-%
aa

PETITION OF COUNTY OF SUFFOLK AND CON-
CERNED CITIZENS OF MONTAUK, INC. FOR
WRIT OF CERTIORARI TO THE UNITED STATES
COURT OF APPEALS FOR THE SECOND CIRCUIT

This petition for certiorari arises out of the Second Cir-
cuit’s reversal on August 25, 1977 of a decision by the
United States District Court for the Eastern District of
New York rendered February 17, 1977 voiding certain off-
shore oil leases sold by the Secretary of the Interior in
violation of the National Environmental Policy Act
(NEPA), and enjoining further activities on the leases
until the environmental impacts thereof are properly evalu-
ated under NEPA by the Secretary. The leases are for

2

exploration and production of oil and gas on the Outer
Continental Shelf (OCS) Sale 40 area in the Baltimore
Canyon area off New Jersey and below Long Island.

Sale 40 is the first in the Mid-Atlantic OCS area. It
involves 154 tracts, comprising an area of 867,750 acres,
a potential of 50 oil producing platforms, more than 1,000
wells and 450 miles of offshore pipelines, increased oil
tanker traffic as well as massive onshore petro-chemical
and other support facilities. Thus, the Second Circuit’s
reversal clears the way for profound and irrevocable
alteration of the Mid-Atlantic seascape and landscape de-
spite the admittedly unresolved major risk of oil pollution
to the Atlantic fishing grounds, and the risk of oil fouling
of ocean beaches and parks and other grievous environ-
mental impacts in America’s most densely populated
coastal area.

Opinions Below

The Second Circuit’s opinion of August 25, 1977 is set
forth in Appendix A to the Petition (unofficially reported
10 Environment Reporter Cases (E.R.C.) 1513.*

*The judgment of the Second Circuit is set forth in Appen-
dix C.

Prior opinions forming the historical background of this liti-
gation are:

1. The District Court’s decision dated August 13, 1976,
preliminarily enjoining Sale 40, scheduled for August 17,
1976. (9 E.R.C. 1769)

2. The Second Cireuit’s opinion dated August 16, 1976
(9 E.R.C. 1793), staying enforcement of District Court’s pre-
liminary injunction.

3. The Supreme Court’s opinion dated August 19, 1976
(by Cireuit Justice Marshall) (50 L. Ed.2d 38) declining
to vacate the Second Cireuit’s stay of enforcement of the
District Court’s preliminary injunction.

4. The Second Circuit's opinion on October 14, 1976 (9
E.R.C. 1794) reversing the District Court’s preliminary in-
junction order.

3

The District Court’s opinion of February 17, 1977 is set
forth in Appendix B. (9 E.R.C. 1798)

Jurisdiction

Petitioner’s motion dated September 12, 1977 to stay
issuance of the mandate of the Second Cireuit pending
application to the Supreme Court for a writ of certiorari
pursuant to Rule 49(b) of the Federal Rules of Appellate
Procedure, was denied by Order of the Second Circuit
dated October 4, 1977. This Petition for certiorari is being
filed within the prescribed ninety days after August 25,
1977. The jurisdiction of this Court is invoked under 28
U.S.C. Section 1254(1).

Questions Presented

1. Whether the Second Circuit erroneously substituted
the “rule of reason” for the “clearly erroneous” rule (Rule
d2a, F.R. Civ. Proc.) to justify its de novo review and re-
versal of the District Court’s evidentiary findings on the
inadequacy of the Secretary’s environmental evaluation.

2. Whether the Second Circuit misapplied Citizens to
Preserve Overton Park, Inc. v. Volpe, 401 U.S. 402 (1971),
in denying the power of the District Court to review and
find arbitrary, the Secretary’s decision, which is based on
an incomplete and defective administrative record, contain-
ing grossly erroneous cost-benefit data relied on by the
Secretary in authorizing Sale 40, which data was unsup-
ported and unexplained and was not even circulated to the
public as required by NEPA.

3. Whether the Second Circuit erred in validating the
Sale 40 Environmental Impact Statement (EIS) despite its
recognition of the EIS’s “apparent failure to deal as thor-
oughly with some environmental consequences of trans-

4

portation (of Sale 40 oil) as might be hoped” on the
assumptions (unsupported by the EIS) that Sale 40 is
environmentally divisible and that the Secretary has the
power to and will at some undetermined future date deal
thoroughly with the oil transportation problem.

Statutes Involved

The statutes involved are:

Administrative Procedure Act, 5 U.S.C. Section
706 (2) ;

National Environmental Policy Act, 42 U.S.C. Section
4332.

Statement of the Case

The Sale 40 Draft EIS was published on December 10,
1975. The Sale 40 Final EIS was released on May 25, 1976.
Neither contained a cost/benefit analysis; the Final EIS
noted that a cost/benefit analysis would be provided in a
separate Sale 40 Program Decision Option Document
(PDOD) prepared for the Secretary.

A separate Sale 40 PDOD was drafted and received by
the Secretary on June 22, 1976. It was not circulated for
public comment. In three pages of tables it estimated: a)
the low and high case timetable of oil and gas development ;
b) the acreage, facilities and equipment expected to
develop the Sale 40 resources; and c) the investment costs
for low and high cases. The PDOD did not explain, docu-
ment or support the estimates and the assumptions under-
lying the estimates and simply attributed the sources of
its information to the United States Geological Survey,
and the Atlantic Offshore Operator’s Committee (a
petroleum industry organization).

The cost-benefit data was not attached to the Environ-
mental Impact Statement for Sale 40 (or otherwise

5

circulated) as recommended by the Guidelines of the
Council of Environmental Quality, 40 C.F.R. See. 1500.8
(a)(8), although the Seeond Cireuit Court mistakenly as-
sumed it was attached. (Appendix A, A30) The PDOD did
not set forth responsible opposing views as to Sale 40 costs
and benefits held by the relevant technical community.

On June 30, 1976, the Secretary announced his decision
to hold Sale 40 on August 17, 1976. County of Suffolk,
and others challenged this decision by moving for & pre-
liminary injunction. Discovery was expedited and the
ease was set for hearing on the earliest possible date the,
parties could be ready. Subsequently, Respondent National
Ocean Industries Associates together with eleven of its
members, and the New York Gas Group, intervened as
defendants. Evidentiary hearings consumed three weeks.
Many distinguished experts testified for both sides. The
attorneys worked days, nights and weekends to speed the
trial because of the need for a prompt decision compelled
by the August 17, 1976 sale date.

On August 13, 1976 the District Court issued its decision
preliminarily enjoining Sale 40. Its opinion concluded that
the Secretary's decision violated NEPA and insufficiently
analyzed environmental dangers because the Final EIS
and PDOD inadequately assessed the impact of state and
local decisions on a) whether pipelines or tankers would
be used to bring the oil ashore, and b) where onshore
facilities could be located.

Respondents then moved in the Second Circuit Court of
Appeals for a stay of enforcement of the District Court’s
preliminary injunction. The Second Circuit, forced to act
on August 16, 1976, the eve of the sale, granted the motion,
ruling that the sale in and of itself would not cause the
petitioners any irreparable injury.

On the following day, August 17, 1976, the petitioners
applied to Cireuit Justice Marshall to vacate the stay. He
declined to dissolve the stay. In his opinion of August 19,

6

1976 he noted that he only had a few hours to review the
District Court’s opinion, the briefs of the parties and the
four-volume EIS, and that he did not have nor could he
meaningfully have considered the voluminous record com-
piled in the District Court. Mr. Justice Marshall found
plaintiffs would not be irreparably injured if the Secretary
were permitted to open bids, but if the government were
to make an irreversible commitment of resources without
preparing an adequate impact statement, this would con-
stitute irreparable injury warranting injunctive relief. He
made clear that invalidation of any resultant leases was a
very real possibility should plaintiffs prevail on the merits,

In a brief opinion on October 14, 1976, the Second Cir-
cuit reversed the District Court’s preliminary injunction
order, holding that petitioners had not demonstrated that
they would suffer irreparable harm between the date of
the preliminary hearing and the trial, and that on its re-
view of the record concerning the NEPA violation found
by the District Court, there was some doubt whether peti-
tioners would succeed on the merits at the trial. Respond-
ents were advised that by proceeding with leasing prior to
a final determination, they assumed the risk of an ultimate
adverse decision.

After further pre-trial hearing and discovery, a trial on
the merits was held before District Judge Jack B. Wein-
stein, at which all parties introduced extensive additional
proof. Twelve hundred pages of new testimony were taken
and numerous additional documents were received in evi-
dence. In all, a total of 4,043 pages of testimony were
taken, 32 witnesses were heard, 273 documents were re-
ceived and the affidavits and proffers of proof for a sub-
stantial number of other persons considered,

The following disputed factual questions were decided by
the District Court: |

a) whether sufficient meaningful information was
available to the Secretary at the EIS Sale 40 stage

7

with which to project likely and feasible pipeline routes
to shore;

b) whether such information could be used to assess
the impact of state and local regulatory powers on the
environmental and economic consequences of the Sale
40 ;

¢) was such information essential to the Secretary’s
cost-benefit analysis of Sale 40;

d) was Sale 40 a unitary «project without separate
controlled arrangement for pipeline /tanker transpor-
tation problems via a Development Plan EIS and the
Secretary’s retained regulatory powers;

e) whether despite meaningful information readily
available to him, the Secretary’s cost/benefit analysis
was so grossly inaccurate and defective as to preclude
him, as the trustee and fiduciary of the public interest
OCS resources, from making an informed evaluation
of Sale 40 in comparison with the possible alternatives;

f) whether the Secretary failed to meaningfully con-
sider alternatives such as the separation of explora-
tion and production;

g) whether the pre-Sale 40 historical evidence of the
Secretary’s ‘‘firm’’ commitment to proceed with Mid-
Atlantie OCS leasing considered in conjunction with
the Secretary’s failure to adequately assess the vitally
linked tanker/pipeline, cost/benefit alternatives and
other critical NEPA issues—justified a finding that
the NEPA review was a charade.

The District Court’s second opinion (Appendix B) ren-
dered February 17, 1977, on the evidence, found all of the
subsequent questions of fact in the affirmative, and ac-
cordingly, enjoined further activities pursuant to the
leases sold in August 1976, and declared the leases null

and void.

. a

8 | 9

The opinion, (which included Appendices totalling 36 While there was substantial evidence that the Sec-
pages® listing the witnesses and exhibits considered by the retary’s decision was not based upon a good faith con-
Court), concluded that the massive new evidentiary record sideration of relevant NEPA documents, but on
served to confirm and expand the bases of the Court’s decisions made privately and in advance of public
earlier tentative conclusion in its decision of August 13, hearings, we find it unnecessary to make any such
1976 that NEPA had been violated. The Court sum- finding. It is enough for purposes of this proceeding
marized the factual findings for its conclusion that NEPA to detail the abstract and misleading aspects of the
had been violated in a number of respects, as follows: operative NEPA documents that prevented any realis-

tic appraisal of either environmental dangers or the

effects of local governmental licensing, permitting, and practical advantages and disadvantages that would
result from the specific Sale 40 leases. Each of the

review powers in the NEPA documents; (2) failed to . ;
consider the environmental impact of specific probable inadequacies, considered below in detail, constitutes a
violation of both the letter and spirit of NEPA and

pipeline routes from the outer continental shelf, in Hay , . os
spite of the fact that projection of such routes is rou- requires rescission of the Secretary's leasing decision.

We find that the Secretary (1) ignored the practical

tinely made by industry ? , caggeeno vee

the ear, ab ee ap can air have ori —_ re! On August 25, 1977, the Second Circuit handed down its

sail. oil and vas iad ag a an apna opinion (Appendix A) reversing the District Court’s in-
and gas p on for Sale and signifi- junction decision.

cantly understated the cost of such production, inelud-
ing pipeline construction; this resulted in a serious lack
of consideration of the likelihood and attendant dan-
gers of increased tanker traffic and an overestimate of
the net value of the entire project; (4) failed to con-
sider the possible impact of particular tract-selection
choices on the feasibility and sites of pipelines; there
was no consideration of the alternatives of either ex-
cluding industry-preferred tracts, or including less
highly desired tracts in the final sale offer because of

In an unusual usurpation of the District Court’s fact
finding functions, as applied to a massive fact intensive
evidentiary record containing much sharply disputed live
and expert testimony from which conflicting inferences
could be drawn, the Second Circuit proceeded ad seriatim
to burrow into the record,’ review the evidence and to ap-
praise and set aside each of the District Court’s factual
findings. In doing so, it violated Rule 52(a) that District
Court findings (particularly as to disputed issues of evi-
related onshore impacts and developments; and (5)

=
Oo

Before:

MansFIELD, Circuit Judge, Smitu, Chief Judge,°
and Paumiert, District Judge.**

~~ =

Appeal from a judgment of the United States District
Court for the Eastern District of New York, Jack B.
Weinstein, Judge, voiding leases made by the Secretary
of the Interior of an area of the Atlantic Continental Shelf
known as Sale 40 for failure to comply with the require-
ments of §102(2)(C) of the National Environmental Policy
Act, 42 U.S.C. §4332(2)(C).

Reversed.

tenia i
or

Irvine Lrxg, Special Counsel for County of Suf-
folk, Babylon, N.Y. (Patricia A. Dempsey,
Attorney, Richard C. Hand, Esq., Babylon,
N.Y., of counsel), for Plaintiff-Appellee
County of Suffolk.

WiuiaM GiteLMan, County Attorney of Nassau
County, Mineola, N.Y. (John F. Picciano,
Deputy County Attorney, Mineola, N.Y., of

a Of the United States District Court for the District of Montana,
sitting by designation.

ee Of the United States District Court for the Southern District of New
York, sitting by designation.

5522 |

-A3-

Appendiz A.

counsel), for Plaintiff-Appellee County of
Nassau.

Wau F. Duping, Jr., Esq., New York, N.Y.,

for Plaintiff-Appellee Concerned Citizens
of Montauk, Inc.

J. CHRISTOPHER JENSEN, Assistant United States

Attorney, Brooklyn, N.Y., Joun J. Z1mMeER-
MAN, Attorney, Department of Justice,
Washington, D.C. (David G. Trager, United
States Attorney for the Eastern District of
New York, Bernard J. Fried, Cyril Hyman,
Assistant United States Attorneys, Brook-
lyn, N.Y., Lawrence R. Hoese, Attorney, De-
partment of Interior, Washington, D.C., of
counsel), for Federal Defendants-Appel-
lants,

Jon M. Kaurman, Esq., New York, N.Y. (Kom-

mel, Rogers, Kaufman, Lorber & Shenk-

‘ man, Sarah Chasis, Attorney, Natural Re-

sources Defense Council, Inc., New York,
N.Y., of counsel), for Plaintiff-A ppellée Na-
tural Resources Defense Council, Inc.

E. Epwarp Bruce, Esq., Washington, D.C.

(Mark D. Nozette, Esq., Covington & Burl-
ing, Washington, D.C., Gene W. Lafitte,
Esq., J. Berry St. John, Jr., Esq., Liskow
& Lewis, New Orleans, La., George A. Bur-
rell, Esq., New York, N.Y., of counsel), for
Intervenor-Defendants-Appellants National
Ocean Industries Association, et al.

Sugarman & Sterno, New York, N.Y. (Robert

L. Clare, Jr., Esq., W. Foster Wollen, Esq.,
Joseph T. McLaughlin, Esq., Kenneth M:

5523

-A4-

Appendtx A.

Kramer, Esq., New York, N.Y., of counsel),
for Amici Curiae Exxon Corp., Gulf Oil
Corp., Mobil Oil, Shell Oil; Robert M. Perry,
Esq., Houston, Texas, of counsel for Exxon
Corp.; James A. Boone, Esq., A. Paul
Brandimarte, Jr., Esq., New Orleans, La.,
of counsel for Gulf Oil Corp.; E. M. Sutter,
Esq., R. B. Shaw, Esq., New Orleans, La.,
of counsel for Shell Oil Corp.; Arthur Ait-
kens, Esq., New York, N.Y., of counsel for
Mobil Oil Corp.

Baxer & Borts, Washington, D.C. (Gordon
Gooch, Esq., John P. Mathis, Esq., Thomas
B. Hudson, Esq., Washington, D.C.; Gray
Castle, General Counsel, John T. Rafferty,
Esq., NL Industries, Inc., New York, N.Y.,
of counsel), for Amicus Curiae NL Indus-
tries, Inc.

Davip J. Mucnow, General Counsel, American
Gas Association, Arlington, Va. (Kevin B.
Belford, Assistant General Counsel, Arling-
ton, Va., of counsel), for Amicus Curiae
American Gas Assoctation.

Wiuticox, Prrozzoto & McCarrxy, Boston, Mass.
(Jack R. Pirozzolo, Esq., Richard F. Mce-
Carthy, Esq., Boston, Mass., of counsel),
for Amicus Curiae New England Council.

RoseNMAN Cotin FrReuND Lewis & Conen, New
York, N.Y. (Samuel H. Lindenbaum, Eszq.,
Martin S. Baker, Esq., Thomas J. DeZure,
Esq., New York, N.Y., of counsel), for
Amicus Curiae Association For A Better
New York, Inc.

5524

—

Appendiz A.

Vinson & Exins, Washington, D.C. (Rush
Moody, Jr., Esq., Michael J. Henke, Esq.,
Washington, D.C., of counsel), for Amicus
Curtae The Business Roundtable.

Stantey C. Van Ness, Public Advocate of the
State of New Jersey, Trenton, N.J. (Robert
P. Corman, Assistant Deputy Public Ad-
voeate, Division of Public Interest o . . e *

(1166) * * * Q. What’s the basis for that assumption?
Exploratory wells are included as an investment capital
cost and you’ve admitted and agreed, I believe, that ex-
ploration (1167) overhead costs are not capital costs in an
economic— A. The FTC treats them as investments

(1169) A. The development of my exhibit assumes a
certain production-to-reserves ratio by year of production.

Q. Yes, that’s what I mean. It does assume a—your
exhibit does. A. Yes, and that’s shown here. Now, I’m
aware that in the Gulf of Mexico there are reservoirs that
will produce 15 percent of their reserves in a given year.
Then you have a much faster rate of decline thereafter,
and believe me, I did it several ways. You can change the
assumption any way you want to, but the results are
going to be the same.

A129
Appendiz D.

You will not be able to reach peak production in 1989
as long as you are bringing them on in 1981.

(1174) * * * A. Yes, sir, but the results will remain the
same. If you increase the per year of production to 12
percent and keep it constant for three years and then drop
it down, you're still going to come up with the same
results.

You can’t make, in the high case—there is no way you
can increase 3,000—3,080,000 mef per day—

Mr. Lafitte: I’m sorry.

A. —in 1989, if you are going to produce a billion cubic
feet a day in 1985 and 240,000 mef per day in ’83, ete.

---

Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40385005_0043%3A1. Public record. Not legal advice.
