Coastal Zone Management Act and its Impact on Offshore Wind Development

Posted on July 28, 2021

Twentieth-century legal battles between state and federal authorities over offshore mineral leases led Congress to enact laws that address which activities, and which locations, give rise to state and federal control (e.g., the Outer Continental Shelf Lands Act (OCSLA), the Submerged Lands Act, and the Coastal Zone Management Act (CZMA)). As the United States prepares to embrace renewable energy sources offshore, these statutes — initially designed to manage traditional oil and gas development — will be applied to offshore wind. How the CZMA will be applied in the context of offshore wind energy development is particularly important to understand, as active locations for wind leasing offshore include coastal states that have not historically been heavily involved in offshore oil and gas development. While the Biden Administration beats the drum for offshore wind development for all of America’s coastlines, lessons from the Gulf Coast states show that the CZMA can empower individual states — and even individual municipalities or counties — to have an outsized impact on offshore energy development.

CZMA — Legal Framework

The CZMA (codified at 16 U.S.C. §§ 1451–1464) was enacted in 1972 and governs permitting activity among federal and state agencies. Pursuant to the CZMA, coastal states may adopt coastal zone management plans (CMPs) and submit them to the Department of Commerce for approval. Of the 35 states and territories eligible to participate, 34 have currently approved CMPs, including the states that border the Great Lakes. States determine both the extent of their “coastal zone” and how their individual CMPs are managed. For example, in Alaska’s previously approved CMP (it is no longer in effect), regional “coastal districts” managed the program and made for a decentralized and patchwork system where local politics could heavily influence permitting decisions. In California, the state’s Coastal Commission retains permanent jurisdiction over developments proposed on tidelands, submerged lands, and public trust lands (with the exception of the San Francisco Bay, which is governed by a stand-alone commission), but has approved Local Coastal Plans (LCPs) for local municipalities to make permitting decisions. In Louisiana, the state retains authority for permits according to the type of development, while parishes may enact local programs for other types of development (permits related to oil and gas, for example are “areas of state concern” while most residential development may be regulated at the parish level).

Federal, state, and local interests can collide under section 307 of the CZMA (16 U.S.C. § 1456), which requires that “Federal Agency activity within or outside the coastal zone that affects any land or water use or natural resource of the coastal zone be carried out in a manner which is consistent to the maximum extent practicable with the enforceable policies of approved State management programs.” The National Oceanographic and Atmospheric Administration’s (NOAA) regulations govern the required federal and state consistency determination process (15 C.F.R. part 930). Subparts C, D, and E are applicable to offshore energy development, with subpart C covering federal agency action (i.e., lease sales on the OCS) and subparts D (federal permits) and E (development plans) covering nonfederal actors, i.e., energy companies.

Consistency determinations come up in a variety of different contexts. For instance, in the context of federal actions (e.g., lease sales), the federal government makes an initial consistency determination, to which the affected state may object within a specified timeframe. Separately, when an offshore lessee submits a federal permit or development plan, it ordinarily simultaneously submits a consistency certificate. In that case, the affected coastal state reviews the consistency certificate to determine whether the activity is “fully consistent” with the state’s CMP, and facilitates public participation in the consistency review, either through comments or a hearing process. The state has up to six months to concur or object and must notify the applicant if the review will go beyond three months for OCS plans. After six months, concurrence is presumed. If the state objects to the consistency certification, the proposed action cannot be approved or permitted. Following an objection, an applicant can appeal the determination to the Secretary of Commerce within 30 days on the grounds that the activity “is consistent with the objectives of this chapter or is otherwise necessary in the interest of national security.” The Secretary can override the objection of the state if either ground is satisfied. The state or the applicant can then challenge the Secretary’s decision in federal court, under the Administrative Procedure Act. The following chart, taken from NOAA’s website, summarizes the disposition of appeals of consistency determinations to the Secretary over the life of the CZMA:

Summary and Lists of CZMA Secretarial Appeals - Feb 2021

CZMA Implications for Offshore Wind Development

As with offshore oil and gas projects, several aspects of an offshore wind project may trigger CZMA consistency review, including: 1) the lease sale itself; 2) the “site assessment” phase or “preliminary term” of a wind lease, during which the lessee conducts activities akin to traditional “exploratory” activities under oil and gas leases (e.g., installation of meteorological towers or buoys); 3) the “construction and operations” phase of a lease, which involves installation of the equipment necessary to generate wind energy and operation of those facilities (e.g., turbines, undersea transmission cables, offshore transformers, onshore substations where the transmission cables come ashore, etc.); and 4) the decommissioning phase. Given the clear analogy between the life cycle of an offshore wind project and that of an offshore oil and gas project, the following discussion highlights examples of disputes arising from consistency determinations in the context of oil and gas projects that illustrate the types of CZMA issues that may arise in the context of offshore wind leases.

  1. Lease Sale. There are several examples of Gulf Coast states relying on their CZMA authority to impede federal leasing. For instance, in Blanco v. Burton, 2006 WL 2366046 (E.D. La. 08/14/2006), the Eastern District of Louisiana considered the State of Louisiana’s argument that a planned OCS lease sale (scheduled for a year after Hurricane Katrina devastated the state) was inconsistent with Louisiana’s CMP. There, the district court denied the state’s motion for a preliminary injunction, but in doing so the court made it clear that he expected Louisiana to prevail on its action for a permanent injunction on the basis that the federal government had treated the CZMA consistency determination (which should be made on a case-by-case basis) in an arbitrary and capricious manner. Id. at 51. That case settled before the court ruled on the permanent injunction.
  2. Exploration Phase. An example of a state flexing its CZMA authority to prevent exploratory activities can be seen in Florida’s efforts to prevent the development of the Destin Dome by Chevron. There, relying on its “policy” of precluding oil and gas development within 100 miles of its coast, Florida objected to Chevron’s exploration plan for the Destin Dome, located about 30 miles offshore. In an appeal that took nearly two years, the Secretary of Commerce overrode the state’s objection; but, when Chevron submitted a development plan, Florida again objected. Chevron’s appeal to the Secretary of Commerce was stalled for nearly four years before Chevron filed suit against the federal government, which led to a settlement providing for the government’s return to Chevron of over $100 million in lease bonuses and Chevron walking away from the project.
  3. Operations and Development Phase. As projects progress from exploration activities to development-related (or analogous) activities, states and local authorities may have considerably more power to affect a project under the CZMA because the construction must be “fully consistent” with the state’s CMP, not merely consistent to the “maximum extent practicable” (the standard applicable to a federal lease sale). In a recent example, Oregon objected to a proposed LNG facility and determined that it was “inconsistent” with the state’s coastal management plan, and the Secretary of Commerce upheld the state’s determination. As a result of the CZMA’s encouragement of CMPs, many states now require coastal use permits issued by the state or local government alongside US Army Corps of Engineers (USACE) permits for activities in coastal or wetland areas. And these state permits can often be challenged in state court. In Joseph v. Sec’y, La. Dep’t of Natural Resources, environmental justice groups challenged the state’s issuance of a coastal use permit for an oil pipeline, arguing that the permit violated the coastal use guidelines promulgated as part of Louisiana’s CMP. 265 So. 3d 945 (La. App. 5 Cir. 01/30/2019). At the trial court level, set in the small parish where the coastal impact would be, the plaintiffs were successful in obtaining relief; but the Louisiana appellate court reversed the judgment, finding that the state agency that issued the permit was entitled to deference in the interpretation of its own guidelines.
  4. Decommissioning Phase. When it comes to decommissioning, Louisiana provides an example of the CZMA authority sharing gone awry in a suite of over 40 lawsuits brought by local parish governments against oil and gas companies that operated in the coastal zone — sometimes decades prior to the enactment of the CZMA and the state’s CMP. The suits are currently at the US Fifth Circuit on the question of whether the cases belong in state or federal court. The Fifth Circuit determined that state court was the proper venue last August but then granted rehearing, and a final ruling is still forthcoming. The lawsuits are premised on the “enforcement” of coastal use permits and Louisiana’s CMP and argue that the state’s coastal program required canals to be backfilled at the cessation of operations. One oil and gas defendant has reached an agreement to fund $100 million in coastal restoration — there are almost 200 other defendants in the lawsuits.

As illustrated above, the CZMA framework sets up a few potential avenues for both states and actors who are hostile to energy development to impede offshore energy projects. While the CZMA lacks a citizen suit provision, citizen groups can seek review of federal consistency determinations under the Administrative Procedure Act and can seek review of state agency determinations in state court. The CZMA can also lead to local politics having an outsized role in federal projects. Many states are updating their CMPs to specifically include state consistency review for offshore wind projects on the OCS, setting up potential issues for offshore wind developers that need to be navigated with care.

Source

It's on us. Share your news here.
Submit Your News Today

Join Our
Newsletter
Click to Subscribe