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ENERGY ACTION EDUC. FOUND. v. ANDRUS

September 17, 1980

ENERGY ACTION EDUCATION FOUNDATION, et al., Plaintiffs,
v.
Cecil D. ANDRUS, Secretary of Interior, et al., Defendants



The opinion of the court was delivered by: JOHNSON

MEMORANDUM OPINION

This matter is before the Court on Plaintiffs' Motion for Partial Summary Judgment or, in the Alternative, for a Preliminary Injunction. Defendants filed an opposition to the motion. After hearing the arguments of counsel for the parties, the Court took the matter under advisement.

BACKGROUND

 In 1953 Congress passed the Outer Continental Shelf Lands Act ("OCS Act") to provide for the leasing of off-shore lands by the federal government to private companies for exploration and development of oil and natural gas resources. This Act gave the Secretary of Interior the authority and discretion to administer leases on federal off-shore lands through the use of two different methods of competitive bidding: (1) a cash bonus bid basis with a royalty fixed by the Secretary of not less than 121/2 per centum of the gross revenue of the lease and (2) a royalty rate bid with a fixed cash bonus payment. *fn1"

 Congress, recognizing the need to reform the OCS Act to avoid excessive dependence on foreign nations for oil and gas supplies, to expand production on the outer continental shelf, to assure a fair return to the public, and to foster competition for the leases, amended the OCS Act in 1978. *fn2" The 1978 Amendments were designed to expedite oil and gas exploration and production for domestic use, to insure the public a fair and equitable return on these resources, to preserve and maintain competition, and to provide for a balance of development with protection of the environment.

 One of the primary purposes of the new legislation is to achieve a superior bidding system through experimentation. The OCS Act, as amended in 1978, provides the Secretary of Interior with authority to grant to the highest responsible qualified bidder or bidders by competitive bidding, oil and gas leases on submerged lands of the outer continental shelf. The statute enumerates the bases on which the bidding, which shall be by sealed bid and at the discretion of the Secretary, shall occur. The bidding systems are:

 
1. Cash bonus bid with a fixed royalty at not less than 121/2 per centum;
 
2. Variable royalty bid, with either a fixed work commitment or a fixed cash bonus as determined by the Secretary, or both;
 
3. Cash bonus bid or work commitment bid with a fixed cash bonus and a diminishing or sliding scale royalty of not less than 121/2 per centum;
 
4. Cash bonus bid with a fixed share of net profits of not less than 30 per centum;
 
5. Fixed cash bonus with a variable net profit share;
 
6. Cash bonus bid with a fixed royalty at not less than 121/2 per centum and a fixed per centum share of net profit of not less than 30 per centum;
 
7. Work commitment bid with a fixed cash bonus and a fixed royalty.

 From 1953 until the 1978 Amendments, almost all lease sales were conducted pursuant to the cash bonus-fixed royalty system. However, the royalty bid-fixed cash bonus bidding system was employed in lease sales in 1977 and the cash bonus-sliding scale royalty system was used in two lease sales in early 1978. Of the eight lease sales that have occurred since the passage of the 1978 Amendments, approximately one-half of the tracts have been offered pursuant to the standard cash bonus-fixed royalty system, and the other half by the cash bonus-sliding scale royalty system.

 The OCS Act, as amended, further requires the Secretary of Interior to prepare and to maintain a comprehensive oil and gas leasing program to implement the policies of the Act. 43 U.S.C.A. § 1344(a) (West Supp.1979). The leasing program is to consist of a schedule of proposed lease sales which the Secretary determines will best meet national energy needs for the five-year period following its approval or reapproval, and is to reflect consideration of environmental, social, and economic concerns as well as the assurance of fair market value to the government on leased land. Congress also imposed the requirement that the Secretary apply alternative bidding systems, other than the cash bonus-fixed royalty, to not less than 20% and not more than 60% of the total area offered for leasing each year during the five-year period beginning September 1978. 43 U.S.C.A. § 1337(a)(5)(B) (West Supp.1979).

 The five-year leasing program contemplated by the statute was approved by the Secretary of Interior in June 1980. The lease sale scheduled for September 1980 is the first sale to take place under the program, and ...


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