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Watt v. Energy Action Educ. Foundation, 454 U.S. 151 (1981)

Watt v. Energy Action Education Foundation

No. 80-1464

Argued October 5, 1981

Decided December 1, 1981

454 U.S. 151


Under the Outer Continental Shelf Lands Act of 1953 (Act), the Secretary of the Interior (Secretary) is authorized to lease tracts of the Outer Continental Shelf (OCS) for the exploration for, and development of, mineral resources, including oil and gas. As originally passed, the Act authorized the Secretary, in his discretion, to solicit bids either by fixing a royalty rate of not less than 12 1/2%, and requiring bids on an initial "cash bonus" to be paid when the lease was awarded, or by fixing the amount of the cash bonus, and requiring bids on the royalty rate. In practice, virtually all tracts were leased on the basis of a fixed royalty, with bidding on the amount of the cash bonus. However, the Outer Continental Shelf Lands Act Amendments of 1978 (1978 Amendments) increased the number of authorized bidding systems to 10, retaining the original system and authorizing new systems, some of which also involve cash bonus bidding, while others use a factor other than the cash bonus as the bidding variable. The 1978 Amendments direct the Secretary to develop a 5-year plan of experimentation with the new systems, requiring him to experiment with the bidding systems other than the traditional cash bonus, fixed royalty system in not less than 20% but not more than 60% of the total area offered for leasing each year, unless he determines that those percentage requirements are inconsistent with the 1978 Amendments' purposes. The 1978 Amendments assure ongoing congressional oversight of the Secretary's leasing activities by requiring frequent reports to Congress. To date, the Secretary has used two of the nontraditional bidding systems in leases covering 49% of the total area offered. However, he has not experimented with any of the systems using a factor other than the size of a cash bonus as the bidding variable. Respondents, including the State of California, brought suit for declaratory and injunctive relief, alleging, inter alia, that the Secretary has abused his discretion by failing to experiment with systems that do not use the size of a cash bonus as the bidding variable. The District Court denied both parties' motions for summary judgment, but the Court of Appeals held, inter alia, that the 1978 Amendments require the Secretary to experiment

Page 454 U. S. 152

with at least some of the bidding systems that do not use the size of a cash bonus as the bidding variable.


1. California has standing to challenge the Secretary's choice of bidding systems. Because the 1978 Amendments require the Federal Government to turn over a fair share of the revenues of an OCS lease to the neighboring coastal State whenever the Federal Government and the State own adjoining portions of an OCS oil and gas pool, California has a direct financial stake in federal OCS leasing off the California coast. In alleging that the bidding systems currently used by the Secretary are incapable of producing a fair market return, California asserts the kind of "distinct and palpable injury" that is required for standing. And California also satisfies the requirement that there be a "fairly traceable" causal connection between the injury it claims and the conduct it challenges, so that, if the relief sought is granted, the injury will be redressed. Pp. 454 U. S. 160-162.

2. The Court of Appeals erred in compelling the Secretary to experiment with non-cash-bonus bidding systems. Pp. 454 U. S. 162-169.

(a) Nothing in the 1978 Amendments suggests that Congress, in committing the Government to the goal of obtaining fair market value for OCS oil and gas resources, intended to channel the Secretary's discretion in choosing among the alternative bidding systems, and nothing in the statute singles out the non-cash-bonus systems for special consideration. The language of the 1978 Amendments requires experimentation with at least some of the new bidding systems, but leaves the details to the Secretary's discretion. Pp. 454 U. S. 162-165.

(b) Nor does the legislative history of the 1978 Amendments compel the conclusion that the Congress as a whole intended to limit the Secretary's discretion to choose among the various experimental bidding systems. When viewed in context, unfavorable references to "cash bonus" bidding show congressional dissatisfaction with large front-end payments associated with the traditional cash bonus bid, fixed royalty system then in effect, not with all forms of cash bonus bidding. Pp. 454 U. S. 165-168.

210 U.S.App.D.C. 20, 654 F.2d 73, reversed.

O'CONNOR, J., delivered the opinion for a unanimous Court.

Page 454 U. S. 153

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