## Facts

- The Minerals Management Service (MMS) approved suspensions for 36 federal offshore oil and gas leases on the outer continental shelf off central California.
- The leases (issued between 1968 and 1984) had not entered production in paying quantities and many were near expiration.
- The suspensions extended the lease terms and preserved the lessees’ ability to pursue future exploration and production that otherwise would have been lost upon expiration.
- California has an approved coastal management program under the Coastal Zone Management Act (CZMA) and asserted the suspensions were subject to state consistency review.
- MMS refused to submit the suspensions for CZMA review, asserting the suspensions were not reviewable federal activities and that later-stage plan reviews would suffice.
- MMS treated the suspensions as categorically excluded from NEPA review and prepared neither an environmental assessment nor an environmental impact statement.
- California, joined by environmental groups and counties, sued to enjoin the suspensions until CZMA review occurred and to require NEPA-compliant analysis.
- The district court ruled for California on both CZMA and NEPA grounds; the federal defendants and lessees appealed.

## Issues

1. Whether MMS’s approval of offshore lease suspensions is a “federal agency activity” affecting the coastal zone and therefore subject to CZMA consistency review.
2. Whether MMS lawfully relied on a NEPA categorical exclusion for the suspensions without a reasoned, contemporaneous administrative record addressing potential extraordinary circumstances.

## Decision

- The Ninth Circuit affirmed the district court’s judgment.
- The court held that approving the lease suspensions was a discretionary federal agency activity affecting the coastal zone and thus required CZMA consistency review.
- The court held MMS’s invocation of a NEPA categorical exclusion was inadequately explained and documented, requiring further NEPA-compliant consideration on remand.

## Legal Principles

- Under the CZMA, federal agency activities that affect a state’s coastal zone must be consistent, to the maximum extent practicable, with the state’s approved coastal management program, and the state is entitled to conduct a consistency review.
- A lease suspension that prevents expiration and preserves future development rights is a discrete, reviewable federal action; potential future coastal effects from preserving those rights can satisfy the CZMA “affecting” standard.
- CZMA review is not limited to a single decision point; separate federal actions at different stages may each trigger consistency review.
- Under NEPA, an agency invoking a categorical exclusion must provide a contemporaneous, reasoned explanation and record support, particularly where evidence suggests extraordinary circumstances such as substantial environmental risk or controversy.
- An undocumented or post hoc justification for a categorical exclusion is insufficient for judicial review and may warrant remand for further agency analysis.

## Conclusion

The Ninth Circuit required MMS to submit offshore lease suspensions for California’s CZMA consistency review and held that MMS could not rely on a NEPA categorical exclusion without an adequate, contemporaneous record explaining why the exclusion applied despite potential environmental concerns and controversy.


California v. Norton, 311 F.3d 1162 (9th Cir. 2002)