Coastal Conflicts and the Courts

In early 1978 the Supreme Court is scheduled to hand down opinion on the preemption of Washington State's tanker law (Ray v. Atlantic Richfield Company) and to consider an appeal in the Baltimore Canyon Outer Continental Shelf (OCS) oil and gas lease sale case (County of Suffolk v. Secretary of the Interior). The Western Oil and Gas Association's suit to prevent approval of the California Coastal Plan also comes to trial. All three of these cases are indicative of a growing federal-state conflict over the management of coastal marine resources. In addition, as states use more regulations and permits to influence the development of coastal areas, conflicts between resource managers and private owners are also increasing, with the "taking issue" (uncompensated government alteration of private property rights) as a focal point of such disputes.

Federal legislation. Historically, most decisions affecting coastal resources have been made by the private market system. However, since many coastal services are not correctly valued by the private market, it was inevitable that, as the coastal zone became an area of growing and conflicting demands, public intervention would be required. The symptoms of this market failure took the form of increased environmental pollution from inadequate industrial and municipal treatment, increased agricultural runoff, oil spills from tankers and offshore production, thermal pollution from electricity generating facilities, and destruction of coastal habitat from dredging, filling, and bulkheading for navigational improvements and commercial and residential developments.

In 1972 the first major federal legislation was passed to set up a framework for the management of coastal resources. The Coastal Zone Management Act (CZMA) provided federal incentives for coastal states to voluntarily develop and administer programs. Incentives were (1) grants and (2) guarantees that federal coastal zone development plans would be formulated in full cooperation with the affected states, except in matters of national security.

Amendments to the CZMA in 1976 focused primarily on the development of energy resources along the coasts, especially those of the outer continental shelf (OCS). Although OCS oil and gas resources themselves may be in the federal domain, their development will clearly affect adjacent coastal states. In addition to requiring states to include in their management programs planning processes for energy facilities, the amendments also established the Coastal Energy Impact Program (CEIP), the first comprehensive scheme aimed at mitigating the adverse impacts of energy development in states with coastal zone management programs which have either been approved or are progressing satisfactorily.

Proposed amendments to the OCS Lands Act, awaiting further consideration by Congress, would give the states a greater role in federal leasing decisions and in monitoring OCS activities. Included are a number of provisions for compensation of damages. For example, an offshore oil pollution fund, financed by a tax on oil produced off-shore, would compensate individuals for damages from oil spills. Also under consideration by Congress are significant revisions to the CEIP program.

State plans: Regulation or an alternative. Will the legal framework, as it is developing, aid in achieving a more beneficial allocation of coastal resources? This depends largely on the type of programs that the individual states develop and on the form of state-federal interaction that evolves.
To date, three state programs have received full federal approval: California (pending judicial review) and Oregon in 1977, and Washington in 1976. These states had begun their own programs before the federal initiative in 1972. A common thread of the state programs on the West Coast is regulation through the use of license and permit procedures.

One of the problems with the regulatory approach is that typically it does not assess either the benefits and costs of decisions or the distribution of these benefits and costs. The question of compensating those experiencing wind-fall losses when new regulations change the rules of the game is also not adequately addressed. The California plan, for example, promises property owners protection against their property being taken without just compensation, as guaranteed by the California and U.S. constitutions. However, this elusive concept in fact guarantees very little, since compensation is not necessarily linked to changes in the market value of the property.

In general, if the architects of such plans ignore rational comparison of the benefits and costs of their proposals and the possibility of compensation, the plans are likely to contain inconsistencies and to be impossible to administer and enforce without continuing conflict. Recognition of these difficulties may in itself dissuade other states from proposing plans which diverge greatly from the status quo.

An alternative to licensing—the use of transferable development rights (TDRs)—has been suggested, but so far not used. One approach would require the planning authority to determine the appropriate level of controlled development to be allowed. Then the planning authority would make available a sufficient number of TDRs to cover the projected level of uncontrolled development. These TDRs would be auctioned off to the highest bidders, with the planning authority entering into the bidding along with private developers in order to limit development to the appropriate level. The revenues generated through the sale of development rights, including those to the planning authority, could then be used to compensate the windfall losses. This, of course, presumes sufficient funding for the planning authority to enter into the bidding process. Ideally, these funds would be derived from taxation or by imposing charges on the beneficiaries of the implied development limitation.

Federal-state interaction. Federal legislation recognizes that state planning without any consideration of the national interest can often lead to significant inefficiencies. Some coastal services have a national rather than local or regional clientele, such as OCS oil- and gas-related activities, port facilities, and unique natural areas that have been seaside as marine sanctuaries or national seashores.

A good deal of the federal-state conflict over coastal zone resource use centers around the location of energy related facilities. Existing legislation provides little guidance for such tough decisions, so that much of the burden now rests on the courts—as reflected by the three key cases to be decided in 1978. Is Washington State's tanker law prohibiting tankers over 125,000 tons deadweight in Puget Sound, preempted by the federal Port and Waterways Safety Act? Did the Department of the Interior's Environmental Impact Statement on the sale of oil and gas leases on the mid-Atlantic OCS fully comply with the requirements of the National Environmental Policy Act, and did it correctly assess the effects of state coastal zone management programs and the CEIP? Does the California Coastal Plan give adequate consideration to development of outer continental shelf resources in the "national interest"? All of these cases are being contested in part over the "federal consistency" issue—and the court decisions will help determine the form of state-federal interaction in the future.

As with the state management programs, a systematic comparison of the benefits and costs of locating energy facilities in coastal areas, along with an assessment of the distribution of these benefits and costs, would be most useful in resolving conflicts, especially if it is accompanied by a scheme for compensation of adversely affected interests. The "unavoidable loss" amelioration provision of the CEIP and the damage compensation proposals in the pending Lands Act amendments are steps in the right direction, although their impact would be a more beneficial one if payments were contingent only upon damages incurred and if the burden of financing the payments rested with those causing the damages.

Sometimes, as in the case of offshore oil and gas leasing, there is a need to separate out the impacts caused by the federally licensed activity itself from those caused by the associated onshore activity. If a state had a functioning TDR system, there is no reason why a such a system could not deal with management of the onshore activities. In fact, the new activities locating in coastal areas could be forced to pay the additional costs of their location in an area. This would help eliminate the need for elaborate schemes for financial assistance to the states for dealing with impacts from onshore facilities.

The future. The current legal framework for deciding coastal issues does not give a clear picture of the pattern of resource allocation that can be expected or of how beneficial this pattern will be. It leaves unanswered the question of how individual preferences for salt marshes versus housing developments or offshore oil and gas versus pristine beaches will be registered or measured. Except for the political process, itself fraught with unknowns, there does not seem be any systematic approach to evaluation of the alternative uses of coastal resources. Instead, the difficult choices will be resolved by legal decisions and political compromise, and there are a great many battles ahead before this is achieved.