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Tuesday, March 23, 2010

Outer Continental Shelf Moratoria on Oil and Gas Development

Curry L. Hagerty
Specialist in Energy and Natural Resources Policy

Outer Continental Shelf (OCS) moratoria provisions, enacted as part of the Department of the Interior appropriations over the last 26 years, prohibited federal spending on oil and gas development in certain locations and for certain activities. Annual congressional moratoria restrictions expired on September 30, 2008. While the expiration of this restriction does not make leasing and drilling permissible in all offshore areas, it is a significant development in conjunction with other changes in offshore leasing activity. Change in moratoria policy signals a shift in policy that may affect other OCS policies as well. 

The goal to increase domestic OCS energy production was the chief policy justification for not restoring annual moratoria beyond FY2008. Other factors in not restoring moratoria restrictions include policies to diversify domestic energy production including the launch of OCS renewable energy programs, and the availability of new OCS technology that would allow OCS activity in deeper waters beyond clear jurisdictional boundaries. These developments, taken together, reflect transformative change in OCS policy alternatives. The impact of these developments during periods of volatility in oil markets and during an exceptionally weak economy, focuses congressional attention on federal priorities for OCS development. 

In the past, Congress has addressed OCS oil and gas development by balancing numerous factors, including (1) economic feasibility; (2) environmental risk; (3) technology; and (4) ocean sovereignty. Disagreement tends to arise in each of these four issue areas because of conflicting concerns over policy objectives between those in favor of offshore oil and gas development and those opposed. Positions are sharply divided on national and coastal state goals associated with OCS activities in former moratoria areas, and in prospective areas where drilling activities or renewable energy projects are permissible in the Gulf of Mexico and the Arctic. 

Around the world, offshore activities are changing and these changes are reflected in international offshore policy disagreements that are not dissimilar to domestic policy disagreements. Economic opportunity and technological advances are driving the global search for energy sources in deeper ocean waters. These activities may clash with national or international environmental policies. Within the framework of the United Nations Convention on the Law of the Sea (UNCLOS) a number of countries are active in establishing parameters for offshore activities, including preparing claims for extended continental shelf areas. Although the United States has not ratified UNCLOS, U.S. efforts are underway to address extended continental shelf areas in a manner not inconsistent with the UNCLOS process. 

Expiration of moratoria is part of a series of changes in domestic and international OCS energy development policy. Moratoria policy impacted federal-state co-ordination on issues such as economic and environmental concerns. As a result of changes in moratoria policies federal-state coordination concerns and nation-to-nation coordination concerns related to addressing such issues as economic and environmental concerns may emerge as issues for Congress.

Date of Report: March 23, 2010
Number of Pages: 22
Order Number: R41132
Price: $29.95

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