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Monday, April 19, 2010

Outer Continental Shelf Moratoria on Oil and Gas Development

Curry L. Hagerty
Specialist in Energy and Natural Resources Policy

Moratoria provisions for the outer continental shelf (OCS), enacted as part of the Department of the Interior appropriations over 26 years, prohibited federal spending on oil and gas development in certain locations and for certain activities. These annual congressional moratoria expired on September 30, 2008. While the expiration of the restrictions 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. The ending of the moratoria signals a shift in policy that may affect other OCS policies as well. 

The chief policy goal in not continuing annual moratoria beyond FY2008 was to increase domestic OCS energy production. Also influential were policies to diversify domestic energy production, including by launching renewable energy programs in the OCS, and the availability of new technology that would allow OCS activity in deeper waters beyond clear jurisdictional boundaries. These developments, taken together, reflect a transformative change in OCS policy alternatives. Their impact during periods of volatility in oil markets and in 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 economic feasibility, environmental risk, technology, and ocean sovereignty. Disagreements tend to arise in each of these four issue areas between those in favor of offshore oil and gas development and those opposed. Positions are sharply divided on national and coastal state goals for OCS activities in former moratorium areas, and in areas in the Gulf of Mexico and the Arctic where prospective drilling activities or renewable energy projects are permissible. 

Around the world, offshore activities are changing, as is reflected in international offshore policy disagreements that are similar 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 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. 

The expiration of congressional moratoria is part of a series of changes in domestic and international OCS energy development policy. Moratorium policies have impacted federal-state coordination on economic and environmental concerns. As a result of changes in these policies, federal-state coordination and nation-to-nation coordination may emerge as issues for Congress as it addresses economic and environmental challenges in the OCS.

Date of Report: April 7, 2010
Number of Pages: 22
Order Number: R41132
Price: $29.95

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