Oil and Gas Development

By the early 1940s, potential oil and gas reserves off the coasts of the United States had been identified, and the technology to recover petroleum was being developed. To assure that other nations would not exploit that potential, President Truman proclaimed United States sovereignty over the resources of the adjacent continental shelf in 1945. In the subsequent dispute over whether the federal government or the states had control of the resources beneath the territorial sea, the federal government prevailed in the U.S. Supreme Court, only to have Congress vest title to the territorial sea and its resources in the coastal states by passing the Submerged Lands Act of 1953. In the same year, Congress also passed the Outer Continental Shelf Lands Act (OCSLA), which reaffirmed the United States' exclusive jurisdiction over its continental shelf resources. It also created authority for the U.S. Department of the Interior (DOI) to encourage discovery and development of oil through a leasing program. The Secretary has delegated this congressional authority to the Minerals Management Service (MMS), a division of the Department of Interior.

The state and its Congressional delegation adopted this position, requesting the Department of Interior to suspend all leasing off Florida's coasts until environmental, economic, and sociological studies are completed; and to adopt a permanent ban on any further leasing within 100 miles of the entire Florida coast, including the Atlantic coast.

In addition to opposing oil and gas development in federal waters off the coasts of Florida, the state has banned drilling in state waters. Nevertheless, oil and gas exploration interests in Florida's territorial waters exist, dating back to the early 1940s when several leases were granted. Three major leases include virtually the entire west coast offshore area. These leases were modified in 1976 and will remain in effect until 2016.

Hydrocarbons have never been produced commercially in Florida's territorial waters. In fact, since 1945 a total of twenty-nine wells have been drilled in the state's territorial waters all of which have been nonproducing. Since 1991, however, Coastal Petroleum, which owns leases to offshore lands in the Gulf of Mexico, has pursued a permit to drill off St. George Island in the Panhandle, and has announced plans to drill in several other locations.

Furthermore, because exploratory wells have recently revealed the existence of gas reserves, interest in drilling in federal waters off Florida has grown. Chevron is currently seeking to obtain the permits that would allow it to establish Florida's first full production offshore rig. Both Mobil and Amoco are seeking to drill exploratory wells off the Panhandle coast.

Management tools addressing oil and gas development

The federal leasing and development program under the OCSLA regulates not if, but how oil and gas development takes place. It includes environmental safeguards and a structured role for states in OCS planning and development. The leasing procedure consists of four phases:

· a five-year leasing program

· the lease sale

· exploration

· development and production.

At the state level, the Board of Trustees of the Internal Improvement Trust Fund (Trustees) has title to and administrative jurisdiction over all state sovereignty submerged lands. These lands are held in trust for the use and benefit of all Floridians. In addition to meeting the criteria established in legislation, all sovereignty lands management decisions must conform to the public interest standard in Article X, Section 11 of the Florida Constitution. This means that private uses of these public lands may only be authorized when not contrary to the public interest.

Florida does not have an offshore oil and gas leasing program. There is, however, statutory authority for onshore and offshore oil and gas leasing, and there is an environmental review process specifically for offshore oil and gas activities in state waters. Furthermore, recent legislation gives the Trustees the authority to require companies to post a surety bond before drilling in Florida waters. The bond must cover the estimated cost of oil spill clean-up and related negative economic impacts of a spill.

The authority to regulate oil and gas leasing, along with existing laws regarding environmental protection and the Trustees' ability to condition the use of state lands, create the legal framework regulating oil and gas development activities beneath submerged lands. Because there are still active leases in state ocean waters, the scope of this authority is extremely important.