Transportation Energy

Offshore Drilling

International, federal and state laws impact the development of offshore oil and gas resources. Regulation of U.S. offshore resources is divided between state and federal law. Generally, states may regulate out to three geographical miles from their coast. State regulations vary from outright bans to permitted drilling and exploration with state agency oversight. The federal government's regime covers all water from where the state boundary ends to the 200 nautical mile mark.

• Federal Moratoria: The Federal law governing development of oil and gas in federal waters is the Outer Continental Shelf Lands Act (OCSLA). It codifies federal control of the outer continental shelf (OCS) and provides comprehensive regulation of OCS oil and gas development. Congress, through appropriations bans, and the President, with authority granted in the OCSLA, have imposed moratoria on OCS development. One moratorium, imposed by President Clinton and in place until 2012, prevents leasing in OCS waters on the east and west coasts of the U.S., as well as in the eastern Gulf of Mexico off the coasts of Florida and Alabama. Congressionally imposed moratoria are similar. However, they are more broadly prohibit offshore leasing and all related activities, including pre-leasing.

• Legislative Developments: On December 10, 2006, Congress passed the Gulf of Mexico Energy Security Act of 2006, as part of the Tax Relief and Health Care Act of 2006. The legislation opens 8.5 million acres of natural gas and oil deposits in the Gulf of Mexico for exploration and drilling. It apportions 37.5 percent of federal royalties from future drilling to the four Gulf of Mexico states, Louisiana, Mississippi, Alabama and Texas. A portion of the revenue is dedicated to coastal restoration, hurricane protection and flood control projects in the states.