REAYLEY, Circuit Judge:
Louisiana sued the United States and a federal lessee operating on the Outer Continental Shelf for violations of the Outer Continental Shelf Lands Act, 43 U.S.C. § 1331
et seq.
(1986), and an alleged policy agreement between Louisiana and the United States. The district court entered summary judgment for the United States and its lessee, 656 F.Supp. 1310. We affirm.
Pursuant to a federal lease, the Samedan Oil Corporation (“Samedan”) conducts an offshore drilling operation on federal Outer Continental Shelf (“OCS”) territory which borders the Louisiana offshore boundary. The leased federal tract is adjacent to state tracts leased by the Cashco Oil Company, the Seneca Resources Corporation and the Pelto Oil Company (collectively referred to as the “state lessees”).
The State of Louisiana sued the United States, the Secretary of the Interior (the “Secretary”), the Director of the Minerals Management Service (“MMS”) (collectively referred to as the “federal defendants”) and Samedan seeking declaratory and in-junctive relief in connection with Same-dan’s “imprudent and wasteful spacing, drilling, completion, and production practices” on its federal lease. Louisiana asserted that a common reservoir of natural gas underlay the federal/Louisiana border with 84% of the reserves located on Louisiana territory and 16% on the federal domain and that Samedan was draining state reserves and engaging in wasteful practices with the permission of the federal defendants.
The state raised three causes of action. First, it alleged that the federal defendants have a duty under 43 U.S.C. § 1337(g) (1986) to enter into a unitization agreement
with the Governor of Louisiana and sought a temporary restraining order and preliminary and permanent injunctions limiting Samedan’s production. It also sought preliminary and permanent injunctions directing the Secretary to engage in negotiations to achieve unitization with respect to Samedan’s lease and a declaratory judgment holding that the Secretary’s refusal to unitize violates § 1337(g).
Second, it alleged that the MMS is in violation of a 1975 policy agreement between Louisiana and the MMS and that the MMS is permitting Samedan to operate in violation of this agreement. Louisiana sought the same relief requested in its first cause of action with the exception of the desired declaratory judgment, which differed in that it sought a holding that the MMS was in violation of the policy agreement.
Louisiana’s third contention was that Samedan is violating Louisiana’s correlative rights by engaging in wasteful production practices and that the federal defendants are in violation of the Outer Continental Shelf Lands Act (“OCSLA”), 43 U.S.C. § 1331
et seq.,
by permitting these practices. It sought a temporary restraining order and preliminary and permanent injunctions limiting Samedan’s production to prevent waste.
The district court granted the state lessees’ motion to intervene as plaintiffs and the state lessees adopted the causes of action and relief sought by Louisiana. The court denied Louisiana’s motion for a preliminary injunction limiting Samedan’s production. The federal defendants and Same-dan separately moved for summary judgment and the federal defendants moved to
dismiss the section 1337(g) unitization claim under Fed.R.Civ.P. 12(b)(2). The court granted the motions for summary judgment as to all three causes of action and, after relabeling the 12(b)(2) motion to a motion under 12(b)(6), granted that motion as well.
This appeal is taken by Louisiana and the state lessees.
We hold that the Secretary has no duty to unitize under section 1337(g)(3) as amended, that the alleged policy agreement did not create legally enforceable rights and that no evidence is presented that Sam-edan engaged in wasteful practices. We therefore affirm the judgment below.
1. Unitization Under Section 1337(g) as Amended in 1986
Louisiana contends that section 8(g) of the OCSLA, 43 U.S.C. § 1337(g), as amended in 1986, requires the Secretary to engage in good faith negotiations with the Governor of Louisiana to achieve unitization of the federal and state tracts upon which Samedan and the state lessees operate. A brief review of the history of section 8(g) is in order.
In 1953, the Submerged Land Act, 43 U.S.C. § 1301
et seq.,
was passed giving coastal states the right and power to manage submerged lands adjoining their respective coasts. For most coastal states, including Louisiana, the grant extends seaward for three miles. The enactment of the OCSLA in 1953, 43 U.S.C. § 1331
et seq.,
authorized the Secretary of the Interior to issue oil, gas and other mineral leases for the submerged lands of the continental shelf, which begins where the states’ jurisdiction ends.
While these statutes established jurisdictional boundaries, they did not address the issue of drainage. Because oil and gas reserves can straddle the jurisdictional boundary, it is possible for the lessee of one government to drain the reserves located on the other government’s territory. Under the common law rule of capture, which we apply to the OCS,
the owner of land has the right to capture oil and gas underlying his property, including that which migrates to his property from another’s land.
In 1978, Congress amended the OCSLA, adding a new section 8(g), 43 U.S.C. 1337(g),
which specifically addressed the
administration of federal OCS lands situated between three and six miles offshore (the “8(g) zone”). Section 8(g) essentially established a scheme whereby revenues obtained by a federal lessee operating in the 8(g) zone would be shared in a fair and equitable manner by the federal government and the coastal state if a determination was made that a common field of oil or gas underlay federal and state territory so as to create a threat of drainage by the federal lessee.
Section 8(g)(1) required that the Secretary provide certain information to the Governor of the affected coastal state at the time that nominations were solicited for the leasing of lands in the 8(g) zone.
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REAYLEY, Circuit Judge:
Louisiana sued the United States and a federal lessee operating on the Outer Continental Shelf for violations of the Outer Continental Shelf Lands Act, 43 U.S.C. § 1331
et seq.
(1986), and an alleged policy agreement between Louisiana and the United States. The district court entered summary judgment for the United States and its lessee, 656 F.Supp. 1310. We affirm.
Pursuant to a federal lease, the Samedan Oil Corporation (“Samedan”) conducts an offshore drilling operation on federal Outer Continental Shelf (“OCS”) territory which borders the Louisiana offshore boundary. The leased federal tract is adjacent to state tracts leased by the Cashco Oil Company, the Seneca Resources Corporation and the Pelto Oil Company (collectively referred to as the “state lessees”).
The State of Louisiana sued the United States, the Secretary of the Interior (the “Secretary”), the Director of the Minerals Management Service (“MMS”) (collectively referred to as the “federal defendants”) and Samedan seeking declaratory and in-junctive relief in connection with Same-dan’s “imprudent and wasteful spacing, drilling, completion, and production practices” on its federal lease. Louisiana asserted that a common reservoir of natural gas underlay the federal/Louisiana border with 84% of the reserves located on Louisiana territory and 16% on the federal domain and that Samedan was draining state reserves and engaging in wasteful practices with the permission of the federal defendants.
The state raised three causes of action. First, it alleged that the federal defendants have a duty under 43 U.S.C. § 1337(g) (1986) to enter into a unitization agreement
with the Governor of Louisiana and sought a temporary restraining order and preliminary and permanent injunctions limiting Samedan’s production. It also sought preliminary and permanent injunctions directing the Secretary to engage in negotiations to achieve unitization with respect to Samedan’s lease and a declaratory judgment holding that the Secretary’s refusal to unitize violates § 1337(g).
Second, it alleged that the MMS is in violation of a 1975 policy agreement between Louisiana and the MMS and that the MMS is permitting Samedan to operate in violation of this agreement. Louisiana sought the same relief requested in its first cause of action with the exception of the desired declaratory judgment, which differed in that it sought a holding that the MMS was in violation of the policy agreement.
Louisiana’s third contention was that Samedan is violating Louisiana’s correlative rights by engaging in wasteful production practices and that the federal defendants are in violation of the Outer Continental Shelf Lands Act (“OCSLA”), 43 U.S.C. § 1331
et seq.,
by permitting these practices. It sought a temporary restraining order and preliminary and permanent injunctions limiting Samedan’s production to prevent waste.
The district court granted the state lessees’ motion to intervene as plaintiffs and the state lessees adopted the causes of action and relief sought by Louisiana. The court denied Louisiana’s motion for a preliminary injunction limiting Samedan’s production. The federal defendants and Same-dan separately moved for summary judgment and the federal defendants moved to
dismiss the section 1337(g) unitization claim under Fed.R.Civ.P. 12(b)(2). The court granted the motions for summary judgment as to all three causes of action and, after relabeling the 12(b)(2) motion to a motion under 12(b)(6), granted that motion as well.
This appeal is taken by Louisiana and the state lessees.
We hold that the Secretary has no duty to unitize under section 1337(g)(3) as amended, that the alleged policy agreement did not create legally enforceable rights and that no evidence is presented that Sam-edan engaged in wasteful practices. We therefore affirm the judgment below.
1. Unitization Under Section 1337(g) as Amended in 1986
Louisiana contends that section 8(g) of the OCSLA, 43 U.S.C. § 1337(g), as amended in 1986, requires the Secretary to engage in good faith negotiations with the Governor of Louisiana to achieve unitization of the federal and state tracts upon which Samedan and the state lessees operate. A brief review of the history of section 8(g) is in order.
In 1953, the Submerged Land Act, 43 U.S.C. § 1301
et seq.,
was passed giving coastal states the right and power to manage submerged lands adjoining their respective coasts. For most coastal states, including Louisiana, the grant extends seaward for three miles. The enactment of the OCSLA in 1953, 43 U.S.C. § 1331
et seq.,
authorized the Secretary of the Interior to issue oil, gas and other mineral leases for the submerged lands of the continental shelf, which begins where the states’ jurisdiction ends.
While these statutes established jurisdictional boundaries, they did not address the issue of drainage. Because oil and gas reserves can straddle the jurisdictional boundary, it is possible for the lessee of one government to drain the reserves located on the other government’s territory. Under the common law rule of capture, which we apply to the OCS,
the owner of land has the right to capture oil and gas underlying his property, including that which migrates to his property from another’s land.
In 1978, Congress amended the OCSLA, adding a new section 8(g), 43 U.S.C. 1337(g),
which specifically addressed the
administration of federal OCS lands situated between three and six miles offshore (the “8(g) zone”). Section 8(g) essentially established a scheme whereby revenues obtained by a federal lessee operating in the 8(g) zone would be shared in a fair and equitable manner by the federal government and the coastal state if a determination was made that a common field of oil or gas underlay federal and state territory so as to create a threat of drainage by the federal lessee.
Section 8(g)(1) required that the Secretary provide certain information to the Governor of the affected coastal state at the time that nominations were solicited for the leasing of lands in the 8(g) zone. Section 8(g)(2) provided that the Secretary inform the Governor of potential areas to be leased and that they consult to determine whether these areas may contain common fields of oil or gas. If an area potentially containing a common field was selected for development, the Secretary was required to offer the Governor the opportunity to enter an agreement concerning the disposition of revenues generated by the federal lessee to permit a fair and equitable division.
Under 8(g)(3) of the 1978 Act, the Governor had 90 days to determine whether to accept the agreement. If the Governor decided to decline the agreement, the Secretary could proceed with the leasing of the area, and under 8(g)(4), the Secretary was required to deposit bonuses, royalties and other revenues attributable to the lease in a separate treasury account until an agreement was reached or a United States District Court determined a fair and equitable disposition of the revenues.
That plan did not work. The Secretary and the governors of coastal states failed to reach agreement, resulting in a balance of $6.1 billion in special treasury accounts by 1986. H.R.Rep. No. 300, 99th Cong., 2d Sess. 547 (1985),
reprinted in
1986 U.S. Code Cong. & Admin.News at 1058. Litigation ensued over the proper allocation of these revenues, but none of these actions were ultimately resolved by the courts.
The two sides also failed to agree on the interpretation of § 8(g); the Secretary maintained that the sole purpose of § 8(g) was to compensate for drainage, and the states contended that § 8(g) not only included drainage but also compensation for onshore impacts of OCS development.
See State of Texas v. Secretary of the Interior,
580 F.Supp. 1197, 1222 (E.D.Tex.1984).
In 1986, Congress amended the OCSLA to obviate the litigation and disputes and to distribute the impounded revenues in the special Treasury accounts. Comprehensive
Omnibus Budget Reconciliation Act of 1985 (Outer Continental Shelf Lands Act Amendments of 1985), Pub.L.No. 99-272,100 Stat. 82, 147-51 (1986) (“1986 Amendments”). Louisiana received $572 million on October 1, 1986, together with 27 percent of deposited federal royalties derived from OCS lessees through September 30, 1985 with interest, and $84 million to be paid over a fifteen year period. 1986 Amendments § 8004(b)(1). The acceptance of a payment under this section satisfied and released all state claims against the United States arising under the 1978 version of section 8(g).
The 1986 amendments comprehensively revised section 8(g). The provisions
that required the Secretary to offer the Governor of an affected coastal state an opportunity to enter an agreement concerning the disposition of revenues generated from federal lessees, and to deposit these revenues in a separate Treasury account if no agreement was reached pending a fair and equitable disposition by court adjudication, were abolished. New section 8(g)(2) provides that 27 percent of “all bonuses, rents, and royalties, and all other revenues ... derived from any lease issued after September 18,1978” on federal land in the 8(g) zone be transmitted to the coastal state adjoining the federal land.
The coastal state receives this 27 percent regardless of whether federal lessees are draining resources from state territory. The remaining 73 percent is transmitted to the United States Treasury. Section 1332, which contains a congressional declaration of policy, was revised to include a new part (4)(B) (the old part (4)(B) was renumbered (4)(C)) which provides that the 27 percent received by states under new section 8(g)(2), “will provide affected coastal states and localities with funds which may be used for the mitigation of adverse economic and environmental effects related to the development of [OCS] resources.”
Section 8(g)(3)
, which is the focus of this litigation, was amended to provide that
the Secretary or the Governor of a coastal state
shall
notify the other if either determines that a common potentially hydrocarbon-bearing area may underlie the federal and state boundary and that the Secretary
shall
provide to the Governor notice of current and projected development in the area. Additionally, if the Secretary has, or intends to, lease the area, the Secretary and the Governor
may
enter into a unitization or other royalty sharing agreement, pursuant to existing law, to share the revenues from production. If no agreement is reached, the Secretary may proceed with the leasing of the area. If an agreement is reached, the revenue received by the federal government is subject to the 27-73 percent division set forth in section 8(g)(2). The wording of this new section does not require the Secretary to unitize or enter into a royalty sharing agreement with the Governor of an affected state.
Louisiana, however, contends that the amended statute compels the Secretary to enter into a unitization or other royalty sharing agreement. Louisiana argues that the word “may” in the phrase, “the Secretary and the Governor of the coastal State
may
enter into an agreement to divide the revenues from production of any common potentially hydrocarbon-bearing area, by unitization or other royalty sharing agreement, pursuant to existing law” (emphasis added), should be read to
require
the Secretary to negotiate either a unitization or other royalty sharing agreement. Louisiana views the permissive nature of the word “may” to permit the Secretary to choose the form of agreement but not to allow the Secretary to refuse to enter any agreement.
To reach this conclusion, Louisiana first argues that revenues derived from section 8(g)(2) do not compensate coastal states for drainage but only for onshore economic and environmental damage, and for the costs of development to the state’s infrastructure, such as roads and schools. Louisiana then argues that section 8(g)(3) is designed to address the drainage issue, and the meaning of this section, construed in the light of its legislative history, requires the Secretary to negotiate in good faith some form of agreement with the Governor of an affected coastal state when the possibility of drainage by a federal lessee exists.
We find no merit to Louisiana’s construction of section 8(g). Its interpretation is not supported by the congressional purpose which animated the 1986 amendments or by the plain meaning of section 8(g)(3). We decline to address Louisiana’s underlying contention that state revenues derived from section 8(g)(2) do not include drainage compensation because our interpretation of section 8(g)(3) makes resolution of that issue unnecessary. Congress contemplated that the Secretary and the Governors would attempt to allocate royalty or unitize production from common reservoirs, but no statutory consequences are provided in the event of failure — either to agree or attempt to agree. The states are assured of substantial compensation by section 8(g)(2).
The 1986 amendments were intended to permanently settle disputes over OCS revenues. Under the 1978 version of section 8(g), the Secretary and the Governors of coastal states were in constant disagreement concerning the fair and equitable disposition of OCS revenues, resulting in a $6.1 billion balance in special treasury accounts. The 27 percent allocation in the 1986 revision of section 8(g)(2) was designed to prevent future litigation on this issue. Senator Johnston, one of the sponsors, made this objective clear:
[T]he committee legislation settles the entire issue, and
thus avoids the inev
itable recurrence of future disputes over future 8(g) revenues....
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Although this legislation offers the States considerably less than they sought, we feel it is a fair and equitable resolution.
We believe this legislation will end current and future litigation over the 8(g) issue,
and by giving the States a small stake in revenues from a small area of the OCS, will actually spur OCS development.
131 Cong.Rec. S15,438 (daily ed. Nov. 14, 1985) (emphasis added). This intention was stated by other senators as well.
Congressional desire to eliminate litigation over OCS revenues is clearly reflected by the allocation to the states of 27 percent of all mineral revenues from federal lands, and by the abolition of the provisions requiring the negotiation of revenue sharing agreements and equitable dispositions by court decree of disputed revenues held in treasury escrow accounts. Louisiana’s construction of section 8(g)(3) would emasculate this clear congressional policy by engaging the courts in further litigation over revenue sharing and the determination of whether the Secretary has negotiated unitization agreements in good faith.
The plain meaning and legislative history of section 8(g)(3) also do not support Louisiana’s contention that the Secretary is compelled to enter a revenue sharing agreement. While the notification requirements of section 8(g)(3) are cast in mandatory language,
the revenue sharing provision is clearly permissive.
This language invests the Secretary with discretion to enter into agreements but does not require him to do so. The legislative history supports this interpretation.
Samedan’s liability on this cause of action is dependent upon a finding of liability against the federal defendants. The district court correctly granted the federal defendants’ and Samedan’s motions for summary judgment.
II. The Policy Agreement
As its second cause of action, Louisiana asserts that Samedan is violating, with the permission of the MMS, a 1975 policy agreement between the United States Geological Survey, the predecessor agency to the MMS, and the Louisiana State Mineral Board and Office of Conservation. This alleged agreement created a 4,000 foot buffer zone along the federal/state boundary (2,000 feet per side), set well spacing requirements within this
zone, provided for the exchange of drilling permits for wells authorized within the zone and provided that the party with the largest share of any unit formed within the zone would have the right to set the unit production rates. Louisiana asserts that this last provision implicitly incorporates a duty on behalf of the Secretary to negotiate unitization agreements in good faith.
Louisiana’s claim is groundless. The alleged agreement is evidenced by internal memoranda, labeled “tentative” and “unofficial,” generated by both parties and by a history of regulation consistent with the terms of this alleged agreement. The district court correctly found that the documents do not create legally enforceable rights either against the federal defendants, because they were never officially adopted, or against Samedan, because they were not published pursuant to the Administrative Procedure Act, 5 U.S.C. § 552(a)(1)(D) (1977).
We affirm the summary judgment against Louisiana’s claim on the policy agreement.
III. The Correlative Rights Claim
Louisiana contends that Samedan’s well spacing and production practices constitute waste and that this activity, along with Samedan’s drainage of state resources, violates Louisiana’s correlative rights. The state bases its correlative rights claim against Samedan on Louisiana and federal law. Under the OCSLA, Louisiana asserts, the Secretary has a duty to protect correlative rights threatened by its lessees and to unitize federal and state tracts where a violation exists.
Federal law determines our disposition of this issue, rendering the state’s claim under Louisiana law groundless. 43 U.S.C. § 1333(a)(1)(2);
see Rodrigue v. Aetna Casualty and Surety Co.,
395 U.S. 352, 356-57, 89 S.Ct. 1835, 1837-38, 23 L.Ed.2d 360 (1969). Section 1334(a) of the OCSLA provides that the Secretary shall prescribe certain rules and regulations and that
[t]he Secretary may at any time prescribe and amend such rules and regulations as he determines to be necessary and proper in order to provide for the prevention of waste and conservation of the natural resources of the outer Continental Shelf, and the protection of correlative rights therein....
Correlative rights “means the right of each lessee to be afforded an equal opportunity to explore for, develop, and produce, without waste, oil or gas, or both, from a common source.” 30 C.F.R. 250.2(i) (1986). The definition of correlative rights excludes claims for drainage losses and is consistent with the rule of capture. Therefore, Louisiana’s third cause of action is limited to an assertion that Samedan is committing waste which the federal defendants have an obligation to prevent through unitization.
The Director of the MMS is authorized to administer the rules and regulations promulgated by the Secretary. 30 C.F.R. 250.1 (1986). The Director has a duty to prevent waste of natural resources by federal lessees. 30 C.F.R. 250.11(a)(1) (1986).
This duty does not require the
Director to unitize to prevent waste;
the unitization regulations are cast in permissive language. 30 C.F.R. 250.51-1, 2 (1986). Other means of preventing waste are available.
The regulations define waste as:
(1) The physical waste of oil and gas; (2) the inefficient, excessive, or improper use of, or the unnecessary dissipation of, reservoir energy; (3) the locating, spacing, drilling, equipping, operating, or producing of any oil or gas well or wells in a manner which causes or tends to cause reduction in the quantity of oil or gas ultimately recoverable from a pool under prudent and proper operations or which causes or tends to cause unnecessary or excessive surface loss or destruction of oil or gas; and (4) the inefficient storage of oil.
30 C.F.R. 250.2(qq) (1986). Louisiana contends that Samedan’s well spacing and production practices tend to cause reduction in the quantity of gas ultimately recoverable.
Assuming that Louisiana or the state lessees would have a cause of action against the Director or Samedan because of waste, this record raises no issue to support such a claim. The closest Louisiana got to this issue was expert testimony given during the hearing on the state’s motion for a preliminary injunction that coordinated exploration might enhance the amount of hydrocarbons ultimately recovered. Against that suggestion was detailed proof by Samedan of prudent operations in accord with federal regulations and under substantial oversight by the MMS. We find no evidence of waste in the record and affirm the summary judgment.
The district court’s judgment is AFFIRMED.