On April 27, 1981, the Department of the Interior (DOI) published the final notice of lease sale 53—the Santa Maria Basin off Central California. In the northern part of the basin are located 29 tracts (out of a total 111 offered) considered environmentally sensitive by many and politically explosive by all. As expected, the state of California sued the federal government and has twice prevailed. Consequently, the DOI appealed these earlier rulings to the Supreme Court and in January 1984 the Court ruled in favor of the DOI. This well publicized case(Watt v. California)represents a failure on the part of the Congress, the Reagan Administration, and the coastal states to reach an accord on the degree of state participation in the Outer Continental Shelf (OCS) development process. This article does not attempt to resolve this debate; rather, this paper presents the contrasting arguments in the U.S. government; and it illustrates how U.S. coastal policy is politicized and shaped from the national level.