Ask the Scholar

{
    "localId": "127539615",
    "label": "Deepwater Ports, 1974 (2)",
    "core": "doc",
    "dtoType": "document",
    "citationUrl": "https://catalog.archives.gov/id/127539615"
}

{
    "id": "127539615",
    "sourceUrl": "https://catalog.archives.gov/id/127539615",
    "contentType": "document",
    "title": "Deepwater Ports, 1974 (2)",
    "citationUrl": "https://catalog.archives.gov/id/127539615",
    "collections": [
        "Glenn R. Schleede Files",
        "Glenn Schleede's Subject Files"
    ],
    "subjects": [
        "Petroleum",
        "Legislation",
        "Waterways",
        "Continental shelf",
        "Pipelines"
    ],
    "iiifBase": "https://s3.us-east-1.amazonaws.com/NARAprodstorage/lz/presidential-libraries/ford/grf-0113/574699/127539615.pdf",
    "thumbnailUrl": "https://s3.us-east-1.amazonaws.com/NARAprodstorage/lz/presidential-libraries/ford/grf-0113/574699/127539615.pdf",
    "largeImageUrl": "https://s3.us-east-1.amazonaws.com/NARAprodstorage/lz/presidential-libraries/ford/grf-0113/574699/127539615.pdf",
    "imageCount": 1,
    "hasImages": true,
    "source": "import",
    "hasTranscription": false
}

{
    "url": "https://catalog.archives.gov/id/127539615",
    "naId": 127539615,
    "coverageEndDate": {
        "logicalDate": "1975-01-31",
        "month": 1,
        "year": 1975
    },
    "coverageStartDate": {
        "logicalDate": "1974-06-01",
        "month": 6,
        "year": 1974
    },
    "levelOfDescription": "fileUnit",
    "recordType": "description",
    "ocrSource": "nara-archive"
}

{
    "seq": 1,
    "pageIndex": 0,
    "type": "document",
    "url": "https://s3.us-east-1.amazonaws.com/NARAprodstorage/lz/presidential-libraries/ford/grf-0113/574699/127539615.pdf",
    "mediaId": "2f1560e8f5433b65",
    "ocrText": "The original documents are located in Box 8, folder \"Deepwater Ports, 1974 (2)\" of the\nGlenn R. Schleede Files, 1974 - 1977 at the Gerald R. Ford Presidential Library.\nCopyright Notice\nThe copyright law of the United States (Title 17, United States Code) governs the making of\nphotocopies or other reproductions of copyrighted material. Gerald Ford donated to the United\nStates of America his copyrights in all of his unpublished writings in National Archives collections.\nWorks prepared by U.S. Government employees as part of their official duties are in the public\ndomain. The copyrights to materials written by other individuals or organizations are presumed to\nremain with them. If you think any of the information displayed in the PDF is subject to a valid\ncopyright claim, please contact the Gerald R. Ford Presidential Library.\nDigitized from Box 8 of the Glenn R. Schleede Files, 1974 - 1977 at the Gerald R. Ford Presidential Library\n93d Congress\n2d Session\n}\nCOMMITTEE PRINT\nDEEPWATER PORT\nPOLICY ISSUES\nA STAFF ANALYSIS\nPREPARED AT THE REQUEST OF\nHENRY M. JACKSON, Chairman\nCOMMITTEE ON INTERIOR AND\nINSULAR AFFAIRS\nUNITED STATES SENATE\nPURSUANT TO\nS. Res. 45\nA NATIONAL FUELS AND ENERGY\nPOLICY STUDY\nSerial No. 93-42 (92-77)\nPrinted for the use of the\nCommittee on Interior and Insular Affairs\nU.S. GOVERNMENT PRINTING OFFICE\n24-935\nWASHINGTON : 1974\nFor sale by the Superintendent of Documents, U.S. Government Printing Office\nWashington, D.C., 20402 . Price $1.10\nFORD & LIBRARY GERALD\nSENATE RESOLUTION 45\nNATIONAL FUELS AND ENERGY POLICY STUDY\nThis publication is a background document for the National Fuels and Energy\nPolicy Study authorized by Senate Resolution 45, introduced by Senators\nJennings Randolph and Henry M. Jackson on February 4, 1971, and considered,\namended, and agreed to by the Senate on May 3, 1971.\nThe resolution authorized the Senate Interior and Insular Affairs Committee,\nand ex officio members of the Committees on Commerce and on Public Works and\nthe Joint Committee on Atomic Energy, to make a full and complete investigation\nand study of National Fuels and Energy Policies.\nSubsequently, on March 1, 1974, in the furtherance of the purposes of Senate\nResolution 45 (92d Congress), the Senate approved the addition of ex officio\nmembers from the Committees on Finance, on Foreign Relations, on Government\nOperations, and on Labor and Public Welfare, also.\nCOMMITTEE ON INTERIOR AND INSULAR AFFAIRS\nHENRY M. JACKSON, Washington, Chairman\nALAN BIBLE, Nevada\nPAULJ. FANNIN. Arizona\nFRANK CHURCH, Idaho\nCLIFFORD P. HANSEN, Wyoming\nLEE METCALF, Montana\nMARK 0. HATFIELD, Oregon\nJ. BENNETT JOHNSTON, JR., Louisiana\nJAMES L. BUCKLEY, New York\nJAMES ABOUREZK, South Dakota\nJAMES A. McCLURE, Idaho\nFLOYD K. HASKELL, Colorado\nDEWEY F. BARTLETT, Oklahoma\nGAYLORD NELSON, Wisconsin\nHOWARD M. METZENBAUM, Ohio\nJERRY T. VERKLER, Staff Director\nWILLIAM J. VAN NESS, Chief Counsel\nHARRISON LOESCH, Minority Counsel\nEx OFFICIO MEMBERS FOR NATIONAL FUELS AND ENERGY POLICY STUDY\nCommittee on\nSenators\nCOMMERCE\nWARREN G. MAGNUSON, Washington,\nChairman\nNORRIS COTTON, New Hampshire\nFINANCE\nRUSSELL B. LONG, Louisiana, Chairman\nWALLACE F. BENNETT, Utah\nFOREIGN RELATIONS\nCLAIBORNE PELL, Rhode Island\nCLIFFORD P. CASE, New Jersey\nGOVERNMENT OPERATIONS\nABRAHAM RIBICOFF, Connecticut\nCHARLES H. PERCY, Illinois\nLABOR AND PUBLIC WELFARE\nWILLIAM D. HATHAWAY, Maine\nPETER H. DOMINICK, Colorado\nPUBLIC WORKS\nJENNINGS RANDOLPH, West Virginia,\nChairman\nPETE V. DOMENICI, New Mexico\nATOMIC ENERGY [JOINT]\nJOSEPH M. MONTOYA, New Mexico\nHOWARD H. BAKER, JR., Tennessee\nWILLIAM J. VAN NESS, Chief Counsel\nGRENVILLE GARSIDE. Special Counsel and Study Coordinator\nRICHARD D. GRUNDY, Executive Secretary and Professional Staff\nDANIEL A. DREYFUS, Professional Staff and Engineering Consultant\nABLON R. TUSSING, Chief Economist\nGREGG ERICKSON, Staff Economist\nC. SUZANNE REED, Professional Staff Member\nDAVID STANG, Deputy Director for Minority\n(II)\nGERALD FORD LIBRARY\nMEMORANDUM OF THE CHAIRMAN\nTo Members and ex officio members of the Senate Committee on Interior\nand Insular Affairs' National Fuels and Energy Policy Study\n(S. Res. 45):\nThe advent of the supertanker has produced a corresponding need\nfor port facilities adequate to handle vessels of unprecedented size.\nAt the present time, the United States has no deepwater ports\ndesigned for this purpose. However, as our dependence on imported oil\ngrows, the possible use of supertankers to carry these imports becomes\nincreasingly significant.\nLegislation is now pending before the Congress which would\nauthorize the construction of deepwater ports under public or private\nsponsorship. Congressional action is required because most potential\ndeepwater port sites are outside U.S. territorial limits, where only\nthe Federal government can exercise authority.\nThe selection of sites for deepwater ports, their construction and\noperation raise a number of basic economic, environmental and\npolitical issues which should be carefully explored before Congress\ntakes final action on deepwater port legislation.\nWith this in mind, I have asked that this background paper on\nDeepwater Port Policy Issues be prepared for the use of Senators\nparticipating in the National Fuels and Energy Policy Study. The\npaper, which was prepared by C. Suzanne Reed of the Committee\nstaff, not only describes the relevant issues but also suggests the\npossible outlines of Federal deepwater port policy. I believe that all\nMembers of the Senate will find this analysis helpful in considering\nlegislation on this subject.\nHENRY M. JACKSON, Chairman.\n(III)\nFORD & LIBRARY GERALD\nCONTENTS\nPage\nMemorandum of the Chairman\nIII\nIntroduction\n1\nChapter 1.-Economics of supertankers\n3\nChapter 2.-Environmental impacts\n7\nChapter 3.-Secondary growth impacts\n11\nChapter 4.-Coastal State response\n17\nChapter 5.-The need for U.S. deepwater ports\n19\nChapter 6.-International and domestic legal implications\n25\nChapter 7.-Institutional aspects of deepwater ports\n35\nChapter 8.-Federal Government response\n43\nChapter 9.-Overview\n45\nAPPENDIXES\nAppendix A\nOffshore deepwater terminal designs\n57\nAppendix B\nExecutive communications\n59\nAppendix C\nUnited States of America: Draft articles for a chapter on the rights and\nduties of States in the coastal seabed economic area\n61\nAppendix D\nOnshore secondary impacts of deepwater terminal facility development\n65\nAppendix E\nLegislation before the Senate in the 93d Congress relating to the devel-\nopment of offshore deepwater ports\n91\nAppendix F\nAreas requiring futher investigation\n99\n(V)\nFORD is LIBRAR GERALD\n1\nDEEPWATER PORT POLICY ISSUES\nA Staff Analysis\nPREPARED BY\nC. SUZANNE REED\nProfessional Staff Member\nAT THE REQUEST OF\nSENATOR HENRY M. JACKSON, Chairman\nCOMMITTEE ON INTERIOR AND INSULAR AFFAIRS\nUNITED STATES SENATE\nPURSUANT TO S. RES. 45\nA NATIONAL FUELS AND ENERGY POLICY STUDY\nJULY 1974\n(VII)\nFORD LIBRARY s GERALD\nINTRODUCTION\nAs a nation which has become increasingly reliant on imported\npetroleum to meet national energy demands, the United States is now\nconfronted with several major policy decisions regarding current\ntrends in the world petroleum distribution and transportation system.\nIn 1972, petroleum supplied 46 percent of total U.S. energy demand.¹\nOf the 16.7 million barrels a day (MMB/D) of petroleum used in that\nyear, 4.7 MMB/D or 28 percent were imported from foreign sources.\nAs domestic energy demands continued to increase and domestic oil\nproduction declined, the volume of U.S. petroleum imports climbed\nuntil, in November, 1973, oil arriving from foreign sources amounted\nto over 7.1 MMB/D.²\nIn 1973 about one-fifth of U.S. petroleum imports was transported\noverland by pipeline from Canada, while the remaining four-fifths\nwere carried by tankers from foreign sources overseas.\nThe average size of tankers used to transport petroleum supplies\nto the United States is 30,000-35,000 deadweight tons (dwt).\nHowever, on a world scale the need to transport ever larger volumes\nof oil over long distances between petroleum producing and con-\nsuming nations has led to the development and increasing use of very\nlarge crude carriers (VLCC's) which range in size from 200,000 to\n500,000 deadweight tons.\nCommonly called \"supertankers\" these vessels can transport large\nvolumes of oil on a long haul voyage at a lower cost than tankers of\na smaller size.\nSupertankers require substantial water depths in order to maneuver,\nand many foreign nations have developed deepwater ports to accom-\nmodate the growing number of such vessels in use today. Deepwater\nports may be naturally deep or dredged areas close to shore, or they\nmay take the form of unloading structures located in naturally deep\nwaters some distance offshore.\nWhile there are several proposals to construct deepwater ports in\nthe United States, none has been built, primarily because a Federal\npolicy to authorize and regulate the construction, operation and use\nof such facilities does not yet exist.\nFurthermore, although there is still considerable interest in building\ndeepwater ports, changes in U.S. energy policy precipitated by the\nMiddle-East oil embargo of late 1973 and early 1974 have altered\nsome of the basic presumptions upon which plans to develop such\nfacilities in the United States were originally based.\nAs we enter a period of transition in national energy policies and\npractices, there is some question over the need for deepwater ports\nin the United States, as well as opposition to the adoption of a Federal\npolicy which would encourage their development. Before such mat-\nters can be resolved, several complex issues must be addressed.\n1 United States Petroleum Statistics, Independent Petroleum Association of America, 1973.\n3 on and Gas Journal, November 12, 1973.\n8 Deadweight ton identifies a ship's total carrying capacity including internal provisions at saltwater\nsummer load line immersion. Actual cargo capacity is slightly less. To derive approximate oil cargo capacity\nin barrels multiply the deadweight tonnage of a tanker by 7.4.\n(1)\nGERALD FORD LIBRARY\nCHAPTER 1.-ECONOMICS OF SUPERTANKERS\nSupertankers today represent a substantial portion of the total\ndeadweight ton capacity in the world tankship fleet, and their numbers\nand size continue to increase. While only 10 percent of the 4,336\nvessels operating in the world tankship fleet have capacities greater\nthan 100,000 dwt, they represent almost 40 percent of the fleet's\ntotal deadweight ton capacity. Of these vessels 276 are between 200,000\ndeadweight tons and 500,000 deadweight tons in size.\nThe average size of vessels under construction in world ship yards\nincreased from 116,300 deadweight tons in 1970 to 147,200 dead-\nweight tons in 1973. Of the 792 vessels under construction as of October,\n1973, 335 were in the 200,000-500,000 deadweight ton class range.\nNine vessels ranging from 225,000-265,000 deadweight tons are being\nconstructed in U.S. yards under the Merchant Marine subsidy pro-\ngram administered by the Maritime Administration. Additional\napplications to construct more than 50 tankers ranging up to 425,000\ndeadweight tons under the program have been received for 1974.\nIt is primarily the cost advantages of supertankers which have led to\ntheir increasing use in the world petroleum transporation system.\nThe costs per deadweight ton of building and operating supertankers\nare considerably less than for smaller tankers. According to a study\nprepared for the September 1973 Intersociety Transportation Con-\nference:\n***\nthe capital component in the cost of carrying oil\ndecreases as tanker size increases.\nThere are several reasons for the reduction in capital cost\nper deadweight ton. The hull weight does not increase pro-\nportionally with cargo capacity; furthermore, auxiliary\nequipment, pumps, and piping systems are relatively insensi-\ntive to size. Accommodation cost is a function of the ship's\ncomplement, and since manning is nearly constant for tankers\n50,000 to 500,000 dwt, this cost per deadweight ton also\ndecreases with an increase in tanker size.²\nThese economies of scale reduce the cost of transporting large\nvolumes of crude petroleum on a long-haul voyage.⁸ (See figure 1.)\n3 Porricelli, Joseph D. and Keith, Virgil, \"Tankers and the U.S. Energy Situation-An Economic and\nEnvironment Analysis.\" For presentation at the Intersociety Transportation Conference of the Inter-\nsociety Committee on Transportation, Sept. 24-27, 1973, p. 042. (Referred to hereafter as Porricelli and\nKeith). Total tanker transportation costs also depend on such variable factors as labor wages and allow-\nances; the costs of equipment and supplies for operation, maintenance and repair; and expenses for fuel,\ninsurance and tax. (For a more complete discussion of such factors see Porricelli and Keith, pp. 037-059.)\nWhile such costs may increase in the future, the Corps of Engineers U.S. Deepwater Port Study notes that\ncertain cost increases may be offset by new technological or engineering advances which could effectively\nreduce both tanker construction and operating expenses: and that such advances might well result in re-\nduced labor and crew requirements, efficiences in fuel utilization and reduced in-port, turnaround and in-\nballast time (Vol. V, pp. 149-156).\n3 There is little reason to expect that the transportation of petroleum products by supertankers will ever\nbecome an economically justifiable practice. The design specifications which would be required to carry a\nvariety of products aboard one vessel, or to pump a diversity of products through the same pipeline, and the\nneed to deliver various products among widely distributed destinations are all factors supporting this con-\ntention. Furthermore, if the United States remains dependent on such nearby foreign refining centers as the\nCaribbean or Canada, the relatively short distance between these locations and the United States would\noperate against the economic advantages of supertanker transportation which result in part from a long-haul\nvoyage.\n(3)\nFORD LIBRARY & GERALD\n4\nCOST PER\nBARREL OF OIL TRANSPORTED\n(DOLLARS)\n2.00\n1.50\n10,000 NAUTICAL MILES - ONE WAY\n$,500 NAUTICAL MILES\n5,000 NAUTICAL MILES\n1.00\n3,000 NAUTICAL MILES\n1,500 NAUTICAL MILES\n500 NAUTICAL MILES\n.50\no\nO\n100\n200\n300\n400\n500\n600\n700\n800\nVESSEL DEADWEIGHT TONS\n(THOUSANDS)\nSource: Cooke, Robert, Malara Concepts of Other Trans crtation 0: Petrolaum,\nAmerican Society - Methanical Engineera, August 2907.\nFIGURE 1.-The relationship between vessel size, transportation cost and route\nlength.\nIn the United States, where a growing reliance on more distant\nsources of petroleum supplies such as the Middle East has spurred\nsubstantial interest in transporting petroleum imports by supertanker,\nmajor oil ports are too shallow for supertankers to enter. Because there\nare no deepwater ports in the United States the transportation cost\nsaving which might be achieved by carrying oil imports in supertankers\nwill depend in part on the cost of building deepwater ports along U.S.\nshores.\nThe cost of building U.S. deepwater ports could range from $150\nmillion for a terminal buoy located in naturally deep water off the\ncoast and connected by pipeline to shore, to over $1 billion for dredging\nand maintaining a conventional harbor and channel system. The cost\nof other types of deepwater ports such as artificial islands or fixed piers\nfalls somewhere within this range depending on the complexity, size,\nlocation, and throughput of the facility envisioned.\nThe economic feasibility of building a deepwater port depends on\nmoving large volumes of oil through the facility on a sustained basis.\nEstimates of cost savings in petroleum transportation which could be\nrealized through deepwater port development in the United States\nrange from $0.02 to $0.50 per barrel of oil delivered depending upon\nthe size of the supertankers carrying the oil and on the size, location,\nthroughput and lifetime of the facility involved. Among all the various\ndeepwater port designs and locations evaluated, the lowest volume\nthroughput for which any facility would be feasible is 600,000 barrels of\noil a day.\nBased on oil import projections published before the Middle-East\noil-embargo which began in October of 1973, the Corps of Engineers\n4 See for example, statement of Dr. William Johnson, Energy Advisor to the Deputy Secretary of Treasury,\nHearings, before Senate Special Joint Subcommittee on Deepwater Ports Legislation, 93d Cong., 2d Sess.\nSerial No. 93-59.\nFORD i LIBRARY GERALD\n5\nU.S. Deepwater Port Study predicted that using supertankers to\ntransport U.S. oil imports instead of using the maximum size vessels\nnow able to enter U.S. ports could yield average annual cost savings\nas high as $1.7 billion by the year 2000. However, the study also states\nthat:\n\"The extent to which these savings would accrue to the\nU.S. economy and how they would be distributed within\nthe economy cannot be predicted with confidence.\" 5\nHistorically, tanker transportation costs have represented a small\nfraction of the price of finished petroleum products. Furthermore,\nwith recent increases in the cost of a barrel of oil, transportation costs\nhave even less influence on the final petroleum product price. The\nAmerican consumer could, therefore, expect little, if any, reduction\nin the price, for example, of a gallon of gasoline, to result from the use\nof supertankers and development of U.S. deepwater ports. Thus,\nrather than citing direct benefits to the consumer, those promoting\ndeepwater port development in the United States argue that super-\ntankers are environmentally as well as economically preferable to\ntankers of conventional size and that U.S. deepwater ports will\ngenerate a variety of secondary economic growth benefits in adjacent\ncoastal areas.\ns Corps of Engineers, U.S. Deepwater Port Study, Aug., 1972, Vol. 1, pg. 10.\nFORD LIBRARY & 0ERALD\nCHAPTER 2.-ENVIRONMENTAL IMPACTS\nMany sources have concluded that certain environmental advan-\ntages can result from using supertankers to transport petroleum\nsupplies. It is often pointed out that for a given level of imports the use\nof supertankers would reduce the risks of tanker groundings, collisions,\nand oil spills by reducing the number of ships operating in U.S.\nharbors and ports. For example, one Government source reports that:\nIn 1970 there were approximately 4,000 ship calls or\nunloadings to handle petroleum imports to the United States.\nThese ships averaged 30,000 dwt. If forecast 1985 imports\narrive in this same average ship size, traffic would increase to\napproximately 21,000 ship calls. If the ships averaged 80,000\ndwt, which is about the largest size currently handled by the\ndeeper U.S. ports, approximately 8,000 port calls would be\nrequired. If imports could arrive in a 320,000 dwt\nVLCC, total activity could be reduced to less than 2,500\nannual port calls each year. This assumes the increase in im-\nports can be brought in as crude oil to a refinery-such a\nreduction in ship calls does not appear practical if imports are\nbrought in as products to widely scattered terminals.¹\nOne analysis of tanker related oil spills based on U.S. Coast Guard\nstatistical data revealed that, from a viewpoint of tanker casualties\nand subsequent pollution, tankers larger than 80,000 dwt can trans-\nport a given quantity of oil over a given distance some seven times\nmore safely than tankers below 80,000 dwt.²\nIn spite of such findings however, there are some characteristics of\nsupertankers which pose particular problems for their operation and\nuse. The sheer length, beam, and draft of a supertanker require it\nto have a much greater maneuvering area and stopping distance than a\ntanker of conventional size. While a tanker of 60,000 dwt may be 731\nfeet long and 105 feet wide with a 43-foot draft, a 250,000 dwt tanker\nmay be 1,143 feet in length, 170 feet in width and draw almost 70 feet\nfully loaded. In addition, supertankers may carry 6 to 10 times as\nmuch oil as a tanker of conventional size, thus the potential for\nenvironmental damage from oil pollution in the event of a single\nsupertanker casualty far exceeds that presented by a tanker of smaller\ncapacity.³\nOffshore Deepwater Ports\nThe substantial water depths (70 to 100 feet) required for super-\ntankers to operate has thus far inhibited their use to transport petro-\n1 Porricelli and Keith, p. 086.\n3 Porricelli and Keith, pp. 072, 073.\n8 For example, a 250,000 dwt tanker may carry 1.8 million barrels of oil as compared to 440,000 barrels\nearried by tankers 60,000 dwt in size.\n(7)\nFORD\nGERALD\nLIBRARY\n8\nleum imports directly to U.S. ports. American ports located close to\nthe major petroleum import demand centers are too shallow to receive\ntankers larger than 80,000 dwt and most ports are restricted to tankers\nhalf that size.\nWhen tankers of greater size carry oil supplies destined for the\nU.S. market they may land their cargo at a nearby foreign deepwater\nport location such as the the Virgin Islands from which oil is trans-\nshipped by smaller tankers to U.S. ports. Alternatively, a large\ncapacity vessel may anchor in a deepwater location offshore and off-\nload its cargo to smaller barges and vessels until it has been sufficiently\nlightered to maneuver in shallow waters. The transportation cost and\nrisk of oil spills increases each time cargo is transferred, making\ntransshipment and lightering less desirable than shipping oil directly\nto U.S. ports.\nExisting channels, harbors, and ports could be dredged to depths\nsufficient for supertanker operations, a course pursued by some foreign\nnations and supported by some local U.S. port authorities. However,\nin many U.S. harbors, dredging would involve the removal and subse-\nquent disposal of as much as 35 feet of bottom material. Past experi-\nences with dredging in America and reports of foreign experience indi-\ncate that such operations are not only costly but can also be highly\ndamaging to the marine and coastal environment. In addition, as\npreviously discussed, there is substantial reason for concern over the\nrisks of operating supertankers close to shore.\nIt is generally agreed that offshore supertanker terminals offer the\ngreatest environmental as well as economic advantage of any deep-\nwater port design.\nThere is a wide range of offshore terminal designs.⁴ However, the\none which appears to be most widely used and which has been pro-\nposed for installation off U.S. shores, is a monobuoy structure known\nas the single point mooring buoy (SPM).\nAt over one hundred foreign locations, monobuoys are used to load\nand unload supertankers with reported success. Such facilities usually\nconsist of pumping buoys which are anchored to the ocean bottom\nand feed into a submarine pipeline connected to shore.\nOne advantage of this type of facility is that locating supertanker\nterminals offshore reduces tanker casualty risks. U.S. Coast Guard\nfigures reveal that tanker accidents such as collisions, rarely occur on\nthe open sea. Rather, ship oil spills generally occur in near-shore areas\nwhere traffic congestion is the heaviest and, where the maneuvering\nof ships is restricted by narrow winding channels.⁵\nAs illustrated in Table 1, comparing the incidents of oil pollution\nwhich might result from importing a given volume of crude oil using\nsupertankers and offshore deepwater ports as opposed to conventional\ntankers and ports demonstrates that over a 20-year period, 80,000 dwt\ntankers using inner-harbor terminals would have a greater number of\noil spills resulting in a higher total loss of crude oil than 250,000 dwt\ntankers using offshore terminals.\n6 See Appendix A.\n5 Porricelli and Keith, p. 087.\nFORD LIBRARY & GERALD\n9\nTABLE 1.-COMPARATIVE TANKER CASUALTIES OVER 20 YEARS\nAssumptions:\nThroughput of 2 million barrels per day in both cases.\nCase 1=0il transported to conventional ports in tankers averaging 50,000 deadweight tons (DWT).\nCase 2-Oil transported to offshore terminals in supertankers averaging 250,000 deadweight tons; transshipment to\nshore via pipelines.\nNumber of incidents\nNumber of tons of oil spilled\nRange of spills (in long tons)\nCase 1\nCase 2\nCase 1\nCase 2\nto 150\n24.0\n3.0\n1,680.0\n186.0\n151 to 500\n8.5\n.65\n3,306.5\n250.3\n501 to 3,000\n3.8\n.44\n4,674.0\n514.8\n3,001 to 14,000\n1.4\n.21\n11,144.0\n1,577.1\n14, 000+\n.17\n8,364.0\nTotal\n37.87\n4.3\n29,168.5\n2,528.2\nSource: Council on Environmental Quality.\nWhile emphasizing the benefits of reduced tanker traffic, those\npromoting offshore deepwater port concepts state that the use of such\nfacilities to receive supertanker-borne petroleum imports would also\nreduce the potential for oil spill related damage in coastline areas. For\nexample, the U.S. Army Corps of Engineers has commented that:\nEstuaries and coastal wetlands are the most biologically\nproductive areas of the marine ecosystem, also the most sen-\nsitive to damage from construction and oil spill effects. At\ninshore sites, such damage would be unavoidable. At off-\nshore sites, however, construction effects are minimized and\nthe probability that spilled oil will enter sensitive estuarial\nareas is much reduced. In addition, the weathering of oil\nthat could take place in route to an estuarine area would\ntend to remove the most immediately toxic and lethal frac-\ntions of the oil. The consensus of the researchers was that\nfar offshore locations minimized the potential for environ-\nmental damage.⁷\nAccording to those favoring the development of offshore deepwater\nports an added factor in their favor is that, as currently proposed for\nthe United States, the transfer of oil cargo from terminal to shore\nwould be accomplished by means of underwater pipeline rather than\nby transshipment vessels. A U.S. Department of Commerce report on\noffshore terminal facilities concluded:\nThe most desirable type of connection between an offshore\npetroleum terminal and onshore refineries, from the economic\nand environmental points of view, is a pipeline. Because\nthere would be no vessels involved, the risk of pollution\nfrom ship grounding, collision, and cargo transfer would not\nexist. Generally there would be considerably less handling\nof the oil, with no need for onshore refinery marine terminals,\nhence less pollution risk.⁸\nOther discussions of pipeline connections between offshore terminals\nand land-based facilities emphasize that waterbottom disturbance\nT \"North Atlantic Regional Study, Preliminary Report\", pg. 24.\n# Offshore Terminal Systems Concepts, Soros Associates, Inc. U.S. Dept. of Commerce, September 1972,\nvol. 2, p. 4.\n24-935-74-2\nGERNLO FORD LIBRARY\n10\ncaused by laying a pipeline would be neither permanent nor severe\nand that the possible risks of oil discharge from pipeline damage would\nbe reduced by burying the pipeline beneath the ocean floor. In this\nregard, Porricelli and Keith state:\nExtensive experience has shown pipelines to be relatively\nsafe. According to data published by the Corps of Engineers,\n95 percent of the underwater pipeline spills which occurred\nduring the interval of 1967 and 1972 were caused by ships'\nanchors damaging the line. The Corps concluded that burying\nthe pipeline would definitely mitigate these accidents and that\npipelines not damaged in this manner operate with spill rates\nless than half a barrel per million barrels throughput.\nIn spite of these findings some environmentally concerned individ-\nuals and groups count as severe the permanent disturbance and\ndestruction of wetlands, wildlife habitats, and other coastal environ-\nments caused by connecting pipelines to storage and transfer facilities\nonshore. Furthermore, pipelines connecting offshore terminals to shore\nwill be of a type and size not widely used in the United States. Dis-\nsatisfaction with the U.S. Government's current pipeline monitoring\ncapabilities have led some to question unflinching assertions of pipe-\nline safety.\nIn general, however, industry has reported highly favorable results\nwith the use of offshore monobuoy structures. According to owners\nand operators, the structures have handled large volumes of oil with\nrelatively few operational difficulties or damage to the environment.¹⁰\nTerminal owners and operators have, however, recognized the need to\nresolve problems resulting from both tanker and terminal equipment\ndesigns and practices. These problems have stimulated the industry\nto establish the Single-Point Mooring Forum, under the auspices of\nthe Oil Companies International Marine Forum, in an effort to im-\nprove tanker mooring and cargo transfer engineering and operation\npractices.\nContinuous efforts to improve the design, construction and operation\nof tankers, and of navigation and related petroleum transportation\nsystems can prevent many of the adverse impacts associated with\nwaterborne movements of petroleum. Such improvements will be\nrequired on both the domestic and international front regardless of\nwhat policy the United States adopts toward the development of\ndeepwater ports or of the size of tankers used to import U.S. petroleum\nsupplies.\n9 Pg. 094.\n10 Mascenik, John, \"Offshore Deepwater Crude-Oil Terminals.\" Oil and Gas Journal, vol. 21, pp. 91-110,\nMarch 5, 1973. In addition to industry reports Porricelli and Keith state that: \"A common ecological mis-\ngiving that is attributed to monobuoys is that a monobuoy as opposed to an offshore island or structure\nhas no facility such as a boom to contain small spills in light seas. This is in fact true. However, the spill\nrate associated with monobuoys does not support this concern. Moreover, portable booms could be deployed\nunder favorable weather conditions\" (p. 003).\nIn contrast, however, a National Science Foundation funded technology assessment of outer continental\nshelf oil and gas operations reported that, \"There was no effective capability for containing and cleaning up\noil on the OCS before Union's blowout at Santa Barbara, California. Subsequent crash efforts by industry\nand government have produced only limited capability even now. In fact, wave heights, wind velocities, and\ncurrents on much of the U.S. OCS exceed designed capabilities at least a third of the time.\n\"Containment and clean-up on the OCS itself may be an illusory goal since, as a practical matter, there is\nan upper limit on sea conditions beyond which neither is possible. Although the primary effort should be to\nprevent accidents. it will never be possible to prevent all accidents and there must be some adequate means\nfor responding when an accident does occur. Consequently, efforts should continue to be made to improve\nthe performance of containment and clean-up devices. However, the primary development effort should\nbe to achieve a capability to deal effectively with oil spills which threaten to come ashore.\" (Emphasis sup-\nplied.) Energy Under the Oceans: A Summary Report of a Technology Assessment of OCS Oil and Gas Opera-\ntions. University of Oklahoma, 1973, pg. 13.\nFORD\nGERALD\nLIBRARY\nCHAPTER 3.-SECONDARY GROWTH IMPACTS\nDeepwater port development is commonly associated with both\nbeneficial economic, and adverse environmental secondary growth im-\npacts. However, it is important to emphasize that the impacts of\npetroleum transportation, processing and distribution activities will\nincrease as a result of the overall increase in total energy demand and\nuse nationally, and may not properly be attributed solely to construct-\ning U.S. deepwater ports. Nevertheless, a number of sources agree\nthat, in the absence of specific controls, deepwater port development\ncould cause a concentration of such impacts to occur. In areas which\nhave already experienced significant industrial development, the in-\ncremental burdens placed on the environment by land requirements\nand effluents associated with petroleum-related industrialization could\nbe particularly severe.\nAccording to the Department of the Interior:\n16*\n* * location of deepwater port facilities in areas where\nthere are existing refineries and petrochemical industries\nmight only initially require expansion of existing storage,\nhandling, and refining facilities to process the incoming\ncrude. The essence of the situation lies in the fact that\neven minor incremental refinery production could add pollut-\nants to an environment that may already be stressed to its\nlimits by previous industrial and commercial activity. For\nexample, concentration of a high level of oil imports through\none site in the highly developed and densely populated Mid-\nAtlantic area could be expected to result in significant\nenvironmental impacts.¹\nPetroleum related industrialization generated by a deepwater port\nmay increase employment and yield additional revenues and other\neconomic benefits in some areas. However, the anticipated environ-\nmental impacts of such growth include:\n1. Increased land requirements for petroleum storage facility,\nrefinery, and petrochemical industry sites;\n2. Degradation and despoilation of wetlands, estuarine areas,\nwildlife habitats and recreation values;\n3. Increased burdens on water supply from both industrial\nand residential growth;\n4. Increased industrial and municipal discharge of polluting\neffluents into waterways and a subsequent decline in water\nquality;\n5. Increased polluting emissions into atmosphere and subse-\nquent decline of air quality;\n6. Increased pressures for land development to provide\nroadways, housing, and municipal services such as schools and\n1 U.S. Department of the Interior, Draft Environmental Impact Statement: Deepwater Ports, June 1973,\npp. IV-87.\n(11)\nFORD LIBRARY s GERALD\n12\nhospitals to accommodate population increases induced by\nindustrial growth.\nThe estimated magnitude of secondary growth impacts varies from\nsource to source and depending upon the locality and basic assump-\ntions under which impacts are assessed. For example, the Council on\nEnvironmental Quality projected secondary growth impacts of various\ndeepwater port locations at different levels of imports as indicated in\nFigures 2, 3, and 4.2\n1985\n2000\n2\nLeyand:\nEmployment\n(1970 7,425,0001\nBaseline Growth\n//////\nBaseline plus Low Option\n1985\n2000\n1985\n2000\nBaseline plusHigh Option\nIncome\n2\n(1970 $81,576 million dollars)\n1905\n2000\n1985\n2000\nPer Capita Income 2\n(1970 $4,160 dollars)\nNAME\n1985\n2000\n1985\n2000\nPopulation\n2\n/////////////////////////\n(1970 19,510,000)\n(ves\n2000\n1905\n2000\n2\nPopulation Density\n(1970 355 residents/square mile)\n1985\n2000\n192\n2000\n1905\n2000\nWater\n2000\n(1970 4,240 million gellons/day)\n2000\n1945\n2000\n1905\n2000\n1915\n7000\n3941\nWater Pollution³ (aco)⁵\n2600\n19#5\n2000\n(1970 - 1,010,000 pounds/day)\nIVES\n2000\n1905\n2000\n1985 2000\nLand Use\n3\n'1970 - 1,300,000 acres developed\n///////\n1985 2000\n2\n3\n4\n5\n0\n,\nGrowth Multiple\nTotal Import includes premary, supplier and inducad,\n2\nEntire Mid Atlantic (legian,\n3Partsming to the Mul Allantic Bell companed of new thein Delaware, essern Pennsylvania, and nurthers, contral, and southern New Jersey,\n\"Fresinater equival.nt.\nUpper of law pairs James full explication of advanced waste treatment sufficient to meet 1903 effivent standards\nFort available\"). lower of bar paids assumes full application of \"bost practical technology (1977 standards).\n6 issumes full secondary treatment (\"best practical\") by 1970.\nSource: Arthur D. Little, Inc.\nFIGURE 2.-Mid-Atlantic region 1985/2000: Selected measures of estimated\ntotal relative refinery and petrochemical-based economic and environmental\nimpacts.\n3 Potential Onshore effects of Deepwater Oil-Terminal Related Industrial Development, Report to the Council\non Environmental Quality by Arthur D. Little, Inc., Vol. 1, pp. 1-26, 1-43, 1-51 (1973).\nFORD LIBRARY i GERALD\n13\n1985\nmoo\nLegard:\nReseling\nGrand?\nEmployerent\nFIRES 1,771,000\n/////////////\n1111.\nBinefine Granch with Law Option Reduction\nUniver Cometh with lingh\n198%\n[\n$1370 $11,120 million dellars)\n2090\n1985\n2020\nPM Cente Income³\n$1970 $3,055 dollars)\nPropertion3\n6:978 3,641,0001\n1995\nzone\nPepulation\nDenity\n$1970 81 rewdents/square mile)\n////////////\n2000\n1985\n7000\n2000\nWater\n$1370 1,072 million gallens/Jay)\n2000\n7500\n1985\n7689\nWater\nPollution\n7\n254,700\nUI,\nIDS\n1985\n2000\nLand\n$1970 555,000 service developed\n2\n1\n4\n5\n6\nGreath Multip's\nSTatel Impact includes primary. supplier and infored\nBACKETTES - department revenued at any for - alrong the Golf\nSTatal State\nLeursuns GuM Coast,\nSpresh\nwater\nof has - full stum of of naste speciment with was In man 1983 citizens standards,\nl'beat\navailable\nE\n-\nml\nbe\nmain\nI\nlast\nagainst\nof\nhas\nle\na\nincluding\n11977\nAssume\n1\nless\n&\n19/0\nSource: Arthur D. Little, Inc\nFIGURE 3.-Louisiana: 1985/2000: Selected measures of estimated total\nrelative refinery and petrochemical-based economic and environmental impacts.\nThe justifiability of expectations that secondary growth and land-\nside environmental impacts will result from the development of\ndeepwater ports has been supported by several other Government\nand independent studies.³ Most sources agree that while not necessarily\nrequired from a technological point of view, there is significant\neconomic incentive to locate petroleum transportation, processing\nand related facilities in areas where such facilities or access to such\nfacilities already exist. Without certain institutional controls to\nencourage dispersion of deepwater ports and related industrialization,\nmany foresee a tendency for these patterns of development to intensify\nand increase as deepwater ports become incorporated into the petro-\nleum supply and distribution system.\nSuitable controls might be designed so that inland demand centers\nare supplied by pipeline with crude oil rather than with products\n3 For a more complete discussion of secondary growth impacts see Appendix D.\nFORD\n&\nGERALD\nLIBRARY\n14\n1285\nLegend:\nBaseline Growth\n(1970-4,247,000)\n//////\nBestme with Luar Option Reduction\n1755\nBowling with High Cption\n1111\nIncome\n11970 39,469 million dollars)\nYes\nCapita\n$1970 $3,525\n///////////\nPapulation³\n11970 11,197,000)\n//////////////\n1985\n7000\nPopulation Density\n3\n(1970 43 residents/square miles\n<<<<<<<<<<<<<<<<<<<<<<<<<\nWater\n4,5,6\n(1970 2,200 million gellons/day)\n1995\nrone\n1985\n8.8\nWater\nPollution\n(SOD)\n(1970 $14,600 pounds/day)\n1/1.\n2004\n1985\nLand Use\n<<<<<<<<<<<<\n11070 $10,000 acres developed)\nI\nTotal impart includes primary, and\nGrowth Mutriple\n-\n-\ndesponsible\nterminal\nat\nany\nlocation\nthe\nGull,\n3state\nintel,\nTran\nfinall\nCard\nregina,\n-\nrepolvations\nSuppre of Pater unles insures full application of trgatment difficult to must 1203 - standards\nThest - of the pairs first of \"Trest Instructions (1977 standard\nAssumes full promitely transmone (bese in 1370.\nSource: Arthur D. Little, Inc.\nFIGURE 4.-Texas: 1985/2000: Selected measures of estimated total relative\nrefinery and petrochemical-based economic and environmental impacts.\nrefined at locations nearby a deepwater port, thus encouraging the\ndevelopment of refineries and petrochemical industries away from land\nareas adjacent to terminal sites.\nFor example, the results of a U.S. Department of Transportation\nstudy suggest that refining deepwater port throughput at inland sites\nwould be tenable and perhaps even preferable, from an economic point\nof view.\nDOT investigations led them to conclude that:\nIn terms of transportation costs, refinery location is a\nsignificant factor affecting the least cost superport location.\nHowever, superport location does not affect the least cost refinery\nlocation. (Emphasis added)\nThe transportation cost savings offshore attributable to\na superport can be more than offset by the dissaving due\nto uneconomical location of refineries.⁴\n4 Hearings, Senate Special Joint Subcommittee on Deepwater Ports Legislation, 93d Cong., 2d Sess.,\nBerial No. 93-59.\nFORD & LIBRARY GERALD\n15\nWhile current industry proposals call for the development of\ndeepwater ports with throughputs as high as 3 or 4 million barrels\nper day, economic analysis has demonstrated that a reasonable rate\nof return could be realized by operating terminals at a much lower\nthroughput capacity of around 1 million barrels per day.⁵ It might\ntherefore, be feasible to limit the throughput allowed at any one ter-\nminal. Such action would operate to reduce pressure for refinery and\npetrochemical industrial development in the adjacent land area.\nAt high U.S. crude oil import levels, throughput limitations or\nother dispersion policies could result in locating deepwater ports\nadjacent to areas which have not previously experienced either\nextensive port or refinery and petrochemical industrial development\nand which would benefit most from economic growth.\nAlthough it has been argued that the secondary economic benefits\nof deepwater port development outweigh the risks of adverse secondary\nenvironmental impacts, some studies of the secondary economic\nimpacts of deepwater port development suggest that the cost of\nproviding additional public services required by accelerated growth\nmay, in some cases, render the relative benefits of new industrialization\nto State and local governments only marginal. Conceivably this could\nreduce the incentive for a State to welcome deepwater port develop-\nment off its shores. In this regard many States have been actively\nseeking the establishment of adequate environmental and economic\nsafeguards at the Federal level and assurances that State interests\nwill be given full consideration in any federally administered deepwater\nport licensing and regulation program.\nFurthermore, in light of a developing concern for improved protec-\ntion and management of the coastal zone, industry proposals to con-\nstruct offshore deepwater ports have prompted many coastal States\nto enact legislation which will significantly influence the future of\nsuch development in the United States.\n5 Dr. William Johnson, Hearings before Senate Special Joint Subcommittee on Deepwater Ports, 93d Cong.,\n2d Sess., Serial No. 93-59.\nGERALD FORD LIBRARY\nCHAPTER 4.-COASTAL STATE RESPONSE\nIn general, the Gulf Coast States favor deepwater port development\nand hope to benefit from the associated secondary growth impacts.\nMost attractive to these States is the anticipated increase in em-\nployment and revenue generated by refineries and petrochemical\nindustries which may locate onshore to process crude oil moving\nthrough an offshore terminal. The prospect of such benefits has resulted\nin the establishment of the Offshore Terminal Commission in Texas\nand the Deep Draft Harbor and Terminal Authority in Louisiana.\nThe States of Mississippi and Alabama have joined forces to create\nthe Ameraport Corporation and are seeking to formalize their activities\npursuant to a Federally approved interstate compact. While such\nentities vary with respect to organization and statutory authority,\neach has as its objective to promote the development of a deepwater\nport off its parent State's shores.\nIn the course of evaluating and formulating policies toward deep-\nwater port development, these States have conducted numerous studies\nto assess potential port-generated economic and environmental im-\npacts. In most cases such studies have concluded that substantial\neconomic benefits will accrue to the States if environmental and\nsecondary growth impacts can be effectively controlled. Some State\nauthorities view public ownership of deepwater ports as the only\nmeans of exercising such control. This belief has led the Texas\nOffshore Terminal Commission to propose building a State-owned\ndeepwater port in order to guarantee that the facility will be regulated\nin a manner fully consonant with State interests.¹ As a corollary to\nefforts promoting deepwater port development, Gulf Coast States\nhave also strengthened their coastal zone management and environ-\nmental protection laws.\nOn the East Coast, environmental quality is of primary concern and\nthere is considerable opposition to refinery siting and petrochemical\nindustrial development. Strong coastal zone protection laws with the\neffect of prohibiting or severely limiting the development of deep-\nwater ports have been proposed or enacted in several Northeastern\nStates, including Delaware, New Jersey, and Maine.\nNevertheless, Atlantic Coast States have continued to assess the\npotential benefits of offshore deepwater ports. Maine is currently\nweighing the possible economic growth advantages of a supertanker\nterminal and refinery siting proposal against its potential adverse en-\nvironmental impacts. Delaware has completed a study considering the\npossibility of constructing a State-controlled deepwater port offshore\nto eliminate the need for lightering operations and the risks of oil\npollution in the Delaware Bay. New Jersey is considering legislation to\ncreate a State agency which would build, own and operate a deepwater\nport. In spite of such proposals public opposition to deepwater ports and\n1 Texas Offshore Terminal Commission, Plan for Development of a Texas Deepwater Terminal, Jan. 24, 1974.\n(17)\nFORD LIBRARY & GERALD\n18\nrelated industrial expansions along the Atlantic Coast will most likely\nremain strong enough to block or substantially delay any such develop-\nment.\nOn the West Coast expectations are that shipments of Alaska\nNorth Slope oil will require accommodations for tankers ranging up to\n150,000 dwt at three main ports; Puget Sound, San Francisco, and\nLos Angeles/Long Beach. Unlike the Gulf and Atlantic Coasts, some\nof the major West Coast port complexes are not constrained from re-\nceiving deep draft tankers by insufficient water depths. While a 150,000\ndwt tanker is not properly classified as a \"supertanker\" it is capable of\nearrying close to 900,000 barrels of oil in one haul. Officials and resi-\ndents of West Coast States have begun to express concern over having\nthese tankers operating close to shore. There is, therefore, growing sup-\nport for building deepwater ports offshore along the West Coast to\nreceive tankers carrying Alaskan oil.\nThe pressures of increasing petroleum transportation activities on\nthe West Coast have also resulted in accelerated efforts to improve\nvessel traffic monitoring and control systems. Such efforts are in addi-\ntion to those promoting the enactment and implementation of coastal\nzone management and protection, and land-use planning programs.²\nResponding in particular to West Coast concerns, the Congress, in\n1973, acted to provide safeguards against possible adverse impacts of\nmoving large volumes of Alaskan oil in coastwise trade. Thus, the\nmeasure authorizing the Trans-Alaskan Pipeline 3 accelerated the\ndeadline, as applied to vessels in coastwise trade, by which the U.S.\nCoast Guard would exercise its authority under the Ports and Water-\nways Safety Act of 1972 4 to require marine transport safeguards such\nas advanced communication and traffic control systems, double\nbottoms and segregated ballast.\nIn general, deepwater port development on the West Coast will\nhinge on the movement of oil from the Trans-Alaska pipeline.\nEven though deepwater ports could be developed at nearshore loca-\ntions, growing sentiment on the West Coast appears to favor deep-\nwater port development offshore.\n2 California, for example, has enacted the Coastal Zone Conservation Act which established planning\nstandards and strict regulation over all development in the State's Coastal zone. The San Francisco Bay\nConservation and Development Commission has also been established to regulate non-marine related\ndevelopment activities.\n$ PL 93-153.\n4 33 U.S.C. 1321-1322.\nFORD LIBRAR i GERALD\nCHAPTER 5.-THE NEED FOR U.S. DEEPWATER PORTS\nWhen deepwater port development was first proposed in the United\nStates, the need for such facilities was based on projections of un-\nprecedented increases in United States petroleum import demands.\nAccordingly, industry and government sources associated a failure to\nbuild deepwater ports in the United States with excessive petroleum\ntransportation costs, the exportation of refinery capacity, loss of\nemployment and revenue, adverse impact on U.S. balance of pay-\nments, and congestion of U.S. port and harbor facilities accompanied\nby increasing risks of environmental degradation.\nThe argument for deepwater port development has lost some force\nover the last year as changes in national policies and programs reflect\na growing concern for reducing U.S. reliance on imported petroleum\nsupplies. Some opponents of deepwater port development have even\nsuggested that there is no longer a need for U.S. deepwater ports and\nthat a Federal program authorizing their development might inhibit\nthe achievement of newly established energy policy goals by creating\nan infrastructure wholly dependent on the continuation of petroleum\nimports. There are two reasons why, however, considerable interest in\ndeepwater port development continues in the United States.\nFirst, according to current plans, oil produced on Alaska's North\nSlope will be carried to West Coast ports by tankers ranging up\nto the 150,000 dwt class. While a 150,000 dwt tanker is not properly\nconsidered a \"supertanker,\" it can carry close to 900,000 barrels of oil.\nEven though ports on the West Coast are deep enough to accommo-\ndate 150,000 dwt tankers, officials and residents of West Coast States\nhave expressed growing concern over unloading large volumes of oil\nclose to shore. There is a popular view on the West Coast that offshore\ndeepwater ports should be used to unload oil transported from the\nAlaskan North Slope.\nSecond, although future U.S. demand for petroleum imports will\ndepend on several highly variable and unpredictable factors including\nthe success of efforts to promote energy conservation and curtail\ngrowth in energy demand, and to develop domestic energy supplies\nincluding alternative energy forms, such demands will probably\nremain high at least through the next decade. This would be a long\nenough period to allow the owners of a deepwater port to recover\ntheir original investment in the facility.\nIt is assumed, in spite of the political uncertainties involved, that\nimported petroleum supplies will originate from the Middle East\nwhere over 80% of proven world petroleum reserves are located. If\ndemand for petroleum imports remains high then the United States\ncould recognize significant environmental and economic advantages if\nimports from the Middle East could be transported directly to U.S.\ndeepwater ports as crude petroleum rather than being shipped as\nrefined products from nearby foreign refining centers.¹ The number of\n1 As stated previously, the cost dvantages of supertankers depend on transporting large volumes of crude\npetroleum over long distances. The transshipment of products from nearby foreign refining sites is more\ncostly than shipping crude oil directly to the United States. In addition the greater number of ships required\nand the added disadvantage that petroleum products are considered more toxic to the environment than\ncrude petroleum make transshipment of products less desirable than the transportation of crude petroleum\nby supertankers from an environmental point of view.\n(19)\nFORD\n&\nGERALD\nLIBRARY\n20\nU.S. deepwater ports which may be required depends on such factors\nas overall national energy demand, the availability of domestic energy\nsupplies and the growth in U.S. refinery capacity.\nNATIONAL ENERGY DEMAND\nAlthough projections about the level of growth in national energy\ndemand varied, there was little dispute prior to the Middle East oil\nembargo which began on October 17, 1973, that demand for petroleum\nproducts in the United States would at least double over the next\ndecade. Energy forecasters predicted that petroleum import demands\nwould, therefore, double by 1980, and that a major portion of these\nimports would be crude oil from the Middle East.\nFor the year preceding the Middle East oil embargo, it appeared\nthat such projections would probably prove correct as patterns of U.S.\nenergy consumption demonstrated a rapid growth in oil import levels\nand a shift towards greater reliance on Middle East oil supplies. For\nexample, in 1972 major sources of U.S. crude oil imports were Mideast/\nAfrica (867.7 thousand barrels per day (MB/D)), Canada (854.4\nMB/D), and Latin America/Caribbean (501.5 MB/D). By September\nof 1973 the average annual totals of crude petroleum imports by major\nsource were: Mideast/Africa, 1494.6 MB/D; Canada, 1146.9 MB/D;\nLatin America/Caribbean, 639 MB/D.\nAs events during the embargo demonstrated, however, high growth\nin national energy demand and increasing reliance on imported petro-.\nleum supplies need not continue indefinitely.\nDuring the Middle East oil embargo, the United States substantially\nreduced energy consumption. Although energy demands increased\nafter the oil embargo was lifted, conservation of energy continues to\nbe espoused as a national goal. How successful energy conservation\nefforts are in the future depends on what national policy directives are\nput into force. At the very least, however, the higher cost of energy\nshould continue to result in more productive and efficient use of energy\nsupplies which will reduce the rate of growth in national energy demand\nbelow pre-embargo oil import projections. Nevertheless, there is little\ndispute, that even though the rate of growth is slowed, overall U.S.\nenergy demands will continue to increase. What portion of these\ndemands are met by petroleum imports depends on the availability of\ndomestic energy supplies.\nDOMESTIC ENERGY SUPPLY\nDuring the Middle East oil embargo, achieving national energy\nself-sufficiency emerged as a high priority national goal. As $ result,\nprograms to increase oil and gas production on the Outer Continental\nShelf, accelerate the production and use of coal, and develop alternative\nenergy forms such as nuclear power, geothermal steam, solar energy,\nand gas and liquid fuels from coal, moved ahead with added momen-\ntum. However, in spite of the new commitment to national energy\nself-sufficiency, most forecasters agree that the time when the United\nStates can rely on its own energy resources lies some distance in the\nfuture.\nGERALD FORD LIBRARY\n21\nFor example, one Government source has estimated that, even\nunder an accelerated program to develop alternative domestic energy\nforms and curtail energy demands, a significant volume of crude\npetroleum imports (possibly as great as 4.4 million barrels a day) will\nbe required into the next decade.² If such projections are correct,\nthe need to import substantial quantities of petroleum will continue\nfor some time to come.\nFurthermore, insofar as energy self-sufficiency is concerned, the\nPresident's announced objective for \"Project Independence\" (the\nofficial Administration watchword for the national energy self-\nsufficiency goal) is to achieve a \"capacity\" for self-sufficiency. Accord-\ning to an Administration spokesman, such a \"capacity of self-suf-\nficiency\ndoes not necessarily mean zero imports. If by 1980\nworld conditions are sufficiently stable and world sources of oil\nsufficiently diverse, it may well be in the national interest to continue\nthe importation of some limited amounts of crude oil.\" 3\nAccording to this view, it would appear that a policy directed\ntowards obtaining a capacity for energy self-sufficiency by the be-\nginning of the next decade does not mean that the United States will\ndiscontinue petroleum imports. Furthermore, even though successful\ndevelopment of alternative domestic energy forms should reduce\nfuture import levels to below original pre-embargo forecasts it is still\nanticipated that import demands will be high enough to warrant the\ndevelopment of U.S. deepwater ports if such imports are in the form\nof crude petroleum as opposed to petroleum products.\nU.S. REFINERY CAPACITY\nBecause it is not economically feasible to transport refined petro-\nleum products by supertankers, the need for deepwater ports in the\nUnited States depends on what volume of petroleum imports arrive\nas crude oil. It is the availability of domestic refinery capacity which\ndetermines what portion of petroleum imports arrive as crude oil as\nopposed to refined products.\nRefinery expansion in the United States has been at a virtual\nstandstill over the last decade. During this period, environmental\nconcerns, siting controversies, and uncertainties about crude oil\nsupplies caused by the Mandatory Oil Import Program led to an\nexporting of refinery capacity to foreign sites where tax advantages\nand lack of environmental controls favor such development.\nFollowing revocation of the Mandatory Oil Import Program and\nprior to the Middle East embargo, crude oil was imported to the United\nStates in sufficient volume to offset the difference between domestic\ncrude oil production and domestic refinery capacity. Additional\nimports in the form of petroleum products arrived in quantities suf-\nficient to make up the difference between U.S. refinery output and\nthe national demand for petroleum products. Thus, in late 1973,\nU.S. refinery capacity stood at about 13.6 million barrels a day\n(MMB/D) exceeding domestic crude oil production by 3 MMB/D.\nU.S. petroleum products demand equalled 17 MMB/D with the dif-\nference between domestic demand and refinery output (2.4 MMB/D)\nbeing met by petroleum products imports.\n2 The Oil and Gas Journal (March 18, 1974), Federal Energy Office estimate.\n3 Reprinted in Appendix B of this report.\nFORD LIBRARY i GERALD\n22\nIn spite of early 1973 Administration pronouncements and changes\nin policy designed to encourage domestic refinery construction,\nsubsequent gains in refinery capacity were the result of expanding\nexisting facilities or completing projects already underway at the\ntime that Federal policy changes were announced. Since there is no\nFederal refinery siting policy per se, a mix of State and local policies,\nFederal environmental controls, various technological factors, and\nprospects for reliable crude oil supplies will continue to determine\nthe rate at which new domestic refinery capacity is brought on line.\nFurthermore, leaving policy considerations aside, actually construct-\ning a new refinery can take anywhere from 2 to 3 years.\nUntil such time as the gap between demand for petroleum products\nand U.S. refinery capacity is closed, further increases in petroleum\nimport demands will most likely be met by refined products rather\nthan crude oil. This would appear to be true even though domestic\ncrude oil production declined almost 10% over the last year, from\n10.8 MMB/D in 1972 to 9.8 MMB/D in 1973. It would seem that the\ndecline in domestic petroleum production rates would precipitate\nan increase in crude oil imports, and that the Middle East with its\nvast oil reserves might be the largest source of supply. However,\noil produced in the Middle East as well as in most other foreign nations\nis sour (high sulfur content) crude petroleum, while most American\nrefineries are designed to process the sweet (low sulfur content)\ncrude petroleum produced in the United States. Supplies of sweet\ncrude in the world market are tight, vet both technological and\nenvironmental factors prevent the use of the more widely available\nsour crude oil in American refineries until they are properly refitted\nto process sour crude and remain in compliance with air quality stand-\nards. Even with some relaxation of air quality standards as recom-\nmended by oil industry spokesmen, retrofitted refineries and new\nrefineries equipped to handle high sulfur crude oil will be required if\nthe United States expects to increase substantially the volume of\ncrude oil supplies imported from the Middle East.\nThe relationship between deepwater port development and U.S.\nrefinery expansion leads to A discussion reminiscent of the controversy\nover \"what came first, the chicken or the egg?\" Industry representa-\ntives repeatedly assert that domestic refinery expansion will not\nprogress at a rapid rate without assurances of secure crude oil supplies.\nIn the industry's view, such assurances inevitably involve a commit-\nment to the development of U.S. deepwater ports which will allow\nthem to plan on transporting crude oil in the most economic means\npossible.\nHowever, unless there is sufficient domestic refinery capacity\navailable, few deepwater ports will be needed in the United States\nsince nearby foreign refining centers will supply the United States\nwith petroleum products.\nBecause it is generally agreed that the United States will need to\nimport petroleum supplies from foreign sources for some time to come,\nindustry spokesmen and Federal officials warn against forcing the\nUnited States to rely on foreign refinery capacity by failing to enable-\n4 See ch. 1, Note 3. supra.\nFORD\ni\nGERALD\nLIBRARY\n23\nthe development of U.S. deepwater ports. Industry and government\nstudies have concluded that the United States economy would lose\npotential investment and employment opportunities as industry\nturned to foreign refinery sites. Furthermore, the economic and en-\nvironmental advantages of supertanker transportation would be lost\nto the United States as greater numbers of conventional tankers were\nused to transport petroleum products to American ports.\nIn summary, there appears to be a need to build deepwater ports on\nthe West Coast soon, in order to facilitate the transportation of oil\nfrom Alaska's North Slope. Furthermore, as far as the need to build\ndeepwater ports off other U.S. coastal areas is concerned, those who\nhave considered the prospects of reducing United States energy demand\nand increasing domestic energy supplies feel that future import levels\nwill warrant the development of at least a few deepwater ports in the\nvery near future. Accordingly, it is argued that the failure to establish\na Federal program enabling U.S. deepwater port development to\nproceed soon, will result in continued exportation of refinery capacity\naccompanied by economic loss, and an incremental increase in burdens\non U.S. port and harbor facilities to a point where both economic and\nenvironmental costs are being borne unnecessarily by the United\nStates because it has no deepwater ports.\nFORD LIBRARY i GERALD\nCHAPTER 6.-INTERNATIONAL AND DOMESTIC LEGAL\nIMPLICATIONS\nAt the present time, there is no Federal agency specifically and\nexclusively empowered to authorize and oversee the construction, op-\neration, and use of deepwater ports.\nDevelopment of deepwater terminal facilities at near shore sites\n(within U.S. territorial limits) would require a number of different\nFederal, State and local authorities to exercise their jurisdiction with\nrespect to: (1) siting, constructing and operating the various structures\nand facilities involved; (2) insuring compliance with standards of\nenvironmental quality and land use; and (3) assuring that operational\nand navigation safety standards are met. Development of such near\nshore facilities is therefore subject to a whole range of permit pro-\ncedures and standards of compliance implemented by a complex inter-\nface of Federal, State, local and possibly interstate government\nentities. For example, in addition to whatever standards of develop-\nment are imposed by State, regional or local authorities, deepwater\nport development within territorial waters would require the grant of\na permit by the Corps of Engineers, pursuant to its authority under\nthe Rivers and Harbors Act, over dredging and erecting structures in\nnavigable waters; approval from the U.S. Coast Guard under its\nauthority to regulate navigation and transportation of hazardous\nmaterials; and the concurrence of other Federal agencies with environ-\nmental protection functions. Approval of deepwater port development\nby any Federal agency would undoubtedly be considered a \"major\nFederal action\" and as such would require the preparation of an en-\nvironmental impact statement pursuant to Section 102(2)(C) of the\nNational Environmental Policy Act. However, by virtue of their juris-\ndiction over landside activities, and because the Federal Government\nhas conveyed certain rights to the States under the Submerged Lands\nAct, the States are viewed as having dominant control over deepwater\nport development in territorial waters.\nIn spite of the fact that sufficient legal authority exists to enable\ndeepwater port development within the three-mile territorial limit,\nthe availability of natural deepwater sites within these boundaries is\nlimited. Thus, while there is still some pressure to dredge existing U.S.\nports to provide sufficient depths for supertanker operations, industry\nhas responded to the opportunities for more economic petroleum\ntransportation by joining in consortia which propose to construct and\noperate offshore deepwater ports. Two such proposals involve siting\nfour or five single point mooring terminal buoys in a cluster, about 25\nmiles off the U.S. gulf coast, that is, beyond U.S. territorial limits. The\nfacilities would be linked by buried submarine pipeline to shore-based\nstorage, pipeline, refining, and processing facilities.\n(23)\n21-035-74-3\nFORD i LIBRARY GERALD\n26\nThe United States has no clearly defined legal framework by which\nto authorize and regulate deepwater port construction and operation\nin international waters. Before such activities can proceed it will be\nnecessary to resolve both the international and domestic legal issues\ninvolved.\nINTERNATIONAL LEGAL IMPLICATIONS\nAs far as can be determined, a U.S. deepwater port constructed\nin international waters would be the first such facility located outside\na nation's territorial limits anywhere in the world. While a nation\nexercises absolute jurisdiction over its territorial waters by virtue of\nthe International Convention on the Territorial Sea and Contiguous\nZone,¹ the freedom of all nations to make certain recognized uses of\nwaters beyond territorial boundaries is guaranteed by the International\nConvention on the High Seas.2 In addition, the Convention on the\nContinental Shelf 3 authorizes a coastal nation to erect structures on\nits continental shelf for the purpose of exploring and exploiting the\nmineral and non-!iving resources, and sedentary living species on or\nunder the seabed.\nNo existing international law, treaty, or agreement specifically\nrecognizes the construction and operation of deepwater ports as a\npermissible use of international waters. Absent such authority, the\nUnited States could possibly wait and hope for clarification of per-\ntinent international legal issues by the 1974 Law of the Sea Con-\nference before authorizing the development of deepwater ports.\nHowever, in view of the time element involved, both with respect to\nreaching international agreement and the number of years required\nto plan and construct an offshore terminal facility, many believe that\npursuing this course would place unnecessary and costly burdens of\nuncertainty on the deepwter port development process.\nIt is also conceivable that a nation wishing to use the high seas in\na manner not specifically authorized by international law might\nunilaterally extend its territorial jurisdiction for this purpose. How-\never, official and non-official sources alike regard such action by the\nUnited States as inappropriate in view of this nation's desire to seek\nlimitations during the Law of the Sea Conference on unilateral ex-\ntensions of territorial jurisdiction. Furthermore, those who favor\n1 Adopted by the United Nations Convention on the Law of the Sea, April 20, 1958 (U.N. Doc. A./Conf.\n13/L. 52). According to article 1 of the Convention \"The sovereignty of a State extends, beyond its land\nterritory and its internal waters, to a belt of sea adjacent to its coast, described as the territorial sea.\" His-\ntorically, a majority of nations (including the United States) claimed three miles as the extent of their\nterritorial limits although claims to wider margins of six and twelve miles were also made. Recently, how-\never, many nations have asserted jurisdiction over much larger areas in a manner commonly described as\n\"creeping jurisdiction\" to protect fishing or other economic and environmental interests. It is anticipated\nthat the 1974 Law of the Sea Conference will establish twelve miles as the acceptable maximum limit for\nextension of territorial jurisdiction.\n2 Adopted by the United Nations Convention on the Law of the Sea, April 29, 1958 (U.N. Doc. A/Conf.\n13/L. 53) article 2 of the Convention provides that: \"The high seas being open to all nations, no state may\nvalidly purport to subject any part of them to its sovereignty. Freedom of the high seas is exercised under\nthe conditions laid down by the articles and by the other rules of international law. It comprises, inter atia,\nboth for the coastal and noncoastal States:\n(1) Freedom of navigation;\n(2) Freedom of fishing;\n(3) Freedom to lay submarine cables and pipelines; and\n(4) Freedom to fly over the high seas.\nThese freedoms, and others which are recognized by the general principles of international law, shall be\nexercised by all states with reasonable regard to the interests of other states in their exercise of the freedom of\nthe high seas.\"\na Adopted by the United Nations Conference on the Law of the Sea, April 29, 1958 (U.N. Doc. A/CONF.\n13/L. 55). Article 1 of the Convention defines \"continental shelf\" as the seabed and subsoil of the sub-\nmarine areas adjacent to the coast but outside the area of the territorial seas, to a depth of 200 metres or,\nbeyond that limit, to where the depth of the superjacent waters admits of the exploitation of the natural\nresources of the said areas;\" and\nthe seabed and subsoil of similar submarine areas adjacent to the\ncoasts of islands.\"\nFORD\nGERALD\n27\ndeveloping U.S. deepwater ports maintain that sufficient authority\nto exercise Federal jurisdiction on the high seas for that purpose may\nbe inferred from the existing international regime.\nFor example, it has proved tempting to search the Convention on\nthe Continental Shelf for authority to construct and operate deep-\nwater ports. However, this approach has been consistently rejected\nby both government and academic sources on the grounds that the\nContinental Shelf Convention supports only those activities which\nare related to the exploration and exploitation of the OCS seabed\nresources, a use for which deepwater ports are not intended.\nSome sources have also suggested that deepwater ports might fall\ninto the category of roadsteads, water areas \"used for the loading. un-\nloading and anchorage of ships\" which according to Article 9 of the\nConvention on the Territorial Sea and Contiguous Zone,⁴ when they\n\"would otherwise be situated wholly or partly outside the outer limit\nof the territorial sea, are included in the territorial sea.\" In general,\nhowever, analogizing deepwater ports to roadsteads, or to artificial\nislands, vessels or any other structures or activities specifically\ngoverned by international accord is regarded as inconsistent with the\nmeaning and intent of international law.\nThe most widely supported belief is that constructing and operating\ndeepwater ports beyond a nation's territorial limits constitutes a\n\"reasonable use\" as contemplated by Article 2 of the Convention on\nthe High Seas.⁵ Thus, under the authority of this Convention a nation\nmight properly exercise jurisdiction on the High Seas in order to\nlicense and regulate such facilities. Proponents of this interpretation\nfind support for their view in the phrase inter alia which implies that\nthe authors of the Convention on the High Seas foresaw a need to\npermit a broader range of uses than those four specified in Article 2.\nThis interpretation has been actively promoted by the U.S. Depart-\nment of State and other Executive agencies.\nHowever, although they consider development of deepwater port\nfacilities to be a reasonable use of the high seas under international\nlaw, the State Department also feels it is necessary to continue to\nseek multilateral agreement on a coastal State's exclusive right to\nauthorize and regulate such facilities within a designated \"Coastal\nSeabed Economic Area.\"\nFor this reason, the United States Delegation attending the Third\nInternational Conference on the Law of the Sea has been working to\nclarify international regulation of deepwater ports by proposing draft\ntreaty articles concerning the construction, operation and use of off-\nshore installations affecting a coastal States' economic interests.⁶\nThe Department of State has also reported that there are nine inter-\nnational conventions to which the United States is party which could\nbear directly on the development and implementation of a national\ndeepwater port policy. These include:\n1. Convention on the Territorial Sea and Contiguous Zone (establishes\nsovereignty over territorial waters and guarantees rights of innocent\npassage).\n6 See note 1. supra.\n8 See note 2. supra.\n0 United States of America; Draft Articles for 0 chapter on the Rights and Duties of States in the Coastal Seated\nEconomic Area, reported in Appendix c.\nFORD i LIBRARY GERALD\n28\n2. Convention on the High Seas (assuring freedom of navigation, of\nfishing, to lay submarine cables and pipelines, and to fly over the high\nseas).\n3. Safety of Life at Sea Convention (SOLAS) (pertaining to ship\nconstruction, equipment and operational standards affecting the safety\nof passengers and crew).\n4. International Convention on Load Lines (pertaining to the con-\ntrol of certain operational aspects of ships docked in foreign ports).\n5. Internatonal Regulations for Preventing Collisions at Sea (volun-\ntary rules of the road).\n6. International Convention for the Prevention of Pollution of the\nSea by Oil (as amended) (directed towards the reduction of intentional\nand nonintentional discharges of oil into the sea).\n7. International Convention Relating to Intervention on the High\nSeas in Cases of Oil Pollution (not yet in effect).\n8. International Convention on Civil Liability for Oil Pollution\nDamage.\n9. Convention on the Establishment of an International Fund for\nCompensation for Oil Pollution Damage (not yet in effect).\nIn the State Department's view, some amendments to these\ninternational agreements may be necessary in order to accommodate\ndeepwater port development. Accordingly, a statement submitted to\nthe Senate Special Joint Subcommittee on Deepwater Ports Legisla-\ntion discussed these admendments as follows:\nThe Convention for Safety of Life at Sea (1960) and the\nInternational Convention on Load Lines (1966) both\nestablish systems whereby the presence of certain certificates\nmay be checked and the requirements of the convention\nenforced in foreign ports by the port state. Amendment of\nthese conventions may be necessary to assure their applica-\ntion to superports. Potential amendment to the multilaterally\ndeveloped International Regulations for Preventing Col-\nlissions at Sea may provide a possible basis for particularizing\nrules of the road for superport areas. Some provisions of the\nInternational Convention for the Prevention of Pollution of\nthe Sea by Oil, in particular the 1971 amendment to this\nConvention, would also apply to superports. The Inter-\nnational Convention Relating to Intervention on the High\nSeas in cases of Oil Pollution Casualties would appear to\napply to superports when it comes into effect. Finally, the\nInternational Conventions on Civil Liability for Oil Pollution\nDamage (1969) and on Establishment of an International\nFund for Compensation for Oil Pollution Damage (1971)\nmight apply to superports, if amended.⁷\nRegardless of the authority under which the U.S. Federal Govern-\nment describes its jurisdiction over offshore deepwater ports, the\nfacility must be constructed and operated in a manner which will\nnot unduly interfere with the rights of other nations under inter-\nnational law or with authorized uses of the oceans in which the United\nStates or its citizens may be involved, such as Outer Continental\nShelf resource exploitation, fishing, or scientific research, and marine\nenvironmental protection.\n7 Hearings before Senate Special Joint Subcommittee on Deepwater Ports Legislation, 93d Cong., 2d Sess.,\nSerial No. 93-59.\nFORD i LIBRARY\n29\nDOMESTIC LEGAL IMPLICATIONS\nWithout some formal provision to that effect the laws of the United\nStates would not automatically extend to a deepwater port facility\nconstructed beyond territorial waters. The manner in which these\nlaws are applied will depend upon the basis in international law by\nwhich the United States describes its jurisdiction over facilities con-\nstructed on the high seas and the institutional arrangement designed\nto administer U.S. deepwater port policy.\nThe development and operation of deepwater ports whether they are\nwithin or outside U.S. territorial waters, involves a broad range of\nnational concerns including energy resource supply, environmental\nquality, navigational safety, and economic viability. As will be dis-\ncussed in Chapter 7, responsibility for these matters resides in a\nnumber of Federal agencies, offices and bureaus. Those Federal\nLaws which might be particularly applicable to deepwater ports and\ntheir associated facilities are those regulating tanker operations, the\nerection of structures and environmental quality in navigable waters;\nleasing on the Outer Continental Shelf, pipeline safety, air and water\nquality, and management of the coastal zone. Some of the major laws\neffecting these policies include:\nRivers and Harbors Act (33 U.S.C. 540 et seq.).\nPorts and Waterways Safety Act (33 U.S.C. 1221-1222).\nFederal Water Pollution Control Act as amended (33 U.S.C.\n1251 et seq.).\nMarine Protection, Research and Sanctuaries Act of 1972\n(86 Stat. 1052; 33 U.S.C. 1401-1421).\nOuter Continental Shelf Lands Act (43 U.S.C. 1331-1346).\nClean Air Act (42 U.S.C. 1857 et. seq.).\nNational Environmental Policy Act (42 U.S.C. 4321 et seq.).\nCoastal Zone Management Act (16 U.S.C. 1451-1464).\nIn addition, the Federal Government has conveyed certain rights\nwithin territorial limits to the States under the Submerged Lands\nAct (67 Stat. 29, 43 U.S.C. 1301 et seq.).\nThe body of law governing activities within U.S. territorial bound-\naries and in navigable waters could if applied to deepwater port\ndevelopment on the high seas, provide basic environmental and navi-\ngational safeguards. However, some of the unique aspects of deep-\nwater port construction, operation and use require that additional\nand more specific protection be devised. For example, questions on,\nwhether existing U.S. law is sufficient to fully regulate port facilities\non the high seas were raised during 1973 hearings before the Senate\nSpecial Joint Subcommittee on Deepwater Ports.\nState Department response to the question,\n\"\nwhat specific\nfurther actions, including additional studies or investigations, do you\nrecommend the Federal Government undertake with respect to the\ndevelopment of deepwater ports?\" was as follows:\nThe State Department believes that more detailed con-\nsideration should be given to questions such as shipping and\nnavigational safety requirements, storage and transshipment,\nenvironmental requirements, the customs laws and civil and\ncriminal jurisdiction as related to the operation of deepwater\nGERALD FORD LIBRARY\n30\nport facilities. Such consideration could provide inputs for\nfurther decisions on regulatory and licensing policies.\"\n1\nA number of independent and government sources have emphasized\na need to meet environmental protection and navigation safety con-\ncerns related to deepwater port development by providing the legisla-\ntive authority necessary to:\nEstablish site quality evaluation criteria which include con-\nsideration of both direct marine, and secondary landside environ-\nmental impacts;\nEstablish specific engineering design, equipment and operating\nstandards for deepwater ports and their associated pipeline and\nstorage facilities;\nDevelop standards for vessel operation and for cargo transfer,\noil spill prevention and oil spill containment systems.\nIn addition, an interagency Study Group formed by the White\nHouse to examine the legal issues involved in deepwater port develop-\nment reported on two matters of particular interest.\nFirst, with respect to licensing pipelines on the Outer Continental\nShelf the study group pointed out that the Department of Transpor-\ntation has clear authority to regulate the safety of pipelines carrying\nnatural gas pursuant to 49 U.S.C. Chapter 24. On the other hand,\nDepartment of Transportation authority to regulate pipelines carry-\ning petroleum or other hazardous substances in interstate commerce\n(18 U.S.C. Chapter 39; 49 U.S.C. §§ 1655(e)(4)) applies neither to\npipelines located on the United States Outer Continental Shelf or to\nstorage facilities located on land.\nThe OCS Lands Act (43 U.S.C 1334(c)) authorizes the Secretary\nof the Interior to license pipeline construction on the Outer Conti-\nnental Shelf and, in consultation with the Interstate Commerce\nCommission and the Federal Power Commission, to assure that\nthey are operated without discrimination against any potential\nshipper of oil, gas, or other mineral products gathered from the\nshelf. The OCS Act does not, however, provide the the enforce-\nment of safety requirements. According to the White House Legal\nStudy Group it is, therefore, uncertain whether the Department of\nInterior or the Department of Transportation is responsible for reg-\nulating the safety of pipelines on the Outer Continental Shelf. The\nStudy Group recommended that deepwater port legislation clarify\nauthority to regulate the safety of pipelines and storage facilities as-\nassociated with deepwater ports both to assure that no regulatory\nvacuum exists and to avoid overlapping jurisdiction among Federal\nagencies.\nSecond, the study group reported a need to extend the Customs\nLaws of the United States over a deepwater port with special regard\nfor whether the port was a fixed structure with storage facilities or\nsimply a pumping buoy. In the case of the former, according to the\nStudy Group, there would be a need to conduct customs activities on\nthe facility itself, while customs regulation of a pumping buoy strue-\nture would be better handled onshore. Furthermore, the Study Group\nrecommended that coastwise trade, (which is controlled by the Bureau\nof Customs) with U.S. deepwater ports, be limited to American\nvessels.\na Hearings before Senate Special Subcommittee on Deepwater Ports, 93d Cong., 2d Sess., Serial 98-59. For a\ncomplete list of responses to this question by other Federal agencies see Appendix F of this report.\nFORD\nGERALD\nLIBRARY\n31\nThe importance of assuring that U.S. deepwater port development\nproceeds in a manner fully consistent with national and international\nlaws and policies pertaining to navigational safety and both marine and\nlandside environmental quality has been discussed in a broad body of\nliterature on the subject of deepwater ports. However, one area of\nconsiderable importance which has not received such careful attention\nis the possible anticompetitive implications of deepwater port\ndevelopment.\nPrinciples of preserving competition in the American economy are\nembodied in several laws and a long history of case law in antitrust.\nBriefly, the major provisions of Federal laws designed to preserve\ncompetition in the American economy are the Sherman Act (15 U.S.C.,\nSec. 1-7), the Clayton Act as amended by the Robinson-Patman Act\n(15 U.S.C., Sec. 12-27), and the Federal Trade Commission Act\n(15 U.S.C., Sec. 41-59).\nThe Sherman Act makes illegal every contract, combination, or\nconspiracy in restraint of trade or commerce among the several States\nor with foreign nations, and makes it illegal for any person to monopo-\nlize or to combine or conspire with any other person to monopolize\nany part of such commerce.\nThe Clayton Act prohibits price discrimination (except when\nbased on grade, quality or quantity; or made in good faith to meet\ncompetition; or where only due allowance for difference in the cost\nof selling or transportation is made) where the effect of such dis-\ncrimination may be substantially to lessen competition or tend to\ncreate a monopoly in any line of commerce. Section 7 of the Clayton\nAct forbids mergers in any line of commerce where the effect may be\nsubstantially to lessen competition or tend to create a monopoly.\nThe Federal Trade Commission Act states that unfair methods of\ncompetition and unfair or deceptive acts or practices in commerce\nare unlawful.\nIn addition, while not properly considered an antitrust law, the\nInterstate Commerce Act (49 U.S.C., Sec. 1-1301), which regulates\nthe operation of railroads and water carriers in interstate commerce,\nalso assures that common carrier oil pipelines will be operated without\ndiscrimination against any oil shipper.\nPursuant to these statutes, the Department of Justice, the Federal\nTrade Commission and the Interstate Commerce Commission all\nhave functions related to preserving competition in the U.S. economy.\nIn spite of the protection afforded by these laws, however, it has\nbeen suggested that legislation authorizing the development of deep-\nwater ports should provide specific assurances against the possible\nanti-competitive impacts of such development.\nIn testimony during Senate committee hearings on legislation\nauthorizing the development of offshore deepwater port facilities, the\nDirector of the Federal Trade Commission's Bureau of Competition\nstated the Commission's concern that the owners of such facilities\nwould effectively control the entry and distribution of crude oil for\nsignificant areas of the country. The potential for abuse of such power,\nin the Commission's view, warrants the establishment of vigorous\nlicense application review procedures and permit conditions.³ Possible\n3 Hearings, Senate Joint Subcommittee on Deepwater Ports Legislation, 93d Cong., 2d sess., Serial No.\n98-59.\nGERALD FORD VIBRARY\n32\nabuses suggested in Federal Trade Commission testimony included\nthe potential for port owners to engage in exclusionary or discrimin-\natory behavior and to influence the location of future refinery ca-\npacity and petrochemical industries.\nFurther testimony presented by the Justice Department's Anti-\nTrust Division emphasized that deepwater ports must be operated in\na manner which would provide \"reasonable and nondiscriminatory\naccess to other competing firms.\" According to the Anti-Trust Di-\nvision testimony, even though an installation could ostensibly be\noperated as a \"common carrier\" (along the lines described by the\nInterstate Commerce Act), certain characteristics of deepwater port\nfacilities might permit reasonable access to be denied as a practical\nmatter by sizing or routing the facility and pipeline in such a way as\nto make it impractical or uneconomic for some potential customers to\nuse, or by imposing tariff requirements which could not be met by\npotential users.\nWhile the Justice Department viewed as unnecessary any ban on\njoint activities by oil companies in the construction and operation of\ndeepwater ports they testified further that:\nAn argument can be made that large scale joint ventures\nare unnecessary in these offshore facilities. The usual reason\ngiven for prevalence of joint ventures in the petroleum\nindustry is that situations presenting considerable risks and\nvery large capital requirements make necessary sharing of\nboth risk and investment.\nBut in construction of large pipeline systems, for example,\npetroleum companies have followed the 90-10 practice; 10\npercent of capital requirements are met by direct investment\nand 90 percent by outside financing.\nIf the total costs estimated for [deepwater ports off the\nGulf Coast] range from $390-400 million, then the capital\ninvestment, after outside financing, might run $39-40 mil-\nlion. This is not an inordinate sum for one of the major oil\ncompanies and might not be insurmountable for\nsmaller\ncompanies.\nAnd a sharing-the-risk argument-often used to justify\njoint interests in exploration and drilling-does not seem\napplicable to this situation.\nThe demand for imported oil,' which will be steady and\ngrowing over the foreseeable future, would seem to insure\nagainst any significant financial risk in the construction and\noperation of such an offshore facility.\nBank financing should be no problem, and indeed, a\ndeepwater port would seem such a good financial opportunity\nthat one need not assume it would be attractive only to those\nalready in the petroleum industry.\nAccording to Justice Department testimony, deepwater port devel-\nopment could be made subject to a \"commodities clause\" prohibiting\na company which owned a deepwater port from using the facility to\ntransport any commodity which it owns in whole or in part or in\nwhich it has any interest. The commodities clause was added to the\nIbid.\nFORD & LIBRARY GERALD\n33\nInterstate Commerce Act by amendment in 1906 and currently applies\nonly to railroads. However, such a provision might serve as an appro-\npriate safeguard against the possible anti-competitive impacts of\ndeepwater port development.\nThe Justice Department did not favor applying a \"commodities\nclause\" provision to deepwater port development. They did feel,\nhowever, that an application to construct a deepwater port should be\nsubjected to their review prior to its approval.\nThe Federal Trade Commission testified that Federal policy should\nrequire that the FTC be consulted on the anti-competitive implications\nof a deepwater proposal before authorization was granted.\nThe Justice Department, Federal Trade Commission, and the Inter-\nstate Commerce Commission all felt that it was important to assure\nthat deepwater ports and their associated pipelines would be regulated\nas \"common carriers\" by the Interstate Commerce Commission.\nWhile, it is not certain what, in practice, the anti-competitive im-\npacts of deepwater port development might be, it is possible that any\npotential for lessening competition through deepwater port develop-\nment could be effectively reduced if appropriate controls were applied.\nThose who lack confidence in this approach, however, suggest that\nsome form of public ownership of deepwater ports is the ultimate solu-\ntion to the problem of potential anti-competitive abuse.\nFORD i LIBRARY GERALD\nCHAPTER 7.-INSTITUTIONAL ASPECTS OF\nDEEPWATER PORTS\nLegislation to authorize and regulate deepwater ports must describe\nan institutional arrangement to carry out Federal deepwater port\npolicy and coordinate that policy with the policies and programs ad-\nministered by other Federal government entities. In addition, be-\ncause the technical aspects and secondary growth impacts of deep-\nwater port construction and operation will involve the environmental\nand economic policies of the coastal States, regulation of deepwater\nport development will also require the coordination of Federal ac-\ntivities with those of State and local government.\nFEDERAL RESPONSIBILITY\nBefore considering what institutional arrangement would be most\nsuitable for administering Federal deepwater port policy it is useful\nto consider what government policies which have some relationship to\ndeepwater port development are being carried out under existing law.\nSeveral Federal agencies have responsibilities and expertise re-\nlating to the development of deepwater ports. They are as follows:\nDEPARTMENT OF TRANSPORTATION\nDOT has overall research, planning and coordination responsibility\nwith respect to the economic, social and environmental interplay be-\ntween domestic and international transportation systems and es-\ntablished policies, regulations and laws.\nDOT also has authority to establish regulations for the safe trans-\nportation of hazardous materials, petroleum, and petroleum products\nin offshore areas and by pipelines and other carriers in interstate or\nforeign commerce.\nAdditional DOT authority includes:\nResponsibility in the anti-pollution area relating to water\nquality in navigable waters;\nInter-face of authority over non-transportation related oil\nfacilities with EPA and Department of the Interior; and\nJurisdiction over transportation of natural gas under Natural\nGas Pipeline Safety Act of 1968 (49 U.S.C. 1671 et seq.).\nThose offices or entities within DOT which have functions especially\nrelated to deepwater ports include:\nU.S. Coast Guard.-U.S.C.G. is the Federal Maritime Law enforce-\nment agency. It is, therefore, the Coast Guard's function to:\nMaintain a system of rescue vessels, aircraft, and lifeboat\nstations to protect life and safety in navigable waters;\nEnforce Federal laws on the High Seas;\nPrevent, detect and control pollution on and adjacent to the\nnavigable waters of the United States;\n(35)\nFORD & LIBRARY GERALD\n36\nMaintain ocean stations to provide meteorological information\nto ships, aircraft and to the Weather Bureau;\nCollect oceanographic data and furnish navigation information\nto ships and aircraft;\nMaintain merchant marine safety through inspection and\nregulation of vessels;\nInvestigate and review marine casualties and acts of incom-\npetency;\nMaintain aids to navigation; and\nEnforce rules and regulations governing the security of ports\nand anchorage and movement of vessels in U.S. waters.\nNational Transportation Safety Board.-NTSB has responsibility\nfor surface transportation accident cause determination and safety\npromotion.\nDEPARTMENT OF THE INTERIOR\nInterior Department responsibilities include administration of\npublic lands; conservation and development of mineral and water\nresources; conservation, development of fish and wildlife resources;\nand coordination of Federal and State recreation programs.\nOffices or entities within the Department which have functions\nparticularly relevant to deepwater ports include:\nBureau of Land Management.-The BLM administers programs\nand policies on Federal Lands including leasing mineral deposits on\nthe Outer Continental Shelf.\nOffice of Oil and Gas.-The 00G functions relate to petroleum\npolicy, programs and problems. It provides a channel of communication\nbetween the Federal Government, petroleum industry, petroleum\nproducing States and the public.\nGeological Survey.-USGS is responsible for the classification of the\npublic lands and the examination of the geological structure, mineral\nresources and products of the national domain including those of the\nOuter Continental Shelf.\nOther offices within the Department of the Interior which have\nsome functions which may relate to deepwater port development\ninclude the Office of Water Resources Research, the Office of Land\nUse and Water Planning, the U.S. Fish and Wildlife Service, and the\nBureau of Sport Fisheries and Wildlife.\nDEPARTMENT OF COMMERCE\nThe Commerce Department is responsible for promoting the United\nStates international economic position, fostering the development of\nthe U.S. merchant marine and for protecting and promoting the de-\nvelopment of marine fisheries.\nOffices or entities within the Department which carry out functions\nrelating to deepwater port development include:\nNational Oceanic and Atmospheric Administration.-In addition to\nassimilating information and data on the ocean environment and\nliving marine resources, NOAA also:\nAdministers and directs the National Sea Grant Program by\nproviding grants to institutions for oceanographic and marine\nenvironmental studies; and\nGERALD FORD LIBRARY\n37\nHas authority over the Coastal Zone Management Program,\nthe National Weather Service, the Marine Mammals Protection\nAct; and the Marine Protection, Research and Sanctuaries Act.\nMaritime Administration.-MARAD administers programs to aid\nin the development, promotion and operation of the U.S. merchant\nmarine and implements the Merchant Marine Subsidy Program.\nCORPS OF ENGINEERS (DEPARTMENT OF THE ARMY)\nPursuant to the Rivers and Harbors Acts and the Refuse Act the\nCorps regulates rivers to improve water quality and enhance fish and\nwildlife; protect shores, oceans and lakes and to protect and prevent\nthe obstruction of U.S. navigable waters. In carrying out these re-\nsponsiblities the Corps issues permits for dredging, discharging effluents\nand erecting structures in navigable waters.\nThe Corps is also involved in overall regional planning for water re-\nsources management, and in the development and construction of\nprojects in the nation's ports and waterways.\nOTHER AGENCIES\nOther Federal agencies or entities which administer programs or\npolicies especially relevant to deepwater port development include:\nThe Environmental Protection Agency.-EPA is responsible for air\nand water quality programs including oil pollution control, and en-\nforces among other laws, the Federal Water Pollution Control Act\nand the Clean Air Act.\nThe Council on Environmental Quality.-CEQ is responsible for\nassessing trends in, and recommending policies concerning, the quality\nof the environment.\nFederal Maritime Commission.-The Commission carries out regula-\ntory authorities under the Shipping Act, the Merchant Marine Acts\nand the Intercoastal Shipping Act, in addition to certain provisions of\nthe Water Quality Improvement Act. The Commission, therefore, ap-\nproves or disapproves agreements filed by common carriers including\ncooperative working agreements between common carriers, terminal\noperators, freight forwarders and other persons subject to the shipping\nlaws.\nInterstate Commerce Commission.-ICC regulates freight forwarders,\nwater carriers and oil pipelines subject to the Interstate Commerce\nAct. In carrying out its functions the ICC assures that common carrier\noil pipelines will be operated without discrimination against any\nshipper.\nFederal Trade Commission.-FTC was created to promote free and\nfair competition in interstate commerce.\nJustice Department.-The Justice Department is charged with\nresponsibility for administering the anti-trust laws of the United\nStates.\nDepartment of State.-The State Department represents U.S.\ninterests in international affairs.\nIn addition to those listed above, other Federal entities such as the\nBureau of Customs in the Department of the Treasury and various\noffices, bureaus and administrations within the Department of Labor,\nhave particular authority which could be brought to bear on the con-\nstruction and operation of deepwater ports.\nGERALD FORD LIBRARY\n38\nSTATE INTERESTS\nStates have significant and understandable interest in both the\neconomic and environmental impacts within their boundaries, of\ndeepwater ports off their shores. States have the power of approval\nover construction of onshore port-related facilities and pursuant\nto the Submerged Lands Act, over offshore pipelines within their\nterritorial waters. A State's enthusiasm for or opposition to a deep-\nwater port requiring landside facilities in its territory thus becomes a\nsignificant factor in authorizing and regulating such offshore tanker\nterminals.\nThe Federal government has legitimate interest in activities within\nState territorial waters under the Commerce clause of the Constitution.\nBy virture of its authority over interstate and foreign commerce, the\nFederal government could conceivably preempt State and local\njurisdiction in territorial waters for the purpose of regulating deep-\nwater ports and their associated components. Regardless of whether\nor not the Federal government establishes a deepwater port authoriza-\ntion and regulatory process which covers facilities within as well as\noutside U.S. territorial waters, administering deepwater port policy\nwill require close coordination of State and Federal activities from the\nearly stages of planning deepwater ports through the regulation of their\noperations. In addition, the inclusion of private, industrial and public\ninterests in these decisionmaking processes is essential to achieving\nfully effective planning and enironmental management goals.\nUncertainty over the State role in 8 Federal deepwater port authori-\nzation process has led some States and their elected representatives to\nseek a policy allowing State governments to veto Federal approval of\ndeepwater port development affecting their coasts. Federal officials\nwho oppose State veto power assure that State governments would be\nconsulted in the Federal deepwater port authorization process, and\nthat the Federal Government does not have sufficient authority to\nexercise the right of eminent domain for the purpose of siting deep-\nwater port related facilities within State controlled waters thereby\noverriding a State's decision not to grant the necessary permits to\ncomplete connections between a deepwater port and the shore.\nAccordingly, deepwater port development would not be authorized off\nthe coast of a State where substantial objection exists. However,\nofficials of the States involved remain unconvinced and feel that the\npressures for expanding petroleum related industrialization and the\nsubsequent impacts at the State level are sufficient to justify allowing\nthe final deepwater port siting decision to rest with the affected States.\nA possible remedy to this dilemma which has been recommended\nis to require that each deepwater port proposal be congressionally\napproved following an appropriate agency review process. Those pro-\nmoting this approach believe that requiring congressional approval of\ndeepwater port projects would provide for representation of States'\ninterests through their elected officials. Many also feel that congres-\nsional review of deepwater port proposals would allow decisions to be\nmade within the context of the circumstances and conditions of energy\nresource development and supply which existed at the time the\nproposal was reviewed.\nGERALD FORD LIBRARY\n39\nALTERNATIVE INSTITUTIONAL ARRANGEMENTS\nSeveral institutional mechanisms have been suggested for coordinat-\ning the functions and responsibilities of the various government\nauthorities concerned with deepwater ports. These proposed institu-\ntional arrangements logically fall into two rough categories, those\nproviding a modified continuation of existing authorities, and those\nrequiring the creation of a new Federal entity. Such alternatives can\nbe described as follows:\nA. Extension of existing authority\nThe functions and responsibilities of all Federal agencies as previ-\nously described could be extended to deepwater port facilities con-\nstructed off the coasts of the United States. This action could result in\nrequiring a party proposing to construct a deepwater port to obtain a\npermit from some established Federal agency. Such an agency might\nbe the Corps of Engineers, which has authority to grant permits for the\nconstruction of structures in navigable waters or the Department of\nInterior which grants permits for the construction of oil and gas drilling\nplatforms and pipelines on the Outer Continental Shelf; the Depart-\nment of Transportation with its broad mandate to coordinate national\ntransportation policies or the Department of Commerce with its in-\nvolvement in maritime affairs and matters of commerce. Extending\nthe authority of an existing Federal agency over deepwater port\ndevelopment might result in creating a new bureau or office of deep-\nwater port policy administration within a department, or in expanding\nthe functions of some existing bureau or office within the designated\nagency.\nThe party proposing to construct the deepwater port under this\nregulatory framework would have to meet the requirements of other\nFederal agencies and obtain such additional permits and licenses as\nmay be necessary to construct pipelines and operate the facility.\nDeepwater port legislation would also need to provide whatever\nadditional authority would be necessary to cover those actions unique\nto the construction or operation of deepwater ports which are not\nsufficiently covered by existing Federal law.\nHowever, in the interest of providing a more unified application\nreview and approval process and to facilitate the coordination of\nFederal agency responsibilities it may be desirable to establish a\ndeepwater port authorization procedure which would eliminate the\nneed to file multiple applications for the various Federal authoriza-\ntions required to construct and operate a deepwater port. This could\nbe accomplished by any of the institutional arrangements described\nbelow.\nB. Lead coordinating agency\nThe Federal Government could authorize and oversee the develop-\nment of offshore supertanker terminals by designating one Federal\nagency and empowering it with the necessary authority to serve as\nthe lead coordinating agency for U.S. deepwater port development.\nUnder this arrangement an application for deepwater port authori-\nzation filed with the lead agency, would constitute the application\nfor all Federal authorizations which might be required to construct\nand operate the port. The head of the lead agency would then consult\nFORD & LIBRARY GERALD\n40\nwith the heads of other Federal agencies to assure that the application\nmet the requirements of all other Federal laws.\nAs discussed previously, there are several Federal agencies with\nfunctions and responsibilities directly related to the development\nof deepwater ports. Almost every one has been suggested by some\nsource, as the agency best suited to assume the lead in the adminis-\ntration of a U.S. Deepwater Port policy. For example, the Depart-\nment of the Interior, the U.S. Coast Guard and the Department\nof Commerce are each designated by different legislative proposals\npending before the 93d Congress, as the principal licensing authority\nfor the construction of offshore deepwater ports. Those who view\ndeepwater port development as primarily an \"energy\" issue with\nbroad implications for land use favor the Department of the Interior\nwith its wide range of functions in these areas as the lead agency for\ndeepwater port development.\nThe Department of the Interior is the focus of a government\nreorganization proposal transferring almost all functions of that\ndepartment together with some of the energy and natural resource\nmanagement functions of other Federal agencies to a new Department\nof Energy and Natural Resources. This proposal, now pending before\nthe 93d Congress, has been offered as one justification for placing\ndeepwater port policy anministration functions in the Department of\nthe Interior.\nThe view that deepwater ports should be administered primarily\nas navigation or transportation facilities which have significant\nimpact on the marine environment has led some to recommend that\ndeepwater port development be placed under the auspices of an agency\nor department with navigation and/or transportation related functions\nsuch. as the Department of Transportation, the U.S. Coast Guard,\nthe Corps of Engineers, the Maritime Administration, the Depart-\nment of Commerce or the National Oceanic and Atmospheric Admin-\nistration. The latter has been recommended especially because of\nits jurisdiction over both marine environmental affairs and the Coastal\nZone Management Program.\nIn addition to a lack of agreement over which Federal agency is\nbest suited to serve as the lead coordinating agency for deepwater\nport development there is also considerable disagreement over the\ndegree of authority which a lead agency should have and the manner\nin which such authority should interrelate with or possibly supersede\nthe authority of other Federal agencies.\nFor example, Congressional attention has in some cases focused\nnot on designating an agency to authorize deepwater port develop-\nment but on assuring that such development will not conflict with the\nfunctions carried out or policies promoted by other Federal agencies.\nSeveral measures pending before the 93d Congress propose to define\nthe roles which agencies such as the Environmental Protection Agency\nor the National Oceanic and Atmospheric Administration must play\nshould some other Federal agency authorize the development of deep-\nwater ports, by requiring these agencies to grant express certification\nof permit applications and plans for construction and operation.\nThe extent to which the advantages of providing a focus for the\nadministration of deepwater port policy in one lead agency could be\nGERALD FORD LIBRARY\n41\nrealized depends in large measure on the success of those procedures\nestablished to coordinate the functions of the various Federal agencies\nconcerned. It is possible that enactment of a Federal reorganization\nplan consolidating many of the energy and natural resource related\nfunctions within one agency would eliminate at least some of the\nadministrative difficulties involved in coordinating such a broad range\nof actions and functions required to oversee the development and\noperation of deepwater ports.\nC. Interagency task force or commission\nCreating an interagency task force or commission to authorize\ndeepwater port development could provide an effective means of\ncoordinating Federal responsibilites relating to deepwater port policy.\nThe interagency task force or commission would consist of the heads\nof those Federal agencies with a broad range of expertise and authority\napplicable to deepwater port development. One of its members would\nserve as Chairman.\nThis group could be authorized to establish rules and regulations\ngoverning the application review process and to consider applications\nand grant permits for the construction of deepwater ports in accord-\nance with Federal law. These responsibilities could be carried out in\nconsultation with the heads of Federal agencies who are not members\nof the group, but who have a particular interest in one or more aspects\nof deepwater port development.\nIn practice, interagency task force membership might include the\nSecretaries of the Department of the Interior, the Department of\nCommerce, the Department of the Army (acting on behalf of the Corps\nof Engineers) and the Administrator of the Environmental Protection\nAgency, with the Secretary of the Department of Transportation\nserving as Chairman. Applications could be reviewed and licenses\ngranted or denied in consultation with the Council on Environmental\nQuality, the Department of State, and the Department of Justice.\nOnce a deepwater port proposal had been authorized, the construe-\ntion and operation of the facility, its associated pipelines and other\ncomponents could be regulated by the various Federal agencies with\nrelevant expertise and appropriately expanded legal authority. This\narrangement of shared responsibility would be similar to that govern-\ning Outer Continental Shelf resource development.\nD. Federal ownership\nProviding for Federal ownership of deepwater ports might result in\nthe creation of a single-purpose Federal deepwater port development\nagency patterned after the Tennessee Valley Authority (TVA) to\nundertake the siting and development of deepwater ports. TVA was\ncreated for the sole purpose of producing electric power in the Tennes-\nsee Valley, and to implement programs relating to the social and\neconomic impacts of carrying out this mission. TVA dams and power\nplants are thus federally owned and operated facilities. It is possible\nthat deepwater ports could be similarly constructed as Federal prop-\nerty, the proceeds of their operation reverting to the Federal treasury\nas do the revenues from TVA power sales. This alternative has been\nrepeatedly discarded with the argument that substantial private\n24-935-74-1\nFORD i LIBRARY GERALD\n42\nindustry interest in developing deepwater ports renders public funding\nunnecessary. However, if Government ownership is considered desir-\nable, direct public subsidy could be supplanted by a guaranteed loan\nprogram whereby initial Federal expenditures are recovered from\nrevenues generated by the deepwater port, or the publicly owned\ncorporation could be empowered to seek financing in the private sector\nfrom the outset.\nFORD & LIBRARY GERALD\nCHAPTER 8.-FEDERAL GOVERNMENT RESPONSE\nOf the agencies with expertise and interest in the area of deepwater\nport development, many have formally addressed themselves to the\nissues raised in this report. The Maritime Administration, the Corps\nof Engineers, and the Council on Environmental Quality have all con-\nducted, or are in the process of completing studies related to the devel-\nopment of deepwater ports.\nThe Maritime Administration within the Department of Commerce\nhas pursued investigations of deepwater port facilities with the\nobjective of promoting the development of such facilities offshore.\nA MARAD contract awarded to the consulting engineering firm of\nSoros Associates \"in an effort to stimulate the development of deep\ndraft marine terminals in the United States\" resulted in the publica-\ntion of a three part study entitled \"Offshore Terminal System\nConcepts\" in September 1972.\nAt the time it was published, the Maritime Administration report's\nassessment of pressures on U.S. ports and harbors that would result\nfrom increasing volumes of U.S. petroleum imports was generally re-\ngarded as sound. However, the conclusions of the report were the\nsubject of considerable concern for two reasons. The report recom-\nmended that a deepwater port facility be constructed off the Delaware\ncoast where opposition to such development is especially strong. It\nalso assumed that the major portion of east coast energy demand\nwould be met by importing crude petroleum from the Middle East,\nand that refinery capacity sufficient to process this crude would be\nbuilt on the Atlantic Coast where, due to localized opposition, petrole-\num related industrial expansion is unwelcome.\nFurther promotion of U.S. deepwater port development has\nresulted from efforts to reinstate the United States with a major\nrole in the world tanker market pursuant to the U.S. Merchant\nMarine Act of 1970. Prior to 1970 the MARAD program to assist in\nthe construction of bulk cargo carriers was extremely limited. In\n1972, oceangoing bulk carriers transported about 85 percent of U.S.\nforeign commerce, yet American-flag vessels carried less than 4 percent\nof the 408 million tons of bulk commodities that moved in this trade.\nSince the economics of U.S. tanker construction and operation have\nmilitated against significant U.S. participation in the world tanker\nmarket, the construction differential subsidy and operating differential\nsubsidy provisions of the Merchant Marine Act of 1970 are designed\nto reduce the cost differences between U.S. and foreign-flag vessels.\nAs of November 1973, 9 contracts to subsidize the construction of\nU.S. supertankers had been granted under the Merchant Marine Act\nand 50 more applications have been filed for 1974. All of these contracts\nare for VLCC's ranging in size from 225,000 deadweight tons to 425,-\n000 deadweight tons.\n1 Offshore Terminal System Concepts, U.S. Department of Commerce, Maritime Adminis-\ntration, September 1972 (p. 1 and generally).\n(43)\nGERALD FORD LIBRARY\n44\nRegardless of whether or not the U.S. Merchant Marine Act is being\nimplemented with the express intent of promoting deepwater port\ndevelopment in the United States, the prospect of operating American\nowned deep draft vessels in world trade frequently serves as an argu-\nment for those who favor constructing deepwater ports off U.S.\ncoasts.\nOther Federal agencies investigating the issues related to deepwater\nports include the Corps of Engineers in the Department of the Army\nwhich has undertaken the task of examining various aspects of deep-\nwater port development through its Institute of Water Resources\n(IWR). In addition, through its regional offices, the Corps has also\ncarried out studies to determine the needs and potential sites for deep-\nwater port development on the Atlantic, Gulf and Pacific coasts pursu-\nant to congressional authorization under the Rivers and Harbors\nAct. The results of these studies are detailed reports of the environ-\nmental, engineering, economic and sociological aspects of deepwater\nport development on each of the United States coasts.\nEarly in 1972, the Council on Environmental Quality was charged\nwith the responsibility of conducting an interagency study of the en-\nvironmental impacts of deepwater ports. The scope of the study ex-\ntends to both the primary effects of constructing and operating deep-\nwater ports and to the landside secondary impacts associated with\ndeepwater port facilities.\nThe study of primary environmental impacts assessed in detail the\npotential adverse consequences of oil tanker casualties at various\nlocations, assuming both low level and high volume cargo loss. The\nstudy of secondary growth impacts reported on what expansion of\nrefinery and related industrial facilities and subsequent environmental\nimpact could be expected to result from deepwater port development\nat various locations along the U.S. coasts.\nThe CEQ studies led to recommendations for developing deepwater\nport terminal buoys of limited throughput far offshore in order to\nminimize both adverse secondary growth impacts and the potential\nfor environmental damage to the coastline in case of a spill.\nIn addition to these Federal agency activities, an interagency task\nforce coordinated at the White House level was formed to study the\neconomic, legal, and environmental aspects of deepwater port de-\nvelopment. Following the interagency review, the Administration\nproposed and recommended the enactment of S. 1751, \"The Deepwater\nPort Facilities Act of 1973,\" authorizing the Secretary of the Interior\nto grant licenses subject to certain conditions, for the development of\noffshore deepwater port facilities beyond the territorial waters of the\nUnited States. This measure was jointly referred to the Senate Com-\nmittees on Interior and Insular Affairs, Commerce and Public Works.\nA special joint subcommittee composed of five members from each of\nthe three full Committees was formed to consider this legislation.\nIn addition to the Administration's proposal over fifteen other\nmeasures relating to deepwater port development were introduced in\nthe 93d Congress.2\n2 See Appendix E for a summary of deepwater port legislation pending before the Senate in the\n93d Congress.\nGERALD FORD LIBRARY\nCHAPTER 9.-OVERVIEW\nThroughout the world, large capacity deep draft vessels known as\n\"supertankers\" are being used to transport oil between petroleum\nproducing and consuming nations. However, supertankers cannot de-\nliver their cargo directly to the United States because most American\nports are too shallow for the deep draft vessels to enter.\nWhile existing U.S. ports could be dredged to create deepwater\nports, monobuoy pumping facilities located in naturally deep water\noffshore are considered the most desirable type of supertanker\nterminal, both from an economic and environmental point of view.\nBecause most potential offshore deepwater port sites are located out-\nside U.S. territorial limits where only the Federal government exer-\ncises authority (albeit limited), Congress must enact legislation to\nauthorize and regulate the construction and use of these deepwater\nports.\nProposals to develop deepwater ports in the United States were\noriginally based on projections that this country would soon depend\nheavily on the Middle East nations for increasing volumes of crude\npetroleum imports. Accordingly, it was argued that:\n1. Deepwater ports offer a cheaper means of transporting imported\npetroleum supplies and can stimulate beneficial economic growth in\nadjacent coastal areas;\n2. Offshore deepwater ports and supertankers are environmentally\npreferable to the use of conventional tankers, harbors and ports at a\ngiven level of imports;\n3. Failure to build deepwater ports in the United States would\nencourage the construction of refinery capacity at foreign sites. This\n\"exportation\" of refinery capacity would result in an adverse impact\non U.S. balance of payments and reliance on the more costly and\nenvironmentally hazardous practice of transshipping petroleum in\nsmaller vessels from foreign deepwater ports. It could also lead to a\nloss of employment and other economic benefits associated with\ndomestic deepwater ports, refineries, and petrochemical industrial\ndevelopment.\nHowever, circumstances have changed since deepwater port devel-\nopment was first proposed in the United States. As a result of the Arab\noil embargo, which began in October of 1973, and continued to March,\n1974, reducing the United States' reliance on foreign petroleum\nsupplies and attaining domestic energy self-sufficiency have emerged\nas high priority national goals. This has created some uncertainty\nover the future of U.S. demand for petroleum imports over the long-\nterm. This uncertainty, coupled with doubts about the rate at which\ndomestic refinery capacity will expand, has raised questions as to the\nneed to develop U.S. deepwater ports.\nEven though a number of economic and environmental benefits are\nassociated with deepwater ports, the risks involved are great enough to\n(45)\nFORD & LIBRARY GLRALD\n46\nwarrant asking whether establishing a Federal policy authorizing\ndeepwater port development is consistent with the economic and\nenvironmental interests of the United States.\nFor example, it has been suggested that deepwater port and related\ndevelopment may actually inhibit the transition to domestic energy\nself-sufficiency by creating an infrastructure which must be sustained\nby continued petroleum imports.\nThere are, however, different interpretations of what the term \"U.S.\nenergy self-sufficiency\" means. Some view the self-sufficiency goal as\none of achieving total reliance on domestic energy supply, therefore\nadvocating that we turn our efforts toward conserving energy, develop-\ning alternative energy forms, and accelerating the exploitation of re-\nsources on the United States Outer Continental Shelf in order to\nachieve this goal. Others argue that energy self-sufficiency is a matter\nof attaining the capability to be totally reliant on domestic energy\nsupplies but continuing to rely on energy imports as long as it is\neconomically and politically feasible to do so. If the latter interpre-\ntation is accepted, then U.S. deepwater port development could be\nviewed as consistent with the energy self-sufficiency goal.\nIn any event, all available evidence suggests that the United States\nwill need to import substantial quantities of oil for the next decade at\nleast. As a result, State and Federal government interest in deepwater\nport development has remained strong. In addition, on the West\nCoast, several officials of State government and a number of indi-\nviduals and interest groups have expressed their preference for using\noffshore deepwater ports to unload oil supplies arriving from Alaska's\nNorth Slope. To meet the need for deepwater ports on the West\nCoast, and enable deepwater port development on the Gulf and\nAtlantic Coast as the need arises, it would, therefore, seem desirable\nfor Congress to enact legislation specifying the conditions which\nmust be met if deepwater ports are to be built. The number of such\nports and the timing of their development can then be determined\nby subsequent events.\nUltimately the form of legislation authorizing and regulating deep-\nwater port development will depend on the manner in which several\nmajor policy issues are resolved. These include: a determination of the\ninternational legal justification for the construction and operation\nof deepwater ports; a decision as to the institutional arrangements\nfor administering Federal deepwater port policy; and a decision as to\nthe nature and extent of Federal participation in the siting and regu-\nlation of deepwater ports. Congress must, therefore, address the\nfollowing questions:\nQuestion 1. What are the international legal implications of U.S.\ndeepwater port development?\nSeveral proposals to build U.S. deepwater ports involve siting\nmonobuoy facilities in naturally deep water several miles offshore.\nSuch deepwater ports would be located beyond U.S. territorial\nlimits, in waters known under international law as the high seas.\nAccording to available evidence, there is no express precedent in\ninternational law for a nation to exercise jurisdiction over the high\nseas in order to authorize and oversee the development and operation\nof deepwater ports. Absent such precedent or established interna-\nGERALD FORD LIBRARY\n47\ntional legal principle, a nation wishing to develop and regulate deep-\nwater ports beyond its recognized territorial limits might pursue one\nof three courses of action:\n(a) Unilaterally extend its territorial jurisdiction over such facilities;\n(b) Find residual authority for such action within the existing\nbody of international law; or\n(c) Seek clarification of and agreement on the deepwater port issue\nby the international community prior to exercising such jurisdiction.\nOfficial and non-official American sources alike argue against\nunilateral extension of territorial jurisdiction on the grounds that such\naction would disadvantage the United States' position vis-a-vis the\ncurrent Law of the Seas negotiations, where this nation is seeking\nlimitations on unilateral extensions of maritime boundaries. These same\nsources also feel that while the United States should unquestionably\nseek clarification of the deepwater port issue at the 1974 International\nLaw of the Sea Conference, to await final agreement by the interna-\ntional community would involve a significant loss of time and re-\nsources. Prior international accord is unnecessary, it is argued,\nbecause there is residual authority within the existing body of inter-\nnational law for a nation to use the high seas for the purpose of\ndeveloping deepwater ports. By far the most compelling argument\nin this regard is that the construction and operation of deepwater\nport facilities constitutes a \"reasonable use\" as contemplated by\nArticle 2 of the Convention on the High Seas.\nQuestion 2. What institutional arrangements should be established\nto administer U.S. deepwater port policy?\nThe expertise and authority which could be applied to the regulation\nof deepwater port development now reside in a number of Federal\nagencies while no one agency has sufficient authority to issue a permit\nor otherwise allow such development to begin. Thus, in addition to\nextending Federal jurisdiction over U.S. deepwater port development\non the high seas, legislation to authorize and regulate deepwater\nports must also establish an institutional arrangement to carry out\ndeepwater port policy and coordinate that policy with other govern-\nment policies and programs.\nThe goal in establishing an institutional arrangement to administer\ndeepwater port policy should be to provide the greatest possible\ncoordination of Federal government functions and achieve maximum\nutilization of Federal expertise.\nThe most practical means of achieving this goal would be to:\n(a) Authorize an existing Federal agency to act as the lead co-\nordinating agency for administering deepwater port development; or\n(b) Create a Federal interagency task force or commission to\nlicense and oversee the regulation of deepwater ports.\nIf a single Federal entity rather than an interagency or joint insti-\ntutional organization were authorized to license deepwater port\ndevelopment the licensing process should be carried out in consulta-\ntion with other Federal agencies having relevant expertise. Once a\ndeepwater port was licensed whether by a lead agency or an inter-\nagency task force or commission, various aspects of deepwater port\ndevelopment could then be regulated by different Federal agencies\nwith relevant expertise and appropriately extended jurisdiction.\nGERALD FORD LIBRARY\n48\nFor example, once a deepwater port was licensed, its construction\nmight be regulated by the Department of Interior or the Corps of\nEngineers. Pipeline saftey would be regulated by the Department of\nTransportation and navigational safety and oil spill prevention by\nthe U.S. Coast Guard. The National Oceanic and Atmospheric\nAdministration and the Environmental Protection Agency would\noversee certain aspects of deepwater port development to assure\ncompliance with environmental quality laws. In addition, the Inter-\nstate Commerce Commission, the U.S. Bureau of Customs, and the\nDepartment of State would carry out their responsibilities with respect\nto deepwater development.\nSuch a regulatory scheme would operate in much the same way\nas the Outer Continental Shelf Oil and Gas Leasing Program.\nQuestion 3. Should the Federal Government establish a single licensing\nand regulatory procedure to cover deepwater port development within as\nwell as beyond U.S. territorial limits?\nAs far as constructing deepwater ports within U.S. territorial\nwaters is concerned, the States, by virtue of their rights under the\nSubmerged Lands Act and authority over landside activities, are\nviewed as having dominant control over deepwater port development.\nNevertheless, the Federal government retains authority over matters\nof interstate and foreign commerce, flood control, dredging, environ-\nmental quality, and navigational safety in territorial waters. Even\nthough state authorized deepwater port development must also meet\nthe requirements of these Federal laws, the procedure for licensing-\nand in some cases, regulating-such facilities, would be different\nfrom that established for facilities beyond U.S. territorial waters\nunless new legislation provided otherwise.\nThere is little dispute that deepwater ports involve interstate and\nforeign commerce. Congress may, on this basis, wish to bring deep-\nwater port authorization within territorial waters under direct Federal\ncontrol by establishing a single Federally administered licensing and\nregulatory process to cover all deepwater port development regardless\nof location. If it was concluded that the Federal government should\nbe the principal licensing authority for all deepwater ports within as\nwell as outside territorial waters, it would be necessary to establish\ncriteria to determine what, in fact, constitutes a deepwater port.\nSuch criteria might be based on the throughput capacity of the\nfacility or on the size of the tankers which it serves.\nQuestion 4. What role should the Federal Government play in selecting\ndeepwater port sites?\nQuestions of controlling the direct and secondary environmental\nimpacts of deepwater port development lead to a consideration of\nwhat role the Federal government should play in selecting deepwater\nport sites. At a minimum, the Federal government must prescribe\nstandards necessary to assure that a deepwater port facility will be\nconstructed and operated with a minimum of risk to the environment\nand without interfering with other authorized uses of the Continental\nShelf and its overlying waters.\nHowever, it may be desirable for the Federal government to exer-\ncise a more decisive role in the deepwater port site selection process.\nFederal investigations concerning deepwater port development,\nGERALD FORD LIBRARA\n49\nespecially those conducted by the Corps of Engineers and Council\non Environmental Quality, have produced a substantial body of data\nand information which could serve as the basis of Federal deepwater\nport siting decisions.\nBeginning with a determination of those market areas which might\nbe beneficially served by deepwater port facilities, potential deep-\nwater port sites could be evaluated to determine those sites which\nmight be developed with a minimum impact on the marine and coastal\nenvironment, where navigational safety can be assured, and where\nsuch development would not interfere with other uses of the oceans\nincluding marine resource development and scientific research.\nA Federal system of designating potential deepwater port sites\nprior to the time that applications for Federal authorization are\nreceived could be used to:\n(1) Assure that deepwater ports are located in areas where the\npotential for environmental degradation is at a minimum;\n(2) Control the number of deepwater ports developed; and\n(3) Encourage the development of refineries and petrochemical\nindustries. in those adjacent coastal areas which can best bear\nindustrial expansion in an environmental sense and which might\nbenefit from accelerated economic growth.\nIn addition, by pre-determining deepwater port sites, the Federal\ngovernment could establish a time frame within which applications to\ndevelop deepwater ports serving a particular market area would be\nreceived, reviewed, and compared with one another.\nThose who argue for limited Federal involvement in deepwater port\nsite selection feel that those entities which will ultimately build and\noperate deepwater ports are best equipped to determine, from an eco-\nnomic and environmental point of view, where such ports should be\nbuilt. Furthermore, the proponents of limited Federal involvement in\ndeepwater port development feel that market forces will determine\nthe number of deepwater ports developed while existing Federal and\nState laws will operate to control the secondary landside development\ngenerated by such ports.\nDepending on the extent of involvement desired, alternative Fed-\neral government roles in the deepwater port site selection process\ninclude the following:\n(a) Establishing standards for site selection to assure that deepwater\nport construction and operation proceeds with minimum environ-\nmental risk and without interfering with other authorized uses of the\nContinental Shelf and its overlying waters;\n(b) Designating those areas off the coast of the United States which\nare suitable for development as deepwater sites. The Federal deep-\nwater port licensing authority could establish a time frame within\nwhich applications to develop deepwater ports in designated areas\nwould be received. The basis for approving an application would de-\npend on the objectives desired. For example, the basis of determination\ncould be strictly environmental and could include consideration of\nwhat secondary development might be involved in a proposal. Deep-\nwater port ownership might also be considered, e.g., a proposal by a\nState government might be preferred over one involving integrated\noil companies or some other form of private ownership; and\nGERALD FORD LIBRARY\n50\n(c) The Federal government could identify those areas which, either\nbecause of vulnerability to direct environmental impacts or because\ndeepwater port development could be expected to produce particularly\nsevere impacts on the adjacent coastal areas, are unsuitable as deep-\nwater port sites. Applications involving such areas would auto-\nmatically not be considered.\nQuestion 5. What type of controls are needed to safeguard against the\ndirect environmental impacts of deepwater port development?\nThe unique characteristics of deepwater port development will\nrequire the U.S. to utilize, and in some cases to improve, regulatory\nand monitoring abilities with respect to the construction and operation\nof submarine pipleines, petroleum transport and transfer facilities, and\noil spill prevention and containment systems.\nThose Federal laws which are designed to prevent environmental\ndegradation from platform and pipeline construction and operation or\nfrom vessel operations and cargo transfers in navigable waters include\nthe Outer Continental Shelf Lands Act, the Rivers and Harbors Acts,\nthe Ports and Waterways Safety Act, the Federal Water Pollution\nControl Act and the National Environmental Policy Act. However,\nthere is some uncertainty as to the manner in which these laws would\napply to deepwater port development beyond U.S. territorial limits.\nIn order. to minimize the environmental risks involved and assure\nthe most complete coverage of deepwater port facilities and super-\ntanker operations, those Federal agencies with appropriate functions\nand expertise such as the Department of the Interior, the Department\nof Commerce, or the Department of Transportation, the Environ-\nmental Protection Agency, the Coast Guard, and the Corps of En-\ngineers, should be authorized to impose and enforce certain conditions\nwith respect to supertanker design and operation, and deepwater port\nterminal facility and pipeline siting, design, construction, and use.\nSuch conditions should include:\n(a) Specific engineering design, construction and operation criteria\nfor deepwater port facilities including pipelines and storage tanks;\n(b) Such specific design, construction and operation criteria for\nvessels utilizing deepwater ports, including double bottoms, segregated\nballast, advanced navigation systems, and manning requirements as\nmay be necessary to minimize the risk of tanker collision and opera-\ntional or accidental spills (deepwater port use could be limited to only\nthose vessels which comply with standards of construction and design\nas may be prescribed by deepwater port legislation); and\n(c) Such requirements and criteria for oil spill prevention and con-\ntainment systems and equipment as may be necessary to provide the\ngreatest possible safeguard against oil pollution damage to the marine\nand coastal environment.\nLegislation should also establish some form of liability to provide\ncompensation for any persons injured as a result of oil pollution dam-\nage resulting from the operation of a deepwater port.\nQuestion 6. What types of controls are needed to safeguard against\nthe secondary environmental impacts of deepwater port development?\nSecondary envionmental impacts which result from expanded re-\nfinery and petrochemical development in coastal areas adjacent to\nFORD & LIBRARY GERALD\n51\ndeepwater port sites can be equally or more severe than the direct en-\nvironmental impacts of deepwater port construction and use.\nIn general, the greater the volume throughput of a deepwater port\nfacility, the greater the potential for adverse secondary environmental\nimpacts to result from its development. It may be argued that if oil\nimport levels are high, operating a number of deepwater ports of\nlimited throughput, and dispersing them at various locations along\nthe coast is preferable to operating a limited number of facilities with\nhigh throughput capacities.\nLaws such as the Coastal Zone Management Act; the Marine Pro-\ntection, Research and Sanctuaries Act; the Clean Air Act; the Federal\nWater Pollution Control Act and the National Environmental Policy\nAct afford some protection against environmental degradation of land\nand water resources. Another measure, pending before the 93rd Con-\ngress, which could offer some means of controlling environmental\ndegradation in coastal areas adjacent to a deepwater port site is S.\n268, the Land Use Policy and Planning Assistance Act. However,\nthere is some feeling that, rather than leaving secondary environmental\nimpacts to be controlled solely by existing laws, legislation to authorize\nthe development of deepwater ports might provide additional safe-\nguards against adverse secondary environmental impacts by:\n(a) Making Federal approval of deepwater port projects contingent\nupon a determination that the project is consistent with the land use,\ncoastal zone management or environmental protection policies and\nprograms of the adjacent coastal states;\n(b) Requiring that the coastal state adjacent to a proposed deep-\nwater port site have in force a Coastal Zone Management Program;\n(c) Requiring the adjacent coastal state to produce an environ-\nmental protection plant specifically designed to control the secondary\nenvironmental impacts of deepwater port development;\n(d) Limiting the throughput capacity of deepwater ports to en-\ncourage the dispersion of secondary environmental impacts.\nQuestion 7. What form of State, Local and public participation is\nneeded in the deepwater port authorization process?\nStates and localities will ultimately experience economic and en-\nvironmental impacts as a result of deepwater port development. While\nsome states expect to benefit from such impacts, others believe that\ntheir economic and environmental interests will be adversely affected\nby deepwater port development and, therefore, oppose the location of a\ndeepwater port off their coasts. It has been suggested that in order to\nprevent an unwilling state from being forced to accept deepwater port\ndevelopment off its shores, the coastal state adjacent to a proposed\ndeepwater port site should have final say over whether a Federal\nlicense to build the port will be granted. Thus a state could prevent a\nport which met all other requirements of Federal law from being built,\neven though the port would be located beyond U.S. territorial\nwaters-i.e., in an area of exclusive Federal jurisdiction.\nThose arguing against state veto power believe that:\n(1) State land use and environmental controls including\nCoastal Zone Management Programs, should be the vehicle for\ndealing with secondary growth;\nFORD i LIBRARY GERALD\n52\n(2) The Federal government would not, as a matter of policy,\nauthorize a deepwater port over the objection of the adjacent\ncoastal state; and\n(3) The State could effectively prevent deepwater port devel-\nopment off its coast by denying piepline and other permits for\ndeepwater port facilities located within state jurisdiction.¹\nHowever, many officials and residents of coastal states are not\nreassured by these arguments. Regardless of whether or not states\nare given the power to veto deepwater port proposals, the farreaching\nimpacts of deepwater port development make ample provision for\nstate, local, and public participation in the deepwater port authoriza-\ntion process desirable to assure that such development proceeds in a\nmanner consistent with state economic and environmental interests.\nLegislation to authorize and regulate deepwater port development\ncould provide for state, local, and public participation by any one, or\ncombination of the following means:\n(a) Requiring that a public hearing be held at the locality nearest\nto a proposed deepwater port site before license approval is granted;\n(b) Requiring consultation with the affected state or states, prior to\ngranting Federal approval for any deepwater port project, and em-\npowering the state or states to require modifications in such a proposal\nprior to its approval;\n(c) Requiring an application for Federal authorization of a deep-\nwater port project to be accompanied by all necessary state authori-\nzations and permits;\n(d) Providing for preferential treatment of deepwater port project\nproposals in which the state is directly involved. Under this system, a\nstate meeting certain requirements could be granted \"first option\"\nover deepwater port development off its shores in anticipation that\nthe state would ultimately join in or lend its support to some private\nentity's deepwater port project proposal. Alternatively a state might,\non its own or in cooperation with an adjacent state or states, undertake\nto construct, own, and operate a deepwater port facility.\nQuestion 8. What action is necessary to protect against the anticom-\npetitive implications of deepwater port development?\nEven though deepwater ports would be subject to the antitrust\nlaws and regulated by the Interstate Commerce Commission as \"com-\nmon carriers,\" there is reason to believe that additional safeguards\nare needed to protect against the anticompetitive implications of\ndeepwater port development. For example:\n(1) Deepwater ports will be similar, in some respects, to the\npipelines which transport oil supplies in interstate commerce.\nThey will be relatively few in number and strategically placed in\nrelation to the petroleum distribution and supply system;\n(2) If, as has been proposed, deepwater ports are owned by\njoint-venture corporations formed by integrated oil companies,\nthese corporations will enjoy some manner of control over both\nthe deepwater port facilities and the refineries and pipelines\nwhich corporate shareholders own individually or jointly in the\nadjacent coastal areas; and\n1 There is a possibility that such a denial could be challenged on the grounds that the state was placing\nunreasonable burdens on interstate and foreign commerce or as exceeding the authority granted to the\nStates by the Federal Government under the Submerged Lands Act of 1953.\nFORD & LIBRARY GERALD\n53\n(3) The FTC, the Antitrust Division of the Department of\nJustice, and the ICC have all testified in Congressional hearings\nthat there is considerable potential for deepwater port owners to\nincrease their control over the oil market even if all antitrust\nlaws and regulations are applied to deepwater port development.\nOfficials representing FTC, ICC, and the Department of Justice\ntestified that the potentially anticompetitive characteristics of deep-\nwater port development might be eliminated by:\n(a) Requiring the appropriate Federal agencies to conduct a\nthorough review of deepwater port project proposals before a license\nis granted to certify that such proposals would not violate antitrust\nlaws or tend to create a monopoly;\n(b) Applying a \"commodity clause\" feature to deepwater port\ndevelopment whereby a deepwater port owner and operator could not\nhandle any commodities in which he has direct or indirect interest; or\n(c) Prohibiting \"joint venture\" involvement by integrated oil\ncompanies in deepwater port development by allowing only single\noil companies or companies completely independent of the petroleum\nindustry to own and operate deepwater ports. (The investment\nrequired to build deepwater ports is not high enough to make joint-\nventure efforts absolutely necessary on financial grounds).\nState governments and industrial interests outside the integrated\noil companies are prepared to undertake deepwater port development\non their own. Thus, a prohibition against joint-venture involvement\nwould not cause significant delay in bringing deepwater ports on line.\nHowever, an alternative to prohibiting joint-venture involvement in\ndeepwater port development would be to encourage state governments\non their own or in contract with companies of their choosing to build\nand operate deepwater port facilities. The objective of such an ap-\nproach would be to provide for public representation, whatever the\ndeepwater port ownership arrangement, to assure that the facility\nwas operated in a manner consonant with the public interest.\nAnother approach would be to grant licenses to construct deepwater\nports on a priority basis. For example, consider a situation where only\none deepwater port is needed to serve a particular market area, and\nseveral applications to construct such a facility are received by the\nFederal agency with deepwater port licensing authority. Applications\nwould then be considered on the following scale of priority:\n(1) Application in which a state is directly involved;\n(2) Application by a firm independent of the oil industry;\n(3) Proposal by an individual company affiliated with the oil\nindustry; or\n(4) Proposal by a joint-venture corporation with integrated oil\ncompanies among its members.\nQuestion 9. Is some form of financial payment necessary to compensate\nadjacent coastal states for burdens incurred as a result of deepwater port\ndevelopment?\nThe need to supply additional services and provide for the protection\nof environmental values as a result of deepwater port development\nmay place increased burdens on the financial resources of adjacent\ncoastal states. It has, therefore, been suggested that states should\nreceive financial payments to compensate for such burdens. Proponents\nFORD i LIBRARY GERALD\n54\nof this recommendation feel that a suitable compensation scheme could\nact as an incentive for states to approve deepwater port development\noff their coasts and undertake the actions necessary to protect their\nenvironmental interests.\nOther sources argue, however, that the secondary growth stimulated\nby deepwater port development should generate sufficient revenues to\ncompensate an adjacent coastal state for any burdens which might\nalso be imposed.\nIf some form of compensation to state governments were deemed\nappropriate, such compensation could be provided by one of the follow-\ning means:\n(a) Where a program such as the Coastal Zone Management Act,\nthe Federal Water Pollution Control Act, or the proposed National\nLand Use Policy and Planning Assistance Act provides payments to\nthe states in support of environmental planning programs, the\namounts of funds granted could be increased by a certain percentage\nfor states affected by the development and operation of deepwater\nports and their associated components; or\n(b) A per-barrel charge could be placed on deepwater port through-\nput. Revenues generated by such a charge could be used to establish\na fund from which states adjacent to or affected by a deepwater port\nreceived payment in support of environmental protection programs\ndesigned to provide such additional services as may be required to\nmeet the pressures of deepwater port development.\nHow A FEDERAL DEEPWATER PORT PROGRAM MIGHT BE\nORGANIZED AND ADMINISTERED\nIn light of the foregoing discussion, deepwater port policy might\nbe organized and administered in the following way:\nDEEPWATER PORT FACILITIES LICENSING BOARD\nA Deepwater Port Licensing Board would be formed by the heads\nof the following agencies, one of whom would serve as Chairman:\nDepartment of the Interior;\nDepartment of Transportation (Coast Guard);\nDepartment of Commerce;\nDepartment of the Army, acting through the Corps of Engi-\nneers; and\nEnvironmental Protection Agency.\nThe Licensing Board would be authorized to:\nDetermine the number of deepwater ports required and identify\npossible sites;\nEstablish rules and regulations governing the application\nreview process;\nReceive applications;\nConduct hearings;\nApprove, disapprove or require revisions in deepwater port\nlicense applications;\nGrant licenses for deepwater port development;\nPrepare a single, detailed Environmental Impact Statement\nand circulate it for review;\nFORD & LIBRARY 97V839\n55\nCoordinate the promulgation of rules and regulations governing\ndeepwater port construction, operation and use;\nCollect and serve as a central clearing house for information\nand data relevant to deepwater port development; and\nMaintain an overview of deepwater policy administration with\nparticular emphasis on the manner in which deepwater port\npolicy interrelates to other Federal policies concerning energy\nresource supply, environmental quality and economic viability.\nThe Licensing Board would carry out its responsibilities in consulta-\ntion with other Federal agencies with a particular interest in one or\nmore aspects of deepwater port development. Such agencies would\ninclude, the Department of Justice, ICC, FTC, Council on Environ-\nmental Quality, and the Federal Maritime Commission.\nAPPLICATION REVIEW PROCESS\nThe Deepwater port license application review process would operate\nas follows:\n1. The application would be filed in the office of the Chairman\nof the Licensing Board. This office would house a permanent pro-\nfessional staff drawn from the Licensing Board member agencies.\n2. An application would constitute the application for all Fed-\neral authorizations which might be required to build a deepwater\nport.\n3. The application would be accompanied by all State permits\nwhich might be required to complete landside installation of deep-\nwater port facilities.\n4. The application would be circulated for comment to all\nFederal agencies with review functions and to the adjacent or\naffected states.\n5. An official of the adjacent State would be enlisted as an ad\nhoc member of the Licensing Board.\n6. All review agency views and the views of the adjacent and\naffected coastal states would be considered.\n7. A hearing would be held at a location in proximity to the\napplication as they deemed appropriate.\n8. A single detailed Environmental Impact Statement con-\ncerning a license proposed to be issued would be prepared by the\nCommission and circulated for review.\nAPPLICATION APPROVAL\nA deepwater port license application would be approved and a\nlicense granted if:\n1. The application met all the requirements of the Deepwater\nPort Act;\n2. All Licensing Board member agencies certified that the ap-\nplication met the requirements of the laws they administer;\n3. The Department of Justice and Federal Trade Commission\ncertified that the proposal would not tend to violate the antitrust\nlaws; and\n4. The adjacent coastal state certified that the deepwater port\nproposal was consistent with the environmental protection and\nland use management programs of the state.\nFORD & LIBRARY 9ERALD\n56\nREGULATION OF DEEPWATER PORT FACILITIES\nOnce a deepwater port proposal was authorized, its construction,\noperation, and use would be regulated as follows:\nUSGS, Corps of Engineers: engineering and structural aspects\nof deepwater port facility.\nCoast Guard: safety, equipment, vessel transportation and\naccidents.\nCoast Guard, EPA, NOAA: marine environmental quality, oil\nspill prevention and containment.\nOffice of Pipeline Safety (DOT), USGS: offshore pipeline design\nand performance standards.\nICC: pipeline regulation, reasonable access, rates, tariffs.\nDepartment of Labor, Coast Guard, State Government: civil and\ncriminal law.\nEPA, NOAA, State Government: Coastal and land based envi-\nronment concerns.\nFORD i LIBRARY GERALD\n57\nAPPENDIX A\nOFFSHORE DEEPWATER TERMINAL DESIGNS* *\nSINGLE BUOY\nMOORING FACILITY\nDISCHARGING LOADING\nTANKER\nMOND MOORING HUDY\nPLOATING\nHOSES\nCONTROL\nVALVE\nCONCRETE\nCLUMPS\nHOBES\nMJORNS\nCHAINS\nANCHORS\nPINELINES TO SHORE TANK FORM\nCONVENTIONAL\nBUOY MOORING\nSURMARINE PIPELINES\nMOORING\nANCHORS\nBUOYS\nSHIPS\nANCHORS\nCHAINS\nMARKER BUDY\nANOMOR\n*Source: U.S. Army Corps of Engineers\n24-935-74-5\nFORD is LIBRARY 074830\n58\nSINGLE POINT MOORING PIER\nSWIVEL\nPLOATING BOOM\nPICED\nPIPLINE\nSTRUCTURE\nARTIFICIAL ISLAND WITH SEA ISLAND ASRTH\nwe TRANSSHIPMENT\nTANN PAPK\nFORD i LIBRARY CERALA\nAPPENDIX B\nEXECUTIVE COMMUNICATIONS\nU.S. DEPARTMENT OF THE INTERIOR,\nOFFICE OF THE SECRETARY,\nWashington, D.C., January 24, 1974.\nHon. JOSEPH R. BIDEN, Jr.,\nU S. Senate,\nWashington, D.C.\nDEAR SENATOR BIDEN: This replies to your letter of November 30,\n1973 asking for updated projections of U.S. reliance on Persian Gulf\npetroleum supplies reflecting the President's announced goal of U.S.\nenergy self-sufficiency by 1980. You also ask whether these updated\nprojections will affect the need or economic feasibility of deepwater\nports.\n\"Project Independence\", in our view, does not aim at eliminating\nU.S. imports of petroleum after 1980. The goal is to achieve the\ncapability of self-sufficiency in energy by that date so that disruption\nin foreign supplies will not cause serious economic repercussions or\njeopardize national security. It is freedom from dependence on foreign\nfuel supplies that we are seeking.\nProject Independence has two basic thrusts: To develop alternate\ndomestic fuel sources and to reduce wasteful and unnecessary con-\nsumption. It is clear that the United States, with six percent of the\nworld's population, cannot continue to consume one-third the world's\nenergy output. Most Americans realize that the era of cheap energy\nis over and have already begun to adjust to this fact in their con-\nsumption patterns. Further adjustments will undoubtedly be required\nin the future. Therefore, it is extremely difficult to project with any\naccuracy the demand levels and import levels over the next several\ndecades. Historical trends will hopefully not be indicative of future\ndemand. We would defer to the Federal Energy Office for the most\nup-to-date projections.\nWe feel, therefore, that petroleum imports will continue through the\n1980's in sufficient quantities to justify the development of deepwater\nports. The Administration's proposal does not identify the location\nor number of ports we expect to license. That decision is to be made\nby the industry. The Administration's proposal is intended to create\na licensing authority in the Federal Government so that such ports\ncan be developed under full environmental safeguards and other\nregulations if the economics warrant it. We hope the Congress will\ncontinue to treat this legislation with high priority.\nSincerely yours,\nJOHN C. WHITAKER,\nUnder Secretary of the Interior.\nI Note. S. 1751, \"Deepwater Port Facilities Act of 1973\".\n(59)\nFORD & LIBRARY 07/1/20\n60\nEXECUTIVE OFFICE OF THE PRESIDENT,\nOFFICE OF MANAGEMENT AND BUDGET,\nWashington, D.C., December 26, 1973.\nHon. HENRY M. JACKSON,\nChairman, Committee on Interior and Insular Affairs, U.S. Senate,\nWashington, D.C.\nDEAR MR. CHAIRMAN: The President has asked me to reply to your\nletter of December 7, 1973, seeking the current Administration\nposition regarding the \"Deepwater Port Facilities Act of 1973\"\nvis-n-vis \"Project Independence.\"\nWhile the President has called for the capacity of self-sufficiency,\nthis does not necessarily mean zero imports. If by 1980 world conditions\nare sufficiently stable and world sources of oil sufficiently diverse, it\nmay well be in the national interest to continue the importation of\nsome limited amounts of crude oil.\nIn the meantime, we most surely will want to continue importing\nsome part of our total crude oil supplies, availability permitting.\nSince the payback period of a deepwater port facility for crude oil\ncan be as short as two years, it is entirely possible that private\ninterests might wish to construct such a facility. In the President's\nview, the Nation might well benefit from the flexibility and cost\nadvantage of having such facilities.\nThere is also the possibility that private interests might wish to\nconstruct a deepwater port facility for some commodities other than\noil. For these reasons, the President still strongly supports S. 1751,\nwhich you introduced.²\nWe thank you for the opportunity to explain our position on this\nbill in view of recent events. We deeply appreciate your cooperation\nto date, and count on your vital support on this matter in the future.\nWith warmest regards,\nSincerely,\nRoy L. AsH, Director.\n2 Note. S. 1751, \"The Deepwater Port Facilities Act of 1973\" was introduced by Sen. Jackson and others\nby request.\nQERALO FORD LIBRARY\nAPPENDIX C\nUNITED STATES OF AMERICA: DRAFT ARTICLES FOR A CHAPTER ON\nTHE RIGHTS AND DUTIES OF STATES IN THE COASTAL SEABED\nECONOMIC AREA 1\nARTICLE 1\n1. The coastal State shall have the exclusive right to explore and\nexploit and authorize the exploration and exploitation of the natural\nresources of the seabed and subsoil in accordance with its own laws and\nregulations in the Coastal Seabed Economic Area.\n2. The Coastal Seabed Economic Area is the area of the seabed\nwhich is:\n(a) seaward of -; and\n(b) landward of an outer boundary of -\n3. The coastal State shall in addition have the exclusive right to\nauthorize and regulate in the Coastal Seabed Economic Area or the\nsuperjacent waters:\n(a) the construction, operation and use of offshore installations\naffecting its economic interests; and\n(b) drilling for purposes other than exploration and exploitation of\nresources.\n4. The coastal State may, where necessary, establish reasonable\nsafety zones around such offshore installations in which it may take\nappropriate measures to protect persons, property, and the marine\nenvironment. Such safety zones shall be designed to ensure that they\nare reasonably related to the nature and function of the installation.\nThe breadth of the safety zones shall be determined by the coastal\nState and shall conform to international standards in existence or to\nbe established pursuant to Article 3.\n5. (a) For the purposes of this Chapter, the term \"installations\"\nrefers to all offshore facilities, installations, or devices other than those\nwhich are mobile in their normal mode of operation at sea.\n(b) Installations do not possess the status of islands. They have\nno territorial sea or Coastal Seabed Economic Area of their own,\nand their presence does not affect the delimitation of the territorial\nsea of the coastal State.\n6. The coastal State may, with respect to the activities set forth in\nthis Article, apply standards for the protection of the marine environ-\nment higher than those required by applicable international standards\npursuant to Article 2.\n7. The coastal State may, with respect to the activities set forth\nin this Article, take all necessary measures to ensure compliance\nwith its laws and regulations subject to the provisions of this Chapter.\n11 This Chapter deals with seabeds resources, and does not deal W 1th fisheries. The proposal of the United\nStates with respect to fisheries beyond the territorial sea was introduced in Subcommittee Il on 4 August 1972\n(A/AC.1S8/SC.1I/SR.40) (Official Records of the General Assemby. Twenty-secenth session. Supplement No. 21,\nA/8781).\n(01)\nFORD i LIBRARY GERALD\n62\nARTICLE 2\nThe coastal State, in exercising the rights referred to in Article 1,\nshall ensure that its laws and regulations, and any other actions it\ntakes pursuant thereto in the Coastal Seabed Economic Area, are\nin strict conformity with the provisions of this Chapter and other\napplicable provisions of this Convention, and in particular:\n(a) the coastal State shall ensure that there is no unjustifiable\ninterference with other activities in the marine environment, and shall\nensure compliance with international standards in existence or\npromulgated by the Authority or the Inter-Governmental Maritime\nConsultative Organization, as appropriate, to prevent such inter-\nference;\n(b) the coastal State shall take appropriate measures to prevent\npollution of the marine environment from the activities set forth\nin Article 1 and shall ensure compliance with international standards\nin existence or promulgated by the Authority or the Inter-Govern-\nmental Maritime Consultative Organization, as appropriate, to prevent\nsuch pollution;\n(c) the coastal State shall not impede, and shall co-operate with\nthe Authority in the exercise of its inspection functions in connection\nwith subparagraph (b) above;\n(d) the coastal State shall ensure that licenses, leases, or other\ncontractual arrangements which it enters into with the agencies or\ninstrumentalities of other States, or with natural or juridical persons\nwhich are not nationals of the coastal State, for the purpose of explor-\ning for or exploiting seabed resources are strictly observed according to\ntheir terms. Property of such agencies, instrumentalities or persons\nshall not be taken except for a public purpose, on a non-discriminatory\nbasis, nor shall it be taken without the prompt payment of just\ncompensation. Such compensation shall be in an effectively realizable\nform and shall represent the full equivalent of the property taken and\nadequate provision shall have been made at or prior to the time of the\ntaking to ensure compliance with the provisions of this paragraph;\n(e) the coastal State shall make available in accordance with the\nprovisions of Article such share of revenues in respect of mineral\nresource exploitation from such part of the Coastal Seabed Economic\nArea as is specified in that Article.\nARTICLE 3\n1. All activities in the marine environment shall be conducted with\nreasonable regard to the rights of the coastal State referred to in\nArticle 1.\n2. States shall ensure compliance with international standards in\nexistence or to be promulgated by Inter-Governmental Maritime\nConsultative Organization in consultation with the Authority:\n(a) regarding the breadth, if any, of safety zones around offshore\ninstallations;\n(b) regarding navigation outside the safety zones, but in the\nvicinity of offshore installations.\nGERALD FORD LIBRARY\n63\nARTICLE 4 2\nNothing in this Chapter shall affect the rights of freedom of naviga-\ntion and overflight and other rights to carry on activities unrelated\nto seabed resource exploration and exploitation in accordance with\ngeneral principles of international law, except as otherwise specifically\nprovided in this Convention.\nARTICLE 5\nAny dispute with respect to the interpretation or application of\nthe provisions of this Chapter shall, if requested by either party to\nthe dispute, be resolved by the compulsory dispute settlement pro-\ncedures contained in Article -, , of Chapter -.\n2 It is assumed that the general articles of the Law of the Sea Convention will contain an article such as\nArticle 4 applicable to all areas beyond the territorial sea. Such an article would obviate the need for several\narticles making the same point here and in other chapters of the Convention:\nGERALD R FORD LIBRARY\nAPPENDIX D\nONSHORE SECONDARY IMPACTS OF DEEPWATER TERMINAL FACILITY\nDEVELOPMENT\n(Prepared by Jean March, Environmental Policy Division, Library of\nCongress at the Request of Senator Henry M. Jackson, Chairman,\nSenate Interior and Insular Affairs Committee)\nSUMMARY\nA major controversy surrounding the development of deepwater\nterminal facilities concerns the landside impacts from induced refining\nand petrochemical industrial growth. Studies of the landside effects of\ndeepwater terminal development have concluded that if induced\nindustrial growth is concentrated in the vicinity of a terminal, un-\nplanned and uncontrolled development could have serious environ-\nmental, social, and economic effects. In this Federal system, the\nauthority and responsibility for governing much of this industrial\ngrowth resides in the State and local governments.\nA major factor in decisions to permit deepwater terminal facility\ndevelopment may be the readiness and ability of State and local\njursidictions to prepare and carry out comprehensive planning for\nland use and economic development in order to minimize any possible\nadverse economic and environmental effects of secondary growth.\nINTRODUCTION\nThe construction of deepwater ports or terminals off the coast of\nthe United States for receiving supertanker traffic has been advocated\nby the present Federal Government Administration and by oil in-\ndustry representatives as a means of reducing the transportation cost\nof importing increasing quantities of foreign oil to meet the nation's\nburgeoning energy demands. Because no existing United States\nharbor is adequately developed to accommodate the largest super-\ntankers in worldwide use, one or more methods (including dredging\nexisting channels, and developing offshore terminal systems) might\nhave to be relied on to provide U.S. unloading facilities for super-\ntankers.\nThe case has been made that use of supertankers and deepwater\nfacilities for oil importation will provide certain advantages such as\nsignificant economies in transportation costs, reduction of the risks of\nship collision and grounding, and reduction of oil pollution probubili-\nties. By contrast, arguments have been advanced by opponents of\ndeepwater facilities that, directly or indirectly, use of supertankers\nwill generate serious negative impacts on the marine and coastal en-\nvironment. The critics of a policy of rapid deepwater terminal facility\n(65)\nGERALD FORD LIBRARY\n67\n(4) a four-fold increase in air pollutant emission from the new indus-\ntrial sources.\nIn contrasting testimony, General J. L. Kelly, Deputy Director of\nCivil Works, Corps of Engineers contended that \"development of\ndeepwater port facilities in the North Atlantic region need not entail\nindustrial development in the immediate vicinity of the facilities.\"\nGeneral Kelly expressed his belief that proper land use planning is\nneeded to determine if industrial expansion would be desirable and, if\nso, where the development should occur.\nTestimony at subsequent Senate hearings 4. 5 demonstrated that\nmany State and local officials feel that the potential landside impacts\nfrom deepwater port-generated secondary growth must be analyzed\nmore fully to minimize possible adverse effects.\nII. TYPES OF POTENTIAL SECONDARY GROWTH IMPACTS\nSo far there has been no development of a deepwater terminal\nfacility in this country, and no existing U.S. ports handle the volume\nof oil imports projected for proposed deepwater terminal facilities.\nMost predictions about resultant secondary growth rely, therefore, on\ninformation stemming from foreign experience.\nExperience abroad\nIn 1971, Arthur D. Little, Inc. (ADL) under contract to the Army\nCorps of Engineers, Institute for Water Resources, completed a study\nof the development and operations experience of selected foreign\ndeepwater ports.⁶ The report focused on problems which might be\nrelevant to deepwater terminal facility planning in the United States,\nincluding secondary growth effects.\nThe researchers found that there had been a \"visible trend of move-\nment of heavy manufacturing facilities to deepwater coastal industrial\nzones\" in Europe. After deep port construction, there had been an\nincreased migration of petroleum refining, petrochemical, chemical,\nsteel, alumina and power plants to the coastal region.\nHowever, this industrial movement was in part due to the fact that\nthe ports had been designed as \"integrated\" ports used for the transfer\nof bulk cargo as well as petroleum, rather than as the \"monoport\"\ntype, used solely for the transfer of petroleum.\nADL also reported that deepwater port-associated land require-\nments were often much greater than anticipated. For example, in\nDunkirk, France, deepwater port planners eliminated proposed green-\nbelts (open space buffers) due to the unexpected heavy demand for\nfuture industrial sites. In Rotterdam, Netherlands, heavy demand for\nindustrial sites near the deep port was anticipated but industrial land\nrequirements nevertheless exceeded the supply of available land.\nEnterprises which could have been sited further inland demanded\nspace near the deepwater industries. Petrochemical producers pre-\nferred to locate in close proximity to the refineries, and petroleum\n4 U.S. Congress. Senate. Committee on Commerce. Offshore Marine Environment Protection Act of\n1973. Hearings, 93d Congress, 1st session. Washington, U.S. Govt. Print. Off., 1973. 335 p. Serial No. 93-20.\nHearings held March 5, 6, and 12, 1973.\n$ U.S. Congress, Senate. Special Joint Subcommittee of the Committees on Interior and Insular Affairs,\nCommerce and Public Works. Joint hearings to consider deepwater port facilities legislation. Washington,\n1973. Hearings held July 23, 24, 25; August 1. 1973: October 2 and 3, 1973.\n6 de Frondeville, Bertrand L., and others. Foreign deepwater port developments-a selective overview\nof economics, engineering and environmental factors. by Arthur D. Little, Inc. Alexandria, Virginia, Army\nEngineer Institute for Water Resources. (1971) (Institute for Water Resources report 71-11).\nGERALD FORD LIBRARY\n68\nrefiners in turn chose to reduce transportation costs by locating near\nthe port. Local officials indicated that due to their underestimation of\nindustrial land requirements, residential areas had been sandwiched\nin between industrial zones. Rotterdam and Antwerp port officials\nreported that in building deepwater ports \"you always need twice the\nland acreage you originally planned.'\nThese experiences indicate that even if planners anticipate second-\nary growth requirements, but lack adequate mechanisms for planning\nenforcement, undesirable effects may be induced by growth pressures.\nOther landside impacts which the ADL researchers found abroad\nincluded:\n(1) industrial expansion which engulfed existing communities and\ndestroyed their value as residential environments;\n(2) noise intrusion from refineries and other plants;\n(3) water pollution, particularly from refinery and petrochemical\ndischarges;\n(4) degradation of air quality from emissions of new industrial and\nresidential development; and\n(5) difficulties in finding for employees of ancillary industry new or\nrelocation housing sites which would result in both acceptable com-\nmuting distances and acceptable residential environments.\nTransfer value in predicting U.S. deepwater terminal facility (DWTF)\nimpacts\nCaution should be exercised in extending the ADL landslide\nimpact findings to deepwater development elsewhere for a number\nof reasons.\nFirst, their findings apply primarily to shoreside, integrated indus-\ntrial ports, which contain both dock facilities and industrial sites. The\nADL researchers concluded that the adverse landside impacts they\nfound would not be generated by a well designed transshipment\ndeepwater terminal facility unless it were allowed to develop into an\nintegrated port complex. In the absence of industrial growth, the\nterminal would not substantially increase employment and population.\nIt is industrial expansion and the population growth it generates\nwhich can result in negative environmental landside impacts. (See\nFig. 1.)\nSecond, several foreign nations had encouraged deepwater port\nindustrial growth as deliberate public policy. Development of deep-\nwater terminals in many foreign locations was undertaken with the\naim of creating coastal industrial complexes. National objectives is\nbe served by such development ranged from promotion of regional\ndevelopment to dispersal of population from congested urban centers.\nA policy of deepwater terminal development for reasons other than\nfostering industrial growth might generate less severe landside impacts\nthan most of the foreign ports studied. For example, construction and\noperations at Bantry Bay, Ireland, a transshipment terminal, were\nfound to have caused negligible landside impacts.\nFinally, it should be noted that the impacts described are not created\nby the deepwater terminal facility or reliance on supertankers for oil\ntransport. As long as increased fuel needs increase the level of a region's\noil imports and production, negative landside impacts could result.\nThe types of fuels used (i.e. clean or dirty fuels), the cost of inputs to\nFORD & LIBRARY\n69\nDEEP WATER TERMINAL FACILITIES\nTRANSPORTATION\nINDUSTRIAL CONCENTRATION\nCOMMERCIAL &\nLINKAGES\n(port related refineries,\nECONOMIC\npetrochemicals\nCONCENTRATION\nPOPULATION AND ECONOMIC EXPANSION\nOUTPUTS\nINPUTS\nWATER POLLUTION\nWATER SUPPLY DEMANDS\nAIR POLLUTION\nDEMANDS FOR LAND\nNOISE POLLUTION\nSOLID WASTE DISPOSAL DEMANDS\nSEWERAGE DISPOSAL DEMANDS\nEMERGY DEMANDS\nDEMANDS FOR INCREASED PUBLIC\nSERVICES\nFIGURE 1.-Secondary impacts which an integrated industrial deepwater terminal\nfacility (DWTF) may generate. If a DWTF is not allowed to induce industrial\nconcentration, it does not substantially increase local demands for water\nsupply, sewerage disposal, energy or solid waste management. Nor does it\ncause significantly increased air, water or noise pollution. However, a DWTF\nmay still increase demands for public services and land somewhat, but the\nmagnitude of these demands will be much smaller than those which could have\nresulted from industrial concentration.\nthe production process (i.e. land, water, energy), and the nature and\nextent of State and local comprehensive planning can affect the\nseverity of landside impacts associated with increased oil imports\nand production. The development of deepwater terminal facilities\ndoes affect to some extent how and where these impacts will be dis-\ntributed, however.\nPotential Landside Impacts of U.S. Deepwater Terminal Facilities\nOther studies conducted for the Army Corps of Engineers and\nseveral State studies 8,9,10 have also warned against the adverse\nshoreside impacts which could result from U.S. deepwater terminal\nfacility development.\nAs well as the impacts cited in the ADL study of foreign deepwater\nports, these reports cite the following potential problem areas:\n(1) processing facilities' requirements for waste product disposal;\n(2) excessive demands of new industry and new population on area\nwater and power supplies and transportation and service delivery\nsystems;\n(3) pressures to critical coastal areas for conversion of land to\nindustrial and residential use; and\n: U.S. Corps of Engineers,' U.S. deepwater port facilities study, V. I-V. Alexandria, Virginia, Army\nEngineer Institute for Water Resources. (1972). (Institute for Water Resources report 72-8).\n$ Delaware. Governor's Task Force on Marine and Coastal Affairs. The constal zone of Delaware: a\nplan for action in Delaware. Newark, Delaware, College of Marine Studies, University of Delaware, 1972.\n1 Maine. Governor's Task Force on Energy, Heavy Industry, and the Maine Coast. Report. Augusta,\nMaine. 1972.\n10 Louisiana State University. Center for Wetlands Resources. Louisiana superport studies, preliminary\nrecommendations and data analysis, report 1. Baton Rouge, Louisiana, 1972. (Louisiana State University\nSea Grant report 72-03).\nFORD & LIBRAR 07683\n70\n(4) increased disaster hazards (e.g. hurricane or flood damage)\nposed by intense use of fragile coastal environments.\nSeveral studies pointed out that there will be threats to the coastal\nzone absent any deepwater terminal facility development. The rele-\nvant question posed in most coastal States was not whether coastal\ndevelopment would occur but rather what type of coastal develop-\nment was preferable and ought to be encouraged. An outright ban\non deepwater port and industrial development would not assure wise\nuse of coastal resources. The Allagash Group Report to the Gover-\nnor's Task Force on Energy in Maine 11 explored the consequences of\nexcluding all heavy industry from the Maine coast. The report's\nfindings can be summarized as follows:\n(1) there is no inherent incompatibility between heavy industries\nand high quality coastal resources if heavy industry is clustered in a\nfew coastal locations and is strictly regulated; and\n(2) even excluding heavy industry from the coast, the shore would\nexperience heavy economic, social and environmental consequences\nfrom rapid growth in the tourist and recreational sectors over the next\ntwenty years. Without careful planning and enforcement mechanisms,\nthe magnitude of environmental demands posed by tourism may be\nequally as severe as those associated with industrial growth. Recrea-\ntion demands pose particularly severe environmental problems, the\nreport notes, because they occur in seasonal patterns which place\nhigh peak stresses on all natural resources and public services.\nThe Allagash Group pointed out that:\nChoosing a future for the Maine Coast which excludes\nheavy industry does not eliminate the problem of maintain-\ning environmental quality. Given the incremental, decentral-\nized nature of this nonindustrial constal development, it is\nnot even clear that the problem is made easier by banning\nheavy industry. Demands on resources by large industries are\nat least easily detected\nthe dispersion of recreation busi-\nnesses and second homes makes monitoring and enforcement\nquite expensive.\nSolutions to these coastal zone problems are compounded by\nmultiple State and local jurisdictions. Even if coordination mecha-\nnisms could be established, inequities would likely occur. In deep-\nwater port development, some jurisdictions could be the recipients of\nmost of the adverse landside impacts and costs and others would reap\nthe benefits. Policies designed to protect the coastal zone alone from\nsecondary development might create industrial sprawl at non-pro-\ntected areas further inland or in an adjacent unrestricted locality. In\nsome cases, such as a proposed Louisiana deepwater port facility, crude\noil would be piped more than 100 miles through pipeline to inland\nrefineries. In this instance, a decision to construct a deepwater facility\noff the coast of one jurisdiction could pose serious problems of\ninduced growth for other jurisdictions hundreds of miles inland. State\nreports indicated a need to deal with such impacts at both State and\ninterstate levels.\n11 Maine, op. cit. The Allagash Group (now named the Allagash Environmental Institute affiliated with\nthe University of Maine Center for Re seare 1 and Advanced Study) is a non-profit organization performing\nenvironmental research on the edge of impl ementation. It has been in existence for roughly three years.\nGERALD FORD LIBRAR\n71\nIII. MAGNITUDES OF POTENTIAL SECONDARY GROWTH IMPACTS\nThe magnitude of the secondary growth problems associated with\ndeepwater terminal facility development is dealt with in recent\nreports of the Council on Environmental Quality. CEQ is directing\ninteragency studies of environmental impacts of deepwater develop-\nment which should provide some estimates of landside impacts for\nvarious terminal locations described by different parameters. During\nthe period of this study, the results of the completed CEQ landside\nimpact studies, contracted to Arthur D. Little, were not yet available.\nPending public release of the CEQ studies, other estimates of shoreside\neffects must, therefore, be relied upon.\nLandside impact studies\nThe CEQ landside study (referred to above) examines various\ndeepwater terminal facility proposals for several locations including\nthe coast of Maine, the Mid-Atlantic Coast and the Gulf Coast.\nAlthough no other study has examined these alternatives simul-\ntaneously, partial data can be accumulated by examining existing\nstudies which pertain to various different DWTF proposals and\nlocations.\nMid-Atlantic Estimates of Secondary Impacts: Preliminary esti-\nmates for one hypothetical set of deepwater terminal facility con-\nditions were developed for the CEQ and subsequently served as a\nbasis for the Army Corps of Engineers Atlantic Coast Regional Study\nof Deepwater Port Facilities, authorized by the Senate Public Works\nCommittee. 12 The results of the Corps of Engineers' study for the\nMid-Atlantic were based on the following assumptions: by year 2000\nthe North Atlantic demand for oil products will reach 9.9 million\nbarrels per day (b/d). To supply this amount, approximately 6.6 million\nb/d of crude and residual fuel oil must be imported from overseas; 13\napproximately 3 million b/d crude must be refined elsewhere and\nbrought by pipeline to the East. Existing refineries will be able to\nexpand capacity from a present 1.4 million b/d to 2.5 million b/d;\nan additional 4.5 million b/d crude will be refined within the North\nAtlantic region, but will require construction of at least 10 additional\nrefineries which could achieve capacities of 400-450,000 b/d each\nby year 2000.\nAnother basic assumption of the CEQ-Corps study (and of most\nother studies concerned with deepwater port secondary growth im-\npacts) is that in the future petrochemical plants will increasingly\nlocate where petroleum refining capacity is expanding. Presently\npetrochemical production is based on obtaining natural gas liquids\nfor producing chemical intermediate hydrocarbons. By 1980, however,\nit is estimated that a short supply of natural gas liquids will dictate\nan increased reliance on petroleum-bused feedstocks for petrochemical\n12 U.S. Corps of Engineers, Philadelphia District, op. cit.\n13 The Corps considered three alternative crude oil import levels for year 2000. The high projection, 6.6\nmillion h/d, which the Corps relied on for the landside impact estimates, is based on an Office of OII and\nGas, Department of the Interior projection of the maximum North Atlantic refinery capacity attainable\nby year 2000. The high projection assumes no stimulation of U.S. oil and gas production and assumes ex-\npansion of East Coast refinery capacity to 50 percent of the area's petroleum requirements by year 2000.\nA medium projection. 4.0 million b/d, which assumes maximum expansion of existing refinery capacity in\nthe North Atlantic but no new refinery growth or production of crude oil in the region. was not examined\nby the Corps in terms of landside impacts. A third alternative, a low projection of 1.0 million b/d, based on\nno refinery expansion in the region even at existing sites, was also rejected by the Corps.\nGERALD FORD VIBRARY\n72\nproduction. Between 1970 and 1980, use of heavy oils in production of\nethylene and propylene is expected to increase from 130 million b/d to\n780 million b/d in the United States. Few new petrochemical plants\nutilizing natural gas liquids will probably be constructed and some\nexisting plants may have to convert to use of heavy oils from refineries.\nBecause of increased petrochemical demands, new refineries are ex-\npected to be designed to have a larger feedstock capacity than existing\nrefineries. Thus, petrochemical growth will most likely occur in areas of\nrefining growth where needed supplies of feedstocks for petrochemical\nproduction could be obtained.\nThe CEQ-Corps figures were also based on a \"worst case\" situation\nin which all the oil imports to the region would enter at one deepwater\nterminal creating a throughput there of 6.6 million b/d. Approximately\n85 percent of these imports were assumed to be refined in the Mid-\nAtlantic area and the other 15 percent at other locations on the East\nCoast. For a deepwater terminal based on these assumptions and\nlocated off the Delaware Bay 14 the following estimates of Mid-\nAtlantic impacts were determined for year 2000:\n(1) Approximately 45,000 acres of land would be diverted to refinery,\ncrude oil storage and petrochemical uses. An additional 63,470\nacres of land would be required merely to house the persons directly\nemployed in terminal, refinery and petrochemical operations. Including\nland needs for population growth due to increased indirect employ-\nment, a total residential land requirement of over 250,000 acres was\nestimated. None of these figures include land required for provision\nof community facilities due to increased population or land needed\nby induced commercial growth.\nIn deriving the land required for new population growth, the\nresearchers apparently did not examine how much natural population\ngrowth would have occurred in the region by year 2000 even without\na deepwater terminal. In all the CEQ-Corps landside impact estimates,\nyear 2000 projections are compared with existing 1972 conditions.\nNo comparison of n deepwater port option versus a no-deepwater\nport option for the region in year 2000 was made. The analysts\napparently did not consider the effect which existing or future State\nand local planning and controls could have in minimizing negative\nsecondary impacts. Thus, these estimates represent \"worst case\"\nlandside estimates for a \"worst case\" Delaware deepwater port option.\n(2) Water needs of new refineries and petrochemical plants would\nbe approximately 1 billion gallons per day. This figure does not\ninclude water requirements of other new industry or of residential\nor associated commercial growth.\n(3) Biochemical oxygen demand (BOD) from plant effluent would\nbe equivalent, even using advanced treatment, to the BOD of raw\nuntreated sewage of 250,000 people. Without upgraded treatment by\nyear 2000, the BOD would be almost three and a half times greater.\nThe BOD analysis apparently did not take into account the require-\nments of the Federal Water Pollution Control Act Amendments of\n1972 (P. L. 92-500). The figures seem to presume that, in spite of con-\n14 Tais location was studied by the Corps despite State of Delaware opposition to such a facility since the\noil industry was giving strong consideration to a Delaware Bay location as a potential site for deepwater\nterminal operations. The Delaware location appears to be the most favored East Coast site by B consortium\nof fifteen major oil companies known as the Delaware Bay Transportation Company Project.\nBEERALO FORD LIBRARK\n73\nstraints imposed by water quality standards enforcement, there will\nbe little or no improvement in waste treatment technology by year\n2000.\n(4) Even using favorable assumptions (low sulfur, low ash fuels,\nor control equipment) potential air pollution loads would be over\nfour times as great as their 1972 levels. The effect which State imple-\nmentation plans under the Clean Air Act Amendments of 1970 (P.L.\n91-604) might have in limiting such emissions is not discussed.\nThe results of the final CEQ landside studies reportedly do not ap-\npear as severe as the preliminary data from the CEQ-Corps' study\nsince the earlier study was based on a \"worst case\" scenario for high\nthroughput at a single location. The Corps of Engineers recently\npublished an interim report on the Atlantic Coast Deepwater Port\nFacilities Study 15 which did not contain detailed information about\nsecondary impacts. However, the Corps did revise the original as-\nsumptions on which the impacts were based. The Corps revised down-\nward their estimate of the most likely year 2000 North Atlantic level\nof crude oil imports. Based on the assumption that in the future local\nand State opposition would limit refinery growth to areas with existing\nrefineries and petrochemical plants, the Corps determined that their\noriginal estimate of 6.6 million b/d was too high and that the medium\nprojection, 4.0 million b/d, was the most likely year 2000 crude oil\nimport level. With reduced levels of regional oil imports and produc-\ntion, one could expect the magnitude of induced landside impacts to\ndecrease.\nIf the new assumptions were used, the Mid-Atlantic landside im-\npacts appear to be less severe than estimated in the original Corps of\nEngineers report.\nComparison of East Coast Sets of Data: Several sources, including\nthe CEQ-Corps study, were used for partial data to calculate secondary\nimpacts magnitudes of a North Atlantic deepwater terminal. To in-\nsure comparability, the calculated impact magnitudes were all based\non the CEQ-Corps \"worst case\" assumptions. A comparison of results\nis presented in Table 1.\nGulf Coast Estimates of Secondary Impacts: Because the levels of\nfuel demand and the nature and extent of present industrialization are\nquite different on the Gulf Coast, the East Coast estimates do not\napply and separate Gulf Coast studies must be examined to obtain\nreliable data on landside impacts. (West Coast impacts have not been\nexamined as thoroughly as Atlantic and Gulf Coast impacts, primarily\nbecause the oil industry has favored Atlantic and Gulf Coast locations\nfor such facilities in the short-term and because major U.S. fuel deficit\nareas are on the East Coast and in the Mid-West.)\nOne report, prepared by the Lower Mississippi Valley Division,\nCorps of Engineers,16 contains the best Gulf Coast data directly\ncomparable to the Mid-Atlantic landside impact estimates. The final\nCorps report on Gulf Coast Deepwater Port Facilities, released in\nJune 1973, contains an analysis of landside impacts from secondary\ngrowth for 7 combinations of possible monobuoy deepwater port\nlocations and five alternative cases of refinery capacity distribution.\n18 U.S. Corps of Engineers. Philadelphia District. North Atlantic Division. Interim report, Atlantic\nCoast deepwater port facilities study, Eastport, Maine to Hampton Roads, Virginia. Philadelphia, Penn-\nsylvania, 1973.\nIt U.S. Corps of Engineers. Lower Mississippi Valley Division. Report on Gulf Coast deepwater port\nfacilities, Texas, Louisiana, Mississippi, Alabama and Florida. Vicksburg, Mississippi, 1973.\n21-935-74-6\nFORD i LIBRARY\n74\nTABLE 1.-MAGNITUDE OF SECONDARY IMPACTS OF MID-ATLANTIC DEEPWATER PORT DEVELOPMENT, BASED\nON CEQ-CORPS \"WORST CASE\" ASSUMPTION FOR YEAR 2000, SELECTED SOURCES\nCEQ-Army\nOil and Gas\nApp. I, Maine\nGeorges Bank\nCorps\nJournal 2\ncoast 3\npetroleum study 4\nLand requirements (acres):\nRefineries and some petrochemicals on\nrefinery sites\n30, 200-'70, 000\nRefineries and all petrochemicals\n45,000\nWater needs (million gallons per day):\nRefineries\n36\n'95-500\nRefineries and all petrochemicals\n1,000\nBOD load (lbs. per day):\nRefineries\n$ 80, 000-$\nRefineries and all petrochemicals\n10 143,650\nAir pollutant emissions (pounds per day):\nRefineries:\nParticulates\n475,000\nSO\n2,097,000\nNOx\n1,425,000\nAll sources:\nParticulates\n1,173,000\nSO\n2,388,400\nNOx\n3,684,000\nElectricity requirements (kilowatt hours\nper year): Refineries\n8, 000, 000, 000\nEmployment (people):\nRefineries\n,900\n700\nRefineries and petrochemicals\n139,000\n1 U.S. Corps of Engineers, Philadelphia District, op. cit.\n1 Nelson, W. L. \"How much land investment needed for grass-roots refineries?\" Oil and Gas Journal. Dec. 4, 1972:\npp. 56-57.\na Veazie, Carl E. app. 1. \"Heavy Industry on the Maine Coast\", in report of the Governor's task force on energy, heavy\nindustry, and the Maine Coast. Augusta, Maine, 1972.\n4 Offshore oil task group. The Georges Bank petroleum study: V. I, impact on New England real income of hypothetical\nregional petroleum developments: V. 11, impact on New England environmental quality of hypothetical regional petroleum\ndevelopments; summary. Cambridge, Mass., Massachusetts Institute of Technology, 1973. (MIT sea grant report 73-5).\n5 Based on 100,000 barrels per day capacity refineries (1970) which could be expanded to handle 400,000 barrels per day\nby year 2000.\n6\nBased on historical land use acquisition averages of the oil industry and existing capabilities.\n7\nRepresents oil industry's \"optimistic\" projection.\n$\nRepresents average of most recent refineries' reported figures.\nI\nAverage of high and low data points.\n10 Computed from Corps' population equivalents for BOD content and per capita figures for an average domestic sanitary\nsewer.\nCombining different strategies of monobuoy siting and refinery loca-\ntions, the Corps considered 15 choices of facility alternatives for Gulf\nCoast deepwater port facilities and ranked these alternatives for a\nvariety of impacts. (Although the Corps examined such deepwater\nport alternatives as dredged channels and artificial islands as well as\nmonobuoys, they performed quantitative environmental analyses for\nonly the monobuoy alternatives.) Only one of the Corps alternatives\n(D7-monobuoy off Sabine Pass, bordering Texas and Louisiana, with\na year 2000 throughput of over 11 million b/d in one location and no\nchange in historical patterns of refining capacity distribution) repre-\nsented an option of developing only one port facility with a high-\nvolume throughput. All other fourteen alternatives examined com-\nbinations of several low-volume monobuoy systems at several locations\nto achieve the requisite level of oil throughput.\nGulf Coast environmental landside impacts: All of the Corps al-\nternatives were based on a Gulf Coast year 2000 crude oil throughput\nof 11,380,000 b/d. They arrived at this projection based on the assump-\ntion that PAD III will need to continue meeting its own fuel needs and\nalso continue supplying crude oil' and products for PADs I and II as\ntheir fuel demands mount. PAD refers to Petroleum Administration\nfor Defense districts. (The United States is divided into five major\nGERALD FORD LIBRARY\nY\n75\nregions for which petroleum data are regularly reported by the Bureau\nof Mines. PAD I includes the entire East Coast, including Florida.\nPAD II is roughly the Mid-West plus Kentucky, Tennessee and\nOklahoma. PAD III is the Gulf Coast plus New Mexico. For the pur-\nposes of the Gulf Coast study, the Corps treated Florida as a part of\nPAD III instead of PAD I.) Gulf Coast refinery capacity was projected\nto grow from 4,818,000 b/d (1972) to 15,175,000 b/d by year 2000. Us-\ning historical trends and information on planned future expansion of\nexisting pipelines, the Corps allocated all projected crude oil imports\namong 10 coastal refining complexes up to 1980. The ten complexes are:\nPanama City, Florida; Pensacola, Florida; Mobile, Alabama; Pas-\ncagoula, Mississippi; Baton Rouge, Louisiana; Lake Charles, Louisi-\nana; Beaumont-Port Arthur, Texas; Galveston-Houston Area, Texas,\nand Corpus Christi, Texas. By 2000, however, they predicted that an\nadditional 1,695,000 b/d of coastal refinery capacity will be required in\nexcess of what could be obtained by expanding existing pipelines. They\nassumed that a new pipeline would be required to provide this capacity\nand that the requisite refinery expansion could occur anywhere on the\nGulf. (See Table 2 for a summary of the location of refining capacity.\nThe year 2000 figures do not include the additional 1,695,000 b/d.)\nTABLE 2.-PROJECTED COASTAL REFINERY CAPACITY, PAD III\n[Barrels per day times 1000\nCoastal complex\n1972 Capacity 1980\n2000\nPanama City\nPensacola\nMobile\n18\n19\n23\nPascagoula\n270\n519\n707\nBaton Rouge\n585\n1,334\n1,847\nNew Orleans\n548\n872\n1,270\nLake Charles\n306\n438\n770\nBeaumont-Port Arthur\n1,291\n1,915\n3,333\nGalveston-Houston area\n1,460\n3,160\n4,434\nCorpus Christi\n340\n805\n1,096\nTotal\n4,818\n9,062\n13,480\n1 Year 2000 figures do not include an extra 1,695,000 barrels per day required by PAD I beyond PAD I's year 2000 allo-\ncation of 7,300,000 barrels per day from the Gulf Coast. Thus, year 2000 figures are short by 1,695,000 barrels per day.\nThe Corps then investigated five alternative cases of refinery dis-\ntribution for the additional 1,695,000 and these cases were used in the\nimpact analyses. (See Table 3, footnotes, for a description of the\nassumptions used by the Corps for Cases I-V for future refining\ncapacity distribution). The Corps used the coastal refinery capacities\nto allocate the 11,380,000 b/d imported crude oil among refining\ncomplexes. All the oil was assumed to be free to be used on the Gulf\nCoast with no prior commitment of oil to refineries located outside\nPAD III.\nBERALD FORD LIBRARY\nTABLE 3.-SUMMARY OF CORPS ESTIMATES OF ONSHORE IMPACTS FROM GULF DWTF DEVELOPMENT\nYear 2000 impacts\nWater pollution (BOD\nAir pollution (particulates\nYear 2000\nin thousands of pounds\nin thousands of pounds\ncrude oil\nLand requirements (acres) Water requirements (mg/d)\nper day)\nper day)\nthroughput,\nMonobouy alternative\nbarrels per\nPetro-\nPetro-\nPetro-\nPetro-\nand refinery location\nDWTF locations\ncalendar days\nImpact location\nRefineries\nchemical\nRefineries\nchemical\nRefineries\nchemical\nRefineries\nchemical\nDI-Case III a\nPanama City\n2,208,000\nLouisiana 4\n6,223\n20,731\n311.00\n2,073.00\n15.0\n93.30\n466.40\n1,762.00\nSouthwest Pass\n3,035.000\nTexas $\n15,215\n27,271\n709.00\n4,727.00\n34.0\n212.70\n76\n1,063.60\n4,018.00\nSabine Pass\n6,137,000\nGulf Total 6\n28,252\n80,401\n1,206.00\n8,040.20\n57.9\n361.90\n1,809.00\n6,834.20\nD2-Case II ,\nPensacola\n852,000\nLouisiana\n8,055\n23,446\n351.70\n2,344.60\n16.9\n105.50\n527.50\n1,992.90\nBayou Lafourche\n3,374,000\nTexas\n18,265\n51,787\n776.80\n5,178.80\n37.3\n233.10\n1,165.20\n4,402.00\nFreeport\n7,154,000\nGulf Total\n28,612\n80,935\n1,214.00\n8,093.60\n58.3\n364.20\n1,821.00\n6,879.00\nD3-Case III a\nMobile-Pascagoula\n2,208,000\nLouisiana 0\n6,223\n20,731\n311.00\n2,073.00\n15.0\n93.30\n466.40\n1,762.00\nBayou bafourche\n3,035,000\nTexas 5\n15,215\n27,271\n709.00\n4,727.00\n34.0\n212.70\n1,063.60\n4,018.00\nFreeport\n6,137,000\nGulf Total 0\n28,252\n80,401\n1,206.00\n8,040.20\n57.9\n361.90\n1,809.00\n6,834.20\nD4-Case I\nMobile-Pascagoula\n608,000\nLouisiana\n8,743\n24,464\n367.00\n2,446.40\n17.60\n110.10\n550.40\n2,079.40\nBayou LaFourche\n3,435,000\nTexas\n18,455\n52,071\n781.00\n5,270.00\n37.60\n234.30\n1,171.60\n4,426.00\nFreeport\n7,337,000\nGulf total\n28,613\n80,935\n1,214.00\n8,093.40\n58.30\n364.20\n1,821.00\n6,879.40\nD5-Case I 0\nMobile-Pascagoula\n4,043,000\nLouisiana\n8,743\n24,464\n367.00\n2,446.40\n17.60\n110.10\n550.40\n2,079.40\nFreeport\n7,337,000\nTexas\n18,455\n52,071\n781.00\n5,270.00\n37.60\n234.30\n1,171.60\n4,426.00\nGulf total\n28,613\n80,935\n1,214.00\n8,093.40\n58.30\n364.20\n1,821.00\n6,879.40\nD6-Case I @\nBayou LaFourche\n4,043,000\nLouisiana\n8,743\n24,464\n367.00\n2,446.40\n17.60\n110.10\n550.40\n2,079.40\nFreeport\n7,337,000\nTexas\n18,455\n52,071\n781.00\n5,270.00\n37.60\n234.30\n1,171.60\n4,426.00\nGulf total\n28,613\n80,935\n1,214.00\n8,093.40\n58.30\n364.20\n1,821.00\n6,879.40\nD7-Case 1 I\nSabine Pass\n11,380,000\nLouisiana\n8,743\n24,464\n367.00\n2,446.40\n17.60\n110.10\n550.40\n2,079.40\nTexas\n18,455\n52,071\n781.00\n5,270.00\n37.60\n234.30\n1,171.60\n4,426.00\nGulf total\n28,613\n80,935\n1,214.00\n8,093.40\n58.30\n364.20\n1,821.00\n6,879.40\nGERALD\nD8-Case V 0\nMobile-Pascagoula\n5,243,000\nLouisiana\n6,223\n20,731\n311.00\n2,073.00\n15.00\n93.30\n466.40\n1,762.00\nFreeport\n6,137,000\nTexas\n15,215\n47,271\n709.00\n4,727.00\n34.00\n212.70\n1,063.60\n4,018.00\nGulf total\n28,613\n80,935\n1,214.00\n8,093.40\n58.30\n364.20\n1,821.00\n6,879.40\nD9-Case III B\nMobile-Pascagoula\n5,243,000\nLouisiana 6\n6,223\n20,731\n311.00\n2,073.00\n15.0\n93.30\n466.40\n1,762.00\nFORD\nFreeport\n6,137,000\nTexas 5\n15,215\n27,271\n709.00\n4,727.00\n34.0\n212.70\n1,063.60\n4,018.00\nGulf total 8\n28,252\n80,401\n1,206.00\n8,040.20\n57.9\n361.90\n1,809.00\n6,834.20\nLIBRARY\nD10-Case III 8\nBayou LaFourche\n5,243,000\nLouisiana\n1\n6,223\n20,731\n311.00\n2,073.00\n15.0\n93.30\n466.40\n1,762.00\nFreeport\n6,137,000\nTexas 5\n15,215\n27,271\n709.00\n4,727.00\n34.0\n212.70\n1,063.60\n4,018.00\nGulf total #\n28,252\n80,401\n1,206.00\n8,040.20\n57.9\n361.90\n1,809.00\n6,834.20\nD11-Case V*\nMobile-Pascagoula\n2,208,000\nLouisiana\n6,223\n20,731\n311.00\n2,073.00\n15.00\n93.30\n466.40\n1,762.00\nBayou LaFourche\n3,035,000\nTexas\n15,215\n47,271\n709.00\n4,727.00\n34.00\n212.70\n1,063.60\n4,018.00\nFreeport\n6,137,000\nGulf total\n28,613\n80.935\n1,214.00\n8,093.40\n58.30\n364.20\n1,821.00\n6,879.40\nD12-Case IV\nBayou LaFourche\n5,243,000\nLouisiana\n12,325\n29,771\n446.60\n2,977.00\n21.50\n134.90\n669.80\n2,530.40\nFreeport\n6,137,000\nTexas\n15,215\n47,271\n709.00\n4,727.00\n34.00\n212.70\n1,063.60\n4,018.00\nGulf total\n28,613\n80,935\n1,214.00\n8,093.40\n58.30\n365.10\n1,821.00\n6,879.40\n013-Case V 1\nMobile-Pascagoula\n2,208,000\nLouisiana\n6,223\n20,731\n311.00\n2,073.00\n15.00\n93.30\n466.40\n1,762.00\nBayou LaFourche\n3,035,000\nTexas\n15,215\n47,271\n709.00\n4,727.00\n34.00\n212.70\n1,063.60\n4,018.00\nFreeport\n5,330,000\nGuif total\n28,613\n80,935\n1,214.00\n8,093.40\n58.30\n364.20\n1,821.00\n6,879.40\nCorpus Christi\n798,000\nD14-Case III 3\nMobile-Pascagoula\n2,208,000\nLouisiana 4\n6,223\n20,731\n311.00\n2,073.00\n15.0\n93.30\n466.40\n1,762.00\nBayou LaFourche\n3,035,000\nTexas à\n15,215\n27,271\n709.00\n4,727.00\n34.0\n212.70\n1,063.60\n4,018.00\nFreeport\n5,339,000\nGult total 6\n28,252\n80,401\n1,206.00\n8,040.20\n57.9\n361.90\n1,809.00\n6,834.20\nCorpus Christi\n798,000\nD15-Case I\nMobile-Pascagoula\n608,000\nLouislana\n8,743\n24,464\n367.00\n2,446.40\n17.60\n110.10\n550.40\n2,079.40\nBayou LaFourche\n3,435,000\nTexas\n18,455\n52,071\n781.00\n5,270.00\n37.60\n234.30\n1,171.60\n4,426.00\nFreeport\n6,314,000\nGulf total\n28,613\n80,935\n1,214.00\n8,093.40\n58.30\n364.20\n1,821.00\n6,879.40\nCorpus Christi\n1,023,000\n1 All refinery capacity except additional 1,695,000 barrels per day required Fby year 2000 is allo-\n6 Gulf total equals the sum of the Louisiana and Texas totals plus the impacts determined by the\ncated using historical trends and information on planned future expansions. See table 2 for a listing\nCorps for the rest of the Gulf, namely: Panama City, Pensacola, and Mobile-Pascagoula.\nof how this capacity is allocated. The excess 1,695,000 barrels per day Is allocated according to five\n7 Under case = it is assumed that a gradual shift eastward in refining capacity occurs due to the\nhypothetical cases, case I-V.\ndemand of PAD 1. Twenty percent of the 1,695,000 capacity is distributed among each of the following:\n77\n2 Barrels per calendar day is essentially the same unit as barrels per day (b/d). It is an expression\nPanama City, Pensacola, Mobile, and Pascagoula; Baton Rouge and New Orleans; Lake Charles\nof the operating capacity of a refinery, generally with an allowance over a period for downtime.\nand Beaumont-Port Arthur; Galveston-Houston area; Corpus Christi.\nAnother unit used to measure refinery capacity, b/sd, measures the capacity of a refinery in barrels\n8 Under case I, it is assumed that the historical pattern would continue. Each complex capacity\nper day during the time the refinery is operating or \"on stream.\"\nwas determined using the ratio of its base capacity (1972) to the base capacity for the entire coastal\n3 Under case 111, the external demand of PAD I is assumed to shift the 1,695,000 barrels per day\nregion (1972) and multiplying by 1,695,000 barrels per day.\neastward. It is assumed that It will be refined at Pascagouia, Mobile, Pensacola, and Panama City\n0 Under case V, it is assumed that the 1,695,000 barrels per day capacity would shift to the Missis-\nwith 25 percent of the capacity at each of these locations,\nsippi-Alabama coast and be distributed equally between Pascagoula and Mobile,\n1 Louisiana total equals the combined Corps impacts for Baton Rouge-New Orleans and Lake\nCharles.\nUnder case IV, it is assumed that the 1,695,000 capacity would shift to the Mississippi River\nand be distributed equally between New Orleans and Baton Rouge.\n5 Texas total equals the combined Corps impacts for Beaumont-Port Arthur, Galveston-Houston,\nand Corpus Christi.\nGERALD\nFORD\nLIBRARY\n78\nOn the basis of these assumptions, the Corps performed their en-\nvironmental analyses on the 15 alternative systems and then applied\nsubjectively derived weighting factors to determine an environmental\nranking for the alternatives. As a result, the port system offshore of\nSabine Pass was deemed to have the least potential environmental\nimpact. The Sabine Pass alternative was one of the least desirable from\nthe standpoint of onshore impacts (land and water requirements, air\nand{water pollution), but it had an excellent offshore environmental\nrating. Even though onshore impacts were weighted 50 percent more\nthan offshore impacts, Sabine Pass' offshore values outweigh its\nnegative onshore impacts. This result points up a serious problem in\ntrying to locate a DWTF with minimal environmental risks. Whereas\none high-volume offshore facility may be environmentally preferable\nwhen considering marine impacts of the terminal itself (i.e. risk of\ncollisions, risk of oil spills reaching coastal areas and estuaries), an\nalternative to a massive concentrated landside area would be several\nsmaller ports and dispersal of associated refining capacity in smaller\nunits. This alternative may be environmentally preferable in terms of\nlandside impacts (i.e. secondary growth demands and landside pollu-\ntion potential).\nThe Corps estimates of onshore impacts for all 15 alternatives are\nsummarized n'Table 3 for the entire Gulf. Land requirements were\ncalculated by the Corps on the following bases: 900 acres of land re-\nquired per each 250 million b/d refinery; 200 acres of land per each 1-\nbillion lb. (37,550 b/d) ethylene-based petrochemical complex. Existing\nrefinery capacities were considered and a 50 percent future expansion\nof existing refineries was assumed. Water resource calculations were\nbased on the following: 8 million g/d water needs per each 100,000 b/d\nrefinery; 20 million g/d water needs per each 1 billion lb. ethylene-\nbased petrochemical complex; 960 lb./d BOD (using \"advanced\ntechnology\") per 250,000 b/d refinery; and 900 lb./d BOD (with \"ad-\nvanced technology\") per each 1 billion lb. petrochemical complex. Air\npollutant loads were calculated assuming 30,000 lb./d particulate emis-\nsions per 250,000 b/d refinery and 17,000 lb./d emissions per 1 billion\nlb. petrochemical complex. The analysis did not indicate what air and\nwater quality standards and controls, if any, were assumed.\nThe Corps data appear to be based solely on impacts from petroleum\nand petrochemical industrial growth. Estimates of additional land and\nwater needs and pollution which could be generated by induced com-\nmercial and residential growth are not examined. In addition, the\nCorps data appear to be based on technical criteria alone.\nIn fact, the overriding factor in predicting landside impacts, accord-\ning to the Corps analysis, would be the assumptions made about\nfuture expansion of refining capacity rather than the choice of individual\ndeepwater port locations or throughput. For all alternatives sharing\nthe same assumptions about refining growth, the magnitudes of a\nrange of landside impacts were identical (see Table 3; i.e., impacts of\nmonobuoy alternative, D1-D3-D9-D10-D14; D4-D5-D6-D7-D15;\nD8-D11-D13).\nThe question ought to be asked whether or not all of the combina-\ntions of deepwater port locations and refining patterns examined by\nthe Corps are realistic. No assumptions apparently were made of the\neffect which the port location(s) might have on location of new refinery\nFORD\nGERALD\nLIBRARY\n79\ncapacity. Instead, the Corps treated the two types of location deci-\nsions as separate events. For example, landside impacts for the one\nhigh-throughput port alternative off Sabine Pass were calculated based\non the same assumptions about refinery capacity that were used to\ncalculate the impacts for four multiple-terminal alternatives. The\nlandside impacts at all Gulf Coast locations were found to be identical\nfor all Case I alternatives, including an alternative with 4 DWTF\nlocations spread out across the Gulf Coast (1 off Mississippi-Alabama,\n1 off Louisiana, 2 off Texas).\nBased on the Corps assumptions, one can say little about the effect\nwhich various deepwater port locations might have on Gulf Coast\nlandside impacts.\nGulf Coast socio-economic landside impacts: Other landside\nimpacts which the Corps Gulf Study discussed were various social\nand economic effects, including: effects on population, employment,\ntotal personal income, per capita income, total earnings and earnings\nper worker; and effects on housing, transportation, educational Sys-\ntems and public facilities. For each monobuoy alternative, D1-15,\nthe Corps attempted to predict Gulf Coast socio-economic conditions\nwith the port alternative and compare them with conditions which\nwould exist without deepwater terminal development.\nDepending on which monobuoy alternative and refining distribution\ncase was examined, the year 2000 predicted total employment increase\nin the Gulf Region generated by deepwater port development ranged\nbetween 854,357 and 929,528; predicted year 2000 population growth\nattributable to DWTF development ranged between 1,123,808 and\n1,272,112 (these figures are based on the same assumptions discussed\npreviously in regard to environmental landside impacts). The Corps\nused essentially the same methodology for this analysis as they used\nto determine environmental impacts (see Gulf Coast Environmental\nLandside Impacts section).\nThe Corps estimated that in the long run the positive economic\neffects, such as increased total personal income and per capita income,\nwould outweigh negative social effects, such as overcrowding of hous-\ning, transportation, education systems and public facilities, which\nmight result in the short-run from rapid population increases.\nThe Corps found once again that distribution of additional refining\ncapacity was a major determinant of the severity of landside impacts.\nThe assumption made about refinery capacity distribution determined\na monobuoy system's social and economic ranking. Case III alterna-\ntives, for which refinery capacity was assumed to shift eastward and\nbe divided equally among Pascagoula, Mobile, Pensacola and Panama\nCity, were found to have the most positive landside social and eco-\nnomic impacts. Alternatives which would result in greater concentra-\ntions of refinery expansion in already developed or industrialized\nareas were found to be less desirable with regard to these impacts.\nGulf Coast economic impact studies: Two other studies have been\ncompleted which provide partial data on secondary impacts from\nDWTF construction off the Gulf Coast. These are a report prepared\nfor the Louisiana Superport Task Force, Loop Inc. 17 and others to\n17 In 1972, Governor Edwards of Louisiana appointed a high-level Louisiana Superport Task Force to\npush for and coordinate efforts to build a deepwater terminal off the Louisiana coast. At the same time a\ngroup of major oil companies were planning to construct a deepwater oil terminal in the Louisiana Gulf.\nThis private consortium of thirteen oil companies is known as Loop Incorporated.\nFORD\nGERALD\nLIBRARY\n81\nyear 2000 if a DWTF were operating by 1977. (The number of em-\nployees per 1000 b/d refined has been declining in Louisiana from 16.4\nin 1961 to 7.9 in 1971. New refineries are being built to be even more\nhighly automated than existing plants. New refineries average from\n2.5-3.5 employees/1000 b/d. Also, the trend toward subcontracting\nof maintenance operations has reduced the employee ratio. Kaiser\nand Gulf South Research Institute assumed that these trends would\ncontinue, but with a decreasing rate.) Projected growth in petro-\nchemical employment was based on an observed relationship during\n1965-71 between refining and petrochemical growth. For every re-\nfining job generated over this period, 2.3 jobs were created in the\npetrochemical industry. This multiplier was expected to hold for the\narea affected by the deepwater port. The analysis assumes this figure\nto be conservative. The offshore oil terminal was estimated to initially\nemploy 315 people with a small increase in employment beyond this\nlevel possible at a later date. However, secondary employment is\nexpected to be much greater. See Table 4 for a chronology of port-\ngenerated direct employment.\nTABLE 4.-ESTIMATED DIRECT EMPLOYMENT GAIN IN LOUISIANA STEMMING FROM AN OFFSHORE OIL\nTERMINAL (DWTF)\nItem\n1980\n1990\n2000\nConstruction employment:\nOffshore terminal\n707\n294\nRefineries\n2,179\n1,538\n5,142\nPotrochemical plants\n823\n748\n1,340\nTotal\n3,709\n2,580\n6,482\nOperating employment:\nOffshore terminal\n315\nRefineries\n2,848\n5,456\n6,837\nPetrochemical plants\n6,550\n10,300\n22,900\nTotal\n9,713\n15,756\n29,737\nTotal direct employment gain\n13,422\n18,336\n36,219\nSource: Taken from H. J. Kaiser Co. and Gulf South Research Institute, op. cit., p. 48.\nThe total employment gain Louisiana would experience from the\ndeepwater port was determined using OBERS 22 projections to\ncalculate the induced employment stimulated by DWTF-generated\ndirect employment increases. Table 5 shows these gains through year\n2000. These gains were derived by means of a computer program which\ncalculated induced increase in employment in all remaining industries\nresulting from employment increases in the petroleum industry.\nThe population increases resulting from these employment gains in\nLouisiana were estimated to be 99,135 in 1980 and 303,733 by year\n2000. The analysis did not estimate how much of the increase would be\nin the vicinity of the deepwater port. The computer program used to\ncalculate induced employment was also used to produce these popula-\ntion growth estimates. The above projections of increase in population\nactually attributable to the deepwater port were obtained based on\nprojections of natural population growth which would occur even\nwithout deepwater port construction and on assumed labor participa-\ntion rates.\n22 U.S. Water Resources Council. OBERS projections of regional activity in the United States, V. 1-.5\nWashington, 1972.\nFORD\nGERALD\nLIBRARY\n82\nTABLE 5.-DIRECT AND INDUCED EMPLOYMENT GAINS GENERATED IN LOUISIANA BY AN OFFSHORE OIL TER-\nMINAL (DWTF)\nItem\n1980\n1990\n2000\nDirect employment gain:\nConstruction\n3,700\n2,600\n6,500\nManufacturing:\nRefining\n2,800\n5,400\n6,800\nChemical\n6,600\n10,300\n22,900\nTotal\n13.100\n18.300\n36,200\nInduced employment\n21,970\n39,720\n76,170\nTotal net gain\n35,070\n58,020\n112,370\nSource: Taken from H. J. Kaiser Co. and Gulf South Research Institute, op. cit., p. 52.\nThe labor participation rate reflects the ratio of total employment\nto total population. A ceiling was imposed on this ratio so that if em-\nployment increases substantially, it becomes necessary ultimately to\nspecify that the increase in labor participation cannot be satisfied by\nnatural regional population growth, and this labor demand must be\nmet by in-migration to the region.\nImpacts on local and State governments: The Louisiana study con-\ncluded with a benefit-cost analysis of secondary growth caused by\nLouisiana offshore oil port construction from the viewpoint of State\nand local government. Impacts on local and State government reve-\nnues and expenditures resulting from development stimulated by an\noffshore deepwater port over a 24-year period were measured and\ncompared.\nCategories included individual taxes, corporate taxes, and operating\nand capital costs for State and local services (such as higher education,\nschools, police, highways and others). The resulting revenues and\nexpenditures were compared to determine a benefit-cost ratio from the\nviewpoint of the affected governments. See Table 6 for a summary of\nthese results.\nTABLE 6.-IMPACT OF AN OFFSHORE OIL TERMINAL ON GOVERNMENT REVENUE AND EXPENDITURES\n[In millions]\nPresent\nvalue\nRevenues:\nIndividual\n$194.3\nCorporate\n284.9\nTotal revenue\n479.2\nCosts:\nCepital costs:\n7.9\n1\n25.9\nTotal\n33.8\nOperating cash:\n141.5\nLack\n264.1\nTotal\n405.6\nTotal costs\n439.4\nRevenue-cost ratio\n1.09:1\nSource: Taken from H. J. Kaiser Co. and Gulf South Research Institute, op. cit., p. 73.\nFORD\nGERALD\nLIBRARY\n83\nThe resulting ratio, 1.09:1, indicates that, at the end of the 24-year\nperiod, for every dollar governmental entities have had to expend on\nservices as a result of deepwater port induced growth, they will have\nreceived 1.09 dollars in revenues. This ratio is not highly favorable\ninasmuch as the discovery of a small estimating or projection error\ncould easily reduce the ratio below the break-even point (i.e. it does\nnot appear that State and local environmental protection costs have\nbeen accounted for). Also, no breakdown of State versus local benefits\nand costs is given, so it is not clear that the division of benefits and\ncosts would be equitable among all governmental entities. Lastly, the\nbenefits and costs are aggregated for the 24-year period which does not\npermit analysis of how costs and benefits will be distributed over time.\nGovernments could be required to provide services and incur costs at\nan early state of DWTF development and wait for a number of years\nbefore increased revenues begin to balance these costs.\nTexas Impacts: Daniel Bragg and James Bradley 23 estimated in\n1972 the economic impact on the State of Texas of a deepwater port\nwhich would have by 1985 a throughput of 3.5 million b/d. Such a\nthroughput level is approximately equal to the 1985 throughput pro-\njected for a Louisiana port.\nMost of the economic and other impacts of a deepwater port were\nprojected to occur in the Texas coastal zone, partly because of the\ntendency which industrv would have to achieve economies by cluster-\ning around such a facility. In addition, Bragg and Bradley expect\nfuture refinery growth to occur where refinery capacity already exists,\nfor reasons previously cited in connection with the Louisiana study,\nand Texas' coastal region already contains almost 90 percent of the\nrefining capacity in the State.\nEmployment Impacts: Using input-output models developed for\nTexas, future gains in employment statewide from deepwater port\nconstruction and operation were calculated to be 336,770 by 1985, of\nwhich nearly 40,000 would be in oil refining.\nThe total increase in State employment from offshore oil port\ndevelopment was determined by applying the input-output model's\nState labor multiplier to projected growth in oil refinery output. 24 See\nTable 7 for a chronology of deepwater port impacts on employment.\nTABLE 7.-NEW JOBS RESULTING FROM TEXAS DEEPWATER TERMINAL\nSource\n1975\n1980\n1985\nOil refining industry\n8,498\n22,595\n39,266\nTotal in State (including refining)\n72,887\n193,789\n336.770\nSource: Taken from Daniel M. Bragg and James R. Bradley, op. cit., p. 43.\nThese employment figures were substantially greater than those\ncalculated for the same years in the Louisiana study for an offshore\nport with a similar volume of throughput. One possible explanation\nfor this difference is that deepwater terminal facility construction\nwas projected to expand Texas refinery capacity from 3 million b/d\nn Bragg and Bradley, op. cit.\n20 Growth In port-related activities such as ship repair, chandlering, and bunkering. tug and towboat\nservices, pilotage and longshore labor was not calculated by Bragg and Bradley. Though these activities\nwould be affected by operation of the terminal the total impact of this growth was not expected to be sig-\nnificant compared to refinery growth.\nFORD LIBRARY\n85\nUnfortunately, none of the landside impact studies adequately\nidentified what standards (either technological or legal) were used to\ndetermine landside impacts. No study discussed assumptions made for\nall of the factors cited by the NPC as influencing environmental im-\npacts. Without this information, it is difficult to determine if the\nmagnitudes cited refer to \"worst case\", \"optimistic\" or \"most likely\"\nprojections. Comparison of results of several studies is hampered unless\nall underlying assumptions are known.\nIV. CONTROLS FOR MANAGING SECONDARY GROWTH AND MINIMIZING\nIMPACTS\nDeepwater terminal-related activities abroad are developed and\nregulated through diverse institutional arrangements, with the national\ngovernments taking the initiative in planning for and controlling the\ndevelopment. In this country, control over port economic activity has\ntraditionally been with the States and local governments. In some of\nthe 30 coastal States (including the Great Lakes States) a single\nstatewide authority develops, improves, and regulates ports. In\nNorth Carolina both coastal and inland ports and related facilities\nare under the jurisdiction of n single agency, the North Carolina Port\nAuthority. However, this is not the case in the majority of constal\nStates. Most coastal States have a number of agencies, State, regional\nand local, which have port planning, development, construction or\nregulatory functions. Statutory authority to control ports or other\ncoastal development also varies widely from State to State. In some\nStates both statutory and constitutional autonomous or semi-autono-\nmous local ports, port parishes or port districts regulate port activities.\nIn other coastal States, various regional or interstate compacts and\ncommissions have responsibility, advisory or administrative, for some\naspects of port-related activity. Local political jurisdictions along the\ncoastline share these responsibilities through their exercise of police\npowers and general governmental functions.\nThe Federal Government also divides responsibility with the States\nand localities for port regulation. For coastal ports, the Department of\nTransportation, through the Coast Guard and Office of Pipeline\nSafety, has responsibility for navigational and vessel safety, for spill\nprevention and cleanup, and for pipeline configuration and operation.\nThe Army Corps of Engineers has responsibility for the maintenance\nand protection of navigable waters. The Department of Commerce,\nthrough the National Oceanic and Atmospheric Administration,\nadministers the Coastal Zone Management Act (P.L. 92-583) although\nthis Act has not yet been fully funded by the Administration. The\nDepartment of the Interior, through the Office of Oil and Gas, issues\nimport licenses for and allocates imports of crude oil and, through the\nBureau of Sport Fisheries and Wildlife, is involved in the management\nof wildlife resources including protection of wetlands in the coastal\nzone.\nIf deepwater terminals were to be constructed offshore outside State\nterritorial waters (in most cases State control extends to the 3-mile\nlimit), the Federal Government would have to assume new responsi-\nbilities for port terminal regulation and control, but the major respon-\nsibility for control and planning of onshore, landside facilities would\nstill remain with the States and localities.\nGERALD FORD (IBRAB)\n86\nState action\nOver the last ten years, increasing concern over protection for rare\nor unprotected natural resources has led the coastal States to take a\nmore active role in planning and controlling land use. Most of the\nearly State programs for coastal areas focused either on wetlands\npreservation or protection of public beach access. Later, some coastal\nStates took the initiative in regulating power plant siting and the\nlocating of industrial and large-scale residential development. More\nrecently, partly in response to the Coastal Zone Management Act of\n1972 (P.L. 92-583), coastal States have become active in the areas of\nshoreline zoning and coastal planning and management.\nThe Atlantic Coast States have generally focused on programs of\nwetlands protection. Going beyond this type of critical areas protec-\ntion, Maine, Delaware, New Jersey and Florida have enacted innova-\ntive legislation to control or direct development along their coastlines.\nGulf Coast States have tended to approach coastal zone management\nby regulating some, but not all, landside activities having environ-\nmental impacts. Unusual recent coastal activity among these States\nincludes the Texas 1969-1973 moratorium on sale, leasing or alteration\nof State-owned submerged lands pending completion of a statewide\ncomprehensive study, and creation of authorities with specific responsi-\nbility for phases of deepwater terminal planning or construction. In\ngeneral, the Pacific Coast States have been most active in comprehen-\nsive coastal regulation and planning. California, Oregon and Washing-\nton have taken inventive legislative or administrative steps to oversee\nmanagement of their coastal resources.\nState actions with the greatest bearing on possible secondary\ndevelopment from deepwater terminal facilities include the following:\n(1) Delaware's Coastal Zone Act of 1971, which barred new develop-\nment of oil refineries, paper and steel mills and petrochemical com-\npanies in coastal regions and established State permitting authority\nover new industrial development in the coastal region. In April Gover-\nnor Sherman introduced environmental legislation to: (a) supplement\nthe State Coastal Zone Act with a State Coastal Zone Management\nAct which would provide for regulation of residential and commercial\ncoastal zone development of greater than local impact (this bill has\ngone to committee but has not yet been enacted); and (b) provide for\nstatewide regulations over private and public wetlands and marshes.\nThe Wetlands Bill has been passed by the General Assembly.\n(2) Maine's Site Location Regulation Act requires n permit to\nundertake any large-scale industrial or residential development.\nMaine's Mandatory Zoning and Subdivision Control Law gives the\nState zoning control over any shoreline areas lacking local zoning\ncontrol. Legislative proposals to create a Maine Development Corpo-\nration and limit heavy industry and port or harbor development to\nspecific constal zones were proposed but not passed in 1973.\n(3) California's Coastal Conservation Act involves planning for\nand regulating all development in the State's coastal region.\n(4) Creation on the Gulf Coast of two State political subdivisions\n(Louisiana Deep Draft Harbor and Terminal Authority; Texas\nOffshore Terminal Commission) and one corporation (Ameraport\nCorporation, Alabama) with responsibility for deep port planning\nand/or development; and\nFORD i LIBRARY 07V839\n87\n(5) Enactment of the New Jersey Coastal Area Facility Review\nAct on June 20, 1973. An earlier environmental package submitted by\nGovernor Cahill included a ban, later compromised to a 4-year\nmoratorium, on deepwater port development within the New Jersey\n3-mile zone and a ban in this same zone on off-shore nuclear generating\nstations. No legislation dealing directly with deepwater ports was\nenacted but provisions strictly regulating offshore nuclear facilities\nwaste disposal were incorporated into a modified Coastal Area\nFacility Review Act which was passed. (In the modified version of\nthe Act which was enacted, certain already industrialized coastal\nareas, including the Delaware River refining complex, were excluded\nfrom the zone and thus from control.) The Act gives the New Jersey\nDepartment of Environmental Protection permit authority over all\nmajor construction within a defined zone (to the 3-mile limit and a\n1,380 square mile zone landward), and requires the preparation of\nenvironmental statements for all major proposed development.\nIn terms of secondary impacts, Maine may have the most interesting\nset of existing and proposed legislation for deepwater terminal facility\nplanning. Other States have taken action which would either: (1) help\nprevent undesirable port activities or industrial development on or off\nshore but would not help determine where and how such development\nmight be acceptable or provide mechanisms which could guide and\nimplement desirable development, or (2) have established institutional\nmechanisms which could facilitate deepwater development while leav-\ning the major initiative in terms of siting of facilities in the hands of\nprivate enterprise.\nMaine's existing law is aimed at preventing negative impacts from\nunplanned large-scale development, which would clearly impose con-\nstraints on landside deepwater port development. As a result of the\nrecommendations of the Governor's Task Force on Energy, Heavy\nIndustry and the Maine Const, however, legislation 27 was proposed in\nthe last legislative session which, had it passed, would have permitted\nthe State to take the initiative in deepwater port siting. The bills\nwould have created two coastal zones in which heavy industrial\ndevelopment would be permitted, one of which could be used for deep-\nwater oil terminal related activities. These zones were chosen on the\nbasis of a mix of economic, environmental and other factors. The pro-\nposed legislative package included a plan to create a Maine Develop-\nment Corporation with authority to facilitate development of refineries\nand pipelines and other facilities in the coastal zone, or to oversee the\ndevelopment of private industrial proposals in the zone. Requirements\nfor economic impact statements, analogous to the statements required\nunder the Section 102(2) (c) provision of the National Environmental\nPolicy Act of 1969, to be filed on all major developments were also\ncontained in the Maine proposals.\nThe bills will be reintroduced in the next session as they were\ndefeated in both the Maine legislative chambers by narrow margins.\nThe proposals' rejection apparently was due in part to the pending\nproposal of the Pittston Company to construct a $350 million oil\nrefinery at Eastport, a location not included in the two-zone proposal.\nThe Gulf Coast deepwater port authorities are also innovative in-\nstitutions, but their mandates are not aimed at secondary landside\n27 Maine. Laws, 1973, Legislative documents 1663, 1759.\nFORD\nGERALD\nLIBRARY\n88\nimpacts or regulation. The Louisiana Deep Draft Harbor and Ter-\nminal Authority enabling legislation 28 does call for the establishment of\nan Environmental Protection Plan which must state how the design\nof the deepwater port will control long-term terminal development so\nthat growth and additions to the terminal do not result in random\ngrowth or environmental degradation, but it does not specify compara-\nble requirements with respect to the secondary growth and industrial\ndevelopment induced by the deepwater port. The Texas Offshore\nTerminal Commission is required by law 29 to have as part of its plan a\nproposal for environmental protection and an analysis of the benefit-\ncost ratio of a proposed facility. Again, no specific instructions to plan\nfor or control landside development are contained in the legislation.\nV. CONCLUSIONS\nAll studies examined agree that major landside impacts from deep-\nwater port construction will follow if uncontrolled refinery and petro-\nchemical concentration is allowed to occur in adjacent coastline areas.\nThe argument is made in the Department of the Interior's Legisla-\ntive Draft Environmental Statement that dispersion of deepwater\nfacility-induced refinery and petrochemical growth would be preferable\nto concentration of capacity in a few locations. Although some new land\nwould be industrialized with dispersal of capacity, the total effect was\nestimated to be less severe than if all new capacity were located in a\nheavily industrialized area. The Interior statement does not contain\nconcrete proposals to achieve such dispersion. Other Administration\nsources also support dispersal of refining capacity and deepwater\nfacilities. Governor John A. Love, former Director of the Energy Policy\nOffice, testified on October 3, 1973, before the Special Joint Subcom-\nmittee of the Senate Interior and Insular Affairs, Commerce and\nPublic Works Committees to the effect that:\nBoth the economic incentives and our environmental pref-\nerences should heavily favor dispersion of deepwater port\nfacilities, in other words a reasonable number of these facil-\nities somewhat evenly distributed over our const\nFor\nenvironmental reasons, both onshore and offshore, I\nfavor a larger number of ports and thus dispersion of the\nship traffic, operating spills and associated refinery\ndevelopment.\nGovernor Love expressed his belief that between the Coastal Zone\nManagement Program and the National Land Use Program, the\neffects of landside secondary development could be controlled and\ndispersed.\nMost studies conclude that the major industrial growth would\nprobably occur, particularly for an Atlantic Coast deepwater terminal,\nin the political jursidictions adjacent to the terminal and its support\nactivities. No available studies measure the potential for controlling\nthis growth through application of additional planning controls.\nThe findings regarding secondary growth are supported and con-\nstrained by the following factors:\n= Lousiiana Laws, 1973, Act 444, regular session. (Louisiana revised statutes title 35, section 3101 et seq.)\n29 Texas Laws, 1972, Vernon's Texas statutes and codes annotated. Water code, sections 12.001-12.003,\n12.011-12.027, 12.061-12.007. West Publishing company.\n30 U.S. Congress, Senate, Special Joint Subcommittee, op. cit.\nGERALD FORD LIBRARY\n90\nemployment generated would amount to nearly 1 million. The\nmagnitude of this second \"induced\" growth would depend on the\nregion in question. In an already highly urbanized region such as the\nMid-Atlantic with a high regional multiplier most of the induced\ngrowth to service direct employment would be likely to be captured\nby the region and the \"induced\" impact would be significant. In a\nless highly urbanized region, current economic theory holds that this\nwould be less true, with more of the \"induced\" economic growth\noccurring outside the region. Yet for a region with a relatively small\neconomic base and low population density, even an induced growth\nof small absolute magnitude could produce significant effects.\nRole of planning\nPerhaps the most important conclusion to be drawn from studies of\ndeepwater port secondary impacts is that narrowly conce. policies\ndirected soiely at advancing or halting such port development alone\ncannot produce an optimal plan for coastal zone resource allocation.\nPlanning to direct and control heavy industry growth may be a neces-\nsary policy for coastal States as the projected year 2000 high level of\noil throughput will cause pressures for industrial expansion even\nwithout deepwater port development. Given pressures on the constal\nzone from non-industrial growth, however, industrial controls alone\nwill probably not be sufficient to protect the coastal environment.\nIf U.S. public policy is shaped with a disregard for past deepwater\nport experience overseas. particularly the results of dealing with such.\ndevelopment separately from other demands for coastal zone resources,\npredictable adverse landside effects may be the result. A major factor\nin decisions to permit superport operations may be the readiness and\nability of State and local jurisdictions to prepare and carry out a\ncomprehensive plan for land use and economic development so as to\nkeep undesirable effects within bounds. It appears that the nature,\nextent, and timing of secondary impacts associated with deepwater\nterminal facility development may be controliable to some extent.\nIn this Federal system, the authority and responsibility for governing\nmuch of this secondary development resides in the State and local\ngovernments or perhaps in special regional bodies.\nWhether in the future the secondary effects of deepwater port\ndevelopment discussed in this analysis will be acceptable to society\nwill depend greatly upon the vigor and quality of the land use planning\nand control of industrial deve.opment which is in the hands of the\nlocal and State governments.\nas The Corps derived the total employment projection from the direct employment Increase based on\na regional multiplier of 4 (e.g. each oi! refining and petrochemical job created will create 4 other jobs). The\nLouisiana study was based on & multiplier of 2.677 in 1980, rising to 3.171 by 1990 and then leveling off to\n3.107 by year 2000. In the Texas study, a direct employment increase of 39,266 by 1985 was projected to\ncreate & total employment increase of 336,770. This implies a multiplier of over 7.5.\nFORD\nGERALD\nLIBRARY\nAPPENDIX E\nLEGISLATION BEFORE THE SENATE IN THE 93D CONGRESS RELATING\nTO THE DEVELOPMENT OF OFFSHORE DEEPWATER PORTS\nEleven legislative proposals related to U.S. deepwater port policy\nhave been introduced in the 93d Congress. In order of their dates\nof introduction, bills pending in the Senate and House are sum-\nmarized as follows:\nS. 80, Mr. Hollings, Mr. Magnuson, Mr. Kennedy, Mr. Stevens, and\nMr. Roth.- bill to amend the Ports and Waterways Safety Act of\n1972 to provide for authority to be placed in the National Oceanic\nand Atmospheric Administration for the evaluation and certification\nof the environmental soundness of the site selection, construction,\nand operation of offshore artificial structures for ports and terminals,\npowerplants, airports, and other such facilities to be located in\ncoastal waters.\nThe statement of findings and purposes of S. S0 indicates that there\nis a nationwide need to oversee the planning, construction, and opera-\ntion of such facilities to prevent damage to coastal navigable waters,\nthe coastal zone, and the resources therein. These resources include\nbut are not limited to fish, shellfish, and wildlife; marine and coastal\nresources; and scenic values.\nS. 80 authorizes the Secretary of the Department of Housing and\nUrban Development, and the Director of the National Oceanic and\nAtmospheric Administration, to ascertain and certify that a proposal\nfor the construction and operation of offshore facilities covered by the\nAct \"does not pose unreasonable threat to the integrity of,\" and that\n\"all possible precautions have been taken to minimize adverse impact.\non\" the marine environment.\nThe Act requires the Secretary to establish criteria and consult\nwith officials of Federal, State and local government entities having\nrelevant jurisdiction or expertise and to hold public hearings prior to\ngranting certification for the development and operation of offshore\nfacilities. Offshore facility projects which have not reached the\nconstruction stage by the effective date of the Act are also subject to\nthe certification process. Such certification is based on an examination\nand evaluation of project plans which must be submitted to the\nappropriate authority at least two years in advance of the anticipated\ndate of beginning construction.\nThe measure also authorizes the Secretary of the Department in\nwhich the Coast Guard is operating to promulgate and enforce \"such\nreasonable regulations with respect to lights and other warning devices,\nsafety equipment, and other matters relating to the promotion of\nsafety of life and property on artificial structures\" covered by the Act.\nAdditional provisions provide for a penalty of $50,000 to $200,000\nfor violation of the Act and empowers the Secretary to initiate injunc-\ntive proceedings to halt the uncertified construction or operation of\nany artificial structure subject to the Act.\n(91)\nGERALD FORD LIBRARY\n92\nS. 80 is now pending before the Committee on Commerce.\nS. 180, Mr. Williams, Mr. Hathaway, Mr. Inouye.-To amend the\nFederal Water Pollution Control Act in order to require the approval\nof adjacent coastal States prior to the construction of certain offshore\nfacilities.\nEssentially the same as a measure introduced in the 92d Congress by\nSenator Boggs as S. 3844, this measure, entitled \"The Coastal Environ-\nment Protection Act\" is proposed as an assertion that \"coastal States\nhave clear authority to approve or disapprove nuclear power generators\nwhich are to be built off their coast in the ocean.\"\nSenator Williams summarized the provisions of his bill as follows:\nMy bill provides that a Federal department or agency\nwhich is considering the construction, licensing or approval\nof any facility beyond the territorial sea off the coast of the\nUnited States must submit a complete report on the facility\nto the Administrator of the Environmental Protection\nAgency who will forward the report to the Governor of each\nadjacent coastal State which might be adversely affected by\npollution from such a facility. Then, those Governors have\n90 days to evaluate the report and disapprove if they choose\nto. If a Governor does disapprove it, the facility cannot be\nlicensed or constructed. 1\nS. 180 excludes facilities constructed under leases pursuant to the\nOuter Continental Shelf Lands Act.\nThe measure was referred for consideration to the Committee on\nPublic Works.\nS. 568, Mr. Tower.-To amend the Outer Continental Shelf Lands\nAct by providing authority for the issuance of permits to construct,\noperate, and maintain port and terminal facilities.\nThis measure is identical to S. 4092, introduced by Senator Tower\nin the 92d Congress. Entitled the \"Outer Continental Shelf Ports and\nFacilities Amendments of 1972,\" the measure authorizes the Secretary\nof the Interior to issue permits \"for the construction, operation, and\nmaintenance of port and terminal facilities on the submerged lands of\nthe Outer Continental Shelf.\"\nPursuant to S. 568, the Secretary must promulgate rules and regula-\ntions and, in granting port and terminal facility permits, take into\nconsideration the need for, environmental impact of, and alternatives\nto, the construction of such facilities. He must in addition provide\nfor public hearings.\nS. 568 was referred for consideration to the Committee on Interior\nand Insular Affairs.\nS. S36, Mr. Case.-To amend the Federal Water Pollution Control\nAct in order to require specific approval by the Congress and by\nadjacent coastal States prior to the construction of certain offshore\nfacilities.\nThis bill would amend that Act by adding a new section at the end\nof Title IV, \"Specific Congressional and State Approval of Certain\nOcean Facilities.\"\nParagraph A of the proposed new section sets forth Congressional\nfindings that offshore construction of deep draft oil docking, electric\nCongressional Record, January 4, 1973, p. S. 167.\nFORD i LIBRARY GERALD\n93\ngenerating plants and oil drilling facilities may cause massive pollu-\ntion problems for neighboring states. An additional finding provides\nthat all such construction must be specifically reviewed and approved\nby Congress and the adjacent States.\nParagraph B prohibits any Federal department or agency from\nconstructing, approving or licensing the construction of any facility\nin or beyond the territorial waters off the coast of the United States\nexcept under certain specific conditions. First, the bill would require\nthe department or agency to file a complete report on the proposed\nfacility with the Administrator of the Environmental Protection\nAgency, which he must then forward together with his own views to\nthe Governor and legislative leaders in each adjacent coastal State\nthat might be adversely affected by the facility. Secondly, Congress\nmust pass a law approving such construction and the Governor of\neach affected State must file a notice of State approval with the\nAdministrator.\nFailure by the Governor to file a notice of approval or disapproval\nof construction within ninety days after receiving the Administrator's\nreport is considered an action of approval under the Act.\nS. 836 is pending before the Committee on Public Works.\nS. 1316, Mr. Biden and Mr. Muskie.-To amend section 311 and\nsection 509 of the Federal Water Pollution Control Act.\nSection I adds definitions of deepwater development and adjacent\nState to section 311 (a) of the Act. Deepwater development is defined as\nany man-made structure either fixed or floating, or dredging activities\nrelated to such structure, which is located in or may affect the navi-\ngable waters of the United States or the water of the contiguous zone,\nand which is intended for such uses as: a port or terminal for the\nloading or unloading of cargoes; or a site for powerplant or airport\ndevelopment, or for solid waste disposal.\nS. 1316 further amends the Federal Water Pollution Control Act\nby prohibiting any Federal agency from permitting the construction\nor operation of a deepwater development until the Administrator of\nthe Environmental Protection Agency has certified that such develop-\nment meets certain criteria of site selection, method and type of\nconstruction, and environmental protection.\nThe Act provides that any person desiring to construct or operate\na deepwater development shall at the time of application for approval\nfrom any Federal agency submit, in accordance with regulations\npromulgated by the Administrator, detailed plans of such development\nwithin two vears prior to the expected date of the beginning of con-\nstruction. Those deepwater developments which are not in the con-\nstruction phase on the date of enactment of the Act but which will\nreach the construction phase at any time within two years after the\ndate of enactment must submit plans to the Administrator \"as soon\nas possible.\"\nCopies of such materials as may be required under the Act in con-\nnection with a permit application must be submitted to the Governor\nof each adjacent State, and made available for public inspection at a\nplace to be designated by the Administrator.\nThe Administrator may certify a deepwater development only\nafter he has received the concurrence of the Governor of the adjacent\nState or States; held a public hearing in accordance with the Ad-\nFORD j LIBRARY GERALD\n93\ngenerating plants and oil drilling facilities may cause massive pollu-\ntion problems for neighboring states. An additional finding provides\nthat all such construction must be specifically reviewed and approved\nby Congress and the adjacent States.\nParagraph B prohibits any Federal department or agency from\nconstructing, approving or licensing the construction of any facility\nin or beyond the territorial waters off the coast of the United States\nexcept under certain specific conditions. First, the bill would require\nthe department or agency to file a complete report on the proposed\nfacility with the Administrator of the Environmental Protection\nAgency, which he must then forward together with his own views to\nthe Governor and legislative leaders in each adjacent coastal State\nthat might be adversely affected by the facility. Secondly, Congress\nmust pass a law approving such construction and the Governor of\neach affected State must file a notice of State approval with the\nAdministrator.\nFailure by the Governor to file a notice of approval or disapproval\nof construction within ninety days after receiving the Administrator's\nreport is considered an action of approval under the Act.\nS. 836 is pending before the Committee on Public Works.\nS. 1316, Mr. Biden and Mr. Muskie.-To amend section 311 and\nsection 509 of the Federal Water Pollution Control Act.\nSection I adds definitions of deepwater development and adjacent\nState to section 311 (a) of the Act. Deepwater development is defined as\nany man-made structure either fixed or floating, or dredging activities\nrelated to such structure, which is located in or may affect the navi-\ngable waters of the United States or the water of the contiguous zone,\nand which is intended for such uses as: a port or terminal for the\nloading or unloading of cargoes; or a site for powerplant or airport\ndevelopment, or for solid waste disposal.\nS. 1316 further amends the Federal Water Pollution Control Act\nby prohibiting any Federal agency from permitting the construction\nor operation of a deepwater development until the Administrator of\nthe Environmental Protection Agency has certified that such develop-\nment meets certain criteria of site selection, method and type of\nconstruction, and environmental protection.\nThe Act provides that any person desiring to construct or operate\na deepwater development shall at the time of application for approval\nfrom any Federal agency submit, in accordance with regulations\npromulgated by the Administrator, detailed plans of such development\nwithin two years prior to the expected date of the beginning of con-\nstruction. Those deepwater developments which are not in the con-\nstruction phase on the date of enactment of the Act but which will\nreach the construction phase at any time within two years after the\ndate of enactment must submit plans to the Administrator \"as soon\nas possible.\"\nCopies of such materials as may be required under the Act in con-\nnection with a permit application must be submitted to the Governor\nof each adjacent State, and made available for public inspection at a\nplace to be designated by the Administrator.\nThe Administrator may certify a deepwater development only\nafter he has received the concurrence of the Governor of the adjacent\nState or States; held a public hearing in accordance with the Ad-\nGERALD FORD LIBRARY\n94\nministrative Procedure Act; and determined that the location, con-\nstruction, and operation of the proposed deepwater port facility will\nnot cause or contribute to environmental degradation or cause viola-\ntions of this Act, the Clean Air Act or any other Act administered by\nthe Environmental Protection Agency.\nThe Act provides for the Administrator to set a reasonable appli-\ncant's fee sufficient to cover the cost of processing applications. It\nfurther provides that constructing a deepwater development without\nprior certification by the Administration shall result in a minimum\nfine of $50,000 per day for each day that construction continues after\nnotice of the violation.\nAlso under the Act, a State Governor's right to concur in certifi-\ncation may be waived after two years unless such State has adopted\nand had approved by the Administrator, an environmental permit\nplan applicable to areas affected by deepwater port facilities.\nThe Act requires such a plan to include the following provisions:\n\"(A) public or private development will be permitted only if in the\nprocess of development, and in the completed project, the development\nwill not result in violation of emission or effluent limitations, standards,\nor other requirements of the Clean Air Act and this Act;\n(B) industrial, residential, or commercial development will not\noccur where it would exceed the capacity of existing systems for\npower and water supply, waste water collection and treatment, solid\nwaste disposal and resource recovery, or transportation, unless such\nsystems are planned for expansion and have adequate financing to\nsupport operation and expansion as necessary to meet the demands\nof the new development without violation of the emission or effluent\nlimitations, standards, or other requirements of the Clean Air Act or\nthis Act at any place where such expansion of such systems or any\nactivities relating thereto may occur;\n(C) industrial or commercial development shall occur only where\nthere exist adequate housing opportunities, on a nondiscriminatory\nbasis and within a reasonable distance of any such development, for\nall persons who are or may be employed in the operation of such\ndevelopment;\n(D) development shall be prohibited on water saturated lands such\nas marshlands, swamps, bogs, estuaries, salt marshes, and other\nwetlands;\n(E) there shall be no further commercial, residential, or industrial\ndevelopment of the flood plains of the navigable waterways in the\nState;\n(F) those responsible for making less permeable or impermeable\nany portion of the landscape will be required to hold or store runoff\nfrom such lands so that it does not reach natural waterways during\nstorm conditions or times of snowmelt;\n(G) to the extent possible, upland watersheds will be maintained\nfor maximum natural water retention;\n(H) utilities, in locating utility lanes, shall make maximum possible\nmultiple use of utility rights of way; and\n(I) any major residential development will include open space areas\nsufficient to provide recreational opportunities for all residents of the\nproposed developments.\"\nTERALD FORD LIBRARY\n95\nThe final provision of S. 1316 asserts that nothing in the Act shall\nbe interpreted as allowing the construction or operation of deepwater\ndevelopments against a State or local government's will.\nThe Act also amends Sec. 509(b) of the Federal Water Pollution\nControl Act in order to make it consistent with the other changes in\nthe Act.\nS. 1316 has been referred to the Committee on Public Works.\nS. 1558, Mr. Roth.-To amend the Federal Water Pollution Control\nAct in order to require the filing of certain environmental impact\nreports and the approval of affected coastal States with respect to\nthe construction of offshore docking facilities for vessels transporting\npetroleum or petroleum products.\nThis measure amends Title IV of the Federal Water Pollution\nControl Act by adding a new section 406 entitled \"Reports and State\nApproval of Certain Offshore Docking Facilities.\"\nParagraph A provides that no Federal department or agency shall\nconstruct, license or approve the construction or operation of any\noffshore docking facility within the territorial seas, the .contiguous\nzone or the ocean unless three specific conditions have been met:\nFirst, such department or agency must file with the Administrator\nof EPA a complete report on the environmental and land use impacts\nof such facility. Secondly, the Administrator must forward copies of all\nreports with respect to such a facility (including reports prepared by\nthe Administrator pursuant to this section) to the Governor and the\nlegislature of each coastal State which may be significantly affected\nby pollution or land use problems as a result of the construction or\noperation of such facility. Following receipt of such reports, each\nState has 120 days to approve or disapprove the construction of such\nfacility.\nParagraph B of the proposed Sec. 406 stipulates that the Governors\nof the affected States may submit, with any notice of approval,\nrecommendations concerning the location, construction, operation or\nuse of the proposed facility. The Federal department or agency author-\nizing the facility is directed to heed those recommendations to the\ngreatest extent possible under Federal law.\nThe Bill provides no definition of the terms used therein.\nS. 1518 was referred to the Committee on Public Works.\nS. 1751: Mr. Jackson, Mr. Baker, Mr. Cotton, Mr. Fannin, Mr.\nJohnston, and Mr. Randolph (by request).-A bill to amend the Outer\nContinental Shelf Lands Act and to authorize the Secretary of Interior\nto regulate the construction and operation of deepwater port facilities.\nAs proposed by the Administration, the \"Deepwater Port Facilities\nAct of 1973\" amends the Outer Continental Shelf Lands Act to\nauthorize the Secretary of the Interior to prescribe rules and regula-\ntions necessary to coordinate activities for the exploration and ex-\nploitation of the oil and gas and other mineral resources of the OCS\nwith the construction and operation of deepwater port facilities.\nTitle I of S. 1751 sets forth Congressional findings that onshore port\nfacilities are increasingly congested and inadequate for large vessels;\nthat the national interest in terms of resources, environniental pro-\ntection, transportation safety, world trade and security is best served\nby the use of larger vessels and development of deepwater ports to\naccommodate them; that construction of such facilities would be a\nGERALD FORD LIBRAR\n96\nreasonable use of the high seas in accordance with international law;\nand that such actions should be subject to Federal license and regula-\ntion and closely coordinated with the regulation of exploration and\nexploitation of offshore resources.\nUnder the measure a deepwater port is a \"facility constructed off\nthe coast of the United States, and beyond three nautical miles from\nsuch coast, for the principal purpose of providing for the transshipment\nof commodities between vessels and the United States. It includes all\nassociated equipment and structures beyond three nautical miles\nfrom such coast, such as storage facilities, pumping stations, and\nconnections to pipelines, but does not include pipelines.\"\nThe Secretary of the Interior is authorized to grant to any citizen\nof the United States; any State or political subdivision of a State, or\nany private, public or municipal corporation meeting criteria of finan-\ncial responsibility, a license to construct and operate a deepwater port\nfacility. Such authorization is conditioned on a finding by the Secre-\ntary that the facility will not unreasonably interfere with navigation\nor otherwise violate international obligations of the United States; and\nthat the facility will be constructed and operated in a manner to\nminimize or prevent any adverse impact on the marine and coastal\nenvironment.\nAdditional provisions require the Secretary to consult with the\nGovernor of any State off whose coast the facility will be constructed\nand to consult with \"all interested or affected Federal agencies\".\nApplication filed under S. 1751 would constitute an application for\nall Federal authorizations required for construction of the port. The\nSecretary of the Interior must be notified by the appropriate Federal\nagencies that the application meets the requirements of the laws they\nadminister prior to granting a permit. In granting a license pursuant\nto the Act, the Secretary is required to file a single detailed environ-\nmental impact statement pursuant to Section 102(2)(c) of the Na-\ntional Environmental Policy Act which will serve as the environmental\nimpact statement for all Federal authorizations required to construct\nthe port.\nThe Deepwater Port Facilities Act of 1973 sets forth an administra-\ntive process for consideration of deepwater port project proposals\nincluding public notification, hearing and judicial review procedures.\nAdditional provision of S. 1751 authorize the Secretary to include\nin a deepwater port license such conditions as he deems necessary to\ncomply with international legal obligations; prevent or minimize pol-\nlution in surrounding waters; assure that operation of the facility will\nnot \"substantially lessen competition or tend to create a monopoly,\"\nand to assure that upon expiration or revocation of a license, the\ndeepwater port licensee will render the facility harmless to navigation\nand the environment.\nS. 1751 establishes civil and criminal penalties for violations of the\nAct and extends the Constitution and the laws and treaties of the\nUnited States over deepwater port facilities insofar as they are con-\nsistent with international law. Additional provisions set forth judicial\nprocedures for enforcing compliance with laws governing the facility.\nPursuant to the measure deepwater ports would be regulated in the\nsame manner as though they were located within the navigable waters\nof the United States. Foreign flag vessels utilizing the facility are\nFORD LIBRARY & 070870\n97\ndeemed to consent to the jurisdiction of the United States for the pur-\npose of the Act which also extends the civil and criminal laws of the\nnearest coastal State over the facility.\nFinal provisions of the bill authorize the Secretary to promulgate\nrules and regulations governing the health and welfare of persons using\ndeepwater port facilities and further, to consult with appropriate\nFederal agencies and seek appropriate international measures regard-\ning navigation in the vicinity of the port.\nS. 1751 was jointly referred to the Senate Committees on Interior\nand Insular Affairs, Commerce and Public Works. A special joint sub-\ncommittee composed of five members from each Committee was estab-\nlished to consider the bill.\nS. 2232, Mr. Hollings and Mr. Magnuson.-A bill to promote\ncommerce and protect the environment by establishing procedures\nfor the siting, construction, and operation of deepwater port facilities\noff the coast of the United States.\nEntitled the \"Offshore Marine Environmental Protection Act of\n1973\" S. 2232 amends the Ports and Waterways Safety Act of 1972.\nThe bill sets forth Congressional findings that deepwater port facilities\nare proposed for construction off the coast of the United States and\nthat a uniform Federal regulatory mechanism is required to oversee\ntheir development and use. S. 2232 also finds a need to insure that\neach coastal state has an approved coastal zone management program\nto assure that the marine and coastal environment will be effectively\nprotected and managed.\nA deepwater port facility as defined by the bill is \"any manmade\nstructure, either fixed or floating, located in the navigable waters of\nthe United States more than five hundred feet to the seaward of the\nmean low-water mark or located beyond the territorial sea of the\nUnited States and which is intended for use as a port or terminal for\ntransportation of goods and commodities from vessels to shoreside.\"\nThe bill authorizes the Secretary of the Department in which the\nCoast Guard is operating to issue a license to construct and operate\na deepwater port facility if he determines that the applicant is finan-\ncially responsible, that the facility will not unreasonably interfere\nwith navigation or other uses of the high seas; threaten the integrity\nof the marine environment or infringe upon any international legal\nobligations of the United States. S. 2232 also established conditions\nfor transfer, modification, revocation or suspension of a license.\nA license pursuant to the Act may not be granted until the Secre-\ntary of the Department of Commerce through the National Oceanic\nand Atmospheric Administration has certified that the adjacent State\nor States has an approved coastal zone management program in\naccordance with the Coastal Zone Management Act of 1972. In\naddition, The Administrator of the Environmental Protection Agency\nand the Secretary of the Department of Interior must certify that the\ndeepwater port project proposal is consistent with the policies and\nprograms they administer. The Secretary of Commerce through\nNOAA is authorized to establish and apply criteria pertaining to the\nquality and use of the marine environment and its resources for\nreviewing and evaluating decpwater port project proposals, and to\nrecommend such license conditions as he deems necessary to protect\nthe marine and coastal environment.\nFORD\ni\nGERALD\nLIBRARY\n98\nThe bill requires that detailed plans for a deepwater port be sub-\nmitted to the Secretary, the Secretary of the Department of Com-\nmerce, the Administrator of the Environmental Protection Agency\nand the Secretary of the Interior at least two years prior to the pro-\nposed commencement of construction. Submission and approval\nof the application as specified by the Act constitutes an application\nand approval for all Federal authorizations which may be required\nfor construction and operation of the facility.\nS. 2232 requires a public hearing to be held at a location in the\nvicinity of a proposed deepwater port site as part of the application\nreview process. Upon issuance of a license, the Secretary, Secretary\nof Commerce, Administrator of the Environmental Protection Agency\nand Secretary of the Interior must jointly prepare and circulate for\nreview, a detailed environmental impact statement pursuant to\nSec. 102(2)(C) of the National Environmental Policy Act.\nFurther provisions of S. 2232 establish standards of record-keeping\nand maintenance, inspection, public access to information, and crimi-\nnal and civil judicial proceedings together with penalties for violation\nof the Act. The bill also establishes an Advisory Council for Deepwater\nPort Policy composed of members representing shipping, labor, petro-\nleum industry and scientific interests and both Federal and State\ngovernment officials. According to the Act, the Council would be\nsupported by staff provided by various Federal agencies with interest\nand expertise relating to deepwater ports.\nFinally the bill establishes the procedures for civil action to obtain\ninjunctive relief, and authorizes appropriations for administration of\nthe Act. S. 2232 also mandates an interagency task force study to\nprepare plans for development and protection of the offshore marine\nenvironment of the United States to be submitted to Congress two\nyears after enactment of the Act.\nS. 2232 was referred to the Committee on Commerce.\nGERALD LIBRUT R. FORD\nAPPENDIX F\nAREAS REQUIRING FURTHER INVESTIGATION\nExecutive Departments identified specific further actions, including\nadditional studies or investigations, concerning U.S. deepwater port\ndevelopment which, in their view, the Federal Government should\nundertake, as follows:\nTHE COUNCIL ON ENVIRONMENTAL QUALITY\nFirst, of course, we recommend passage of the Administration bill\nS. 1751. The Department of the Interior should develop a comprehen-\nsive and effective licensing program that will require applicants to\nconduct detailed studies of the proposed port sites and alternatives\nand will assure the selection of port locations and the operation of\nports in a manner that will minimize or avoid significant adverse\nenvironmental impacts.\nTHE DEPARTMENT OF STATE\nAlthough development of deepwater port facilities is a reasonable\nuse of the high seas within international law, the State Department\nfeels it is important to continue to seek multilateral agreement on an\nexclusive coastal State right to authorize and regulate such facilities\nwithin its Seabed Economic Area. In this connection, we have intro-\nduced the proposals discussed in question 2. Because legislation is\nrequired to ensure adequate federal licensing and regulatory authority\nover deepwater port facilities, the Department of State supports the\nenactment of S. 1751, the Deepwater Port Facilities Act of 1973. The\nDepartment of State believes, however, that more detailed considera-\ntion should be given to questions such as shipping and navigational\nsafety requirements, storage and transshipment, environmental re-\nquirements, customs laws and civil and criminal jurisdiction as related\nto the operation of deepwater facilities. Such consideration could\nprovide input for further decisions on regulatory and licensing policies.\nTHE U.S. ARMY CORPS OF ENGINEERS\nAn important area of further study remains if deepwater ports are\nto be constructed in a timely fashion, and if their environmental and\neconomic characteristics are to be compatible with the public interest.\nThis is the area of the specific design, equipment, and operating criteria\nto apply to the delivery system of which the offshore terminal would\nbe a part. If the system is to operate in the public interest, there must\nbe scientifically determined and publicly accepted determinations of\nanticipated environmental an operating performance. Whether the\n(99)\nFORD LIBRARI i GERALD\n100\nterminal and/or other parts of the system are to be privately or pub-\nlicly built and operated, the Federal government must develop the\ncapability to initiate or to evaluate relevant design, equipment and\noperating standards. Additionally, environmental studies will be re-\nquired for any specific site location(s) for which a permit application\nis received.\nTHE DEPARTMENT OF INTERIOR\n(a) The Department of the Interior will complete a final environ-\nmental impact statement.\n(b) Development of detailed institutional and organizational re-\nlationships between the Interior Department and the other various\npublic agencies which will have management, technical advisory, or\nreview roles.\n(c) Development of licensing system including specific deepwater\nport regulations to fully implement the legislative authority.\n(d) In cooperation with sister departments, continue necessary and\nrelated environmental and economic studies including siting criteria,\npollution dispersal and related containment measures, and regional\nand local economic impacts.\nNATIONAL OCEANIC AND ATMOSPHERIC ADMINISTRATION\n(U.S. DEPARTMENT OF COMMERCE)\nInformation on coastal zone and port related subjects is still being\nproduced by the Sea Grant Program, but at a slower rate than an-\nticipated. Over 1,200 reports have been issued under the Program's\nsponsorship during its SIX and one-half years of existence; well over\na third relate to coastal zone topics.\nIn addition, much of the information needed for deepwater port\nsiting decisions is being collected under direct NOAA programs.\nThese include biological studies of the National Marine Fisheries\nService; tides and currents measurements and nautical mapping\nactivities of the National Ocean Survey; meteorological studies of\nthe National Weather Service; studies of ocean and atmospheric\nprocesses by the Environmental Research Laboratories; and other\nNOAA programs. We believe that these programs represent a sig-\nnificant capability and nucleus of effort for providing information\nrequired to assess the environmental impacts of deepwater ports,\nand we would anticipate that much of the necessary information will\nstem from these ongoing efforts. In addition, however, it would be\nnecessary to extend and strengthen the present programs to assess\nfully the environmental issues associated with location of specific\ndeepwater ports as these are considered in the future.\nDEPARTMENT OF TRANSPORTATION\nThe most urgent action for the Federal Government is to enact\nlegislation giving the responsibility of licensing deepwater port\nconstruction and operation to a Federal Agency.\nAdditional studies are needed in the environmental area on opera-\ntional and technological aspects to reduce potential oil spills and to\nimprove existing methods in containment and recovery of oil spills.\nFORD i LIBRARY 9ERALD\n101\nIn the economic area additional investigations are needed to deter-\nmine the overall impact to the national economy of alternative loca-\ntions and the transportation and distribution system requirements of\ndeepwater port development. Also on-shore environmental and\nsecondary economic impacts of deepwater port development need\nfurther study.\nU.S. COAST GUARD (U.S. DEPARTMENT OF TRANSPORTATION)\nBased on general knowledge of the numerous studies and reports\nmade on the subject, the Coast Guard feels that an adequate federal\nstatute dealing with the development and operation of deepwater port\nfacilities is required. The requirements established by this federal\nlegislation, in all probability, will lead to the identification of topics\nwhich must be studied by a number of federal, state and local agen-\ncies. The Coast Guard, because of its responsibilities in maritime law\nenforcement, port safety, merchant vessel safety, aids to navigation\nand marine environmental protection as well as search and rescue, will\nbe vitally interested and involved in any federal actions planned in\nconnection with deepwater port facilities. Details of this projected\ninvolvement are discussed in response to Question 8, below.\nQuestion 8. What role would you view for your department, agency\nor office in the accomplishment of such further actions? (Refer to\nprevious responses whenever applicable.)\nResponse 8. Throughout all the responses to the questions above,\nthe Coast Guard has identified program responsibility in maritime\nlaw enforcement, port safety, merchant vessel safety, aids to naviga-\ntion, marine environmental protection and search and rescue. Assum-\ning that any federal statute would include provisions which would\nmake applicable the existing federal laws of the United States to the\ndeepwater port facility, the Coast Guard program responsibilities\nlisted above and including, in certain cases, the Bridge Administration\nprogram, would reflect considerable Coast Guard involvement.\nAlthough any request for the establishment of a deepwater port\nfacility will undoubtedly include the rationale for site selection and\nthe complete plans for site development and operation, for purposes of\nclarity, the deepwater port facility concept can be reviewed in three\nfunctional stages: site selection, site development, and facility\noperation.\nSite selection\nThe evaluation of deepwater port facility sites should include con-\nsideration of the safety, environmental and security elements of U.S.\nnational interests. Safety and environmental factors must be balanced\nwith other considerations in site selection. Navigational patterns,\nfeasibility of establishing aids to navigation, vessel maneuvering\ncharacteristics, necessity for maritime pilots, vessel traffic control\npatterns, etc., also are some of the necessary ingredients to a proper\nsite evaluation.\nWith respect to safety and environmental factors, the Coast Guard\nshould be consulted in the review of site selection so as to ensure\nminimal navigational interference in approaches, sea lanes and pos-\nsible structures in the vicinity, fishing, and other uses, as well as\nhazards to the environment.\nFORD\nGERALD\nLIBRARY"
}