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    "ocrText": "The original documents are located in Box 27, folder \"Outer Continental Shelf Oil Leasing\n- Publications (2)\" of the John Marsh Files 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 Gerald R. Ford donated to the United\nStates of America his copyrights in all of his unpublished writings in National Archives collections.\nWorks prepared by U.S. Government employees as part of their official duties are in the public\ndomain.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.\nPage\nCalendar No. 1088\n93D CONGRESS\nSENATE\nREPORT\n2d Session\nNo. 93-1140\nENERGY SUPPLY ACT OF 1974\nSEPTEMBER 9, 1974.-Ordered to be printed\nMr. JACKSON, from the Committee on Interior and Insular Affairs,\nsubmitted the following\nREPORT\ntogether with\nMINORITY VIEWS\n[To accompany S. 3221]\nThe Committee on Interior and Insular Affairs, to which was re-\nferred the bill (S. 3221) to increase the supply of energy in the United\nStates from the Outer Continental Shelf; to amend the Outer Con-\ntinental Shelf Lands Act; and for other purposes, having considered\nthe same, reports favorably thereon with an amendment and recom-\nmends that the bill, as amended, do pass.\nThe amendment is as follows:\nThe amendment to the text strikes all after the enacting clause and\ninserts a complete new text which is printed in italic type in the re-\nported bill.\nI. PURPOSE\nDuring the next decade, development of conventional oil and gas\nfrom the United States Outer Continental Shelf can be expected (a)\nto provide the largest single source of increased domestic energy, (b)\nto supply this energy at a lower average cost to the U.S. economy than\nany alternative and (c) to supply it with substantially less harm to\nthe environment than almost any other source.\nOCS oil and gas and the policy issues associated with them have\nbeen relatively neglected during the recent crisis in favor of much less\npromising concerns such as price incentives for stripper wells and\nother marginal onshore production (whose aggregate potential con-\ntribution to increased output is quite small) or research and develop-\nment for coal and oil shale conversion (which are high cost sources,\nhave long payout times, and pose very serious environmental prob-\nDigitized from Box 27 of The John Marsh Files at the Gerald R. Ford Presidential Library\n2\n3\nlems). Our effort to improve the short- and medium-term supply of\nnatural resources of the \"subsoil and seabed of the Continental Shelf\ndomestic primary fuels should be directed first of all toward increas-\nbeneath the high seas but contiguous to the coasts of the United\ning the rate of exploration and development on the OCS.\nStates\" to be subject to the control and jurisdiction of the U.S. The\nThe major policy issues concerning the OCS are the rate and loca-\nproclamation did not define the seaward limits of the Continental\ntion of leasing, environmental safeguards, impacts on coastal states,\nShelf but the accompanying press release (September 28, 1945) from\nthe lease allocation system and the extent to which industry informa-\nthe White House indicated that the submerged land which is covered\ntion about the nature and extent of the resources should be divulged\nby no more than 100 fathoms (600 feet) of water was considered as\nto the government and to the public.\nthe Continental Shelf.\nBecause the OCS represents such a large and promising area for oil\nThe 1958 Geneva Convention on the Continental Shelf ratified by\nand gas exploration, the Committee believes that the Congress must\nthe U.S. in 1960 includes an open-ended definition of the Shelf as\nupdate the Outer Continental Shelf Lands Act of 1953 (67 Stat. 462,\nextending to a depth of 200 meters \"or beyond that limit to where\n43 U.S.C. §§ 1331-1343) which has never been amended to provide\nthe depth of the superjacent waters admits of the exploitation of the\nadequate authority and guidelines for the kind of development activity\nnatural resources.\"\nthat probably will take place in the next few years.\nIn 1947 and 1950, the Supreme Court ruled on the controversy be-\nDespite the intense and justified concern of many people over the\ntween the United States and various coastal states over ownership and\npotential damage to the environment from oil and gas development on\ncontrol of the Shelf. The Supreme Court decided that the entire Shelf\nthe OCS, there is an increasing feeling that OCS development may\nwas under Federal control. United States V. California, 332 U.S. 19\nwell be more acceptable environmentally than other potential domes-\n(1947) ; United States V. Louisiana, 339 U.S. 699 (1950) United\ntic energy resources such as massive strip mining for coal and oil\nStates V. Texas, 339 U.S. 707 (1950). However, in 1953 Congress passed\nshale.\nthe Submerged Lands Act which \"released and relinquished\" to the\nThere are a variety of obstacles to OCS oil and gas development\ncoastal states that portion of the Shelf extending out from the mean\ntoday. These include technological, economic, environmental, legal\nhigh tide line for 3 miles or to their historic boundaries. Congress fol-\nand administrative problems.\nlowed this with the OCS Lands Act which was primarily designed to\nS. 3221 is designed to remove these obstacles in order to facilitate\nbe an affirmation of the 1945 assertion of jurisdiction by President\nrapid and responsible-as opposed to quick and dirty-development\nTruman.\nof the oil and gas resources of the Outer Continental Shelf.\nThe 1953 Act reflects this emphasis on jurisdictional questions. Its\nThere are two basic thrusts to the bill. First, it reasserts Congress'\nspecial Constitutional responsibility to \"make all needful rules and\n\"bare bones\" leasing authority with essentially no statutory standards\nor guidelines also reflects the relative lack of basic knowledge concern-\nregulations respecting the territory or other property belonging to\ning, and interest in, development of the resources of the Shelf at that\nthe United States\". (U.S. Const. Art. IV Sec. 3 Cl. 2) The 1953 Outer\ntime.\nContinental Shelf Lands Act is essentially a carte blanche delegation\nCURRENT EMPHASIS ON DOMESTIC SOURCES OF ENERGY\nof authority to the Secretary of the Interior. The increased importance\nof OCS resources, the increased consideration of environmental im-\nSince the imposition of the Arab oil embargo the United States has\npacts and emphasis on comprehensive planning, require Congress to\nbecome intensely concerned about its dependence on foreign sources of\nput some \"flesh on the bones\" in the form of standards and criteria for\nenergy. Congress and the nation have focused on the means of reducing\nthe Secretary to follow in the exercise of his authority.\nU.S. reliance on foreign energy supplies and prudently exploiting a\nSecond, the bill gives the Secretary new authority needed to man-\nsubstantial domestic resource base. One of the major results of this\nage the programs anticipated in the last third of the twentieth century.\neffort is the National Energy Research and Development Policy Act\npassed by the Senate last December. That Act establishes as a national\nII. BACKGROUND AND NEED\nobjective \"development within 10 years of the option and the capa-\nbility for the United States to become energy self-sufficient through\nHISTORY OF OCS ACT\nthe use of domestic energy resources by socially and environmentally\nIn 1953, Congress enacted the Outer Continental Shelf Lands Act.\nacceptable means.\"\nThis Act authorizes the Secretary of the Interior to grant mineral\nThe research and development program authorized by that act is\nleases on the Outer Continental Shelf and to prescribe regulations for\ndesigned to help meet that goal over the next 10 years. However, in\ntheir administration.\nthe shorter term, available domestic energy resources, particularly\nPresently, the Outer Continental Shelf program is handled jointly\nfossil fuels, must be developed more rapidly.\nby the Geological Survey and the Bureau of Land Management under\nDuring the next decade, development of conventional oil and gas\na joint arrangement which divides responsibility by allocating to the\nfrom the United States Outer Continental Shelf can be expected (a)\nBLM the leasing function and to the Survey the prelease resource\nto provide the largest single source of increased domestic energy, (b)\nevaluation and the post-lease administration function.\nto supply this energy at a lower average cost to the U.S. economy than\nThe OCS Act of 1953 stemmed from the proclamation on the Con-\nany alternative and (c) to supply it with substantially less harm to\ntinental Shelf issued by President Truman in 1945. It declared the\nthe environment than almost any other source.\n4\n5\nHISTORY OF OUTER CONTINENTAL SHELF RESOURCE DEVELOPMENT\nportant one, because many billions of dollars of investment and much\nThe total shelf and continental margin area of the Outer Conti-\neffort separate the one from the other.\nnental Shelf is estimated to be approximately 1,175,680,000 acres (in-\nThe U.S. Geological Survey estimates that the potential recoverable\ncluding areas beyond the 200-meter water depth to 2,500-meter water\npetroleum resources remaining on the OCS of the United States out to\ndepth). Of this total, the area under Federal jurisdiction is approxi-\na water depth of 200 meters are 58-116 billion barrels of crude oil and\nmately 1,146,680,000 acres.\nnatural gas liquids and about 355-710 trillion cubic feet of natural gas.\nPursuant to the Submerged Lands Act and subsequent court deci-\nFor purposes of comparison, the United States consumed 6 billion\nsions, coastal states have jurisdictions within 3 miles of their\nbarrels of oil and 23 trillion cubic feet of gas in 1973.\ncoasts and Texas and Florida have jurisdiction for three marine\nleagues off their Gulf of Mexico coasts-which accounts for the differ-\nNEED FOR LEASING IN \"FRONTIER AREAS\"\nence in area of the shelf and margin area and that part under Federal\njurisdiction.\nOf the 1,081,000 barrels a day produced in 1973 the major portion or\nThe Department of the Interior reports that since the passage of the\n1,029,000 barrels a day came from wells in the Gulf of Mexico, in\nother words, almost all of it.\nOCS Lands Act (67 Stat. 462; 43 U.S.C., Sec. 1331-1343) on August 7,\n1953, 33 lease sales have been held, the large majority of which have\nThe remaining 52,000 barrels a day was produced from fields off\nSouthern California.\nbeen offshore Louisiana and Texas. Nineteen hundred forty leases have\nbeen issued embracing over eight million acres. Petroleum and sulfur\nGas production totaled 8.9 billion cubic feet a day in 1973, all but\nproduction amounts to approximately 12 percent of total domestic\n20 million cubic feet a day from the Gulf of Mexico.\nproduction and natural gas production amounts to approximately 13\nDuring the past 20 years, over 12,000 wells have been drilled on\npercent.\nFederal Outer Continental Shelf lands resulting in total production\nProduction of hydrocarbons includes over three billion barrels of\nof 3.3 billion barrels of oil and 20.7 trillion cubic feet of gas.\noil (including condensate) and nineteen trillion m.c.f. of natural gas.\nIf we are to increase our OCS oil and gas development, leasing must\nAlso over thirteen million long tons of sulfur and over 4 million long\ntake place in new or \"frontier\" areas. A number of steps have already\nbeen taken in that direction.\ntons of salt have been produced.\nThe Outer Continental Shelf Lands Act provides for payment to\nOn April 18, 1973, the President announced that the Outer Con-\ntinental Shelf leasing rate would be increased from 1 million acres\nthe Federal Government of revenues derived from oil and gas leases\non the Outer Continental Shelf subject to Federal jurisdiction.\nper year to 3 million acres per year and that the 5-year tentative\nleasing schedule should be revised to reflect this acceleration.\nAll OCS leases issued to date have required payment to the Federal\nOn April 18, 1973, the President directed the Council of Environ-\nGovernment based on a royalty rate of 162/3 percent in the amount or\nvalue of the production saved, removed, or sold from the lease. The\nmental Quality (CEQ) to study the environmental impact of oil and\ngas production on the Atlantic and Gulf of Alaska Outer Continental\nannual rental and minimum royalty required for leases offered at gen-\neral lease sales (unproven areas) have been $3 per acre, and have been\nShelf, since it was clear that continued accelerated leasing in the\nGulf of Mexico and offshore California would soon consume available\n$10 per acre for leases offered at drainage sales (proven areas). Total\nacreage in those areas.\nFederal revenues from Outer Continental Shelf resource development\nOn January 23, 1974, the President directed that Outer Continental\namount to over 10 billion dollars.\nShelf leasing be even further accelerated and that 10 million acres be\nleased in 1975.\nOCS OIL AND GAS RESERVES\nIn February of this year, Secretary of the Interior Morton asked the\nThe U.S. Geological Survey recently estimated that there are now\nStates, environmental and industry groups, and the general public to\nproved reserves of 2.2 billion barrels of oil and 2.0 trillion cubic feet\nlist the Outer Continental Shelf areas in which they had the greatest\nof gas in the OCS off Southern California, and 3.5 billion barrels of\ninterest by their order of preference and to specify environmental\noil and 36.8 trillion cubic feet of gas in the OCS in the Gulf of Mexico\nproblems that would be encountered in developing these Outer Conti-\noff Louisiana and Texas. This is a total of 5.7 billion barrels of oil\nnental Shelf areas.\nand 38.8 trillion cubic feet of gas.\nThe Committee believes that the OCS Lands Act must be amended\nIn addition to the proved, discovered reserves known to exist on the\nas provided in S. 3221 before any large-scale expansion of leasing\nOCS, the continental margin of the United States is believed to con-\ntakes place.\ntain very large amounts of undiscovered oil and gas resources. The\nIII. MAJOR PROVISIONS\npresence of these resources has not actually been demonstrated, nor\nPolicy.-The Act declares that the OCS is a vital national resource\ncan it be determined what portion may prove to be economically recov-\nreserve held by the Federal government for all the people, which\nerable even if they are discovered. The figures given represent those\nshould be made available for orderly development, subject to envi-\narrived at by geological inference from indirect evidence. The dis-\nronmental safeguards, when necessary to meet national needs.\ntinction between potential resources and proved reserves is an im-\n6\n7\nLeasing Program.-The Secretary is directed to prepare a compre-\ninformed decisions about fair market value of resources. As part of\nhensive leasing program designed to carry out the objective of making\nthis program the Secretary would be authorized to purchase data and\navailable for leasing as soon as practicable all OCS lands geologically\ncontract for stratigraphic drilling on the OCS.\nfavorable for oil and gas development without undue environmental\nThe Secretary would prepare and publish maps and reports on the\ndamage. This program would indicate the size, timing, and location of\nOCS. This information should help potential oil and gas developers\nleasing activity which the Secretary believes would meet national\nto participate in and the general public to understand, OCS programs.\nenergy needs over the next 10 years. The leasing program must be\nResearch and Development.-To improve technology used in OCS\nconsistent with the following principles:\ndevelopment, the Secretary would be directed to carry out a research\n(1) management of the Outer Continental Shelf in a manner\nand development program where such research was not being done ade-\nwhich considers all its resource values and the potential impact\nquately by others. This would include consideration of (1) downhole\nof oil and gas development on other resource values and the\nmarine environment;\nsafety devices, (2) methods for reestablishing control of blowing out\n(2) timing and location of leasing SO as to distribute more\nor burning wells, (3) methods for containing and cleaning up oil\nevenly exploration, development and production of oil and gas\nspills, (4) improved drilling bits, (5) improved flaw detection systems\namong various areas of the Outer Continental Shelf considering:\nfor undersea pipelines, (6) new or improved methods of development\n(A) existing information concerning their geographical,\nin water depths over six hundred meters, and (7) subsea production\nsystems.\ngeological and ecological characteristics;\n(B) their location with respect to, and relative needs of,\nOil Spill Liability.-The bill puts into law the existing rule, estab-\nregional energy markets;\nlished by Departmental regulation, that an OCS lessee is liable for\n(C) interest by potential oil and gas producers in explora-\nthe total cost of control and removal of spilled oil. It also creates a\ntion and development as indicated by tract nominations and\nnew strict liability rule for damages from OCS oil spills. The pro-\nother representations;\nvisions are patterned after the Trans-Alaska Pipeline Authorization\n(D) an equitable sharing of developmental benefits and\nAct of 1973. (Title II of P.L. 93-153.)\nThe damage liability is imposed without regard to fault. and with-\nenvironmental risks among various regions of the United\nStates; and\nout regard to ownership of the land or resource damaged if the land\n(3) receipt of fair market value for public resources.\nor resource is relied on for subsistence or economic purposes. Thus\nThe program would include estimates of appropriations and staffing\nthere can be recovery for damage to fisheries despite the fact that the\nrequired to prepare the necessary environmental impact statements,\nfisherman has no property right in the uncaught fish. Resort owners\nobtain resource data and any other information needed to decide\ncould also recover for loss of business caused by an oil spill on the\nwhether to issue any lease and to supervise operations under every\nbeach even though they do not own the beach. On the other hand,\nlease in the manner necessary to assure compliance with the require-\nsport fishermen or vacationers could not recover for any inconvenience\nments of the law, the regulations, and the lease.\ncaused by a spill.\nThe environmental impact statement on the leasing program would\nThe provision puts a limit of $100 million for damages from any\ninclude an assessment by the Secretary of the relative significance of\none incident. The lessee is liable for the first $7 million and the Off-\nthe OCS energy resources toward meeting national demands, the capa-\nshore Oil Pollution Settlement Fund, created by the Act, is liable for\nbalance.\nbility of industry to develop those resources, and the relative environ-\nmental hazard of each area proposed to be leased.\nThe money in this Fund will come from a fee of 21/2 on each barrel\nThere are provisions for public participation in the development of\nof oil produced from the Outer Continental Shelf. The Fund will be\nthe program and coordination with the states which may be impacted\nadministered by OCS lessees subject to audit by the General Account-\ning Office.\nby leasing and with management programs established pursuant to\nthe Coastal Zone Management Act of 1972.\nThe Fund is authorized to borrow from commercial sources so no\nThe leasing program would have to be reviewed and reapproved\ngovernment funds would be used to pay damage claims.\nannually. Once the program has been approved, and no later than\nThe Committee believes that a comprehensive Federal statute gov-\nJanuary 1, 1978, no leases would be issued unless they are for areas\nerning liability for all ocean oil spill damages is badly needed. This\nincluded in the program. The Secretary would be authorized to obtain\nlaw should cover OCS operations, tankers, deepwater ports and all\nfrom private sources any data and reports which he needed to prepare\nother sources. Section 303 of S. 3221 calls for a liability study by the\nthe program.\nAttorney General which would assist in preparing a comprehensive\nFederal Oil and Gas Survey Program.-The Secretary would be\nstatute. The Committee anticipates working on this subject with the\ndirected to conduct a survey of oil and gas resources of the OCS. This\nother Committees participating in the National Ocean Policy Study.\nprogram would be designed to provide information about the probable\nAssistance to the Coastal States.-The coastal states are impacted\nlocation, extent and characteristics of these resources. It would provide\nby OCS development in a variety of ways. Testimony received by the\na basis for development and revision of the leasing program and more\nNational Ocean Policy Study and the study done by the Council on\nEnvironmental Quality, \"OCS Oil and Gas-An Environmental\n9\n8\nwhere failure or malfunction of the equipment would have a substan-\nAssessment\" indicates that the secondary impacts onshore are far\ntial impact on public health, safety or the environment.\ngreater than the direct impact from oil spills and the activity on the\nEnforcement of Safety Regulations.-To assure that increased\nOCS lease site itself. These impacts stem from the development of\nOCS development proceeds in as safe a manner as possible, the Secre-\nonshore support facilities for OCS development and the location of\ntary would be directed to conduct regular inspections and strictly en-\npetroleum refining and transportation facilities near production sites.\nforce safety regulations. The inspections must take place at every stage\nThe Committee believes that coastal state opposition to OCS leasing\nof operations which means that Congress must provide funding and\ncan lead to significant delays in oil and gas development. A major\nmanpower needed. Penalties for violation of the regulations would\nreason for such opposition in \"frontier\" leasing areas such as the\nbe increased and lessees would be required to give the Secretary any\nAtlantic and Alaska coasts as well as in California is concern about\ninformation he needs to assure a safe operation.\nthe ability of State and local governments to cope with the onshore\nDevelopment and Production Requirements.-The Secretary would\neconomic and social problems caused by OCS development.\nbe directed to include a development plan in each lease which would\nThese legitimate concerns of these States must be balanced against\nspell out the work to be performed and a time schedule for perform-\nthe national need to develop the Federal energy resources of the Outer\nance. These plans could, of course, be revised in light of changed\nContinental Shelf. The Committee believes that the Federal Govern-\ncircumstances.\nment should assist the States in ameliorating adverse environmental\nRevised Bidding Systems.-There has been considerable public dis-\nimpacts and controlling secondary economic and social impacts asso-\ncussion and debate about the need for revised bidding systems for\nciated with OCS oil and gas development. For this reason S. 3221\nOCS leases. The existing law authorizes two methods. The first is\nprovides that 10% of the Federal OCS revenues but not to exceed\nawarding the leases to the highest bidder of a cash bonus with a royalty\n$200 million per year will be available for grants to impacted coastal\nrate fixed in advance of the sale. This is the method used in all OCS\nStates for this purpose.\nlease sales to date.\nThe bill provides that these grants will be made by the Secretary\nThe second method would award the lease to the person bidding the\nof the Interior. The Secretary must coordinate the grants with man-\nhighest royalty rate with a cash bonus fixed in advance.\nagement programs established under the Coastal Zone Management\nS. 3221 would eliminate the royalty bidding alternative. The Com-\nprograms established under the Coastal Zone Management Act of\nmittee believes that royalty bidding frequently will result in very high\n1972. The extent and nature of the overall adverse impacts may vary\nbids because an operator risks little with such a bid. At high royalty\ngreatly. The Secretary is given broad discretion in determining the\nrates only the lowest cost oil and gas will be developed and produced.\namount and purpose of the grants. One of the most important uses\n(With a cash bonus and the present OCS royalty rate of 162/3 per-\nof these grants will be to develop adequate planning and management\ncent, an operator would develop any property for which the cost of\nprograms over the coastal landside areas where commercial and indus-\nproduction less royalty was less than 831/3 percent of the wellhead\ntrial development is apt to occur. The Committee expects that in many\nprice. With a royalty rate of 75 percent, no oil that cost more than 25\ninstances, the grants would be used to supplement management pro-\npercent of the wellhead price would be developed.) Perhaps only half\ngrams established under the Coastal Zone Management Act.\nas much oil and gas would be produced from a given tract under roy-\nInformation submissions by industry.-The bill requires any person\nalty bidding as under the cash bonus system.\nholding a geological or geophysical exploration permit to submit to the\nCash bonus bidding is a good system of (a) placing acreage in the\ngovernment the data and information obtained during exploration.\nhands of responsible, capable and diligent operators, (b) encouraging\nAll oil and gas lessees would have to submit data about the oil and gas\nearly exploration and development of OCS leases, (c) maximizing\nresources in the area covered by the lease. The Secretary would keep\nultimate recovery, (d) assuring fair market value for the Government.\nall proprietary data confidential until he determines that public avail-\nHowever, the high initial investment required by cash bonus bidding\nability of the data would not damage the competitive position of the\ntends to limit participation in OCS development.\npermittee or lessee.\nThe Committee believes that alternative lease allocation systems\nThe Committee feels strongly that private parties using public re-\nshould be considered. The Department of Interior has announced that\nsources for private profit should be required to make information they\nit intends to experiment with royalty and net profit sharing bidding.\nobtain about the resources available to the representatives of the pub-\nOthers have advocated work program bidding such as has been used\nlic. At the same time, the Committee recognizes the value of this in-\nin the North Sea. S. 3221 calls for a study of alternative systems with\nformation to the individual explorer or producer. The provisions of\na report and recommendations to Congress within one year.\nS. 3221 are designed to balance the public's interest in obtaining in-\nIn the interim, S. 3221 would also authorize two approaches to net\nformation about its resources and public's interest in maintaining an\nprofit sharing. One would allow leases to be issued to the highest cash\nactive and competitive oil and gas industry.\nbonus bidder, with the United States taking a share of the net profits\nSafety and Performance Standards.-S. 3221 directs the Secretary\nof not less than 30%. The other would permit bidding based on the\nto establish safety and performance standards for all pieces of equip-\nnet profit share with a fixed cash bonus. The Committee recognizes\nment pertinent to public health, safety or environmental protection.\nthat these alternatives may not be the \"perfect solution\". However,\nThese standards must require use of the best available technology\n10\n11\nthey should facilitate entry into the OCS development business of\nSECTION 18-DEVELOPMENT OF OUTER CONTINENTAL SHELF LEASING\nmore independent producers and are certainly worth trying on an\nPROGRAM\nexperimental basis.\nIV. COMMITTEE RECOMMENDATION\nSection 18 establishes a policy of making available for leasing as\nsoon as practicable all OCS lands determined to be both geologically\nThe Committee on Interior and Insular Affairs in open markup\nfavorable for oil and gas and capable of supporting development with-\nsession on August 12 recommended that S. 3221 be approved by the\nout undue environmental hazard.\nSenate.\nThe Committee recognizes that the phrase \"without undue environ-\nV. LEGISLATIVE HISTORY\nmental hazard or damage\" is imprecise. The Committee also recognizes\nthat any oil and gas development will involve some environmental\nS. 3221 was introduced on March 22, 1974. Hearings were held on\nhazard or damage. This section establishes a process which will permit\nthe bill by the Interior Committee on May 6, 7, 8 and 10. In addition\nthe Secretary to weigh the environmental risks against the potential\nthe Committee participated in the hearings conducted by the National\nbenefits from making the oil and gas available to meet national energy\nOcean Policy Study on the economic, environmental, and social im-\nneeds.\npacts of development of the oil and gas resources of the Outer Con-\nSubsection 18(b) directs the Secretary to prepare a 10-year leasing\ntinental Shelf. These took place on April 23, 24, 25, and May 2 and 22.\nprogram. It sets out policies to be followed in preparing the program\nA major focus of these hearings was the Council on Environmental\nincluding orderly development of energy resources, environmental\nQuality's study entitled, \"OCS Oil and Gas-An Environmental As-\nprotection, receipt of fair market value, public participation, and\nsessment\", released April 18.\nintergovernmental coordination.\nIn addition the Committee has, since the initiation of the National\nThe leasing program should display the information for all inter-\nFuels and Energy Policy Study, conducted several hearings dealing\nested Federal, State and local government officials, the oil and gas\nwith OCS matters. These have been printed as Outer Continental\nindustry, and the general public.\nShelf Policy Issues (92-27, parts I-III) ; Federal Leasing and Dis-\nSubsection 18 (c) requires that the program include estimates of the\nposal Issues (92-32) ; and Trends in Oil and Gas Exploration (92-33,\nappropriations and staffing required to prepare the necessary envi-\nparts I and II).\nronmental impact statements, obtain resource data and any other in-\nformation needed to carry out the law including supervision of all\nVI. SECTION-BY-SECTION ANALYSIS\noperations to assure compliance. The Committee intends that these\nestimates represent the Secretary's best judgment of actual needs\nSection 1 contains the short title and table of contents.\nrather than the views of the Office of Management and Budget as to\nwhat funding levels are appropriate for inclusion in the President's\nTITLE I. FINDINGS AND PURPOSES\nBudget.\nSection 101 sets out a number of findings about the current and\nSubsection 18 (d) requires the inclusion in the environmental im-\nfuture energy supply situation, and the potential role of the oil and\npact statement on the leasing program of an assessment by the Secre-\ngas resources of the Outer Continental Shelf (OCS).\ntary of the relative significance of the probable oil and gas resources\nSection 102 states the purposes of the Act. These include increasing\nof each area proposed to be offered for lease in meeting national de-\nproduction of oil and gas from the Outer Continental Shelf in a man-\nmands, the most likely rate of exploration and development that is\nner which assures orderly resources development, protection of the\nexpected to occur if the areas are leased, and the relative environ-\nenvironment, and receipt of fair market return for public resources\nmental hazard of each area. The Committee recognizes that the Sec-\nand encouraging development of new technology to increase human\nretary cannot determine these factors with a great degree of precision.\nHowever, an expression of his best judgment based on available infor-\nsafety and eliminate or reduce environmental damage.\nmation should be very helpful in balancing the conflicting values in-\nvolved during the decision-making process.\nTITLE II. INCREASED PRODUCTION OF OUTER CONTINENTAL SHELF\nSubsection 18(e) directs the Secretary to establish procedures for\nENERGY RESOURCES\nreceipt and consideration of nominations for areas to be offered for\nThis title contains a series of amendments to the Outer Continental\nlease or to be excluded from leasing, for public notice of and partici-\nShelf Lands Act of 1953 (43 U.S.C. 1331-43) (OCS Act).\npation in development of the leasing program, for review by State and\nSection 201 amends Section 3 of the OCS Act to add a policy state-\nlocal governments which may be impacted by the proposed leasing,\nment that OCS is held for all the people, and its resources should be\nand for coordination of the program with management programs\nmade available for orderly development subject to environmental\nestablished pursuant to the Coastal Zone Management Act of 1972.\nsafeguards.\nThese procedures will be applicable to any revision or reapproval of\nSection 202 adds 12 new sections to the OCS Act. These are\nthe leasing program.\n12\n13\nThe Secretary uses a nomination process at the present time. The\nCommittee wants to be sure that this form of industry and public\nThe Committee believes that the government must have better in-\nformation about the resources it owns than it has had in the past. Pub-\nparticipation in the leasing program is continued.\nSubsection 18(f) calls for publication of a proposed leasing pro-\nlication of this information should be helpful to potential entrants\ngram in the Federal Register and its submission to the Congress within\ninto the OCS oil and gas development industry, particularly those\nwith less capital to risk than the large major oil companies.\ntwo years after enactment of this section.\nSubsection 18 (g) provides that after the leasing program has been\nAs part of the survey program, Subsection 19(b) authorizes the\nSecretary to contract for, or purchase the results of or, where the re-\napproved by the Secretary or after January 1, 1978, whichever comes\nfirst, no OCS leases may be issued unless they are for areas included\nquired information is not available from commercial sources, conduct\nin the approved leasing program. The Committee believes that the\nseismic, geomagnetic, gravitational, geophysical, or geochemical in-\nvestigations, and to contract for or purchase the results of strati-\n10-year program should be adopted as soon as possible. At the same\ngraphic drilling. The Committee believes that in most instances the\ntime, we recognize that this will take some time and that leasing\nshould continue during this time. Three years should be ample time to\nSecretary can acquire the information required for the survey pro-\ngram from private industry. This will allow the present active explor-\ndevelop the program.\nSubsection 18(h) provides that the Secretary may revise and re-\nation and data industry to continue without the government as a direct\napprove the leasing program at any time and he must review and\ncompetitor. However, this subsection does authorize the Secretary to\nconduct certain investigations directly.\nreapprove the leasing program at least once each year. The require-\nSubsection 19 directs the Secretary to prepare and publish and\nment for annual reapproval is designed to assure that the program\nfully reflects new information and changing conditions. Obviously,\nkeep current a series of detailed topographic, geological, and geophysi-\ncal maps of and reports about the Outer Continental Shelf, based on\nsubstantial changes in the program may be required in some years,\nnonproprietary data, which shall include, but not necessarily be lim-\nwhile in others there may be little or no change.\nSubsection 18(i) authorizes the Secretary to obtain from public\nited to, the results of seismic, gravitational, and magnetic surveys on\nsources or to purchase from private sources, any surveys, data, reports,\nan appropriate grid spacing to define the general topography, geology,\nand geophysical characteristics of the area.\nor other information (excluding interpretations of such data, surveys,\nThe Committee believes that these maps and reports should be very\nreports, or other information) which may be necessary to assist him in\nvaluable to all persons interested in OCS oil and gas development. In\npreparing environment impact statements and making other evalua-\norder to be sure that once the survey program is underway the maps\ntions required by this Act. The Secretary must maintain the confi-\nand reports are available to potential lessees and other interested per-\ndentiality of all proprietary data or information for such period of\nsons, this subsection requires publication of the maps no later than six\ntime as is agreed to by the parties. This confidentiality requirement is\nmonths prior to the last day for submission of bids for any areas of\ndesigned to allow the Secretary to negotiate for the purchase of data\nthe Outer Continental Shelf scheduled for lease on or after January 1,\non the basis that it will be kept confidential for as long as the seller\n1978. The Committee intends that the topographic maps be prepared\nwishes. Requiring the public release of all purchased data at any par-\nby the National Oceanic and Atmospheric Administration, National\nticular time would tend to lead data owners to refuse to sell the data to\nOcean Survey. The Secretary of the Interior, would simply provide\nthe Secretary. This provision allows the Secretary and the owner of\nfor publication.\nthe information to work out a mutually acceptable arrangement.\nSubsection 19 (d) provides that within six months after enactment\nSubsection 18(j) authorizes and directs the heads of all Federal de-\nof this section, the Secretary shall submit to Congress a plan for con-\npartments or agencies to provide the Secretary with any nonpro-\nducting the survey and mapping programs required by this section.\nprietary information he requests to assist him in preparing the leasing\nThis plan will identify the areas to be surveyed and mapped during\nprogram.\nthe first five years of the programs and estimates of the appropriations\nand staffing required.\nSECTION 19-FEDERAL OUTER CONTINENTAL SHELF OIL AND GAS SURVEY\nSubsection 19 (e) provides that information about the program be\nPROGRAM\nincluded in the Secretary's annual report of activity under the OCS\nLands Act.\nSubsection 19 (a) directs the Secretary to conduct a survey program\nSubsection 19 (f) provides that the Secretary will not have to pre-\nregarding oil and gas resources of the Outer Continental Shelf. The\npare an environmental impact statement before taking actions to carry\nprogram will provide information about the probable location, extent,\nout the oil and gas survey.\nand characteristics of such resources in order to provide a basis for\nSubsection 19 (g) authorizes appropriations to carry out the survey\n(1) development and revision of the leasing program required by sec-\nprogram in fiscal years 1975 and 1976. The Committee intends to re-\ntion 18 of the Act, (2) greater and better informed competitive inter-\nview the survey program and enact additional authorization legisla-\nest by potential producers in the oil and gas resources of the Outer\ntion for future years.\nContinental Shelf, (3) more informed decisions regarding the value\nSubsection 19(h) provides that any person holding an oil and gas\nof public resources and revenues to be expected from leasing them, and\nlease shall provide the Secretary with any existing data (excluding\n(4) the mapping program required by subsection 19(c).\ninterpretations of such data) about the oil or gas resources in the area\n14\n15\nsubject to the lease. All proprietary data or information will be kept\nby the Manned Undersea Science and Technology Office of the Na-\nconfidential until the Secretary determines that public availability of\ntional Oceanic and Atmospheric Administration. The expected in-\nsuch proprietary data or information would not damage the competi-\ncrease in OCS operations in deep water makes it imperative that this\ntive position of the lessee.\nwork be continued and expanded if necessary to assure diver safety.\nThe Committee believes that users of public resources should fur-\nnish resource information to the government. However, the Commit-\nSECTION 21-ENFORCEMENT OF SAFETY REGULATIONS INSPECTIONS\ntee recognizes the competitive value of proprietary information. This\nsubsection is designed to balance the competing interests involved.\nSubsection 21 (a) directs the Secretary to regularly inspect all op-\nerations authorized pursuant to this Act and strictly enforce safety\nSECTION 20-RESEARCH AND DEVELOPMENT\nregulations promulgated pursuant to this Act and other applicable\nlaws and regulations relating to public health, safety, and environ-\nSubsection (a) authorizes and directs the Secretary to carry out\nmental protection. It also requires holders of leases to allow access to\na research and development program designed to improve technology\nany inspector promptly and provide any requested documents and\nrelated to development of OCS oil and gas resources where he deter-\nrecords that are pertinent to public health, safety, or environmental\nmines that such research and development is not being adequately con-\nducted by any other public or private entity.\nprotection. The subsection also requires physical observation by an inspector\nThe Committee does not want the Secretary to get involved in a re-\nof the installation or testing at least once each year of all safety equip-\nsearch and development program which duplicates work being done\nment designed to prevent or ameliorate blowouts, fires, spillages, or\nby private industry, or another government agency. However, it is\nother major accidents; and periodic onsite inspection without advance\nclear that there are needs for new technology which are not being met.\nnotice to the lessee to assure compliance with public health, safety, or\nWhere there are gaps in ongoing efforts, this provision authorizes the\nenvironmental protection regulations.\nSecretary to fill them.\nThe Secretary also must investigate and report on all major fires and\nSubsection 20 (b) requires the Secretary, after review and comment\nmajor oil spillage occurring as a result of operations pursuant to this\nby the Administrator of the Environmental Protection Agency, to\nAct.\nestablish safety and environmental performance standards for all\nSubsection 21 (c) provides that the Secretary shall consider any\npieces of equipment, that are pertinent to public health, safety, or en-\nallegation from any person of the existence of a violation of any\nvironmental protection, used in exploration, development, and produc-\nsafety regulations issued under this Act. The Secretary must answer\ntion of oil and gas from the Outer Continental Shelf. These standards\nsuch allegation no later than ninety days after receipt thereof, stating\nmust call for use of best available technology when the potential ef-\nwhether or not such alleged violations exist and, if so, what action has\nfect of malfunctions on public health, safety, or the environment would\nbeen taken.\nbe substantial.\nThis provision is designed to allow any interested person who\nThe Committee believes that requiring use of best available tech-\nbelieves the safety regulations are being violated to trigger an investi-\nnology is essential to assure the highest degree of safety in OCS oper-\ngation by the Secretary. In most cases this form of citizen involve-\nations. However, the Committee does not intend that installed equip-\nment would be more effective than legal action.\nment must be replaced with every minor technological improvement.\nIt also recognizes that there may be more than one \"best\" way to\nSECTION 22-LIABILITY FOR OIL SPILLS\nachieve a particular objective or do a particular job.\nSubsection directs the Secretary, with the concurrence of the\nSubsection 22 (a) requires any person in charge of any operations\nSecretary of the department in which the Coast Guard is operating,\nin the Outer Continental Shelf, as soon as he has knowledge of a dis-\nto establish equipment and performance standards for oil spill cleanup\ncharge or spillage of oil from an operation, to notify immediately the\nplans and operations. Such standards shall be coordinated with the\nappropriate agency of the United States Government.\nNational Oil and Hazardous Substances Pollution Contingency Plan.\nSubsection 22 (b) is patterned after the tanker oil spill liability\nThe Committee is aware that the Secretary has already developed\nprovisions of the Trans-Alaska Pipeline Authorization Act of 1973.\nprocedures for oil spill cleanup. This subsection does not require him\nSubsection 22 (b) (1) makes the holder of a lease or right-of-way\nto start all over again, but rather to update the existing program.\nissued or maintained under this Act and the Offshore Oil Pollution\nUnder Subsection (d) the Secretary, in cooperation with the\nSettlements Fund established by this subsection strictly liable with-\nSecretary of the Navy and the Director of the National Institutes of\nout regard to fault and without regard to ownership of any adversely\nHealth, will conduct studies of underwater diving techniques and\naffected lands, structures, fish, wildlife, or biotic or other natural re-\nequipment suitable for protection of human safety at depths greater\nsources relied upon by any damaged party for subsistence or economic\nthan those where such diving now takes place.\npurposes. The holder is liable for all damages, sustained by any per-\nThe Committee is aware that the Navy is conducting diving studies\nson as a result of discharges of oil or gas from any operation author-\nat the present time. Work on oil platform submersibles is being done\nized under this Act if such damages occurred (A) within the territory\nof the United States, Canada, or Mexico or (B) in or on waters within\n16\n17\ntwo hundred nautical miles of the baseline of the United States,\nSECTION 23-NEGOTIATIONS WITH STATES\nCanada, or Mexico from which the territorial sea of the United States,\nCanada, or Mexico is measured, or (C) within one hundred nautical\nSection 23 directs the Secretary to negotiate with those coastal\nmiles of any operation authorized under this Act.\nStates which are asserting jurisdiction over the Outer Continental\nThe Committee included damages in Canada and Mexico in order\nShelf with a view to developing interim agreements which will allow\nto protect the interests of our neighbors.\nenergy resource development prior to final judicial resolution of the\nrule. Subsection 22 (b) (2) provides three exceptions to the strict liability\ndispute. The Committee is aware of the current litigation between the\nUnited States and the Atlantic Coastal States over those States'\nStrict liability is not imposed on the holder or the fund if the holder\nclaims to ownership of the Outer Continental Shelf. The Committee\nor the fund proves that the damage was caused by an act of war.\nbelieves that such disputes should not be allowed to prevent develop-\nStrict liability is not imposed on the holder if the holder proves that\nment of the OCS oil and gas resources.\nthe damage was caused by the negligence of the United States or other\ngovernmental agency. Strict liability is not imposed with respect to\nSECTION 24-DETERMINATION OF BOUNDARIES\nthe claim of a damaged person if the holder or the fund proves that\nthe damage was caused by the negligence or intentional act of such\nSection 24 authorizes the President to establish procedures for set-\nperson.\ntling any outstanding boundary disputes, including international\nStrict liability for all claims out of any one incident is limited to\nboundaries between the United States and Canada and between the\n$100 million. The holder is liable for the first $7 million and the fund\nUnited States and Mexico, and establish boundaries between adjacent\nis liable for the balance. If the total claims allowed exceed $100,000,000,\nStates, as directed in section 4 of the OCS Act. Negotiations of this\nthey are reduced proportionately.\ntype have been going on for many years. This section expresses the\nIn any case where liability without regard to fault is imposed pur-\nsense of the Committee that a greater sense of urgency is needed in\nsuant to this subsection, the rules of subrogation shall apply in ac-\norder to arrive at a settlement.\ncordance with the State law.\nThe Offshore Oil Pollution Settlements Fund is administered by the\nSECTION 25-COASTAL STATE FUND\nholders of leases issued under this Act under regulations prescribed\nby the Secretary. The fund is subject to annual audit by the Comp-\nSubsection 25 (a) establishes a Coastal States Fund in the Treasury.\ntroller General. A fee of 21/2 cents per barrel of oil produced pursuant\nThe Secretary is directed to make grants from the Fund to the coastal\nto any lease issued or maintained under this Act is paid into the fund.\nStates impacted by anticipated or actual oil and gas production to\nCosts of administration are paid from the fund. If the fund is unable\nassist them to ameliorate adverse environmental effects and control\nto satisfy a claim, the fund may borrow the money needed to satisfy\nsecondary social and economic impacts associated with the develop-\nthe claim from any commercial credit source, at the lowest available\nment of Federal energy resources in, or on the Outer Continental Shelf\nrate of interest.\nadjacent to those States. The grants may be used for planning, con-\nNotice of the damage must be given to the Secretary within three\nstruction of public facilities, and provision of public services, and such\nyears following the date on which the damage occurred. The collection\nother activities as the Secretary may prescribe by regulations. The\nof amounts for the fund ceases when $100 million has been accumu-\ngrants must be used for activities directly related to such environ-\nlated, but is renewed when the accumulation in the fund falls below\nmental effects and social and economic impacts. In order to be eligible\n$85 million.\nfor grants from the Fund, the coastal State must establish pollution\nSubsection 22 (c) restates the existing rule established by Depart-\ncontainment and cleanup systems for pollution from oil and gas devel-\nmental regulation, that the lessee is liable for the total cost of control\nopment activities on its submerged lands.\nand removal of any spilled oil.\nThe Committee believes that the Federal Government should assist\nSubsection 22 (d) requires all holders of leases issued or maintained\nthe States in ameliorating adverse environmental impacts and con-\nunder this Act to establish and maintain evidence of financial responsi-\ntrolling secondary economic and social impacts associated with OCS\nbility of not less than $7 million. It spells out ways of establishing such\noil and gas development. The need for such grants is discussed in the\nresponsibility.\nMajor Provisions section of this report.\nSubsection 22 (e) provides that Section 22 does not supersede section\nSubsection 25 (b) gives the Secretary broad discretion to determine\n311 of the Federal Water Pollution Control Act Amendments of 1972\nthe amount and purpose of the grants and to set guidelines for grant\nor preempt the field of strict liability or to enlarge or diminish the\neligibility. The Secretary must coordinate the grants with manage-\nauthority of any State to impose additional requirements.\nment programs established under the Coastal Zone Management Act\nThe Committee did not want to override the cleanup requirements of\nof 1972. The Committee expects the Secretary to work closely with the\nthe 1972 Act except to provide unlimited liability for cost of cleaning\nSecretary of Commerce in developing criteria for grants and estab-\nup OCS oil spills. The Committee also did not want to preclude the\nlishing coordination procedures.\nStates from imposing more stringent requirements if they wished to\nThe Committee rejected the concept of coastal States receiving a\ndo SO.\nfixed share of Federal OCS revenues. However, the Committee recog-\nnizes that Federal decisions to develop OCS resources can have impacts\n38-533 0 74 2\n18\n19\non the States. It is the Committee's intent that grants under this section\ntems permitted under present law as compared to the bonus bidding\nshall be adequate to compensate impacted coastal States for the full\nsystem; (2) evaluation of alternative bidding systems not permitted\ncosts of any adverse environmental effects and social and economic\nunder present law; (3) measures to ease entry of new competitors;\nment, and production.\nimpacts caused by Federal offshore oil and gas exploration, develop-\nand (4) measures to increase supply to independent refiners and\ndistributors.\nSubsection 25 (c) provides that ten per centum of the Federal\nThe Committee believes that it would be desirable to increase the\nrevenues from the Outer Continental Shelf Lands Act shall be paid\ncompetition in the OCS oil and gas development industry. The Com-\ninto the Fund. However, the total amount paid into the Fund shall\nmittee recognizes that OCS development requires large capital expend-\nnot exceed $200 million per year.\nitures which tend to limit participation. The study required by this\nThe Committee believes that the $200 million per year ceiling on the\nsection is designed to assist the Committee in making further changes\nFund future. should provide an adequate source of grants for the foreseeable\nin the Outer Continental Shelf Lands Act.\nIn order to make some funds available for grants immediately, sub-\nSECTION 28-ENFORCEMENT AND PENALTIES\nsection 25(d) authorizes a direct appropriation to the Fund of $100\nmillion. This amount will be repaid out of future OCS revenues allo-\nSubsection 28(a) authorizes the Attorney General to institute, at\ncated to the Fund.\nthe request of the Secretary, civil actions for restraining orders or in-\nSECTION 26-CITIZEN SUITS\njunctions or other appropriate remedies to enforce the Act or any\nregulation or order issued under it.\nSection 26 provides for citizen participation in the enforcement of\nSubsection 28 (b) provides for a civil penalty to be assessed against\nthe Act by civil law suits (1) against any person who is alleged to be\nany person who after notice of failure to comply and opportunity for\nin violation of the Act or the regulations, or any lease or permit issued\na hearing continues to fail to comply with the Act or any regulation\nunder the Act; or (2) against the Secretary for alleged failure to per-\nor order issued under it. The maximum penalty is $5,000 per day.\nform a nondiscretionary act or duty.\nSubsection 28 (c) provides criminal penalties for knowing and will-\nSuits may be brought by \"any person having an interest which is or\nful violations of any provision of this Act, or any regulation or order\nmay be adversely a ffected.\" The Committee intends that this includes\nissued under the authority of this Act designed to protect public\npersons who meet the requirements for standing to sue set out by the\nhealth, safety, or the environment or conserve natural resources. There\nSupreme Court in Sierra Club V. Morton (405 U.S. 727 (1972)).\nare also criminal penalties for any person who knowingly and will-\nSubsection (b) requires that no action for violation of the law may\nfully makes any false statement, representation, or certification in any\nbe started for 60 days after written notice under oath of the alleged\napplication, record, report, plan, or other document filed or required\nviolation to the alleged violator and the Secretary. If the Secretary\nto be maintained under this Act, or who knowingly and willfully falsi-\nbegins a civil action against the violation, no court action could take\nfies, tampers with, or renders inaccurate any monitoring device or\nplace on the citizen's suit. The 60-day waiting period does not apply\nmethod of record required to be maintained under this Act or know-\nwhen the violation or failure to act constitutes an imminent threat to\ningly and willfully reveals any data or information required to be kept\nthe plaintiff's health or safety or would immediately affect a legal\nconfidential by this Act.\ninterest of the plaintiff. This provision is designed to give the Secre-\nThe criminal penalty is a fine not more than $100,000, or imprison-\ntary and the alleged violator an opportunity to stop any violation thus\nment for not more than one year, or both.\nmaking court proceedings unnecessary.\nSubsection 28 (d) provides for application of the criminal penalties\nSubsection (d) provides that the court may award costs of litigation\nagainst corporate officials when the violator is a corporation or other\nincluding reasonable attorney's fees to any party and require a bond\nbusiness entity.\nwhere a temporary restraining order or preliminary injunction is\nSubsection 28 (e) states that the remedies prescribed in this section\nsought.\nmay be exercised concurrently and are in addition to any other rem-\nThe Committee believes that citizen suits can play an important role\nedies afforded by any other law or regulation.\nin assuring that lessees comply with the law. The possibility of a citizen\nsuit should help to keep program administrators \"on their toes.\"\nSECTION 29-ENVIRONMENTAL BASELINE AND MONITORING STUDIES\nSECTION 27-PROMOTION OF COMPETITION\nSubsection 29(a) requires that prior to permitting oil and gas\ndrilling on any area of the Outer Continental Shelf not previously\nSection 27 directs the Secretary to prepare a report with recom-\nleased under this Act, the Secretary, in consultation with the Admin-\nmendations for promoting competition and maximizing production\nistrator of the National Oceanic and Atmospheric Administration of\nand revenues from the leasing of Outer Continental Shelf lands. The\nthe Department of Commerce, shall make a study of the area involved\nreport is due within one year and will include a plan for implementing\nto establish a baseline of those critical parameters of the Outer Con-\nrecommended administrative changes and drafts of any proposed leg-\ntinental Shelf environment which may be affected by oil and gas\nislation. The report will consider (1) other competitive bidding sys-\ndevelopment.\n20\n21\nThe Committee believes that these environmental baseline studies\neliminate the provision which allows royalty bidding. The new sub-\nare essential to determining the actual environmental impacts of oil\nsection (a) retains the cash bonus bidding option and adds the option\nand gas development. The baselines studies may be made after leases\nof a lease under which a net profits share is reserved to the United\nare issued but must be completed prior to the time drilling begins.\nStates.\nSubsection (b) requires monitoring of production areas in a man-\nThe Committee's decision to eliminate the royalty bidding alterna-\nner designed to provide time-series data which can be compared with\ntive is based on the widespread agreement of most economists and oil\nchanges. previously collected data for the purpose of identifying any significant\nindustry representatives concerning the unndesirable effects of royalty\nbidding. Specifically, the Committee believes that royalty bidding\nSubsection (c) directs the Secretary to give preference to the use\nwould encourage speculation, increase the likelihood of premature\nof Government owned and Government operated vessels, to the maxi-\nshutdown of production under conditions of high royalty rates, and\nmum extent practicable, in contracting for work in connection with\nresult in reduction in petroleum output and lease revenues.\nthe environmental baseline and monitoring studies. The Secretary will\nHowever, the Committee wants to provide a lease allocation system\ncoordinate all such studies with the Administrator of the National\nthat would encourage the widest possible participation in competitive\nOceanic and Atmospheric Administration and shall, whenever pos-\nlease sales consistent with receipt by the public of fair market value\nsible, utilize existing Government owned and Government operated\nfor its resources. Testimony before this Committee and elsewhere has\nmarine research laboratories in conducting the studies.\nrevealed general acceptance of the proposition that high bonus bids\nThe Conference Report of the House and Senate Appropriations\nhave created a barrier to the entry of small and medium size oil firms\nCommittees on the Special Energy Research and Development Act\nto the OCS arena. The Committee believes that net profits share ar-\nof 1975, H.R. 14434 (H. Rept. No. 93-1123), detailed the agreement\nrangements can be effective in shifting government revenue away from\nthat with regard to energy-related environmental baseline research on\ninitial bonuses and into deferred payments made out of a leaseholders\nthe Outer Continental Shelf, the resources of the agency best out-\nprofits.\nfitted to carry out this task be utilized on a contract basis. It was agreed\nUnder the provisions of Section 203 the Secretary would be allowed\nthat this agency was the National Oceanic and Atmospheric Admin-\nto offer net profits leases either (1) on the basis of a cash bonus with\nistration (NOAA) of the Department of Commerce. The Special\na fixed share of the net profits derived from operation of the tract of\nEnergy R & D Act appropriated $6,630,000 to the Department of Com-\nno less than 30 per centum reserved to the United States, or (2) on the\nmerce to remove from mothball, properly outfit and man three of the\nbasis of a fixed cash bonus with the net profit share reserved to the\nnation's finest research vessels, the Discoverer, the Surveyor, and the\nUnited States as the bid variable.\nMiller Freeman. These vessels would be made available to work with\nIn order to determine net profits it is necessary to resolve a number\nthe Department of Interior in conducting environmental baseline re-\nof potentially complex accounting issues concerning the allocation of\nsearch, especially in target areas for new development.\ncosts and income. The overall impact of these matters on the govern-\nThe Committee wants the studies mandated by the section to be\nment's revenue should be relatively minor since any reduction in the\ncooperative efforts of all government agencies with canability. This\npublic's net profits share (resulting-for example-from the calucula-\nwould include NOAA, the Geological Survey, and the Bureau of\ntion of net profits after rather than before income taxes) probably\nLand Managment.\nwould be offset by a compensating increase in bonus payments. This\nTestimony in five days of hearings before the Senate Ocean Policy\nincrease could be substantial. Since a reduction in bonuses is an im-\nStudy (S. Res. 222) has confirmed that current Federal data-gather-\nportant objective of the legislation it was decided that these cost alloca-\ning efforts on the OCS are inadequate and insufficient to cope with a\ntion issues should be resolved in favor of lower bonuses, with attention\nstepped-up leasing effort. Additional scientists, ships and equipment\nto administrative simplicity and accepted industry practices.\nare going to be needed.\nUnder existing law, all OCS oil and gas leases are for a primary\nSection 203 revises the terms under which the Secretary of the In-\nterm of five years. As amended by Section 203, Subsection 8(b) of the\nterior may offer oil and gas leases on the Outer Continental Shelf.\nOCS Lands Act would permit the Secretary to issue leases with a\nUnder existing law the Secretary is permitted to offer oil and gas\nprimary term of up to ten years.\nlcases on the basis of either (1) a cash bonus bid with a royalty fixed\nThe purpose of the increase in permissible maximum primary lease\nat no less than 121/2% of the gross revenue from the lease, or (2) on the\nterm is to encourage exploration and development in areas of un-\nbasis of a royalty rate bid with a fixed cash bonus. Since the OCS\nusually deep water or adverse weather conditions, where the five year\nLands Act was approved in 1953 all OCS leases have been offered for\nperiod may be insufficient for both exploration and the mobilization of\ncash bonus bids with a royalty rate fixed at 16% of the gross value of\nnew technology called for in the event of a discovery.\nproduction. The Department of the Interior plans a small scale test of\nSection 204 further amends Section 8 of the OCS Lands Act by\nroyalty bidding as part of the OCS lease sale scheduled for September,\nrequiring that royalty and net profits share oil produced from all\n1974. Section 203 revises subsection 8(a) of the OCS Lands Act to\nleases granted after the effective date of the amendment be offered\n22\n23\nby the Government at a competitive auction. The physical quantity\nThe Committee recognizes that there must be some flexibility in the\nrepresented by the Government's net profit share is determined by\ndegree of detail required in development plans. It expects that the\ndividing the net profit due the United States attributable to oil by\nSecretary will require exploration activity to start within a specified\nits unit value at the wellhead.\ntime. If production is established the development plan would need to\nThe existing law (Section 5(a) (1)) authorizes sales of royaltv oil\nbe revised. This subsection authorizes revisions of development plans\nand gas \"at not less than market value\" but sets out no other guidelines.\nif the Secretary determines that revision will lead to greater recov-\nThe Secretary has been allocating royalty oil to \"small refiners\", as\nery of the oil and gas, improve the efficiency of the recovery operation,\ndefined in Department regulations.\nor is the only means available to avoid substantial economic hardship\nThe purpose of the amendment is to create a free market in crude\non the lessee or permittee.\npetroleum. However, the Committee was anxious to insure that inde-\nThe new subsection 5(e) prohibits flaring of natural gas from any\npendent refiners not be denied access to OCS crude. To this end, Sec-\nwell after the date of enactment of S. 3221, unless the Secretary finds\ntion 203 directs the Secretary to limit participation in sales where such\nthat there is no practicable way to obtain production or to conduct\nlimitation is necessary to assure adequate supplies of oil at equitable\ntesting or workover operations without flaring.\nprices to independent refiners. The Secretary can define the term \"in-\nThe Committee believes that unnecessary waste of this valuable nat-\ndependent refiner\" by regulation. The Committee intends that the term\nural resource must not be permitted.\napply only to those refiners not part of an organization which produces\nSection 207 amends Section 11 of the OCS Lands Act which author-\ncrude petroleum. The Secretary could impose a size limitation in terms\nizes the Secretary to permit geological and geophysical exploration\nof refining capacity if he deemed that desirable.\nin the Outer Continental Shelf.\nSection 205 amends Section 15 of the OCS Lands Act to provide for\nThe revised Section 11 would require that all permits for such ex-\na comprehensive annual report by the Secretary to the Congress on\nplorations contain terms and conditions designed to (1) prevent in-\nthe entire Outer Continental Shelf program. It specifies that the re-\nterference with actual operations under any OCS lease and (2) prevent\nport include: a detailing of all moneys received and expended, and of\nor minimize environmental damage. The permittee would be required\nall leasing, development, and production activities; a summary of\nto furnish the Secretary with copies of all data (including geological,\nmanagement, supervision, and enforcement activities; a summary of\ngeophysical, and geochemical data, well logs, and drill core analyses)\ngrants made from the Coastal State Fund; and recommendations to\nobtained during such exploration. The Secretary must maintain the\nthe Congress for improvements in management, safety and amount\nconfidentiality of all data SO obtained until after the areas involved\nof production in leasing and operations in the Outer Continental Shelf\nhave been leased or until such time as he determines that making the\nand for resolution of jurisdictional conflicts or ambiguities.\ndata available to the public would not damage the competitive position\nThis report will aid the Congress in performing its oversight func-\nof the permittee, whichever comes later.\ntions and should be very useful to anyone interested in the OCS\nThe Committee believes that requiring the permittee to give the\nprogram.\ndata to the representative of the property owner (i.e. the Secretary)\nSection 206 adds two new subsections to Section 5 of the OCS Lands\nis an appropriate condition for allowing the exploration. At the same\nAct. Both are designed to insure maximum production from outstand-\ntime, the Committee believes that the confidentiality requirement will\ning leases.\nprotect the competitive interest of the explorer.\nThe new subsection (d) provides that all leases issued after\nSection 208 is a technical amendment to delete material from Sub-\nS. 3221 is enacted must require that development be carried out in\nsection 5 (a) (2) which duplicates the new Section 28 which would be\naccordance with a development plan which has been approved by the\nadded by S. 3221.\nSecretary. Failure to comply with the development plan will ter-\nParagraph (2) of Subsection 4(a) of the OCS Lands Act provides\nminate the lease.\nthat:\nThe development plan will set forth, in the degree of detail estab-\nTo the extent that they are applicable and not inconsistent with\nlished in regulations issued by the Secretary, specific work to be per-\nthis Act or with other Federal laws and regulations of the Secre-\nformed, environmental protection and health and safety standards to\ntary now in effect or hereafter adopted, the civil and criminal laws\nbe met, and a time schedule for performance. The development plan\nof each adjacent State as of the effective date of this Act are\nmay apply to all leases included within a production unit.\nhereby declared to be the law of the United States for that por-\nA proposed development plan must be submitted to the Secretary\ntion of the subsoil and seabed of the Outer Continental Shelf, and\nwithin six months after the date of enactment of S. 3221 for all out-\nartificial islands and fixed structures erected thereon, which would\nstanding permits and leases. Failure to submit a development plan or\nbe within the area of the State if its boundaries were extended\nlease. to comply with an approved development plan shall terminate the\nseaward to the outer margin of the Outer Continental Shelf.\nThe phrase \"as of the effective date of this Act\" has been interpreted\nto freeze the applicable State law as of August 7, 1953. The Commit-\n24\n25\ntee believes that whenever State law is applied on the Outer Continen-\ntal Shelf it should be the law in effect at the time of application. Sec-\n2. S. 3221 was ordered favorably reported to the Senate on a roll\ntion 209 achieves this by deleting the reference to the effective date of\ncall vote of 10 yeas and 5 nays. The vote was as follows:\nthe OCS Lands Act.\nJackson-Yea\nFannin-Nay\nBible-Yea\nHansen-Nay\nTITLE III. MISCELLANEOUS PROVISIONS\nChurch-Yea\nHatfield-Yea\nSection 301 directs the Secretary of Transportation to review ap-\nMetcalf-Yea\nBuckley-Nay\nJohnston-Yea\npropriations and staffing needed to monitor adequately pipelines to\nMcClure-Nay\nAbourezk-Yea\nassure that they meet safety standards and to identify needs for new\nBartlett-Nay\nlegislation. It also directs the Interstate Commerce Commission and\nHaskell-Yea\nNelson-Yea\nthe Secretary of Transportation to report on the adequacy for trans-\nMetzenbaum-Yea\nportation facilities for OCS oil and gas.\nSection 302 directs the Secretary of the Interior to report to the\nVIII. COST ESTIMATES\nComptroller General and the Congress within 6 months on all shut-\nin oil and gas wells and all wells flaring natural gas. The Comptroller\nIn accordance with Section 252 (a) of the Legislative Reorganization\nGeneral is to review and evaluate the reasons for allowing the wells\nAct of 1970 the Committee provides the following estimates of cost:\nto be shut-in or to flare gas within 6 months after receiving the\nEnactment of S. 3221 will entail some increase of Federal costs for\nSecretary's report. The Committee is aware that the Secretary and the\nmore intensive management and inspection of OCS operations. The\nFederal Power Commission have collected considerable data on this\nCommittee believes that these costs should be offset by increased rev-\nsubject already. It is not intended that this job should be repeated as\nenues to the government from the increased oil and gas development\non the OCS.\nlong as the existing reports contain the information needed by the\nComptroller General.\nSection 303 directs the Attorney General to study methods for im-\nplementing a uniform Federal law providing liability for damage\nfrom marine oil spills from all sources, including OCS operations,\ntankers, and deepwater ports. The Administrative Conference of the\nUnited States and the Office of Technology Assessment are to be\nconsulted.\nThe Committee is acutely aware of the need for a comprehensive\nFederal statute providing liability for oil spill damage. The Trans-\nAlaska Pipeline Act (P.L. 93-153) established special liability rules\nand funding for oil which passes through the pipeline and is spilled\nfrom tankers. The Deepwater Ports Act currently under consideration\nwill establish another set of rules for such ports, as will this Act, for\nOCS spills. Legislation for tanker oil spill liability is being drafted\nby the Committee on Commerce. The Committee hopes that one Fed-\neral law can be enacted to cover all these situations. Section 303 is\nidentical to a provision in the Deepwater Ports bill being reported\njointly by this Committee, and the Committees on Public Works and\nCommerce.\nSection 304 is a standard severability clause.\nVII. TABULATION OF VOTES CAST IN COMMITTEE\nPursuant to Section 133 (b) of the Legislative Reorganization Act\nof 1946, as amended, the following is a tabulation of voters of the\nCommittee during consideration of S. 3221:\n1. During the Committee's consideration of S. 3221 a number of\nvoice votes and formal roll call votes were taken on amendments.\nThese votes were taken in open markup session and, because they\nwere previously announced by the Committee in accord with the pro-\nvisions of Section 133 (b), it is not necessary that they be tabulated\nin the Committee report.\n26\n27\nIX. EXECUTIVE COMMUNICATIONS\nthe Secretary would be required to carry out a research and development\nOF\nprogram to improve technology related to development of OCS oil and\ngas resources.\nUnited States Department of the Interior\nThe bill provides for a safety and environmental protection\nOFFICE OF THE SECRETARY\nprogram which would include (i) safety and environmental standards for\nWASHINGTON, D.C. 20240\nequipment used in OCS exploration, development and production, (ii)\nequipment and performance standards for oil spill cleanup plans and\noperations, and (iii) a safety regulation enforcement program which\nMAY 4 1974\nincludes specified Federal inspection of OCS operations. Issuance\nand continuance of leases would be conditioned upon compliance with\nDear Mr. Chairman:\nsuch regulations. A standard of strict liability for oil spill\ndamages would be imposed on leaseholders except where damage is caused\nThis responds to your request for the views of this Department\nby war or the damaged party.\nconcerning several bills which deal with the energy resources of the\nOuter Continental Shelf, S. 3221, S. 2762, S. 2858, S. 2922, S. 2389\nSection 8 of the Outer Continental Shelf Lands Act would be revised\nand S. 3185.\nto specify that bidding for OCS leases on a \"net profit\" basis is allowed,\nin addition to bonus bidding, but royalty bidding would be excluded.\nWe recommend that none of these bills be enacted, since appropriate\nThe bill would also permit the Secretary to sell Federal royalty\nlaw. action with respect to OCS energy resources can be taken under existing\noil by competitive bidding and would prohibit him from continuing\nleases which would otherwise terminate, unless there is a reasonable\nassurance of production from such leases within the period of an\nThe bills\nextension. Additional provisions are included to assure full\ndevelopment and maximum production from OCS leases, including a\nS. 3221 would require the Secretary of the Interior to undertake a\nGeneral Accounting Office audit of shut-in wells, Secretarial uniti-\nprogram of promoting petroleum production from the Outer Continental\nzation or cooperation or pooling agreements, and review authority\nShelf subject to new environmental and safety requirements. The\nfor development plans.\nOuter Continental Shelf Lands Act would be amended to declare that United\nStates policy is to make available for leasing prior to 1985 all OCS\nFive percent of OCS revenues would be paid into a newly created Coastal\nlands determined to have geologically favorable potential and be capable of\nStates Fund, subject to a $200 million per year maximum. The Secretary\ndevelopment the without undue environmental harm. To carry out this policy\nwould be authorized to make grants from the Fund to coastal States\nthe Secretary would be required to develop a leasing program, specifying\nto ameliorate adverse environmental effects and control secondary\nsize, timing and location of leasing activity that will best\nsocial and economic impacts associated with development of Federal\nmeet energy needs for the ten year period following approval, subject\nOCS energy resources. Secretarial regulations for administration of\nto certain criteria directed toward overall resource management, geographic\nthe Fund would include requirements for grant eligibility, with the\ndecentralization of leasing and receipt of fair market value for public\nproviso that no grant could be made for more than ninety percent of\nresources. An open nomination procedure would be established for areas\nthe cost of activities to be conducted under the grant. The Secretary\nto be leased or excluded from leasing. The bill specifies matters\nwould also be authorized to negotiate with a view to developing interim\nto be included in the environmental impact statement for leased areas\nagreements to permit energy resource development prior to final\nand authorizes the Secretary to obtain all information from public\njudicial resolution of disputes relating to such resources. The President\nor private sources necessary to make evaluations required by the Act.\nwould be authorized to establish procedures for resolution of international\nor interstate boundary disputes.\nThe bill would also require the Secretary to undertake a major OCS oil\nand gas survey, including geologic investigations and drilling, and\na mapping program. No part of the survey and mapping program would\nbe considered a major Federal action under the National Environmental\nleases or permits for oil or gas exploration or development on the\nPolicy Act of 1969 except drilling exploratory wells. Persons holding\nOCS would be required to provide the Secretary with pertinent information\nconcerning the area which the lease or permit covers. In addition,\n28\n29\nS. 2858 requires the Secretary to prepare within 6 months of enactment\nS. 2922 would provide that sixty percent of revenues from OCS leases\na leasing schedule of all OCS areas to be leased in the ensuing five\nafter enactment would be paid to the adjacent coastal states without\nyears. The schedule must include an assessment of relative hazards to\nlimitation on use except that (i) rentals, bonuses or revenues other\nthe environment, or commercial or recreational uses of adjacent ocean\nthen royalties shall be included only if necessary to produce revenues\nand coastal areas, of operations in each area, compared to the environ-\nof $50 million in each state and (ii) if revenues attributable to a\nmental hazard in all other areas under consideration in the leasing\nstate in any one year exceed $25 million the share of the excess over\nschedule. Broad authority is provided for the Secretary to obtain\nthat amount shall be reduced in accordance with a schedule of percentages\ninformation necessary to assist him in making the assessment. Within\nranging from 45 down to 10 percent on the excess over $50 million.\nthe earlier of (1) one year after enactment or (2) promulgation of\nthe five-year leasing schedule and assessment of environmental hazards,\nS. 2922 also requires the Secretary within one year after enactment\nthe Secretary would be prohibited from taking steps to lease any area\nto conduct a comprehensive study and collect all relevant data on\nuntil other areas having a lesser hazard to the environment or commercial\nOCS areas \"potentially available for exploration of oil and gas\nor recreational uses have already been leased or the leasing process\nresources,' but not yet leased pursuant to the Act. No leasing could be\nfor such areas has already begun. New leasing schedules and environmental\nconducted on any area until the study of that area was completed.\nassessments would be required at not less than five year intervals.\nOn the basis of the study and other specified procedures, the Secretary\nThe bill also would establish a policy of insuring, \"through improved\nwould also be required to designate (i) priority areas having the\ntechniques, maximum precautions, and constant use of the best available\ngreatest potential for development of oil and gas resources and the least\ntechnology by well-trained personnel, the safest possible operations\nrisk of environmental damage (ii) areas of critical environmental\nin the Outer Continental Shelf.' A number of fixed requirements to\nconcern in which leasing should be prohibited. The bill specifies\nimplement this policy are set forth in the bill together with an\ncertain sources from which the Secretary would gather information,\nelaboration of procedures to be followed in imposing safety requirements.\nincluding non-governmental parties. All such information must be\nAdditional enforcement provisions and civil and criminal penalties are\nmade available to the public but, unless otherwise provided by law\nincluded in the bill. The bill also imposes strict liability for\nor the Act, individual company data obtained would be kept confidential\nunlawful oil spills up to $15 million and subject to the defense that\nfor one year except as necessary to carry out the bill's provisions.\ndamage resulted from an act of the injured party or an act of war or\nPublic hearings would be required in coastal areas affected by leasing\ngovernment. Liability in excess of $15 million would be subject to\nand the consent of the Governor of any affected coastal state would\nordinary negligence rules.\nalso be required.\nS. 2672 creates a Marine Resources Conservation and Development Fund\nThe bill imposes several additional leasing requirements. The Secretary\ninto which would be paid seventy percent of the revenues from OCS leases\nmust make public sixty days prior to entering into any lease the term\nafter enactment. Thirty percent of such revenues would be paid to\nof a lease, the background information obtained for the area in which\nthe coastal state adjacent to the lease to be used for conservation\nthe lease is located, and, upon request, bids and supporting materials.\npurposes. The Marine Resources Conservation and Development Fund would\nSpecial conditions to take the background information into account\nbe available to the Secretary of Interior for \"broad and varied marine\ncould be imposed in any lease and specific authority would be given to\nresources conservation and development programs.\" A newly established\nallow the Secretary to give preference as to the oil and gas produced\nAdvisory Board would be established to assist the Secretary in carrying\nto the area affected by the lease. The bill also requires the Secretary\nout his functions in using the Fund, and Regional Environmental Review\nto impose specified production requirements and to conduct a survey\nBoards would be established to review the adequacy of provisions of\nof 'producing, shut-in' wells.\nlaw and regulations to protect the environment and to monitor enforcement\nactions, make recommendations to the Secretary, and hold public hearings\nS. 2922 also adds a requirement that no lease be issued until the\nin connection with administration of the Act.\nFederal Trade Commission and the Department of Justice determine that\nit will not involve an antitrust law violation. Also required would\n30\n31\nbe a Secretarial report with recommendations for promoting competititon\nDiscussion We agree generally with many of the essential objectives\nand maximizing revenues from OCS leasing and a plan for implementing\nof these bills, but recommend against their enactment at this time.\nsuch recommendations. The report would be required to consider various\nThe existing Outer Continental Shelf Lands Act permits substantial\nbidding systems, measures to ease entry of new competitors and measures\nlatitude for adjustment to changing circumstances and our program\nto increase supply to independent refiners and distributors.\nfor development of the OCS can be fully carried out under the present\nlaw. Significant changes in that law could seriously delay achievement\nThe Environemntal Protection Agency would be given authority to prescribe\nof the degree of national energy independence which we believe is vital.\nand enforce environmental protection regulations and an Outer Continental\nShelf Operations Advisory Board would be established. The bill would also\nDiscussed more specifically below are some of the more important respects\nrequire States to prepare a report like the environmental impact statement\nin which we believe provisios of these bills are either unnecessary or\nwhich Federal agencies are required to prepare under the National\nundesirable.\nEnvironmental Policy Act before construction or development of any kind\nis permitted on navigable waters, as defined in section 2(a) (2) of the\nScope of leasing program Provisions limiting or otherwise modifying the\nSubmerged Lands Act. The bill also imposes strict oil discharge\nscope of the OCS leasing program are undesirable. For example, the goal\nresponsibility up to $100 million, subject to certain defenses including\nstated in S. 3221 of leasing all available prospectively productive OCS\nthe defense that the discharge was caused by act of war or by negligence\nlands by 1985 is unrealistic and implies a rapid rate of development\nof the damaged party. An Outer Continental Shelf Liability Fund would\nwhich may involve undesirable environmental or other effects and which\nbe established to pay claims in excess of those recoverable against\nis far in excess of that presently planned. Our best estimate of the\nprivate parties (up to $100 million). Owners and operators of vessels\nnext appropriate change in the scope of the OCS program is to lease\nwould be liable only up to $14 million. The Fund would be constituted\nsome 10 million acres in calendar year 1975. We believe that the rate\nand continually replenished by a five cents per barrel fee imposed on\nof leasing implicit in S. 3221 would dispose of vast OCS acreages\nOCS production.\nwithout increasing petroleum exploration and production beyond that\nachievable under the current program. The current leasing program is\nThe bill would also require the Secretary to establish and maintain on\nsufficiently large that availability of drilling rigs will be the main\nOCS lands a reserve operating capacity for ninety days production of\nlimiting constraint rather than availability of unexplored leases.\nan amount of oil equal to one-fourth of 1972 crude oil imports.\nConversely, the requirement in S. 2858 that all areas be ranked by\nexpected productivity and hazard to environmental, commercial and\nS. 2380 requires a distribution of OCS revenues from leases after enactment\nrecreational factors and be made available for development SO that the\n(1) 50% to the adjacent coastal state (ii) 25% to other states, and\nmost environmentally safe areas are leased first is unduly restrictive.\n(iii) 25% to the Federal government.\nWe lack information and administrative ability to carry out this task,\neven if it were desirable to do SO. Complying with this bill's\nS. 3185 specifies a formula for determining Federal OCS revenues in\nlimitations could well result in a moratorium on leasing vitally needed\naddition to the cash bonus for each lease executed after enactment.\nOCS energy resources.\nUnder the formula, the Federal government would receive sixty percent\nof the well head value of oil and gas produced after deduction of\nFurthermore, the CEQ study has concluded that leasing can be carried\nproduction and exploration costs. Such costs would be limited to forty\nout in the areas included in that study if appropriate safety and\npercent of the well head value of oil and gas produced, except that\nenvironmental requirements are adhered to in each area. We intend to\nthe Secretary could allow additional costs associated with secondary\nrequire of the industry whatever design criteria and practices are\nrecovery methods. Exploration and production costs could be carried\nnecessary to meet the CEQ concerns.\nover from year to year. The Secretary would also be given discretion\nto reduce the 60 percent Federal share to 50 percent and to require\nIn contrast, the present law provides sufficient flexibility for an\nthat not over 16 2/3 percent of the Federal entitlement be paid in\nappropriate balancing of energy and environmental factors. Our concern\nkind. The Secretary would have authority to prescribe regulations\nis to improve the leasing system within the present framework and in\nand lease terms including imposition of rentals.\nthis connection the Department recently has adopted a two-tier system for\n32\n33\ndesignating tracts to be leased. Under it industry nominates promising\nareas and the public at large is invited to comment on environmental and\nWe also oppose the provision in S. 2922 specifically requiring FTC and\nother considerations bearing on tract selection. Based on this and its\nJustice Department review and approval of each lease for antitrust law\nown independent review, the Department then specifies areas to be leased.\nviolations. Normal antitrust inforcement procedures are adequate to\nassure compliance with these laws and individual lease reviews would\nA related consideration is the specific study or other requirements\nunduly disrupt the OCS program. In addition, the bill's requirement\nfound in several of the bills which are prerequisites to leasing.\nthat Interior report on ways to promote competition is unnecessary in\nS. 2922, for example, requires completion of a very comprehensive study\nlight of our present continuing effort to develop more competitive\nand also mandates that the consent of adjacent coastal State governors\nleasing system.\nbe obtained prior to leasing. We concur in the need for adequate study\nof areas to be leased. Present law adequately provides for this through\nSafety and environmental programs. The need for constantly improving our\nthe National Environmental Policy Act and the Outer Continental Shelf\nenvironmental protection and safety programs is clear and we concur\nLands Act, and our policy is to expand our capability rapidly for\nin the broad objective of several of the bills to achieve this end.\ndetermining all the facts necessary to a balanced leasing program.\nWe also agree that consultation with coastal States is appropriate\nThe Interior Department is, however, implementing the present OCS Lands\nbut requiring consent of their governors is unwise in view of the broader\nAct in accordance with the National Environmental Policy Act to insure\nnational aspects of the OCS program.\nthat these considerations are adequately taken into account. Provisions\nsuch as those contained in S. 2858, S. 2672, S. 2922 and S. 3221 are\nLease offering and conditions - competition and other economic\nunnecessary as the actions are authorized under existing laws. Also\nconsiderations The OCS Lands Act provide that leasing of OCS lands\nsuch provisions might be detrimental if transitional problems of\nshall be by competitive sealed bidding on the basis of a cash\ncomplying with their provisions delay current studies or other actions\nbonus bid with a fixed royalty on a bid royalty with a fixed bonus,\nwe are currently undertaking to improve environmental protection and\nbut in no instance can the royalty be less than 12.5 percent. The\nother requirements. Moreover, complying with such elaborate procedures\nleases are for a five year term. These provisions are sufficiently\nas those mandated in section 4 of S. 2858 (particularly new sections 10\nflexible for institution of the most desirable alternative leasing\nof the Act) could well hinder prompt and balanced development of\nsystems to promote competition while serving the public's interest\nenvironmental and safety requirements. And we oppose specifically the\nin receiving a fair return for its resources and using those resources\nundersirable fragmentation of responsibility which would result from\nin the most responsible manner.\nassigning safety and environmental regulation responsibility to the\nEnvironemental Protection Agency, as does S. 2922.\nDifferent methods of bidding for OCS leases are under constant\nconsideration. Bonus bidding has historically been used for Federal\nThe Department is undertaking preparation of a full environmental impact\nOCS leasing, but the Department is committed to a test royalty bid\nstatement on the new 10 million acre leasing program pursuant to the\noffering not later than the September 1974 OCS lease sale. Although\nNational Environmental Policy Act. The Council on Environmental Quality\nthis experiment is a royalty bid experiment, we believe that the\nhas recently completed a study of OCS leasing, which includes a number\ninformation developed will tell us enough about both bonus and royalty\nof recommendations which we believe will improve our administration of\nbidding to indicate whether further consideration of other possible\nthe OCS program. These and other actions will, we submit, appropriately\nbidding methods is justified. We are also examining the feasibility\nserve the objective of insuring safety and environmental protection.\nof a number of other systems such as profit sharing, installment or\ncontingency bonus payments.\nResearch and Development A strong research and development program is\nessential both with respect to energy and environmental aspects of\nWe are opposed to mandating any single system which would result in\nOCS mineral development. It is, however, being accomplished\na loss of the flexibility which the present Act provides. Imposition,\nunder existing law and several provisions in the bills under consideration\nfor example, of the net revenue sharing formula in S. 3185 would be\nmight, if enacted, actually adversely affect the R&D effort. Mandating\nhighly undesirable, even though such a leasing system may have advantages\n(as well as disadvantages) compared to other leasing methods.\n34\n35\na wide range of studies by different agencies, as does S. 3221, may\nMoreover, since the bill's provisions would exempt all actions other than the\npreclude desirable coordination and executive flexibility. S. 2672 would\ndrilling of exploratory wells from classification as a major Federal\nchannel funds on an arbitrary basis to states and thereby constitute\naction for the purposes of Section 102(2)(c) of NEPA, it would seem\nan unwise diffusion of R&D efforts.\nthat exploratory wells must therefore be considered major Federal actions.\nRequiring an EIS could significantly delay the drilling of exploratory wells\nPublic information and participation in OCS decisions Assuring that\nthat are important to the conduct and completion of the survey and mapping\nthe public has access to information needed to make intelligent decisions\nprograms prescribed under S. 3221 and could result in unnecessary delays\nwith respect to OCS energy resources and an adequate opportunity to\nin the preparation and publication of the prescribed maps and in the\nparticipate in OCS program decisions is essential. Equally important\ndevelopment of information important to an effective and expeditious leasing\nis the desirability of developing a more extensive resource information\nprogram for OCS lands.\nbase.\nSimilar objections appear in several of the other bills. S. 2922 imposes\nThe Interior Department presently has the necessary authority to pursue\nseveral data gathering requirements in section 3 (adding a new section\nthese objectives. Consultations with industry representatives,\n15 to the OCS Lands Act) which are costly and may be virtually impossible\nenvironmentalists and others are presently underway concerning the\nto obtain within the time frame set forth. The impact of the study\nadvisability of an exploratory program. The present OCS Lands Act\nrequirement is particularly serious because of the bill's requirement\npermits the Department to require that permittee furnish us with\nthat no leasing be conducted in any area for which the study has not been\ndata obtained during exploration and we expect to reach conclusions\ncompleted.\nabout what should be done in this regard shortly.\nDistribution of OCS revenues Several of the bills (S. 3221,\nIt would not be appropriate to amend the OCS Lands Act at this time\nS. 2672, S. 2922, S. 2389) would divert revenues from the U.S. Treasury\nto require the development of specific informational programs.\nto adjacent coastal and other states and we oppose such provisions.\nTo illustrate, the survey and mapping program required by section\nReceipts under the Outer Continental Shelf Lands Act from OCS oil and\n202 of S. 3221 would impact quite heavily and perhaps undesirably\ngas leases belong to the Federal Government and currently make a\non our OCS program. If enacted, this provision would require that\nsubstantial contribution to Federal income. If such revenues were\na survey of OCS oil and gas resources be conducted and that the\ndiverted to coastal and other States, as the bills provide, the Federal\nSecretary maintain a current series of detailed topographic, geological,\nGovernment would need to increase its income from other sources. Also\nand geophysical maps of and reports about the OCS. Maps for all\nthe bills adopt inflexible allocations of funds to such States without\nareas under lease or proposed for leasing prior to July 1, 1977,\nregard to need or resources.\nwould have to be prepared and published prior to July 1, 1976; maps\nof areas proposed for leasing after July 1, 1977, would have to\n#\nbe prepared and published not later than six months prior to the\nlast day for submitting bids for the areas offered for lease; the\nTo summarize, the bills before the Committee deal with the major issues\nmaps of all prospective areas must be prepared and published not\nrelating to use of the energy resources of the Outer Continental Shelf.\nlater than ten years after the date of enactment.\nTo meet our present energy needs, however, we believe that the present\nOCS Lands Act provides a satisfactory framework and that further legislation\nUnder these provisions a plan for conducting the prescribed survey and\nsuch as that before the Committee is undesirable or unnecessary.\nmapping programs would have to be submitted to Congress within six months\nafter enactment. A progress report to Congress, including a summary of\ninitial data compiled, would be due within 20 months after enactment,\nand progress reports would be required on an annual basis thereafter.\nConducting such an extensive mapping and survey effort would be extremely\ndifficult, expecially within the time frame set forth, and would not\nlikely produce results justifying the effort. Again, our present program\nundertaken pursuant to existing authority and modified as needs change,\nshould be satisfactory.\n36\n37\nThe Office of Management and Budget has advised that there is no\nHENRY M. JACKSON, WASH. CHAIRMAN\nobjection to the presentation of this report from the standpoint\nAM NEV.\nPAUL J. FANNIN, ARIZ.\nRANK CHURCH, IDAHO\nCLIFFORD P. HANSEN, 1440.\nof the Administrations's program.\nIT NETCALF, MONT.\nMANK O. HATFIELD, OREG.\nMENNITT CHNSTON JR., LA.\nJAMES L. BUCKLEY, N.Y.\n11459 ADDRESS 5. DAK.\nJAMES A. MC CLURE, IDAHO\nLOTO 6. ASKELL COLO.\nDEWEY F. BARTLETT, . OKLA.\nSincerely yours,\nAPPOOD NE WON, W.S.\nUnited States Senate\nDWARD M. METZENSAUM OHIO\nIn ? Writa'e\nCOMMITTEE ON\nJERRY T. VERKLER, STAFF DIRECTOR\nINTERIOR AND INSULAR AFFAIRS\nWASHINGTON, D.C. 20510\nUnder\nSecretary of the Interior\nHon. Henry M. Jackson\n20 May 1974\nChairmman, Committee on\nInterior and Insular Affairs\nUnited States Senate\nWashington, D.C. 20510\nThe Honorable John C. Whitaker\nUnder Secretary\nDepartment of the Interior\nWashington, D. C. 20240\nDear Secretary Whitaker:\nDuring your testimony on May 6 on S. 3221 and other\nbills pending before the Subcommittee which would revise\nthe Outer Continental Shelf Lands Act, you indicated that\nthe Department was in \"general agreement with many of the\nessential objectives of the bills\" but you recommended\nagainst their enactment \"at this time\". Your statement\nindicated that your recommendation was based on the be-\nlief \"that a significant change in that law (ocs Lands\nAct) could create serious delays in achieving the degree\nof energy self-sufficiency for the nation which is no\nnecessary\".\nIn order to help the Subcommittee in its deliberations,\nI would appreciate it if you would specify what provisions\nof S. 3221 could, in your opinion, \"create serious delays\"\nand indicate precisely how and why such delays could occur.\nIn addition to this information, I have a number of\nspecific questions which I would like the Department to\nanswer. They are:\n1. What is the status of the alternatives for Outer\nContinental Shelf exploratory programs which you indicated\nthe Department was discussing with environmental and in-\ndustry groups?\n38\n39\nThe Honorable John C. Whitaker\n20 May 1974\nSTATEMENT\nOF\nPage 2\nUnited States Department of the Interior\n2. You indicated that the Department had not decided\nOFFICE OF THE SECRETARY\nto conduct profit sharing experiments because there might\nWASHINGTON, D.C. 20240\nbe a legal challenge. Do you object to being given the\nexpress authority to conduct such an experiment as S. 3221\nwould provide?\n3. You indicated that the Department was establishing\nJUL\n}\n974\nan environmental monitoring and/or baseline study program\nin the Mississippi-Alabama-Florida area leased recently.\nPlease describe this program in some detail. What is the\nHonorable Lee Metcalf\nnature and scope of the information being sought? How\nChairman, Subcommittee on\nMinerals, Materials and Fuels\nlong will the studies be conducted? What level of funding\nUnited States Senate\nand manpower is allocated to these studies?\nWashington, D.C. 20510\n4. You indicated that the coastal states have the\nDear Senator Metcalf:\nright to refuse to allow a pipeline from the Federal Outer\nContinental Shelf to cross the State owned subjerged lands.\nHas the Department Solicitor or the Attorney General made\nS. May testimony on S. 3221 and other legislation dealing\nIn response 6 to your letter regarding Under Secretary Whitaker's\na formal ruling on this question? If so, please furnish\nof S. 3221, 3221 please find enclosed our comments on specific with\nit to the Committee. If no formal ruling has been made,\nof which could create serious delays in achieving provisions degree\nwhat is the basis for your opinion? It appears to me\nenergy self-sufficiency for the nation which is so necessary. the\nthat your position is inconsistent with the provisions of\nat Generally, while many features of the bill are apparently\nSection 6 of the Submerged Lands Act (43 USC 1314) which\nearly improving OCS leasing procedures, there is little to directed\nreserves certain rights to the United States over the sub-\nexploration and optimm production from OCS leases. encourage\nmerged lands.\nstudies with and reporting. The bill requires minerals fact geophysical\ninvestigation authority proposed concentrates heavily on geological and Much of the\n5. You indicated that in order to lease tan million\nauthority to implement findings and recommendations.\nobligations to report to Congress, without reference finding to\nacres in 1975 as directed by the President the Department\nwould probably offer between 12 and 15 million acres. In\nResponses are also provided to the five specific questions you asked.\nlight of the experience in the Department's most recent sale,\nwhen less than 50% of the acreage offered was actually leased,\nWe will be glad to provide any further information you desire.\nisn't it likely that the Department might have to offer\ntwenty million acres in 1975?\nSincerely yours,\nThank you very much for your cooperation.\n(Sgd) Ken M. Brown\nVery truly yours,\nKen M. Brown\nLegislative Counsel\nEnclosures\nLee Metcalf\nChairman, Subcommittee on\nMinerals, Materials and Fuels\n41\n40\nor\nQuestion 1:\nUnited States Department of the Interior\nWhat is the status of the alternatives for Outer Continental Shelf\nexploratory programs which you indicated the Department was discussing\nOFFICE OF THE SECRETARY\nwith environmental and industry groups?\nWASHINGTON, D.C. 20240\nAnswer:\nWe have had a series of useful discussions with representatives from\nMemorandum\nMAY 2 4. 1974\nindustry and environmental organizations. A report summarizing the\nTo:\nSecretary\nvarious opinions that were expressed during these discussions is enclosed.\nUnder Secretary\nAfter a careful appraisal of the alternative exploratory programs which\nThrough:\nJared G. Carter\nhad been proposed, we doubt that any one of them would add much to the\nFrom:\nDarius W. Gaskins, Jr.\n10-million acre offshore leasing program planned for 1975. But we have\nSubject:\nOCS - Summary of consultations with Industry and Environmental\nOrganizations\nnot completely rejected the option of accelerating offshore activities\nWe recently met with representatives of the following companies:\nby a suitable exploratory program and will closely examine each promising\nAmoco\nExxon\nMurphy 011\nprogram that is recommended. We are also pursuing some other measures\nCitgo\nGeneral Crude 011\nPhillips\nColumbia Gas\nGulf\nShell\nwhich will increase the rate of exploration on the Outer Continental Shelf.\nContinental 011\nHusky 011\nSun 0il\nDow Chemical\nMobil\nTexaco\nThe Department is discussing a limited deep stratigraphic drilling program\nand environmental organizations:\nwith an industry group, which would provide geologic information for\nCenter for Law and Social Policy\nNRDC\nseveral frontier areas. All drilling would take place under carefully\nEnvironmental Policy Center\nNational Wildlife Federation\nThe Institute of Ecology\nSierra Club\nspecified conditions to prevent undue harm to the environment. All infor-\nNational Audubon\nSport Fishing Institute\nmation would be made available to the Department 30 days after collection,\nto obtain their views on the alternative exploration programs we had been\nconsidering and on some other matters. Briefly, the programs are:\nexcept for information on environmental hazards or shows of petroleum,\n1.\nSale in 1975 in several frontier areas covering a limited number of\nwhich must be reported immediately. Data on environmental hazards would be,\nleases and requiring unitized exploration.\nand data on shows of petroleum when judged to be significant may be, made\n2. Company exploratory drilling on structures through one-year leases\nin limited number of frontier areas, followed by a preference lease\npublic at once. The Department is also considering a policy of requiring\nif a discovery is made. All data to be made public.\nthat all industry geological and geophysical data should be made available\n3. Federal exploratory leasing program, all data being made public\nismediately\nto the Government. Such data would be released to the public 10 years\n4.\nFederal stratigraphic drilling program, all data being made public\nafter collection, or 60 days after a lease sale, whichever comes sooner. A\nimmediately.\npublic hearing has been scheduled for the 15th of July for this purpose.\n42\n43\nThis is a summary of their answers to the main questions put to them.\nThe representatives of the environmental organizations did not have\nvery firm opinions on the programs. To the extent that preferences\nQuestion 1: Would any of the proposed exploration programs get petroleum\nwere stated, they favor\nfaster than the planned ten million acre two-tier leasing\nprogram?\nan exploratory drilling program financed and operated by\nthe government over any company-financed program;\nThere was not a single company which thought that any of the proposed\nprograms would add much to the current ten million acre program. A\ndelaying the ten million acre leasing program until the\ntypical comment was: \"We believe pre-lease drilling is wholly\nresults of the government exploration program are known;\nunnecessary, would delay the programs, and further would not be very\neffective because the best structures are usually large and complex, and\nbaseline studies before any lease sales take place, or at\nthey require a considerable exploration program involving many wells to\nleast before production begins, followed by a comprehensive\ndefine their potential.\" We were told repeatedly that a few holes even\nmonitoring program.\nwhen drilled on structure would not condemn an area if they turn out to\nbe dry and not significantly increase the speed of initial exploration\nQuestion 2: Would a stratigraphic drilling program in frontier areas\nif shows of hydrocarbon appear. Specific examples noted were:\nbe useful in guiding lease sales toward the most promising\nstructures? In particular, are you going to participate\nAbout 200 holes were drilled in the North Sea before the first\nin the stratigraphic program of the \"Sun group?\"\nmajor oil discovery was made.\nThere was no agreement on the merits of stratigraphic drilling. Most of\nAbout 65 holes have been drilled off Nova Scotia without finding\nthe majors indicated that stratigraphic data would not add much to geo-\ncommercial quantities of hydrocarbons.\nphysical information. \"Stratigraphic data is of minimal value if one\nhas good geophysical data. The latter will indicate where the structures\nWith the exception of Prudhoe Bay, many unsuccessful holes were\nare and that's where we will drill.\" It was apparent that they would\ndrilled on the Alaskan North Slope.\nprefer less commonly available information before lease sales rather\nthan more. As one of them put it, publicly available data just drives\nThis is not to say that some companies would not like more information\nup bid prices.\non frontier OCS basins. One major, c.g., said that 30 holes if drilled\non structure would really give us a lot of information. The Oregon/\nThree of the independent companies argued that stratigraphic data for\nWashington case was cited as an example where a few holes told a lot\nfrontier areas would be quite useful since we lack definite knowledge\nabout that area. And 1f one of the proposed exploration programs had\nabout sedimentary structures. In their view, stratigraphic information\nto be selected, this company would prefer alternative 1. But they, as\ncan be used to guide lease sales toward the most promising tested\nwell as all the other companies, would rather proceed under our planned\nstructures. One large independent company would join the Sun group\naccelerated leasing program and drill the holes in the course of\nalthough they think it is a waste of time and money, because \"the\nexploring their tracts acquired at regular lease sales.\npositive indications don't prove anything and the negative indications\ndon't downgrade expectations.\" One of the majors stated that they\nOne other major company stated a preference if one of the programs had\nwould join the Sun group merely to protect themselves, while another\nto be adopted. Their view was that if data must be made public, the\ndefinitely would not. The other companies did not commit themselves.\ngovernment may as well drill the wells, and so they opted for alterna-\ntive 3. All the other companies, majors and independents, did not\nQuestion 3: Are there significant advantages, particularly with respect\nfavor any of the proposed programs.\nto rig-years saved, in unitizing the exploration efforts in\nfrontier areas?\nOne independent company was fearful that such exploration programs could\ndestroy the independents' offshore business since the government may as\nMost companies were either mildly for or mildly against unitization.\na result be selling known oil deposits. This would favor the integrated\nSome believed that unitization would result in considerable savings in\ncompanies and bring in large end users who would simply outbid the\nthe number of exploratory wells drilled and, given the shortages of rigs,\nindependents. The company argued that the independents make their money\ndrilling pipes, casings, etc., significantly increase the rate of develop-\nby finding and selling crude oil.\nment in frontier areas. All companies, however, would prefer voluntary\nto imposed unitization, saying that far more voluntary units would exist\nif the government had not practiced checkerboard leasing in the past.\nUnitizati CO entail problems with respect to allocating expiora-\nplan and the drilling operator.\ntion costs fairly among the participants, and agreeing on the drilling\n44\n45\nQuestion 4: What are your views about the Department's planned\nOne major company suggested that instead of a ban against\naccelerated leasing program?\njoint bidding, the government might impose an upper bound\nThe companies, large and small, universally approved of accelerated\non the number of tracts a company can acquire in any one sale.\nleasing. Some stated that the oil industry has a large spare capacity\nto explore and develop much more acreage than in the past. Some believed\nAll of the independent companies favored joint bidding \"but\nthat the industry can respond to sales of 10-15 million acres per year,\n1f joint bidding has to be limited, then the largest companies\nwhile others suggested smaller numbers. All companies emphasized the\nshould be prohibited from bidding jointly.\"\nimportance of announcing sales frequently and regularly as far into the\nfuture as possible; this would make their planning efforts and those of\nBright spot analysis was said to be an important new tool in\ntheir contractors far easier.\ngeophysical exploration, primarily in locating and identifying\ngas deposits. \"Bright spot techniques may increase confidence\nAlmost all companies--majors and independents--took the opportunity to\nto as much as 75 percent on existence of hydrocarbons, but\nwe still will not know volumes.\"\nmake the following points:\nThey like the present bidding system and do not want any\nAlthough we talked to only a relatively small number of companies, we\nsignificant changes. Except for two independents, no company\nbelieve that we did have a representative sample and that the answers\nlikes royalty bidding. The two companies favor some form of\nwould not change much if more companies were canvassed. In appraising\nroyalty bidding to case the front money problem. Many of the\nthe responses of the companies to our questions, we must remember that\ncompanies prefer to see a general reduction in the level of\nthey basically are satisfied with the terms and conditions of offshore\nbonuses paid, but \"although a bonus bidding system has a\nleases, and will therefore reject any modifications which are going to\nfront money problem, the other alternatives have worse\nchange the familiar pattern of doing business unless the modifications\ndisadvantages.\"\nare clearly in the best interests of the industry. Despite this recog-\nnized bias, it is doubtful whether any of the exploration programs which\nTwo of the independent companies stated that a royalty bidding\nhad been proposed would add much to our accelerated leasing program.\nsystem would encourage speculative land acquisitions, and\nNotwithstanding the somewhat negative attitude of the majors toward the\nbring in such end users as utilities and airlines who would\nSun 011 stratigraphic drilling program, there is no good reason why we\nsimply outbid all but the very largest of the independents.\nshould not approve this project. We are presently examining all aspects\nThey favor the current bidding system and a large-scale\nof unitization and will have a staff paper on this topic in the near\nleasing program because \"this would satiate the majors and\nfuture.\nleave a lot of good acreage for the smaller companies.\nFour companies, while acknowledging that such a system would\nprobably not be feasible in the U.S., stressed the desirability\nof the British system in which tracts are allocated on the basis\nDarius W. Gaskins, Jr.\nof work commitments and fixed profit sharing.\nThey would like us to establish clear guidelines about our bid\nrejection system so that all participants know which criteria\nare being used. \"Why doesn't the government state the minimum\nbid it will accept for each tract in advance of a lease sale?\"\nSome companies are quite upset about any bid rejections. \"We\ncan't understand why you reject bids. After all, we are\nbidding in an auction.\"\nWith respect to our proposed ban on joint bidding by the\nlargest companies, some of the majors\n1. wanted to know how we arrived at the cutoff point of\n5 billion barrels, and\n2. did not think it was desirable to prohibit joint bidding\nby the majors.\n46\n47\nQuestion 2:\nQuestion 3:\nYou indicated that the Department had not decided to conduct profit sharing\nYou indicated that the Department was establishing an environmental\nexperiments because there might be a legal challenge. Do you object to\nmonitoring and/or baseline study program in the Mississippi-Alabama-\nbeing given the expressed authority to conduct such an experiment as\nFlorida area leased recently. Please describe this program in some\nS.3221 would provide?\ndetail. What is the nature and scope of the information being sought?\nHow long will the studies be conducted? What level of funding and man-\nAnswer:\npower is allocated to these studies?\nAt the time of the May 6, 1974 testimony, the Department was concerned\nAnswer:\nthat a profit sharing leasing experiment could not be conducted under the\nIn May 1974, a Bureau of Land Management. (BLM) contract was signed with\nexisting provisions of the OCS Lands Act without being subject to legal\nthe State University System of Florida Institute of Oceanography (SUSIO).\nchallenge. We now have a Solicitor's opinion which states that the existing\nThe terms of this contract provide for the initial sampling of a baseline\nAct offers sufficient flexibility to allow a profit sharing experiment.\nenvironmental survey of the Outer Continental Shelf (OCS) areas that were\nTherefore, as stated earlier under the discussion of delay problems of\nleased in the December 1973, Mississippi-Alabama-Florida lease sale.\nS.3221, the Department is attempting to formulate a profit sharing test.\nField sampling began in mid-May, and will be completed for this first\nIt is expected that the experiment can be held no later than January 1975.\nsample by the end of June after which time laboratory analysis will\nWe do not now see a need for specific legislation to grant authority to\ncommence. Results of this baseline study will be finalized by March 15,\nconduct such an experiment.\n1975. Some of the environmental aspects to be studied include: background\nlevels of hydrocarbons in water, sediment and organisms; background levels\nof tract metals in water, sediments and organisms; characteristization of\nbenthic and planktonic communities; description of sediments and relation-\nand\nships between organisms and abiotic parameters; standard oceanographic\nmeasurements suchas salinity, temperature, micronutrients, dissolved oxygen).\nThe aim of the program is to establish a pre-operational baseline of those\ncritical parameters in the OCS environment which may be affected by oil\nand gas development activities. Future measurements to be made on the\n48\n49\nsame stations, both inside the leased areas and outside on the control\nQuestion 4:\nstations, will provide time series data which can be compared with pre-\nYou indicated that the coastal states have the right to refuse to allow\na pipeline from the Federal Outer Continental Shelf to cross the State\nviously collected information for the purpose of determining significant\nowned submerged lands. Has the Department Solicitor or the Attorney\nGeneral made a formal ruling on this question? If so, please furnish\nchanges.\nit to the Committee. If no formal ruling has been made, what is the\nbasis for your opinion? It appears to me that your position is incon-\nsistent with the provisions of Section:6 of the Submerged Lands Act\nIt is anticipated that these baseline/monitoring studies in the MAFLA area\n(43 USC 1314) which reserves certain rights to the United States over\nthe submerged lands.\nwill continue for at least five years, and will be funded at $10-15 million.\nBy the end of FY '74 the BLM will have added 9 new staff positions to\nAnswer:\ndevelop study plans, review proposals, coordinate the efforts of all\nThe question of coastal States right to refuse to allow a pipeline from\ncontractors, oversee contract activity, and liaison with Federal, State,\nthe OCS to cross State owned submerged lands arose during preparation of\nand local agencies and institutions. An additional eleven positions will\nlegislation to license deepwater ports on the OCS. The Solicitor's\nbe open in FY '75. No manpower is being added to perform the actual\nopinion is that coastal States do have the power to restrict pipelines\nsampling and analytical work.\nfrom crossing submerged lands beneath State territorial waters. A copy\nof this opinion, dated September 20, 1973, is attached.\nBesides the baseline/monitoring program in the MAFLA area, BLM has requested\nfunds to conduct similar studies in four other OCS areas: The Gulf of\nAlaska, Southern California, South Texas, and the Atlantic Coast. Study\nplans for these four additional areas are in various stages of development.\nThe National Oceanic and Atmospheric Administration, in conjunction with\nthe U.S. Geological Survey, the Bureau of Sport Fisheries and Wildlife, and\nthe University of Alaska has submitted a proposal entitled \"Environmental\nAssessment of the Northwestern Gulf of Alaska-First Year Program.\" This\nstudy plan represents a first step in the assessment of the marine environ-\nment in the Gulf of Alaska.\n38-533 o 4\n50\n51\nOF\nUnited States Department of the Interior\nbut shall not be deemed to include, proprietary\nrights of ownership, or the rights of tanagement,\nadministration, leasing, use, and development of\nOFF\nOFFICE OF THE SOLICITOR\nthe lands and natural resources which are speci-\nWASHINGTON, D.C. 20240\nfically recognized, confirmed, established, and\nvested in and assigned to the respective States\nIN REPLY REFER TO:\nand others by section 3 of this Act.\"\nThe statutory authority in § 6(a) of the Submerged Lands Act quoted\nabove does give the United States some authority in the three mile\nzone, but a mere retention of rights in, and nowers of regulation\nMemorandum\nand control of, lands for the constitutional purpose of commerce\nSEP 1973\ndoes not provide adequate statutory authority for the exercise of\nTo:\nDeputy Under Secretary Carter\nthe right of eminent domain to obtain a right-of-way for a pipeline.\nFrom:\nAssistant Solicitor - Minerals\nI find no authority in the Outer Continental Shelf Lands Act to\nauthorize the Federal Government to condemn a right-of-way across\nDivision of Energy and Resources\nState lands in order to develop the Federal resources of the Outer\nSubject: of Pipeline a State rights-of-way across submerged lands\nContinental Shelf. In any event that Act pertains to the resources\nof the United States Outer Continental Shelf and would not extend\nto oil imported from a foreign country. So for the constal States\nwhether 1973, The Solicitor on a \"Deepwater State has asked Port me Legislation\". to respond to The your memorandum of August 14,\nhave been willing to cooperate with Federal lessees and the need to\nacquire rights-of-way in the face of State opposition has not arisen.\nreferred to as territorial waters in what crossing\nlands beneath State could prohibit pipelines from specific question the submerged is\nGulf of Mexico the \"three mile zone\" (or three Senator Johnston\nJune Fergerwore\nthe Outer Continental off Texas Shelf. and Florida) lying between league the zone coast in and the\nFrederick N. Ferguson\nWe for conclude Congress that to coastal States presently have this\novercome it would require new Federal power legislation. and that\ncc:\nSecretary's Files\nThe these Submerged lands Lands Act (43 U.S.C. §§ 1301-1315) to\nMr. Allen (OL)\nStates. beneath territorial waters to the granted title\nMr. Findlay (OL)\nAct nor the Outer rights in this area. Neither the United\nhave proprietary Consequently, the coastal States, and respective not the coastal States,\nMr. Ferguson\nMiss Wagner\ncrossing the Federal three Government authority with U.S.C. §§\ngrants the Continental Shelf Lands Act (43 Submerged 1331-1343) Lands\nDER Reading File\nDocket Section\n8/31/73\nbe granted only by mile the State. zone. A right-of-way respect across State to pipelines lands can\nFNFerguson:bar:9-20-73\ngrants Although title section 3 of the Submerged Lands Act (43\nUnited States States, section 6 (43 U.S.C. § 1314) retains mile for zone the\nthe coastal to the submerged lands within the three U.S.C. § 1311) to\n\"all its navigational servitude and rights\nnational commerce, navigation, national defense, and purposes\nnavigable waters for the constitutional and of\npowers of regulation and control of said lands in and\naffairs, all of which shall be paramount inter- to,\n53\n52\nQuestion 5:\nthe sales in an attempt to lease the ten million acres annually.\nYou indicated that in order to lease ten million acres in 1975 as directed\nby the President, the Department would probably offer between 12 and 15\nTo assist the Department in selecting the most promising areas for leasing,\nmillion acres. In light of the experience in the Department's most recent\nsale, when less than 50 percent of the acreage offered was actually leased,\na Federal Register notice of February 20, 1974, requested industry to\nisn't it likely that the Department might have to offer 20 million acres\nin 1975?\ndesignate their preference of areas to be offered for leasing. The notice\nAnswer:\nalso asked for a rating of areas based upon environmental concern. A\nA decline in the amount of acreage leased as compared to the total offered\nreport of the responses to the Federal Register notice is enclosed.\nwas not unexpected by the Department. It was recognized that to maintain\na high level of leasing, attractive prospects must be selected and offered\nfor sale. This is becoming more of a problem because nearly all of the\nsuccessful offshore leasing has taken place off Louisiana and East Texas\nand the amount of favorable acreage remaining in this area is limited.\nSecondly, it was anticipated that industry would be more selective in\ntheir leasing practices and in committing available capital when they\nwere aware that plans were being prepared to expand leasing to new areas.\nThe proposed schedule for leasing ten million acres annually will concen-\ntrate heavily on leasing in new frontier areas. Moreover, industry has\nindicated that they will strongly support initial leasing in new frontier\nareas because of the potential involved. Therefore, if expansion of leasing\ninto new areas is not delayed because of environmental or other problems,\nit is still the belief of the Department that ten million acres can be\nleased during 1975 by offering for sale up to 15 million acres. We will,\nhowever, continually monitor the individual lease sales as the accelerated\nleasing program progresses. If it appears that the amount of acreage leased\nof the total offered does decline, we will increase the acreage offered in\n55\n54\nOF\nLikewise, sections 18(f) through (j) would have a minimal practical\neffect, except perhaps in two respects. First, section 18(h) requires\nUnited States Department of the Interior\nthe Secretary to review and reapprove the leasing program at least\nonce each year. This intrusion of executive discretion may, on the\nOFFICE OF THE SECRETARY\none hand, require needless paperwork and establish an unenforceable\nWASHINGTON, D.C. 20240\nrequirement or, on the other hand, compel too much review and reapproval\nof leasing programs. Second, section 18(i) confers broad authority\nJUL 2 6 1974\non the Secretary to obtain information needed to prepare environmental\nimpact statements with little regard for recently enacted energy data\nDear Mr. Chairman:\nand information provisions, the need for limiting governmental authority\nor providing appropriate protection of private interests.\nIn accordance with Secretary Morton's July 16 letter on Committee\nPrint No. 1 of S. 3221, relating to the energy resources of the\nOCS oil and gas survey program. To a large degree the bill's\nOuter Continental Shelf (OCS) this letter sets forth the Interior\nprovisions adding a new section 19 to the OCS Lands Act (page 9, line 1\nDepartment's analysis of Committee Print No. 1 and our position con-\nthrough page 11, line 18) are unnecessary, but to the extent they are\ncerning its major provisions. We previously expressed our views on\nlikely to have an actual effect, they could impact quite heavily and\nS. 3221 as originally introduced by letter dated May 4, 1974.\nperhaps undesirably on our OCS program. The bill would require that a\nsurvey of all OCS oil and gas resources be conducted and that the\nWe oppose amending the Outer Continental Shelf Lands Acts at this\nSecretary maintain a current series of detailed topographic, geological\ntime, because it would disrupt current efforts to achieve full\nand geophysical maps of and reports about the OCS. Maps would be\nutilization of these resources. The specific problems that enactment\nrequired no later than six months prior to the last day for submission\nof S. 3221 would cause are discussed below.\nof bids for OCS areas scheduled for lease on or after July 1, 1977; and\nin no case later than ten years after enactment of all other areas.\nLeasing program. Title II of the bill purports to establish a national\npolicy of use of OCS resources and the criteria for a leasing program.\nUnder these provisions a plan for conducting the prescribed survey and\nTaken together these provisions are so general for the most part that\nmapping programs would have to be submitted to Congress within six months\nthey contribute little or nothing to a sound program. Our present\nafter enactment. A progress report to Congress, including a summary of\npolicy and actions are easily comprehended by these provisions which are\ninitial data compiled, would be due within 20 months after enactment,\nat best unnecessary and at worst confusing and productive of controversy\nand progress reports would be required on an annual basis thereafter.\nand litigation. Where these provisions are more specific, they are in\nConducting such an extensive mapping and survey effort would be extremely\nseveral instances either superfluous or harmful. We believe it is\ndifficult, especially within the time frame set forth, and would not\nundesirable at this time to require development of a ten-year leasing\nlikely produce results justifying the effort. Carrying out the mapping\nprogram as contemplated by the bill, since this would divert scarce funds\nand survey requirements (including surveys on a spacing no greater\nand manpower from more pressing matters in the OCS, and other programs.\nthan two kilometers) would require large expenditures of money, possibly\nFor any leasing program, however, it is standard governmental operating\non the order of several billion dollars. Again, our present program\nprocedure to prepare at the appropriate time the budget and manpower\nundertaken pursuant to existing authority and modified as needs\nestimates called for in new section 18(c) of the OCS Lands Act which the\nchange, should be satisfactory.\nbill would add (page 6, line 20 through page 7, line 5). New section\n18(d) mentions some factors which must be included in the environmental\nMoreover, since the bill's provisions would exempt all actions other\nimpact statement on the leasing program. These are factors which obviously\nthan the drilling of exploratory wells from classification as a major\nwill be included whether or not section 18(d) becomes law, but we oppose\nFederal action for the purposes of section 102(2)(c) of the National\non principle this amendment to the National Environmental Policy Act.\nEnvironmental Policy Act, it would seem that exploratory wells must\nNew section 18(e) requires the Secretary of the Interior to establish\ntherefore be concidered major Federal actions. Requiring an environmental\nprocedures for a leasing tract-nomination system-something we have already\nimpact statement could significantly delay the drilling of exploratory\ndone under the present OCS Lands Act, as indicated in our May 4 letter.\nwells that are important to the conduct and completion of the survey and\nmapping programs prescribed under S. 3221 and could result in unnecessary\ndelays in the preparation and publication of the prescribed maps and in\nthe development of information important to an effective and expeditious\nleasing program for OCS lands.\n56\n57\nResearch and development. A strong research and development program\nwith respect to both energy and environmental aspects of OCS mineral\nLease terms. The provisions of the present OCS Lands Act are\ndevelopment is being accomplished under existing law. New section 20\nsufficiently flexible for institution of the most desirable alternative\nof the Act (page 11, line 20 through page 13, line 7) is superfluous.\nleasing systems to promote competition while serving the public's\ninterest in receiving a fair return for its resources and using\nSafety. As pointed out in our May 4 letter, a recent OCS study by\nthose resources in the most responsible manner. Different methods\nthe Council on Environmental Quality has concluded that leasing can\nof bidding for OCS leases are under constant consideration. Bonus\nbe carried out in OCS areas if appropriate safety and environmental\nbidding has historically been used for Federal OCS leasing, but the\nrequirements are adhered to and we intend to require of industry\nDepartment is committed to a test royalty bid offering not later than\nwhatever measures are needed to assure a safe and environmentally\nthe September 1974 OCS lease sale. Although this experiment is a\nsound program. In this regard, we are meeting the concerns under-\nroyalty bid experiment, we believe that the information developed\nlying the new section 21 which the bill would add to the OCS Lands\nwill tell us enough about both bonus and royalty bidding to indicate\nAct, including inspection, accident investigation and reporting\nwhether further consideration of other possible bidding methods is\nmeasures\njustified. We are also examining the feasibility of a number of\nother systems such as profit sharing, installment or contingency\nLiability for oil spills. The Administration currently has under\nbonus payments We are opposed to mandating any single system which\nconsideration comprehensive legislation relating to oil spill and\nwould result in a loss of the flexibility which the present Act\nother OCS liability. We recommend that the Committee defer action\nprovides.\nin this area until the Administration proposal is developed. The\nCouncil on Environmental Quality has previously commented on new\nSection 203 of the bill would revise setion 8 of the OCS Lands Act\nsection 22 (page 15, line 23 through page 17, line 19).\nto specify that bidding for OCS leases on a \"net profit\" basis is\nallowed, in addition to bonus bidding, but royalty bidding would be\nNegotiation with States and boundary determinations. New sections 23\nexcluded. The Committee Print modified the original bill to specify\nand 24 of the OCS Lands Act (page 17, line 20 through page 18, line 8)\nthat not less than 30% of net profit must be paid to the United States,\nprovide no new authority for the Executive Branch and merely call\ninstead of requiring a 55% payment. Section 204 of the bill would\nfor actions pertaining to the matters with which we are already\nalso permit the Secretary to sell Federal royalty oil by competitive\ndealing.\nbidding and would prohibit him from continuing leases which would\notherwise terminate, unless there is a reasonable assurance of pro-\nCoastal State Fund. We are opposed to provisions of the bill which\nduction from such leases within the period of an extension. Additional\nwould create a new program of grants to adjacent coastal States and\nprovisions are included in section 206 to assure full development and\nthereby divert revenues from the U.S. Treasury. Receipts under the\nmaximum production from OCS leases, Secretarial unitization or coopera-\nOCS Lands Act from OCS oil and gas leases belong to the Federal\ntion or pooling agreements, and review authority for development plans.\nGovernment and curently make a substantial contribution to Federal\nIn our view \"net profit\" bidding is permitted under the present Act\nincome. If such revenues were diverted to coastal States, as new\nsubject to certain non-objectionable limitations. We are continuing\nsection 25 of the Act would provide (page 18, line 10 through page\nto evaluate the desirability of \"net profit\" and other forms of\n19, line 20), the Federal Government would need to increase its income\nbidding.\nfrom other sources. In effect, the bill increases Federal expenditures\noutside the normal budget and appropriation process, which is both bad\nmanagment and inflationary. It results in an inflexible allocation\nof funds to such States without regard to need or resources and also\nfractionates efforts to address the environmental, social and enconmic\nproblems of OCS energy development.\nFORD is LIBRARY DERALD\n58\n59\nMiscellaneous. Sections 301 and 302 of the bill require several\nSTATEMENT OF THE HONORABLE RUSSELL W. PETERSON,\ninvestigations and studies as to which attention is already being\nCHAIRMAN, COUNCIL ON ENVIRONMENTAL QUALITY\ndirected. The authority conferred is redundant and poses the\nBEFORE THE SUBCOMMITTEE ON MINERALS, MATERIALS,\npotential of confusing current authorities and efforts.\nAND FUELS OF THE SENATE COMMITTEE ON\nINTERIOR AND INSULAR AFFAIRS\nIn regard to section 302, we have been studying and monitoring shut-in\nand flaring wells under the OCS Lands Act and have furnished information\nto the Congress on this subject.\nMay 10, 1974\nSincerely yours,\nMr. Chairman and Members of the Committee:\nRoyston C. Hughes\nI am pleased to appear here today to discuss the\nAssistant Secretary of the Interior\nstudy on Outer Continental Shelf oil and gas which the\nHonorable Henry M. Jackson\nChairman, Committee on\nCouncil on Environmental Quality has recently completed and\nInterior and Insular Affairs\nUnited States Senate\nhow that study relates to the legislation on this subject\nWashington, D.C. 20510\npending before the Committee.\nOn April 18, 1974, the Council submitted to the\nPresident the results of a one-year study which had been\nprepared at his request. Although we have made the report\nOCS OIL AND GAS - AN ENVIRONMENTAL ASSESSMENT available to\nthe committee, I would like to submit a copy of the report\nfor the record.\nIn my April 24, 1974 testimony before the Senate\nCommerce Committee's hearings on National Oceans Policy, I\nsummarized the findings and recommendations of CEQ's report.\nI understand that the Committee on Interior and Insular\nAffairs is participating in that study so there is no need\nfor me to repeat that summary here. I have attached a\n60\n61\nsummary of detailed findings of CEQ's study to my statement\nAs a result of the study, the Council developed the\nfor the record.\nfollowing ranking of relative environmental risks, ranging\nThis report was intended to advise the President on\nfrom lowest to highest, associated with potential oil and\nthe relative risks of oil and gas development in the\ngas operations in the Atlantic and Gulf of Alaska outer\nAtlantic and Gulf of Alaska outer continental shelves (OCS)\ncontinental shelves:\nand to suggest ways in which the risks can be minimized or\nEastern Georges Bank (East of 68° W; EDS 1 and 2)\nprevented.\nSouthern Baltimore Canyon (South of 37° N; EDS 9)\nTo carry out this assessment, the Council undertook\nWestern Georges Bank (West of 68° W; EDS 3 and 4)\nCentral Baltimore Canyon (Between 37° and 39.5°\nstudies in a number of areas. Both offshore and onshore\nN; EDS 6,7, and 8)\nimpacts of oil spills and discharges and of other OCS-related\nNorthern Baltimore Canyon (North of 39.5° N; EDS 5)\nSoutheast Georgia Embayment (EDS 10,11,12,13, and 14)\nactivities were studied. Statistical analyses of oil\nWestern Gulf of Alaska (West of 150° W; ADS 7,8, and 9)\nspill data were performed to identify specific problem\nEastern Gulf of Alaska (East of 150° W; ADS 1,2,3,\n4,5, and 6)\nareas. The movement of oil in the oceans was determined\nThe hypothetical development locations are identified in\nusing computer modeling techniques. The ability of OCS\nFigures 1 and 2 which are attached.\ntechnology and practices to perform safely under hostile weather\nand seismic conditions was assessed. Estimates of potential\nThe ranking is CEQ's best estimate of the overall\noil and gas resources which may be found in the various\nrelative degree of risk to the marine, coastal, and human\nOCS areas were reviewed. The potential benefits of OCS\nenvironment; it is based on an integration of the study's\noil and gas production from those areas in satisfying\nfindings with respect to the effects of development onshore\nregional energy demand were investigated. Finally, the\nas well as of oil spills offshore, incidence of severe\neffectiveness of Federal regulatory and enforcement processes\nweather and seismic phenomena in potential development\nand the broader issues of intergovernmental coordination and\nareas, the state of technology, and projections of regional\nplanning were examined.\nenergy needs.\n63\n62\nThe Council also concluded that the Federal Government\nSanta Barbara, it is argued by some, was a critical\nmust be guided by and committed to a set of essential principle:\nstep in catalyzing general public reaction to the many\nin choosing areas to lease and in administering environ-\nenvironmental problems we face. Although the Outer\nContinental Shelf Lands Act of 1953 was passed long before\nmentally safe offshore operations.\nthe environmental awareness of the past few years, the Act\nNow I would like to turn to the relationship between\nhas effectively been \"amended\" by recent legislation. The\nthe CEQ study and the legislation pending before the\nNational Environmental Policy Act of 1969 sponsored by this\nCommittee. As Under Secretary Whitaker indicated before\nCommittee and three 1972 laws -- the Coastal Zone Management\nthe Committee on May 6, the Administration recommends\nAct, the Federal Water Pollution Control Act Amendments,\nagainst enactment of the bills before the Committee at\nand the Marine Protection, Research and Sanctuaries Act --\nthis time. The Council agrees with many of the objectives\nhave required incorporation of more responsive environ-\nof the bills, recognizing as they do the need for\nmental objectives, procedures, and practices into the\nenvironmental protection of our marine, coastal, and onshore\nadministration of the Outer Continental Shelf Lands Act.\nresources. It does not appear necessary or desirable,\nhowever, to enact these bills in order to ensure that the\nThe CEQ study found that consistent application of\nenvironmental risks of OCS oil and gas operations be made\nseveral guiding principles in OCS leasing and development\nacceptable.\ncan significantly reduce the risk to every element of the\nProgress has been made by the offshore oil and gas\nenvironment. These principles which interpret and amplify\nindustry in improving technology and work practices since\nprinciples implicit in the environmental legislation\n1969 Santa Barbara accident. In addition, more stringent\nrecently enacted include:\nFederal regulations for OCS operations have been issued and\nExploration and development of the OCS must take\nplace under a policy which puts very high priority\nenforcement of these regulations has been strengthened.\non environmental protection.\n64\n65\nThe location and phasing of OCS leasing should be\nthe several OCS areas we studied strongly recommends that\ndesigned to achieve the energy supply objectives\nthese differences be fully recognized in the evolution of\nof the leasing program at minimum environmental\nrisk.\nan OCS leasing program. Second, the recent revision of\nThe best commercially available technology must\noil and natural gas resource estimates to lower values adds to\nbe used to minimize environmental risks in new\nOCS areas.\nthe growing recognition that we must plan now to use our\nRegulatory authorities available to Federal agencies\nlimited petroleum resources more carefully in the future.\nmust be fully implemented and requirements strictly\nenforced to minimize environmental risks in new\nFor any type of resource development, the risks and costs must\nOCS areas.\nbe balanced with the benefits to be gained. The Council\nPlanning at all phases of OCS oil and gas operations\nmust respect the dynamic relationship between\nbelieves that when the risk of developing OCS oil and gas\ninitial Federal leasing decisions and subsequent\nstate and local community action. The states and\nbased on our current state of knowledge and technology -- is\nthe communities affected must be given complete\ninformation as early as possible so that planning\ngreater than that of an available alternative, then we\ncan precede and channel the inevitable development\npressures. Experience must be continuously\nshould not move ahead until we know more and can do better.\nintegrated into the management process.\nMost of the bills before this Committee do recognize the\nThe Council strongly encourages the Department of\nneed to incorporate environmental factors into our OCS leasing\nInterior and other Federal agencies with responsibilities\ngoals. Some place more emphasis on avoidance of oil and gas\nin the OCS to fully consider these principles in their\noperations in environmentally hazardous OCS areas than\npolicies and program.\nothers. Some seem to place primary emphasis on accelerated\nI would now like to comment on some of the specific\ndevelopment of the OCS with environmental protection added as\nprovisions in the proposed bills and point out sections of\nan afterthought.\nour report relating to the provisions.\nLeasing Program Goals\nTwo findings of the CEQ study strongly emphasize the\nneed for a well-planned leasing OCS program. First, the\nsignificant differences in relative environmental risks among\n38-533 o 74 5\n66\n67\nThe Council strongly recommends a balanced approach --\nCEQ is working with the Department of Interior and\none where measures for expanded energy supply are balanced\nother Federal agencies to determine if there are environ-\nwith measures for environmental protection. If the risk\nmental benéfits and costs which derive from specific features\nfrom OCS development is acceptable, the Council believes\nof alternative leasing arrangements and, if negative impacts\nthat we should proceed with caution and with a commitment\nmay occur, how they can be kept at acceptable levels.\nto prevent or minimize damage.\nFederal OCS Responsibility\nOur recommendations to the President and the affected\nIn OCS OIL AND GAS - AN ENVIRONMENTAL ASSESSMENT,\nFederal agencies were designed to bring about such a\nwe pointed out that in the past the industry has in effect\nbalance. This balance can be accomplished within the\ndetermined the information needs for OCS leasing. We\nexisting legislative framework. We will be working with the\nindicated that\nDepartment of Interior and other Federal agencies to see\n\"Industry's incentives, however, are\nnot always sufficient to generate all\nthat it is achieved.\nthe data necessary for effective environ-\nmental regulation. Prior to a lease sale,\nAlternative Leasing Arrangements\nindustry understandably concentrates on\nThe Council did not conduct a detailed study of alternative\nobtaining and analyzing data that locate\npetroleum deposits. The unavailability of\nhigh-resolution seismic data to USGS before\nOCS leasing arrangements. During the seven public hearings\ncompleting the final environmental impact\nstatement is due in part to the fact that\nwhich we conducted last September and October, we heard\nthe companies have little economic\nincentive to acquire such costly data until\ntestimony from a number of witnesses on a number of proposed\nafter tracts are finally selected. After\nthe lease sale, moreover, there is little\nmodifications to the existing leasing system. In our\neconomic incentive for industry to acquire\ndata solely for assessment of environmental\nanalyses we could not identify significant differences in\nrisks.\nenvironmental effects resulting from different leasing\nNumerous suggestions have been made in various studies\narrangements. Therefore we felt that, while consideration\nand in our public hearings for making more information and\nof these issues in the evolution of national energy policy\nanalyses available to the Government and public.\nis essential, they did fall outside of the scope of our\nmandate.\n68\n69\nIn our report, the Council recommended that the\nStudies of seismic and bottom conditions soon to be\nDepartment of the Interior determine the kinds of information\nundertaken in the Gulf of Alaska by the U.S. Geological\nand analyses necessary for adequate assessment of environmental\nSurvey are directly responsive to the Council's concern\nfactors at all stages of leasing and development. The Depart-\nwith the potential impacts of geological hazards on offshore\nment should take appropriate measures to obtain such infor-\noperations in that area.\nmation, including acquisition and analysis of high-resolution,\nnear-surface seismic reflection data for the purpose of\nAdequacy of OCS Technology and Practices\ndetermining the nature and magnitude of geologic hazards\nAs I stated above, the offshore oil and gas industry\nprior to tract selection.\nand Federal regulatory agencies have made real progress in\nThe Council also recommends that the Department of\nthe past several years. However, our report has found that\nInterior consider the competitive consequences, at different\noperations in both frontier OCS regions would confront\nstages in the process, of requiring disclosure of certain\nharsher conditions than have been previously faced in\nindustry data and analyses. The department should weigh\nother United States offshore areas and that conditions in\nthose consequences against the benefits to be obtained and\nthe Gulf of Alaska are more severe than the industry has yet\ndevelop standards for governing such disclosure. In making\nexperienced anywhere in the world.\nthat balance, it should consider particularly the need\nStorm conditions in parts of the Atlantic may be more\nfor informed public participation in the NEPA process.\nsevere than in the Gulf of Alaska or the North Sea. Average\nAs Under Secretary Whitaker pointed out on Monday, the\nweather conditions generally will be worse, though, in the\nOCS Lands Act allows the Department of Interior to require\nGulf of Alaska.\nlessees to provide the Secretary with copies of all data\nobtained during exploration. The Department will soon\npublish proposed rulemaking on this matter in the Federal\nRegister.\n70\n71\nEarthquakes and tidal waves also present serious\nThe Council recognizes the important role of research\nproblems in the Gulf of Alaska with large (Richter magnitude 7)\nand development in bringing into use more environmentally\nearthquakes expected every 3 to 5 years and giant (Richter\nprotective OCS technologies. We have purposely called for\nmagnitude 8) earthquakes expected every 25 years in the\nthe development of performance requirements which will\narea where oil and gas development has been proposed.\nencourage the development and early adoption of safer equip-\nBased on our evaluation of OCS technology to meet\nment and facilities, rather than lock the industry into a\nthe conditions which would be confronted, the Council made\nstatic technology. Specifically, we have called for the\na number of recommendations to the Federal agencies responsibl\nuse of the best commercially available technology in critical\nfor establishing standards and procedures for OCS operations.\nOCS operation and, and at the same time, we encourage the\nThe recommendations are grouped in three major\nindustry to do better.\nareas -- improved consideration of the human element in\nThe technology assessment and technical recommendations\nOCS equipment design and operating practices, improved\nin our report cover most of the research and development topics\ntechnology to meet the harsher conditions of the Atlantic\nidentified in S.3221.\nand Gulf of Alaska OCS, and improved technology and\nThe Council feels that its recommended actions can\npractices to minimize the impacts in virgin OCS areas. The\nbe accomplished under the existing legislative framework.\nspecific recommendations are detailed in the attached\nIf technology R&D and performance testing are required in\nsummary. The Council believes that adoption of these\ncarrying out the recommendations as we anticipate they\nrecommendations would substantially reduce the risk of\nwill, then we believe that the industry should bear the\noperations in the new OCS areas.\ncost of the R&D with the Federal government conducting\nindependent evaluation of equipment and facility\nperformance.\n73\n72\nAt least three states -- Maine, Massachusetts, and\nOil Spill Liability\nFlorida -- have enacted legislation providing for oil\nIn its assessment of oil spill liability coverage,\npollution liability. Unlike the Federal measures, all\nthe Council found that there was no private party recovery\nthree allow private parties recovery for pollution damage\nunder Federal law for pollution damage from non-vessel or\nwithin state jurisdiction (i.e., within 3 miles of the\nnon-oil-vessel pollution sources. Interior Department\ncoast). But most states have not provided for oil spill\nregulations issued under the OCS Lands Act make lessees\nliability. Although additional state action may be useful,\nfinancially responsible for total removal of pollution\nthe Council believes economic and administrative con-\nfrom drilling and production operations. If the lessee\nsiderations in ensuring adequate compensation and financially\ndoes not take necessary cleanup measures, the Geological\nresponsible defendants make uniformity desirable.\nSurvey's area supervisor is authorized to do so at the\nThe Council in its report recommended that a compre-\nlessee's expense.\nhensive Federal liability system for OCS-related oil\nSimilarly, the Federal Water Pollution Control Act\nspill cleanup and damages be established through new\nprohibits certain discharges of oil and hazardous sub-\nlegislation. CEQ believes the Federal Government should\nstances and authorizes Federal Government cleanup at the\ncarefully consider the full economic and environmental.\noperator's expense unless the operator does so properly.\nimplications of various types of liability --- fault or no-\nThese provisions do not apply, however, to offshore\nfault - and various means of ensuring adequate compensation\nfacilities beyond 3 miles of the coast or to any pollution\nsuch as liability insurance for operators or a revolving\ndamage beyond 12 miles.\nfund financed through charges on operators. The Trans-\nAlaska Pipeline Authorization Act is one precedent which\ncertainly bears close study.\n74\n75\nBecause of the scope of the oil spill liability issue\nFirst, such a provision provides a clear channel for\nand the inadvisability of dealing with the complex subject\nremedying violations. Second, such a provision can serve\npiecemeal, the Council does not believe that it is necessary\nto improve administrative effectiveness in developing\nor advisable to amend the OCS Lands Act to add a liability\nregulations and ensuring compliance by keeping Federal\nsection. The Administration is now studying the liability issu\nregulators on their toes. Third, citizen suit provisions\nin a broad context and will carefully assess the merits of\nwould reduce challenges based on complicated legal theories.\nalternative approaches including the possibility of compre-\nOther Federal agencies are opposed to citizen suit\nhensive Federal liability legislation to cover oil pollution\nprovisions because they believe that citizen suits could\nfrom vessels as well as from offshore oil operations.\nlead to unacceptable delays in accelerating leasing and\ndevelopment in the Outer Continental Shelf. Some believe\nCitizen Suit\nthat there are currently available means for legal redress\nThe Council's report stated that citizen suit\nand there is no need to broaden the basis of standing to\nprovisions, which allow interested persons to sue to remedy\nsue to enforce OCS regulations.\nviolation of Federal regulations or permit conditions, can\nprovide a useful compliance mechanism. The Council\nOCS Revenue Sharing\nrecommended that the Secretary of the Interior seek the\nThe Council's report did not address the issue of OCS\nestablishment of such a right under the OCS Lands Act.\nrevenue sharing. We did recognize the critical need for\nAs you know, the Administration opposes amending the\nclose cooperation between the Federal Government and the\nOCS Lands Act at this time. This position includes the\ncoastal states to minimize the adverse impacts of onshore\ncitizen suit provision. The Council, however, believes\ndevelopment induced by OCS oil and gas operations. The\nthat a citizen suit provision is a beneficial feature for\nCouncil recommended expanded use of the NEPA process and\nthe Coastal Zone Management Act and future use of a land use\nseveral reasons.\nplanning act as three mechanisms for facilitating the\nrequired coordination.\n76\n77\nThe Coastal Zone Managment Act may be the best\nSummary of Specific Findings\nmechanism for routing Federal assistance to the states to\nundertake advanced planning for onshore development. In\nProbability and Fate of Oil Spills\naddition, as our report points out states can strengthen\nA comprehensive analysis of oil spill data for\noffshore platforms, pipelines, and tankers was performed\ntheir coastal zone management programs by developing\nby ECO, Inc., and the Massachusetts Institute of Technology.\nThis analysis indicated that, for a given size of oil field,\nspecial technical expertise on all phases of OCS develop-\noil spills are highly likely during the life of an oil field.\nFor example, if a medium sized field (two billion barrels\nment and its onshore and offshore impacts. Funding for such\nin place) is discovered and produced, it is likely that one\nlarge platform spill (over 1,000 barrels) and either one\nefforts can come from general revenue sharing, specialized\nlarge pipeline spill if pipeline transportation is used or\nnearly two large tanker spills if tanker transportation is\nFederal assistance, or increased tax and other economic\nused will occur during the life of the field. More spills\nwould likely occur in large fields; fewer spills would\nbenefits accruing from onshore development.\noccur in smaller fields. Smaller spills are likely to\noccur more frequently, e.g., although during the life of\na medium-sized field only one large platform spill is\nThe Council hopes that its report and the companion\nlikely to occur, over 33,000 barrels -- mostly from small\nspills -- are likely to be released from platforms\nvolumes detailing the study of onshore impacts can be of\nduring the same period.\nassistance to states and local communities in anticipating\nThe potential impacts of OCS operations on the ocean\nand coastal environment depends in part on where oil\nplanning needs. Through long-range and dynamic planning,\nreleased in the ocean travels and how it weathers. The\nmovement of oil spilled into the ocean was determined by\nwe believe that states and local communities can avoid\nthe Massachusetts Institute of Technology using computer\nmodeling techniques. This model calculates the probability\nunbearable sudden increases in planning and\nof oil coming ashore from hypothetical oil and gas resource\nlocations (see section on OCS Resources) and, to test the\nimplementation costs.\nsensitivity of results to specific spill location, from\nvarious points closer to and farther from the coast. Wind\nSummary\nand current data are used so results could be presented in\nterms of the percentage of the time that an oil spill would\nThe Council believes that these hearings are very\nbeach during the \"best\" and \"worst\" seasons. For all sites\nconsidered, spring and summer tend to be the worst seasons.\nuseful in opening for public scrutiny the important public\nThe results of the modeling for the Atlantic are presented\nin Table 6-1. Similar results are given in the report for\npolicy questions surrounding the development of OCS resources.\nthe Gulf of Alaska.\nI hope that this discussion of the relationship between\nThe results presented below are based on hypothetical\noil spills released from platforms, pipelines, and tankers\nour report and the bills pending before the Committee\nin or near potential oil fields. Further, it is assumed, in\nthese examples, that oil spill contaiment and cleanup\nhas been of assistance.\nsystems are not deployed to mitigate the impact of the spills.\n78\n79\nFor the Georges Bank area, the probability of oil\nspills reaching shore from the hypothetical sites in the\nOffshore Impacts of OCS Development\neastern Bank (EDS 1 and 2) is low -- 15 to 20 percent in spring,\nthe worst season. Closer to shore in the western Bank\nThe Council found that significant adverse ecological\n(EDS 3 and 4) the probability reaches 35 to 50 percent in\nimpacts can result from accidental oil spills, continuous\nthe spring.\ndischarges of oil from platforms and ships, and construction\nactivities. Significant impacts can be mitigated or\nFor the Baltimore Canyon area, the probability of oil\neliminated, however, by proper siting, stringent environmental\nbeaching varies widely. In the southern part of the area\ncontrols; careful construction and operation, and adequate\n(EDS 9), the probability is nearly zero in all seasons.\nbaseline studies and monitoring to identify areas to be\nIn the central part (EDS 6,7, and 8), it reaches 20 percent\navoided and additional measures needed.\nin the spring. In the northern part (northof EDS 5),\nit increased dramatically as the release site was\nThe study found that there are two major types of\nmoved closer to Long Island, especially during the summer.\ncauses of impacts on marine and coastal biology. There\nAt the site 50 miles from shore, the probability is only 10\nare transient causes such as (a) impacts of oil spills,\npercent; at 25 miles it has increased to 75 percent, and at 10\nand (b) impacts of platform construction and pipelaying.\nmiles it has risen to 95-100 percent.\nEqually important, though, are operational causes such as\n(a) discharge of oil from platforms; (b) discharge of\nFor the Southeast Georgia Embayment, a similar pattern\ndrilling muds, cuttings, etc., and (c) discharge of oily\nwas found for oil releases from all sites -- in the spring,\nballast from tankers.\nthere is a 95-100 percent probability of oil reaching shore\nfrom all of the sites.\nTo analyze the ecological effects of oil spills and\ndischarges and construction activities, CEQ contracted the\nTwo different patterns of oil spill behavior emerged\nMassachusetts Institute of Technology. In predicting the\nin the Gulf of Alaska. In the western Gulf (ADS 7,8, and 9),\nimpact of oil spills and discharges on marine organisms,\nthe probability of oil coming ashore was relatively low\nMIT considered both initial impacts and population\n5 to 10 percent in summer, the worst season, except for\nrecovery. Five types of effects were identified -- direct\nrelease sites near to shore in the vicinity of ADS 7.\nlethal toxicity, sublethal effects, coating, tainting,\nDuring other seasons, the probability of oil going ashore\nand habitat changes.\nfrom these sites is near zero. In the eastern Gulf, however,\nthe probability is 95-100 percent in the summer for all sites\nAn important consideration is the persistence of 011\nin the marine or coastal environment. Although previous\nand 40-75 percent even in winter, the best season.\nestimates of oil persistence in different environments\nhave not been based on careful, quantitative analysis,\nBecause of uncertainty in wind and current data, these\nmodeling results should not be interpreted as exact\nthey do indicate that oil probably persists much longer\nin salt marshes with soft sediments (up to 10 years) than\npredictions of the movement of oil in the marine areas\nstudied. The results do indicate reliable trends which are\non rocky shores or coarse sediments (a few months). The\nadequate for identifying problem areas. The computer modelin\ndegradation and weathering of the oil depends on a\nnumber of factors such as temperature, turbulence, sunlight,\ndoes not consider the use of oil spill containment and clean-\netc. It does appear that oil would persist longer in the\nup equipment.\nGulf of Alaska than in the Atlantic.\nThe study found that oil spills can be a \"considerable\npotential threat\" to breeding flocks or other aggregations\nof birds. Birds are most susceptible to coating with oil\nwhich increases heat losses from the body and often leads to\ndeath because of exposure. Both Atlantic and Gulf of\nAlaska coastal areas provide wintering, breeding, and\nfeeding grounds for thousands of species of birds. In the\nGulf of Alaska, over 200 species are found along the coast,\nincluding whole populations of some species such as the\nendangered Dusky Canada goose.\n81\n80\nOil spills and discharges can also threaten fish populations\nOnshore Impacts of OCS Development\nfound that finfish and shellfish in the larval stages\nThe Council found that there were two major causes\nMIT particularly susceptible if oil, even at low concentrations, oil can\nof onshore impacts induced by OCS oil and gas operations\nare enters spawning or nursery areas. The presence of in\nin coastal communities: construction and service for\ninhibit or prevent homing or spawning behavior\noffshore operations, and industrialization based on the\nalso anadromous species such as salmon. The report identifies each\nlanding of the oil and gas (oil storage and refining,\na number of potentially threatened fish species in of\ngas process, and petrochemical processing). The induced\nthe potential OCS areas.\nonshore activities can have both positive and negative\neffects on the coastal communities affected. These effects\nThe study discusses recovery from the effects of oil\ninclude demographic, economic (jobs and value of output),\nspills and concludes that some biological populations,\nphysical (water demand, electrical requirements, houses\nincluding some species of birds and anadromous fish, may\nand offices), social (schools, hospitals, police, etc.),\nrequire many years to recover from the results of a spill.\nand environmental (air and water pollution, solid waste\ndisposal, land use).\noil spills can threaten not only biologically productive\ncoastal wetlands and salt marshes but also beaches and\nThe nature and magnitude of the impacts depend on\nrecreational areas.\nmany factors - the level and location of OCS oil and gas\nproduction, the nature of the area where induced develop-\nEffects of pipeline construction through coastal wetlands\nment is located, the extent of state and local planning\nalso considered. Measures to minimize the physical\nefforts to cope with the development. Based upon a number\nwere and biological impacts were suggested; avoidance of pipeline\nof necessary assumptions which are described in the report,\ncorridors in environmentally sensitive areas was recommended.\nthe Council analyzed the impacts upon\nsample areas along the Atlantic, the Gulf of Alaska, and\nTo support the study of the biological effects of oil,\nthe west coast. In particular, four sample areas were\nenvironmental resource inventories in the OCS areas studied\nchosen along the Atlantic: Bristol County, Mass.; Cape\nwere compiled and assessed. Providing the inventories\nMay and Cumberland Counties, N.J.; Charleston, S.C., and\nto MIT were the Research Institute of the Gulf of Maine\nJacksonville, Fla. Two areas -- Cordova and Valdez were\n(TRIGOM), the University of Rhode Island, the Virginia\nchosen in Alaska and two Puget Sound and San Francisco --\nInstitute of Marine Sciences (VIMS) and the University of\nwere chosen on the west coast.\nAlaska. Many important data were not available such as\ndata on species life histories, effects of oil at various\nIn general, the Council found that local impacts were\nstages in the life cycles, and wildlife, bird, and commercial\nmuch more substantial than regional impacts. Economic impacts\nfisheries, especially for the Gulf of Alaska.\nrange widely. For example, by the year 2000, as many as\n75,000 jobs could be created in the Charleston sample area\nwhile only 20,000 could be created in Bristol County, Mass.,\nassuming high levels of OCS production. Significant shifts\nin the size and nature of the local population could occur\nfrom larger economic impacts. The areas studied in Alaska\nand Charleston, S.C, could be subjected to greater economic\nand demographic impacts as a result of OCS-related activities.\n38-533 o 74 6\n83\n82\nStatus of Technology\nThe study indicates that impacts on the social\ninfrastructure of the sample areas may be significant.\nThe Council found that the performance of the offshore\nThe demand for services -- hospitals, schools, housing,\ntransportation, sewage treatment, and public utilities\noil and gas industry has improved substantially since\nmay be difficult to meet. The sample areas with greatest\nSanta Barbara. In addition, more stringent Federal regulations\nfor OCS operations have been issued and Federal enforcement\nwater supply problems are San Francisco and Southern New\nof these regulations has been strengthened.\nJersey, although Charleston would also have significant\nproblems.\nOperations in the two frontier OCS areas, however, will\nLand suitable for primary industrial development\nconfront harsher conditions than have been previously faced\nin other areas. The study points out that storm conditions\nappears adequate along the Atlantic. Such land may not\nin parts of the Atlantic may be more severe than in the\nbe widely available in the Alaskan, San Francisco, and\nGulf of Alaska or the North Sea. Weather conditions\nPuget Sound areas because of environmental, locational,\nand topographical constraints. Even along the Atlantic,\ngenerally will be worse, though, in the Gulf of Alaska.\nEarthquakes and tidal waves also present serious\nwetlands, national parks and seashores, and coastal\nrecreational areas significantly reduce the land avail-\nproblems in the Gulf of Alaska with large (Richter\nmagnitude 7) earthquakes expected every 3 to 5 years and\nable for both primary industrial and general development.\ngiant (Richter magnitude 8) earthquakes expected every 25\nWithout careful planning and controls, land development\nyears in the area where oil and gas development has been\ncould significantly impact wetlands, parks, and recre-\nproposed.\national areas as well as destroy important pristeen\necosystems.\nAs indicated in the section on Probability and Fate\nThe study indicated that air and water pollution are not\nof Oil Spills, oil spills are highly likely during the life\ngenerally expected to be significant because of increased\nof an oil field unless significant improvements are made in\nuse of emission and effluent control technologies. In\nOCS technology and practices.\nselected locations, hydrocarbon emissions and BOD levels\nmay rise due to concentration of refineries and petrochemical\nThe Council made recommendations in three major\nindustries. In these areas, decreased hydrocarbon emissions\nareas -- improved consideration of the human element in\nas a result of auto emission controls would be offset by\nOCS equipment design and operating practices, improved\nnew sources of hydrocarbons, especially from refineries.\ntechnology to meet the harsher conditions of the Atlantic\nWhere significant increases in population are anticipated,.\nand Gulf of Alaska OCS, and improved technology and\nas in Charleston, auto emissions may also be a factor.\npractices to minimize the impacts in virgin OCS areas.\nThese recommendations are summarized below:\n1.\nImproved consideration of the human element in\nOCS equipment design and operating practices\n--- Incorporation of human factors engineering\ninto OCS equipment design\nCertification of critical OCS operating\npersonnèl\n85\n84\nInstitutional and Legal Mechanisms for\nImproved technology to meet harsher conditions\nManaging OCS Development\n2.\nDetailed performance requirements for drilling\nThe Council found that OCS development will vitally\nplatforms\naffect important state interests, and state regulatory\nauthorities can significantly shape OCS development and\n-- Detailed performance requirements for production\nrelated nearshore and onshore activities. Federal-state\nplatforms\ncoordination is therefore urgently needed. The Council\nrecommended that affected states strengthen their coastal\nDetailed performance requirements for offshore\nzone management agencies, and that Federal agencies\noil storage facilities\ncooperate with them on an ongoing basis. Federal-state\ncooperative efforts should focus on development of state\n-- Use of subsea production equipment where\ncoastal zone plans prior to OCS development. The National\nenvironmental protection would be enhanced\nEnvironmental Policy Act (NEPA) process can be another important\nmeans for Federal-state coordination.\n-- Detailed performance requirements for surface-\nactuated subsurface safety valves\nWithin the Federal government, OCS responsibilities\nare fragmented and there is no formal coordinating mechanism.\n-- Requirement that improved methods of downhole\nEstablishment of the Department of Energy and Natural\npressure measurement be used\nResources could improve coordination. The Council believes\nthat NEPA is the best planning tool for the near term.\n-- Detailed performance requirements for workover\nImpact statements concerning OCS activites should discuss\nand servicing operations on OCS platforms\nalternative uses of specific OCS, nearshore, and onshore\nareas; and all Federal agencies proposing major OCS actions\n-- Detailed performance requirements for OCS\nshould prepare programmatic impact statements on a regional\npipeline protection\nbasis.\n-- Requirement that tankers transporting OCS oil\nThe Department of Intérior has primarily acquired data\nemploy segregated ballast capacity preferably\nin the past with a view to locating productive tracts and\nwith double bottoms\nhas treated industry data as proprietary. The Council\nrecommended that Interior obtain the data necessary to assess\n3.\nImproved technology and practices to minimize\nenvironmental and safety factors at all stages of leasing\nimpacts in virgin OCS areas\nand development, and develop standards to govern public\ndisclosure of such information.\n-- Identification of critical environmental areas\nand incorporation of appropriate measures in\nThe effectiveness of OCS inspections was\nNational Oil Pollution Contingency Plan\ncriticized in a recent GAO report, and an in-house Interior\nstudy has found existing enforcement sanctions inadequate\n-- Establishment of effluent standards for waste\nto deter violations. The Council recommended that Interior\nwater discharge from OCS facilities, including\npropose more stringent sanctions and establish and train\ninstallation of best commercially available\ninspection teams as necessary to verify compliance.\ncontrol technology to minimize oil discharge\nThe major gap in the liability system concerns\nDevelopment of detailed guidelines for disposal\nprivate party recovery of damages from non-vessel-source\nof drilling muds, cuttings, etc.\npollution. The Council recommended that establishment of\na comprehensive Federal liability system for OCS-related\nContinuation of efforts to improve oil spill\noil spill cleanup and damages through new legislation.\ncontainment and cleanup capability\n-- Advanced planning for pipeline corridor siting\nand designation of corridors which minimize\nintrusion into environmentally sensitive\n86\n87\nOCS Resources\nPerspectives on Energy Growth\nAlthough the presence of oil and gas in the Atlantic\nThree energy growth scenarios are examined for the\nand Gulf of Alaska OCS has not been confirmed by exploratory\nnation, and for the New England, Middle Atlantic, South\ndrilling, geological and geophysical. investigations indicate\nAtlantic and West Coast Regions. For all three scenarios\nthat conditions favorable to the accumulation of large\nincluding the low growth* case, existing domestic oil and\nreservoirs of oil and gas exist in parts of the Atlantic\ngas sources will have to be supplemented by imports,\nand Gulf of Alaska. Exceptionally thick sediment beds\nsynthetic oil and gas produced from coal and shale, and\n(potential sources of hydrocarbons) and potential geological\noil and gas produced in new areas.\ntraps occur in the Baltimore Canyon and Georges Bank. Some\nextremely large potential geological traps and thick sedi-\nOn the East Coast, OCS oil and gas could replace\nments occur in the Gulf of Alaska.\nimported oil and gas and domestic coal in the primary fuel\nmix. Assuming medium energy demand growth and average\nRecent estimates by the U.S. Geological Survey indicate\nGeorges Bank production estimates, the New England region\nthat the Atlantic OCS may contain 10 to 20 billion barrels\nmay obtain 30 percent of its crude petroleum and 70 percent\nof undiscovered economically recoverable petroleum liquids\nof its gas from the Georges Bank by 1985. The Baltimore\n(crude oil and natural gas liquids). The Atlantic OCS may\nCanyon may provide 13 percent of the oil and 10 percent of\nalso contain 55 to 110 trillion cubic feet of natural gas.\nthe gaseous fuel requirements for the Mid-Atlantic by 1985.\nEstimates of oil and gas resources in the Gulf of Alaska\nProduction from the Southeast Georgia Embayment may provide\nare not as well characterized as those in the Atlantic,\n15 percent of the South Atlantic region's oil requirements\nwith petroleum liquid resources estimates ranging from three to\nand 13 percent of its gas requirements by 1985.\n25 billion barrels and natural gas from 15 to 30 trillion\ncubic feet. The recent U.S.G.S. estimates (March 1974) are\nPacific Coast requirements for additional oil can be\nsubstantially lower than those quoted earlier by the\nmet from the Alaskan North Slope. Production from the\nGeological Survey.\nGulf of Alaska could not be absorbed by the Pacific Coast;\nAlaskan oil would shift to other parts of the country,\nFor purposes of modeling environmental and economic\nparticularly the Midwest.\nimpacts, hypothetical locations of potential oil and gas\naccumulations were developed. The locations, indicated\nAn analysis of the environmental tradeoffs between\nby a circle of 25-mile radius, are shown in Figures 1 and 2.\nOCS oil and gas and increased imports or increased domestic\nThe circles are located in areas where the sediments are\ncoal indicates that oil and gas development on the OCS\nthicker than 10,000 feet and cover one or more attractive\ncould lead to lower oil pollution levels in the oceans\ngeological traps. The locations were developed using\nthan from imported oil. Environmental impacts -- both\npublicly available information only.\noffshore and onshore -- from OCS oil and gas development\nmust be balanced against the impacts resulting from\nincreased coal use such as strip mining and increased air\npollution.\n*CEQ's Half and Half Plan is based on growth in net per capita\nenergy consumption of 0.7 percent per year and on a continuing\nconservation effort which would, through improved efficiency\nand elimination of waste, save energy at a rate of 0.7 percent\nper year. This program -- half growth and half conservation --\nwould provide an effective increase in usable energy of 1.4\npercent per year, equal to the average rate of growth experi-\nenced from 1947 to 1972.\n88\n89\n1\nNEW\nENGLAND\nTROUGH\nSeattle\nBoston\n4 GEORGES 3 2 BANK\nWASHINGTON/OREGON\nLos Angeles\nSan Francisco\nMID-ATLANTIC\nMASSACHUSETTS/\nRHODE ISLAND\nNew York\nNORTHERN\nCALIFORNIA\nTROUGH\nBristol\n5\nWASHINGTON\nWhatcom\nSkagit\n7\n8\nBALTIMORE CANYON 6\n§\n58°\n56°\nWashington\nNEW JERSEY/NEW YORK/\nCross\nSound\nCALIFORNIA\nSolano\nContra Costa\nPENNSYLVANIA/DELAWARE\n200\nMILES 20\n50 KILOME TERS KILOMETERS\nAssumptions\nREGION\nLocality\nHypothetical\nDriling Sites\nCumberland\nCape May\n9\n140°\nw\n$\nCANADA\nR\nS'A\nOF\nSOUTH ATLANTIC\nCULF\n145°\nCordove\nSOUTH CAROLINA/GEORGIA\nValder\nBerkeley\nAtlanta\n12 11 GEORGIA SMBAYMENT\nHinchinbrook\nGULF OF ALASKÁ\nDorchester\nWilliam\nSound\n5\nCharieston\nAnchorage\n6\nAssumptions\nSOUTH CAROLINA/FLORIDA\nNassau\nSt. Johns\n150°\nREGION\nDuval\nClay\nBaker\nL\n13 14\nLocality\nINEM your\n8\nD\nHypothetical\nFigure 1-2. Gulf of Alaska Hypothetical Drilling Sites and Alaska/\nWest Coast Hypothetical Onshore Development Areas\nDrilling Sites\nFigure 1-1. Atlantic Hypothetical Drilling Sites and Hypothetical Onshore Development Areas\n155°\nTEXT\nTrinity\nChiriko\n91\n90\nSTATEMENT OF\nTABLE 6-1\nHONORABLE JOHN R. QUARLES\nDEPUTY ADMINISTRATOR\nProbabilities of Oil Spills Coming Ashore from Hypothetical Spill Sites in the Atlantic Ocean\nENVIRONMENTAL PROTECTION AGENCY\nBEFORE THE\nDistance from shore\nCOMMITTEE ON INTERIOR AND INSULAR AFFAIRS\nShore point\nSeason'\n10\n25\n50\n75\n100\n125\nCenter of EDS\nUNITED STATES SENATE\nmiles\nmiles\nmiles\nmiles\nmiles\nmiles\nWASHINGTON, D. C.\neast\neast\neast\neast\neast\neast\nMAY 6, 1974\nNantucket\nSpring\n65%\n45%\n30%\n25%\n20%\n20%\n15% (EDS 1)\nAutumn\n30\n10\n5\n0-5\n0-5\nNear 0\nNear 0 (EDS 1)\nNantucket Shoals\nSpring\n50\n50\n35\n30\n20\n20\n20 (EDS 2)\n35 (EDS 3)\nWinter\n5\n5\n5\n5\n5\n4-5\nNear 0 (EDS 2)\nMr. Chairman, I am appearing on behalf of the\nNear 0 (EDS 3)\nDavis South Shoal\nSpring\n55\n50\n35\n25\n20\n-\n50 (EDS 4)\nEnvironmental Protection Agency, to discuss the environmental\nWinter\n10\n10\n5\n5\n5\n-\n5-10 (EDS 4)\nGreat South Bay\nSummer\n95-100\n75\n10\n-\n-\n-\n10 (EDS 5)\nissues addressed in the various bills now pending in the\n(Long Island)\nWinter\n30\n15\nNear 0\n-\n-\n-\nNear 0 (EDS 5)\nAtlantic City\nSpring\n-\n20\n25\n15\n-\n-\n20 (EDS 6)\nCongress which would amend the Outer Continental Shelf Lands\nWinter\n-\n0-5\n0-5\n0-5\n-\n-\n0-5 (EDS 6)\nFenwick Island\nSpring\n-\n15\n20\n20\n-\n-\n20 (EDS 7)\nAct of 1953. I am accompanied by Dr. A. Gordon Everett,\nWinter\n-\n0-5\n0.5\n5\n-\n-\n5 (EDS 7)\nChincoteague Inlet\nSpring\n-\n5\n15\n25\n-\n-\n20 IEDS 8)\nDirector, Office of Technology, and Mr. Kenneth E. Biglane,\nAutumn\n-\n0-5\n0-5\n0-5\n-\n-\n0-5 (EDS 8)\nCape Henry, Va.\nSpring\nNear 0\nNear 0\nNear 0\nNear 0 (EDS 9)\nDirector, Division of Oil and Special Materials Control.\n-\n-\n-\nAutumn\n-\nNear 0\nNear 0\nNear 0\n-\n-\nNear 0 (EDS 9)\nCape Romain, S.C.\nSpring\n-\n95\n65\nNear 0\n-\n-\n95 (EDS 10)\nAs this Committee is aware, the search for and develop-\nAutumn\n-\nNear 0\nNear 0\nNear 0\n-\n-\nNear 0 IEDS 10)\nSavannah\nSpring\n-\n95-100\n95\n80\n20\n95-100 (EDS 11)\nment of petroleum and natural gas on the submerged continental\n-\nAutumn\n-\n20\n5\nNear o\nNear 0\n-\n5 (EDS 11)\nFernandina Beach,\nSpring\n-\n95\n55\n20\n0-5\n-\n90 (EDS 12)\nmargins of this country touches on many political, economic,\nFla.\nWinter\n-\n15\n10\nNear 0\nNear 0\n-\n15 (EDS 12)\nDaytona Beach,\nSummer\n-\n-\n-\n-\n-\n-\n50 (EDS 13)\nlegal, and environmental considerations. Our needs for new\nFla.\nAutumn\n-\n-\n-\n-\n-\n-\nNear 0 IEDS 13)\nand more abundant supplies of energy resources are not\n- Computer model not run at this point.\nI Two seasons are listed for each area. In the first season, oil spilled has the highest probability of reaching shore; in the second\nseason, oil spilled has the lowest probability. Probabilities are intermediate in the unlisted seasons.\ninseparable from our needs to preserve our natural environment.\n\"The estimates for Great South Bay are distances south of the bay rather than east.\nSource: The Massachusetts Institute of Technology Department of Ocean Engineering.\nWe must realize, however, that a mere enlargement of energy\nsupplies will only serve to aggravate the misuse and wasteful\nconsumption of energy resources. Energy independence requires\nthat our national efforts be directed toward not only increasing\nenergy production, while minimizing adverse impacts on the\nenvironment, but, more importantly, toward reducing demand.\n92\n93\nThe Congress has demonstrated its concern for the\nother marine resources found in the leasing areas--requires\ndevelopment of resources on the OCS through hearings and\nfull implementation and strict enforcement of the require-\nlegislation. We have before us today seven bills focusing\nments and authorities available to Federal agencies.\nIn\non the Outer Continental Shelf as examples of Congressional\nthis regard EPA has important environmental regulatory\nefforts. These bills embrace several common themes:\nresponsibilities under existing law that have significant\n(1) The need for new energy sources to be recovered\nimpact on the OCS and adjacent shore areas.\nwithout undue risk to the marine, coastal, and\nThe Clean Air Act requires that the States submit\nhuman environments.\nimplementation plans to achieve national air quality standards.\n(2) Proposed alteration and adjustments to be made\nOur authority under the Act will oblige States through their\nin environmental regulatory controls.\nplans to take full account of new energy-related facilities.\n(3) The need for further study and accelerated\nParticular attention will have to be paid to concentrations\ndevelopment of technology which must accompany\nof new onshore facilities for the processing of oil and gas\nthe envisioned expansion of OCS leasing.\nproduction from the Shelf. Under our regulations, concentra-\n(4) Proposed changes in leasing, management, financing,\ntions of new pollution sources must be assessed at the\nand use of Federal revenues.\nearliest planning stages. This is to ensure that the ambient\nI believe that by directing my discussion to those areas\nair quality standards will be achieved and maintained. The\nmost closely relating to environmental concerns, Mr. Chairman,\nAct requires that the best available technology be used for\nI will be able to best present EPA's views on the various\nnew sources of air pollution.\nlegislative proposals that have been made. The bills speci-\nUnder the Federal Water Pollution Control Act and the\nfically dealing with leasing, management, financing, and\nMarine Protection, Research and Sanctuaries Act, a Federal\ndisposition of Federal revenues do not fall within EPA's\nprogram of marine pollution abatement and control was\npurview.\nestablished. EPA sets ocean discharge criteria which are then\nThe need to regulate and manage the uses of natural\nused to evaluate permit applications for the dumping or dis-\nresources-particularly oil and gas on the OCS, but also\ncharge of waste material into the waters of the territorial\n94\n95\nsea, the contiguous zone, and the oceans. We are now\nand coordinated fashion to control, contain and mitigate\npromulgating effluent limitations under the Federal Water\nthe adverse effects of the spill on the ocean and shoreside\nPollution Control Act requiring use of the best practicable\nenvironments.\ncontrol technology by 1977 and best available control\nThe potential danger of environmental damage is\ntechnology by 1983 for discharges into the navigable waters,\ninextricably associated with increased production activity\nincluding coastal waters and from offshore facilities.\non the OCS and serves to underscore the importance of safety\nOne of our continuing concerns is the responsiblity\nand environmental protection programs. Several of the bills\nwe hold under the Federal Water Pollution Control Act for the\nwe are now considering give particular attention to this\ncontrol of oil and hazardous substances spills. Response to\narea. The solution they envision is to be largely accompanied\noil spill incidents and marine disasters creating potential\nby the transfer or partial assignment of many of the authori-\npollution hazards, which occur upon the navigable waters of\nties just described to other Federal agencies. Not only would\nthe United States, adjoining shorelines and the waters of the\nthese assignments lead to needless duplication of effort but\ncontiguous zone is governed by section 311 (c) (2). The\nin many instances such readjustment or diversification of\nNational Oil and Hazardous Substances Contingency Plan prepared\nresponsiblity would lessen the comprehensive treatment now\npursuant to that section delineates procedures, techniques,\nreceived under existing authority.\nand responsibilities of the various Federal, State, and local\nEPA was given the primary Federal responsibility for\nagencies. The Environmental Protection Agency and the United\nS\ncoming to grips with the complex problems of protecting our\nStates Coast Guard have shared the lead in spill control\n12\nnatural environment. Our Agency experience, motivation, and\nprograms in this country's navigable waters. With respect to\n[8\ncompetence in handling this duty are not further encumbered\nthe Outer Continental Shelf, the Department of the Interior,\nof\nby other responsibilities. With respect to the OCS, we see\nU. S. Geological Survey, is the lead agency and provides the\n55\nno reason for a departure from the present system.\nexpertise for oil pollution control programs connected with\nE\nWe cannot agree that these alterations are necessary for\nexploration, drilling, and production operations. In the\nthe accelerated development of the Outer Continental Shelf.\nevent of a Shelf oil spill episode, all three agencies act\nAs indicated earlier in our discussion of the National\npursuant to the National Contingency Plan, in a pre-designated\nContingency Plan, EPA has established a good working\n96\n97\nrelationship with other agencies and the changes contemplated\nEPA is actively working with other Federal agencies\nwould tend to create a confusion over respective areas of\nto identify in order of rank recognizable research needs\nresponsibility detrimental not only to our advances in energy\nand to initiate an integrated approach to achieve these\nproduction but also to the environment.\nresearch goals. Through discussions with the Department of\nEPA's activities have not been solely confined to the\nthe Interior and the National Oceanic and Atmospheric\ndevelopment of response programs or implementation plans. We\nAdministration we have helped to lay the groundwork for the\nare also pursuing a variety of research projects concerning\nestablishment of an interagency team to develop the resources\noil pollution effects in our Office of Research and Develop-\nmanagement data necessary to the responsibilities that each\nment.\nagency has for the OCS. In this effort considerable progress\nIn fiscal year 1973, EPA conducted a $2.14 million-dollar\nis being made. The Environmental Protection Agency is also\nresearch and development program in oil spill containment,\nparticipating as a member of the OCS Resource Management\nremoval and recovery, approximately 30 percent of the budget\nAdvisory Board which was set up through the Bureau of Land\nwas allocated to the completion of an advance testing and\nManagement.\nevaluation facility, for oil spill control equipment.\nWe are pleased to see the bills proposed recognize this\nEPA has also supported a National Academy of Sciences\nimportant research-gathering need New legislation is not\nworkshop on Input, Fates and Effects of Petroleum in the\nrequired because existing authority is currently adequate.\nMarine Environment. This report is now in the process of\nWe at EPA believe that the end product of the organiza-\nbeing published and will provide an up-to-date overview of\ntion, planning, and study already a part of the existing\nthe results of recent research in this area.\nOuter Continental Shelf development program will be an\nThe importance and availability of adequate baseline\nimprovement in the quality and scope of management of both\nand resources management data prior to commencement of pro-\nrenewable and non-renewable resources. Such data will also\nduction activities which may alter the existing conditions\nimprove the quality of environmental impact statements and\ncannot be overemphasized. Such data should include food-\nshould do much to aid the progress of energy development by\nchain effects, geological data, physical, meteorological,\nremoving the problem areas and gaps in information prior to\nand oceanographic information.\nthe review and evaluation stages.\n38-533 o 74 7\n98\n99\nIn summary, Mr. Chairman, we would recommend that the\nproceeds in an environmentally sound manner. We agree that\npresent environmental regulatory scheme and assignment of\ncontinuing research and monitoring activities are necessary\nauthority be kept intact. The legislative remedies suggested\nbut again the authorities presently available should be\nfail to consider the existing framework of environmental\nexpanded rather than readjusted.\nauthorities and responsibilities now established. The\nThis concludes my prepared statement, Mr. Chairman.\nexperience and progress being made today in the administration\nMy colleagues and I will be pleased to answer any questions\nof the Outer Continental Shelf Lands Act as well as the\nthe Committee might have.\napplication of other authorities held by the various agencies\nThank you.\nargue strongly against restructuring the present mechanisms\nWe have good working relationships with the Department of the\nInterior, the National Ocean and Atmospheric Administration,\nand the Coast Guard. Should these relationships be realigned\nas a result of amendments and alterations to the present law,\nthe possibility for confusion, delay of present efforts and\neven possible cross-purposes between regulations exercised by\none agency and permit requirements issued by another is a most\nlikely consequence. As we are committed to maximizing protec-\ntion of the environment while pursuing increases in energy\nproduction, our goal must not be endangered or delayed by\nneedless reorganization.\nThe Environmental Protection Agency agrees that new\nenergy sources must be found and developed to meet this\ncountry's growing demands for energy. The balance must be\nstruck with the dual need to ensure that the development\n100\n101\nto contain and remove pollutants. This arrangement has worked\nOf\nDEPARTMENT\nwell and we see no reason to change existing responsibilities\nOFFICE OF THE SECRETARY OF TRANSPORTATION\nCOMMITTEE\nfor the containment, removal, and investigation of oil spills\nWASHINGTON, D.C. 20590\non the OCS. We presently have this responsibility for the\nUNITED STATES of AMERICA\nterritorial sea and the contiguous zone under section 311 of the\nMAY 9 1974\nFederal Water Pollution Control Act (FWPCA), and Title I of the\nPorts and Waterways Safety Act. We also have the experience\nand expertise in, as well as the personnel and resources available\nHonorable Henry M. Jackson\nfor, oil spill containment, and removal for the coastal marine\nChairman, Committee on Interior and Insular Affairs\nenvironment generally. (See, for example, the Intervention on\nthe High Seas Act, and the Oil Pollution Act of 1961.)\nUnited States Senate\nWashington, D. C. 20510\nWe are also concerned about the personnel safety aspects of\noffshore drilling operations. The regulation of oil production\nDear Mr. Chairman:\nfacilities themselves belongs within the expertise of the U. S.\nWe would like to take this opportunity to offer the views\nGeological Survey in DOI. However, we must be assured that we\nof the Department of Transportation on S. 3221, a bill\nwill have adequate authority to inspect facilities for fire\nsafety, evacuation, and other maritime related personnel safety\n\"To increase the supply of energy in the United\ninterests consistent with the authority established in the OCS\nStates from the Outer Continental Shelf; to amend\nLands Act. Similarly, our aids-to-navigation authority under\nthe Outer Continental Shelf Lands Act; and for\nthat Act and under title 14, United States Code, must remain\nundisturbed.\nother purposes.\"\nand S. 2858 and S. 2922, similar bills entitled the \"Outer\nThe Office of Management and Budget advises that, from the\nContinental Shelf Safety Act of 1974\" and the \"Outer\nstandpoint of the Administration's program, there would be\nContinental Shelf Lands Act Amendments of 1974\" respectively.\nno objection to the submission of this report to the Committee.\nThe purpose of these bills is to make oil and natural gas\nresources in the Outer Continental Shelf (OCS) available as\nSincerely,\nrapidly as possible, consistent with the need for orderly\nresource development and protection of the environment.\nThe Department of Transportation objects to enactment of the\nRayleyt Rady Rodney E. Eyster\nblayst\nbills, particularly with regard to the application of environ-\nmental protection and marine safety regulations to the OCS,\nGeneral Counsel\ndue to their failure to reflect and conform with the established\nresponsibilities of this Department for: (1) pipeline safety;\n(2) prevention, containment, and removal of oil spills; and,\n(3) marine safety and navigational aids.\nWith regard to pipeline safety, we are opposed to any provision\nwhich would remove from this Department the responsibility for\nsafety of oil and gas pipelines and storage facilities which are\nconsistent with existing laws.\nThe bills S. 2858, S. 2922, and S. 3221 would assign responsi-\nbility for the removal of oil spills on the OCS to the National\nOceanic and Atmospheric Administration (NOAA), the Environmental\nProtection Agency (EPA), and the Department of Interior (DOI)\nrespectively. DOT and DOI have agreed on their respective\nresponsibilities on the OCS in a Memorandum of Understanding\ndated August 16, 1971. This Department has the expertise and\ncapability for coordination and direction in respect to measures\n102\n103\nEXECUTIVE OFFICE OF THE PRESIDENT\nOFFICE OF MANAGEMENT AND BUDGET\n6. S. 3185, a bill \"To amend the Outer Continental\nWASHINGTON, D.C. 20503\nShelf Lands Act with respect to payments to be made\nunder oil and gas leases pursuant to such Act\"\n(requested March 28, 1974); and,\nMAY 16 1974\n7. S. 3346, a bill \"To amend certain provisions of\nof the United States, and for other purposes\"\nlaw relating to the leasing of oil and gas deposits\n(requested April 17, 1974).\nHonorable Henry M. Jackson\nChairman, Committee on Interior\nThe the Office of Management and Budget concurs in the\nand Insular Affairs\nUnited States Senate\nbills. accordingly recommends against enactment of the seven\nand Department of the Interior in its reports on these views bills, of\n3106 New Senate Office Building\nWashington, D. C. 20510\nSincerely,\nDear Mr. Chairman:\nThis is in response to your requests for the views of the\nOffice of Management and Budget on the following bills:\nnufred H Ronemel\n1. S. 2389, a bill \"To authorize certain revenues\nfrom leases on the Outer Continental Shelf to be\nmade available to coastal and other States\"\nWilfred H. Rommel\n(requested March 28, 1974);\nAssistant Director for\nLegislative Reference\n2. S. 2672, a bill \"To create a Marine Resources\nConservation and Development Fund; to provide for\nthe distribution of revenues from Outer Continental\nShelf lands; and for other purposes\" (requested\nMarch 28, 1974);\n3. S. 2858, a bill \"To amend the Outer Continental\nShelf Lands Act for the purpose of increasing the\nsafety of offshore drilling and production\"\n(requested February 9, 1974 and March 28, 1974);\n4. S. 2922, a bill entitled the \"Outer Continental\nShelf Lands Act Amendments of 1974\" (requested\nMarch 7, 1974 and March 28, 1974);\n5. S. 3221, a bill entitled the \"Energy Supply Act\nof 1974\" (requested March 28, 1974);\n105\n104\nStatement by\nFEDERAL ENERGY ADMINISTRATION\nRobert M. White\nAdministrator, National Oceanic\nWASHINGTON, D.C. 20461\nand Atmospheric Administration\nDepartment of Commerce\nJUL 15 1974\nbefore the\nOFFICE OF THE ADMINISTRATOR\nSenate Interior and Insular Affairs Committee\nThe Honorable Henry M. Jackson\nMay 6, 1974\nChairman, Interior and Insular Affairs\nNew Senate Office Building, Room 3110\nWashington, D.C. 20510\nMr. Chairman, I wish to thank you and members of the Committee\nDear Mr. Chairman:\nfor the invitation and opportunity to comment on S. 3221, the \"Energy\nI have recently learned that your Committee is planning\nSupply Act of 1974,\" and other bills pending before the Committee which\nto consider S3321, which would amend the Outer Continental\nShelf Lands Act of 1953. As Duke Ligon testified in early\nwould amend the \"Outer Continental Shelf Act of 1953.\"\nMay, (copy attached) it is the opinion of the Administration\nthat no amendments are necessary or desirable at this time\nThe Department of Commerce, through the National Oceanic and\nsince many of the matters contained within the proposed\namendments can be handled more effectively and expeditiously\nAtmospheric Administration (NOAA), has broad responsibilities which are\nunder existing laws.\naffected by the bills being considered by this Committee. While we\nThe Outer Continental Shelf Lands Act is broad and flexible.\nChanges and adjustments to existing policy can by carried\nrecognize that the basic intent of the bills is to accelerate the\nout by virtue of authority contained in that Act. As a\nmatter of fact, the Interior Department is pursuing that\ndevelopment of oil and gas on our continental shelves, we believe that\ncourse through changes in leasing regulations, additional\nproposed changes, and by some experimental lease sales planned\nenactment would result in a duplication of authorities, programs and\nfor execution beginning later this year.\ncapabilities that already exist in part within the National Oceanic and\nIn light of the above and in the hope that we can avoid\nconfusion in this matter, I would appreciate your recon-\nAtmospheric Administration of the Department of Commerce and in part in\nsidering the desirability of proceeding with any amendments\nto the Outer Continental Shelf Lands Act at this time.\nother agencies. I propose only to comment on those aspects of the bill\nSincerely,\nwhich overlap noáa, deferring comment on other provisions to other Adminis-\nJroms John CU Sawhill\ntration witnesses. In particular, I would like to discuss the provisions\nof the bill which relate to Coastal Zone Management, Environmental Assessment,\nAdministrator\nand Marine Mapping and Charting.\nAttachment\nCoastal Zone Management\ncc: The Honorable Paul J. Fannin\nUnited States Senate\nThe Coastal Zone Management Act of 1972 is now being implemented by\nNOAA. This Act lays the basis for rational and balanced management of our\n106\n107\ncoastal zone. Such management must anticipate the near-shore and onshore\nAchievement of a satisfactory coastal zone plan does not stop\nproblems that accompany outer continental shelf oil and gas development.\nwith the planning itself but requires implementation over a period\nUnder the Act, the Federal Government\nof years, and the Coastal Zone Management Act makes provision for\nwill provide funding to the coastal States to help in this management\nthis by a program of grants that would be of special importance where\nprocess, so that they can deal effectively with the secondary and supporting\ndifficult questions of energy siting are concerned.\nactivities that will be associated with offshore oil and gas production.\nIt would seem logical that funds to the coastal States come through\nS. 3221, however, would amend the Outer Continental Shelf Lands Act\nthe Coastal Zone Management Act so that Federal funding to the States\nto provide a Coastal State Fund, into which 5% of the Federal revenues\ncan be used and developed in a comprehensive way.\nfrom the resources of the shelf would be paid. The Secretary of the Interior\nThe Coastal Zone Management Act is being rapidly implemented.\nwould be authorized to make matching grants to the coastal states from this\nAlthough the first funding for the program became available only last\nFund to \"ameliorate adverse environmental effects and control secondary\nDecember, Federal program development grants have already been given\nsocial and economic impacts\" caused by the development of energy resources\nto six coastal States in the last 45 days. We expect to have almost\non the continental shelf. Such grants may be used for \"planning, construction\nall the coastal States involved in the grants phase of the Program by\nof public facilities and provision of public services, and such other acti-\nJune 30 of this year.\nvities as the Secretary may prescribe.\"\nIn my judgment, the coastal States are ready and willing to join\nTo the extent such grants are used for planning and management, they\nwith the Federal Government in planning for OCS development. They want\noverlap the functions already provided for and funded with matching grants\neffective involvement from the earliest moment in planning for this\nunder the Coastal Zone Management Act. This Act refers particularly to\ndevelopment. This cooperation and financial assistance can be provided\nthe demands upon our lands and waters of the coastal zone arising, in\nwithin the Coastal Zone Management Act.\npart, from \"extraction of mineral resources and fossil fuels.\" Cooperation\nwith the Federal Government in developing land and water use programs \"of\nmore than local significance\" is specifically stressed. The stated goal\nis \"the wise use of land and water resources of the coastal zone giving\nfull consideration to ecological, cultural, historic and esthetic values\nas well as to needs for economic development.\" The overlap with S. 3221\nis apparent.\n108\n109\nEnvironmental Assessment\nEven prior to the recent interest in baseline studies of the Outer\nI\nunderstand that a representative of the Council on Environmental\nContinental Shelf, we had initiated studies on the fate and effect of oil\nQuality will testify on the impact of OCS oil and gas development on the\non marine ecosystems. These include studies of Prince William Sound,\nenvironment. My own concern is that, as we move to develop the oil and\nAlaska, and the New York Bight. Several of our National Marine Fisheries\ngas resources of the shelf, we take timely steps to acquire, in a\nService Laboratories are undertaking detailed studies of the effects of\ncost-effective manner, the scientific and technical information needed\noil on specific marine organisms; this is proving to be a crucial issue\nto anticipate and minimize environmental impacts.\nin understanding the environmental impact of Outer Continental Shelf\nNQAA is the principal oceanic agency of the Federal Government with\ndevelopment. Massachusetts Institute of Technology, supported through\na network of biological and physical laboratories in all our coastal areas,\nNOAA's Sea Grant Program, has made an initial assessment of the potential\nand with a large research and survey fleet. The National Marine Fisheries\nenvironmental effects of oil and gas drilling on Georges Bank, which pro-\nService of NOAA is the repository of the basic knowledge of the fishery\nvided a base for the further analyses done in connection with the recent\nresources of shelf areas and is charged under the Fish and Wildlife\nCouncil on Environmental Quality report on offshore oil and gas drilling.\nCoordination Act for assessing the effects of pollution on fisheries and\nThese are only examples of our efforts being made under existing authorities\nrecommending means of alleviating dangerous or undesirable effects of\nto understand the impact of oil and gas development upon the living resources\nof the marine environment.\nsuch pollution including petroleum pollution. The marine weather fore-\ncasting capabilities of the National Weather Service, and the ocean and\nMarine Mapping and Charting\natmospheric data centers of the Environmental Data Service add to NOAA's\nIn our opinion, the combined capabilities of NOAA and the Geo-\ncomprehensive environmental capabilities. These capabilities are now\nlogical Survey of the Department of Interior essentially represent the\nbeing brought to bear in work with the Bureau of Land Management (BIM) on\ncivil marine mapping capabilities of the Federal government, and are in\nstudies of the potential environmental impact of Outer Continental Shelf oil\na position to perform this work.\nand gas development, particularly in the eastern Gulf of Mexico and the\nGulf of Alaska. We expect to continue to cooperate closely with BIM in the\ndesign and implementation of needed studies in other areas as well. We\nalso are participating actively in the Department of the Interior's Outer\nContinental Shelf Research Advisory Board, which is advising on the design\nand conduct of baseline studies in potential lease areas.\n110\n111\nThrough our National Ocean Survey and its predecessor organization,\ndemarcation of the lateral seaward boundaries between the United States\nthe Coast and Geodetic Survey, our agency has had a long history of opera-\nand Mexico.\ntions, and more importantly, an expertise in the mapping and charting of\nWe fully concur that seaward boundary determinations are important\nt..e waters off our coasts. We have completed bathymetric and geophysical\nelements in the management and development of our outer continental shelf\nsurveys for 22 of some 154 map units required to map our continental shelves\nseaward resources; however, necessary authorities and agency responsibilities\nat a scale of 1:250,000. From these surveys we have produced to date 18\nare available and new authority is not required.\nbathymetric, 7 magnetic and 3 gravity maps at that scale. In addition, we\nThank you, Mr. Chairman, I would be pleased to answer any questions\nhave produced from existing sources of data 23 additional bathymetric maps\nfor the Committee.\nat different scales.\nWe are now working to the requirements of the Department of Interior to\nproduce urgently needed bathymetric maps for their use in resource assess-\nment in the Gulf of Mexico, and are developing plans to assist them in other\nareas as the leasing program increases.\nNOAA, in coordination with the Department of Justice and the Department\nof State, has been active in the determination of marine boundaries. Parties\nheretofore involved in legal proceedings concerning boundary determinations,\nbe they private or govermmental, have turned to NOAA for technical assistance.\nAs a normal consequence of our charting the nation's coastal waters, we\nhave been involved in the development of the legal aspects of coastal\nboundaries. The courts, as well as participants involved in litigation of\nthis highly technical area of law, have consistently looked to us as the\nprinciple repository of expertise to settle boundary disputes. NOAA has\nbeen traditionally consulted by the States regarding the seaward extension\nof their own boundaries. The Congress, also, solicits technical comments\nfrom us prior to its approval of compacts between states concerning seaward\nlateral boundaries. In the international area, we established in 1972, in\ncollaboration with the Department of State and the Mexican government, the\n112\n113\nX. CHANGES IN EXISTING Law\n(σ) interest by potential oil and gas producers in explora-\nIn compliance with subsection (4) of rule XXIX of the Standing\ntion and development as indicated by tract nominations and\nother representations;\nRules of the Senate, changes in existing law made by the bill, S. 3221,\nas ordered reported, are shown as follows (existing law proposed to be\n(D) an equitable sharing of developmental benefits and\nomitted is enclosed in black brackets, new matter is printed in italic,\nenvironmental risks among various regions of the United\nStates; and\nexisting law in which no change is proposed is shown in roman):\n1. Section 201 of S. 3221 would amend Section 3 of the Outer Conti-\n(3) receipt of fair market return for public resources,\nnental Shelf Lands Act as follows:\n(c) The program shall include estimates of the appropriations and\nSEC. 3. JURISDICTION OVER OUTER CONTINENTAL SHELF.-(a) It is\nstaffing required to prepare the necessary environmental impact state-\nhereby declared to be the policy of the United States that the subsoil\nments, obtain resource data and any other information needed to\nand seabed of the outer Continental Shelf appertain to the United\ndecide the order in which areas are to be scheduled for lease, to make\nStates and are subject to its jurisdiction, control, and power of disposi-\nthe analyses required prior to offering tracts for lease, and to super-\ntion as provided in this Act.\nvise operations under every lease in the manner necessary to assure\n(b) This Act shall be construed in such manner that the character as\nlease. compliance with the requirements of the law, the regulations, and the\nhigh seas of the waters above the outer Continental Shelf and the right\nto navigation and fishing therein shall not be affected.\n(d) The environmental impact statement on the leasing program\n(c) It is hereby declared that the Outer Continental Shelf is a vital\nprepared in accordance with section 102(2) (C) of the National En-\nnational resource reserve held by the Federal Government for all the\nvironmental Policy Act of 1969, shall include, but shall not be limited\npeople, which should be made available for orderly development, sub-\nto, an assessment by the Secretary of the relative significance of the\nject to environmental safeguards, consistent with and when necessary\nprobable oil and gas resources of each area proposed to be offered for\nto meet national needs.\nlease in meeting national dęmands, the most likely rate of exploration\n2. Section 202 of S. 3221 would add the following new sections to the\nand development that is expected to occur if the areas are leased, and\nOuter Continental Shelf Lands Act:\nthe relative environmental hazard of each area. Such environmental\nimpact statement shall be based on consideration of the following\nDEVELOPMENT OF OUTER CONTINENTAL SHELF LEASING PROGRAM\nfactors, without being limited thereto: geological and geophysical\nconditions, biological data on existing animal, marine, and plant life,\nSEC. 18. (a) Congress declares that it is the policy of the United\nand commercial and recreational uses of nearby land and water areas.\nStates that Outer Continental Shelf lands determined to be both geo-\n(e) The Secrętary shall, by regulation, establish procedures for re-\nlogically favorable for the accumulation of oil and gas and capable of\nceipt and consideration of nominations for areas to be offered for lease\nsupporting oil and gas development without undue environmental\nor to be excluded from leasing, for public notice of and participation\nhazard or damage should be made available for leasing as soon as\nin development of the leasing program, for review by State and local\npracticable in accordance with subsection (b) of this section.\ngovernments which may be impacted by the propoșed leasing, and for\n(3) The Secretary is authorized and directed to prepare and main-\ncoordination of the program with management programs established\ntain a leasing program to implement the policy set forth in subsection\npursuant to the Coastal Zone Management Act of 1972. These proce-\n(a). The leasing program shall indicate as precisely as possible the\ndures will be applicable to any revision or reapproval of the leasing\nsize, timing, and location of leasing activity that will best meet na-\nprogram.\ntional energy needs for the ten-year period following its approval or\n(f) The Secretary shall publish a proposed leasing program in the\nreapproval in a manner consistent with subsection (a) above and\nFederal Register and submit it to the Congress within two years after\nwith the following principles:\nenactment of this section.\n(1) management of the Outer Continental Shelf in a manner\n(g) After the leasing program has been approved by the Secretary\nwhich considers all its resource values and the potential impact\nor after January 1, 1978, whichever comes first, no leases under this\nof oil and gas exploration and development on other resource\nAct may be issued unless they are for areas included in the approved\nvalues of the Outer Continental Shelf and the marine environ-\nleasing program.\nment;\n(h) The Secretary may revise and reapprove the leasing program\n(2) timing and location of leasing 80 as more evenly to dis-\nat any time and he must review and reapprove the leasing program\ntribute exploration, development, and production of oil and gas\nat least once each year.\namong various areas of the Outer Continental Shelf, considering:\n(i) The Secretary is authorized to obtain from public sources, or\n(A) existing information concerning their geographical,\nto purchase from private sources, any surveys, data, reports, or other\ngeological, and ecological characteristics;\ninformation (excluding interpretations of such data, surveys, reports,\n(B) their location with respect to, and relative needs of,\nor other information) which may be necessary to assist him in pre-\nregional energy markets;\nparing environment impact statements and making other evaluations\n38-533 74 8\n114\n115\nrequired by this Act. The Secretary shall maintain the confidentiality\n(h) The Secretary shall, by regulation, require that any person\nof all proprietary data or information for such period of time as is\nholding a lease issued pursuant to this Act for oil or gas exploration or\nagreed to by the parties.\ndevelopment on the Outer Continental Shelf shall provide the Sec-\n(j) The heads of all Federal departments or agencies are authorized\nretary wtih any existing data (excluding interpretation of such data)\nand directed to provide the Secretary with any nonproprietary in-\nabout the oil or gas resources in the area subject to the lease. The Sec-\nformation he requests to assist him in preparing the leasing program.\nretary shall maintain the confidentiality of all proprietary data or in-\nFEDERAL OUTER CONTINENTAL SHELF OIL AND GAS SURVEY PROGRAM\nformation until such time as he determines that public availability\nof such proprietary data or information would not damage the com-\nSEC. 19. (a) The ,Secretary is authorized and directed to conduct a\npetitive position of the lessee.\nsurvey program regarding oil and gas resources of the Outer Con-\ntinental Shelf. This program shall be designed to provide information\nRESEARCH AND DEVELOPMENT\nabout the probable location, extent, and characteristics of such re-\nSEC. 20. (a) The Secretary is authorized and directed to carry out a\nsources in order to provide a basis for (1) development. and revision\nresearch and development program designed to improve technology\nof the leasing program required by section 18 of this Act, (2) greater\nrelated to development of the oil and gas resources of the Outer Conti-\nand better informed competitive interest by potential producers in the\nnental Shelf where he determines that such research and development\noil and gas resources of the Outer Continental Shelf, (3) more in-\nis not being adequately conducted by any other public or private entity\nformed decisions regarding the value of public resources and revenues\nincluding but not limited to-\nto be expected from leasing them, and (4) the mapping program re-\n(1) downhole safety devices,\nquired by subsection (c) of this section.\n(2) methods for reestablishing control of blowing out or burn-\n(b) The Secretary is authorized to contract for, or purchase the\ning wells,\nresults of or, where the required information is not available from\n(3) methods for containing and cleaning up oil spills,\ncommercial sources, conduct seismic, geomagnetic, gravitational, geo-\n(4) improved drill bits,\nphysical, or geochemical investigations, and to contract for or pur-\n(5) improved flaw detection systems for undersea pipelines,\nchase the results of stratigraphic drilling, needed to implement the\n(6) new or improved methods of development in water depths\nprovisions of this section.\nover six hunderd meters, and\n(c) The ,Secretary is directed to prepare and publish and keep cur-\n(7) subsea production systems.\nrent a series of detailed topographic, geological, and geophysical maps\n(b) The Secretary shall, after review and comment by the Adminis-\nof and reports about the Outer Continental Shelf, based on nonpro-\ntrator of the Environmental Protection Agency, establish safety and\nprietary data, which shall include, but not necessarily be limited to,\nenvironmental performance standards for all pieces of equipment, that\nthe results of seismic, gravitational, and magnetic surveys on an ap-\nare pertinent to public health, safety, or environmental protection, used\npropriate grid spacing to define the general topography, geology,\nin exploration, development, and production of oil and gas from the\nand geophysical characteristics of the area. Such maps shall be pre-\nOuter Continental Shelf. To achieve the purposes of this subsection,\npared and published no later than six months prior to the last day for\nsuch standards shall require the use of best available technology when\nsubmission of bids for any areas of the Outer Continental Shelf\nthe potential effect on public health, safety, or the environment would\nscheduled for lease on or after January 1, 1978.\nbe substantial.\n(d) Within six months after enactment of this section, the Secretary\n(c) The Secretary, with the concurrence of the Secretary of the\nshall develop and submit to Congress a plan for conducting the survey\ndepartment in which the Coast Guard is operating, shall establish\nand mapping programs required by this section. This plan shall in-\nequipment and performance standards for oil spill cleanup plans and\nclude an identification of the areas to be surveyed and mapped during\noperations. Such standards shall be coordinated with the National Oil\nthe first five years of the programs and estimates of the appropria-\nand Hazardous Substances Pollution Contingency Plan, and reviewed\ntions and staffing required to supplement them.\nby the Administrator of the Environmental Protection Agency, and\n(e) The ,Secretary shall include in the annual report required by\nthe Administrator of the National Oceanic and Atmospheric\nsection 15 of this Act, information concerning the carrying out of his\nAdministration.\nduties under this section, and shall include as a part of each such re-\n(d) The Secretary, in cooperation with the Secretary of the Navy\nport a summary of the current data for the period covered by the\nand the Director of the ,National Institutes of Health, shall conduct\nreport.\nstudies of underwater diving techniques and equipment suitable for\n(f) No action taken to implement this section shall be considered a\nprotection of human safety at depths greater than those where such\nmajor Federal action for the purposes of section 102 (2) (C) of the\ndiving now takes place.\nNational Environmental Policy Act of 1969.\n(g) There are hereby authorized to be appropriated such sums as\nENFORCEMENT OF SAFETY REGULATIONS; INSPECTIONS\nare necessary to carry out the purposes of this section during fiscal\nSec. 21. (a) (1) The Secretary shall regularly inspect all operations\nyears 1975 and 1976.\nauthorized pursuant to this Act and strictly enforce safety regulations\n116\n117\npromulgated pursuant to this Act and other applicable laws and regu-\nor Mexico or (B) in or on waters within two hundred nautical miles of\nlations relating to public health, safety, or environmental protection.\nthe baseline of the United States, Canada, or Mexico from which the\nAll holders of leases under this Act shall allow promptly access at the\nterritorial sea of the United States, Canada, or Mexico is measured, or\nsite of any operations subject to safety regulations to any inspector,\n(C) within one hundred nautical miles of any operation authorized\nand provide such documents and records that are pertinent to public\nunder this Act. Claims for such injury or damages may be determined\nhealth, safety, or environmental protection, as the Secretary or his\nby arbitration or judicial proceedings.\ndesignee may request.\n(2) Strict liqbility shall not be imposed under this subsection on\n(2) The Secretary shall promulgate regulations within ninety days\nthe holder or the fund if the holder or the fund proves that the damage\nof the enactment of this section to provide for\nwas caused by an act of war. Strict liability shall not be imposed under\n(4) physical observation at least once each year by an inspector\nthis subsection on the holder if the holder proves that the damage was\nof the installation or testing of all safety equipment designed to\ncaused by the negligence of the United States or other governmental\nprevent or ameliorate blowouts, fires, spillages, or other major\nagency. Strict liability shall not be imposed under this subsection with\naccidents; and\nrespect to the claim of a damaged person if the holder or the fund\n(B) periodic onsite inspection without advance notice to the\nproves that the damage was caused by the negligence or intentional act\nlessee to assure compliance with public health, safety, or envi-\nof such person.\nronmental protection regulations.\n(3) Strict liability for all claims arising out of any one incident shall\n(3) The ,Secretary shall make an investigation and public report\nnot exceed $100,000,000. The holder shall be liable for the first $7,000,-\non all major fires and major oil spillage occurring as a result of opera-\n000 of such claims that are allowed. The fund shall be liable for the bal-\ntions pursuant to this Act. For the purposes of this subsection, a\nance of the claims that are allowed up to $100,000,000. If the total\nmajor oil spillage is any spillage in one instance of more than two\nclaims allowed exceed $100,000,000, they shall be reduced proportion-\nhundred barrels of oil over a period of thirty days: Provided, That\nately. The unpaid portion of any claim may be asserted and adjudi-\nthe Secretary may, in his discretion, make an investigation and report\ncated under other. applicable ederal or State law.\nof lesser oil spillages. All holders of leases under this Act shall coop-\n(4) In any case where liability without regard to fault is imposed\nerate with the Secretary in the course of such investigations.\npursuant to this subsection, the rules of subrogation shall apply in\n(4) For the purposes of carrying out his responsibilities under this\naccordance with the laws of the State in which such damages occurred:\nsection, the Secretary may by agreement utilize with or without reim-\nProvided, however, That in the event such damages occurred outside\nbursement the services, personnel, or facilities of any Federal agency.\nthe jurisdiction of any State, the rules of subrogation shall apply in\n(b) The Secretary shall include in his annual report to Congress\naccordance with the laws applicable pursuant to section 4 of this Act.\nrequired by section 15 of this Act the number of violations of safety\n(5) The offshore Oil Pollution Settlements Fund is hereby estab-\nregulations found, the names of the violators, and the action taken\nlished as a nonprofit corporate entity that may sue and be sued in its\nthereon.\nown name. The fund shall be administered by the holders of leases\n(c) The Secretary shall consider any allegation from any person of\nissued under this Act under regulations prescribed by the Secretary.\nthe existence of a violation of any safety regulations issued under this\nThe fund shall be subject to an annual audit by the Comptroller Gen-\nAct. The Secretary shall answer such allegation no later than ninety\neral, and a copy of the audit shall be submitted to the Congress. Claims\ndays after receipt thereof, stating whether or not such alleged viola-\nallowed against the fund shall be paid only from moneys deposited in\ntions exist and, if 80, what action has been taken.\nthe fund.\n(6) There is hereby imposed on each barrel of oil produced pur-\nLIABILITY FOR OIL SPILLS\nsuant to any lease issued or maintained under this Act of a fee of\nSEC. 22. (a) Any person in charge of any operations in the Outer\n21/2 cents per barrel. The fund shall collect the fee from the lessees or\nContinental Shelf, as soon as he has knowledge of a discharge or spill-\ntheir assignees. Costs of administration shall be paid from the money\nage of oil from an operation, shall immediately notify the appropriate\ncollected by the fund, and all sums not needed for administration and\nagency of the United States Government of such discharge.\nthe satisfaction of claims shall be invested prudently in income pro-\n(b) (1) Notwithstanding the provisions of any other law, the holder\nducing securities approved by the Secretary. Income from such secu-\nof a lease or right-of-way issued or maintained under this Act and\nrities shall be added to the principal of the fund.\nthe Offshore Oil Pollution ,Settlements Fund (hęreinafter referred to\n(7) Subject to the limitation contained in subparagraph (3) of this\nas \"the fund\") established by this subsection shall be strictly liable\nsubsection, if the fund is unable to satisfy a claim asserted and finally\nwithout regard to fault and without regard to ownership of any ad-\ndetermined under this subsection, the fund may borrow the money\nversely affected lands, structures, fish, wildlife, or biotic or other natu-\nneeded to satisfy the claim from any commercial credit source, at the\nral resources relied upon by any damaged party for subsistence or\nlowest available rate of interest, subject to the approval of the\neconomic purposes, in accordance with the provisions of this subsection\nSecretary.\nfor all damages, sustained by any person as a result of discharges of\n(8) No compensation shall be paid under this subsection unless\noil or gas from any operation authorized under this Act if such dam-\nnotice of the damage is given to the Secretary within three years\nages occurred (A) within the territory of the United States, Canada,\nfollowing the date on which the damage occurred.\n118\n119\n(9) Payment of compensation for any damage pursuant to this\nsubsection shall be subject to the holder or the fund acquiring by\nCOASTAL STATE FUND\nsubrogation all rights of the claimant to recover for such damages\nSEC. 25. (a) There is hereby established in the Treasury of the\nfrom any other person.\nUnited States the Coastal States Fund (hereinafter referred to as the\n(10) The collection of amounts for the fund shall cease when\n\"fund\"). The Secretary shall make grants from the fund to the coastal\n$100,000,000 has been accumulated, but shall be renewed when the\nStates impacted by anticipated or actual oil and gas production to\naccumulation in the fund falls below $85,000,000. The fund shall insure\nassist them to ameliorate adverse environmental effects and control\nthat collections are equitable to all holders of a lease or right-of-way.\nsecondary social and economic impacts associated with the development\n(11) The several district courts of the United ,States shall have\nof Federal energy resources in, or on the Outer Continental Shelf ad-\njurisdiction over claims against the fund.\njacent to the submerged lands of such States. Such grants may be used\n(c) If any area within or without a lease granted or maintained\nfor planning, construction of public facilities, and provision of public\nunder this Act is polluted by any discharge or spillage of oil from\nservices, and such other activities as the Secretary may prescribe by\noperations conducted by or on behalf of the holder of such lease, and\nregulations. Such regulations shall, at a minimum, (1) provide that\nsuch pollution damages or threatens to damage aquatic life, wildlife,\nsuch activities be directly related to such environmental effects and\nor public or private property, the control and removal of the pollutant\nsocial and economic impacts; and (2) require each coastal State, as a\nshall be at the expense of such holder, including administrative and\nrequirement of eligibility for grants from the fund, to establish pollu-\nother costs incurred by the Secretary or any other Federal or State\ntion containment and clean up systems for pollution from oil and gas\nofficer or agency. Upon failure of such holder to adequately control\ndevelopment activities on the submerged lands of each such State.\nand remove such pollutant, the Secretary in cooperation with other\n(b) The Secretary, in accordance with the provisions of subsection\nFederal, State, or local agencies, or in cooperation with such holder, or\n(a), shall, by regulation, establish requirements for grant eligibility:\nboth, shall have the right to accomplish the control and removal at the\nProvided, That it is the intent of this section that grants shall be made\nexpense of the holder.\nto impacted coastal States to the maximum extent permitted by sub-\n(d) The Secretary shall establish requirements that all holders of\nsecion (c) of this section and that grants shall be made to impacted\nleases issued or maintained under this Act shall establish and maintain\ncoastal States in proportion to the effects and impacts of offshore oil\nevidence. of financial responsibility of not less than $7 million. Fi-\nand gas exploration, development and production on such States. Such\nnancial responsibility may be established by any one of, or a combina-\ngrants shall not be on a matching basis but shall be adequate to com-\ntion of, the following methods acceptable to the Secretary: (A) evi-\npensate impacted coastal States for the full costs of any environmental\ndence of insurance, (B) surety bonds, (C) qualification as a self-\neffects and social and economic impacts of offshore oil and gas explora-\ninsurer, or (D) other evidence of financial responsibility. Any bond\ntion, development, and production. The Secretary shall coordinate all\nfiled shall be issued by a bonding company authorized to do business\ngrants with management programs established pursuant to the Coastal\nin the United States.\nZone Management Act of 1972.\n(e) The provisions of this section shall not be interpreted to super-\n(c) Notwithstanding any other provision of law, 10 per centum of\nsede section 311 of the Federal Water Pollution Control Act Amend-\nthe Federal revenues from the Outer Continental ,Shelf Lands Act, as\nments of 1972 or preempt the field of strict liability or to enlarge or\namended by this Act, shall be paid into the fund: Provided, That the\ndiminish the authority of any State to. impose additional require-\ntotal amount paid into the fund shall not exceed $200,000,000 per year.\nments.\n(d) There is hereby authorized to be appropriated to the fund\nNEGOTIATIONS WITH STATES\n$100,000,000.\nSEC. 23. The Secretary is authorized and directed to negotiate\n(e) For the purpose of this section, \"coastal State\" means a State or\nwith those coastal States which are asserting jurisdiction over the\nterritory of the United States in, or bordering on, the Atlantic, Pacific,\nOuter Continental Shelf with a review to developing interim agree-\nor Arctic Ocean, the Gulf of Mexico, or Long Island Sound.\nments which will allow energy resource development prior to final\nCITIZEN SUITS\njudicial resolution of the dispute.\nSEC. 26. (a) Except as provided in-subsection (3) of this section,\nDETERMINATION OF BOUNDARIES\nany person having an interest which is or may be adversely affected\nSEC. 24. Within one year following the date of enactment of this\nmay commence a civil action on his own behalf-\nsection, the President may establish procedures for settling any out-\n(1) against any person including-\nstanding boundary disputes, including international boundaries be-\n(A) the United States, and\ntween the United States and Canada and between the United States\n(B) any other governmental instrumentality or agency\nand Mexico, and establish boundaries between adjacent States, as\nto the extent permitted by the eleventh amendment to the\ndirected in section 4 of this Act.\nConstitution who is alleged to be in violation of the provi-\nsions of this Act or the regulation promulgated thereunder,\nor any permit or lease issued by the Secretary; or\n120\n121\n(2) against the Secretary where there is alleged a failure of\nthe Secretary to perform any act or duty under this Act which is\n(3) measures to ease entry of new competitors; and\nnot discretionary with the Secretary.\n(4) measures to increase supply to independent refiners and\n(b) No action may be commenced-\ndistributors.\n(1) under subsection (a) (1) of this section-\nENFORCEMENT AND PENALTIES\n(A) prior to sixty days after the plaintiff has given notice\nSec. 28. (a) At the request of the Secretary, the Attorney General\nin writing under oath of the violation (i) to the Secretary,\nmay institute a civil action in the district court of the United States for\nand (ii) to any alleged violator of the provisions of this Act\nthe district in which the affected operation is located for a restraining\nor any regulations promulgated thereunder, or any permit or\norder or injunction or other appropriate remedy to enforce any provi-\nlease issued thereunder;\nsion of this Act or any regulation or order issued under the authority\n(B) if the ,Secretary has commenced and is diligently\nof this Act.\nprosecuting a civil action in a court of the United States to\n(b) If any person shall fail to comply with any provision of this\nrequire compliance with the provisions of this Act or the\nAct, or any regulation or order issued under the authority of this Act,\nregulations thereunder, or the lease, but in any such action in\nafter notice of such failure and expiration of any period allowed for\na court of the United States any person may intervene as a\ncorrective action, such person shall be liable for a civil penalty of not\nmatter of right; or\nmore than $5,000 for each and every day of the continuance of such\n(2) Under subsection (a) (2) of this section prior to sixty days\nfailure. The Secretary may assess, collect, and compromise any such\nafter the plaintiff has given notice in writing under oath of such\npenalty. No penalty shall be assessed until the person charged with a\naction to the Secretary, in such manner as the Secretary shall by\nregulation prescribe, except that such action may be brought\ncharge. violation shall have been given an opportunity for a hearing on such\nimmediately after such notification in the case where the violation\n(c) Any person who knowingly and willfully violates any provision\ncomplained of, constitutes an imminent threat to the health or\nof this Act, or any regulation or order issued under the authority of\nsafety of the plaintiff or would immediately affect a legal interest\nthis Act designed to protect public health, safety, or the environment\nof the plaintiff.\nor conserve natural resources or knowingly and willfully makes any\n(c) In any action under this section, the Secretary, if not a party,\nfalse statement, representation, or certification in any application,\nmay intervene as a matter of right.\nrecord, report, plan, or other' document filed or required to be main-\n(d) The court, in issuing any final order in any action, brought pur-\ntained under this Act, or who knowingly and willfully falsifies, tam-\nsuant to subsection (a) of this section, may award costs of litigation\npers with, or renders inaccurate any monitoring device or method of\nincluding reasonable attorneys fees to any party, whenever the court\nrecord required to be maintained under this Act or knowingly and\ndetermines such award is appropriate. The court may, if a temporary\nwillfully reveals any data or information required to be kept confi-\nrestraining order or preliminary injunction is sought, require the\ndential by this Act, shall, upon conviction, be punished by a fine of\nfiling of a bond or equivalent security in accordance with the Federal\nnot more than $100,000, or by imprisonment for not more than one\nRules of Civil Procedure.\nyear, or both. Each day that a violation continues shall constitute a\n(e) Nothing in this section shall restrict any right which any person\nseparate offense.\nor class of persons may have under this or any statute or common\n(d) Whenever a corporation or other entity violates any provision\nlaw to seek enforcement of any of the provisions of this Act and the\nof this Act, or any regulation or order issued under the authority of\nregulations thereunder, or to seek any other relief, including relief\nthis Act. any officer, or agent to such corporation or entity who author-\nagainst the Secretary.\nized, ordered, or carried out such violation shall be subject to the same\nPROMOTION OF COMPETITION\nfines section. or imprisonment as provided for under subsection (c) of this\nSEC. 27. Within one year after the date of enactment of this section,\n(e) The remedies prescribed in this section shall be concurrent and\nthe Secretary shall prepare and publish a report with recommenda-\ncumulative and the exercise of one does not preclude the exercise of\ntions for promoting competition and maximizina production and rev-\nthe others. Further, the remedies prescribed in this section shall be\nenues from the leasing of Outer Continental Shelf lands, and shall\nin addition to any other remedies afforded by any other law or\nregulation.\ninclude a plan for implementing recommended administrative changes\nand drafts of any proposed legislation. Such report shall include con-\nENVIRONMENTAL BASELINE AND MONITORING STUDIES\nsideration of the following-\n(1) other competitive bidding sustems permitted under present\nSEC. 29. (a) Prior to permitting oil and gas drilling on any area\nlaw as compared to the bonus bidding system;\nof the Outer- Continental Shelf not previously leased under this Act,\n(2) evaluation of alternative bidding systems not permitted\nthe ,Secretary; in consultation with the Administrator of the National\nunder present law;\nOceanic and Atmospheric Administration of the Department of Com-\nmerce, shall make a study of the area involved to establish a baseline\n122\n123\nof those critical parameters of the Outer Continental ,Shelf environ-\nContinental Shelf which are not covered by leases meeting the require-\nment which may be affected by oil and gas development. The study\nments of subsection (a) of section 6 of this Act. The bidding shall be\nshall include, but need not be limited to, background levels of hydro-\nby sealed bids and, at the discretion of the Secretary, shall be either\ncarbons in water, sediment, and organisms; background levels of trace\n(1) on the basis of a cash bonus bid with a royalty fixed by the Secre-\nmetals in water, sediments, and organisms; characterization of benthic\ntary at not less than 121/2 per centum in amount or value of the pro-\nand planktonic communities; description of sediments and relation-\nduction saved, removed, or sold, (2) on the basis of a cash bonus bid\nships between organisms and abiotic parameters; and standard oceano-\nwith a fixed share of the net profits derived from operation of the\ngraphic measurements such as salinity, temperature, micronutrients,\ntract of no less than 30 per centum reserved to the United States, or\ndissolved oxygen.\n(3) on the basis of a fixed cash bonus with the net profit share reserved\n(b) Subsequent to development of any area studied pursuant to\nto the United States as the bid variáble. The United States net profit\nsubsection (a) of this section, the ,Secretary shall monitor the areas\nshare shall be calculated on the basis of the value of the production\ninvolved in a manner designed to provide time-series data which can\nsaved, removed, or sold, less those capital and operating costs directly\nbe compared with previously collected data for the purpose of identify-\nassignable to the development and operation (but not acquisition)\ning any significant changes.\nof all oil and gas leases issued under this Act to the lessee under a net\n(c) In carrying out the provisions of this section, the Secretary is\nprofit sharing arrangement. No capital or operating charges for mate-\ndirected to give preference to the use of Government owned and Gov-\nrials or labor services not actually used on an area leased for oil or gas\nernment operated vessels, to the maximum extent practicable, in con-\nunder this Act under a net profit-sharing arrangement; allocation of\ntracting for work in connection with such environmental baseline and\nincome taxes; or expenditure for materials or labor services used prior\nmonitoring studies. In order to avoid needless duplications, the Secre-\nto lease acquisition shall be permitted as a deduction in the calculation\ntary shall coordinate all such activities with the Administrator of the\nof net income. The Secretary shall by regulation establish accounting\nNational Oceanic and Atmospheric Administration and shall, when-\nprocedures and standards to govern the calculation of net profits. In\never possible, utilize existing Government owned and Government\nthe event of any dispute between the United States and a lessee con-\noperated marine research laboratories in conducting research author-\ncerning the calculation of the net profits, the burden of proof shall be\nized by this section.\non the lessee. That part of the net profit share due the United States\n3. Section 203 of S. 3221 would amend Subsections (a) and (b) of\nwhich is attributable to oil production may be taken in kind in the\nSection 8 of the Outer Continental Shelf-Lands Act as follows:\nform of oil and disposed of as provided in subsection (k) of this sec-\nSEC. 8. LEASING OF OUTER CONTINENTAL SHELF.-[(a) In order to\ntion. That part of the net profits share due in kind shall be deter-\nmeet the urgent need for further exploration and development of the\nmined by dividing the net profit due the United States attributable to\noil and gas deposits of the submerged lands of the outer Continental\nthe product or products taken in kind by the fairmarket value at the\nShelf, the Secretary is authorized to grant to the highest responsible\nwellhead of the oil and/or gas (as the case may be) saved, removed\nqualified bidder by competitive bidding under regulations promulgated\nor sold. In determining the attribution of profits as between oil and\nin advance, oil and gas leases on submerged lands of the outer Conti-\ngas, costs shall be allocated proportionately to the value of their\nnental Shelf which are not covered by leases meeting the requirements\nrespective shares of production.\nof subsection (a) of section 6 of this Act. The bidding shall be (1)\n(b) An oil and gas lease issued by the Secretary pursuant to this\nby sealed bids, and (2) at the discretion of the Secretary, on the basis\nsection shall (1) cover a compact. area not exceeding five thousand\nof a cash bonus with a royalty fixed by the Secretary at not less than\nseven hundred and-sixty acres, as the Secretary may determine, (2)\n121/2 per centum in amount or value of the production saved, removed\nbe for a period of (i) in five years or (ii) for up to ten years where\nor sold, or on the basis of royalty, but at not less than the per centum\nthe Secretary deems such longer period necessary to encourage ex-\nabove mentioned. with a cash bonus fixed by the Secretary.]\nploration and development in areas of unusually deep water or ad-\n[(b) An oil and gas lease issued by the Secretarv pursuant to this\nverse weather conditions, and as long thereafter as oil or may be\nsection shall (1) cover a compact area not exceeding five thousand\nproduced from the area in paying quantities, or drilling or well re-\nseven hundred and sixty acres, as the Secretary may determine, (2)\nworking operations as approved by the Secretary are conducted there-\nbe for a period of five years and as long thereafter as oil or gas mav be\non, and (3) contain such rental provisions and such other terms and\nproduced from the area in paying quantities. or drilling or well re-\nprovisions as the Secretary may prescribe at the time of affering the\nworking operations as approved by the Secretary are conducted\narea for lease.\nthereon, (3) require the payment of a royalty of not less than 121/2\n4. Section 204 of S. 3221 would amend Section 8 of the Outer Con-\nper centum, in the amount or value of the production saved, removed,\ntinental Shelf Lands Act by adding the following new subsection (k)\nor sold from the lease. and (4) contain such rental provisions and such\n(k) Upon commencement of production of oil from any lease, issued\nother terms and provisions as the Secretary may prescribe at the time\nafter the effective date of this subsection, the Secretary shall offer to\nof offering the area for lease.]\nthe public and sell by competitive bidding for not less than its fair\n(a) The Secretary is authorized to grant to the highest responsible\nmarket value, in such amounts and for such terms as he determines,\nqualified bidder by competitive bidding under regulations promul-\nthat proportion of the oil produced from said lease which is due to\ngated in advance, oil and gas leases on submerged lands of the Outer\nthe United States as royalty or net profit share oil. The Secretary\n124\n125\nshall limit participation in such sales where he finds such limitation\nmeans available to avoid substantial economic hardship on the lessee or\nnecessary to assure adequate supplies of oil at equitable prices to in-\npermittee.\ndependent refiners. In the event that the Secretary limits participa-\n(e) After the date of enactment of this section, holders of oil and\ntion in such sales, he shall sell such oil at an equitable price. The lessee\ngas leases issued pursuant to this Act shall not be permitted to flare\nshall take any such royalty oil for which no acceptable bids are re-\nnatural gas from any well unless the Secretary finds that there is no\nceived and shall pay to the United States a cash royalty equal to its\npracticable way to obtain production or to conduct testing or workover\nfair market value, but in no event shall such royalty be less than the\noperations without flaring.\nhighest bid.\n7. Section 207 of S. 3221 would amend Section 11 of the Outer Con-\n5. Section 205 of S. 3221 would amend Section 15 of the Outer Con-\ntinental Shelf Lands Act as follows:\ntinental Shelf Lands Act as follows:\n[SEC. 11. GEOLOGICAL AND GEOPHYSICAL EXPLORATIONS.-Any agency\nSEC. 15. REPORT BY SECRETARY.-As soon as practicable after the\nof the United States and any person authorized by the Secretary may\nend of each fiscal year, the Secretary shall submit to the President of\nconduct geological and geophysical explorations in the outer Conti-\nthe Senate and the Speaker of the House of Representatives a report\nnental Shelf, which do not interfere with or endanger actual opera-\ndetailing the amounts of all moneys received and expended in connec-\ntions under any lease maintained or granted pursuant to this Act, and\ntion with the administration of this Act during the preceding fiscal\nwhich are not unduly harmful to aquatic life in such area.]\nyear.\nANNUAL REPORT BY SECRETARY TO CONGRESS\nGEOLOGICAL AND GEOPHYSICAL EXPLORATION\nSEC. 15. Within six months after the end of each fiscal year, the Sec-\nSEC. 11. No person shall conduct any type of geological or geophysi-\nretary shall submit to the President of the Senate and the Speaker of\ncal explorations in the Outer Continental ,Shelf without a permit\nthe House of Representatives a report on the leasing and production\nissued by the Secretary. Each such permit shall contain terms and\nprogram in the Outer Continental Shelf during such fiscal year, in-\nconditions designed to (1) prevent interference with actual operations\ncluding a detailing of all moneys received and expended, and of all\nunder any lease maintained or granted pursuant to this Act; (2) pre-\nleasing, development, and production activities; a summary of manage-\nvent or minimize environmental damage; and (3) require the per-\nment, supervision, and enforcement activities; a summary of grants\nmittee to furnish the Secretary with copies of all data (including geo-\nmade from the Coastal State Fund; and recommendations to the Con-\nlogical, geophysical, and geochemical data, well logs, and drill core\ngress for improvements in management, safety and amount of pro-\nanalyses) obtained during such exploration. The Secretary shall main-\nduction in leasing and operations in the Outer Continental ,Shelf and\ntain the confidentiality of all data 80 obtained until after the areas in-\nfor resolution of jurisdictional conflicts or ambiguities.\nvolved have been leased under this Act or until such time as he deter-\n6. Section 206 of S. 3221 would add the following new subsections\nmines that making the data available to the public would not damage\nto Section 5 of the Outer Continental Shelf Lands Act:\nthe competitive position of the permittee, whichever comes later.\n8. Section 208 of S. 3221 would amend paragraph (2) of Subsection\nInsuring Maximum Production From Oil and Gas Leases\n5 (a) of the Outer Continental Shelf Lands Act as follows:\n(2) [Any person who knowingly and willfully violates any rule or\n(d) (1) After enactment of this section no oil and gas lease may be\nregulation prescribed by the Secretary for the prevention of waste,\nissued pursuant to this Act unless the lease requires that development\nthe conservation of the natural resources, or the protection of correla-\nbe carried out in accordance with a development plan which has been\ntive rights shall be deemed guilty of a misdemeanor and punishable\napproved by the Secretary, and provides that failure to comply with\nby a fine of not more than $2,000 or by imprisonment for not more\nsuch development plan will terminate the lease.\nthan six months, or by both such fine and imprisonment, and each day\n(2) The development plan will set forth, in the degree of detail es-\nof violation shall be deemed to be a separate offense.] The issuance\ntablished in regulations issued by the Secretary, specific work to be\nand continuance in effect of any lease, or of any extension, renewal,\nperformed, environmental protection and health and safety standards\nor replacement of any lease under the provisions of this Act shall be\nto be met, and a time schedule for performance. The development plan\nconditioned upon compliance with the regulations issued under this\nmay apply to all leases included within a production unit.\nAct and in force and effect on the date of the issuance of the lease if\n(3) With respect to permits and leases outstanding on the date of\nthe lease is issued under the provisions of section 8 hereof, or with the\nenactment of this section, a proposed development plan must be sub-\nregulations issued under the provisions of section 6(b), clause (2),\nmitted to the Secretary within six months after the date of enactment\nhereof if the lease is maintained under the provisions of section 6\nof this section. Failure to submit a development plan or to comply\nhereof.\nwith an approved development plan shall terminate the permit or\n9. Section 209 of S. 3221 would amend paragraph (2) of Subsection\nlease.\n4(a) of Outer Continental Shelf Lands Act as follows:\n(4) The Secretary may approve revisions of development plans if\n(2) To the extent that they are applicable and not inconsistent with\nhe determines that revision will lead to greater recovery of the oil and\nthis Act or with other Federal laws and regulations of the Secretary\ngas, improve the efficiency of the recovery operation, or is the only\nnow in effect or hereafter adopted, the civil and criminal laws of each\n126\nadjacent State [as of the effective date of this Act] are hereby declared\nto be the law of the United States for that portion of the subsoil and\nseabed of the Outer Continental Shelf, and artificial islands and fixed\nstructures erected thereon, which would be within the area of the\nState if its boundaries were extended seaward to the outer margin\nof the Outer Continental Shelf, and the President shall determine and\npublish in the Federal Register such projected lines extending seaward\nMINORITY VIEWS OF SENATORS FANNIN, HANSEN,\nand defining each such area. All of such applicable laws shall be ad-\nBUCKLEY, McCLURE, AND BARTLETT\nministered and enforced by the appropriate officers and courts of\nthe United States. State taxation laws shall not apply to the Outer\nSUMMARY OF MINORITY VIEWS\nContinental Shelf.\nWe strongly oppose S. 3221 and voted against reporting it for the\nfollowing reasons:\n1. The bill, while purporting to increase oil and gas production on\nthe Outer Continental Shelf, would in fact decrease production.\n2. The bill is totally undesirable and unnecessary according to the\ntestimony of a majority of the witnesses and continued reiteration of\nthese and other repudiations of the bill by correspondence received\nfrom the Administration which was ignored by the Committee.\n3. The geological data disclosure authority granted by the bill is\nconfiscatory, anti-competitive, would discourage OCS exploratory\nefforts and in combination with the mapping program required by the\nbill could encourage \"fly by night\" speculators to seek OCS leasing\nrights.\n4. The first essential steps toward the formulation of a Federal Oil\nand Gas Corporation would be taken under the broad authority and\npunitive provisions created by the bill.\n5. Many problems posed by various provisions of the bill, while\ntroublesome individually, taken in the aggregate would cause serious\ndelays and inequities in expanding OCS leasing, exploration, and pro-\nduction programs thereby frustrating, rather than expediting, the\nachievement of domestic energy self-sufficiency.\n6. The coastal state fund created by the bill would implement an\nunconscionable bribery of coastal states not to resist OCS leasing pro-\ngrams on federal lands adjacent to their coasts at the expense of all\nU.S. taxpayers and particularly to the detriment of the citizens of\ninland states.\nThese objections and others are set forth in detail below.\n1. The bill, while purporting to increase oil and gas production on\nthe Outer Continental Shelf, would in fact decrease production\nThe findings section of the bill recognizes the need for increased\ndomestic production of oil and gas and the purposes section states that\nthe bill is intended to \"increase domestic production of oil and natural\ngas in order to assure material security, reduce dependence on un-\nreliable foreign sources, and assist in maintaining a favorable balance\nof payments \" The substantive contents of the bill, however, would\nhave the effect of achieving just the opposite. The manifold disincen-\ntives created by the bill, hereinafter discussed at length would impair\nrather than increase domestic production on the OCS thereby frustrat-\ning material prosperity and national security, increasing dependence\non unreliable foreign sources, and contributing to an increasingly\ninfavorable balance of payments.\n(127)\n130\n131\ncumbered by other responsibilities. With respect to the OCS,\nLETTER TO CHAIRMAN HENRY M. JACKSON FROM UNDER SECRETARY OF THE\nwe see no reason for a departure from the present system.\nINTERIOR JOHN C. WHITAKER OF MAY 4, 1974\nJohn C. Whitaker, on Monday, May 6, 1974, stated:\nHon. HENRY M. JACKSON,\nIn conclusion, Mr. Chairman, we are expanding, our\nChairman, Committee on Interior and Insular Affairs,\nOCS leasing and we are convinced that this expanded pro-\nU.S. Senate, Washington, D.C.\ngram will be conducted under terms and conditions that pro-\nDEAR MR. CHAIRMAN: This responds to your request for the views\ntect our environment and our land based communities from\nof this Department concerning several bills which deal with the energy\nunacceptable adverse impacts.\nresources of the Outer Continental Shelf, S. 3221, S. 2762, S. 2858,\nWe believe that the flexibility provided by the current\nS. 2922, S. 2389 and S. 3185.\nlegislation is extremely desirable and that legislative changes\nWe recommend that none of these bills be enacted, since appropriate\nare unnecessary at this time.\naction with respect to OCS energy resources can be taken under exist-\nRobert B. Kruger, Attorney-at-Law, on Tuesday, May 7, 1974\ning law.\ntestified:\nThe bills\nIn 1968, I was the project director for the Study of the\nS. 3221 would require the Secretary of the Interior to undertake a\nOuter Continental Shelf Lands of the United States, pre-\nprogram of promoting petroleum production from the Outer Conti-\npared by my law firm for the Public Land Law Review\nnental Shelf subject to new environmental and safety requirements.\nCommission.\nThe Outer Continental Shelf Lands Act would be amended to declare\nWe made a comprehensive study of the operation of the\nthat United States policy is to make available for leasing prior to 1985\nleasing system created under the Outer Continental Shelf\nall OCS lands determined to have geologically favorable potential and\nLands Act.\nbe capable of development without undue environmental harm. To\nOur basic conclusion at that time was that the leasing sys-\ncarry out this policy the Secretary would be required to develop a leas-\ntem, itself, was a viable and competitive one which contained\ning program, specifying the size, timing and location of leasing activ-\nno major structural defects.\nity that will best meet energy needs for the ten year period following\nEugene H. Luntey, on Friday, May 10, 1974, emphasized:\napproval, subject to certain criteria directed toward overall resource\nmanagement, geographic decentralization of leasing and receipt of fair\nWe are not convinced that a revision of the OCS\nmarket value for public resources. An open nomination procedure\nAct is necessary, or would be the most expeditious route to\nwould be established for areas to be leased or excluded from leasing.\npursue such changes.\nThe bill specifies matters to be included in the environmental impact\nWe believe it may be possible for the bidding procedure to\nstatement for leased areas and authorizes the Secretary to obtain all\nbe modified by the Secretary of the Interior under the pres-\ninformation from public or private sources necessary to make evalua-\nent Act so as to provide greater encouragement for explora-\ntions required by the Act.\ntion and development.\nThe bill would also require the Secretary to undertake a major OCS\nRussell Petersen, on Friday, May 10, 1974, said:\noil and gas survey, including geologic investigations and drilling, and\nBecause of the scope of the oil spill liability issue and the\na mapping program. No part of the survey and mapping program\ninadvisability of dealing with the complex subject piecemeal,\nwould be considered a major Federal action under the National En-\nthe Council does not believe that it is necessary or advisable\nvironmental Policy Act of 1969 except drilling exploratory wells. Per-\nto amend the OCS Lands Act to add a liability section.\nsons holding leases or permits for oil or gas exploration or develop-\nment on the OCS would be required to provide the Secretary with\nEugene H. Luntey, on Friday, May 10, 1974, remarked:\npertinent information concerning the area which the lease or permit\n*** due process under existing law would seem to offer\ncovers. In addition, the Secretary would be required to carry out a re-\nreasonable safeguards and new legislation is not necessary to\nsearch and development program to improve technology related to\nensure adequate accountability.\ndevelopment of OCS oil and gas resources.\nDespite the Administration's continuous and patient efforts to offer\nThe bill provides for a safety and environmental protection pro-\ngram which would include (i) safety and environmental standards\nwritten comments on a timely basis during the hearing and mark-up\nfor equipment used in OCS exploration, development and production,\nstages of the Committee's consideration of the bill, nearly all such\n(ii) equipment and performance standards for oil spill cleanup plans\ncommunications were largely ignored. Five examples of such corre-\nand operations, and (iii) a safety regulation enforcement program\nspondence are included in relevant part below:\n132\n133\nwhich includes specified Federal inspection of OCS operations.\nprogram is sufficiently large that availability of drilling rigs will be\nIssuance and continuance of leases would be conditioned upon com-\nthe main limiting constraint rather than availability of unexplored\npliance with such regulations. A standard of strict liability for oil\nleases. ***\nspill damages would be imposed on leaseholders except where damage\nFurthermore, the CEQ study has concluded that leasing can be\nis caused by war or the damaged party.\ncarried out in the areas included in that study if appropriate safety\nSection 8 of the Outer Continental Shelf Lands Act would be re-\nand environmental requirements are adhered to in each area. We intend\nvised to specify that bidding for OCS leases on a \"net profit\" basis is\nto require of the industry whatever design criteria and practices are\nallowed, in addition to bonus bidding, but royalty bidding would be\nnecessary to meet the CEQ concerns.\nexcluded. The bill would also permit the Secretary to sell Federal\nIn contrast, the present law provides sufficient flexibility for an\nroyalty oil by competitive bidding and would prohibit him from con-\nappropriate balancing of energy and environmental factors. Our con-\ntinuing leases which would otherwise terminate, unless there is a rea-\ncern is to improve the leasing system within the present framework\nsonable assurance of production from such leases within the period of\nand in this connection the Department recently has adopted a two-tier\nan extension. Additional provisions are included to assure full devel-\nsystem for designating tracts to be leased. Under it industry nominates\nopment and maximum production from OCS leases, including a Gen-\npromising areas and the public at large is invited to comment on en-\neral Accounting Office audit of shut-in wells, Secretarial unitization\nvironmental and other considerations bearing on tract selection. Based\nor cooperation or pooling agreements, and review authority for devel-\non this and its own independent review, the Department then specifies\nopment plans.\nareas to be leased. A related consideration is the specific study or other\nFive percent of OCS revenues would be paid into a newly created\nrequirements found in several of the bills which are prerequisites to\nCoastal States Fund, subject to a $200 million per year maximum. The\nleasing. ***\nSecretary would be authorized to make grants from the Fund to\nWe concur in the need for adequate study of areas to be leased.\ncoastal States to ameliorate adverse environmental effects and control\nPresent law adequately provides for this through the National En-\nsecondary social and economic impacts associated with development\nvironmental Policy Act and the Outer Continental Shelf Lands Act,\nof Federal OCS energy resources. Secretarial regulations for admin-\nand our policy is to expand our capability rapidly for determining all\nistration of the Fund would include requirements for grant eligibility,\nthe facts necessary to a balanced leasing program. We also agree that\nwith the proviso that no grant could be made for more than ninety\nconsultation with coastal States is appropriate but requiring consent\npercent of the cost of activities to be conducted under the grant. The\nof their governors is unwise in view of the broader national aspects\nSecretary would also be authorized to negotiate with a view to devel-\nof the OCS program.\noping interim agreements to permit energy resource development prior\nLease offering and conditions-competition and other economic con-\nto final judicial resolution of disputes relating to such resources. The\nsiderations.-The OCS Lands Act provide that leasing of OCS lands\nPresident would be authorized to establish procedures for resolution\nshall be by competitive sealed bidding on the basis of a cash bonus\nof international or interstate boundary disputes.\nbid with a fixed royalty on a bid royalty with a fixed bonus, but in no\nDiscussion.-We agree generally with many of the essential objec-\ninstance can the royalty be less than 12.5 percent. The leases are for\ntives of these bills, but recommend against their enactment at this\na five year term. These provisions are sufficiently flexible for institu-\ntime. The existing Outer Continental Shelf Lands Act permits sub-\ntion of the most desirable alternative leasing systems to promote com-\nstantial latitude for adjustment to changing circumstances and our\npetition while serving the public's interest in receiving a fair return\nprogram for development of the OCS can be fully carried out under\nfor its resources and using those resources in the most responsible\nthe present law. Significant changes in that law could seriously delay\nmanner.\nachievement of the degree of national energy independence which we\nDifferent methods of bidding for OCS leases are under constant con-\nbelieve is vital.\nsideration. Bonus bidding has historically been used for Federal OCS\nDiscussed more specifically below are some of the more important\nleasing, but the Department is committed to a test royalty bid offering\nrespects in which we believe provisios of these bills are either unneces-\nnot later than the September 1974 OCS lease sale. Although this ex-\nsary or undesirable.\nperiment is a royalty bid experiment, we believe that the information\nScope of leasing program.-Provisions limiting or otherwise modi-\ndeveloped will tell us enough about both bonus and royalty bidding to\nfying the scope of the OCS leasing program are undesirable. For ex-\nindicate whether further consideration of other possible bidding meth-\nample, the goal stated in S. 3221 of leasing all available prospectively\nods is justified. We are also examining the feasibility of a number of\nproductive OCS lands by 1985 is unrealistic and implies a rapid rate\nother systems such as profit sharing, installment or contingency bonus\nof development which may involve undesirable environmental or other\npayments.\neffects and which is far in excess of that presently planned. Our best\nWe are opposed to mandating any single system which would result\nestimate of the next appropriate change in the scope of the OCS pro-\nin a loss of the flexibility which the present Act provides. ***\ngram is to lease some 10 million acres in calendar year 1975. We believe\nSafety and environmental programs.-The need for constantly im-\nthat the rate of leasing implicit in S. 3221 would dispose of vast OCS\nproving our environmental protection and safety programs is clear\nacreages without increasing petroleum exploration and production be-\nand we concur in the broad objective of several of the bills to achieve\nyond that achievable under the current program. The current leasing\nthis end.\n134\n135\nThe Interior Department is, however, implementing the present\nOCS Lands Act in accordance with the National Environmental Policy\nUnder these provisions a plan for conducting the prescribed survey\nAct to insure that these considerations are adequately taken into\nand mapping programs would have to be submitted to Congress within\naccount. Provisions such as those contained in ***\nsix months after enactment. A progress report to Congress, including\na summary of initial data compiled, would be due within 20 months\nS. 3221 are unnecessary as the actions are authorized under exist-\nafter enactment, and progress reports would be required on an annual\ning laws. Also such provisions might be detrimental if transitional\nbasis thereafter. Conducting such an extensive mapping and survey ef-\nproblems of complying with their provisions delay current studies\nfort would be extremely difficult, especially within the time frame set\nor other actions we are currently undertaking to improve environ-\nmental protection and other requirements. ***\nforth, and would not likely produce results justifying the effort. Again,\nThe Department is undertaking preparation of a full environ-\nour present program undertaken pursuant to existing authority and\nmodified as needs change, should be satisfactory.\nmental impact statement on the new 10 million acre leasing program\nMoreover, since the bill's provisions would exempt all actions other\npursuant to the National Environmental Policy Act. The Council on\nthan the drilling of exploratory wells from classification as a major\nEnvironmental Quality has recently completed a study of OCS leas-\ning, which includes a number of recommendations which we believe\nFederal action for the purposes of Section 102 (2) (C) of NEPA, it\nwill improve our administration of the OCS program. These and other\nwould seem that exploratory wells must therefore be considered major\nactions will, we submit, appropriately serve the objective of insuring\nFederal actions. Requiring an EIS could significantly delay the drill-\ning of exploratory wells that are important to the conduct and comple-\nsafety and environmental protection.\ntion of the survey and mapping programs prescribed under S. 3221 and\nResearch and Development.-A strong research and development\nprogram is essential both with respect to energy and environmental as-\ncould result in unnecessary delays in the preparation and publication\npects of OCS mineral development. It is, however, being accomplished\nof the prescribed maps and in the development of information impor-\nunder existing law and several provisions in the bills under considera-\ntant to an effective and expeditious leasing program for OCS lands.\nSimilar objections appear in several of the other bills. S. 2922 im-\ntion might, if enacted, actually adversely affect the R&D effort. Man-\ndating a wide range of studies by different agencies, as does S. 3221,\nposes several data gathering requirements in section 3 (adding a new\nmay preclude desirable coordination and executive flexibility. ***\nsection 15 to the OCS Lands Act) which are costly and may be virtu-\nPublic information and participation in OCS decisions.-Assuring\nally impossible to obtain within the time frame set forth. The impact\nthat the public has access to information needed to make intelligent\nof the study requirement is particularly serious because of the bill's\ndecisions with respect to OCS energy resources and an adequate op-\nrequirement that no leasing be conducted in any area for which the\nstudy has not been completed.\nportunity to participate in OCS program decisions is essential. Equally\nimportant is the desirability of developing a more extensive resource\nDistribution of OCS revenues ***\ninformation base.\nS. 3221, *** would divert revenues from the U.S. Treasury to ad-\nThe Interior Department presently has the necessary authority to\njacent coastal and other states and we oppose such provisions. Receipts\npursue these objectives. Consultations with industry representatives,\nunder the Outer Continental Shelf Lands Act from OCS oil and gas\nenvironmentalists and others are presently underway concerning the\nleases belong to the Federal Government and currently make a sub-\nadvisability of an exploratory program. The present OCS Lands\nstantial contribution to Federal income. In such revenues were diverted\nAct permits the Department to require that permittee furnish us with\nto coastal and other States, as the bills provide, the Federal Govern-\ndata obtained during exploration and we expect to reach conclusions\nment would need to increase its income from other sources. Also the\nabout what should be done in this regard shortly.\nbills adopt inflexible allocations of funds to such States without regard\nIt would not be appropriate to amend the OCS Lands Act at this\nto need or resources.\ntime to require the development of specific informational programs.\nTo summarize, the bills before the Committee deal with the major\nTo illustrate, the survey and mapping program required by section\nissues relating to use of the energy resources of the Outer Continental\n202 of S. 3221 would impact quite heavily and perhaps undesirably\nShelf. To meet our present energy needs, however, we believe that the\non our OCS program. If enacted, this provision would require that\npresent OCS Lands Act provides a satisfactory framework and that\na survey of OCS oil and gas resources be conducted and that the\nfurther legislation such as that before the Committee is undesirable or\nSecretary maintain a current series of detailed topographic, geologi-\nunnecessary.\ncal, and geophysical maps of and reports about the OCS. Maps for all\nThe Office of Management and Budget has advised that there is no\nareas under lease or proposed for leasing prior to July 1, 1977, would\nobjection to the presentation of this report from the standpoint of the\nhave to be prepared and published prior to July 1, 1976; maps of\nAdministration's program.\nareas proposed for leasing after July 1, 1977; would have to be\nSincerely yours,\nprepared and published not later than six months prior to the last\nJOHN C. WHITAKER,\nday for submitting bids for the areas offered for lease; the maps of\nUnder Secretary of the Interior.\nall prospective areas must be prepared and published not later than\nten years after the date of enactment.\n136\n137\nLETTER TO SUBCOMMITTEE CHAIRMAN LEE METCALF FROM LEGISLATIVE\nPreparation and mapping for publication of such data would be\nCOUNSEL OF THE INTERIOR DEPARTMENT, KEN M. BROWN OF JULY 1,\ncostly in manpower and time; and because of the time lag for pre-\n1974\nparing and releasing the mapped data, the information supplied would\nbe of questionable value to industry. Industry itself collects and con-\nHon. LEE METCALF,\ntinually updates data on potential OCS prospects well ahead of\nChairman, Subcommittee on Minerals, M aterials, and Fuels,\nscheduled lease sales and in many instances ahead of the initial data\nU.S. Senate, Washington, D.C.\ngathered by the Government.\nDEAR SENATOR METCALF In response to your letter regarding Under\nThis data publication provision may not significantly delay energy\nSecretary Whitaker's May 6 testimony on S. 3221 and other legisla-\ndevelopment from the OCS: However, it will divert technical exper-\ntion dealing with S. 3221, please find enclosed our comments on spe-\ntise away from data evaluation for selection of tracts to be offered for\ncific provisions of S. 3221 which could create serious delays in achiev-\nleasing. Identification of favorable prospects will be a critical factor\ning the degrees of energy self-sufficiency for the nation which is so\nin the success of an accelerated leasing program, especially in new\nnecessary.\nfrontier areas.\nGenerally, while many features of the bill are apparently directed\nSection 27.-This section requires completion of a study of methods\nat improving OCS leasing procedures, there is little to encourage early\nto promote competition and maximize revenue, and presumably pro-\nexploration and optimum production from OCS leases. Much of the\nduction, from leasing OCS lands. The study would include a plan for\nauthority proposed concentrates heavily on geological and geophysi-\nimplementing recommended administrative changes and drafts of\ncal investigation and reporting. The bill requires minerals fact finding\nproposed legislation.\nstudies with obligations to report to Congress, without reference to\nThe Department has evaluated these points in the past and is con-\nauthority to implement findings and recommendations.\ntinually investigating procedures for improving OCS leasing. There-\nResponses are also provided to the five specific questions you asked.\nfore, completing a study of these specified points within one year\nWe will be glad to provide any further information you desire.\nwould prove to be only an exercise since there is no provision in the\nSincerely yours,\nAct to incorporate further changes in leasing methods without addi-\nKEN M. BROWN, Legislative Counsel.\ntional legislation.\nEnclosures.\nSection 203, 8.-Under revision of the lease terms, OCS leasing\nwould be restricted to bonus bidding-royalty bidding would be elimi-\nEXAMPLES OF SPECIFIC PROVISIONS OF S. 3221 WHICH COULD DELAY\nnated. The Department is committed to hold a test of royalty bidding\nENERGY SELF-SUFFICIENCY\nat the September 1974, OCS lease sale. Also, the Department is in-\nvestigating the possibility of conducting a test of profit sharing at a\nSection 202, 18(d).-This subsection is interpreted to call for an\nfuture lease sale (possibly September 1974 or January 1975).\nenvironmental impact statement on the leasing program which would\nThe proposed legislation, as written, would prevent such lease tests\ninclude an oil and gas resource assessment of each area to be offered\nor adoption of other leasing practices, if they are found to be desir-\nfor leasing.\nable. The only exception to cash bonus bidding with a fixed royalty is\nPast lease program schedules prepared by the Department have not\na cash bonus with profit sharing fixed at 55 percent. It should be rec-\nrequired impact statements. Instead, environmental statements were\nognized that the profit sharing method would provide no royalty oil\nprepared for individual sales scheduled. The Department is now pre-\nfor distribution under subsection (k) of this section.\nparing a programmatic impact statement for the proposed accelerated\nSection 206, 5.-Subsection (g) would require each lease issued after\nprogram to lease ten million acres annually, and presumably a sepa-\nenactment of this section to require an approved development plan.\nrate impact statement will continue to be prepared for each lease sale\nApproving a development plan prior to any drilling could be complex\nunder that schedule. None of these statements would satisfy the lan-\nand could delay both exploration and production. Because of unique\nguage of the bill as it is now written.\noperating conditions encountered on the OCS and the diverse owner-\nThe time frame for completion of an impact statement in accordance\nship patterns that could exist, a separate plan probably would be\nwith NEPA and a resource assessment as required in the bill could be\nnecessary for each lease issued or unit formed. Requests for approval\nrestrictive. Preparation of a statement covering all areas to be in-\nfor revised plans (allowed under the bill) would be continuous. For\ncluded in the program could require two to three years to complete.\ninstance, a successful OCS lease program of ten million acres annually\nIt probably would be more complex than the trans-Alaska pipeline\ncould involve up to 2,000 development plans.\nand oil shale statements and much more comprehensive than the CEQ\nIt would be preferable for the Act to authorize the Secretary, at his\nenvironmental assessment of OCS development on the Atlantic and\ndiscretion, to require exploratory wells to be drilled within specified\nGulf of Alaska, which was completed in one year.\nperiods and if production were established, to file an approved devel-\nSection 19.-The proposed legislation would increase the Depart-\nopment plan within a given time-possibly six months. This approach\nment's obligation for gathering, mapping and publishing data on OCS\nwould not delay exploratory drilling, which would be carried out\nresources. Geophysical maps and other data would be required to be\nunder existing stipulations and orders.\nprepared and published by July 1, 1976, for OCS areas under lease or\nscheduled for lease on or before June 30, 1977.\n138\n139\nLETTER TO CHAIRMAN HENRY M. JACKSON FROM THE SECRETARY OF THE\nin this matter, I would appreciate your reconsidering the desirability\nINTERIOR, ROGERS C. B. MORTON, OF JULY 15, 1974\nof proceeding with any amendments to the Outer Continental Shelf\nLands Act at this time.\nDEAR MR. CHAIRMAN: In view of your Committee's plan to mark-up\nSincerely,\nS. 3221, I wish to reiterate the Administration's strong opposition to\nenactment of this legislation which would amend the Outer Con-\nJOHN C. SAWHILL, Administrator.\ntinental Shelf Lands Act. Our letter of May 4, 1974, expressed the\nLETTER TO CHAIRMAN HENRY M. JACKSON FROM ASSISTANT SECRETARY OF\nreasons for this position in detail.\nTHE INTERIOR, ROYSTON C. HUGHES, OF JULY 26, 1974\nWe now have a sound program for the development of Outer\nContinental Shelf energy resources which we believe will achieve\nHon. HENRY M. JACKSON,\nsubstantially the same objectives as S. 3221. Extensive environmental\nChairman, Committee on Interior and Insular Affairs,\nprotection and safety measures are incorporated in our program to\nU.S. Senate, Washington, D.C.\nassure Outer Continental Shelf development is conducted with the\nDEAR MR. CHAIRMAN: In accordance with Secretary Morton's July\nminimum acceptable environmental costs and with the greatest possi-\n16 letter on Committee Print No. 1 of S. 3221, relating to the energy\nble safety for workers. New bidding systems are being evaluated and\nresources of the Outer Continental Shelf (OCS) this letter sets forth\ntest sales will be conducted to make certain these valuable energy\nthe Interior Department's analysis of Committee Print No. 1 and our\nresources are leased in a manner which will guarantee a fair return to\nposition concerning its major provisions. We previously expressed our\nthe citizens of the United States and enhance fair competition among\nviews on S. 3221 as originally introduced by letter dated May 4, 1974.\nbidders.\nWe oppose amending the Outer Continental Shelf Lands Acts at\nThe present Outer Continental Shelf Lands Act can fully accommo-\nthis time, because it would disrupt current efforts to achieve full\ndate these objectives and will permit a substantial degree of latitude\nutilization of these resources. The specific problems that enactment\nfor adjustment to future changing circumstances, conditions and tech-\nof S. 3221 would cause are discussed below.\nnology. Enactment of S. 3221 at this time would disrupt these efforts\nLeasing program.-Title II of the bill purports to establish a na-\nresulting in serious delays in meeting the President's goal of energy\ntional policy of use of OCS resources and the criteria for a leasing\nself-sufficiency. I urge your support for the present program, which I\nprogram. Taken together these provisions are so general for the most\nbelieve best serves national energy needs, and for retaining the present\npart that they contribute little or nothing to a sound program. Our\nlegislative framework governing the Outer Continental Shelf.\npresent policy and actions are easily comprehended by these provisions\nSincerely yours,\nwhich are at best unnecessary and at worst confusing and productive\nROGERS MORTON,\nof controversy and litigation. Where these provisions are more spe-\nSecretary of the Interior.\ncific, they are in several instances either superfluous or harmful. We\nbelieve it is undesirable at this time to require development of a ten-\nLETTER TO CHAIRMAN HENRY M. JACKSON FROM ADMINISTRATOR OF THE\nyear leasing program as contemplated by the bill, since this would\nFEDERAL ENERGY ADMINISTRATION, JOHN C. SAWHILL, OF JULY 15, 1974\ndivert scarce funds and manpower from more pressing matters in the\nHon. HENRY M. JACKSON,\nOCS, and other programs. For any leasing program, however, it is\nChairman, Interior and Insular Affairs, New Senate Office Building,\nstandard governmental operating procedure to prepare at the appro-\nWashington, D.C.\npriate time the budget and manpower estimates called for in new sec-\ntion 18(c) of the OCS Lands Act which the bill would add (page' line\nDEAR MR. CHAIRMAN: I have recently learned that your Committee\n20 through page 7, line 5). New section 18(d) mentions some factors\nis planning to consider S. 3221, which would amend the Outer Con-\nwhich must be included in the environmental impact statement on the\ntinental Shelf Lands Act of 1953. As Duke Ligon testified in early\nleasing program. These are factors which obviously will be included\nMay (copy attached), it is the opinion of the Administration that no\nwhether or not section (d) becomes law, but we oppose on principle\namendments are necessary or desirable at this time since many of the\nthis amendment to the National Environmental Policy Act. New sec-\nmatters contained within the proposed amendments can be handled\ntion 18(e) requires the Secretary of the Interior to establish pro-\nmore effectively and expeditiously under existing laws.\ncedures for a leasing tract-nomination system-something we have al-\nThe Outer Continental Shelf Lands Act is broad and flexible.\nready done under the present OCS Lands Act, as indicated in our\nChanges and adjustments to existing policy can be carried out by\nMay 4 letter.\nvirtue of authority contained in that Act. As a matter of fact, the\nLikewise, sections 18(f) through (j) would have a minimal practi-\nInterior Department is pursuing that course through changes in\ncal effect, except perhaps in two respects. First, section 18(h) requires\nleasing regulations, additional proposed changes, and by some experi-\nthe Secretary to review and reapprove the leasing program at least\nmental lease sales planned for execution beginning later this year.\nonce each year. This intrusion of executive discretion may, on the one\nIn light of the above and in the hope that we can avoid confusion\nhand, require needless paperwork and establish an unenforceable\n140\n141\nrequirement or, on the other hand, compel too much review and re-\nsound program. In this regard, we are meeting the concerns underlying\napproval of leasing programs. Second, section 18(i) confers broad\nthe new section 21 which the bill would add to the OCS Lands Act,\nauthority on the Secretary to obtain information needed to-prepare\nincluding inspection, accident investigation and reporting measures.\nenvironmental impact statements with little regard for recently en-\nLiability for oil spills.-The Administration currently has under\nacted energy data and information provisions, the need for limiting\nconsideration comprehensive legislation relating to oil spill and other\ngovernmental authority or providing appropriate protection of private\nOCS liability. We recommend that the Committee defer action in this\ninterests.\narea until the Administration proposal is developed. The Council on\nOCS oil and gas survey program.-To a large degree the bill's pro-\nEnvironmental Quality has previously commented on new section 22\nvisions adding a new section 19 to the OCS Lands Act (page 9, line 1\n(page 15, line 23 through page 17, line 19).\nthrough page 11, line 18) are unnecessary, but to the extent they are\nNegotiation with States and boundary determinations.-New sec-\nlikely to have an actual effect, they could impact quite heavily and\ntions 23 and 24 of the OCS Lands Act (page 17, line 20 through page\nperhaps undesirably on our OCS program. The bill would require that\n18, line 8) provide no new authority for the Executive Branch and\na survey of all OCS oil and gas resources be conducted and that the\nmerely call for actions pertaining to the matters with which we are\nSecretary maintain a current series of detailed topographic, geologi-\nalready dealing.\ncal and geophysical maps of and reports about the OCS. Maps would\nCoastal State Fund.-We are opposed to provisions of the bill which\nbe required no later than six months prior to the last day for submis-\nwould create a new program of grants to adjacent coastal States and\nsion of bids for OCS areas scheduled for lease on or after July 1,\nthereby divert revenues from the U.S. Treasury. Receipts under the\n1977; and in no case later than ten years after enactment of all other\nOCS Lands Act from OCS oil and gas leases belong to the Federal\nareas.\nGovernment and currently make a substantial contribution to Fed-\nUnder these provisions a plan for conducting the prescribed survey\neral income. If such revenues were diverted to coastal States, as new\nand mapping programs would have to be submitted to Congress within\nsection 25 of the Act would provide (page 18, line 10 through page\nsix months after enactment. A progress report to Congress; including\n19, line 20), the Federal Government would need to increase its in-\na summary of initial data compiled, would be due within 20 months\ncome from other sources. In effect, the bill increases Federal expendi-\nafter enactment, and progress reports would be required on an annual\ntures outside the normal budget and appropriation process, which is\nbasis thereafter. Conducting such an extensive mapping and survey\nboth bad management and inflationary. It results in an inflexible\neffort would be extremely difficult, especially within the time frame\nallocation of funds to such States without regard to need or resources\nset forth, and would not likely produce results justifying the effort.\nand also fractionates efforts to address the environmental, social and\nCarrying out the mapping and survey requirements (including surveys\neconomic problems of OCS energy development.\non a spacing no greater than two kilometers) would require large\nLease terms.-The provisions of the present OCS Lands Act are\nexpenditures of money, possibly on the order of several billion dollars.\nsufficiently flexible for institution of the most desirable alternative\nAgain, our present program undertaken pursuant to existing authority\nleasing systems to promote competition while serving the public's\nand modified as needs change, should be satisfactory.\ninterest in receiving a fair return for its resources and using those re-\nMoreover, since the bill's provisions would exempt all actions other\nsources in the most responsible manner. Different methods of bidding\nthan the drilling of exploratory wells from classification as a major\nfor OCS leases are under constant consideration. Bonus bidding has\nFederal action for the purposes of section 102 (C) of the National\nhistorically been used for Federal OCS leasing, but the Department is\nEnvironmental Policy Act, it would seem that exploratory wells must\ncommitted to a test royalty bid offering not later than the September\ntherefore be considered major Federal actions. Requiring an environ-\n1974 OCS lease sale. Although this experiment is a royalty bid experi-\nmental impact statement could significantly delay the drilling of explo-\nment, we believe that the information developed will tell us enough\nratory wells that are important to the conduct and completion of the\nabout both bonus and royalty bidding to indicate whether further\nsurvey and mapping programs prescribed under S. 3221 and could\nconsideration of other possible bidding methods is justified. We are\nresult in unnecessary delays in the preparation and publication of the\nalso examining the feasibility of a number of other systems such as\nprescribed maps and in the development of information important to\nprofit sharing, installment or contingency bonus payments. We are\nan effective and expeditious leasing program for OCS lands.\nopposed to mandating any single system which would result in a loss\nResearch and development.-A strong research and development\nof the flexibility which the present Act provides.\nprogram with respect to both energy and environmental aspects of\nSection 203 of the bill would revise section 8 of the OCS Lands Act\nOCS mineral development is being accomplished under existing law.\nto specify that bidding for OCS leases on a \"net profit\" basis is\nNew section 20 of the Act (page 11, line 20 through page 13, line 7) is\nallowed, in addition to bonus bidding, but royalty bidding would be\nsuperfluous.\nexcluded. The Committee Print modified the original bill to specify\nSafety.-As pointed out in our May 4 letter, a recent OCS study by\nthat not less than 30% of net profit must be paid to the United States,\nthe Council on Environmental Quality has concluded that leasing can\ninstead of requiring a 55% payment. Section 204 of the bill would also\nbe carried out in OCS areas if appropriate safety and environmental\npermit the Secretary to sell Federal royalty oil by competitive bidding\nrequirements are adhered to and we intend to require of industry\nand would prohibit him from continuing leases which would other-\nwhatever measures are needed to assure a safe and environmentally\nwise terminate, unless there is a reasonable assurance of production\n142\n143\nfrom such leases within the period of an extension. Additional provi-\nEven though the bill requires that the Secretary shall maintain\nsions are included in section 206 to assure full development and maxi-\nthe confidentiality of all such proprietary data or information SO\nmum production from OCS leases, Secretarial unitization or coopera-\nreceived, these requirements have been qualified by vague clauses\ntion or pooling agreements, and review authority for development\npertaining to the amount of time such information or data shall\nplans. In our view \"net profit\" bidding is permitted under the present\nremain confidential.\nAct subject to certain non-objectionable limitations. We are continuing\nIt is likely that use of the data in the published maps and sur-\nto evaluate the desirability of \"net profit\" and other forms of bidding.\nveys required by the Act and in the environmental impact state-\nMiscellaneous.-Sections 301 and 302 of the bill require several in-\nments required by The National Environmental Policy Act, let\nvestigations and studies as to which attention is already being directed.\nalone the high probability of \"leaks\", will result in disclosure of\nThe authority conferred is redundant and poses the potential of con-\nproprietary information.\nfusing current authorities and efforts.\nB. Such disclosure of proprietary information and subsequent pub-\nIn regard to section 302, we have been studying and monitoring\nlication as part of the Environmental Impact Statements or as part\nshut-in and flaring wells under the OCS Lands Act and have furnished\ninformation to the Congress on this subject.\nof COMPETITIVE. the mapping publications required by the act would be ANTI-\nSincerely yours,\nSuch publication of proprietary information would alleviate\nROYSTON C. HUGHES,\nor substantially reduce competition as between present or prospec-\nAssistant Secretary of the Interior.\ntive OCS lessees. Regarding the disclosure of raw data as well as\ninterpretative information, this anticompetitive effect is most\nIn summary, the Outer Continental Shelf Lands Act of 1953 has\nsevere in areas on the OCS not under lease. Exploration permits\nbeen and remains a landmark legislative measure which provides an\nconvey no exclusive rights to the holder to explore any area of the\nample statutory foundation for the orderly management of the oil and\nOCS. Each potential lessee has an equal right to explore any\ngas resources of the federal offshore area. The administration has\nunleased area of the OCS and in turn an incentive to do SO in order\nrepeatedly emphasized, and we agree, that tampering with an Act\nto acquire sufficient information to enable him competitively to\nthat has steadfastly served the nation for over twenty years is unneces-\nidentify promising tracts. To require him to disclose either data\nsary, undesirable, and counterproductive. S. 3221 is unnecessary,\nor interpretative information resulting from such exploratory\nundesirable, and counterproductive to the rapid attainment of energy\ninitiatives cuts at the heart of the competitive system.\nself-sufficiency.\nThe very backbone of competitive free enterprise in the de-\n3. The geological data disclosure authority granted by the bill is con-\nvelopment of the OCS is the fact that private companies main-\nfiscatory, anticompetitive, would discourage OCS exploratory\ntain and build their competitive positions on the strength of\nefforts and in combination with the mapping program required\ntheir own proprietary information. For such information to be\nby the bill could encourage \"fly by night\" speculators to seek\ngiven out by the Federal Government would destroy that free\nOCS leasing rights\ncompetition and therefore severely delay development of the\nOCS resource.\nSection 18(i) authorizes the Secretary of the Interior to obtain\nunlimited \"data\" and \"other information\" from public and private\nC. Rather than increasing the ease of entry into OCS production\nsources concerning potential oil and gas reserves for use in preparing\noperations and thereby providing for increased competition, the data\nEnvironmental Impact Statements; and\nand information disclosure requirements in combination with the\nSection 19(h) directs the Secretary to require lessees and explora-\nrequirement that the Secretary publish such data and information\ntion permit holders to disclose \"any data about the oil or gas resources\nwould discourage private efforts to obtain such exploratory data and\ninformation on the OCS.\nin the area subject to the lease\" in order to conduct a mapping\nA company would object to using its own capital to finance\nprogram.\nexploratory efforts if the results of such efforts would automati-\nSection 207 amends Section 11 of the existing Act and requires, as\na condition for the issuance of an exploration permit, that the per-\ncally be turned over to the government, which, through publica-\nmittee turn over to the government all data obtained (including well\ntion of such information in the form of maps and environmental\nlogs and the actual drill cores) during exploration.\nimpact statements would in turn be making it available to com-\nA. Such authority is CONFISCATORY in nature and could lead\npeting companies. The result would be a substantial lessening\nof private exploration forcing an increased level of federal ex-\nto an unconstitutional \"taking of proprietary information\".\nAlthough OCS lessees have, by regulation, traditionally been\nploration and a subsequent dependence upon such federal ex-\nrequired to transmit raw data to the USGS resulting from drill-\nploratory information by all companies wishing to obtain OCS\ning and production operations, they have not been required to\nleases. Thus, by virtue of the fact that the principal, if not ex-\ndisclose either raw data or proprietary interpretative information\nclusive, source of exploratory information will be that collected\nresulting from exploratory efforts conducted pursuant to an ex-\nby the federal government greater uncertainty on the part of the\nploration permit for unleased areas. Requiring such disclosure\ncompanies concerning the interpretation of such data and re-\ncould result in the confiscation of proprietary information.\nluctance by the companies to rely upon the exploratory informa-\n144\n145\ntion collected by the government would serve as a disincentive\nOnce private industry has been throughly discouraged and de-\nto responsible companies to submit bids at future OCS lease sales.\nlays in OCS development are apparent, the availability of mas-\nD. Instead, \"FLY BY NIGHT\" SPECULATORS would be en-\nsive amounts of high quality information, trained survey, drill-\ncouraged to try to make a \"fast buck\" by utilizing the data published\ning and geological personnel and modern, sophisticated equip-\nby the federal government as a basis for submitting bids at future\nment, would dictate the use of it all \"in the public interest\". When\nOCS sales.\nall the above elements are present, we would have a federal oil and\nThe Interior Department has already been troubled by specu-\ngas exploration company, complete with an unlimited supply of\nlators (in one case, Fats Domino) submitting bids at OCS lease\nprospects, a captive market and the ability to control prices.\nsales. This problem would be seriously magnified if the data\nShort of such a result, the government could easily be inclined to\nprovisions of the bill became law.\nnationalize or partially nationalize the U.S. petroleum industry\n4. The first essential steps toward the formulation of a Federal oil\nas the British government has already announced its intention to\ndo in the North Sea area.\nand gas corporation would be taken under the broad authority\nand punitive provisions created by the bill\nSuch a temptation should never be presented to the government\nin a nation whose economic strength is the result of its protection\nSection 19(b) authorizes the Interior Department to obtain in-\nof free enterprise.\nformation by itself conducting, contracting for or purchasing the re-\nsults of, surveys and investigations.\n5. Many problems posed by various provisions of the bill, while\nSection 19 (h) requires the industry to share its data about \"the oil\ntroublesome individually, taken in the aggregate would cause\nor gas resources\" as a condition precedent for retaining a lease.\nserious delays and inequities in expanding OCS leasing, ex-\nSection 207 requires disclosure to the Interior Department of data\nploration, and production programs thereby frustrating, rather\nobtained pursuant to exploration permits.\nthan expediting the achievement of domestic energy self-\nSection 19(c) directs the Interior Department to map the OCS and\nSufficiency\nto a degree of detail suitable for actually drilling for oil and gas and\nA. Section 18(f), (g) and (h) prohibit leasing any OCS area\nthat no area may be leased until such maps are published.\nafter January 1, 1978, not included in a published leasing program.\nA. Such authorities, if exercised, would cause the Interior Depart-\nThis requirement is not only unnecessarily cumbersome and\nment to compete directly with private enterprise.\nrigid, but would also cause leasing delays by preventing practi-\nThe enormity of the mapping requirements creates a huge in-\ncal and needed adjustments in areas to be included in individual\nformational need which can be filled only by government enter-\nlease sales. This intrusion into reasonable executive discretion\ning the data business in competition with private enterprise. Oil\nmay, on the one hand, require needless paperwork and establish\nexploration and geophysical companies which normally sell their\nand unenforceable requirement or, on the other hand, compel too\ninformation to oil companies, will not want to supply geo-scien-\nmuch review and reapproval of leasing programs.\ntific data if they know it would be made public, since its value\nB. Section 18(d), which amends NEPA, lists factors which need to\nstems from its remaining confidential. There is, thus a strong\nbe included in environmental impact statements which although in-\ndisincentive to the industry which could be overcome only by\nflexibly restrictive in parts is also too broad to be properly applied\ngovernment exercising its authority to perform the surveys on\nregarding all future OCS lease sales, including those in virgin areas.\nits own account. Because of government's market impact. not only\nIt is not only unnecessary but would also cause delays in expediting\nwould the geo-data industry lose a major customer, but it would\nthe Interior Department's already expanded leasing program.\nface a new, all powerful competitor which would obtain, com-\nC. Section 19(d) requires the Secretary within six months to sub-\npile and publish the data at a fraction of its cost.\nmit to Congress a survey and mapping plan.\nThe need for increased drilling. caused by the mapping require-\nThis subsection would require delays in both mapping and leasing\nments, given the shortage of drilling rigs, would encourage the\nprograms by virtue of the fact that manpower needed for action pro-\ncreation of a drilling fleet which also would compete with the\ngrams would be taken away from their work to prepare a planning\ndrilling industry. Finally, the sections of the Act which authorize\ndocument of questionable utility.\nthe collection of industry's raw data creates a distinct competitive\nD. Section 21 of the bill calls for an arbitrarily expanded and de-\ndisadvantage and an exploratory disincentive to private enter-\ntailed safety program.\nprise. The results of such a situation would be uncertainty, court\nThis is one of the bill's most classic examples of \"overkill\".\nbattles. and delav. Industry would be forced out of business or\nThe Interior Department in its letter to the Chairman of May 4th\nout of the country in an effort to seek opportunities, thus increas-\npointed out that:\ning the delay in OCS development and increasing costs to the\n*** a recent OCS study by the Council on Environ-\nconsumer.\nmental Quality has concluded that leasing can be carried\nB. Given all the elements of a \"business\" opportunity, the urge of\nout in OCS areas if appropriate safety and environmen-\nthe government to seize it would be irresistable.\ntal requirements are adhered to and the Interior Depart-\n38-533 O 74 10\n146\n147\nment is already requiring of industry whatever measures\nIn any action taken by the Federal Government different law-\nare needed to assure a safe and environmentally sound\nyers may have several different views which may or may not coin-\nprogram. In fact it is already meeting the concerns\ncide with the governments. The sole basis for permitting this di-\nunderlying the new section 21 which the bill would add\nvergence of opinion to be argued in court should be whether or\nto the OCS Lands Act, including inspection, accident in-\nnot a party has standing and is being injured. To provide other-\nvestigation and reporting measures.\nwise, as this section does, will encourage a proliferation of law\nThere is no way for the Congress to be able to generalize and\nsuits. The resultant effect will be lucrative attorneys' fees and\nprescribe for all future individual platforms in the Gulf of\ndelay.\nMexico, the Atlantic, the Pacific and off Alaska, safety standards\nStatutes should encourage obedience to orderly process and re-\nas all inclusive as those contained in Section 21. Implementing\nspect for lawful authority. This provision of S. 3221 does neither.\nthese safety requirements would cause serious delays not only\nSection 26 would not only constitute an express invitation to\nbecause of expanded manpower and cost requirements, but also\ncitizens to initiate law suits to delay any or all parts of the ex-\nbecause of litigation which would result seeking to enjoin further\npanded OCS program and thereby frustrate the early attainment\nOCS leasing, exploration, and production until all safety stand-\nof energy self sufficiency, but would additionally substitute gov-\nards had been complied with.\nernment by individual extremist groups for government by orga-\nE. Section 26 of the bill authorizes citizen suits.\nnized representation.\nIt thereby, in addition to citizen suits already encouraged by\nThe impact on attainment of energy self sufficiency is incalcu-\nNEPA, creates broader standing for many new and separate\nlable. Each suit could result in delay. Since continuing action is\ncauses of action to be brought against both the Interior Depart-\nrequired of the Secretary (annual revision or reapproval of the\nment and any person alleged to be violating any part of the Act.\nleasing plan, coastal state grants, revision of lease terms etc.)\nIn light of the experience of the trans-Alaska pipeline litigation\nthere is no end to the delay that can be encountered if suits are\nand numerous suits already brought under NEPA to enjoin OCS\nfiled every time the Secretary is required to act.\nlease sales, this section would constitute an express invitation to\nSome measure of the type of delay this type of litigation can\neach U.S. citizen to initiate lawsuits to slow down and otherwise\ncause is illustrated by the nation's experience with the Alaska\ndelay the entire OCS program.\npipeline. The five year delay was ended only by an act of Congress\nThe citizens' suit provision of S. 3221 is one more step toward\nat a time when due to severe petroleum shortages many were\nwaiting in long lines to obtain gasoline.\n\"government by combat between attorneys\".\nUnder this provision any citizen with an interest which is or\nThe citizen suit concept had its origin, presumably, in instances\nmay be adversely affected may commence a civil action to enforce\nwhere the government agencies responsible for enforcing the law\nwere failing to perform their duty. Suits by private citizens were\nthe law. Any citizen may intervene as a matter of right in a suit\na means of correcting that governmental dereliction. Section 26\nbeing diligently prosecuted by the government.\nassumes that the Secretary and other agencies of government will\nBy providing a forum for private citizens to share in or become\ntotally fail-to-perform their respective duties. It's almost anom-\nthe dominant partner in the Executive Branch's Constitutional\nresponsibility to execute and enforce the laws of the land, the\nalous that the functions assigned to the Secretary would be\nCongress is frustrating and thwarting the goal of orderly devel-\nspelled out, and then, in effect, provide that if any citizen who\nopment of the Outer Continental Shelf.\ndoesn't agree with the Secretary can bring the matter up in liti-\nOur system of jurisprudence has traditionally provided relief\ngation and let the Court decide whether the Secretary was right\nto persons when direct injury is involved. The language of this\nor wrong. A person who is injured should have \"his day in court\"\nsection, however, would substitute \"interest\" for \"injury\". It then\nand he does without citizen suit provisions. The citizen suit pro-\ngoes one step further and attempts to create the interest by the\nvision seems to encourage any person-who may not be injured-\nto bring policy determinations into the courthouse.\ntrust concept of Section 201 which states that \"is a vital na-\ntional resource held in trust by the Federal Government for all\nNEPA already presents sufficient opportunity for citizens to\nparticipate in the OCS decision making process; in fact, too much\npeople\". Under such a concept all citizens would have a justifi-\nopportunity.\nable interest under the bill even though the interest is shared in\nThe Courts have become more and more liberal in recent years\ncommon with all other citizens and there is no injury to the party\nbringing the suit. This is an abdication of government. Enforce-\nin granting \"standing\" to sue. The liberalized standing concept\nwas somewhat narrowed by the Supreme Court in the Mineral\nment of the law of the land, insofar as the Outer Continental\nKing case (Sierra Club V. Morton). In that case the Court held\nshelf is concerned, would be placed in the hands of citizens with-\nthat the goal is to put the right to litigate in the hands of those\nout regard to the diligence with which the government is per-\nwho have a direct stake in the outcome, not those who seek to do\nforming its responsibilities. The net result will be a government\nno more than vindicate their own value preferences through the\nby vigilantes.\njudicial process. This decision still permits suit by any individual\n148\n149\nwho has in fact suffered an injury or by an organization as a rep-\n(c) Cleanup oil spills.\nresentative of members who have in fact suffered an injury.\n(d) Drilling bits.\nIn Natural Resources Defense Council v. Morton several orga-\n(e) Flaw detection for undersea pipelines.\nnizations sought and were granted an injunction barring lease sale\n(f) Development of wells in deep water.\nof oil and gas on OCS because the NEPA statement failed to dis-\n(g) Subsea production.\ncuss in detail alternatives to the sale. This resulted in a delay of\n20 (b) Citizen and/or Company and or Union v. Secretary.-\none year.\nSafety and environmental standards. 1. Almost certain chal-\nThe following is a list of suits which could be brought, and in all\nlenges to safety and environmental standards for OCS explora-\nlikelihood would be brought, under the provisions of Section 26.\ntion and production equipment.\nThe delays which could result from such litigation are evident.\n20 (c) Citizen and Company v. Secretary.-\n1. Cleanup and Performance standards of oil spill cleanup\nCitizen v. Secretary--challenging 10 year plan\ntoo rigid.\n18 (b) (1) 1. Management does not consider all resources values\n2. Cleanup and Performance standards of oil spill cleanup\nproperly.\ntoo loose.\n18 (b) (1) 2. Management does not consider potential impact oil\n21 (a) Citizen and/or Union v. Secretary.-All types of litiga-\nand gas exploration on other resource values of OCS.\ntion-safety too loose, inspection not made or too lax, challenge\n18 (b) (2) 3. Timing and location doesn't properly distribute and\ncontinuation of lease.\ndecentralize exploration and development among various areas\n21 (b) Company v. Secretary.-All types litigation-safety regu-\nof OCS under (A), (B), (C) and (D).\nlations too rigid.\n18 (b) (3) 4. Doesn't provide for receipt of \"fair market value.\"\n18 (c) 5. Estimates of required appropriations and staffing im-\nCitizen v. Company\nproper.\n22 (c) Where differences between environmentalists and Secretary\n18 (d) 6. Environmental statement improperly assesses oil and\ngas resources of each area.\nover whether pollution threaten aquatic or wildlife citizens will\nsue.\n18 (d) 7. Environmental statement improperly assesses rates of\nCitizen v. Secretary\nexpected exploration and development.\n18 (d) 8. Environmental statement improperly assesses geologi-\n29 1. Various challenges on Baseline and Monitoring Studies.\ncal and geophysical conditions, biological data, commercial and\n203 2. Leasing and accounting challenges.\nrecreational uses of \"nearby land and water areas.\"\n204.3. Disposition of royalty oil.\n18 (e) 9. Challenge Secretary's regulations on procedures for re-\n206 (d) 4. Litigation over extension of leases-waiver develop-\nceipt and consideration of nominations, public notice, partici-\nment requirements.\npation of State and local governments and coordination pro-\ngram with programs under Coastal Zone Management Act.\nCitizen and/or Company v. Secretary\n18 (h) 10. Every revision by Secretary subject to same attacks.\n23. Challenging any interim agreements between the U.S. and\nCompany v. Secretary-challenging 10 year plan\ncoastal states allowing energy resources development in dis-\n18 (i) 1. Challenging right of government under 18(b) and (i) to\nputed areas.\nobtain private data about location of oil and gas reserves.\n18 (j) 2. Challenging right of government agencies to disclose\nCitizen and/or Company v. Secretary\ndata given in confidence.\n25 Challenging V. Federal grants made to coastal states to assist\nin ameliorating adverse environmental effects and control of\nCitizen and/or Company v. Secretary\nsecondary social and economic impacts associated with OCS\n19 (h) 1. Challenge requirement that holder of lease or permit give\nNational energy resources development.\nSecretary any data about oil or gas resources subject to lease or\nCitizen v. Secretary\npermit.\n203 (a) Challenging accounting procedures and standards govern-\nCompany v. Secretary-challenge research by Secretary\ning the calculation of net profits and the actual calculation of\nnet profits.\n20 (a) 1. Challenge finding that research not being conducted by\nF. Section 28 additionally authorizes the Attorney General to bring\nother public or private entity.\nsuits against persons subject to the Act and imposes criminal and civil\n(a) Safety devices.\npenalties for violations of the Act.\n(b) Controlling blowouts.\n150\n151\nThis section is another case of \"overkill\" apparently designed to\nIn addition to the concept being ill-conceived, Section 22 is de-\ncause more delays. Its inclusion suggests that OCS permittees and\nficient in the following ways:\nlessees have been acting in bad faith. No such reports have been\nreceived by the Committee substantiating such a notion. We con-\n(1) A lessee is liable for damages to any person who is\nclude therefore that the inclusion of this section was intended to\neffected (a) within the territory of the United States, Can-\nada or Mexico; (b) in or on waters within two hundred\nseek public favor by attacking U.S. petroleum companies in order\nnautical miles of the baseline of the United States, Canada\nto distract attention away from the dismal legislative record of the\nor Mexico from which the territorial sea of the United States,\nNinety-third Congress regarding energy legislation.\nCanada or Mexico is measured; or (c) within one hundred\nG. Section 204 which amends Section 8 of the OCS Lands Act com-\nnautical miles of any operations authorized under this Act.\"\nmands the Secretary to dispose of its share of the oil by competitive\nbid for not less than its fair market value.\nIt is inconceivable that in this bill dealing with development\nof our Outer Continental Shelf that we are trying to estab-\nThere are no guidelines concerning how the Secretary will de-\nlish international law on damages due to persons in foreign\ntermine value. This becomes particularly important when an inde-\ncountries. This is the purpose and intent of numerous inter-\npendent refuses to purchase as provided in Subsection (k) and\nnational conventions and conferences, which are now under-\nthe lessee is obligated to purchase for not less than the highest\nway, e.g., Law of the Sea Conference in Caracas, Venezuela.\nbid. Presumably, an independent could bid a high amount of a\nThe scope of any liability section at this time should be lim-\nsmall quantity of oil, thus compelling the lessee to purchase the\nited to damages resulting in spills on the Outer Continental\nremaining portion at such amount, even though it be higher than\nShelf or in or on waters above the Outer Continental Shelf.\nfair market value.\n(2) Strict liability is imposed for damages even if the dam-\nThis is a discriminatory and highly inequitable burden to place\nages that occur are caused by an \"Act of God\". This has been\non the lessee. If he cannot have the opportunity to bid on the\na well-accepted defense to strict liability and should be in-\nroyalty oil he should not be forced to pay a price higher than fair\ncluded as such under Section 22 (b) (2). This is particularly\nmarket value.\ntrue when there is an absolute requirement to clean-up any\nThe provision is inconsistent with its title in that it attempts to\nspills regardless of cause.\nlegislate the sale of net profit oil as well, which oil will be a contin-\n(3) There is a limit of $100,000,000 for each incident with\nually indeterminate amount, depending on the profitability of op-\nrespect to damages but not clean-up. The $100,000,000 limit\nerations for a given period. The provision as drawn precludes a\nshould be applied to both damages and clean-up. A $7,000,000\nlessee from having access to a considerable portion of the oil de-\nthreshold liability for the lessee and a $100,000,000 limit is\nrived from his lease as opposed to a fixed amount in a\nmore than adequate to instill incentives to operate safetly and\nstrict royalty situation which permits proper economic planning.\nprotect those damaged and affected by a spill.\nThe inability of a lessee to have access to net profits oil under his\nI. Section 203. Revision of Lease Terms, provides that bidding shall\nlease will thus have a negative effect on the valuation of an area\nbe at the discretion of the Secretary on the basis of a cash bonus with\nand thus be reflected in his bids.\na fixed royalty or not less than 121/2% or on the basis of a cash bonus\nThe basic right to dispose of royalty oil is spelled out at the\nwith a share of the net profits derived from operation of the tract of\noutset. However, the provision goes on to attempt to legislate the\nno less than 30% reserved to the United States or on the basis of a cash\nSecretary's right to discriminate against other than \"independent\nbonus with a variable net profit bid.\nrefiners\", by limiting participation in such sales should the Sec-\nThe method of bidding on leases should be retained as presently\nretary deem it appropriate. The authority of the Secretary to\nwritten in the existing Act, but there should be a study and report\nrestrict the right of any parties to bid is highly questionable.\nto Congress on all reasonable alternatives as called for in Section\nH. Under Section 22, there is established strict liability for damages\n27. The Department of the Interior and the Federal Energy Ad-\nsubject to a $100,000,000 limit for each incident and unlimited liability\nministration both oppose changing the law in this area. Further,\nfor a clean-up and removal. A liability fund is established through col-\nit is illogical to call for a study of all alternatives and then man-\nlection of 21/2 cents for each barrel of oil produced in the Outer Con-\ndate what ones are to be used.\ntinental Shelf.\nOne of the alternatives is a \"net profit\" concept. If implemented\nThe Federal Water Pollution Control Act Amendments of 1972\nthis would severely reduce if not retard OCS development. A de-\nand well-established tort law provide full and adequate protection\nvelopment program under a net profits sharing system would ne-\nfor damages and clean-up. To now establish new liability laws in\ncessitate the recovery of substantially more reserves to economi-\nthis area is redundant and unnecessary. It is also counter to accel-\ncally justify the required expenditures to develop. Under this type\nerating development of our domestic supplies. This results from\nof arrangement the lessee must recoup the tremendous costs of dry\nrequiring the diversion of $100,000,000 into a fund which could be\nholes, lease acquisitions and other exploratory costs of non-pro-\nmore beneficially used to explore for and develop oil and gas.\nductive leases from which there is no profit. This format will thus\n152\n153\nresult in the elimination of any prospective tracts from bid con-\nreceived from the Director of the Office of Management and Budget,\nsideration with the accompanying depression of production and\nalong with supporting documentation, are reprinted below:\nreserves.\nUnder the existing bidding system, a bidder's evaluation of the\nU.S. SENATE,\nreserve potential is the principal factor in determining the\nCOMMITTEE ON INTERIOR AND INSULAR AFFAIRS,\namount of bonus bid for a given tract. Under the proposed net\nWashington, D.C., August 14, 1974.\nprofits sharing system, it is possible that the level of bidding will\nMr. FRANK ZARB,\nbe keyed more to a minimum earning requirement and minimum\nDeputy Director, Office of Management and Director, Executive Office\nexpenditure level. This could result in less development at a slower\nBuilding, Washington, D.C.\npace. The goal for the Outer Continental Shelf is to maximize\nDEAR FRANK: As you know, the Senate Interior & Insular Affairs\nproduction through full and accelerated development.\nCommittee has reported S. 3221, the so-called Energy Supply Act\nMany tracts awarded under a net profits leasing format would\nwhich deals with Outer Continental Shelf (OCS).\nnot be fully developed and would be abandoned earlier in their\nSection 25 (Committee Print 2 attached) calls for a creation of a\nproducing life in view of added cost burdens, resulting in a waste\nCoastal State Fund which would provide for 200 million dollars\nof natural resources.\nper year for payment to coastal states which are adjacent to the Fed-\nThe recognized problem areas associated with a net profit sys-\neral OCS on which oil and gas exploration and production activities\ntem leasing format both at a fixed and variable bid rate fully\nare to be conducted.\nwarrants a detailed and complete review by the Department of\nThis fund is little more than another form of the OCS revenue shar-\nthe Interior and that the results be keenly analyzed before this\ning concept. It is my understanding that the current administration,\napplicable section of the OCS Lands Act is further considered for\nand for that matter, every administration since the Outer Continental\namendment. For the same reasons other alternative methods of\nShelf Lands Act of 1953 was passed, has been opposed to a revenue\nbidding should be reviewed and a report thereon filed with\nsharing measure. The false premise for a Coastal State Fund is that\nCongress.\nactivities of oil and gas companies conducted on the outer continental\nJ. Failure to comply with the development plans prescribed in Sec-\nshelf constitutes an adverse economic or social impact on the adjacent\ntion 206 would result in termination of the lease, regardless of whether\ncoastal state. It does not appear to me that such activities are in fact\nsuch failure was caused by events beyond the control of the lessee.\ndetrimental to the economy of the adjacent coastal state.\nIn the event of the termination of a lease, no provision in this\nFurhermore, I question if as a matter of public policy the U.S.\nsection is made for notice or a hearing for the lessee or for a re-\nGovernment should \"buy\" the acceptance of leasing activities to be\nbate of any part of the payments made for the leases.\nimplemented in the federal offshore areas. It is unfair for land-locked\nThe ten problems described in detail above are but a few of the\nstates to subsidize the coastal states, especially since coastal states\nmany provisions of the bill which would cause serious delays and\nhave already been allowed jurisdiction over and revenue of adjacent\ninequities in expanding OCS leasing, exploration and production pro-\ncoastal water inside the Federal OCS.\ngrams, thereby frustrating rather than expediting the achievement of\nTo my regret, the Committee chose to ignore the position expressed\ndomestic energy self-sufficiency.\nby the Department of Interior on behalf of the Administration. As\n6. The coastal State fund created by the bill would implement an un-\nquoted on Page 24, Committee Print 2, the Department of Interior\nconscionable bribery of coastal States not to resist OCS leasing\nwrote:\nprograms on Federal lands adjacent to their coast at the expense\n\"Coastal State Fund. We are opposed to provisions of the bill which\nof all U.S. taxpayers and particularly to the detriment of the\nwould create a new program of grants to adjacent coastal States and\ncitizens of inland States\nthereby divert revenues from the U.S. Treasury. Receipts under the\nThe creation of a program for granting OCS revenues to adjacent\nOCS Lands Act from OCS oil and gas leases belong to the Federal\nGovernment and currently make a substantial contribution to Federal\ncoastal states under Section 25 is an unwarranted diversion of reve-\nincome. If such revenues were diverted to coastal States, as new section\nnues from the U.S. Treasury. Such a diversion of funds would be\n25 of the Act would provide, the Federal Government would need to\ninflationary, inequitable, and constitute a poor budgetary practice.\nincrease its income from other sources. In effect, the bill increases Fed-\nIn addition, OCS receipts belong to all the people of the country who\ncurrently receive benefits through congressional appropriation from\neral expenditures outside the normal budget and appropriation proc-\ness, which is both bad management and inflationary. It results in an\nthe Treasury. Diverting these revenues for coastal states only, with-\ninflexible allocation of funds to such States without regard to need or\nout requirement for need, would give coastal stataes windfalls and\nresources and also fractionates efforts to address the environmental,\nwould require increased taxation to make up for diverted revenues.\nsocial and economic problems of OCS energy development.\"\nSenator Dewey F. Bartlett, aware of this inequity, wrote to the\nI propose to offer an amendment on the Senate floor which would\nOffice of Management and Budget on August 14 to solicit Adminis-\ndelete Section 25. The bill is likely to be called up for floor action\ntration views specifically on this section. His letter and the reply he\n154\n155\nearly next week. If you agree with my position on this issue, could you\nShould any Federal assistance be needed, the existing programs for\nfurnish me with additional information to be circulated to my col-\ncommunity development provided by Commerce, HEW, HUD, Agri-\nleagues in an effort to obtain their support of this amendment?\nculture, Labor and EPA should be used rather than establishing over-\nSincerely,\nlapping and conflicting new programs.\nDEWEY F. BARTLETT,\nRegarding environmental damage from potential oil spills, it does\nU.S. Senator, Oklahoma.\nnot appear equitable for the Federal Government to provide compen-\nsation when spills do not occur. When accidents do occur, the com-\npanies are liable for proven environmental damages. Only companies\nthat can bear this liability are permitted to lease. In addition, the\nEXECUTIVE OFFICE OF THE PRESIDENT,\npossibility of spills is reduced by providing strict regulations and then\nOFFICE OF MANAGEMENT AND BUDGET,\nenforcing them.\nWashington, D.C., August 16, 1974.\nHon. DEWEY F. BARTLETT,\nCHAPTER 6.¹ SHARING OCS REVENUES WITH ADJACENT STATES\nU.S. Senate,\nWashington, D.C.\nINTRODUCTION\nDEAR SENATOR BARTLETT: I certainly appreciate your proposal to\noffer an amendment to delete section 25 of S. 3221. We agree with your\nThis paper examines the possibility of sharing Federal collection\nposition on this issue and are happy to provide you with additional\nfrom Outer Continental Shelf (OCS) mineral production with ad-\ninformation on why we strongly oppose earmarking OCS receipts.\njacent states. It considers various justifications which have been ad-\nThe Office of Management and Budget also agrees with the viewpoint\nvanced for such sharing, examining the evidence in support of each,\nof the Department of the Interior as quoted in your letter.\nthe type of sharing each suggests, and the adjacent states for which\nWe are providing you with two papers. The first, which should\na rationale seems to be particularly appropriate. The paper also con-\nbe useful for your general circulation, gives in abbreviated form the\nsiders the effect of different means on Federal revenues.\nreasons for opposing payments to coastal States from OCS receipts.\nThe second is a copy of part of a paper prepared by a work group\nJUSTIFICATIONS FOR SHARING OCS REVENUES WITH ADJACENT STATES\nstudying OCS problems, chaired by Dr. William A. Vogely and pre-\npared in 1972. This paper presents the counter arguments to the rea-\nSharing OCS revenues with adjacent states has been supported for\nsons usually presented by those who propose sharing OCS receipts\nthe following three reasons: (1) to compensate adjacent states for\nwith coastal States.\nthe adverse fiscal impact of OCS activity; (2) to compensate adjacent\nWe have not had an opportunity to examine the bill as reported by\nstates for the adverse environmental impact of OCS activity; and\nthe Committee, but will do SO as soon as it is available. If we can be\n(3) to mitigate state opposition to OCS activity. Each of these ra-\ntionales is considered below.\nof further help, please feel free to call on Frank Zarb or myself.\nSincerely,\n(1) The argument has been made that OCS activity has an adverse\nRoy L. Ash, Director.\nfiscal impact on the adjacent state(s). Mineral production from the\nEnclosures.\nOCS does not yield any royalties or severance taxes to state govern-\nments. Yet the governments of adjacent states and localities must\nREASONS FOR OPPOSING SHARING OCS RECEIPTS WITH COASTAL STATES\nprovide public services to OCS workers and their families. To help\nstates. pay for these services, OCS revenues should be shared with adjacent\nThe OCS recepts are from Federal lands and therefore belong to all\nthe American people, not just those living in the coastal States.\nThis argument, while making the accurate point that OCS mineral\nPayments to coastal States would be inflationary by adding to Gov-\nproduction does not yield any royalties or severance taxes to adjacent\nernment outlays or would force the Government to either raise taxes\nstates, ignores the fact that OCS activity currently provides consider-\nand other revenue or reduce expenditures of priority programs.\nable revenues to adjacent states at present. Employees engaged in the\nLegislation of this kind violates the spirit of the just passed Con-\nvarious aspects of OCS activity are subject to state income tax, state\ngressional Budget and Impoundment Control Act of 1974. In doing SO\ngeneral and selective sales taxes, state license fees, and state and local\nit reduces the ability in future years of the Executive and the Con-\nproperty taxes. Businesses located onshore serving offshore facilities\ngress in allocating funds to the highest needs.\nare subject to state corporate income taxes, state sales taxes, and state\nIt is doubtful that there are serious adverse economic impacts on the\nand local property taxes.\nStates from OCS leasing activities. Employees working on energy de-\nThe question thus become one of determining whether the addi-\nvelopment are highly paid and thus bring a larger than average share\ntional state and local revenues attributable to OCS activity exceed or\nof revenues through State income and other taxes. In addition, the\nOCS related businesses with high values will be subject to State and\n1 Reproduced from \"Report of the Economic Working Group Outer Continental Shelf\nTask Force,\" May 1972 by Dr. William A. Vogley, Chairman, OSC Economic Work Group.\nlocal taxes and will provide a large contribution to the tax base.\n156\n157\nare equal to additional state and local expenditures because of OCS\nIn particular circumstances, states may be able to prove a net bur-\nactivity, and, if not, whether this provides a rationale for sharing OCS\nden. If so, payments corresponding to the net burden could be paid to\nrevenues to make up the difference. For the average state, it is likely\naffected states and localities. This, however, does not provide any argu-\nthat revenues will exceed or equal expenditures for the following\nment to sharing a fixed percentage of OCS revenues with adjacent\nreasons. Offshore workers and onshore workers in support of offshore\nstates.\nfacilities have incomes at average to above-average levels compared to\n(2) The argument has been made that OCS production poses the\naverage per capita and family income in the adjacent states off which\nthreat of potential environmental damage to adjacent states. OCS\nOCS activity has occurred. Subsequently, they, on average, pay more\nrevenues should therefore be shared with adjacent states to provide\ncapita in state sales and income taxes than the average resident of the\ncompensation for these damages.\nstate (these taxes accounted for 84% of all state tax collections in\nThis argument only supports impact payments as needed. It does\n1970). They will, also on average, pay more personal property tax to\nnot provide a rationale for regular sharing of a fixed percentage of\nlocal governments. Onshore facilities serving OCS activity are major\nOCS revenues. OCS production poses only a threat, not a certainty,\ncomponents of the property tax base of the communities where they\nof environmental damage. Compensation for damages is made only\nare located. Hence, OCS activity provides, in most cases, greater than\nafter damages have occurred, not whether they occur or not occur.\naverage shares of state and local revenues.\nHowever, it is doubtful whether compensatory impact payments\nThe expenditure picture on the whole is more cloudy since the im-\nfor enviornmental damage to adjacent states from OCS revenues is\npact of OCS activity on various state and local function varies widely.\nthe appropriate means to handle potential problems here. Payments\nAdditional expenditures per capital for education for OCS-associated\nto states only are not likely to compensate all parties suffering dam-\nemployees and their families are likely to be slightly greater than the\nages. Moreover, if the liability for damages is borne by the Federal\nstatewide average, given a preponderance of OCS-associated em-\ngovernment, the incentives to operating companies to minimize the\nployees with children of school age. Additional expenditures per capita\nprobability of occurrence of damage-causing accidents would be\nfor transportation for OCS activities could be more or less depending\nreduced.\non location. With the exception of most of the Alaskan OCS areas, the\nAn alternative approach to the problem would be to concentrate\nOCS areas of the nation having a high potential for oil and gas pro-\non minimizing the possibility of damage-causing accidents occurring\nduction have well-developed transportation networks in the coastal\nbv maintaining strict. adequately enforced Federal regulation of\nregions of the adjacent states. Additional expenditure per capita for\nOCS exploration and production and by permitting only companies\nwelfare programs attributable to OCS activity is likely to be substan-\nwhich can demonstrate an adequate technical and financial capability\ntially less than the statewide average. Additional total expenditures\nto explore and operate OCS leases. When accidents do occur, the\nper capita attributable to OCS activity is therefore not likely to be\ncompany responsible should be liable for proven damages. Only\nsignificantly greater than average state expenditure per capita.\nthose companies which have the capability to bear such liabilities\nOn average, OCS activity would therefore not be likely to impose a\nshould be permitted to lease OCS lands.\nnet fiscal burden upon adjacent states. The likely single exception to\n(3) The argument has been made that sharing of OCS revenues\nthis would come in those states which depend upon royalties and sev-\nwith adjacent states is necessary to overcome political objections to\nerance taxes for substantial proportions of state revenue. States ad-\nOCS exploration and production. Current or proposed OCS activity\njacent to current or potential OCS activity in this category are Louisi-\nhas occasioned state suits for a variety of reasons. Sharing is seen as\nana, Texas, and Alaska (once North Slope production begins). Since\na way of overcoming these.\ntax collections attributable to OCS activities would not include royal-\nThe impact of sharing here depends on the sources and direction of\nties and severance taxes. the additional revenues may be less than addi-\nstate objections. States have gone into court with the Federal govern-\ntional expenditures. If this situation occurs and is attributable to state\nment claiming rights to OCS production. But, this has not been a\ndependence upon royalties and severance taxes, it does not seem to be\nsource of opposition to OGS exploration and production, only to the\na strong argument for sharing OCS revenues. Those states which by\nsharing of revenues from it. This question is amenable to settlement,\nthe good fortune of natural endowment have substantial mineral pro-\nin the courts with OCS revenues held in escrow while exploration\nduction on which they can levy royalties and severance taxes have a\nand production continue.\nsource of revenue not available to most states. This enables them to\nSeveral adjacent states (particularly Alaska, Louisiana, and Texas)\nhave either greater expenditures with identical sales, income, and prop-\nhave feared that offshore exploration and production will draw capi-\nerty taxes per $1,000 of personal income (a typical measure of revenue\ntal away from onshore exploration and production, thus having a\neffort) or the same amount of expenditures with lower sales, income,\nlong-term negative impact on state severance tax income. From the\nand property taxes per $1,000 of personal income than those states\npoint of view of the nation as a whole, it is desirable that investment\nwhich by reason of natural endowment cannot levy a severance tax. On\nin exploration goes where it is likely to be most profitable (which,\nthe basis of equal revenue efforts on those tax sources available to all\nin the petroleum industry, generally means where production is likely\nstates for similar levels of expenditure, there would be little empirical\nto be most prolific). Moreover, given the substantial revenues which\nevidence for a net fiscal burden resulting from OCS activity.\n158\n159\nthese states still receive from onshore activity, this is not likely to\nCONCLUSION\nprovide a substantial source of opposition.\nState and groups within states have objected to OCS activity for\nThe six major arguments detailed above, while too numerous and\nfear of environmental damage. This has been the major reason for\nlengthy to repeat here, should present our colleagues with a compelling\nopposition to OCS exploration and production, particularly off the\nrationale to cast their vote against S. 3221.\nAtlantic Coast and off the California coast. It may also prove to be a\nPAUL FANNIN.\nsource of opposition for Gulf of Alaska exploration as well. It is un-\nCLIFFORD P. HANSEN.\nknown whether the sharing of OCS revenues with adjacent states\nJAMES BUCKLEY.\ncould overcome this opposition. Essentially, it depends on the charac-\nJAMES McCLURE.\nteristics of the political coalition opposing OCS leasing. Such a\nDEWEY BARTLETT.\nmeasure is not likelv to sway conservationist groups. It may produce\nsome changes in position among state and local office-holders. probably\nin inverse proportion to the size of the opposing coalition. Alternative\nmeasures, such as those suggested under the discussion of the second\nargument, plus the establishment of a record of several years of explo-\nration and production free from major accidents is likely to be more\neffective in overcoming opposition from this quarter.\nIn short, revenue sharing for this purpose may not be effective or\nmay be less effective than other means. Moreover, unlike criteria based\non need, this purpose offers no guidelines for selecting the appropriate\npercentage of OCS revenues to be shared with the adjacent states.\nMEANS OF SHARING AND THEIR EFFECTS\nThe preceding discussion has indicated two basic means of sharing\nOCS revenues: compensatory impact payments and sharing a fixed\nproportion of OCS revenues. If compensatory impact payments were\nto be made, their overall impact on Federal revenues is likely to be\nrelatively insignificant. Since compensatory payments would be only\nfor net fiscal burdens and for damages not covered by company\nliability, they would not likely be more than 5% on average of Federal\nrevenues from OCS activity.\nAny program to share a fixed proportion (ranging from 5% to\n50%) of OCS revenues with the adjacent states would have propor-\ntionally greater effects on Federal revenues. Such methods of sharing\nwith adjacent states would encounter some problems in defining what\nconstitutes the adjacent state. For OCS areas off Alaska, the Pacific\nCoast states, and the states bordering the Gulf of Mexico (with the\npossible exception of Louisiana-Mississippi-Alabama), this presents\nno problem. For the states on the Atlantic Coast north of Chesapeake\nBay, the whole matter is highly problematical. The extension of state\nboundaries seaward results in many intersections in potential OCS\nareas (such as the Georges Bank and the Baltimore Canyon Trough).\nIn some cases, three states could legitimately make a claim to be the\nadjacent state. Unless some distributive formula were developed which\nwas acceptable to all parties (such as equal shares where multiple\nclaims can be established), sharing programs based on the premise of\nautomatic sharing with the adjacent state are likely to occasion\nconsiderable litigation.\nFor the reasons set forth in the above correspondence and supporting\ndocumentation, we question the wisdom, practicality and equity of\nSection 26.\nSeptember 18, 1974\nCONGRESSIONAL RECORD-SENATE\n16987\nThe Department should weigh those con-\nSenator from New York (Mr. BUCKLEY),\nTITLE HI--MISCELLANEOUS PROVISIONS\nsequences against the benefits to be obtained\nthe Senator from Kentucky (Mr. Cook),\nSec. 301. Pipeline safety and operation.\nand develop standards for governing such\nthe Senator from Nebraska (Mr. CURTIS),\nSec. 302. Review of shut-in or flaring wells.\ndisclosure.\nthe Senator from Colorado (Mr. DOM-\nSec. 303. Oil spill liability study.\nThe Council also endorsed the per-\nINICK), and the Senator from Maryland\nSec. 304. Fuel stamp study.\nformance regulations and safety stand-\n(Mr. MATHIAS) are necessarily absent.\nSec. 305. Relationship to existing law.\nSec. 306. Severability.\nards in S. 3221 as follows:\nI also announce that the Senator from\nTITLE I--FINDINGS AND PURPOSES\nWe have purposely called for the develop-\nIllinois (Mr. PERCY) is absent on official\nFINDINGS\nment of performance requirements which\nbusiness.\nwill encourage the development and early\nThe result was announced-yeas 64,\nSEC. 101. The Congress finds and declares\nadoption of safer equipment and facflities,\nthat-\nnays 23, as follows:\nrather than lock the industry into a static\n(1) the demand for energy in the United\ntechnology.\n[No. 412 Leg.]\nStates is increasing and will continue to\nSpecifically, we have called for the use of\nYEAS-64\nincrease for the foreseeable future;\nthe best commercially available technology\n(2) domestic production of oil and gas\nAbourezk\nHathaway\nNelson\nin critical Outer Continental Shelf opera-\nAllen\nNunn\nhas declined in recent years;\nHollings\ntion and, at the same time, we encourage the\nBeall\nHuddleston\nPackwood\n(3) the United States has become increas-\nindustry to do better.\nBible\nHughes\nPell\ningly dependent upon imports of oil from\nThe technology assessment and technical\nBiden\nHumphrey\nProxmire\nforeign nations to meet domestic energy\nrecommendations in our report cover most\nBrooke\nInouye\nRandolph\ndemand;\nBurdick\nJackson\nRibicoff\nof the research and development topics iden-\n(4) increasing reliance on imported oil is\nByrd.\nJavits\nRoth\ntified in S. 3221.\nHarry F., Jr.\nJohnston\nSchwelker\nnot inevitable, but is rather subject to sig-\nCEQ also supported a Federal liabil-\nByrd, Robert C.\nLong\nScott, Hugh\nnificant reduction by increasing domestic\nCannon\nMagnuson\nSparkman\nsources of energy supply;\nity system for Outer Continental Shelf\nCase\nMansfield\nStafford\n(5) consumption of natural gas in the\noil spills and damages and expressly en-\nChurch\nMcClellan\nStennis\nUnited States has greatly exceeded addi-\ndorsed inclusion of a citizen suit provi-\nClark\nMcGee\nStevenson\ntions to domestic reserves in recent years,\nCranston\nMcGovern\nSymington\nsion in the Outer Continental Shelf\nEagleton\nMcIntyre\nTalmadge\nso that currently available supplies are less\nLands Act.\nEastland\nMetcalf\nThurmond\nthan demand;\nI was disappointed that the minority's\nErvin\nMetzenbaum\nTunney\n(6) technology is or can be made avail-\nFulbright\nMondale\nWeicker\nable which will allow sufficient production\nopening statement on the floor continued\nGravel\nMontoya\nWilliams\nand consumption of domestic energy supply\nto employ misleading quotations. For ex-\nHaskell\nMoss\nYoung\nto meet demands consistent with national\nample, they cited objections raised by the\nHatfield\nMuskie\nenvironmental policies;\nadministration to provisions of S. 3221\nNAYS-23\n(7) the Outer Continental Shelf contains\nwhich are no longer in the bill. They also\nAlken\nDomenici\nHruska\nsignificant quantities of petroleum and natu-\ncited administration objections which\nBaker\nFannin\nMcClure\nral gas, which are a vital national reserve\nBartlett\nFong\nPearson\nwere specifically directed at other bills\nthat must be carefully managed in the public\nBellmon\nGoldwater\nScott,\ninterest; and\nbefore the committee which contain pro-\nBrock\nGriffin\nWilliam L.\nvisions which are not now and have never\nChiles\nGurney\nStevens\n(8) there presently exists a variety of tech-\nCotton\nHansen\nTaft\nnological, economic, environmental, admin-\nbeen in S. 3221.\nDole\nHelms\nTower\nistrative, and legal problems which tend to\nAll this seems, Mr. President, to be a\nretard the development of the oil and natural\nNOT VOTING-13\ndesperate effort by the industry, the ad-\ngas resources of the Outer Continental Shelf;\nministration, and my Republican friends\nBayh\nCurtis\nKennedy\n(9) it is the national policy to preserve,\nBennett\nDominick\nMathias\nto maintain the status quo. Those of us\nBentsen\nHart\nPastore\nprotect, and develop the resources of this\nwho support S. 3221 believe that the\nBuckley\nHartke\nPercy\nNation's coastal zone, and to provide for the\nstatus quo tips the scales heavily in\nCook\norderly siting of energy facilities therein;\n(10) the development, processing, and dis-\nfavor of the oil industry and against the\nSo the bill (S. 3221) was passed, as\ntribution of the oil and gas resources of the\ninterest of the American people who own\nfollows:\nOuter Continental Shelf, and the siting of\nthese resources. Mr. President, we believe\nS. 3221\nrelated energy facilities, may cause adverse\nthat the time has come to tip the scales\nAn act to increase the supply of energy in the\nimpacts on the coastal zones of the various\nin the other direction and to help the\nUnited States from the Outer Continental\ncoastal States; and\npeople regain control of their resources.\nShelf; to amend the Outer Continental\n(11) the Coastal Zone Management Act of\nWe believ that S. 3221 balances the\nShelf Lands Act; and for other purposes\n1972 provides policy, procedures, and pro-\ngrams designed to anticipate such adverse\nscales.\nBe it enacted by the Senate and House\nimpacts and in part prevent them by ap-\nThe PRESIDING OFFICER. Is all time\nof Representatives of the United States of\npropriate planning and management of land\nyielded back?\nAmerica in Congress assembled, That this\nand water resources in the costal zone.\nMr. JOHNSTON. I yield back my time.\nAct may be cited as, the \"Energy Supply of\nPURPOSES\nMr. JACKSON. I ask for the yeas and\n1974\"\nTABLE OF CONTENTS\nSEC. 102. The purposes of this Act are to\nnays.\n(1) increase d nestic production of oil\nThe yeas and nays were ordered.,\nSec. 1. Short title and table of contents.\nand natural gas in order to assure material\nThe PRESIDING OFFICER. All time\nTITLE I-FINDINGS AND PURPOSES\nprosperity and national security, reduce de-\nis yielded back. The question is, Shall the\nSec. 101. Findings.\npendence on unreliable foreign sources, and\nbill pass, The yeas and nays have been\nSec. 102. Purposes.\nassist in maintaining a favorable balance of\npayments;\nordered and the clerk will call the roll.\nTITLE II-INCREASED PRODUCTION OF\n(2) make oil and natural gas resources in\nThe legislative clerk called the roll.\nOUTER CONTINENTAL SHELF ENERGY\nthe Outer Continental Shelf available as\nRESOURCES\nMr. ROBERT C. BYRD. I announce\nrapidly as possible consistent with the need\nthat the Senator from Indiana (Mr.\nSec. 201. National policy for Outer Conti-\nfor orderly resources development, and pro-\nnental Shelf.\ntection of the environment, in a manner con-\nBAYH), the Senator from Texas (Mr.\nSec. 202. New sections of Outer Continental\nsistent with the Mining and Mineral Policy\nBENTSEN), the Senator from Michigan\nShelf Lands Act.\nAct of 1970 and designed to insure the public\n(Mr. HART), the Senator from Indiana\nSec. 203. Revision of lease terms.\na fair market return on disposition of public\nMr. HARTKE), the Senator from Massa-\nSec. 204. Disposition of Federal royalty oil.\nresources;\nchusetts (Mr. KENNEDY), and the Sena-\nSec. 205. Annual report.\n(3) encourage development of new and Im-\ntor from Rhode Island (Mr. PASTORE) are\nSec. 206. Insuring maximum production\nproved technology for energy resource pro-\nnecessarily absent.\nduction that will increase human safety and\nfrom oil and gas leases.\neliminate or reduce risk of damage to the\nI further announce that, if present\nSec. 207. Geological and geophysical explo-\nenvironment; and\nand voting, the Senator from Massa-\nration.\n(4) provide States which are directly im-\nchusetts (Mr. KENNEDY), and the Sena-\nSec. 208. Enforcement\npacted by Outer Continental Shelf oil and\ntor from Rhode Island (Mr. PASTORE),\nSec. 209. Laws applicable to Outer Conti-\ngas exploration and development with com-\nnental Shelf.\nwould each vote \"yea.\"\nprehensive assistance in order to assure ade-\nSec. 210. Authority of Governor of adjacent\nquate protection of the onshore social, eco-\nMr. GRIFFIN. I announce that the\nState to request postponement of\nnomic, and environmental conditions of the\nSenator from Utah (Mr. BENNETT), the\nlease sales.\ncoastal zone.\n16988\nCONGRESSIONAL RECORD\nSeptember 18, 1974\nTITLE II-INCREASED PRODUCTION OF\nother information needed to decide the or-\nernmental authorities in conducting such\nOUTER CONTINENTAL SHELF ENERGY\nder in which areas are to be scheduled for\nstudy. The Secretary shall report to the Con-\nRESOURCES\nlease, to make the analyses required prior to\ngress by January 1, 1976 the results of such\nNATIONAL POLICY FOR OUTER CONTINENTAL\noffering tracts for lease, and to supervise\nstudy.\nSHELF\noperations under every lease in the manner\n\"FEDERAL OUTER CONTINENTAL SHELF OIL AND\nnecessary to assure compliance with the re-\nSEC. 201. Section 3 of the Outer Continental\nGAS SURVEY PROGRAM\nquirements of the law, the regulations, and\nShelf Lands Act is revised by adding the fol-\n\"Sec. 19. (a) The Secretary is authorized\nthe lease.\nlowing new subsection (c) and (d)\nand directed to conduct a survey program\n\"(d) The environmental impact statement\n\"(c) It is hereby declared that the Outer\nregarding oil and gas resources of the Outer\non the leasing program prepared in accord-\nContinental Shelf is a vital national resource\nance with section 102(2) (C) of the National\nContinental Shelf. This program shall be de-\nreserve held by the Federal Government for\nsigned to provide information about the\nEnvironmental Policy Act of 1969, shall in-\nall the people, which should be made avail-\nprobable location, extent, and characteristics\nclude, but shall not be limited to, an as-\nable for orderly development, subject to\nof such resources in order to provide a basis\nsessment by the Secretary of the relative sig-\nenvironmental safeguards, consistent with\nfor (1) development and revision of the leas-\nnificance of the probable oil and gas re-\nand when necessary to meet national needs.\nsources of each area proposed to be offered\ning program required by section 18 of this\n\"(d) It is hereby recognized that develop-\nfor lease in meeting national demands, the\nAct, (2) greater and better informed com-\nment of the oil and gas resourcs of the Outer\nmost likely rate of exploration and develop-\npetitive interest by potential producers in the\nContinental Shelf will have significant im-\noil and gas resources of the Outer Continen-\nment that is expected to occur if the areas\npact on coastal zone areas of adjacent States\nare leased, and the relative environmental\ntal Shelf, (3) more informed decisions re-\nand that, in view of the national interest in\nhazard of each area. Such environmental im-\ngarding the value of public resources and\nthe effective management of the coastal zone,\npact statement shall be based on considera-\nrevenues to be expected from leasing them,\nsuch States may require assistance in pro-\ntion of the following factors, without being\nand (4) the mapping program required by\ntecting their coastal zone insofar as possible\nsubsection (c) of this section.\nlimited thereto: geological and geophysical\nfrom the adverse effects of such impact.\"\n\"(b) The Secretary is authorized to con-\nconditions, biological data on existing ani-\ntract for, or purchase the results of or, where\nNEW SECTIONS OF OUTER CONTINENTAL SHELF\nmal, marine, and plant life, and commercial\nthe required information is not available\nLANDS ACT\nand recreational uses of nearby land and\nfrom commercial sources, conduct seismic,\nSEC. 202. The Outer Continental Shelf\nwater areas.\nLands Act is hereby amended by adding the\n(e) The Secretary shall, by regulation,\ngeomagnetic, gravitational, geophysical, or\ngeochemical investigations, and to contract\nfollowing new sections:\nestablish procedures for receipt and consid-\neration of nominations for areas to be offered\nfor or purchase the results of stratigraphic\n\"DEVELOPMENT OF OUTER CONTINENTAL SHELF\ndrilling, needed to implement the provisions\nfor lease or to be excluded from leasing, for\nLEASING PROGRAM\nof this section.\npublic notice of and participation in develop-\n\"SEC. 18. (a) Congress delares that it is\n\"(c) The Secretary, in cooperation with\nment of the leasing program, for review by\nthe policy of the United States that Outer\nthe Secretary of Commerce, is directed to\nState and local governments which may be\nContinental Shelf lands determined to be\nprepare and publish and keep current a series\nimpacted by the proposed leasing, and for\nboth geologically favorable for the accumu-\nof detailed bathymetric, geological, and geo-\ncoordination of the program with manage-\nlation of oil and gas and capable of support-\nphysical maps of and reports about the Outer\nment program being developed by any State\ning oil and gas development without undue\nContinental Shelf, based on nonproprietary\nfor approval pursuant to section 305 of the\nenvironmental hazard or damage should be\ndata, which shall include, but not necessarily\nCoastal Zone Management Act of 1972 and\nmade available for leasing as soon as prac-\nbe limited to, the results of seismic, gravita-\nwith the management program of any State\nticable in accordance with subsection (b)\ntional, and magnetic surveys on an appropri-\nwhich has been approved pursuant to section\nof this section.\nate grid spacing to define the general bathy-\n306 of such Act. These procedures shall be\n\"(b) The Secretary is authorized and di-\nmetry, geology, and geophysical characteris-\napplicable to any revision or reapproval of\nrected to prepare and maintain a leasing pro-\ntics of the area. Such maps shall be pre-\nthe leasing program.\ngram to implement the policy set forth in\npared and published no later than six months\n\"(f) The Secretary shall publish a pro-\nsubsection (a) The leasing program shall\nprior to the last day for submission of bids\nposed leasing program in the Federal Reg-\nindicate as precisely as possible the size,\nfor any areas of the Outer Continental Shelf\nister and submit it to the Congress within\ntiming, and location of leasing activity that\nscheduled for lease on or after January-\ntwo years after enactment of this section.\nwill best meet national energy needs for the\n1978.\n\"(g) After the leasing program has been\nten-year period following its approval or re-\n\"(d) Within six months after enactment\napproved by the Secretary or after January\napproval in a manner consistent with sub-\nof this section, the Secretary shall develop\n1, 1978, whichever comes first, no leases under\nsection (a) above and with the following\nand submit to Congress a plan for conduct-\nthis Act may be issued unless they are for\nprinciples:\ning the survey and mapping programs re-\nareas included in the approved leasing pro-\n(1) management of the Outer Continental\nquired by this section. This plan shall in-\nShelf in a manner which considers all its\ngram.\nclude an identification of the areas to be\nresource values and the potential impact of\n\"(h) The Secretary may revise and re-\nsurveyed and mapped during the first five\noil and gas exploration and development on\napprove the leasing program at any time\nyears of the programs and estimates of the\nother resource values of the Outer Conti-\nand he must review and reapprove the leas-\nappropriations and staffing required to im-\nnental Shelf and the marine environment;\ning program at least once each year.\nplement them.\n\"(2) timing and location of leasing to dis-\n\"(1) The Secretary is authorized to obtain\n(e) The Secretary shall include in the\ntribute exploration, development, and pro-\nfrom public sources, or to purchase from\nannual report required by section 15 of this\nduction of oil and gas among various areas\nprivate sources, any surveys, data, reports,\nAct, information concerning the carrying\nof the Outer Continental Shelf, considering:\nor other information (excluding interpreta-\nout of his duties under this section, and\n\"(A) existing information concerning their\ntions of such data, surveys, reports, or other\nshall include as a part of each such report\ngeographical, geological, and ecological char-\ninformation) which may be necessary to as-\na summary of the current data for the period\nacteristics;\nsist him in preparing environment impact\ncovered by the report.\n\"(B) their location with respect to, and\nstatements and making other evaluations\n\"(f) No action taken to implement this\nrelative needs of, regional energy markets;\nrequired by this Act. The Secretary shall\nsection shall be considered a major Federal\n\"(C) their location with respect to other\nmaintain the confidentiality of all proprie-\naction for the purposes of section 102(2) (C)\nuses of the sea and seabed including but not\ntary data or information for such period of\nof the National Environmental Policy Act of\nlimited to fishing areas, access to ports by\ntime as is agreed to by the parties.\n1969.\nvessels, and existing or proposed sea lanes;\n\"(J) The heads of all Federal departments\n\"(g) There are hereby authorized to be ap-\n\"(D) interest by potential oil and gas pro-\nor agencies are authorized and directed to\npropriated such sums as are necessary to\nducers in exploration and development as\nprovide the Secretary with any nonproprie-\ncarry out the purposes of this section during\nindicated by tract nominations and other\ntary information he requests to assist him\nfiscal years 1975 and 1976, to the Secretary\nrepresentations;\nin preparing the leasing program. In addi-\nand to appropriate Federal agencies having\ntion, the Secretary is authorized and directed\n\"(E) an equitable sharing of develop-\nresponsibilities under this section.\nto utilize the existing capabilities and re-\nmental benefits and environmental risks\n\"(h) The Secretary shall, by regulation, re-\nsources of other Federal departments and\namong various regions of the United States;\nquire that any person holding a lease issued\nagencies by appropriate agreement.\npursuant to this Act for oil or gas explora-\n\"(3) timing and location of leasing so that\n\"(k) The program developed pursuant to\ntion or development on the Outer Contin-\nto the maximum extent practicable areas\nthis section shall include the reservation of\nental Shelf shall provide the Secretary with\nwith less environmental hazard are leased\nan appropriate area or areas as a National\nany existing data (excluding interpretation\nfirst; and\nStrategic Energy Reserve. The Secretary shall\nof such data) about the oil or gas resources\n\"(4) receipt of fair market return for pub-\nconfer with appropriate Federal officials to\nin the area subject to the lease. The Secre-\nlic resources,\ndetermine the extent and locations of such\ntary shall maintain the confidentiality of\n\"(c) The program shall include estimates\nreserves. The Secretary shall study the most\nall proprietary data or information until\nof the appropriations and staffing required of\nappropriate means of developing and main-\nsuch time as he determines that public avail-\nall existing Federal programs necessary to\ntaining such reserves in the national interest.\nability of such proprietary data or informa-\nprepare the required environmental impact\nThe Secretary shall consult with other Fed-\ntion would not damage the competitive posi-\nstatements, obtain resource data and any\neral agencies and departments and nongov-\ntion of the lessee.\nSeptember 18, 1974\nCONGRESSIONAL RECORD-SENATE\n16989\n\"SAFETY REGULATIONS FOE OIL AND GAS\n\"(7) subsea production systems.\n\"(d) In any investigation directed by this\nOPERATIONS\n\"(b) The Secretary, with the concurrence\nsection the Secretary or the Secretary of the\n\"SEC. 20. (a) POLICY.-It is the policy of\nof the Secretary of the department in which\ndepartment in which the Coast Guard is op-\nthis section to insure, through improved\nthe Coast Guard is operating, shall estab-\nerating shall have power to summon before\ntechniques, maximum precautions, and max-\nlish equipment and performance standards\nthem or their designees witnesses and to re-\nimum use of the best available technology\nfor oil spill cleanup plans and operations.\nquire the production of books, papers, doc-\nby well-trained personnel, the safest possible\nSuch standards shall be coordinated with\numents, and any other evidence. Attendance\nthe National Oil and Hazardous Substances\noperations in the Outer Continental Shelf.\nof witnesses or the production of books,\nSafe operations are those which minimize\nPollution Contingency Plan, and reviewed by\npapers, documents, or any other evidence\nthe Administrator of the Environemental\nthe likelihood of blowouts, loss of well con-\nshall be compelled by a similar process as in\ntrol, fires, spillages, or other occurrences\nProtection Agency, and the Administrator\nthe United States district court. In addition,\"\nof the National Oceanic and Atmospheric\nwhich may cause damage to the environ-\nthey or their designees shall administer all\nAdministration.\nment, or to property, or endanger human life\nnecessary oaths to any witnesses summoned\n\"(c) The Secretary of Commerce, in co-\nbefore said investigation.\nor health.\noperation with the Secretary of the Navy,\n\"(b) REGULATIONS; STUDY.-(1) (A) The\n\"LIABILITY FOR OIL SPILLS\nthe Secretary of the department in which\nSecretary. with the concurrence and advice\nthe Coast Guard is operating, and the Di-\n\"SEC. 23. (a) Any person in charge of any\nof the Administrator of the Environmental\nrector of the National Institutes of Occupa-\noperations in the Outer Continental Shelf, as\nProtection Agency and the Secretary of the\ntional Safety and Health, shall conduct\nsoon as he has knowledge of a discharge or\nDepartment in which the Coast Guard is\nstudies of underwater diving techniques and\nspillage of oil from an operation, shall im-\noperating, shall develop, from time to time\nequipment suitable for protection of human\nmediately notify the appropriate agency of\nrevise, and promulgate safety regulations for\nthe United States Government of such dis-\nsafety.\noperations in the Outer Continental Shelf,\ncharge.\n\"ENFORCEMENT OF SAFETY REGULATIONS;\nto implement as fully as possible the policy\n(b) (1) Notwithstanding the provisions of\nINSPECTIONS\nof subsection (a) of this section. Within\nany other law, the holder of a lease or right-\none year after the enactment of this section,\n\"SEC. 22. (a) (1) The Secretary and the\nof-way issued or maintained under this Act\nthe Secretary shall complete a review of\nSecretary of the department in which the\nand the Offshore Oil Pollution Settlements\nexisting safety regulations, consider the re-\nCoast Guard is operating shall jointly en-\nFund (hereinafter referred to as \"the fund\")\nsults and recommendations of the study\nforce the safety and environmental pro-\nestablished by this subsection shall be strict-\nauthorized in paragraph (2) of this sub-\ntection regulations promulgated under this\nly liable without regard to fault and without\nsection, and promulgate a complete set of\nAct. They shall regularly inspect all opera-\nregard to ownership of any adversely affected\nsafety regulations (which may include Outer\ntions authorized pursuant to this Act and\nlands, structures, fish, wildlife, or biotic or\nContinental Shelf orders) applicable to oper-\nstrictly enforce safety regulations promul-\nother natural resources relied upon by any\nations in the Outer Continental Shelf or any\ngated pursuant to this Act and other appli-\ndamaged party for subsistence or economic\nregion thereof. Any safety regulations in\ncable laws and regulations relating to public\npurposes, in accordance with the provisions\nhealth, safety, or environmental protection.\neffect on the date of enactment of this sec-\nof this subsection for all damages, sustained\nAll holders of leases under this Act shall\nby any person as a result of discharges of oil\ntion which the Secretary finds should be\nallow promptly access at the site of any\nor gas from any operation authorized under\nretained shall be repromulgated according\noperations subject to safety regulations to\nthis Act if such damages occurred (A) within\nto the terms of this section, but shall remain\nany inspector, and provide such documents\nthe territory of the United States, Canada,\nin effect until so repromulgated. No safety\nand records that are pertinent to public\nor Mexico or (B) in or on waters within two\nregulations (other than field orders) pro-\nhealth, safety, or environmental protection,\nhundred nautical miles of the baseline of the\nmulgated pursuant to this subsection shall\nas such Secretaries or their designees may\nUnited States, Canada, or Mexico from which\nreduce the degree of safety or protection\nrequest.\nthe territorial sea of the United States,\nto the environment afforded by safety regu-\n'(2) The Secretary, with the concurrence\nCanada, or Mexico is measured, or (C)\nlations previously in effect.\nof the Secretary of the department in which\nwithin one hundred nautical miles of any\n\"(B) In promulgating regulations under\nthe Coast Guard is operating, shall promul-\noperation authorized under this Act. Claims\nthis section, the Secretary shall require on\ngate regulations within ninety days of the\nfor such injury or damages may be deter-\nall new drilling and production operations\nenactment of this section to provide for-\nmined by arbitration or judicial proceedings.\nand, wherever practicable on already exist-\n(A) physical observation at least once each\n\"(2) Strict liability shall not be Imposed\ning operations, the use of the best available\nyear by an inspector of the installation or\nunder this subsection on the holder or the\ntechnology wherever failure of equipment\ntesting of all safety equipment designed to\nfund if the holder or the fund proves that\nwould have a substantial effect on public\nprevent or ameliorate blowouts, fires, spill-\nthe damage was caused by an act of war.\nhealth, safety, or the environment.\nages, or other major accidents; and\nStrict liability shall not be imposed under\n\"(2) Upon the enactment of this section,\n\"(B) periodic on site inspection without\nthis subsection on the holder if the holder\nthe National Academy of Engineering shall\nadvance notice to the lessee to assure com-\nproves that the damage was caused by the\nconduct a study of the adequacy of existing\npliance with public health, safety, or en-\nnegligence of the United States or other gov-\nsafety regulations and technology, equip-\nvironmental protection regulations.\nernmental agency. Strict liability shall not be\nment, and techniques for operations in the\n\"(3) The Secretary of the department in\nimposed under this subsection with respect\nOuter Continental Shelf, including but not\nwhich the Coast Guard is operating shall\nto the claim of a damaged person if the holder\nlimited to the subjects listed in subsection\nmake an investigation and public report on\nor the fund proves that the damage was\n(a) of this section. Not later than nine\nall major fires and major oil spillage occur-\ncaused by the negligence or intentional act\nmonths after the enactment of this section,\nring as a result of operations pursuant to this\nof such person.\nthe results of the study and recommenda-\nAct. For the purposes of this subsection, a\n\"(3) Strict liability for all claims arising\ntions for improved safety regulations shall\nmajor oil spillage is any spillage in one in-\nout of any one incident shall not exceed\nbe submitted to the Congress and to the\nstance of more than two hundred barrels of\n$100,000,000. The holder shall be liable for the\nSecretary.\noil over a period of thirty days: Provided,\nfirst $7,000,0000 of such claims that are al-\n\"RESEARCH AND DEVELOPMENT\nThat he may, in his discretion, make an in-\nlowed. The fund shall be liable for the bal-\nvestigation and report of lesser oil spillages.\n\"SEC. 21. (a). The Secretary is authorized\nance of the claims that are allowed up to\nAll holders of leases under this Act shall co-\nand directed to carry out a research and\n$100,000,000. If the total claims allowed ex-\noperate with him in the course of such in-\ndevelopment program designed to improve\nceed $100,000,000, they shall be reduced pro-\nvestigations.\nportionately. The unpaid portion of any claim\ntechnology related to development of the\n\"(4) For the purposes of carrying out their\noil and gas resources of the Outer Conti-\nmay be asserted and adjudicated under other\nresponsibilities under this section, the Sec-\napplicable Federal or State law.\nnental Shelf where similar programs are not\nretary or the Secretary of the department in\n'(4) In any case where liability without\npresently being conducted by any Federal\nwhich the Coast Guard is operating may by\nregard to fault is imposed pursuant to this\ndepartment or agency and where he deter-\nagreement utilize with or without reimburse-\nsubsection, the rules of subrogation shall\nmines that such research and development\nment the services, personnel, or facilities of\napply in accordance with the laws of the\nis not being adequately conducted by any\nany Federal agency.\nState in which such damages occurred: Pfo-\nother public or private entity including but\n\"(b) The Secretary shall include in his\nvided, however, That in the event such dam-\nnot limited to-\nannual report to Congress required by sec-\nages occurred outside the jurisdiction of any\n\"(1) downhole safety devices,\ntion 15 of this Act the number of violations\nState, the rules of subrogation shall apply\n\"(2) methods for reestablishing control of\nof safety regulations found, the names of the\nin accordance with the laws applicable pursu-\nblowing out or burning wells,\nviolators, and the action taken thereon.\nant to section 4 of this Act.\n\"(3) methods for containing and cleaning\n\"(c) The Secretary shall consider any al-\n\"(5) The Offshore Oil Pollution Settle-\nup oil spills,\nlegation from any person of the existence of\nments Fund is hereby established as a non-\n\"(4) improved drilling bits,\na violation of any safety regulations issued\nprofit corporate entity that may sue and\n\"(5) improved flaw detection systems for\nunder this Act. The Secretary shall answer\nbe sued in its own name. The fund shall be\nundersea pipelines,\nsuch allegation no later than ninety days\nadministered by the holders of leases issued\n\"(6) new or improved methods of develop-\nafter receipt thereof, stating whether or not\nunder this Act under regulations prescribed\nment in water depths over six hundred\nsuch alleged violations exist and, if so, what\nby the Secretary. The fund shall be subject\nmeters, and\naction has been taken.\nto an annual audit by the Comptroller Gen-\n16990\nCONGRESSIONAL RECORD-SENATE\nSeptember 18, 1974\neral, and a copy of the audit shall be sub-\ndeveloping interim agreements which will al-\nIsland Sound, including Puerto Rico, the\nmitted to the Congress. Claims allowed\nlow energy resource development prior to\nVirgin Islands, Guam, and American Samoa.\nagainst the fund shall be paid only from\nfinal judicial resolution of the dispute.\n\"CITIZEN SUITS\nmoneys deposited in the fund.\n\"DETERMINATION OF BOUNDARIES\n\"(6) There is hereby imposed on each bar-\n\"SEC. 27. (a) Except as provided in subsec-\nrel of oil produced pursuant to any lease\n\"SEC. 25. Within one year following the\ntion (b) of this section, any person having\nissued or maintained under this Act a fee\ndate of enactment of this section, the Presi-\nan interest which is or may be adversely\n2½ of cents per barrel. The fund shall collect\ndent may establish procedures for settling\naffected may commence a civil action on his\nthe fee from the lessees or their assignees.\nany outstanding boundary disputes. includ-\nown behalf-\nCosts of administration shall be paid from\ning international boundaries between the\n\"(1) against any person Including-\nthe money collected by the fund, and all sums\nUnited States and Canada and between the\n\"(A) the United States, and\nnot needed for administration and the satis-\nUnited States and Mexico, and establish\n\"(B) any other governmental instrumen-\nfaction of claims shall be invested prudently\nboundaries between adjacent States, as di-\ntality or agency to the extent permitted by\nin income producing securities approved by\nrected in section 4 of this Act.\nthe eleventh amendment to the Constitu-\nthe Secretary. Income from such securities\n\"COASTAL STATE FUND\ntion who is alleged to be in violation of the\nshall be added to the principal of the fund.\n\"SEC. 26. (a) There is hereby established\nprovisions of this Act or the regulation\n(7) Subject to the limitation contained\nin the Treasury of the United States the\npromulgated thereunder, or any permit or\nin subparagraph (3) of this subsection, if\nCoastal State Fund (hereinafter referred to\nlease issued by the Secretary: or\nthe fund is unable to satisfy a claim as-\nas the \"fund\"). The Secretary shall manage\n\"(2) against the Secretary where there is\nserted and finally determined under this sub-\nand make grants from the fund according to\nalleged a failure of the Secretary to perform\nsection, the fund may borrow the money\nthe regulations established pursuant to sub-\nany act or duty under this Act which is not\nneeded to satisfy the claim from any com-\nsections (b) and (c) to the coastal States\ndiscretionary with the Secretary.\nmercial credit source, at the lowest avail-\nimpacted by anticipated or actual oil and\n\"(b) No action may be commenced-\nable rate of interest, subject to the approval\ngas production.\n\"(1) under subsection (a) (1) of this sec-\nof the Secretary.\n\"(b) The purpose of such grants shall be\ntion-\n\"(8) No compensation shall be paid under\nto assist coastal States Impacted by antici-\n\"(A) prior to sixty days after the plain-\nthis subsection unless notice of the damage\npated or actual oil and production to\ntiff has given notice in writing under oath\nis given to the Secretary within three years\nameliorate adverse environmental effects\nof the violation (1) to the Secretary. and\nfollowing the date on which the damage\nand control secondary social and economic\n(ii) to any alleged violator of the provisions\noccurred.\nimpacts associated with the development of\nof this Act or any regulations promulgated\n\"(9) Payment of compensation for any\nFederal energy resources in, or on the Outer\nthereunder, or any permit or lease issued\ndamage pursuant to this subsection shall be\nContinental Shelf adjacent to the sub-\nthereunder;\nsubject to the holder or the fund acquiring\nmerged lands of such States. Such grants\n\"(B) if the Secretary has commenced and is\nby subrogation all rights of the claimant to\nmay be used for planning, construction of\ndiligently prosecuting a civil action in a\nrecover from such damages from any other\npublic facilities, and provision of public\ncourt of the United States to require com-1\nperson.\nservices, and such other activities as may be\npliance with the provisions of this Act or\n\"(10) The collection of amounts for the\nprescribed by regulations promulgated pur-\nthe regulations thereunder, or the lease, but\nfund shall cease when $100,000,000 has been\nsuant to subsection (c) of this section. Such\nin any such action in a court of the United\naccumulated, but shall be renewed when the\nregulations shall, at a minimum, (1) pro-\nStates any person may intervene as a matter\naccumulation in the fund falls below $85,-\nvide that such regulations be directly re-\nof right; or\n000,000. The fund shall insure that collec-\nlated to such environmental effects and so-\n\"(2) Under subsection (a) (2) of this sec-\ntions are equitable to all holders of a lease\ncial and economic impacts; (2) take into\ntion prior to sixty days after the plaintaiff\nor right-of-way.\nconsideration the acreage leased or proposed\nhas given notice in writing under oath of\n\"(11) The several district courts of the\nto be leased and the volume of production\nsuch action to the Secretary, in such manner\nUnited States shall have jurisdiction over\nof oil and gas from the Outer Continental\nas the Secretary shall by regulation prescribe,\nclaims against the fund.\nShelf off the adjacent coastal State; and (3)\nexcept that such action may be brought im-\n\"(c) If any area within or without a lease\nrequire each coastal State, as a requirement\nmediately after such notification in the case\ngranted or maintained under this Act is pol-\nof eligibility for grants from the fund, to\nwhere the violation complained of, consti-\nluted by any discharge or spillage of oil\nestablish pollution containment and clean-\ntutes an imminent threat to the health or\nfrom operations conducted by or on behalf\nup systems for pollution from oil and gas\nsafety of the plaintiff or would immediately\nof the holder of such lease, and such pollu-\ndevelopment activities on the submerged\naffect a legal interest of the plaintiff.\ntion damages or threatens to damage aquatic\nlands of each such State.\n\"(c) In any action under this section, the\nlife, wildlife, or public or private property,\n\"(c) The Secretary of Commerce, in ac-\nSecretary, if not a party, may intervene as a\nthe control and removal of the pollutant\ncordance with the provisions of subsection\nmatter of right.\nshall be at the expense of such holder, in-\n(b), and this subsection, shall, by regulation,\n\"(d) The court, in issuing any final order\ncluding administrative and other costs in-\nestablish requirements for grant eligibility:\nin any action, brought pursuant to subsec-\ncurred by the Secretary or any other Federal\nProvided, That it is the intent of this sec-\ntion (a) of this section, may award costs\nor State officer or agency. Upon failure of\ntion that grants shall be made to impacted\nof litigation including reasonable attorneys\nsuch holder to adequately control and re-\ncoastal States to the maximum extent per-\nfees to any party, whenever the court deter-\nmove such pollutant, the Secretary in co-\nmitted by subsection (d) of this section and\nmines such award is appropriate. The court\noperation with other Federal, State, or local\nthat grants shall be made to impacted\nmay, if a temporary restraining order or\nagencies, or in cooperation with such holder,\ncoastal States in proportion to the effects\nprelimlnary injunction is sought, require the\nor both, shall have the right to accomplish\nand impacts of offshore oil and gas ex-\nfiling of a bond or equivalent security in ac-\nthe control and removal at the expense of\nploration, development and production on\ncordance with the Federal Rules of Civil\nthe holder.\nsuch States. Such grants shall not be on a\nProcedure.\n\"(d) The Secretary shall establish require-\nmatching basis but shall be adequate to\n\"(e) Nothing in this section shall restrict\nments that all holders of leases issued or\ncompensate impacted coastal States for the\nany right which any person or class of per-\nmaintained under this Act shall establish\nfull costs of any environmental effects and\nsons may have under this or any statute or\nand maintain evidence of financial responsi-\nsocial and economic impacts of offshore oil\ncommon law to seek enforcement of any of\nbility of not less than $7 million. Financial\nand gas exploration, development, and pro-\nthe provisions of this Act and the regulations\nresponsibility may be established by any\nduction. The Secretary shall coordinate all\nthereunder, or to seek any other relief, in-\none of, or a combination of, the following\ngrants with management programs estab-\ncluding relief against the Secretary.\nmethods acceptable to the Secretary: (A)\nlished pursuant to the Coastal Zone Man-\n\"PROMOTION OF COMPETITION\nevidence of insurance, (B) surety bonds,\nagement Act of 1972.\n\"SEC. 28. Within one year after the date of\n(C) qualification as a self-insurer, or (D)\n\"(d) Notwithstanding any other provision\nother evidence of financial responsibility.\nenactment of this section, the Secretary\nof law, 10 per centum of the Federal reve-\nshall prepare and publish a report with\nAny bond filed shall be issued by a bonding\nnues from the Outer Continental Shelf Lands\ncompany authorized to do business in the\nrecommendations for promoting competition\nAct, as amended by this Act, or the equiv-\nand maximizing production and revenues\nUnited States.\nalent of forty ($.40) cents per barrel from\nfrom the leasing of Outer Continental Shelf\n\"(e) The provisions of this section shall\nthe Federal revenues from the Outer Conti-\nlands, and shall include a plan for im-\nnot be interpreted to supersede section 311\nnental Shelf Act, whichever is greater, shall\nplementing recommended administrative\nof the Federal Water Pollution Control Act\nbe paid into the fund: Provided, That the\nchanges and drafts of any proposed legisla-\nAmendments of 1972 or preempt the field of\ntotal amount paid into the fund shall not\ntion. Such report shall include consideration\nstrict liability or to enlarge or diminish the\nexceed $200,000,000 per year for fiscal 1976\nof the following\nauthority of any State to impose additional\nand 1977.\nrequirements.\n\"(1) other competitive bidding systems\n\"(e) There is hereby authorized to be ap-\npermitted under present law as compared to\n\"NEGOTIATIONS WITH STATES\npropriated to the fund $100,000,000.\nthe bonus bidding system;\n\"SEC. 24. The Secretary is authorized and\n\"(f) For the purpose of this Act, 'coastal\n\"(2) evaluation of alternative bidding sys-\ndirected to negotiate with those coastal\nState' means a State of the United States in,\ntems not permitted under present law;\nStates which are asserting jurisdiction over\nor bordering on, the Atlantic, Pacific, or\n\"(3) measures to ease entry of new com-\nthe Outer Continental Shelf with a view to\nArctic Ocean, the Gulf of Mexico, or Long\npetitors; and\n16992\nCONGRESSIONAL RECORD-SENATE\nSeptember 18, 1974\nin the degree of detail established in reg-\n(B) provide for a shorter postponement\ntransport facilities and regulations to fa-\nulations issued by the Secretary, specific\nthan requested provided that such period of\ncilitate distribution of oil and gas resources\nwork to be performed, environmental pro-\ntime is adequate for study and provision to\nof the Outer Continental Shelf. The report\ntection and health and safety standards\nameliorate any adverse economic or environ-\nshall include recommendations for changes\nto be met, and a time schedule for perform-\nmental effects or other damage and for con-\nin existing legislation or regulations to fa-\nance. The development plan may apply to\ntrolling secondary social or economic impact\ncilitate such distribution.\nall leases included within a production unit.\nassociated with the development of Federal\nREVIEW OF SHUT-IN OR FLARING WELLS\n\"(3) With respect to permits and leases\nenergy resources in, or on, the Outer Con-\noutstanding on the date of enactment of this\nSEC. 302. (a) Within six months after en-\ntinental Shelf adjacent to the submerged\nsection, a proposed development plan must\nactment of this Act the Secretary shall sub-\nlands of such State; or\nbe submitted to the Secretary within six\nmit a report to Comptroller General and the\n\"(C) deny the request for postponement\nmonths after the date of enactment of this\nCongress listing all shut-in oil and gas wells\nif he finds that such postponement would\nsection. Failure to submit a development\nand wells flaring natural gas on leases is-\nnot be consistent with the national policy\nplan or to comply with an approved develop-\nsued under the Outer Continental Shelf\nas expressed in section 3 of this Act.\nment plan shall terminate the permit or\nLands Act. The report shall indicate why\n\"(3) The Governor of a State aggrieved by\nlease.\neach well is shut-in or flaring natural gas,\nthe action of the Secretary shall have ten\n\"(4) The Secretary may approve revisions\nand whether the Secretary intends to require\ndays to appeal directly to the National\nof development plans if he determines that\nproduction or order cessation of flaring.\nCoastal Resources Appeals Board established\nrevision will lead to greater recovery of the\n(b) Within six months after receipt of the\npursuant to paragraph (4) of this subsection.\noil and gas, improve the efficiency of the\nSecretary's report, the Comptroller General\nSuch Board shall hear the appeal within\nshall review and evaluate the reasons for al-\nrecovery operation, or is the only means\nfifteen days of its receipt and shall render\navailable to avoid substantial economic\nlowing the wells to be shut-in or to flare\na final decision within forty-five days of such\nhardship on the lessee or permittee.\nnatural gas and submit his findings and\nhearing. The Board shall overrule the action\n\"(e) After the date of enactment of this\nrecommendations to the Congress.\nof the Secretary if it finds that (A) the\nsection, holders of oil and gas leases issued\nOIL SPILL LIABILITY STUDY\nState is not adequately protected from ad-\nto this Act shall not be permitted to flare\nverse environmental and economic impacts\nSEC. 303. (a) The Attorney General, in\nnatural gas from any well unless the Sec-\nand other damages pursuant to subpara-\nconsultation with the Administrative Con-\nretary finds that there is no practicable way\nference of the United States and the Office of\nto obtain production or to conduct testing\ngraph (3) of paragraph (2) of this subsec-\nor workover operations without flaring.\".\ntion; or (B) the request of the Governor for\nTechnology Assessment, is authorized and\npostponement is consistent with the na-\ndirected to study methods and procedures for\nGEOLOGICAL AND GEOPHYSICAL EXPLORATION\nimplementing a uniform law providing lia-\ntional policy as expressed in section (3) of\nSEC. 207. Section 11 of the Outer Conti-\nbility for damage from oil spills from Outer\nthis Act.\nnental Shelf Lands Act is hereby amended to\nContinental Shelf operations, tankers, deep-\n\"(4) (a) There is hereby established, in\nwater ports, and other sources. The study\nread as follows:\nthe Executive Office of the President, the Na-\n\"Sec. 11. No person shall conduct any type\nshall give particular attention to methods of\ntional Coastal Resources Appeals Board\nof geological or geophysical explorations in\nadjudicating and settling claims as rapidly,\n(hereinafter called the 'Board'), which shall\nthe Outer Continental Shelf without a per-\neconomically, and equitably as possible.\nbe composed of the following, or their des-\nmit issued by the Secretary. Each such per-\n(b) The Attorney General shall report the\nignees-the Vice President, who shall be\nmit shall contain terms and conditions de-\nresults of his study to the Congress within\nChairman of the Board, the Secretary of the\nsix months after the date of enactment of\nsigned to (1) prevent interference with ac-\nInterior, the Administrator of the National\nthis Act.\ntual operations under any lease maintained\nOceanic and Atmospheric Administration,\nFUEL STAMP STUDY\nor granted pursuant to the Act; (2) pre-\nthe Administrator of the Environmental Pro-\nvent or minimize environmental damage;\nSec. 304. The Administrator of the Federal\ntection Agency, and the Chairman of the\nand (3) require the permittee to furnish the\nEnergy Administration and the Secretary of\nCouncil on Environmental Quality.\nSecretary with copies of all data (including\nthe Department of Health, Education, and\n\"(b) The Board shall-\ngeological, geophysical, and geochemical\nWelfare are authorized and directed to carry\ndata, well logs, and drill core analyses) ob-\n\"(1) transmit a written report to the ap-\nout a study to determine the feasibility of\npropriate committees of Congress as to the\ntained during such exploration. The Secre-\nestablishing a fuel stamp program. The pro-\ntary shall maintain the confidentiality of\nbasis for any decision rendered; and\ngram would utilize coupons to assist those\nall data so obtained until after the areas\n\"(2) conduct such hearings pursuant to\non low and fixed incomes in purchasing home\ninvolved have been leased under this Act or\nsection 554 of title 5, United States Code.\nheating fuels in the winter months. The Ad-\nuntil such time as he determines that making\n\"(5) For the purposes of this section, an\nministrator of the Federal Energy Adminis-\nthe data available to the public would not\naggrieved State is defined as being one which\ntration and the Secretary of Health, Educa-\ndamage the competitive position of the per-\nhas requested a postponement of a lease sale\ntion, and Welfare are directed to report to the\nmittee, whichever comes later.\".\nbut has been denied such postponement or\nCongress the results of such study, together\nprovided a shorter period of time in which to\nENFORCEMENT\nwith their recommendations with respect\nameliorate adverse impacts associated with\nthereto, within sixty days of the effective date\nSEC. 208. Subsection 5(a) (2) of the Outer\ndevelopment of the Outer Continental Shelf\nof this Act.\nContinental Shelf Lands Act is hereby\nand the Governor has determined that such\namended by deleting the first sentence.\nRELATIONSHIP TO EXISTING LAW\nperiod of time is not adequate.\nLAWS APPLICABLE TO OUTER CONTINENTAL\n\"(6) This section shall take effect immedi-\nSEC. 305. Except as otherwise expressly\nSHELF\nately upon enactment of this Act.\".\nprovided herein, nothing in this Act shall be\nconstrued to amend, modify, or repeal any\nSEC. 209. Paragraph (2) of subsection (a)\nTITLE IHI-MISCELLANEOUS\nof section 4 of the Outer Continental Shelf\nprovision of the Coastal Zone Management\nPROVISIONS\nAct of 1972.\nLands Act is amended by deleting the fol-\nPIPELINE SAFETY AND OPERATION\nSEVERABILITY\nlowing words: \"as of the effective date of this\nAct\".\nSEC. 301. (a) The Secretary of Transpor-\nSEC. 306. If any provision of this Act, or\ntation, in cooperation with the Secretary of\nthe application of any such provision to any\nAUTHORITY OF GOVERNOR OF ADJACENT STATE\nthe Interior, is authorized and directed to\nTO REQUEST POSTPONEMENT OF LEASE SALES\nperson or circumstance, shall be held invalid,\nreport to the Congress within sixty days after\nthe remainder of this Act, or the application\nSEC. 210. Section 8 of the Outer Continen-\nenactment of this Act on appropriations and\nof such provision to persons or circumstances\ntal Shelf Lands Act, as amended by this Act,\nstaffing needed to monitor pipelines on Fed-\nother than those as to which it is held in-\nis further amended by inserting at the end\neral lands and the Outer Continental Shelf\nvalid, shall not be affected thereby.\nthereof the following:\nso as to assure that they meet all applicable\n\"(i) (1) The Secretary shall give notice\nstandards for construction, operation, and\nMr. JOHNSTON. Mr. President, I move\nof the sale of each lease pursuant to this\nmaintenance.\nto reconsider the vote by which the bill\nAct to the Governor of the adjacent State.\n(b) The Secretary of Transportation, in CO-\nwas passed.\nAt any time prior to such sale the Governor\noperation with the Secretary of the Interior,\nMr. ROBERT C. BYRD. I move to lay\nmay request the Secretary to postpone such\nis authorized and directed to review all laws\nthat motion on the table.\nsale for a period of not to exceed three years\nand regulations relating to the construction,\nfollowing the date proposed in such notice\noperation, and maintenance of pipelines on\nThe motion to lay on the table was\nif he determines that such sale will result\nFederal lands and the Outer Continental\nagreed to.\nin adverse environmental or economic im-\nShelf and report to Congress within one year\nTRIBUTE TO SENATOR JOHNSTON\npact or other damage to the State or the\nafter enactment of this Act on administra-\nMr. MANSFIELD. Mr. President, with\nresidents thereof. In the event of any such\ntive changes needed and recommendations\nrequest, the Secretary shall postpone the\nfor new legislation.\nthe passage of the Outer Continental\nsale until proceedings under this subsection\nShelf measure, the Senate has witnessed\n(c) One year after the date of the enact-\nare completed.\nment of this Act, the Interstate Commerce\nas superb and skillful a job of legislative\n\"(2) The Secretary shall, not later than\nCommission and the Secretary of Transporta-\nability as has ever been performed in the\nthirty days from the receipt of such request:\ntion shall submit to the President and the\nSenate. It is to Senator BENNETT JOHN-\n\"(A) grant the request for postponement;\nCongress a report on the adequacy of existing\nSTON that I pay this tribute and to the\nSeptember 18, 1974\nCONGRESSIONAL RECORD-SENATE\n16991\n\"(4) measures to increase supply to in-\nareas involved in a manner designed to pro-\ndeep water or adverse weather conditions,\ndependent refiners and distributors.\nvide time-series data which can be compared\nand as long thereafter as oil or gas may be\n\"ENFORCEMENT AND PENALTIES\nwith previously collected data for the pur-\nproduced from the area in paying quantities,\n\"SEC. 29. (a) At the request of the Secre-\npose of identifying any significant changes.\nor drilling or well reworking operations as\ntary, the Attorney General may institute\n\"(c) In carrying out the provisions of this\napproved by the Secretary are conducted\na civil action in the district court of the\nsection, the Secretary is directed to give pref-\nthereon, and (3) contain such rental provi-\nUnited States for the district in which the\nerence to the use of Government owned and\nsions and such other terms and provisions as\naffected operation is located for a restrain-\nGovernment operated vessels, to the maxi-\nthe Secretary may prescribe at the time of\ning order or injunction or other appropriate\nmum extent practicable, in contracting for\noffering the area for lease.\".\nwork in connection with such environmental\nremedy to enforce any provision of this Act\nDISPOSITION OF FEDERAL ROYALTY OIL\nor any regulation or order issued under the\nbaseline and monitoring studies. In order\nSEC. 204. Section 8 of the Outer Continen-\nauthority of this Act.\nto avoid needless duplications, the Secretary\nshall coordinate all such activities with the\ntal Shelf Lands Act as amended by this Act\n\"(b) If any person shall fail to comply\nwith any provision of this Act, or any reg-\nAdministrator of the National Oceanic and\nas amended by this Act is further amended\nAtmospheric Administration and shall, when-\nby adding a new subsection (k) to read as\nulation or order issued under the authority\nfollows:\nof this Act, after notice of such failure and\never possible, utilize existing Government\nexpiration of any period allowed for correc-\nowned and Government operated marine\n\"(k) Upon commencement of production\ntive action, such person shall be liable for\nresearch laboratories in conducting research\nof oil from any lease, issued after the effec-\na civil penalty of not more than $5,000 for\nauthorized by this section.\".\ntive date of this subsection, the Secretary\neach and every day of the continuance of\nREVISION OF LEASE TERMS\nshall offer to the public and sell by competi-\ntive bidding for not less than its fair market\nsuch failure. The Secretary may assess, col-\nSEC. 203. Section 8 of the Outer Continen-\nvalue, in such amounts and for such terms as\nlect, and compromise any such penalty. No\ntal Shelf Lands Act is amended by revising\npenalty shall be assessed until the person\nhe determines, that proportion of the oil\nsubsections (a) and (b) to read as follows:\ncharged with a violation shall have been\nproduced from said lease which is due to the\n\"(a) The Secretary is authorized to grant\ngiven an opportunity for a hearing on such\nUnited States as royalty or net profit share\nto the highest responsible qualified bidder\ncharge.\noil. The Secretary shall limit participation\nby competitive bidding under regulations\nin such sales where he finds such limitation\n\"(c) Any person who knowingly and will-\npromulgated in advance, oil and gas leases\nfully violates any provision of this Act, or\nnecessary to assure adequate supplies of oil\non submerged lands of the Outer Continental\nany regulation or order issued under the\nat equitable prices to independent refiners.\nShelf which are not covered by leases meeting\nauthority of this Act designed to protect pub-\nIn the event that the Secretary limits par-\nthe requirements of subsection (a) of section\nlic health, safety, or the environment or\nticipation in such sales, he shall sell such oil\n6 of this Act. The bidding shall be by sealed\nconserve natural resources or knowingly and\nat an equitable price. The lessee shall take\nbids and, at the discretion of the Secretary,\nwillfully makes any false statement, repre-\nany such royalty oil for which no acceptable\nshall be either (1) on the basis of a cash\nsentation, or certification in any application,\nbids are received and shall pay to the United\nbonus bid with a royalty fixed by the Sec-\nrecord, report, plan, or other document filed\nStates a cash royalty equal to its fair mar-\nretary at not less than 12½ per centum in\nor required to be maintained under this\nket value, but in no event shall such royalty\namount or value of the production saved,\nAct, or who knowingly and willfully falsifies,\nbe less than the highest bid.\".\nremoved, or sold, (2) on the basis of a\ntampers with, or renders inaccurate any\ncash bonus bid with a fixed share of the\nANNUAL REPORT\nmonitoring device or method of record re-\nnet profits derived from operation of the\nSEC. 205. Section 15 of the Outer Continen-\nquired to be maintained under this Act or\ntract of no less than 30 per centum reserved\ntal Shelf Lands Act is amended to read as\nknowingly and willfully reveals any data or\nto the United States, or (3) on the basis of\nfollows:-\ninformation required to be kept confiden-\na fixed cash bonus with the net profit share\n\"ANNUAL REPORT BY SECRETARY TO\ntial by this Act, shall, upon conviction, be\nreserved to the United States as the bid\nCONGRESS\npunished by a fine of not more than $100,000,\nvariable. The United States net profit share\nor by imprisonment for not more than one\n\"SEC. 15. (a) Within six months after the\nshall be calculated on the basis of the value\nyear, or both. Each day that a violation\nend of each fiscal year, the Secretary shall\nof the production saved, removed, or sold,\ncontinues shall constitute a separate offense.\nsubmit to the President of the Senate and\nless those capital and operating costs directly\n\"(d) Wheneyer a corporation or other\nthe Speaker of the House of Representatives\nassignable to the development and operation\nentity violates any provision of this Act, or\n(but not acquisition) of each individual oil\na report on the leasing and production pro-\nany regulation or order issued under the au-\nand gas lease issued under this Act to the\ngram in the Outer Continental Shelf during\nthority of this Act, any officer, or agent of\nsuch fiscal year, including a detalling of all\nlessee under a net profit sharing arrange-\nsuch corporation or entity who knowingly\nmoneys received and expended, and of all\nment. No capital or operating charges for\nand willfully authorized, ordered, or carried\nmaterials or labor services not actually used\nleasing, development, and production activi-\nout such violation shall be subject to the\non an area leased for oil or gas under this\nties; a summary of management, supervision,\nsame fines or imprisonment as provided for\nAct under a net profit-sharing arrangement;\nand enforcement activities; a summary of\nunder subsection (c) of this section.\nallocation of income taxes; or expenditure\ngrants made from the Coastal State Fund;\n\"(e) The remedies prescribed in this sec-\nfor materials or labor services used prior to\nand recommendations to the Congress for\ntion shall be concurrent and cumulative and\nlease acquisition shall be permitted as a\nimprovements in management, safety and\nthe exercises of one does not preclude the\ndeduction in the calculation of net income.\namount of production in leasing and opera-\nexercise of the others. Further, the remedies\nThe Secretary shall by regulation establish\ntions in the Outer Continental Shelf and for\nprescribed in this section shall be in addi-\naccounting procedures and standards to gov-\nresolution of jurisdictional conflicts or am-\ntion to any other remedies afforded by any\nern the calculation of net profits. In the\nbiguities.\nother law or regulation.\nevent of any dispute between the United\n\"(b) Section 313(a) of the Coastal Zone\n\"ENVIRONMENTAL BASELINE AND MONITORING\nStates and a lessee concerning the calcula-\nManagement Act of 1972 (86 Stat. 1280) is\nSTUDIES\ntion of the net profits, the burden of proof\namended by striking the word 'and' after\n\"SEC. 30. (a) Prior to permitting oil and\nshall be on the lessee. That part of the net\nthe word 'priority' in subsection (8); re-\ngas drilling on any area of the Outer Con-\nprofit share due the United States which is\nnumbering existing subsection (9) as sub-\ntinental Shelf not previously leased under\nattributable to oil production may be taken\nsection (10); and inserting the following\nthis Act, the Secretary, in consultation with\nin kind in the form of oil and disposed of\nnew subsection (9) 'an assessment of the\nthe Administrator of the National Oceanic\nas provided in subsection (k) of this section.\nonshore social, economic, and environmental\nand Atmospheric Administration of the De-\nThat part of the net profit share due in\nimpacts in those coastal areas affected by\npartment of Commerce, shall make a study\nkind shall be determined by dividing the\nOuter Continental Shelf oil and gas ex-\nof the area involved to establish a baseline\nnet profit due the United States attribut-\nploration and exploitation; and'.\".\nof those critical parameters of the Outer\nable to the product or products taken in\nINSURING MAXIMUM PRODUCTION FROM\nContinental Shelf environment which may\nkind by the fair market value at the well-\nOIL AND GAS LEASES\nbe affected by oil and gas development. The\nhead of the oil and/or gas (as the case may\nSEC. 206. Section 5 of the Outer Continen-\nstudy shall include, but need not be limited\nbe) saved, removed or sold. In determining\nthe attribution of profits as between oil and\ntal Shelf Lands Act is amended by adding\nto, background levels of hydrocarbons in\nthe following new subscetions:\nwater, sediment, and organisms; background\ngas, costs shall be allocated proportionately\nlevels of trace metals in water, sediments,\nto the value of their respective shares of\n\"Insuring Maximum Production From Oil\nand organisms; characterization of benthic\nproduction.\nand Gas Leases\nand planktonic communities; description of\n\"(b) An oil and gas lease issued by the\n\"(d) (1) After enactment of this section\nsediments and relationships between orga-\nSecretary pursuant to this section shall (1)\nno oil and gas lease may be issued pursuant\nnisms and abiotic parameters; and standard\ncover a compact area not exceeding five\nto this Act unless the lease requires that de-\noceanographic measurements such as salin-\nthousand seven hundred and sixty acres, as\nvelopment be carried out in accordance with\nity, temperature, micronutrients, dissolved\nthe Secretary may determine, (2) be for a\na development plan which has been ap-\noxygen.\nperiod of (1) in five years or (ii) for up to\nproved by the Secretary, and provides that\n\"(b) Subsequent to development of any\nten years where the Secretary deems such\nfailure to comply with such development\narea studied pursuant to subsection (a) of\nlonger period necessary to encourage explora-\nplan will terminate the lease.\nthis section, the Secretary shall monitor the\ntion and development in areas of unusually\n\"(2) The development plan will set forth,"
}