waves greatly hindered containment and cleanup activities. Besides underscoring the dangers associated with the lack of safety and sound construction certification for oil tankers, which for the most part fly under "flags of convenience", the disaster generally demonstrated the obvious limitations of present pollution prevention and cleanup technology whether from a tanker, pipeline or even from a rig or platform. The Coast Guard was barely into its investigation of the Argo Merchant incident when the Liberian-registered tanker, Olympic Games, plowed aground in the Delaware River, releasing 133,500 gallons of light Arabian crude oil These and other tanker spills illustrate that OCS exploration and development should be safer than relying heavily on tanker transportation of imported oil; which has reached the rough equivalent of 30 Argo Merchant shiploads per day For example a study by Science magazine found that, "Tankers are the source of the highest volume of oil spilled each year and platforms have the lowest volume *** without petroleum production from the Atlantic Outer Continental Shelf imports of crude oil and petroleum products will increase, and the concomitant use of more tankers will increase the number of collisions and accidents along with deliberate spills occurring in the Atlantic Coastal waters."

The winter of 1976-77 was a bitter one for Americans. Shortages of gas led to cold homes and offices, and some cases the closing of businesses and factories, and a resulting loss of jobs. Safe, expeditious development of OCS resources would reduce these problems. Gas distributors testified before our committee that they need the provisions of H.R. 1614, which provides for new bidding systems, for example, royalty bidding, for gas distribution to needy geographic areas, and for return of produced gas to developer's region, to allow them to participate in OCS leasing and thus assure secure sources of gas at home. The gas shortage led to questions about governmental control over developers and producers. A preliminary investigation of five gas fields off the Louisiana coast discovered "shut-in" reservoirs totaling almost 1 trillion cubic feet of gas and that production from ongoing operations in three fields had been reduced precipitously since 1974.36 A study based on this investigation questioned the adequacy of government oversight of producer's activities by findings that:

1. Production had fallen sharply in the past 2 years in three of the four fields reviewed.

2. In all four fields, production was substantially below the maximum efficient rate of production (MER's)-maximum production "benchmarks" established initially by the producers.

3. The "benchmark" MER's themselves had been substantially reduced during the past 2 years by the producers."

On February 17, 1977, Judge Jack B. Weinstein invalidated the mid-Atlantic Lease Sale No. 40 (covering the Baltimore Canyon lease area with a potential production of as much as 1.4 billion barrels of oil and 9 trillion plus cubic feet of natural gas) on the grounds that it violated the National Environmental Policy Act of 1969. Although the ruling has now been reversed, it underscores that the present OCS law needs reform to avoid delays, eliminate legal inadequacies and

36 See "Preliminary Investigation-Production Capability and Production Levels at Selected Natural Gas Production Fields in the Gulf of Mexico Outer Continental Shelf", a report to the Secretary of the Interior, prepared by J. W. Wilson & Associates, Inc., Washington, D.C., February 1977.

lessen the genuine concern by environmentalists, state and local officials and other citizens. The key bases of Judge Weinstein's decision were: (1) The lack of adequate information about the effects of the sale; (2) the lack of adequate consultation with affected governments and persons; (3) the lack of adequate resource data, potential benefits, and potential risks to allow rational and balanced policy judgments; (4) the lack of step-by-step procedures to insure people decision making; (5) the lack of an assured procedure to have a second look at OCS activities often discovered when resource potential is known; and, (6) the lack of procedures for terminating overly risky activities. Of course, all of these defects are cured by H.R. 1614. In fact, the conclusion of the appelate court in reversing Judge Weinstein was that the new Secretary of Interior, adopting the procedures mandated by H.R. 1614, could adequately monitor future activities and their impact. In short, delays caused by the lower court's rescission of Sale No. 40 would have been eliminated if H.R. 1614 had been law.37

One event vividly dramatized the risks that accompany offshore oil and gas operations—that is, the North Sea oil platform blowout of late April 1977. During its 212 years, the committee heard witness after witness from the large oil companies argue against increased safety and environmental protections. "We can do the job," they stressed. "Leave us alone! We have the technology to avoid catastrophes. Look at what we've done in the North Sea," they defended.

Over a 7 day period in April of 1977, over 147,000 barrels of oil were dumped into the Norwegian North Sea, creating an oil slick over as much as 300 square miles. The blowout occurred on the Bravo platform operated by the Phillips Petroleum Co. in the Ekofisk field. Apparently some tools had been dropped into the well hole obstructing the flow, and when the crew was readying the well for re-working, it began to blow. In the confusion of the night, the blowout preventor was installed backwards. The well raged out of control for days until two American troubleshooters, "Boots" Hanson and Paul "Red" Adair, were finally successful in subduing it.

Just 3 weeks before the incident Mr. Adair had been quoted by the British media as warning that a "fearsome accident" in the North Sea was inevitable, and that when it came the safety equipment available for the North Sea rigs would be inadequate to contain it. Testifying later before the House Ad Hoc Select Committee on the OCS on the catastrophe, Mr. Adair indicated that what was needed was a wellequipped semi-submersible, like the "Big Red One", which has a fire pump that spurts out better than 30,000 gallons a minute, a machine shop, a hospital and other equipment to combat disaster situations involving drilling platforms. Mr. Adair's semi-submersible rescue vehicle would cost about $50 million and would be able to fight blowouts and fires for long periods of time in rough seas. Apparently, foreign countries are way ahead of the United States in ordering this type of equipment.

The North Sea blowout resulted in the loss of as much as 8.2 million gallons of oil worth over $2 million, and forced the shutdown

37 The situation was summed up by Chairman Murphy in a February 17 statement on the decision: "Last August, I warned the Interior Department about the deficiencies in the procedures surrounding the sale. They did not listen. I asked for support for OCS reform. They actively opposed. I urged more complete information as to OCS activities and impacts. They withheld. Today's decision demonstrates that their failure to listen to me, to the OSC Committee, and the Congress, necessarily resulted in more delays in our efforts to safely and expeditiously develop our offshore oil and gas resources." It should be noted that the new Secretary of Interior is listening.

of production operations in the entire area. The cost alone for "Red" Adair and company to squelch the blowout was reported at $6.6 million. In addition, the cost in damages to the platform and equipment, and cleanup expenses were substantial. The real extent of environmental damages and harm to fishery resources, if any, is unknown. The blowout conclusively demonstrated the very real environmental threat posed by offshore drilling, the inadequacy of offshore pollution cleanup technology, and the inadequacy of onsite safety equipment and regulation. "In short", Chairman Murphy summarized at a select committee hearing, "the (Norwegian) Government may not have adequately regulated (the offshore operations). The companies were trusted, and the myth of technological competence had to be dissipated. by a disaster". He emphasized, "While no one can honestly say that we can prevent spills, we can, and must, insure that all precautions. are taken and that OCS development will not give up safety for speed". Hence, the North Sea blowout and others like it justify the use of the "best available technology" standards where economically achievable as required by H.R. 1614.

The GAO studies

In March of 1977, the General Accounting Office, the investigative arm of Congress, reported on Lease Sale No. 35 (Southern California) concerning problems in selecting and evaluating land to lease.. On March 7, Monte Canfield of GAO briefed the committee on the report. The report explicitly states and recommends the following:

Bills (S. 9 and H.R. 1614) identical to S. 521 have been introduced into the 95th Congress.

The recommendation in this report is in line with the thrust of provisions in the proposed legislation to provide for an Outer Continental Shelf leasing program that will identify size, timing and location of leasing to meet national goals and to assure receipt of a fair market value for the oil and gas owned by the Federal Government. GAO recommends the Congress favorably consider this legislation.

In its evaluation of the Southern California Lease Sale No. 35, the GAO questioned the adequacy of the Interior Department's tract selection, resource evaluation and revenue estimates. The sale wasTM held on December 11, 1975 and 231 oil and gas tracts (approximately 1.3 million acres) were offered. The GAO found that because the prelease tract selections and evaluations were based on minimal and insufficient resource information, that the estimates of tract values were unreliable, hence the return to the public based upon the fair market value could not reasonably be assured. A full 84 percent of the tracts offered either showed no resource value, or insufficient resources to sustain profitable operations, some due to the limits of present technology. Potential revenues initially put at $2.3 billion were overestimated fivefold with the final results showing that only 24 percent of the tracts were leased, producing $417 million for the Treasury. The GAO also assailed the competitive aspects of the lease sale pointing out that of 231 tracts only 70 received bids, and the majority of tracts bid on, that is 70 percent, secured only one or two. offers.

'Consequently the GAO recommended:

The Secretary of the Interior should direct a geological exploration which would implement a systematic plan for appraising Outer Continental Shelf oil and gas resources, including selected stratigraphic test drilling.

In summary, the GAO reiterated:

39

The Department's policy of leasing the maximum resource in minimum time could adversely affect our domestic energy production. This policy encourages speculation in the Outer Continental Shelf lands and can tie up industry capital in lands with no or minimal resources and infringe on the public's right to receive fair market value for the resources.38 The above statements and recommendations were re-stated in a June 1977 GAO report on "Outer Continental Shelf Sale No. 40-Inadequate Data Used to Select and Evaluate Lands to Lease," " requested by the Ranking Minority Member of the OCS Committee. Held on August 17, 1976, the Baltimore Canyon Sale offered 154 oil and gas leases off the coast of Delaware, Maryland, and New Jersey. The yield to the Government in bonus bids was $1.1 billion in addition to probable royalty revenues down the road. Again the GAO attacked the reliability of DOI's resource assessment program, and pointed out that high bonus bidding was no indication of ultimate resource potential. For example, Sale No. 23 in 1953 brought $1.5 billion in bonus bids, but no exploitable resources have been found. GAO urged that Interior direct a geological exploration program and institute a systematic plan for OCS resource appraisal. As before, GAO recommended:

After Interior knows what land industry has explored and how thoroughly it was explored, if any data is still needed, the Department of the Interior should take necessary actions, including public financing of stratigraphic drilling, to obtain

it.

The Select Committee considered the criticisms and recommendations of the GAO. As suggested, the passage of H.R. 1614 will ameliorate many problem areas identified by various GAO reports and testimony before the Committee.

Numerous other studies have contributed to the literature calling for long-awaited changes in the present system of OCS leasing and management. For instance, a study was undertaken by the California Coastal Commission on OCS policies, problems and practices. The Committee makes note that nearly all of the recommendations of that study have been included in H.R. 1614.

The Carter administration

There is a new approach, cooperation and support, by the executive branch as to OCS reform.

38 "Outer Continental Shelf Sale No. 35-Problems Selecting and Evaluating Land to Lease," General Accounting Office, No. EMD-77-19, March 7, 1977, pp. i-vi. 39 "Outer Continental Shelf Sale No. 40-Inadequate Data Used to Select and Evaluate Lands to Lease," General Accounting Office, No. EMD-77-51, June 29, 1977, pp. i-iv.

During the Presidential campaign, during the transition period, and during the early months of his administration, President Carter repeatedly called for the reform of our OCS leasing practices, and emphasized the need for balanced resource development and the implementation of sound environmental safeguards. În carrying out the President's program, a new Secretary of the Interior, Cecil D. Andrus has reconfirmed the administration's position at his confirmation hearing and in every public statement and decision since then.

The new Secretary of the Interior has indicated his concern for a balanced approach to OCS decisionmaking.

Secretary Andrus made his imprint on Interior's OCS leasing program early. In the crisis atmosphere of the past winter's gas shortage, he issued an urgent request on January 24, 1977, to more than 50 operators on the Gulf of Mexico OCS to increase the production of natural gas as rapidly as sound safety and environmental practices would permit. Shortly thereafter, he announced the cancellation, at least temporarily of the Alaskan Cook Inlet sale, which had been slated for late February, in order to personally make a thorough review of the studies, comments and options available concerning the proposed sale. Upon reports of possible improper "shut-ins", he immediately directed that a comprehensive review of gas production in the Gulf of Mexico be undertaken to ferret out any possible hoarding of the resource for speculative purposes and to insure that the maximum flow of gas is supplied that is congruent with good safety and conservation practices.

Secretary Andrus has identified OCS reform as one of his first two legislative priorities in Congress. The Secretary has decided to momentarily slow down lease sales to re-evaluate present Interior Department OCS procedures; to put into effect a more deliberate and realistic program; and to allow Congress to act on pressing OCS reforms. He has urged legislation to give affected States a greater voice in OCS decision-making, which is a key feature of H.R. 1614. On this matter, Secretary Andrus stated simply, "*** we have to recognize that the states bordering the Outer Continental Shelf where the oil may or may not be found should be given input into the process in order to protect against the social and economic impacts on those States." He continued, "I think the Outer Continental Shelf lands can be utilized with *** adequate protection and give us less exposure than some of our present tankers." He has pushed for the dissemination of more data and information to the states on OCS activities, which H.R. 1614 would provide.

The Secretary has worked to enhance competition in the auctioning of leases on the OCS, provided for in H.R. 1614 through the required use of new bidding systems, competitive impact reviews and reporting requirements. Pressing for adequate procedures to incur the proper and timely development of lease tracts-a concept embodied in the "due diligence" provisions of H.R. 1614-he has stated emphatically, "Resources simply cannot be held for speculation. We must be sure when leases are given out, that exploration and development occur promptly." 40 Additionally, he commissioned a study of

40 See op. cit., Interior Nomination Hearings, Jan. 17-18, 1977, pp. 1-82.