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shut-in wells, included in the OCS bill. Finally, he has taken note of the difficulties and delay associated with our present system in relation to court challenges of OCS decisionsa malady which is cured by the citizen suit and expedited judicial review provisions of H.R. 1614.

Most recently, on May 17, Secretary Andrus also announced a revised ieasing schedule for lease sales through the end of 1978 (figure 7, p. 94). This schedule continues leasing in known areas while opening up exploration and development in frontier areas in a manner that emphasizes cooperation with coastal State and communities to identify and resolve conflicts. That schedule is a close parallel to the leas

a ing program standards in H.R. 1614.

Realizing that OCS reforms are required in legislation, and thus not just dependent on who is elected or appointed, Secretary Andrus and the Carter administration have explicitly stated the need for, and their support of, the reforms in H.R. 1614. In testimony before the Committee, Secretary Andrus stated, "I believe that amendment of the OCS Lands Act is overdue and would like the Department of the Interior to work closely with this committee toward enactment of amendments this session." The following excerpts from the Interior Department's testimony will serve to summarize its backing of H.R. 1614:

The Department supports the concepts in H.R. 1614 designed to achieve the objective of assuring State and local communities an effective role in OCS decisions. These include an information program *** (and) opportunities for the Governors to make recommendations to the Department.

We also support the efforts in H.R. 1614 to improve the balancing of environmental protection with the achievement of the benefits of domestic energy production. In particular, the Department supports

continuation of the authority for gathering data on environmental condi. tions and changes that might result from OCS activities;

specific consideration of potential environmental damages in the development of the leasing program, the sale of leases on specific tracts, and the approval of OCS activities;

an orderly and coordinated review of environmental, safety and health regulations to assure that they are clear and effective. In addition, the Department supports legislation on oil spill liability, preferably in a comprehensive bill rather than in the OCS amendments. We support legislation that would

authorize pre-lease exploration when deemed necessary ;

provide for approval, modification or disapproval of exploration development and production plans;

provide for suspension or cancellation of leases when it is clear that the environmental risks or damages of continued operations will place inequitable burdens upon those who use the marine or coastal environments that

are not outweighed by the national benefits of producing the oil and gas. We support the mandate to use alternative bidding systems, although these alternatives need not be limited to eight.

Additional testimony from John O'Leary, Administrator of the Federal Energy Administration, called for the early enactment of H.R. 1614 to increase the input of the States, provide adequate environmental and other safeguards, to minimize time-consuming litigation and to achieve orderly OCS development. In particular, Mr. O'Leary pointed out that the responsibility for the baseline study program should remain in the Interior Department. He emphasized that, “FEA strongly favors the vesting of authority in the Department of the Interior to cancel leases when the continued activity would cause serious harm or damage to the human or marine environment." It might be added that the cancellation provisions of the bill also enjoy widespread support among environmental groups.

Charles Warren, Chairman of the Council on Environmental Quality in his March testimony before the committee, stated in no uncertain terms:

The bill before you today would make major changes in the law and the management system which have evolved over 20 years. We believe the changes are needed. In April, 1974, CEQ concluded a year-long environmental assessment of OCS oil and gas development and submitted its report to the President. We concluded that leasing in frontier areas must be conducted under carefully controlled conditions. H.R. 1614 would allow full implementation of the recommendations of the CEQ study.

The bill specifically addresses clear limitations in the present law. It assures better management of OCS resources by providing:

Authority for a distinct pause between exploration and development to reevaluate how and whether to proceed with development.

Recognition that leases should not irrevocably alienate publicly-owned resources, and authority to cancel 'leases and compensate in extreme situations.

Clear authority to require data submission by the lessee, with specific provision for making certain data public.

Authority for a full range of alternative bidding systems to maximize competition and revenues.

Larger lease sizes and longer lease terms than allowed under current law, which are desirable in some frontier areas.

Clarification of specific regulatory authorities, particularly the ability to require best available technology economically achievable to protect health, safety and the environment.

Definition of the role and authority of states in OCS decisionmaking. The President himself has publicly committed himself to OCS reforms such as those in H.R. 1614. His comprehensive energy package singled out the OCS as an important, near-term source of oil and gas, but expressed caution that environmental safeguards be vigorously maintained. The committee's bill received explicit support as follows:

Oil and gas under Federal ownership on the Outer Continental Shelf (OCS) are important national assets. It is es

sential that they be developed in an orderly manner, consistent with national energy and environmental policies. The Congress is now considering amendments to the OCS Lands Act, which would provide additional authorities to ensure that OCS development proceeds with full consideration of environmental effects and in consultation with States and communities. These amendments would require a flexible leasing program, using bidding systems that will enhance competition, ensure a fair return to the public, and promote full resource recovery. The Administration strongly supports passage of this legislation.

The President has also directed the Secretary of the Interior to undertake a review of OCS leasing procedures. This review will establish a sound basis for the leasing program and assure adequate production from the OCS, consistent

with sound environmental safeguards. Less than a month later, President Carter again underscored the urgency of OCS reform in his environmental message. It is important to quote the entire portion of that message to Congress relating to the Outer Continental Shelf:

The oil and gas under Federal ownership on the outer continental shelf must be developed in an orderly manner, reconciling the Nation's energy needs with the fullest possible protection of the environment.

Amendments to the OCS Lands Act now being considered by the Congress, with provisions proposed by the Administration, will provide important new authority to the Secretary of the Interior. I urge expeditious passage of legislation to regulate the outer continental shelf, and in particular I favor provisions which would:

Permit full evaluation of the effects of oil production, and cancel leases or terminate operations when harm or damage to the environment outweighs the advantage of continued operations;

Improve consultation with states and communities to assure that they have a real role in decisions which affect them;

Require industry to use the best available economically achievable safety and pollution control technology in operations on the outer continental shelf.

In addition to new legislation, certain administrative steps should be taken in this area. The first is to assess the size and scheduling of the OCS program. The Secretary of the Interior has already revised this program through 1978 to reflect reasonable production objectives as well as the various environmental considerations in each OCS region.

As the Secretary now proceeds to reevaluate the longerterm OCS program, I have directed him to work closely with the Governors of affected coastal states to guarantee that proposals for the timing and sequence of offshore lease sales are reasonable, not only in a technological sense but also in economic, social, and environmental respects. Because the Alaskan outer continental shelf is particularly sensitive and

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controversial, I am directing him to give special emphasis to
it. I have also asked him to work closely with the Secretary
of Commerce as she identifies potential marine sanctuaries in
areas where leasing appears imminent.

To obtain fuller knowledge about the environmental im-
pact of leasing and production, and to increase participation
by the states in the process of decision, I have further directed
the Secretary of the Interior to:

Establish an OCS Information Clearinghouse to receive inquiries about federal OCS activity:

Develop regulations, operating orders, and lease provisions specifying the information required from industry about both the offshore and onshore impacts of prospective development;

Facilitate cooperative planning among industry, the Interior Department, and Department of Transportation, and the states for lease development, pipeline locations, pipeline standards, and onshore facilities:

Establish procedure for compliance with the National Environmental Policy Act in connection with development plan approvals.

Because OCS activities should be administered in the most orderly way possible, I am directing the Secretary of the Interior to study carefully the prospect of reorganizing his Department's management of these valuable resources.

He and the Administrator of the Environmental Protection Agency should also coordinate their respective regulatory activities to ensure that exploration and development are

not delayed by procedural confusion. The committee is appreciative of the backing provided by the administration. We have worked hand-in-hand with the executive branch, principally the Department of the Interior, and interested parties on all sides of the issues to work out language on controversial provisions to bring before the full House a balanced, workable bill worthy of enactment. With our annual bill for oil imports at a level of as much as $45 billion and rising, time is of the essence. In view of the urgent need to increase oil and gas production to heat our homes, to keep our economy functioning soundly, and to preserve the very security of the Nation, your committee entreats the House to take favorable and expeditious action on H.R. 1614.

C. NEED FOR THE SPECIFIC REFORMS OF H.R. 1614

Testimony demonstrated support not only generally for H.R. 1614 but also specifically for the major provisions of H.R. 1614, including: Revisions of bidding and lease administration, requirements for exploration and development plans, lease suspension and cancellation, on-structure drilling, development plans, development of a five year leasing program, coordination and consultation with affected states, baseline and monitoring studies, safety regulations, OCS information program, offshore oil spill pollution funds and direct grants to the states.

1. Revisions of bidding and lease administration

Stuart C. Mut of the Atlantic Richfield Co. indicated that his company had no objection to granting the Secretary of Interior the authority and the flexibility to use alternative bidding systems at his discretion.

E. H. Clark, Jr., president and chief executive officer of Baker International Corp., strongly favored work commitment bidding rather than bonus bidding:

Roger Hedgecock of San Diego County, Calif., testified that the separation between exploration and production leasing would result in better resource development decisionmaking.

Darius W. Gaskins, Jr., Director, Bureau of Economics, FTC testified that Interior should have the flexibility to experiment with different leasing systems, although not specifically mentioned in the legislation, such as the so-called "dual leasing system".

The Federal Trade Commission in testimony from Walter T. Winslow, Bureau of Competition, supported Section 205 of H.R. 1614, “Bidding Systems" but suggested that the Secretary be free to experiment with variations of all bidding systems; for example, the twostage bidding system whereby exploration rights would be leased separately from development and production rights.

The American Gas Association supported, at the earliest practicable time, exploration to determine the extent of our natural resources, and alternative bidding systems amended to mandate the percentage under the non-cash system at 50 percent.

Richard H. Bowerman, chairman of the board, Southern Connecticut Gas Co., on behalf of the Associated Gas Distributors opposed the cash bonus bidding system, and suggested that a mandate should be incorporated into H.R. 1614, to reduce the use of this system to a maximum of 50 percent. In addition, he stated that alternative bidding methods should not be limited to the eight systems specified in the bill.

The Environmental Policy Center favored the limiting of the use of the bonus bidding system to not more than 50 percent of the acreage leased.

The Governor of New Jersey. Brendon T. Bvrne, urged the use of alternative leasing systems, eliminating front-end, cash bonus bids, to increase competition.

James F. Flug of the Energy Action Committee called for substantial reduction on the use of cash bidding to no more than 10 percent of the acreage in any given lease sale, except where there is a clear showing of need for its use. The Secretary's authority to waive the bidding restrictions in the bill for the first year should be removed.

2. Requirements for exploration and development plans

Evelyn F. Murphy, Secretary of Environmental Affairs, Massachusetts, stated that some form of separation of exploration from development is crucial to any rational OCS planning process. This is also why the dual environmental impact statement approach is so important, she said.

The EPA also expressed strong support for the dual environmental impact statement system provided for in H.R. 1614.

John Klein, county executire, Suffolk County, N.Y., felt that exploration and development of the OCS should be explicitly separated.

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