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structure). In contrast, the new Secretary of the Interior testified before our committee that he intends to offer permits in areas which have "the greatest likelihood of containing significant oil and gas accumulations” (on-structure).
To insure the testing of the value of “on-structure” permits, subsection (3) requires the Secretary to offer such permits at least once during the 2-year period after enactment of the 1977 amendments.
To avoid any delays, the subsection provides a requirement that the Secretary set a specific deadline on the length of time he will offer such permits. Of course, if such permits are offered, and no qualified applicant seeks them, "on-structure drilling” will not occur. Such a result appears unlikely, however. Representatives of some of the middle and smaller oil companies testified and submitted statements that in some areas, such "on-structure drilling" would provide additional information about an area's possible accumulation of hydrocarbons. Two company representatives indicated that they sought “onstructure” permits but their applications were denied because of the previous Interior Department's policy prohibiting such permits.
By providing geological information about the proposed lease area prior to leasing, this program could increase the probability that the public will receive a fair return for the sale of its resources, and decrease the likelihood that industry will expend large sums of bonus bids for lands which turn out to be valueless.
In addition, the program would facilitate entry into OCS activity to smaller, independent oil and gas producers who often presently cannot reasonably assume the risks involved in bonus bidding-paying large cash sums in advance with no assurance of recovery of oil or gas. By providing all bidders participating in the test with sufficient information to make bids which more accurately reflect the value of the tracts to be purchased, this program might lessen some of this risk.
Subsection (h) establishes the requirements for regulations as to the granting of any pre-lease exploration permit, “on” or “off-structure”. It is patterned on existing regulations, 43 C.F.R. 251.4. Section 207.--Annual Report
Section 207 amends section 15 of the Outer Continental Shelf Lands Act to require the Secretary of the Interior to submit an annual report in two parts within 6 months of the end of each fiscal year.
Part One of the annual report would describe the OCS leasing and production program, including an accounting of all moneys, and all activities, a summary of management, supervision and enforcement activities, a list of shut-in and flaring wells, and recommendations to Congress for improvements in management, safety, amount of production, and resolution of any jurisdictional conflicts.
Part 2 of the report, to be prepared after consultation with the Attorney General, is to describe programs and plans for the promotion of competition. The report is to include recommendations and findings by the Attorney General, which are to be considered advisory only and not binding as to any future action or inaction, and plans for implementing recommended administrative changes or proposals for new legislation.
It is to contain an evaluation of the various bidding systems, an explanation for the failure to use any new bidding system, an evaluation of any other bidding system not authorized by the Act, an evaluation of the effectiveness of joint bidding limitations, an evaluation of other measures to encourage entry of new competitors, and an evaluation of measures to increase the supply of oil and gas to independent refiners and distributors. Section 208.—New Sections of the Outer Continental Shelf Lands Act
Section 208 adds 11 new sections to the Outer Continental Shelf Lands Act. Section 18.-Leasing Programs
Section 18 establishes a process which will permit the Secretary of the Interior to weigh environmental and other risks against energy potential and other benefits in determining how, when and where oil and gas should be made available from the various Outer Continental Shelf areas to meet national energy needs.
Subsection (a) directs the Secretary of the Interior to prepare, approve and maintain a 5-year leasing program, to review it at least every year, and to revise and reapprove it as appropriate.
The purpose of any program, revision, or reapproval is to implement the policies of the Act to indicate the size, timing, and location of leasing activities for each 5-year period following approval or later reapproval.
Management of the program is to be balanced, considering all the economic, social, and environmental impacts of oil and gas activities. In determining the timing and location of future activities in the various geographic regions, the leasing program should consider the existing characteristics of such regions, the need to share developmental benefits and risks among the various regions, the location of these regions with respect to the needs of the various regional markets, the locations of the regions with respect of other uses of sea and seabed, the interest of developers in a particular area, the availability of sufficient equipment and capital to allow expeditious exploration and development, the environmental nature of the various OCS areas, and any relevant baseline or predictive information.
In addition, the Secretary is to consider the views of affected states as to any relevant law, goals or policies which they have identified specifically and as to the effect of any approved coastal zone management program.
The securing of information to allow evaluation of these factors will not necessarily involve additional recordkeeping by either private persons or the Government. Later subsections provide that the Secretary can purchase from private sources and obtain from public sources, including Federal departments and agencies, any information necessary for use in preparing and revising a program.
Selection and timing of leasing areas should, to the maximum extent possible, maintain a proper balance between the potential of environmental damage, resource discovery, and on-shore adverse impact. Finally, leasing activities, including the scheduling of lease sales and the amount to be included in the lease sales, should assure receipt to the Government of fair market value for our public resources.
The leasing program should display this information for all interested federal, state, and local government officials, the oil and gas industry, and the general public.
Subsection 18(b) requires that the Secretary estimate and include in the program the appropriations and staff required to obtain, analyze, and interpret information; conduct baseline studies and prepare any necessary environmental impact statements (as for example prior to a lease sale); and supervise activities so as to assure due diligence and compliance with this Act, regulations, and the terms of the lease. As the purpose of these estimates is to provide information to the Congress, the States, and the public, the committee intends that these estimates represent the Secretary's best judgment of actual costs rather than a view as to what are appropriate funding levels in a budget.
Subsections (c) and (d) provide for submission, review and promulgation of the leasing program. During the preparation of a proposed leasing program, the Secretary is to solicit suggestions from Governors, local government executives, and interested Federal agencies. Specifically, he is to solicit comments from the Attorney General and the Federal Trade Commission as to the competitive impact of the proposed program and they must report their conclusions to him in a timely fashion. In addition, the Secretary can and ordinarily should solicit comments from any other interested person.
The Secretary has 9 months after the date of enactment of the 1977 amendments to formally submit his proposed leasing program and publish it in the Federal Register. However, prior to such formal submission, he must continue his coordination with interested parties, especially affected States. At least 60 days prior to publication and submission, the Secretary is to transmit a copy of his proposed program to the Governor of each affected State. The Governors are to solicit appropriate comments from the executives of affected local areas. Any comment requesting modification, if timely lodged by the Governor, must be responded to in writing with justifications.
At the time the Secretary publishes the proposed program, he is to submit it to Congress, the Attorney General, Governors, and, through Governors, local executives.
The Attorney General, within 90 days after the date of publication, is to submit comments on the anticipated effects of such program on competition. Such comments, of course, do not bind him to any future action or inaction, but are advisory only. In addition, any State, local government, or other person including energy companies, environmental organizations or Members of Congress, can submit recommendations and comments as to any aspects of the program.
After this 90-day period, the Secretary is to submit to Congress and the President his final leasing program, together with any formal comments received during or after his preparation. At the time of the submission of the Secretary's final program, the Secretary is to indicate why any specific recommendation by the Attorney General, or a State or local government, has not been accepted. The program does not become effective until 60 days after this submission.
It is intended by the committee that reasonable recommendations by the Attorney General, or by a State or local government, are to be accepted. If, however, the Secretary has valid reasons not to accept
them, he may reject the request by explaining those reasons, subject, of course, to congressional oversight and judicial review.
Congressional oversight is, of course, always involved in the activities of any Federal Government agency. Here, specific information is to be supplied to the Congress at least 60 days prior to adoption of a final leasing program. Congress can, of course, in that period or thereafter, adopt appropriate legislation, or take any other measures, as to that leasing program.
In addition, section 23(c), of this Act provides for judicial review of a leasing program. Any person adversely affected or aggrieved (which could include a Governor of an affected State) by the leasing program can file a petition for review of the Secretary's approval of a program within 60 days to the U.S. Court of Appeals for the District of Columbia. The review before the Court of Appeals is to be made on the basis of the record before the Secretary, including comments and recommendations from the Attorney General and the various State and local governments, and other persons, and the Secretary's responses thereto.
Subsection 18(d)(3), provides that after the leasing program has been approved by the Secretary, or 18 months following enactment of the 1977 amendments, whichever comes first, no OCS lease may be issued unless it is for an area included in the approved leasing program. The committee believes that a 5-year leasing program should be adopted, in accordance with this Act, as quickly as possible. However, the committee also realized that to prepare a program in conformity with this Act might take up to 18 months, and that leasing should continue during this time.
There is intended to be no delay or interruptions in lease sales. During the period of time that the proposed leasing program is being considered and determined, leasing is to continue as heretofore. Once the leasing program is approved, leasing is to continue under that program. If the approved leasing program is under judicial challenge, leasing can continue until judicial review is completed.
Subsection 18(e) provides that the Secretary must review the leasing program every year, and can revise and reapprove the program in the same manner as originally approved. An annual review is to assure that the program fully reflects updated information and changing conditions. Substantial changes in the program may be required some years, and a new program must be prepared at least every five years. However, there may be some years where little or no change is required.
Subsection 18(f), requires the Secretary to establish procedures for receipt and consideration of nomination for areas to be offered for leasing or to be excluded from leasing, for public notice of, and participation in, development of a leasing program, for review by State and local governments, for periodic consultation with these governments, lessees, and representatives of other individuals or organizations involved in activity in the Outer Continental Shelf, including representatives of the fishing and tourist industries, and for coordination of the program with management programs and consistency requirements established pursuant to the Coastal Zone Management Act of 1972. The Secretary presently uses a nomination process. The com
mittee intends that this form of industry and public participation in a leasing program be continued. In addition, the Secretary has established limited procedures for public participation and consultation in the development and maintenance of a leasing program. The committee intends that this section will require him to strengthen and expand these procedures.
Subsection 18(g), authorizes the Secretary to obtain from public sources or purchase from private sources any surveys, data, reports or other information (including interpretations) which may be necessary to assist him in preparing any environmental impact statement, either for the entire leasing program, if necessary, or for any particular lease sale, and in making other evaluations required by this Act. Confidentiality of all data is to be maintained as in accordance with this Act, appropriate regulations, or agreement between the parties. This confidentiality requirement is designed to allow the Secretary to negotiate for the purchase of data on the basis that it will be kept confidential for as long as the seller wishes. Requiring the public release of all purchased data at any particular time would tend to lead data owners to refuse to sell the data to the Secretary. This provision allows the Secretary and the owner of the information to work out a mutually acceptable arrangement.
Subsection 18(h), directs the heads of all Federal departments or agencies to provide the Secretary with any non-proprietary information he requests to assist him in preparing a leasing program, and allows them to provide other information to the Secretary. In addition, the Secretary is to use the existing resources of Federal departments and agencies wherever possible.
The intent of subsections 18(g) and (h), is that the Secretary obtain all necessary information from all reasonable sources, but avoid duplication of data collection efforts wherever possible. Section 19.—Coordination and Consultation with Affected States and
Local Governments This section is intended to insure that Governors of affected States, and local government executives within such States, have a leading role in OCS decisions and particularly as to potential lease sales and development and production plans. In addition, it is intended to provide a mechanism for involvement of Governors and local Government officials.
Effect of recommendations Comments from State and local executives are to be generally solicited by the Secretary of the Interior and specific recommendations requested as to lease sales and development and production plans. The Governor must submit his recommendations as to a lease sale within sixty (60) days, and as to a development and production plan within ninety (90) days. The Secretary shall accept a Governor's recommendation (and may accept a local executive's recommendation) 51 if he determines that the recommendations provide for a reasonable balance between the national interest and State and local needs. Any rejection
61 Whether or not recommendations are made by a local government executive to the Secretary, the committee expects that Governors of affected states would consult with representatives of affected local governments and should forward their views, when appropriate, as part of their formal recommendations.