requirements for a Certificate of Registry; and if the owner is a corporation, association or partnership, it must be 75 percent owned by U.S. citizens; and (2) that the vessel itself must be built in the United States and if more than 500 tons, not have been rebuilt outside the United States, and not have been previously owned by a foreigner or placed under a foreign flag.

Finally, section 31 reinforced the provisions of section 4(f) of the amended OCS Act by requiring that all rigs and other vessels and structures involved in OCS activities comply with U.S. prescribed design, construction, alteration, and repair standards for rigs and platforms. This requirement is intended to ensure that U.S. safety and environmental standards apply to all equipment used on the Outer Continental Shelf. It is not, however, this committee's intention to disrupt drilling operations by equipment now in the OCS. The implementation of these regulations for vessels and equipment now on the OCS should be promulgated in such a manner as to provide for a period of transition to full compliance with U.S. standards.

TITLE III—OFFSHORE OIL POLLUTION FUND

Title III provides the procedures to be followed in the event of an oilspill and compensation for cleanup costs and damages resulting from such a spill. The title applies to spills from any offshore facility in the OCS and any transportation device, while in OCS waters, including vessels for the delivery of the oil and gas from the offshore facility.

The committee strongly supports comprehensive legislation to establish a system of liability and compensation for oil damage. Specifically, the committee is aware that such comprehensive legislation, H.R. 6803, will be considered by the House very shortly.57

If such comprehensive legislation is not enacted by the time of final consideration of the 1977 OCS amendments, it is the committee's intention that the amendments be offered on the floor, or in conference, to conform title III to comprehensive proposals. If such legislation is enacted, it is the committee's intention to delete this title. Until such legislation is enacted however, the provisions of title III, as they may be conformed later, are needed to protect other resources and uses of the Outer Continental Shelf. A section by section analysis of the present title III follows:

Section 301.-Definitions

This section defines 13 terms which appear in the oilspill liability title.

The section first defines what expenses are to be included in assessing liability by a spiller to a newly created pollution fund. The committee

57 On May 16, 1977. the Merchant Marine and Fisheries Committee reported out H.R. 6803. House Report 95-340. As this bill was also within the jurisdiction of the Committee on Public Works and Transportation, it was thereafter reviewed by that committee and was approved on June 30, 1977, with certain amendments. These amendments were then approved by the Committee on Merchant Marine and Fisheries on July 13, 1977. Floor action was then requested for the bill with agreed amendments. Even though the bill has bi-partisan support and Suspension Calendar action was requested, the press of other legislation has delayed consideration of the bill by the full House as of the time of this report.

intends that the Department of Transportation establish specific criteria, consistent with these definitions, for the determination of "cleanup costs" and "damages".

"Cleanup costs" are to include all reasonable and actual costs incurred in removing or attempting to remove oil discharged from an offshore facility or vessel or in attempting to prevent, reduce, or mitigate damages from such a discharge. Costs incurred by the Federal Government, any State, local or foreign government, and the contractors and subcontractors of such Governments, including administrative expenses, such as the transportation of personnel and equipment to and from an oil spill, are specifically covered. The committee hopes and expects that State, local and foreign governments will cooperate fully with Federal officials in cleaning up oilspills, but they need not be operating under Federal supervision in order to be eligible for reimbursement for their cleanup costs pursuant to this title. Cleanupcosts must be "reasonable" (necessary, and approximately equal to the market value of similar goods and services), and "actual" (really incurred).

"Damages" are to be all direct and actual injuries, except cleanup costs, which are proximately caused by the discharge of oil from an offshore facility or vessel. The types of damages recoverable under this title, such as injury to real or personal property or natural resources and loss of income or earning capacity, are listed in section 307. The committee intends the phrase "direct and actual" to refer to the nature of the injury and not the cause of it. In order to claim damages under this Title, a claimant must be directly and actually injured, but such injuries need only be "proximately caused" by an oil discharge.

"Discharge" includes any spilling, leaking, pumping, emptying, pouring, or dumping, whether intentional or unintentional, and applies to accidental as well as intentional or operational discharges.

An "offshore facility", included within the scope of this title, is any oil refinery, drilling structure, oil storage or transfer terminal, pipeline, or related appurtenance which is used or capable of being used to drill for, pump, produce, store, handle, transfer, process, or transport OCS oil, but does not include vessels or deepwater ports. To be considered an offshore facility under this title, a facility must be located on the Outer Continental Shelf. Vessels are separately defined and are separately treated by this title. However, once a drilling ship or other watercraft is attached to the seabed for exploration, development or production, it is to be considered an "offshore facility" rather than a vessel, for purposes of applying the differing requirements for a facility as compared to a vessel.

A "vessel" means every description of watercraft or other contrivance, whether or not self-propelled, which is used to transport oil directly from an off-shore facility. Once a vessel is operating in the "navigable waters" of the United States, it is not included in this title.

This title establishes a fund for the payment of damages beyond a set maximum of liability for the spiller. For conveniences, this section defines "fund" as the Off-shore Oil Pollution Compensation Fund established under section 302 (a) of this title, and "revolving account” as the account in the U.S. Treasury for the fund which is established under section 302 (b) of this title. The fund is to be administered by

the Department of Transportation, while the revolving account, which supplies moneys to the fund, is to be located in the Treasury. Amounts in the revolving account are to be made available to the fund through an appropriations act.

Liability for all cleanup costs and for damages to a set maximum is placed on an "owner" and on an "operator" which are separately defined. The owner of an offshore facility is any person owning such facility, whether by lease, permit, contract, license, or other form of agreement. The owner of an offshore facility which was abandoned without the prior approval of the Secretary of the Interior is the person who owned the facility immediately prior to its abandonment. If the facility was abandoned with the prior approval of the Secretary, the previous owner would not be liable for any discharges from the facility. The owner of a vessel would be any person owning the vessel.

The operator of an offshore facility is any person operating such facility whether by lease, permit, contract, license or other formal agreement. The operator of an offshore vessel would be any person operating or chartering by demise the vessel.

"Person" is defined to include any legal entity, including an individual, a public or private corporation, partnership, or other association, or a Government entity, and "person-in-charge" is to apply to the individual immediately responsible for the operations of an offshore facility or vessel. In the event that such individual is not aboard the offshore facility or vessel, the one who has been assigned, or who has assumed, his responsibilities is to be considered the person-in-charge.

The "Secretary" referred to in this title is to be the Secretary of Transportation. It is the intent of the committee that the Secretary delegate authority to the Coast Guard to implement and administer the provisions of this title.

An "incident" is any occurrence or series of related occurrences which cause, or immediately thereafter, oil pollution, meaning a harmful discharge as described in section 303 of this title. The incident may involve one or more offshore facilities or vessels.

Section 302.—Establishment of the Fund and the Revolving Account

Section 302 establishes an Offshore Oil Pollution Compensation Fund in the Department of Transportation. It is the intention of the committee that the Coast Guard fulfill the responsibilities of the Department with respect to administration of the fund. The fund may sue or be sued in its own name.

A revolving Treasury account is also established, without fiscal year limitation, to be available to the fund. Subsequent appropriations legislation is to be enacted with general language establishing the fund and the revolving account, without fiscal year limitation, and with provisions for the use of the revolving account by the fund.

Section 321 of this title authorizes appropriations for the establishment and operation of the revolving account and the fund, and initial and continuous funding for this title.

Section 303.-Prohibition

This section prohibits the discharge of oil from any offshore facility or vessel in quantities which the President determines to be harmful under section 311 (b) of the Federal Water Pollution Control Act (33 U.S.C. 1321(a)).

Section 304.-Notification

Any person in charge, as defined in section 301, of an offshore facility or vessel must notify the Secretary as soon as he learns of any oil discharge in harmful quantities from such facility or vessel. Failure to notify is punishable by a fine of up to $10,000 or one year in jail, or both."

Report of an oilspill as soon as it occurs enables Federal officials to be promptly sent to the spill scene to supervise or undertake cleanup activities. If the corporation which owns or operates the facility or vessel, and not the person directly in charge, was held responsible for notification, the commencement of cleanup operations might be substantially delayed. The sooner that cleanup actions are taken following a spill, the easier and less expensive it is to clean it up.

In order to encourage prompt and accurate notification, a limited immunity provision is included. Notice or any information obtained as a result of such notice cannot be used against any person supplying the report, except for a prosecution for perjury or giving a false

statement.

Section 305.-Removal of Discharged Oil

This section directs the President to remove or arrange for the removal of spills of harmful quantities from offshore facilities and appropriate vessels, unless he finds that the owner or operator will do so properly and expeditiously. Cleanup operations are to be conducted, to the greatest extent possible, in accordance with the National Contingency Plan established pursuant to section 311 (c) (2) of the Federal Water Pollution Control Act. Money in the revolving account can be drawn in order to pay promptly for all cleanup costs incurred by the Government in removing or minimizing damages caused by an oil discharge.

Section 305 corresponds closely to similar provisions in the Federal Water Pollution Control Act, which currently governs Federal cleanup of oil spills of offshore facilities within State waters, but not on the OCS. The intent of this section is to extend the existing program to discharges on the OCS. Although the section places Federal cleanup responsibility nominally with the President, it is understood that the Coast Guard would administer this provision.

In addition, this section allows the President to pay States immediately for any cleanup expenses as they accrue.

Although other sections of this title provide that states would be entitled to seek such reimbursement directly from the fund, some states have indicated that they need the assurance of full and immediate reimbursement, as would come from the President more quickly than from the fund, in order to commit state funds to cleaning up oil spills.

Section 306.—Duties and Powers

This section outlines the responsibilities and the powers of the Secretary of Transportation in administering this title. The committee intends that such duties, responsibilities and powers be delegated to the Coast Guard.

The Secretary is to administer and maintain the fund, to establish regulations and provide for the fair and expeditious settlement of

claims, to provide for public access to information related to this title, to submit an annual report to the Congress, and to perform other functions that are prescribed by law.

The Secretary can utilize the personnel or services of any government agency, whether federal, state or local, or of any other organization, can issue and amend rules and regulations, can conduct investigations, can obtain information and hold meetings or public hearings, can enter into contracts, agreements, or other arrangements for the acquisition of material, information, or other assistance, and can issue and enforce appropriate legal orders during proceedings.

Section 307.-Recoverable Damages

If real or personal property is damaged or destroyed, the owner may recover the value of the loss or damage as of the time of injury, the cost of restoring, repairing, or replacing such property, any decline in value of such property, and any loss in income during repair, restoration or replacement.

The scope of this section includes recovery for costs incurred by private parties in removing or attempting to remove discharged oil, and in reducing or mitigating, or attempting to reduce or mitigate, damages to real or personal property. It is intended that property owners will only seek compensation for replacement costs when they cannot otherwise restore or repair their property.

If real or personal property or natural resources are damaged or destroyed by an oil discharge, recovery is also allowed for loss of income or impairment of earning capacity if the claimant derives at least one-fourth of his annual earnings from activties which make use of the property or resources which have been damaged or destroyed. Recovery is limited to losses incurred during a 5-year period. This covers businesses that do not own property or resources affected by an oil spill, but whose income depends upon the ability of them or their customers to use such property or resources. Among the possible claimants under this subsection are fishermen in cases where fish are polluted or killed by an oil spill, and hotel and restaurant owners and employees in resort towns which lose business because of an oil spill. The term "income" is used in this subsection to include wages, earnings, or profits, and is not intended to mean net income or net profits. A hotel or restaurant owner could recover lost income that would have paid for his employees' wages or salaries, as well as his own, among other costs. In such cases, the owner would be required to distribute such lost wages or salaries to his employees.

If natural resources are damaged or destroyed by an oil discharge, Federal or State governments may recover the costs and expenses of restoring, repairing, or replacing such resources. Replacement costs and expenses would only be recovered if it is impossible to otherwise restore or repair the resources. The committee anticipates that Federal or State governments would seek recovery when oil damages or destroys public beaches, marshlands, wetlands, fisheries, flora, fauna, wildlife, and other natural resources.

Finally, if real or personal property is damaged or destroyed, the Federal Government or any State or local government may recover any related lost tax, royalty, rental, or net profit share revenue. Recovery is limited to revenue losses incurred during a 1-year period.