Continental Shelf to transport such gas to its market. Section 503 requires the Federal Power Commission, or any successor Department or agency with the same regulatory authority, to permit any natural gas distributing company involved in OCS development and production to transport to its service area any gas obtained by such company from its lease. It is intended that this provision would be applicable whether the distribution company directly or indirectly engages in exploration, development and production. Thus, it would apply whether the distribution company itself or a production subsidiary or affiliate of the company does the exploration.

It is the intention of the committee that this mandate to the Federal Power Commission or its successor, shall only effect the gas discovered by a distributor on its lease hold. It is not the committee's intention to effect the general curtailment powers of the Federal Power Commission or its successor. The Federal Power Commission or its successor may, in accordance with its regulations and procedures, determine, through curtailments, the delivery of all natural gas. The only effect of this section would be that the Federal Power Commission or its successor, cannot exercise its curtailment power in any way to preclude the natural gas found by such distributing company on its own lease from being returned to its service region. Such gas may, of course, be counted as part of the amount allocated to such service region by the Federal Power Commission or its successor in any general curtailment process.

Section 504.-Antidiscrimination Provisions

During consideration of the OCS amendments during the 94th Congress, some concern was expressed that several Federal programs designated to assure equal employment and contracting opportunity might not be automatically applicable to activities on the Outer Continental Shelf. To insure that such provisions are applicable to OCS procedures, the committee adopted this section that provides that all agencies responsible for the promulgation and enforcement of regulations relating to the OCS shall take such affirmative action as they deem necessary to assure equal opportunity to all persons. Such equal opportunity must be provided as to all persons. Such equal opportunity must be provided as to all activities associated with exploration, leasing, development, and production and specifically includes employment, bidding and awarding of contracts and subcontracts.

The term "affirmative action" is intended to include the provisions under Executive Order 11296, and to be interpreted like those policies, rules, regulations and orders of the various Federal departments and agencies already implementing that order.

Similarly enforcement of rules as to equal opportunity under this section should be substantially as those that appear in the various provisions and rules of agencies and departments relating to title VI of the Civil Rights Act of 1969 and rules as to appropriate sanctions and penalties for noncompliance should be based on the range and nature of the sanction and penalty provisions applicable under title VI of the Civil Rights Act of 1964.

Section 505.-Sunshine in Government

Currently, Federal agencies and specifically the Department of the Interior require that their employees who are at the GS-15 level or

above and in a decisionmaking position file financial interest statements which are not available to the public. This requirement is not based on any statutory provision but on a 1965 Executive Order, No. 11222 and implementing Civil Service Commission regulations.

The committee was concerned, however, about reports 58 that while progress in implementation has occurred, this order and the implementing regulations are not sufficient and are not adequately enforced. This section is intended to insure that Department of the Interior require that its employees who are involved with OCS activities file statements regarding any financial interest in any person or company involved in OCS leasing. Penalties are provided for those who fail to comply with this requirement. The section does not prevent Interior employees from having such interests, but rather merely requires that they disclose such interests. These disclosures would be available to the public, and would have to be reviewed by Interior. Interior would provide for appropriate congressional oversight by filing appropriate reports as to the disclosures and their actions as to these disclosures. The section does not require such reports of every Interior employee. However, the reporting requirement should not be based on the mere grade level of the employee, but rather on the nature of the employee's responsibilities. Thus, positions that are of a nonregulatory or nonpolicymaking nature could be made exempt from the reporting requirement. The requirement does not apply to consultants.

Adequate provision is made in the Section for a determination by Interior as to what "financial interests" are required to be reported.59 Section 506.-Investigation of Availability of Oil and Natural Gas From the Outer Continental Shelf

The committee was concerned about the lack of adequate information about the general availability of future supplies of domestic oil and gas resources. Conflicting reports by various Federal agencies, congressional committees, and private groups as to present reserves and potential discoverable resources have made it difficult for Congress to make decisions on the various vital energy issues. A central reserve data gathering authority is believed to be essential.

The committee, while aware of the need for a comprehensive analysis of potential domestic sources of oil and gas, is, of course, limited to provide for procedures related to the OCS. Thus, it adopted a provision for a review and investigation as to potential OCS resources.

This section requires the Secretary of the Interior to conduct a continuing investigation of the availability of the oil and gas resources on the Outer Continental Shelf and to report to Congress within a year of its investigation, and then annually thereafter.

Specifically, this section makes it explicit that the committee has found that despite our urgent need, there is a lack of adequate energy information available, in a coordinated and comprehensive manner, to Congress and the President with respect to crude oil and natural

53 General Accounting Office, Report to the Congress, Department of the Interior Improves Its Financial Disclosure System for Employees (December 2, 1975).

50 On Dec. 17, 1976, the Department of the Interior adopted regulations as to employee responsibility and conduct which provides for reports by employees and defines "known financial interests". These regulations became effective December 23, 1976. 41 Fed. Reg. 56100 to 56132 (December 23, 1976), 43 C.F.R. 20.735-1 to 20.735-51 (1977).

As indicated in the text of the analysis, the requirement of reports is limited to GS-15 and above and violations do not include sanctions other than disciplinary action.

gas resources from the OCS. The committee was concerned that heretofore, data was based almost totally on producer information. The purpose of this section is to require a study of present and potential OCS resources, based on verified, independent data, so as to aid rational decisionmaking as to how to meet possible energy emergencies, and as to establishing energy pricing and conservation policies.

The section requires such an investigation to be made independently by non-oil and gas industry or producers affiliated persons and is to include an independent evaluation of industry and trade association data and a collection of data from other Federal, State, and local agencies. The Secretary of the Interior is to evaluate this data and make an independent estimate of present and potential OCS resources and the effect of these estimates on the ability to substitute energy sources by end use consumers in order to conserve oil and gas and lessen demand. To allow a proper investigation, the Secretary must develop standardized objective criteria for comparison purposes. Specifically, he must make an independent determination of the optimum rates of production-MER (maximum efficient rate) and MPR (maximum production rate).

This section does not require industry data to be submitted company by company, but rather only requires it to be submitted in the aggregate. The section does not involve duplication of efforts. It leaves to the Secretary's discretion the manner in which information is to be gathered and he may rely upon work and data now being performed by other agencies, governments, or organizations, provided he assures the accuracy, independence and credibility of the energy information he reports.

Finally, this section itself does not include any provision for federal exploration. Pre-lease drilling, exploration by contract, and other possible private and public exploration activities were separately considered by the committee in adopting an amended section 11 of the Outer Continental Shelf Lands Act.

Section 507.-State Management Program

On July 26, 1976, amendments to the Coastal Zone Management Act of 1972 (16 U.S.C. 1451) provided for review by those States who have an approved Coastal Zone Management Program of OCS exploration plans and development and production plans, which will affect the land or water use in the coastal zone of such States. Section 307 (c) (3) (B); 16 U.S. 1451 (c) (3) (B). Under the procedures established by that Act, any such plan must attach a certification that each activity complies with or is consistent with a State's approved management program. Activities will then only be allowed if the State concurs in the certification, the Secretary of Commerce overrules the State's nonconcurrence, or if the State fails to indicate concurrence or nonconcurrence within 6 months of receipt of the certification.

In adopting procedures as to exploration plans and development and production plans, the committee provided in amended section 11, that the Secretary of the Interior has 30 days after submission of any exploration plan, and in section 25, that the States have 90 days

after receipt of development and production plan, to approve or disapprove plans to bring the Coastal Zone Act in conformity with the 1977 OCS Amendment. The committee amended the Coastal Zone Management Act by providing that States with approved coastal zone management plans will have 90 days to review plans. If they do not respond within that period, then concurrence with the certification of compliance with their plans shall be conclusively presumed.

Section 508.—Relationship to Existing Law

Section 508 provides for consistency of this Act with all other acts, including the Coastal Zone Management Act, the National Environmental Policy Act, and the Mining and Mineral Policy Act, unless expressly provided to the contrary.

The committee was specifically aware of the recent creation of a new Department of Energy, which assumes some of the functions delegated by this Act to the Secretary of the Interior and other Federal officials. As of the date of the committee's ordering of the reporting out of this Act, a conference report on the Department of Energy Organization Act, S. 826 (H.R. No. 95-539), had been filed with both Houses.

The language agreed upon by the conferees with regard to leasing of OCS resources gives the Department of Energy the authority of the Secretary of the Interior to issue regulations which relate:

"(1) fostering of competition for Federal leasing (including, but not limited to, prohibition on bidding for development rights by certain types of joint ventures); (2) implementation of alternative bidding systems authorized for the award of Federal leases; (3) establishment of diligence requirements for operations conducted on Federal leases (including, but not limited to, procedures relating to the granting or ordering by the Secretary of the Interior of suspension of operations or production as they relate to such requirements); (4) setting rates of production for Federal leases; and (5) specifying the procedures, terms and conditions for the acquisition and disposition of Federal royalty interests taken in kind."

In addition, the Department of Energy is given the authority of the Secretary of the Interior to establish production rates for Federal leases, and transfers to it, the authority under Sections 105 and 106 of the Energy Policy and Conservation Act relating to joint ventures and setting of rates of production.

The committee believed it was premature to provide for a transfer of authority either by a general statement or in detail, from the present departments, bureaus, and agencies to the Department of Energy. While the legislation creating a Department of Energy is now law, before the OCS amendments have been adopted, it is, of course, not yet known what changes will be made to this Act by the House of Representatives and then possibly later in a conference prior to final passage. It is the committee's intention to recommend to the House. appropriate language that would conform this Act to the Department of Energy Reorganization Act, or to work with the Senate which has already adopted general conforming language in its OCS bill S. 9, at the time of conference, on incorporating such language.

VII. COST OF THE LEGISLATION

Pursuant to clause 7 of the rule XIII of the Rules of the House of Representatives, the committee has estimated the costs of the legislation.

Title I of the bill, "Findings and purposes with respect to managing the resources of the Outer Continental Shelf," involves no implementation costs.

Title II of the bill amends the Outer Continental Shelf Lands Act of 1953. The cost effects of this title of the bill involve implementation costs, including safety regulation and enforcement, costs associated with the vesting of new responsibilities in the Department of Interior; miscellaneous responsibilities on the part of the Department of Justice and the Department of Labor; the establishment of fishermen's gear compensation funds by the Interior Department; and the anticipated short term revenue loss that will accompany experimentation with new bidding systems.

The responsibilities of the Department of Interior include, inter alia, the formulation of a 5-year leasing program, the conducting and/or contracting of baseline and monitoring studies, the experimentation and analysis of alternate bidding systems and numerous reporting and other requirements. The additional costs of the new responsibilities required by H.R. 1614 to the Interior Department are estimated at $14.7 million per year.

An increase in the cost of enforcement is anticipated as the level of activity on the OCS increases. In fiscal year 1978, this increase is expected to be about (1) million, primarily for the purchase of new vessels, aircraft, and other enforcement equipment. This includes the participation of the U.S. Coast Guard in safety enforcement and other investigative and reporting activities. In later years, the added costs are only expected to be (1) million per year.

Miscellaneous additional implementation costs are expected to be incurred under title II by the Departments of Justice and Labor. The former agency will review, comment and report on the competitive aspects of development plans and Interior's leasing program. The latter agency, through OSHA will conduct a joint study on the adequacy of safety regulations, promulgate and enforce regulations for Occupational safety and health, and other investigative and reporting activities. These miscellaneous additional costs are not expected to exceed $.9 million per year.

The implementation costs for title II are summarized in the following table: