an amendment which would have given the Secretary the power to use any bidding system to sell Outer Continental Shelf leases. There was no limitation on his use of any bidding system because we felt that he should be free to use any system that seemed best for a particular lease tract or tracts. Though no one disagreed with this principle, the amendment failed because it did not mandate the use of new bidding systems! We submit that it is counterproductive to impose before the fact absolute restrictions on the use of any bidding system. It is also unwise to include in the law detailed descriptions of new bidding systems. If the Secretary finds a part of such a bidding system unworkable when he tries to put it into effect, Congress would have to act before the bidding system could be used. To require congressional approval before the Secretary can vary from prescribed percentages of usage of new bidding systems significantly compounds the error of requiring the percentage usage scheme in the first place. The Secretary's ability to plan and carry out a coherent leasing program is definitely inhibited by having to get even a small variance from the statutory formula approved by Congress. We hope that the House will see the wisdom of allowing the Secretary to pick the bidding system(s) to fit the requirements of the lease sale area and adopt an amendment to that effect during floor consideration of H.R. 1614.

DUAL LEASING-SECTION 205

A major new defect has been added to the legislation in the form of the concept of "dual leasing". This is not a new bidding system, but rather a major revision in the way the government conveys property rights. It is not a new method of acquiring a lease, but a new type of lease altogether.

Under this new proposal, the Secretary of the Interior would be able to issue two new types of Outer Continental Shelf lease: the exploration lease, and the development lease. The winner of the exploration lease would be entitled to a stated percentage of the profits made by the winner of the development lease from deposits discovered by the explorer.

In some way, the Government would decide that exploration on a particular tract was finished and that it was time to offer the right to develop the resources on that tract. This is never clear because exploration commonly continues long after development and production begin. The winner of the exploration lease will want to continue for as long as possible to maximize his chances and amount of future profits.

The Government would, in some unspecified way and to an unspecified extent, share the cost of exploration through payments to the winner of the exploration lease. The lessee and the Government would apparently sit down behind closed doors after the exploration lease was sold to agree on how much the exploration should cost. This would, of course, also determine how much the lessee would be paid by the Government. This is really a scheme for getting the Federal Government into the oil exploration business on a lease by lease, well-by-well basis. It would be a large and costly operation simply to insure that the Government was not being cheated.

Paying the exploration lessee is not the only cost involved in dual leasing. There are additional features which are costly both in terms

of time and money. Armies of new bureaucrats will be needed to police this scheme and one another. Two long and costly lease sales will have to be held for each tract leased where this system is used. Another "major Federal action" is created which could require another long and costly environmental impact statement and serve as another source of law suits.

This new approach to OCS leasing is not simply another bidding system. It also is not the same as the system now employed in Canada. We have only touched on a few of the major problems which would be created under this proposal. It gives rise to so many uncertainties, would cause so many delays and would involve the government in the oil business to such a large extent that it should be eliminated from this legislation.

FEDERAL EXPLORATION-SECTION 206

Prior to the action of the Ad Hoc Select Committee, there had been some controversy over whether or not the Secretary of the Interior has the power to undertake exploratory drilling under the Outer Continental Shelf Lands Act. Section 11 of that act reads as follows:

SEC. 11. Geological and Geophysical Explorations. Any agency of the United States and any person authorized by the Secretary may conduct geological and geophysical explorations in the Outer Continental Shelf, which do not interfere with or endanger actual operations under any lease maintained or granted pursuant to this Act, and which are not unduly harmful to aquatic life in such area.

The committee print of H.R. 1614 adopted several changes in the present wording of Section 11 and proposed numerous new subsections to that part of the Act.

Changes made in H.R. 1614 to the present wording of Section 11 include adding the Secretary of the Interior as one specifically empowered to conduct geological and geophysical exploration on the shelf and adding the words "including core and test drilling" to make clear the extent to which the Secretary and others could go in their activities under this section.

Among the various totally new subsections proposed for addition to section 11 is one in the form of a specific grant of authority to the Secretary of Interior which would have allowed him "to contract for exploratory drilling on geological structures which the Secretary determines should be explored by the Federal Government for national security or environmental reasons or for the purpose of expediting leasing, exploration and development." The intent of the drafters of the committee print was "that the Secretary be specifically given the discretion to authorize exploration by contract". The Ad Hoc Select Committee voted to remove the proposed Section 11 (h) and thus deny the Secretary the power to contract out for Federal Outer Continental Shelf exploration activities. If, prior to this action by the committee, there had been some controversy over the way in which the Secretary could undertake exploratory drilling in light of changes proposed in section 11 of the act, there should be none afterward.

If H.R. 1614 as passed by the select committee becomes law, the Secretary could, provided funds were appropriated, send Interior

Department employees out to conduct exploration. He could not contract out and have others do it for him because this power has been specifically proposed, specifically debated and specifically rejected by the select committee. This specific rejection eliminates any possibility that the power to contract out can be inferred to be a part of the general grant of power to the Secretary to carry on exploratory activities.

The Minority does not favor any federally-financed and directed exploration for oil and gas reserves. All Secretaries of the Interior since passage of the Act have apparently agreed with us as no such activities have been conducted to date. The economic burden that federal exploration would impose directly on the backs of the already overburdened taxpayers cannot and has not been justified. The educated guess as to the amount of resource present made after billions were spent on federal exploration would not be significantly better than the educated guess which could be made by the Secretary after reviewing all of the data derived from all of the exploratory activities of all the oil companies given permits under the Act. The Treasury should not be depleted to carry out an activity that will never be cost-effective.

Secretary Andrus, unfortunately, has repeatedly indicated his intent to depart from the precedent set by previous Secretaries and go ahead with a program of federally funded exploration instead of holding that power in reserve. Last Congress the House of Representatives voted to recommit a bill very similar to H.R. 1614 because of a fear that it provided for federal exploration. Proponents of that legislation argued that it did not, in fact, provide for federal exploration and stated that they were against that concept. H.R. 1614 clearly contains explicit provisions under which Secretary Andrus intends to carry out federal exploration. This legislation must not be passed with such provisions in it.

LEASE CANCELLATION AND COMPENSATION-SECTION 204

H.R. 1614 is inferior to the bill passed by the select committee in the last Congress in the area of compensation for the taking of property rights involved when a lease is cancelled. H.R. 1614 attempts to set before the fact statutory factors to be used exclusively in determining the amount of compensation to be paid a lessee in some unknown future situation. The bill would also require the Secretary in some instances to offer an amount of compensation less than "the fair value of the cancelled rights as of the date of cancellation." The supporters of this unfair concept argue that it is perfectly all right for the government to take someone's property without paying fair value for it if such is provided for in the contract under which the Government conveyed those rights to him in the first place. One does not have to go beyond elementary contract law and elementary constitutional law to discover the fallacy of their argument.

First, a contract cannot exist nor a severable term be binding if it is not the product of a meeting of the minds of the parties involved. Mutuality of agreement cannot be imposed by one party. Second, the Constitution clearly requires that where the government takes away the property rights of a citizen, that citizen must be paid just com

pensation. The Congress cannot simply pass a law and direct the Secretary to ignore the requirement placed on him by the Constitution. Surely the first time a lease would be cancelled and the lessee paid less than just compensation, the lessee would go to court and secure his rights. The only thing this legislation should contain with regard to the amount of compensation to be paid (when compensation is to be paid) is "that such cancellation shall not foreclose any claim for compensation as may be required by the Constitution of the United States."

BASELINE STUDIES- -SECTION 20

H.R. 1614 contains provisions which drastically alter the form and content of what has up to now been a valuable scientific tool. The baseline, or benchmark, study is one of several tools used by ecologists in their efforts to understand population fluctuations of species in their natural environment. The changes made in H.R. 1614 have come about because of a basic misunderstanding of the role of a baseline study. If enacted into law, they would cause needless and costly duplication of scientific effort and, worst of all, prevent the complete inventory of species present in Outer Continental Shelf areas to be leased.

This inventory is really what baseline studies are supposed to do. To be most useful, such studies must be undertaken as long as possible before man's activities begin in a prospective lease area. This can be done without in any way delaying the Secretary's leasing program only if we do not confuse a baseline study with an environmental impact statement. Unfortunately, this is exactly what H.R. 1614 does.

If the National Environmental Policy Act requires the preparation of an Environmental Impact Statement in a lease area, such an EIS would be prepared substantially at the same time that baseline studies would be under way. An EIS is, of course, specifically designed to predict all impacts of a proposed governmental activity on the environment. Under the present provisions of H.R. 1614, the completion of a baseline study would require much of the same work as that which would be done by the Interior Department for the EIS. This would be costly in terms of money but also in that it would keep some of the very limited number of scientists and ships available from being able to complete baseline studies in all areas to be leased.

It is not in the public interest to waste time, money and human resources to conduct duplicative studies. The combination of Environmental Impact Statements, baseline studies and subsequent monitoring studies will provide all the information needed in a timely and cost-effective way. The five-factor mini-EIS required under H.R. 1614 should be deleted from the bill and a true baseline study and monitoring program put in its place.

BEST AVAILABLE AND SAFEST TECHNOLOGY-SECTION 21

The concept of "best available and safest technology" is found in H.R. 1614 primarily with reference to the carrying out of the national policy described in Section 202 of the bill and which would become part of new Section 3 of the Outer Continental Shelf Lands Act.

(6) operations on the Outer Continental Shelf should be conducted in a safe manner by well-trained personnel using

technology, precautions, and techniques sufficient to prevent
or minimize the likelihood of blowouts, loss of well control,
fires, spillages, physical obstruction to other users of the
waters or subsoil and seabed, or other occurrences which may
cause damage to the environment or to property, or endanger
life or health.

What does "best available and safest technology" mean and can it be implemented to most effectively carry out our national policy goals? Under H.R. 1614, the Secretary of the Interior would have to pick out the "best" and "safest" way to do things which are now done well and safely in any one of several, modern ways. The Secretary would for instance have to examine all blow-out preventers on the market and determine which excelled all others in its ability to protect the safety and health of workers and preserve the environment. This is an impossible, delay-causing and unnecessary undertaking. The task is impossible because no consensus exists even as to whether down-hole or surface blow-out preventers are best, let alone which of the numerous and successful designs now in use is best. Much of the effectiveness of any technology has to depend on the competence of the men operating the machines. Human error can render useless the most effective machine. The development of techniques to prevent or cope with blowouts or other dangerous situations and the setting of training standards for personnel are not covered in the "best available and safest technology" approach as found in H.R. 1614. In the blowout off Norway in the North Sea last year, the equipment being used was state-of-the-art equipment. The new equipment could not prevent the accident that happened.

Delay in implementing the law would be caused by forcing the Secretary to try to find the one "best" and "safest" technology of all those now in existence. Once determined the so-called "best" and "safest" machine would be the only one permissible on new operations and this would surely result in law suits being brought by manufacturers of competitive devices arguing either that they really have the "best" and "safest" technology or that the Secretary's decision was arbitrary and capricious. As the Secretary's decision would also create a monopoly in the manufacturer of the "best" and "safest" machine, further development of others' machines would be inhibited by putting their manufacturers out of business. Small companies with no other source of income would not survive. These delays and uncertainties would cause economic decision-makers to be very unsure as to which machines they could plan to use as part of planned future operations. What is "best" and "safest" today when they have to commit themselves to multimillion dollar decisions may not be so regarded in a month or a year. No secure decision could be made and new production would be greatly reduced.

The bad effects of jousting with the "best available and safest technology" windmill are more pronounced because it is an unnecessary exercise. The far more commonly used and sound approach in encouraging the use and development of new technology is to set standards which must be equaled or exceeded before a product is found acceptable for use. The setting of performance standards designed to implement national policy would not be as time-consuming, subjective or controversial as the picking of one "best available and safest technology".