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“(C) If, in any fiscal year, the total amount of funds available for making grants to coastal states pursuant to this subsection is greater than the total amount of grants payable to such states pursuant to this subsection, the difference between such two amounts shall remain in the Treasury of the United States and be credited to miscellaneous receipts.

“(D) If, in any fiscal year, the total amount of funds available for making grants to coastal states pursuant to this subsection is less than the total amount of grants payable to all coastal states pursuant to this subsection, there shall be deducted from the amount payable to each coastal state an amount equal to the product of

"(i) the amount by which the total amount of grants payable to all coastal states exceeds the total amount of funds available for such grants; multiplied by

“(ii) a fraction, the numerator of which is the amount of grants payable to such coastal state in such fiscal year and the denominator of which is the total amount of grants payable to all coastal states in such fiscal year.”. (c) Paragraph (5) (B) (i) of such section 308 (b) (as renumbered by subsection (b) of this section) is amended

(1) by striking out "necessary, because of the unavailability of adequate financing under any other subsection,” and inserting in lieu thereof “necessary''; and

(2) by striking out “new or expanded". (d) Paragraph (6) of such section 308 (b) (as renumbered by subsection (b) of this section) is amended to read as follows:

“(6) After making the calculations provided in paragraphs (2) and (3) of this subsection, the Secretary shall require each coastal state which is to receive grants under this subsection to provide adequate assurances of being able to return to the United States any funds to which paragraph (8) of this subsection may apply. After obtaining such assurances, the Secretary shall disburse the proceeds of such grants to such coastal state.

(7) Any coastal state which receives proceeds of any grant under this subsection only may expend or commit such proceeds

(A) after a determination by the Secretary that such proceeds will be expended or committed by such state in accordance with the purposes set forth in paragraph (5) of this subsection; and

“(B) before the close of the fiscal year immediately following the fiscal year in which the proceeds were received. “(8) The United States shall be entitled to recover from any coastal state an amount equal to all or any portion of a grant made to such state under this subsection which is not expended or committeed in compliance with paragraph (7) of this subsection.".

(e) Paragraph (3) of section 318(a) of the Coastal Zone Management Act of 1972 is amended to read as follows:

“(3) such sums, not to exceed $50,000,000 for the fiscal year ending September 30, 1978, and not to exceed $125,000,000 for each of the fiscal years ending September 30, 1979, September 30, 1980, September 30, 1981, September 30, 1982, September 30, 1983, and September 30, 1984, as may be necessary for grants under section 308 (b);". (f) The amendments made by this section shall take effect on October 1, 1977.

TITLE V-MISCELLANEOUS PROVISIONS

REVIEW OF SHUT-IN OR FLARING WELLS

SEC. 501. (a) In a report submitted within six months after the date of enactment of this Act, and in his annual report thereafter, the Secretary shall list all shut-in oil and gas wells and wells flaring natural gas on leases issued under the Outer Continental Shelf Lands Act. Each such report shall be submitted to the Comptroller General and shall indicate why each well is shut-in or flaring natural gas, and whether the Secretary intends to require production on such a shut-in well or order cessation flaring.

(b) Within six months after receipt of the Secretary's report, the Comptroller General shall review and evaluate the methodology used by the Secretary in allowing the wells to be shut-in or to flare natural gas and submit his findings and recommendations to the Congress.

94-224-77

REVIEW AND REVISION OF ROYALTY PAYMENTS

SEC. 502. As soon as feasible but no later than ninety days after the date of enactment of this Act, and annually thereafter, the Secretary of the Interior shall submit a report or reports to the Congress describing the extent, during the two-year period preceding such report, of delinquent royalty accounts under leases issued under any Act which regulates the development of oil and gas on Federal lands, and what new auditing, post-auditing, and accounting procedures have been adopted to assure accurate and timely payment of royalties and net profit shares. Such report or reports shall include any recommendations for corrective action which the Secretary of the Interior determines to be appropriate.

NATURAL GAS DISTRIBUTION

SEC. 503. The Federal Power Commission shall, pursuant to its authority under section 7 of the Natural Gas Act, permit any natural gas distributing company which engages, directly or indirectly, in development and production of natural gas from the Outer Continental Shelf to transport to its service area for distribution any natural gas obtained by such natural gas distributing company from such development and production. For purposes of this section, the term “natural gas distributing companymeans any person (1) engaged in the distribution of natural gas at retail, and (2) regulated or operated as a public utility by a State or local government.

ANTIDISCRIMINATION PROVISIONS

SEC. 504. Each Federal agency or department given responsibility for the promulgation or enforcement of regulations under this Act or the Outer Continental Shelf Lands Act shall take such affirmative action as deemed necessary to assure that no person shall, on the grounds of race, creed, color, national origin, or sex, be excluded from receiving or participating in any activity, sale, or employment conducted pursuant to the provisions of this Act or the Outer Continental Shelf Lands Act. The agency or department shall promulgate such rules as it deems necessary to carry out the purposes of this section, and any rules promulgated under this section, through agency and department provisions and rules which shall be similar to those established and in effect under title VI of the Civil Rights Act of 1964.

SUNSHINE IN GOVERNMENT Sec. 505. (a) Each officer or employee of the Department of the Interior whom

(1) performs any function or duty under this Act or the Outer Continental Shelf Lands Act, as amended by this Act; and

(2) has any known financial interest in any person who (A) applies for or receives any permit or lease under, or (B) is otherwise subject to, the pro

visions of this Act or the Outer Continental Shelf Lands Act, shall, beginning on February 1, 1978, annually file with the Secretary of the Interior a written statement concerning all such interests held by such officer or employee during the preceding calendar year. Such statement shall be available to the public. (b) The Secretary of the Interior shall(1) within ninety days after the date of enactment of this Act

(A) define the term “known financial interest" for purposes of subsection (a) of this section; and

(B) establish the methods by which the requirement to file written statements specified in subsection (a) of this section will be monitored and enforced, including appropriate provisions for the filing by such officers and employees of such statements and the review by the Secretary

of such statements; and (2) report to the Congress on June 1 of each calendar year with respect to such disclosures and the actions taken in regard thereto during the preceding calendar year. (c) In the rules prescribed in subsection (b) of this section, the Secretary may identify specific positions within the Department of the Interior which are of a non regulatory or nonpolicymaking nature and provide that officers or employees occupying such positions shall be exempt from the requirements of this section.

(d) Any officer or employee who is subject to, and knowingly violates, this section shall be fined not more than $2,500 or imprisoned not more than one year, or both.

INVESTIGATION OF AVAILABILITY OF OIL AND NATURAL GAS FROM THE

OUTER CONTINENTAL SHELF

SEC. 506. (a) The Congress hereby finds that,

(1) there is a serious lack of adequate basic energy information available to the Congress and the Secretary of the Interior with respect to the availability of oil and natural gas from the Outer Continental Shelf;

(2) there is currently an urgent need for such information;

(3) the existing collection of information by Federal departments and agencies relevant to the determination of the availability of such oil and natural gas is uncoordinated, is jurisdictionally limited in scope, and relies too heavily on unverified information from industry sources ;

(4) adequate, reliable, and comprehensive information with respect to the availability of such oil and natural gas is essential to the national security of the United States; and

(5) this lack of adequate reserve data requires a reexamination of past data as well as the acquisition of adequate current data. (b) The purpose of this section is to enable the Secretary of the Interior and the Congress to gain the best possible knowledge of the status of Outer Continental Shelf oil and natural gas reserves, resources, productive capacity, and production available to meet current and future energy supply emergencies, to gain accurate knowledge of the potential quantity of oil and natural gas resources which could be made available to meet such emergencies, and to aid in establishing energy pricing and conservation policies.

(c) The Secretary of the Interior shall conduct a continuing investigation, based on data and information which he determines has been adequately and independently audited and verified, for the purpose of determining the availability of all oil and natural gas produced or located on the Outer Continental Shelf.

(d) The investigation conducted pursuant to this section shall include, among other items,

(1) an independent determination of the MER (maximum efficient rate) and MPR (maximum production rate) in relation to the actual production from the fields, reservoirs, and wells on the Outer Continental Shelf commencing with production during the twelve-month period immediately prior to the date of enactment of this section, and an independent estimate indicating whether production from such fields, reservoirs, and wells has been less then the maximum efficient rate and maximum production rate, and, if so, the reason for such difference;

(2) an independent estimate of total discovered reserves (including proved and indicated reserves) and undiscovered resources (including hypothetical and speculative resources) of Outer Continental Shelf oil and natural gas by fields and reservoirs ;

(3) a determination of the utilization of Outer Continental Shelf oil and natural gas in terms of end-use markets so as to ascertain the consumption by different classes and types of end users ;

(4) the relationship of any and all such information to the requirements of conservation, industry, commerce, and the national defense; and

(5) an independent evaluation of trade association estimates of Outer Continental Shelf reserves, ultimate recovery, and productive capacity since 1965 which shall be accompanied by a detailed description of procedures used by such associations and the manner in which their data relates to the results yielded in the investigation under this section. In order to provide maximum opportunity for evaluation and continuity, the Secretary of the Interior shall obtain all of the available data and other records which the trade associations have used in compiling their data with respect to

reserves. (e) The Secretary of the Interior shall not later than six months after the date of enactment of this section, submit an initial report to the Congress on the results of the continuing investigation required under this section and shall submit subsequent reports annually thereafter. The initial report shall include cost estimates for the separate components of the continuing investigation and a time schedule for meeting all of its specifications. The schedule shall provide for producing all the required information within a year after the date of enactment of this section. The Secretary of the Interior shall make separate reports on past data as follows:

(1) within six months after the date of enactment of this section, on the acquisition and details of trade association data and information; and

(4) within twelve months after such date, an evaluation of the trade association materials, and within eighteen months after such date, the relationship between trade association data and the new data collected under

this section. (f) The Secretary of the Interior shall consult with the Federal Trade Commission regarding categories of information acquired pursuant to this section. Notwithstanding any other provision of law, the Secretary of the Interior shall, upon request of the Federal Trade Commission, make available to such Commission any information acquired under this section.

(g) For purposes of this section, the term “Outer Continental Shelf” has the meaning given such term in section 2(a) of the Outer Continental Shelf Lands Act.

STATE MANAGEMENT PROGRAM

SEC. 507. Section 307 (c)(3)(B) (ii) of the Coastal Zone Management Act of 1972 (16 U.S.C. 1456(c)(3)(B) (ii)) is amended to read as follows:

“(ii) concurrence by such state with such certification is conclusively presumed as provided for in subparagraph (A), except that the time period after which such concurrence shall be presumed shall be three months; or”.

RELATIONSHIP TO EXISTING LAW

Sec. 508. Except as otherwise expressly provided in this Act, nothing in this Act shall be construed to amend, modify, or repeal any provision of the Coastal Zone Management Act of 1972, the National Environmental Policy Act of 1969, the Mining and Mineral Policy Act of 1970, or any other Act.

I. SUMMARY OF KEY PROVISIONS OF H.R. 1614

A. H.R. 1614 AND THE SECRETARY OF THE INTERIOR

H.R. 1614 vests new and increased responsibility in the Secretary of the Interior. Specific purposes, policies and findings detail that this power is to be used to provide for rational management of the oil and gas resources of the Outer Continental Shelf. National energy requirements, affected states' needs, environmental protection, alternate uses of the coastal waters and lands, and economic reality, are all to be taken into account.

The new Secretary of the Interior has stated that he desires the specific mandates, guidelines and authority provided by H.R. 1614. By his actions, he has indicated his ability to properly undertake the responsibilities for modern Outer Continental Shelf management.

The Secretary must first develop a comprehensive leasing program. In accordance with a new section 18 of the Outer Continental Shelf Lands Act, the Secretary has 9 months in which to prepare the leasing program, indicating size, timing, and location of leasing activities for the next 5 years. He must review the program annually and update it as necessary. The timing and location of the leasing are to be based on a balance of an assessment of environmental damage, discovery potential, and impact on the coastal zone.

The Secretary must submit this plan to the Attorney General, who shall submit comments on the effects of such a program on competition; and to States, local governments, and other persons, who may submit comments or recommendations with regard to any aspect of the program. The plan is then transmitted to the Congress, with all comments. All specific recommendations received must be accepted by the Secretary, unless he indicates specifically why they are not being accepted. Once a leasing program has been approved, all leasing is to be in accordance with the program.

The Secretary can then award leases to bidders. At present, the cash bonus system is used almost exclusively. Under that system, in order to win a lease, a company must have vast amounts of capital, and the price to the company is set without full knowledge of the value of the oil and gas in the area. This may reduce competition for offshore leases to the major oil companies and reduce the public return for resources. To increase competition for off-shore leases and secure higher returns to the public Treasury, section 8 of the Outer Continental Shelf Lands Act has been amended to allow the Secretary to use other bidding methods based on net profits; royalty; or work commitments stated in dollar amounts. The Secretary is required to choose the new bidding systems in at least 50 percent of all lease sales in frontier areas during the next 5 years. If, however, the Secretary finds that he must use the present system for more than 50 percent of the lease sales in order to promote efficient development or competition, he must submit a report to the Congress, and either House can pass a resolution of disapproval within thirty days and thus preclude him from exceeding that limitation.

Other provisions prohibit joint bids among major producers; allow leases to be for a reasonable production unit; and provide for lease periods of 5 years, or under specific circumstances, for 10 years, and then extensions once there is a discovery. In order to insure competition, and provide for rational use of bidding systems, rules and regulations as to the systems and lease sales must be promulgated in advance, and a random selection method used to select areas where new bidding systems are to be used, with certain exceptions.

Such rules, and the random selection procedure are to be public. The Attorney General and the Federal Trade Commission are to specifically comment on such rules.

To manage activities on a lease, the Secretary of the Interior is to issue regulations to enforce the Act. Section 204 of the bill amends section 5 of the Act to mandate provisions for the issuance of regulations dealing with the temporary suspension of activities on a lease, as well as for the cancellation of a lease based on a balancing of risks and benefits. Cancellation or termination is also permitted, and sometimes required, for failure to comply with law, lease terms, or applicable regulations.

To allow oversight by the Congress, the Secretary of the Interior is to file an annual report to the Congress within 6 months after the end of each fiscal year on the OCS leasing and production program. Section 207 of the bill amends section 15 of the Act to require this annual report to include a detailed accounting of all monies; a detailed accounting of all activities; a summary of management, supervision, and enforcement activities; a list of all shut-in and flaring wells; and recommendations to the Congress for improvements in management, safety, amount of production, and resolution of jurisdictional disputes.

In addition, the Secretary is to submit a report, after consultation with the Attorney General, with recommendations for promoting competition, and containing an evaluation of the various bidding systems; why a particular bidding system has not been utilized; an evaluation of alternative bidding systems not authorized by the Act; an evalua

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