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tion of joint bidding restrictions in promoting competition; and an evaluation of any measures to increase the supply of oil and gas to independent refiners and distributors.
B. H.R. 1614 AND THE BUREAUCRACY
Although primary responsibility for OCS supervision is given to the Secretary of the Interior, certain responsibilities are given to other agencies and Departments. For example, Coast Guard, the Army, OSHA, and the Office of Pipeline Safety are granted authority, and with this authority the responsibility, for promulgation and enforcement of certain regulations. Of course, other
agencies and departments have responsibilities under other laws for OCs and OCS-related activity. One key function of H.R. 1614 is to provide for coordinated Federal action, by limiting duplication of effort, overregulation, and conflicting standards. Thus, the leasing program required by section 18 is to be prepared and promulgated after extensive consultation with other agencies. Regulations, and enforcement of those regulations are required to be after necessary consultation and are to be coordinated.
Preparation of reports, environmental assessments, environmental impact statements, and resource information are to be cooperatively undertaken and generally coordinated under the leadership of the Secretary of the Interior. Information prepared by one agency, or expertise developed by another, are to be used to the maximum extent possible to limit costs and avoid delays. Permits, licenses and leasing requirements are to be coordinated to facilitate "one-stop” shopping by those involved in OCS activities. The Secretary of the Interior is to prepare a compilation of all regulations, from whatever source, to facilitate a total comprehension of the OCS regulatory structure.
In addition, H.R. 1614 includes provisions to increase public confidence in governmental activity. More information is to be provided and increased participation granted to states and citizens as to OCS activity at all stages in the planning, leasing, regulatory, and enforcement process.
Potential conflicts of interests are limited by requirements for financial disclosure and by restrictions on future employment by supervising government personnel.
C. H.R. 1614 AND THE ENERGY INDUSTRY
Lessees and permittees will face more and stricter regulations and enforcement as a result of this legislation. However, they will also enjoy less red tape, fewer delays, and greater certainty about the political environment in which they are operating. In addition, certain elements of the energy industry will be assured a larger role in OCS activities.
As described above, industry complaints about "overregulation” should be reduced by H.R. 1614 and its provisions providing for coordination and facilitating "one-stop” shopping. In addition, specific provisions have been included in the bill to eliminate unnecessary delays.
While a new leasing program is being prepared and promulgated, leasing activities are to continue. Environmental studies are generally
to be conducted before or while exploration activities are conducted. Retroactive regulations are not permitted if they cause undue delay and are not essential. Requirements for exploration plans, and development and production plans are generally limited to unexplored areas and are not applicable to activities already commenced or approved. In general, the natural stages of the OCS process are used, and the increased and updated requirements applied, so as to limit undue interference and delays.
Private energy companies will continue to be the major explorers for oil and gas, and the developers and producers of these resources.
Section 206 amends section 11 of the OCS Lands Act, but includes the original language of section 11, which allowed geological and geophysical explorations to be conducted by any agency of the United States or any person authorized by the Secretary.
This language, which has been part of the law for twenty-three years, means that the federal government can, as now, allow exploration pursuant to a lease, permit, or regulation, conduct exploration itself, or contract out for exploration to be done by private industry prior to a lease sale. New language has been added that would require the Secretary, at least once in the next 2 years, to offer qualified applicants an opportunity to conduct on-structure stratigraphic drilling, prior to a lease sale. If no
private company wishes such a permit, such drilling will not occur. In addition, existing procedures for stratigraphic drilling, on- or off-structure, are readopted.
A company which has obtained a lease must submit an exploration plan for approval by the Secretary before it may proceed with its exploration activities. The exploration plan is to include a schedule of activities, a description of the equipment to be used, the general location of each well to be drilled, and other information as required by the Secretary. The Secretary must review the plan to see if it is in accordance with the law, regulations prescribed under the Act, and the provisions of the lease. The Secretary has 30 days to approve or modify such a plan, but may delay approval if he believes a suspension of activities on the lease is warranted.
A company which has obtained a lease must also submit a development and production plan in accordance with a new section 25 of the OCS Act, prior to beginning development and production of the oil and gas covered in the lease. This plan must describe the specific work to be performed, all offshore facilities and operations proposed by the lessee or known by him, environmental and safety protections, the rate of development and production, a time schedule for performance, and other relevant information. In addition, a lessee is to prepare a statement describing all facilities and operations, other than on the Outer Continental Shelf, proposed and known by him which will be constructed or utilized in development and production of oil and gas from a lease area, including the location and site of such facilities, the land, labor, material and energy requirements, and all environmental and safety protections.
The plan then goes through a review procedure by the Governors, and
any other interested party. This review process utilizes the natural pause that now occurs between a discovery and the decision to develop and produce. During this period, companies presently take periods up to 18 months or 2 years to plan future activity, order and secure platforms, and make on-shore arrangements. The Secretary must finally approve, disapprove, or require modifications of the plan.
While these requirements are fundamental to an updated OCS law, they are not new or untested. Present regulations require submission of exploration and "d and p” plans. Moreover, these provisions, and others in the bill, are not unduly restrictive. It is expected that most problems will be resolved through the review and approval process. Good faith by all parties will insure smooth step-by-step progress. As noted earlier, these requirements are generally applicable to new leases in previously undeveloped areas. Industry will then have adequate time to prepare for and comply with, appropriate procedures. Finally, if a lessee loses a lease through no fault, he is assured by H.R. 1614, as he is not necessarily now, of adequate and known compensation.
H.R. 1614 also provides new opportunities to the energy industry. In general, state and public participation will increase the knowledge, and reduce the fears, of exploitation opponents. Revised procedures will limit frivolous lawsuits, and expedite all court actions. Cooperation, and thus more certainty, will be provided.
Finally, many elements of the energy industry will now have an opportunity for involvement in OCS activities. New bidding systems, reducing the need for large up front bonus payments, should allow more companies to secure OCS leases and allow all companies to use capital to explore resources. Review of actions, leases, and other activities by the Attorney General and in certain instances, the Federal Trade Commission should increase the probability of real competition and thus involvement by more energy companies. Provisions for distribution of royalty, net profit share, or purchased oil, and for a set-aside of all oil, to smaller refiners may well mean the survival of those companies. Specific procedures for distribution of natural gas, whether by royalty or net profit share, or by a lessee, will allow gas companies to participate in OCS activities.
D. H.R. 1614 AND STATE AND LOCAL GOVERNMENTS
A major purpose of H.R. 1614 is to involve the states and affected local areas within the States in the entire exploitation process to a greater degree. The bill provides an opportunity for them to participate in the decisionmaking process with regard to the overall leasing program of the Secretary, and individual development and production plans of the oil companies. The States and local areas are also supplied with information so that they will be able to plan for and ameliorate the on-shore consequences of off-shore development, and with assistance in coping with the on-shore impacts of such development. Involving States in the process from the beginning should avoid time-consuming lawsuits later.
A new section 18 of the OCS Act requires a 5-year leasing program that must be prepared with, and then submitted to, the States and local governments for review.
Specific input is also required for certain key OCS decisions. All recommendations by a Governor of an affected State, and through Governors, heads of affected local government units, with regard to a proposed lease sale or a proposed development and production plan, must be submitted within 60 days and must be accepted by the Secretary if he determines that they are consistent with the national interest. In addition, under the new section 25, modifications and approvals of the development and production plans must be, to the extent possible, consistent with approved state coastal zone management programs.
A new section 26 details an Outer Continental Shelf Oil and Gas Information Program. All lessees and permittees must provide access to the Secretary to all data obtained from their offshore activities and must provide copies of any specific data and interpretation as the Secretary may require. After the Secretary has obtained, processed, analyzed and interpreted this data, he shall make available to affected States a summary of data to assist them in planning for onshore impacts. That summary shall include estimates of reserves, size and timing of development if any, location of pipelines, and location and nature of onshore facilities. In addition, he is to allow access by a state Governor's representative to all information, including proprietary data, after a lease sale, under appropriate arrangements for confidentiality.
Title IV of the bill amends the Coastal Zone Manage provides $125,000,000 to OCS affected States, based on a formula that seeks to insure that all such States receive funds, that no one State secures too much, and that States will be compensated in relation to real impact.
One final provision which affects some states deals with the leasing of tracts within three miles of the seaward boundary of any coastal state. Section 205 of the bill, which amends section 8 of the Act, states that prior to the leasing of any lands within three miles of the seaward boundary of any coastal state, the Secretary is to provide relevant information to the Governor of the affected state and to offer the Governor the opportunity to enter an arrangement for the special leasing of any such area which might contain a geological structure or trap common to both State and Federal lands. If the Governor accepts, the area is to be so leased. If the Governor refuses, the Secretary may go ahead and lease the area without any special arrangements. In either event, all bonuses, royalties, rents and other revenues are to be placed in an escrow fund until geological information allows the Secretary and the Governor of the affected coastal state to determine the proper allocation of payments.
E. H.R. 1614 AND THE ENVIRONMENT
There are many provisions under H.R. 1614 for the protection of the marine, coastal, and human evironment.
A new section 20 requires studies to obtain baseline information and then to monitor areas. The Interior Department, using the National Oceanic and Atmospheric Administration within the Department of Commerce, to the maximum degree practicable, must prepare a study on any area or region included in a lease sale. These studies are to be used in determining approval of any development and production plan, and are to attempt to predict impacts on the marine biota from OCS activities, and possible spills.
Section 25 of the Act provides for a review of activities after exploration and prior to development and production. An environmental impact statement and a hearing is mandated in previously undeveloped regions to occur at least once in every major lease area prior to approval of development and production. Through an environmental impact statement procedure, or a set period for comments and recommendations, where no such process is involved, section 25 insures input from Governors, local governments, and other persons into the decision on whether to approve a development and production plan. If the plan cannot be made safe, then the plan is to be disapproved by the Secretary.
Other provisions of the bill provide for suspensions and cancellations for environmental reasons; of course, with adequate compensation for a cancellation.
In general, the whole OCS process, from preparation of a leasing program, selection of tracts for leasing, promulgation and enforcement of regulations, and review of activities must consider environmental consequences—to the waters, to the air, to adjacent coastal areas, and to the living resources.
F. H.R. 1614 AND THE WORKER
The new section 21 of the Act provides for a review of safety and environmental regulations. Regulations should require on all new drilling and production operations, and when practicable, on existing operations, the best available and safest technology 'economically achievable.
The Secretary of Labor is to issue interim regulations related to hazardous activities in or on the waters above the Outer Continental Shelf.
The new section 22 of the Act provides for enforcement of these safety and environmental regulations. Regular unannounced inspections are mandated, as well as investigations of death, serious injuries, major fires, and oil spills, and review of allegations and complaints by any person.
Finally, a new section 31 provides for increased use of American workers in OCS activities. Manning, registration and documentation requirements are established to provide not only for safe operations but also for use of American and not foreign personnel.
G. H.R. 1614 AND THE CITIZEN
Through the new section 23, citizen suits are authorized by anyone having an interest that can be adversely affected against the relevant government agency or department, or against any other person, for a violation of the Act, implementing regulations, or terms of a lease or permit.
Remedies and penalties for violations of the Act, lease terms, or applicable regulations, are set out in the new section 24 of the Act.
Title III of the Act establishes an Offshore Oil and Pollution Fund and provides for procedures in the event of an oil spill and compensation for damages resulting from such an oil spill. The provisions of this title apply to spills from any offshore facility in the OCS, and any transportation device, including vessels, for the oil and gas from the offshore facility.
Procedures are established for the clean-up of spills, and the lessee or operator of the vessel is to be strictly liable for all clean-up costs. With limited exceptions, the lessee or operator is also strictly liable