language as to local governments. The conference report incorporates a modified version of the House amendment. First, finding (10) recognizes that there is a possibility of adverse impacts on States and on local government units within States. Finding (11) provides that affected local governments are to have access to planning information and to make comments on decisions, but through States. States are to work in close cooperation with affected local governments to insure such access and input.

The change is the first of several that the managers made as to the involvement of local governments in OCS activities and decisionmaking. Other changes will be explained as they arise in this discussion. In general, it is intended that local governments are generally to act through their State government representatives; that data and recommendations are to be forwarded to and by local governments through State governments. Which local governments are to be considered affected will be determined by the Governors of affected States. In addition, the managers intend that there is to be no independent basis for legal action by a local government unit against activities under this act, or actions pursuant to this act, because of a dispute with a State government as to whether they are "affected" and regarding any alleged failure to consult with, submit data to, or receive the recommendations of a local government.

The conference report includes as a finding (14), language in the Senate bill not contained in the House amendment, which details the need to develop resources in light of long-range energy needs and adequate protection of renewable resources. In addition, the conference report includes as a finding (15) language in the Senate bill, not contained in the House amendment which states that funds should be made available for damages to commercial fishing vessels and gear.

Section 102-Purposes

This section follows provisions in both the Senate bill and House amendment stating the purposes of the act, the intent of which is clear. Purpose No. (1) follows the Senate bill and provides that the policies and procedures for managing OCS resources are those "which are intended to result in expedited exploration and development of the area". The House amendment contains no such language. The conference report thereby emphasizes the need for the expeditious yet safe exploration and development of the Outer Continental Shelf.

The House amendment specifically refers to local governments in purposes (4), (5), and (6). The Senate bill does not include such references in these provisions. The conference report adopted a modified version of the House amendment, which makes it clear, as noted in the discussion on Section 101, that the purposes of the act are to assist and involve local governments, but only "through States".

The Senate bill includes a purpose (10) to establish a fishermen's fund to compensate for damages to commercial fishing vessels and gear, resulting from Outer Continental Shelf activities. The House amendment contains no such explicit purpose, but does later provide for the establishment of such a fund. The conference report includes the referenced purpose of the Senate bill calling for the establishment of a fishermen's contingency fund.

TITLE II-AMENDMENTS TO THE OUTER CONTINENTAL SHELF LANDS ACT

This title contains a series of amendments to the Outer Continental Shelf Lands Act of 1953 (43 U.S.C. 1331 -9) (OCS Act).

Section 201-Definitions

Both the Senate bill and House amendment, in similar language, provide definitions for use throughout the bill. The conference report resolves the minor differences between the two versions and amends section 2 of the OCS Act.

New definition of "Serectary”—Section 2(b)

The House amendment changes the definition of "Secretary" to insure applicability not only to the Secretary of the Interior but to the Secretary of Energy or the Federal Energy Regulatory Commission, where appropriate, as certain functions under the OCS Act were transferred to them pursuant to the Department of Energy Organization Act (42 U.S.Č. 7101 et seq.) (DOE Act). The Senate bill contains no such language. The conference report adopts the House definition of the term "Secretary". In addition, the conference report adopts specific language in section 608 (b) to make it explicit that the passage of this act is not to modify provisions of the DOE Act transferring authority or functions.

The managers recognize the need for a new definition for the term "Secretary" in order to maintain the responsibilities of the Secretary of Energy and the Federal Energy Regulatory Commission (FERC) in light of the enactment of the Department of Energy Organization Act (Public Law 95–91).

Specifically, under section 302(b), transferred to the Secretary of Energy are the "functions of the Secretary of the Interior to promulgate regulations under the Outer Continental Shelf Lands Act, which relate to the

...

(1) fostering of competition for Federal leases (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 DOE Act also provides that functions of the Secretary of the Interior to establish production rates for all Federal leases are to be transferred to the Secretary of Energy.

The DOE Act also established a leasing liaison committee composed of employees of the Department of Energy and the Department of the Interior to provide an institutional coordinating mechanism to supplement and to assist in alternative interdepartmental coordination efforts

regarding energy mineral leasing. In addition, the DOE Act directs the Secretary of Energy to consult with the Secretary of the Interior during preparation of regulations relating to certain provisions in Federal leases. Furthermore, the DOE Act directs the Secretary of the Interior to afford the Secretary of Energy not less than 30 days prior to granting a Federal lease to disapprove any term or condition of such lease which relates to a matter within the Secretary of Energy's area of responsibility.

Finally, the DOE Act provides that the Department of the Interior shall be the lead agency for purposes of preparation of an environmental impact statement as required by Section 102(2)(C) of the National Environmental Policy Act for any action with respect to Federal energy mineral leases, unless the action involves matters within the exclusive authority of the Secretary of Energy.

In addition to this new definition of "Secretary" and conforming language in section 608(b), the Managers have also made certain changes throughout the bill, and will provide comments in this explanation to more specifically indicate the appropriate delegation, under the DOE Act, of responsibilities between the Secretary of the Interior, the Federal Energy Regulatory Commission, and the Secretary of Energy.

New definition of "lease”—Section 2 (c)

The House amendment defines "lease" to authorize exploration, development, and production of "geothermal steam”. The Senate bill authorizes leases for "geothermal resources." There are also punctuation and structural differences between the two provisions defining "lease". The conference report follows the House amendment by changing the term, "mineral lease," in the OCS Act of 1953, to "lease" so as to more properly describe the authorization for the exploration, development and production of oil and gas or other mineral resources; and by adding a new definition of "minerals" to make it explicit that the Secretary of the Interior has the power to lease geothermal resources on the OCS.

Additional definitions

The conference report retains new definitions included in both the Senate bill and the House amendment for the terms "coastal zone", "affected State", "marine environment", "coastal environment", "human environment". "Governor", "exploration", "development", "production", "antitrust law", "fair market value", "major Federal action", and "minerals."

In the definition of "affected State", the Managers intend that the "Secretary", determining applicability of this provision in certain circumstances, is to be the Secretary of the Interior. In the definition of "affected State", the House amendment adds "directly to such State" to relate to oil transported. The Senate bill contains no such phrase. The conference report follows the House amendment, so that oil indirectly transported would not, in and of itself, qualify a State for "affected State" status.

In the definition of "human environment", the House amendment refers to "esthetic" components and applies to the "recreation, air and water" of those areas affected. The Senate bill does not include such references. The conference report is the same as the Senate bill.

In the definition of "exploration" the House amendment describes drilling "on or off geological structures", while the Senate bill describes such drilling as "on or off known geological structures". The conference report follows the Senate bill, adopting the phrase "on or off known geological structures".

The definition of "exploration" and "development" of the House amendment discusses discovery "in paying quantities", while the Senate bill refers to discovery "in commercial quantities". On this technical difference, the conference report follows the House amendment, employing the phrase, "in paying quantities"-presently used in OCS practice. Also the House amendment defines "development" to include "pipeline routing". The Senate bill contains no such reference. The conference report adopts the language of the House amendment.

In the definition of "major Federal action" as to actions by the Secretary calling into operation the provisions of the National Environmental Policy Act (NEPA), "Secretary" means the Secretary of the Interior.

Regarding the definition of the term "fair market value”, the Managers intend that the determination by the Secretary of the Interior of fair market value is to be undertaken in consultation with the Secretary of Energy. This term, as defined in subsection (o), is only used in this act in relation to the purchase and distribution of oil and gas under section 27.

The House amendment defines "frontier area" for the purpose of applying certain procedures required by the OCS Amendments. The Senate bill contains no such definition. The conference report follows the Senate bill and contains no such definition. The inapplicability of provisions of this Act to specific areas are specifically detailed in the conference report and will be noted in this discussion as appropriate.

The House amendment defines "minerals" to include all kinds of resources. The Senate bill contains no such provision. This change in the House amendment has resulted in a number of technical changes throughout the House amendment, deleting references to oil, natural gas, and geothermal resources, which are contained in the Senate bill. The conference report is the same as the House amendment, defining "minerals".

The managers recognize that "geopressured-geothermal and associated resources" included in the new definition of "minerals", apply to such combined resources as methane, heat and kinetic energy and that these resources may sometimes be developed with other hydrocarbons. Much progress is expected to be made in developing the technology to produce and utilize the resources. The managers therefore intend that the Secretary have the flexibility to issue leases for-geopressured-geothermal and associated resources either alone or in combination with oil and gas leases.

Section 202-National policy for the Outer Continental Shelf

Section 202 amends section 3 of the OCS Act, originally a jurisdictional provision, and makes it into a declaration of national policy. The original provisions of section 3, providing that the subsoil and seabed of the OCS belong to the United States and that all existing rights of navigation and fishing in OCS waters are to be continued, are restated.

Policy statements are added to emphasize that the OCS is held for all the people, and its resources should be made available for expeditious and orderly development subject to environmental safeguards, and with due consideration to affected States.

The House amendment as to adverse effects policy (4) (A), contains reference to impacts on "affected local governments". The House amendment as to policy (4) (B), on participation, contains references to "affected local governments". The House amendment as to purpose (5), dealing with recognition of local rights and responsibilities, includes specifically "local governments". The Senate bill contains no such references. In all of the above-mentioned policy statements, the conference report adopted a modified version of the House amendment. Policies for assistance, participation, and consideration are to involve local governments "through States", and "where appropriate." As the discussion in the explanation on references to local governments in the findings (sec. 101) noted, such references to local governments' involvement in this Act provide no independent basis for legal action by a local government unit against activities under this act, or actions pursuant to this act, because of a dispute with a State government as to whether they are "affected", or regarding any alleged failure to consult with, submit data to, or receive the recommendations of a local government.

Section 203-Laws applicable to the Outer Continental Shelf

Both the Senate bill and the House amendment amend section 4(a) (1) of the OCS Act of 1953 by changing the term "fixed structures" to "and all installations and other devices permanently or temporarily attached to the seabed" and making other technical changes. The conference report retains this language.

The intent of the managers in amending section 4(a) of the 1953 OCS Act is technical and perfecting and is meant to restate and clarify and not change existing law. Under the conference report language, Federal law is to be applicable to all activities on all devices in contact with the seabed for exploration, development, and production.

One particular aspect of federal law, and its applicability to OCS operations, was specifically addressed by the conferees-application of U.S. customs laws.

The conferees were informed that the U.S. Customs Service has interpreted existing section 4(a)(1) to mean that foreign-built production platforms are not subject to import duties when they are brought into OCS waters and attached to the seabed. Specifically, the Customs Service has stated that such platforms are not actually being imported to the United States until they are placed on the shelf and need not pay customs duties.1 The conferees reject this interpretation and believe it is contrary to the intent of Congress in enacting the 1953 act. Moreover, to make it explicit that this interpretation should not be continued to be given effect, the conferees state that one of the purposes of this change in 4(a) (1) is to make it clear that U.S. custom duties are to apply to platform, built overseas, and brought into OCS waters

1 The Customs Service indicates that once the platforms are in place, machinery, equipment, and other items placed on the structure are subject to duties. Of course, the conferees believe this is, and continues to be, the law.