Secretary not generally require that the air mass above the OCS itself be brought into compliance with national or State ambient air quality standards but that regulations might be appropriate for the air above or near an artificial installation or other device (platform), so that emissions from such source is controlled to prevent a significant effect on the air quality of an adjacent onshore area.

Other provisions in the conference report provide that exploration plans, and development and production plans, are to comply with any regulations promulgated pursuant to section 5(a) (8) of the amended OCS Act. Thus, in considering approval, modifications, and disapproval of a submitted exploration plan, or a development and production plan, the Secretary is to insure compliance with any applicable regulations promulgated, pursuant to section 5(a) (8).

The conferees do not intend that the application of section 5(a) (8) regulations will interfere with the time periods provided in the conference report for review and approval of explorations plans, and development and production plans. The conferees expect that these regulations will be implemented consistenly with the timetables established by these amendments.

The managers were aware that on April 13, 1978, the Environmental Protection Agency made a notice of determination that the Clean Air Act, as amended (42 U.S.C. sec. 7401 et seq.) and regulations promulgated thereunder, apply to activities on the Outer Continental Shelf when such activities could affect the air quality of an adjacent State. By their adoption of requirements for regulations for compliance with air quality standards, the conferees do not intend to supersede the Clean Air Act or the responsibilities of the EPA Administrator. There is no intent to affect, extend or reduce, whatever present authority the Environmental Protection Agency has in applying and enforcing the Clean Air Act, including the use of EPA's permitting authority.

Specifically, the conferees intend that the Secretary of Interior shall be guided by the Clean Air Act, in consultation with the Environmental Protection Agency, in promulgating regulations to maintain consistency with ambient air quality standards, and its procedures establishing the technological means for controlling air emissions.

It is expected that some activities may not have significant effects because of distance from shore or meteorological conditions that blow the pollution out to sea. If an OCS activity or facility is determined to have no such significant effect, when, for example, it is located many miles from the coast, the requirements of the regulations under section 5(a) (8) would not apply.

Pipeline rights-of-way

The original OCS Act of 1953 provides in section 5 (e) for rightsof-way for pipeline purposes for the transportation of minerals. The conference report adopts certain technical changes to this subsection from the House amendment and Senate bill.

The House amendment provides in section (5) (e) for regulations to be prescribed by "the Secretary (of Interior), or where appropriate, the Secretary of Transportation." The Senate provides for regulations and conditions as may be prescribed by "the Secretary (of Interior)

not inconsistent with regulations promulgated by the Secretary of Transportation under the Natural Gas Pipeline Safety Act of 1968." The conference report is the same as the House amendment.

The House amendment provides in section (5) (e) for regulations and conditions "including (as provided in section 21(b) of this act) utilization of the best available and safest technology for pipeline burial and other procedures." The Senate bill provides for conditions and regulations "including assuring maximum environmental protection by utilization of the best available and safest technology, including the safest practices for pipeline burial." The conference report follows the Senate bill, with the addition of the phrase "(as provided in section 21(b) of this act)" from the House amendment. Section 21(b), as will be discussed later, notes that more than one technology may be acceptable as "the best available and safest." To emphasize the point, a technical change was adopted to make "technology" plural. The House amendment also provides for nondiscriminatory pipeline transportation or purchase as to oil or natural gas "produced from such lands in the vicinity of the pipeline." The Senate bill contains no such production area reference. The conference report follows the Senate bill and contains no such reference.

A number of technical changes were made in 5(e) to conform the subsection to present law. The "Federal Power Commission" is changed to "Federal Energy Regulatory Commission." The phrases "in the case of gas and Interstate Commerce Commission" and "in the case of oil" were stricken. And the "Administrator of the Federal Energy Administration" was changed to the "Secretary of Energy.' Pipeline competition

The Senate bill alone contains a subsection (f) detailing the competitive principles for pipeline transportation of OCS oil and gas. The provision in the Senate bill is intended to (1) prevent "bottleneck monopolies" and other anticompetitive situations involving OCS pipelines and (2) promote efficiency and sound planning involving pipeline sizing. The House amendment contains no such provision. The conference report adopts the provision of the Senate bill with an amendment. The agreed-to subsection (f) provides for open and nondiscriminatory access to apply to all pipelines and is a reaffirmation and strengthening of subsection 5 (e), which provides for the transport or purchase of all OCS oil and gas "without discrimination."

In addition, in the case of new pipelines, except in the Gulf of Mexico and Santa Barbara Channel, the Secretary is given the discretion to order an expansion of throughput capacity. However prior to doing so: (1) There must be a specific request by a shipper, owner or nonowner; (2) there must be a full hearing after due notice; (3) there must be a finding that expansion is within technological limits and economic feasibility.

If such expansion is ordered, then the requesting shipper must be responsible for bearing the proportionate share of costs and risks related to the expansion.

The conferees recognize that there may be circumstances in which it would be appropriate and fair to all concerned for the company requesting expansion of a pipeline's throughput capacity to pay the

pipeline owner both (1) a proportionate share of the incremental cost associated with the expansion, and (2) a proportionate share of the current value of the pipeline.

If, for instance, an expenditure of $14 million for new pumps would double the throughput capacity of a pipeline having a current value of $200 million, it might be entirely fair and reasonable under all the circumstances especially those involving the promotion of financial incentives and competition and the protection of investments for the company requesting the expansion to pay a share of the $14 million and a share of the $200 million. If the requesting company had to pay only a share of the $14 million, it might be able to take full advantage of the expansion without having to bear any of the cost or risk previously assumed by the pipeline owner.

The language agreed to by the conferees, therefore, authorizes a determination to be made whether the requesting company should pay the pipeline owner a portion of the current value in addition to a portion of the incremental cost of expansion.

Whenever it is determined that the requesting company should bear a proportionate share of the costs and risks of the pipeline itself and not just the expansion, the share should not exceed the expected percentage of the company's average throughput. In addition, the price of such share should be consistent with rate base and rate of return regulations, and payment in appropriate circumstances, may confer to the requesting company an equivalent portion of the ownership and control of the pipeline.

The conferees were explicit that expansion may not be ordered under this section for any pipeline operating in a developed area (the Gulf of Mexico and the Santa Barbara Channel) and for any pipeline authorized prior to the date of enactment of this bill.

The conferees believe that provisions for nondiscriminatory access and expansion of capacity upon request are ordinarily not appropriate for feeder lines to a facility where oil and gas are first collected, or where oil or gas are first separated, dehydrated, or otherwise processed. Thus, in most cases, such lines would be exempted from the requirements of this subsection. Such exemption, however, is to occur only after a review and if necessary, a hearing, and then an appropriate order or regulation.

In conformity with present agency responsibility, this subsection provides that the application of competition principles are to be undertaken by the Department of Energy and FERC where appropriate. The discretionary decision of throughput expansion is to be made by FERC.

In implementing this subsection and applying competitive principles, the Secretary of Energy and the FERC are to consult with and give due consideration to the views of the Attorney General, who in turn is to consult with the Federal Trade Commission. Once again, in submitting his views, the Attorney General is to set forth the reasons for his views, and any recommendations, including the pertinent factual and policy considerations and legal precedents, if any. No independent cause of action is created by this consultation requirement. Therefore, the failure of the Attorney General to submit his views, or the insufficiency of the reasons given for his views and recommenda

tions, are not to be an independent basis for a law suit. Furthermore, the conferees do not intend to abridge any existing authority of any agency or department, including the Federal Trade Commission, to solicit or give comments as to this or any other provision of this bill or actions taken in accordance with such provisions. (See discussion in this statement of managers on section 5(a) as to Attorney General and Federal Trade Commission role, responsibilities and independent authority.)

Finally, as specifically stated in paragraph (4) nothing in this subsection on pipeline competition is intended to alter present authority, under any other provision of law, of any agency of the United States with respect to pipelines on or across the OCS.

Rates of production

Both the House amendment and Senate bill provide for production of oil and gas at determined rates. Rates must be set that are consistent with any rule or order issued by the President in accordance with other laws. If no such rate or order has been issued, rates must be consistent with regulations established to assure maximum production as described in section 5(g) (2). The conference report adds a technical change, adding "of Energy" to make explicit that the reference to "Secretary" to promulgate regulations as to production rates in this provision means the "Secretary of Energy" in accordance with section. 302 (b) (4) of the DOE Act.

The Senate subsection as to rates of production includes a paragraph (3) amending the Energy Policy and Conservation Act of 1975 to require the publication of final rules on the maximum efficient rate of production. The House amendment contains no such language. The conference report follows the House amendment, and paragraph (3) from the Senate bill was deleted.

Coordination of and recommendations on OCS activities

The House amendment contains a subsection providing for the coordination of activities of all Federal agencies by the Secretary of Interior, and for notification to the Secretary of Interior of all OCS related actions by any Federal department or agency.

The Senate bill contains no such provisions. The conferees adopted the House amendment with an amendment which provides that, in order to facilitate coordinated Federal action on OCS activities, the head of any Federal department or agency taking any action significantly affecting OCS activities is to notify the Secretary of the Interior of this action. The Secretary is thereafter to notify Governors of affected States. After such notification, the Secretary may recommend changes to the agency or department proposing such action.

The Governor of any State shall have the right to be notified of any action. However, no third party, including citizens, shall have the right to raise as a basis for legal action, the failure of the Governor to be notified. The head of the Federal departments or agencies which are to submit notification of an action to the Secretary can be compelled by the Secretary to comply with this coordination mandate. However, the failure of a department or agency to submit such inforcation shall not be a basis for an independent cause of action by any third party. Furthermore, the failure of the Federal department or

agency to accept any recommendations by the Secretary shall not be a basis for an independent cause of action by any third party.

The Secretary of Interior, by receiving notice and information on all actions affecting the OCS, will be able to evaluate the overall effect of any particular Federal decision on OCS policy. In addition, the Governor shall be able to look to one person-the Secretary-to receive information concerning any Federal Government action affecting OCS areas impacting on his jurisdiction.

Section 205-Revision of bidding and lease administration

New bidding systems

Section 205 amends section 8 of the OCS Lands Act by providing new bidding options and procedures.

The original OCS Lands Act of 1953 provides that leases are to be awarded to the highest responsible qualified bidder, through competitive and sealed bidding procedures, on the basis of a cash bonus, with a fixed royalty of no less than 1212 percent, or on the basis of a royalty, at no less than 122 percent, and a fixed bonus. Subsection (a) of section 8 is amended to still require competitive, sealed bidding procedures and to still authorize bonus and royalty bids, but now also to authorize a number of new bidding systems.

Under this act, and in accordance with the DOE Act, the Secretary of the Interior retains the power to issue leases. The Secretary of Energy is to retain responsibility for promulgating regulations implementing alternative bidding systems (see sec. 302(b) (2) of the DOE Act). Both Secretaries are to continually consult with each other in accordance with sections 303 (b) and 303 (c) of the DOE Act.

The House amendment provides in (a) (1) for regulations for the depositing of cash bids in an interest-bearing account and for earned interest to be paid to the Treasury when bids are accepted, and to unsuccessful bidders if bids are rejected. The Senate bill contains no such provision. The conference report follows the House amendment by providing for such regulations.

Both the Senate bill and the House amendment contained specific provisions authorizing variable royalty, variable net profit, fixed net profit, and work commitment bidding alternatives but use different language and structure to do so. The conference report adopts the Senate bill language and form.

Both the Senate bill and House amendment authorize the use of nonenumerated alternative bidding systems or modifications of bidding systems specifically described.

The Senate bill provides that any nonenumerated system can only be used after having been submitted to Congress and then only if neither House passes a resolution of disapproval within 30 days. The House amendment simply provides that new bidding systems shall be promulgated by rule, after an opportunity for a hearing, and then transmitted to Congress. No provision for disapproval, specifically as to use of new bidding systems, by Congress is included in the House amendment. The conference report follows the Senate bill and contains a one House veto provision for nonenumerated bidding systems, as paragraph (a) (4).

Any such nonenumerated system or modification, while it can include any number of fixed terms, conditions, or parts, can only have one