The CHAIRMAN. Doc, I have one last statement. I want to make sure everyone understands, be it port commissioners, county commissioners, or otherwise. While this money is guaranteed for coastal communities, there is no guarantee that Coos will get it over Clatsop, or Tillamook will get it over Western Lane. It is not allocated among the counties on a formula once you get to the coast. There you will meritoriously have to compete with other coastal projects.

Mr. STEVENSON. I think in our particular area we are not too nervous about that, because we think we have some challenges here that are going to justify that competition.

The CHAIRMAN. Congratulations on the success that you are having here, at least a turnaround that I sense we are at least having in this county. It is long deserved.

Mr. STEVENSON. Thank you, Senator.

The CHAIRMAN. Doc, thank you very much.

Next we will take Bruce Laird, the chairman of the port commission. Again, Bruce, "ports" will be in the bill.

STATEMENT OF BRUCE LAIRD, PRESIDENT, PORT OF COOS BAY COMMISSION, COOS BAY, OREG.

Mr. LAIRD. I was not even going to mention it.

Well, it is great to welcome you here. It is always a pleasure to welcome who I believe is Oregon's premier statesman, Senator Packwood.

The CHAIRMAN. Thank you.

Mr. LAIRD. I wish Governor Atiyeh were here and I could also say kind things about him, too, but it is an honor and a pleasure to be able to present testimony before you today.

First, I would like to take this opportunity to again say_thank you, and publicly thank you for your part in assisting the Port of Coos Bay in acquiring the now highly successful drydock. It is a 1,000-ton dry dock, 220 feet long. It floats most of the time-The CHAIRMAN. It has to float all of the time.

Mr. LAIRD. Yes. The drydock in the past 7 months has contributed nearly $5 million directly to the community through shipbuilding companies. It has directly employed over 20 skilled craftsmen and provided shipbuilding and repair capabilities, which have added greatly to the port's reputation and continued viability as a full service port. It cannot be said too much what a terrific thing this has been. It has been a clear-cut success.

The CHAIRMAN. I might again say, there is a perfect example of Federal-local cooperation. Bruce and the port commissioners called this need to my attention, and we discovered this surplus dock and got it from the General Services Administration, given to us down here. You obviously have kept it busy from the moment that it opened.

I was there at that dedication. It was an exciting day, and I am delighted that it has worked out, I suppose even better than you could have hoped at the time.

Mr. LAIRD. We never dreamed. We completely underestimated the volume of activity that the drydock would process by 80 per

cent.

But I also wanted to say that I think the overwhelming public benefit of the dry dock really does serve as a positive example to the Senate, to the House, and to the State, of what local, State, and Federal authorities can accomplish by such cooperative approaches. I think S. 2792 contains the economics of similar accomplishments. Bearing directly on the subject of today's hearing, the Port of Coos Bay recognizes the potential and the challenge for our local, regional, and statewide economy if offshore lease receipt sharing were to become a reality. The challenge of our port system, and especially for the Port of Coos Bay, is to provide sufficient capital for shoreside development, often for projects with State and national economic and security benefits, from a port district which only encompasses the local communities of Coos Bay, North Bend, East Side, Bunker Hill, and the Charleston area.

The Port of Coos Bay District simply does not contain sufficient economic resources to provide for the development requirements to recognize the true economic promise of our deep-draft international port. Deep-draft ports are truly part of a statewide and national transportation system. Ports represent the transfer point for most of our Nation's exports and imports, and will make up a key part of any viable economic development strategy. Ports are deserving and will require political and financial support if we are to be able to adequately perform the job in front of us.

Offshore lease revenue sharing is consistent with the onshore mineral lease sharing program which now currently helps local communities with handling development impacts. Coastal offshore leases will cause similar problems for the coastal areas and deserve equal consideration.

We of the Port of Coos Bay view these impacts both as an opportunity and a potential liability-an opportunity for an economically devastated area to diversify, and a liability when we view local government's capabilities to provide the needed industrial and residential services, sewer and water, industrial lands, roads, and all the dock facilities, the equipment to handle the cargoes-the list just goes on endlessly.

I understand the legislation contains wording requiring at least 40 percent of the funds be passed through to local government. This is important, especially if the local government is a port. Local governments, port districts included, are most often directly responsible for the services I have referred to.

Local governments are most aware of the needs of local industry. We are more responsive. The financial capability of our area to provide for possible impacts to service today's needs and prepare for the future is definitely enhanced by the 40-percent passthrough requirement.

Additionally, I would like to add that S. 2792 recognizes the unemployment factors, the population slippage, and the economic conditions of the States involved in the offshore lease revenue sharing.

Also significant in this consideration would be the inclusion or formation of a capital fund to finance particularly large public projects which require intensive capitalization. This is extremely significant.

Surrounding the money issue, I think that consistency is infinitely more important in the funding stream than virtually any other

factor. Eighty percent of something, if it is consistent, we can leverage on it, we can use it. But a sharp fluctuation in the funding makes it extremely difficult to use outside of a windfall profit approach.

The CHAIRMAN. The value, of course, of the dollar in revenue sharing has gone down a bit as inflation has gone on and the money has not been increased, and yet local governments have not complained too much about that because they consistently know how much they are going to get, quarter by quarter by quarter.

Mr. LAIRD. That would be our situation as well. Consistently, we can borrow against the funds. Inconsistent, well, that is another matter altogether.

Well, the emphasis on fisheries research is also a key positive point within the proposed bill. The fishing industry is finding it more and more difficult to survive financially under the new Federal restrictions, and with severely impacted resources, and high interest rates. Help for this industry is deserved, and could help the south coast region regain some of its former prominence in the commercial fishing industry.

The Port of Coos Bay applauds your efforts and Governor Atiyeh's on behalf of the proposed offshore lease receipts sharing legislation. We support the intent and look forward to working with you to promote passage of S. 2792.

The results, as we see them, are entirely positive, and the economic value to the port district is substantial.

The CHAIRMAN. Let me ask you a question. Let us assume that this port becomes a staging area for Outer Continental Shelf development. Even if gas or oil is not discovered off the coast of Oregon, you become a staging area for manufacturing drilling rigs and handling pipe. Give me an idea of some of the impacts that you would have, and then give me an idea-while this bill will give Oregon $8 million a year, I have a feeling the capital the port would need would be greater than that, if you become a serious staging area. Give me a rough idea of what you are thinking of in terms of capital needs.

Mr. LAIRD. A serious staging area, we would take a quick blush estimate of $100 million capital required. We need extensive docks, and not the temporary docks which we see so often built, but the concrete, steel piling docks, with the appropriate grading taken care of, sewer systems laid in.

Our rail system needs to be upgraded to get out to the staging area which is most likely to be served. There is a bridge that will have to be replaced. Actually, there is probably several bridges that will have to be replaced. Heavy equipment will be required, the heavy lift cranes that will undoubtedly be required. Barge facilities would have to be worked in, too.

Probably if such a development were to occur too quickly it would be a great problem for the community to handle. It would completely swamp the community-the school system, the housing, and all the other things that would develop from having a massive, quick increase in your population.

But it is the kind of problem I think we would all love to work on, rather than the downside problems which we have been working on.

The impact would change the entire nature of the community in a positive sense. It would supply the fuel for us to break through and become a true, full-service international port, a world-class port, rather than being a world-class port-I think our claim to fame is the world's largest wood products port. But with a change of this nature, we would become, in addition to the largest wood products port, a major world-class port in a diversified sense.

The CHAIRMAN. I have said before if you look at the east coast, I have never counted them, but there must be 500 potential good ports in all those little coves and inlets. On the west coast, we only have half a dozen, of which Coos Bay is one and Astoria is another. We have, in that sense, some natural advantages in Oregon that most other areas cannot touch if we can just cross that threshold. At some place you cross it and then the momentum is all with you. The limit to this growth is almost unknown.

Mr. LAIRD. Unknown.

I might add that in our current strategy to provide the capital for the funding of the capital facilities which we recognize as being required, we are looking at revenue from our lease operations and wharfage fees to supply income which we can borrow against to fund these other projects.

Under this kind of scenario for financing, we believe we are playing a 20- or 30-year ball game to take care of what we see are the existing potential business opportunities which exist today, such as developing some of the shipping of the materials and whatnot into the Alaskan market, which is booming.

We are seeing lots of inquiries on that, and we simply do not have the capital to break into that market. The beauty of the bill that is being proposed here is it will accelerate the development of the Port of Coos Bay immeasurably.

We just could not be more appreciative and thankful.

The CHAIRMAN. Bruce, thank you very much. I have no other questions.

[The statement follows:]

STATEMENT OF BRUCE A. Laird, PRESIDENT, PORT of Coos Bay COMMISSION Senator Packwood, Governor Atiyeh, it is an honor and a pleasure to be able to present testimony before you today.

First, I would like to take the opportunity to again publicly thank you for your part in assisting the Port of Coos Bay in acquiring our now highly successful 1,000ton, 220-foot floating drydock. The drydock in the past 7 months has contributed nearly $5 million directly to the community through local shipbuilding companies, directly employed over 20 skilled craftsmen and provided shipbuilding and repair capabilities which has added greatly to the Port's reputation and continued viability as a full service Port.

We can only hope that the overwhelming public benefit of the drydock can serve as a positive example to the rest of the Senate, the House and the staff of what local, state and federal authorities can accomplish by such a cooperative approach. We feel that Senate Bill 2792 contains the economics of similar accomplishments. Bearing directly on the subject of today's hearing, the Port of Coos Bay recognizes the potential and challenge for our local, regional and statewide economy if offshore lease receipt sharing were to become a reality.

The challenge of our port system, and especially for the Port of Coos Bay, is to provide sufficient capital for shoreside development, often for projects with state and national economic and security benefits from a port district which only encompasses the local communities. The Port of Coos Bay District simply does not contain sufficient economic resources to provide for the development requirements to recognize the true economic promise of our deep draft port.

Deep draft ports are truly part of a statewide and national transportation system. Ports represent the transfer point for most of our nation's exports and imports and will make up a key part of any viable economic development strategy. Ports are deserving and will require political and financial support if they (we) are to adequately perform our job.

Currently, the on-shore mineral lease sharing program helps local communities with development impacts. Coastal off-shore leases cause similar problems for coastal areas and deserve equal consideration. We at the Port of Coos Bay view these impacts both as an opportunity and as a potential liability. An opportunity for our economically devastated area to diversify and a liability when we view local governments capabilities to provide the needed industrial and residential services; sewer, water, industrial lands and roads.

I understand the legislation contains wording requiring at least 40 percent of the funds be passed through to local governments. This is important. Local governments, port districts included, are most often directly responsible for the services I have referred to. Local governments are most aware of the needs of local industry and citizens. The financial capability of our area to provide for possible impacts to service today's needs and prepare for the future is definitely enhanced by the 40 percent pass-through requirement.

The emphasis on fisheries research is also a key positive point within the proposed bills. The fishing industry is finding it more and more difficult to survive financially under new federal restrictions and with severely impacted resources and high interest rates. Help for this industry is deserved and could help the South Coast regain some of its former prominence in commercial fisheries.

The Port of Coos Bay applauds the efforts of Senator Packwood and Governor Atiyeh on behalf of the proposed off-shore lease receipt sharing legislation. We support the intent and look forward to working with you to promote the passage of Senate Bill 2792. The results, as we see them, are entirely positive. The economic value to our Port District could be substantial.

Thank you again for the opportunity to present this testimony.

The CHAIRMAN. Next we will take Commissioner Harold Rutherford of Lane County, but appearing here today in his capacity as president of the Oregon Coastal Zone Management Association. Good afternoon, Commissioner.

STATEMENT OF HAROLD RUTHERFORD, CHAIRMAN, OREGON COASTAL ZONE MANAGEMENT ASSOCIATION, INC., NEWPORT, OREG.

Mr. RUTHERFORD. Good afternoon, Senator Packwood.

I would like to explain for the record that I am Harold Rutherford, a Lane County commissioner, but today I am representing in testimony, as Senator Packwood said, the Oregon Coastal Zone Management Association, Inc., of which I am currently the chair

man.

The association is a voluntary organization comprised of 26 local units of government, from ports, soil and water conservation districts, cities and counties. It comprises all seven of the coastal counties, all of the soil and water conservation districts, quite a few of the ports, and a large number of the cities. It is as that representative that I speak to you today.

We have a vital interest in the wise utilization of our coastal resources. This is our effort to speak to you in a unified voice in that respect.

These remarks I make today will be reflective of the vital interests that we have in the receipts sharing concept that goes back to at least March 1981, when we testified as a body in the oversight hearing on the continuation of funding to the States and local governments under section 306 of the Coastal Zone Management Act.