514 



June 30, 1983 

 -3- 



In short, seperate leasing would be fundamentally at odds 

 with the whole premise of the American OCS leasing system. The 

 Congress might consider the system in place in other countries, 

 such as Canada or Great Britain as alternatives, but it should be 

 understood that any desire to completely seperate production from 

 exploration would entail moving to a different OCS leasing 

 system. 



3. Do not allow "economic cost cutting". This requirement 

 is often explained in terms of requiring pipelines regardless of 

 cost. 



This approach sounds attractive, but it cannot be adopted in 

 the absence of the full realization that the costs which are not 

 "cut" are passed directly on to New England consumers. They are 

 not born by the oil companies. 



The question then becomes one of deciding whether consumers 

 are to be required to pay higher prices for oil and gas than they 

 would otherwise pay, or whether some risk is to be imposed on 

 Georges Bank. 



Congress may decide to impose the costs on consumers through 

 such a requirement, but it should be prepared to d"efend its 

 choice of doing so through an explicit finding that the 

 incremental reduction in risks are greater than the increased 

 costs to consumers. 



4 . Emphasize that oil and gas is only to be extracted if 

 the natural resources of the area are protected. Ignoring for 

 the time being the question of whether oil and gas are natural 

 resources, this suggestion amounts to changing the balancing test 

 of current law to a presumption against oil and gas and in favor 

 of other resources. Such a presumption may be appropriate in 

 certain circumstances, but applied universally it would radically 

 alter the basic policy set forth in the OCSLAA. 



A more appropriate change in the general balancing test 

 might be to require that the Secretary of the Interior assure the 

 maximum return to the nation from all the marine resources in the 

 areas which he leases for oil and gas. This would set a national 

 policy of attempting to make the best use of the oceans from all 

 perspectives, including both fisheries and oil. 



Choices could then be made about how to achieve best use. 

 If conflicts were ireconcilable, preference would be given to the 

 highest value resource. 



