635 



tentially involving tens of thousands of construction workers and 

 support personnel. Much of the Outer Continental Shelf oil and/or 

 natural gas bearing lands are located off of rural or, in the case of my 

 own State, frontier coastline. 



The small towns and villages along these coasts are incapable of 

 assimilating the large influx of oil related personnel and their families. 

 Many of these commmiities will sutler a three- or four- fold increase in 

 population almost overnight. If we wait for the large influx of popula- 

 tion to occur before awarding grants and/or loans to the municipali- 

 ties for the building of roads, schools, sewers, and the like the resulting 

 hardship and chaos during the lag time will be tragic. In order to deal 

 effectively with impact as extensive as that created by an Outer Con- 

 tinental Shelf oil and/or natural gas drilling and production project 

 States and municipalities must plan ahead and be given adequate 

 front end money to build the impact compensating facilities prior to 

 the time the impact occurs. Impact related facilities can only be built 

 with great difficulty after the impact has occurred. These facilities 

 must be completed and ready for the oil worlvcrs and their dependents 

 when they arrive. Front end money is an absolute necessity for success- 

 fully dealing with the severe impacts created by the production of 

 Outer Continental Shelf oil and natural gas. 



The bond guarantee and automatic grant provisions of this bill are 

 surprisingly simple, nonrevenue sharing means for dealing with the 

 problem of front-end money for State and local governments. When 

 a State or local govermnent learns that an Outer Continental Shelf 

 energy resource project is to be commenced either within its jurisdic- 

 tion or on adjacent Outer Continental Shelf lands, the State or 

 municipality will want to take measures that will reduce, ameliorate, 

 or compensate for impact prior to its occurrance so that adequate 

 facilities will exist when the large influx of people occurs. In order to 

 obtain the front-end money for the financing of these projects. State 

 and local governments will issue bonds which could be guaranteed by 

 the Secretary of Commerce. 



Let me emphasize that. This is really a discretionary concept; be- 

 cause, under the provisions of this bill, this money would revert to the 

 Treasury, if it is not used to meet impacts that have been approved 

 under the plan or used to repay bonds guaranteed by the Secretary of 

 Commerce. I think the Secretary of Commerce will have a great deal 

 of discretion in administering tliis concept. 



The Secretary's guarantee would produce enough confidence among 

 investors to enable a small municipality to issue large amounts of 

 bonds which it would otherwise be unable to do. The Secretary's guar- 

 antee is discretionary and he is entrusted with the responsibility of 

 insuring that the projects funded by the Federal guaranteed bonds 

 are used to cope with the impact from Outer Continental Shelf energy 

 resource exploration or production. 



The automatic grants, awarded to States adjacent to Outer Con- 

 tinental Shelf lands producing oil or natural gas, or States landing 

 oil or natural gas shipped directly from the Outer Continental Shelf 

 lands adjacent to another State, are used by the State and local Gov- 

 ernments to retire the federally guaranteed bonds. The bill mandates 

 that the automatic grants be used to retire local bonds first, State bonds 



