751 



25 



year. It is important to note, however, that the funds themselves are 

 derived from the general Treasury, not from OCS royalty and bonus 

 revenues specifically. This means that they are subject to the normal 

 budgetary and Congressional appropriation processes, as revised under 

 the Congressional iiudget and impoundment Control Act of 1974. 



The declining allocation formula under section 308 (k) applies to 

 the number of years during which any oil or gas exceeding a rate of 

 100,000 barrels per day is landed in a State or produced adjacent to 

 that State. All oil covered in each State is calculated at the same rate, 

 in any given year, starting with the first year of production or landing 

 above the minimum level. If a State exceeds a landing rate or adjacent 

 production rate of 1 million barrels (.laily, the oil or gas in excess of that 

 rate is not calculated in the automatic grant formula for that year. 



Some States may serve as landing points for OCS oil or gas even 

 though they themselves are not adjacent to OCS lands where energy 

 resources are being produced. Similarly, States may be adjacent to 

 OCS development activities, the crude product of which may be 

 landed in another State. In either of these cases, the affected States 

 will be eligible for automatic grants under section 308 (k) in an 

 amount half as great as that to which they would be entitled, accord- 

 ing to the allocation formula, if the oil or gas had been produced on 

 OCS lands adjacent to the State and also landed in that State. In the 

 event that the State adjacent to production has exceeded its one- 

 million-barrel-per-day limit, but the landing State has not (or vice 

 versa), the State within the limit remains eligible for its half of the 

 automatic grant. 



Like the grants and loans made available under the Coastal Energy 

 Facility Impact Fund, the automatic grants must be used to amelio- 

 rate adverse impacts resulting from energy resource development and/ 

 or — in this case — "related" energy facilities. $50 million annually is 

 authorized for automatic grants through hscal year 1978, after which 

 the authorization is to be sufficient to provide all eligible States with 

 grants at the formula rate. 



Senator Stevens proposed, and the Committee adopted, a third 

 option for States seeking funds to cope with onshore impacts of off- 

 shore oil or other energy-related facilities. Section 319 authorizes the 

 Federal Government to guarantee State or local bonds which are is- 

 sued for the purpose of constructing public facilities or taking other 

 measures to ameliorate adverse impacts in the coastal zone resulting 

 from energy developments. This option is attractive because it encour- 

 ages States and localities to use traditional bonding mechanisms, with 

 the additional security of a Federal guarantee, and does not require 

 Federal funds except in the (hopefully) rare instance of default. 

 States which are receiving automatic grants under section 308 (k) are 

 directed to designate the proceeds of those grants, or a portion of them 

 as needed, to the repayment or retirement of such bonds. 



The three foregoing options for States coping with coastal zone im- 

 pacts of energy development — impact funds, automatic grants and 

 bond guarantees — are, the Committee believes, a comprehensive and 

 responsible approach to meeting legitimate coastal State concerns. 

 During joint hearings with the Cx>mmittee on Interior and Insular 

 Affairs on Outer Continental Shelf development and coastal zone man- 

 agement in spring 1975, numerous witnesses expressed the view that 



