902 

 16 



program based on a determination of "net adverse impacts", and a 

 federal bond guarantee program. 



The first federal assistance scheme included in the program is in 

 the form of an automatic payment plan. The Secretary of Commerce 

 shall make payments to each coastal state in each fiscal year based on 

 the average of six proportions relating to the level of Outer Continen- 

 tal Shelf energy activity. The six proportions would each represent 

 a ratio of the level of state activity to the level of national activity. 

 The average of the six ratios would determine the proportion of the 

 total fund allocated to each coastal state. 



By setting forth the six criteria in the first assistance program, the 

 Committee intended to reflect the level of Outer Continental Shelf 

 activity occurring adjacent to or within a coastal state based on the 

 premise that the level of activity would be closely proportional to the 

 level of impact which would result as a consequence of such activity. 



Each coastal state receiving payments under this scheme must ex- 

 pend the funds for specific purposes and in a specific order of priority. 

 First, the state shall retire any bonds which were issued and guaran- 

 teed under section 319 of the bill. First priority for retiring these bonds 

 is to be given to the retirement of local bonds. If there are no state or 

 local bonds issued and guaranteed, the state can then use the funds for 

 purposes of planing for and carrying out projects which are required 

 as a result of Outer Continental Shelf energy activities. The third and 

 final purpose for which the state could expend the funds is to reduce 

 or ameliorate any loss of ecological or recreational resources which 

 were caused by Outer Continental Shelf energy activities. 



Any money provided to a state and not spent or not committed for 

 purposes authorized is to be returned to the Treasu^\^ The Secretary 

 of Commerce shall be responsible for determining this each year by 

 utilizing the auditing provisions of section 313 (as redesignated) of 

 the Coastal Zone Management Act of 1972. 



The authorized level of funding for the automatic grant section 308 

 (a) commences with $50 million in fiscal year 1977 and escalates incre- 

 mentally to $125 million in fiscal year 1981. The Committee adopted 

 the escalating authorizations approach since the fund is intended to be 

 one which will benefit all of the affected coastal states. As new "fron- 

 tier" areas such as Alaska and the Atlantic Coast States begin to enter 

 into the exploration and development phases of OCS activity, the fund 

 will increase to permit a more equitable distribution of funds to such 

 states. 



In the version of H.R. 3981 originally approved by the Subcommit- 

 tee on Oceanography, direct assistance was restricted to OCS impacts 

 only. The Senate version of this bill, S. 586, on the other hand, pro- 

 vides coverage for a broad range of energy facilities which might have 

 impacts on the coasts. 



The Committee after much deliberation came to the conclusion that 

 a middle position between these two approaches was the most equitable. 

 Direct assistance is provided for a limited number of energy facilities 

 in addition to those associated with the offshore petroleum industry in 

 the "net adverse impact" portion of section 308. 



The second assistance program (section 308(b)) in the bill deals 

 with "coastal energy activities." The primary criterion on which the 



