914 

 28 



The evidence is clear that some sort of assistance to states and locali- 

 ties faced with the sudden introduction of a major new industrial 

 activity such as offshore petroleum is warranted. While some urban 

 areas with hi^h unemployment and an existing base of municipal serv- 

 ices can readily absorb the arrival of a major new industry such as off- 

 shore petroleum — indeed, may welcome it— other areas are not so sit- 

 uated. Isolated rural areas such as Yakutat and Cordova, Alaska, with 

 populations of 500 and 4,000 respe<itively, will likely be altered funda- 

 mentally by the introduction of the offshore industry. Furthermore, 

 they fill be unable to provide the services and facilities which the sud- 

 den flux of workers will require. Additionally, areas such as these are 

 near prime fishing grounds and the fear of offshore oil spills or other 

 damage from the offshore exploration and development activity runs 

 high. 



It is not only small Alaskan villages which could be uprooted. A 

 study done for the Council on Environmental Quality, for instance, 

 taking the high case estimate of the reserves which might be found off 

 the Charleston, South Carolina coast produced an estimate that the 

 population of that area will double in a decade as a result of OCS 

 operations. 



There have been studies prepared for the states of Texas and Louisi- 

 ana that likewise indicate those areas have suffered net losses (income 

 generated vs. expenses required) as a result of their OCS experiences. 

 The studies have been criticized for their methodology, but serve as 

 indications that the introduction of the offshore industry is not an 

 automatic boon. 



Just as the coastal zone program itself contains a balanced approach 

 to future use of resources, providing for development where appro- 

 priate and conservation where necessary, H.R. 3981 represents a 

 balance between state and local rights and national needs. 



It contains in part of the proposed Coastal Energy Activity Impact 

 Program an automatic grant formula to compensate for OCS impacts. 

 The money is to be apportioned according to the extent of the offshore 

 activity adjacent to a particular state. 



Beyond this, the Committee provides that if a state or locality can 

 demonstrate that it has had to bear expenses or has suffered damages 

 not covered by the automatic fund for OCS operations, a second part 

 of the program will come into play. On a finding that a net adverse 

 impact beyond the compensation already provided and other avail- 

 able federal programs has taken place, additional grants would be 

 authorized. Also, this fund would be available for the limited types of 

 coastal energy facilities beyond those associated with OCS opera- 

 tions mentioned above, namely deepwater port, LNG, and coal and 

 oil loading facilities. 



While $125 million anually is provided for the second portion of 

 the fund, it may well be that only a portion will be found necessary. 

 The Committee feels this approach is fiscally responsible and is 

 responsive to the stated requirements of the affected coastal states and 

 localities. 



The preponderance of the testimony from the states during the five 

 hearings conducted this year by the Subcommittee on Oceanography 

 was not flat opposition to expanded offshore drilling. Rather, the 

 testimony was to the effect that states wanted to he involved in the 



