928 

 42 



New subsection (m) defines "local government" as a political sub- 

 division of a coastal state if the subdivision has the authority to levy 

 its own taxes or if it provides any public service which is financed in 

 whole or in part by taxes. 



New subsection (n) defines "net adverse impacts" and was contained 

 in a substitute amendment proposed by Representatives Murphy and 

 du Pont and accepted by the full Committee during markup. This 

 concept had not been defined in the Senate Bill (S. 586), nor in the 

 original version or the September 29 or October 18 Committee Prints 

 of H.R. 3981. Because of the importance to the administration of the 

 impact grants under section 308(b) and some confusion which sur- 

 rounded it, the Committee felt it appropriate to specify this concept. 



Essentially, net adverse impacts occur when the beneficial conse- 

 quences of a "coastal energy activity" (defined in subsection 304(o)) 

 are outweighed by the economical or ecological costs of such an activ- 

 ity. This cost-benefit calculation is to be made only on activities which 

 occur in or significantly affect a state's coastal zone, only on conse- 

 quences which are directly related and in the same general location 

 and according to the administrative criteria specified in section 308 (c) . 



In terms of the comparability of the consequences, it is important 

 to note that the phrase in the definition "when weighed against the 

 benefits of a coastal energy activity which directly offset such costly 

 consequences" is intended by the Committee to preclude the consid- 

 eration of some distant benefit in the state as an offsetting variable 

 against a localized cost. 



Two examples of net adverse impact calculations are included in 

 the definition. First, additional or expanded public services or public 

 facilities which are required because of coastal energy activity- induced 

 rapid and significant population changes or economic development 

 would be the "costs" in the net adverse impact calculation. The gen- 

 eration of taxes through the state and local government's usual and 

 reasonable revenue raising structure — taxes which will accrue from 

 the population chanares or economic development " — would be the 

 "benefits." The availability of other Federal funds which could be 

 used to offset the costs, including the OCS payments authorized in 

 subsection 308(a), would also be considered benefits. The extent to 

 which the "costs" exceeded the "benefits" would constitute a net 

 adverse impact. 



Second, another cost would be the unavoidable loss of unique or 

 unusually valuable ecolosrical or recreational resources as a result of 

 coastal energy activity. This is intended to include not only existing 

 resources of this nature but also those ecological or recreational areas 

 of potentially unique value which could be endangered by the location 

 and operation of energy facilities. In fact, it is hoped that existing 

 ecological or recreational areas will, to the maximum extent possible, 



"The Committee added the phrase "economic develonment" during markup to reflect its 

 belief that no one economic indicator, such as population chance, adeouatelv measures the 

 subtlety of Impact. The Committee was concerned that the use of population as the sole 

 criterion would overlook the considerable amount of Rovernmental services rendered to 

 Industr.v itself : the fact that such services to industry and individuals niljrht not take place 

 in thf, state of the individual's residence : the relative governmental expense of serving 

 capital Intensive enercrv activities with roads and canals and port facilities : and the evi- 

 dence from the Gulf of Mexico that the demand for povernmental services is not diminished 

 mierely beep use population is not chantrinir. Additionally, since the Committee did not intend 

 that the Secretary encacp in criticism of the tax structure adopted by any State. It has 

 prefaced the terms "usual and reasonable means of generating state and local revenues" 

 with the word "Its". 



