1038 



duction of, energy, resources or resulting from the location, construction, expan- 

 sion, or operation of a related energy facility and/or for projects designed to pro- 

 vide new or additional public facilities nad public services whch are related to 

 such exploration, development, production, location, construction, expansion, or 

 operation, except that such grants shall initially be designated by each receiving 

 State to retire State and local bonds, if any, which are guarnateed under section 

 316 of this Act. . . ." 



Pursuant to Subsection (e), a state was required to refund to the Federal 

 treasury any unexpended funds, but neither machinery for monitoring of state 

 expenditures was provided nor was a time limit for state expenditures provided. 



We believe the language as reflected in the Congressional Record involving our 

 colloquy is clear and unmistakable. ( See attached exhibit C) 



III. CONFERENCE KEPORT 



Even prior to Thursday's meeting, the Conference Committee had very sub- 

 stantially eroded both the concept of and funding of tlie impact grant fund — 

 at least insofar as Louisiana was concerned. A comparison of the 1975 text with 

 the "pre-Thursday text" shows the extent to which Louisiana has lost. 



Speciflcally : 



(1) Under the 1975 legislation, a state's share was determined by oil produced 

 adjacent to or landed in a coastal state. Under tlie "pre-Thursday text," that 

 share was to be only % determined by production and landing. The other % was 

 to be measured in acreage "newly leased" and the number of individuals who ob- 

 tained "new employment" as a result of "new or expanded outer continental shelf 

 energy activity." 



(2) The uses to which this money could be applied had been greatly circum- 

 scribed in the "pre-Thursday text." But, a state could still use the money to pro- 

 vide "new or improved public facilities and public services which are required 

 as a direct result of outer continental slielf activity." The amendment further 

 stipulated that the Secretary could not disapprove plans relating to liighways 

 and secondary roads, docks, navigation aids, fire and police protection, water sup- 

 ply, waste collection and treatment (including drainage), schools and education, 

 and hospitals and health care. 



As you know, the latter "must approve" category was designed to salvage what 

 use Louisiana had left of the formula impact grant funds. 



The change in the formula, with its two-thirds emphasis on new and expanded 

 production and new OCS jobs, would virtually write Louisiana out of much of 

 the funds. There are already over 10,000 holes in the Gulf and billions of dollars 

 of federal production in the OCS off the coast of Louisiana. This production has 

 already peaked and is dropping. The impact of dropping economic activity and 

 its accompanying decrease in employment is a much more severe impact than 

 that from expansion — particularly in a state which is 41st in per capita income. 



The final "Catch 22", of course, occurred in the Thursday meeting. The sole 

 effect of this meeting was to write Louisiana the rest of the way out of the 

 formula impact grants. It did so by requiring that the grants be : "necessary, 

 because of the unavailability of our adequate financing under any other sub- 

 section, to provide new or improved public facilities and public services which 

 are required as a direct result of new or expanded outer continental shelf 

 activity." 



The "automatic formula grants" are no longer "automatic," as provided in 

 our earlier compromise, and the funds can no longer be used for broad OCS re- 

 lated impacts, as in our earlier compromise, but apparently must only be used 

 for impacts attributable to "new or expanded OCS activity." 



Financing is, in fact, provided under other subsections of this bill for each 

 use described in the grant section, except tlie retirement legerdemain gives a 

 state a grant only if it cannot borrow the money, wliile at the same time pro- 

 viding that a state can borrow the money from the Federal government. Appar- 

 ently the formula grant funds can only be used, particularly for public facilities 

 and public services, when a state has already exhausted the loans made available 

 by the Federal government. 



The loan provisions of this Act are virtually useless to Louisiana. Tliese pro- 

 visions are designed for a state whose energy production in the OCS is just be- 

 ginning — such as Alaska or some of the East Coast states. The judgment of 

 whether an adverse impact is wholly or partially attributable to "new and 

 expanded" OCS activity as opposed to ongoing OCS activity off the coast of 



