Some notes on regulations and history. It is clear that our government failed to protect our shores.
The Basis of Offshore Legislation and Regulations
The Outer Continental Shelf Lands Act
As noted previously, the OCSLA is the primary governing legislation regarding U.S. offshore regions. When first passed in 1953 it required DOI to perform specific responsibilities in managing the OCS. An integral part of the OCSLA is the requirement that DOI manage an offshore leasing program for mineral development. In doing so DOI must ensure that the U.S. government receives fair market value for acreage made available for leasing, and it must enact regulations that guarantee resource conservation, environmental protection, and operational safety for anyone involved in the activities.
The OCSLA also stipulates that the decision makers must seek balance between potential damage to the environment and coastal areas and potential energy supply. Areas with the greatest resource potential should have greater priority for development, particularly in areas where earlier development has proven a rich resource base. For every 5-year leasing program, MMS publishes a comprehensive document detailing the information and reasoning behind the leasing decisions. If a lease block is not included in the 5-year program, it may not be leased during the program.
The Federal Oil and Gas Royalty Management Act
In 1982 Congress passed the Federal Oil and Gas Royalty Management Act to ensure that all Federal lands in the offshore have proper accounting and enforcement mechanisms. This included a comprehensive system for determining, collecting and auditing all fees and payments for offshore leases in addition to conducting inspections and enforcing penalties. The increased responsibilities led the Secretary of the Interior to create the MMS within the Department to administer all responsibilities relating to natural gas and oil production on the OCS. They range from the scheduling of sales and the leasing of
8 Energy Information Administration, Office of Oil and Gas, September 2005
OCS tracts to approval and oversight of offshore operations and the conduct of environmental studies. Today the MMS collects and disperses billions of dollars in revenue from the sale of mineral leases. Offshore leases brought in revenues of $5.2 billion in 2000. This represents 73.1 percent of the $7.1 billion in revenues collected from all Federal and American Indian mineral leases that year.
Legislation
National Environmental Policy Act of 1969
The National Environmental Policy Act, passed in 1969, requires the Federal Government to consider the environmental impacts of any proposed actions as well as reasonable alternatives to those actions. Through tools such as Environmental Assessments, Environmental Impact Statements (EIS), and Categorical Exclusion Reviews, parties who propose an offshore project can better understand and make decisions on how to manage for environmental consequences. An EIS is prepared for every lease sale held by the MMS.
Coastal Zone Management Act of 1972
The Coastal Zone Management Act was passed in 1972 based on the perceived need to preserve, protect, develop, and restore or enhance the resources of U.S. coastal zones. This Act encourages coastal States to complete an individual Coastal Zone Management Plan for their coastal areas and requires State review of Federal actions that affect land and water use in these coastal areas. The consistency clause of this Act gives States the power to object to any Federal action that they deem not consistent with their approved Coastal Zone Management Plan. The Department of Commerce is the lead Federal Department responsible for assisting States with their coastal zone management plans, reviewing and approving the plans, and conducting continuous monitoring for compliance. NOAA, within the Department of Commerce, carries out these responsibilities but the Secretary of Commerce must grant final approval to all coastal zone management plans before implementation. NOAA reported 34 of 35 coastal States and U.S. territories were participating in the program in 2003 and that 99 percent of the U.S. shoreline was covered by approved plans.
Economic Considerations
MMS collects about $6 billion dollars on average in revenue each year from the individuals and companies that lease offshore lands for natural gas and oil development. When awarded a lease through a competitive bidding process, the lease holder pays the bid bonus and then rents the right to develop the resources in that area. In addition, lease holders pay royalties to the MMS based on the value of any natural gas and oil actually produced. MMS, in turn, is responsible for the disbursement of any revenue acquired through the leasing activities to the appropriate Federal or State agencies.
Congress has passed economic legislation to deal with these amounts and the way MMS collects and manages funds derived from the sale and operation of offshore leases. The rules have had a substantial impact on natural gas and oil production in the OCS. They aim to promote production in areas where it may otherwise be prohibitively expensive to drill and to help ensure that the distribution of revenue is fair and equitable.
BONUSES OF OVER $441,000,000 was paid out in one year alone...in 2000 Gee, do you think that is a problem?
U.S. Commission on Ocean Policy
The Oceans Act of 2000 established the U.S. Commission on Ocean Policy, a bipartisan panel appointed by the President to examine current U.S. ocean policies and offer findings and recommendations for the future. The commission fulfilled its charge in September 2004 with a comprehensive report that included 212 recommendations addressing all aspects of ocean and coastal policy. Although it is far too early to discern the possible impacts of these recommendations, a few of them could have significant effects on offshore natural gas and oil exploration and production. For example, the recommendations related to offshore natural gas and oil activities include changing the structure of leasing revenue distribution so that coastal States invest in renewable ocean and coastal resources, expanding the environmental studies program operated by the MMS, and studying in more detail the appropriateness and feasibility of gas hydrate exploration and production. Throughout the report the commission emphasizes the importance of habitat protection and restoration, greater use of conservation activities, and the need to reverse trends in biodiversity reduction.
Summary
As technological advances have increasingly allowed the natural gas and oil industry to explore and produce in deeper water and from farther beneath the ocean floor over the past half-century, developments in the management of these submerged lands have aimed to balance the conflicting interests and needs associated with these activities.
The earliest laws and regulations established Federal, State, and international jurisdiction over offshore areas. In 1953, the SLA and the OCSLA defined these regions and maintained that coastal States hold the rights to any natural resources within 3 nautical miles of their coastline. The Federal Government holds jurisdiction outside of this boundary. International boundaries were established in 1983 under Proclamation Number 5030 which set the U.S. EEZ. This claimed rights for the United States to all waters up to 200 nautical miles from the coastline.
The OCSLA also set the base of how to manage these lands for natural gas and oil activities. It recognized the need to balance the potential for damage to the environment and coastal areas with the potential for energy supply. An integral component of the act is the requirement of DOI to lease offshore areas for mineral development and enact regulations to ensure resource conservation, environmental protection, operational safety, and equitable distribution of revenue. In 1982, the Secretary of the Interior created the MMS as part of the Federal Gas and Oil Royalty Management Act to administer and manage all responsibilities related to natural gas and oil production in offshore areas. |
