lieve will provide coastal States and affected communities with their fair share of OCS revenues.

One, only coastal States affected by OCS activities should receive a share of OCS revenues. This can be accomplished by relating a State's share of OCS revenues to the level of leasing and production from the adjacent OCS and to the OCS oil and gas first landed in the State.

Two, the funds available for sharing should be a percentage of annual OCS revenues. They should not be dependent on periodic congressional appropriation. Further, the calculation of these funds should not be tied to a base year.

Third, some of the shared revenues should go to the States to be distributed at their discretion. A State should pass down a substantial share to potentially affected local communities to be available for their use in preparing for OCS impacts.

Finally, we believe that affected States should not be penalized because they do not have approved coastal zone management programs.

Our submitted comments reflected the following concerns with H.R. 5. These are:

One, the bill limits the shared revenues for any year to the lesser of $300 million or an amount equal to 10 percent of the amount by which OCS revenues exceed the base year. The 1982 revenues were $7.6 billion. Early this year Interior estimated revenues for 1983 to be $11.8 billion. We believe there is a likelihood that the 1983 revenues will be less as a result of recent and impending price cuts. Depending on the severity of the price cuts, little or no revenues would be available for sharing under H.R. 5. We believe that States supporting OCS activity should be assured of their participation in OCS revenues by setting aside a fixed percentage of these revenues for the State.

Second, the proposed formula for revenue sharing allocates 80 percent of the shared revenues on the basis of factors which may not reflect the level of the State's involvement with OCS activities. First, the formula gives 20 percent consideration to a State's coastal population and 20 percent consideration to its shoreline mileage. We see no relationship between either population or length of coastline and the level of OCS activity. A coastal population factor allows more credit to Milwaukee, which is a thousand miles removed from the OCS, than to Santa Barbara County, which directly offsets the center of OCS activity in the Pacific region.

Also, coastline factors allow Michigan more credit than Louisiana. Further, Texas, which has over 2,400 wells drilled in its OCS but does not have an approved coastal zone management program, will not be eligible to participate in the 40 percent of the revenues shared on coastline or population factors because these factors apply only to States with approved coastal zone management programs.

Our second concern with the formula is that it allocates 20 percent of the shared revenues on the basis of number of coastal-related energy facilities, including facilities not related to OCS activity, such as electric generating plants. We believe the location of an electric generating plant is inappropriate for consideration in any

OCS revenue-sharing program which is designed to reflect OCS impact.

Third, the formula gives 20-percent credit for the number of lease-sales but only 10 percent weight for the amount of leased acreage. We suggest that leased acreage should be given greater weight than scheduled sales. Leased acreage produces OCS revenues and confers the right to explore and produce. Scheduling sales does neither.

Finally, we question the requirement in H.R. 5 that specifies that a State's share shall be used to fund various Federal programs. We believe States are capable of deciding how their revenues should be best spent to benefit their people. Instead of funding Federal programs, we would like to see some portion of the shared revenues passed down to local communities for projects relating to OCS exploration and development.

This concludes my summary. I will be happy to answer any questions you have.

Mr. D'AMOURS. Thank you very much.

[The statement of Margaret Rourke follows:]

PREPARED STATEMENT OF MARGARET C. ROURKE, CHEVRON U.S.A. INC. ON BEHALF OF THE WESTERN OIL AND GAS ASSOCIATION

My name is Margaret Rourke. I am employed by Chevron U.S.A. Inc., one of the member companies of Western Oil and Gas Association. I am appearing today on behalf of WOGA, a petroleum trade association whose members explore for, develop and market oil and gas in the seven western states of Alaska, Arizona, California, Nevada, Washington, Oregon, and Hawaii.

Offshore of these states are:

1. 1,600 wells,

2. Over 51 percent of the OCS lease sales and 54 percent of the acreage proposed for leasing in the current OCS Five-Year Leasing Program, and

3. The only two commercial oil fields discovered in the OCS outside the Gulf of Mexico, including the highly publicized Point Arguello Field which is believed to be the most significant domestic oil discovery since Prudhoe Bay.

Our WOGA members strongly support the OCS leasing program and are ready to fully explore and develop its offshore resources. But in many cases our efforts have been blocked by the opposition of state and local governments. This is certainly true in my home state of California. California initiated suits opposing the OCS five year leasing program and every major OCS lease sale proposed off California since 1968. Its Coastal Commission is currently on record opposing offshore leasing along more than 80 percent of its coastline. Most recently this Commission exercised its consistency certification authority to block the drilling of a well on an OCS lease for which the lessee paid the Federal government over five million dollars.

In the past year, my company, Texaco, Phillips and other participants began planning for development of the Point Arguello field which we discovered last year. Our schedule of development will allow us to go on production in early 1986 provided we receive necessary and timely approvals from all involved agencies, including the State of California, and Santa Barbara County. Obviously, my Company is vitally interested in assuring that our plan for the Arguello field onshore installation is processed expeditiously so that we can meet our schedule.

We believe that a properly constructed OCS revenue sharing proposal will help provide incentives for state and local communities, including Santa Barbara County, to support OCS activity and will further a cooperative and supportive partnership among the state, local communities and Federal Government on offshore drilling. For this reason, WOGA members generally support the concept of OCS revenue sharing. We recommend the following provisions which we believe will provide affected coastal states and communities with their fair share of OCS revenues.

1. Coastal states affected by OCS activities should receive a share of OCS revenues. A state's share of OCS revenues should be related to the level of leasing and production from the adjacent OCS and to the OCS oil and gas first landed in the state.

2. The funds available for sharing should be a percentage of annual OCS bonuses and royalties and not subject to any periodic Congressional appropriation process. The calculation of these funds should not be tied to a base year.

3. Some of the shared revenues should go to the states to be distributed at their discretion. A state should pass down a substantial share to potentially affected local communities and counties to be available for their use in preparing for OCS energy development

4. Affected states should not be penalized because they do not have approved coastal zone management programs.

WOGA'S POSITION ON H.R. 5

Our members are concerned about the following provisions in this bill. We do not believe these provisions will further our underlying objective of assisting coastal states and local communities to prepare for OCS exploration and development.

1. The bill limits the shared revenues for any year to the lesser of $300 million or an amount equal to 10% of the amount by which OCS revenues exceed the 1982 base year. 1982 revenues were $7.6 billion. Early this year, Interior estimated revenues for 1983 to be $11.8 billion (revised downward from $18 billion) and for 1984 to be $11.9 billion. There is a likelihood that the 1983 and 1984 revenues will be less as a result of recent and impending crude oil price cuts. Depending on the severity of the reduction in prices, little or no revenues would be available for sharing under H.R. 5. We believe that states supporting offshore activities should be assured that they will participate in OCS revenues by setting aside a fixed percentage of these revenues for the state. Such a provision would be consistent with the revenue sharing provisions for onshore Federal lands.

2. The proposed formula for for revenue sharing is extremely complex and in many important respects appears inequitable because it allocates 80 percent of the shared revenues on the basis of factors which may not reflect OCS impacts as hereafter discussed. We do not believe such a formula will provide the appropriate incentives for states affected by OCS activities to support new production off their coastlines.

This bill allocates shared funds (after deducting the 10-20 percent which the Secretary of Commerce elects to set aside for the National Sea Grant College Program) under a formula which gives 20 percent consideration for a state's coastal population and 20 percent consideration for its shoreline mileage. We see no relationship between either population or length of coastline and impacts of OCS activities. A coastal population factor over compensates heavily populated coastal states and allows more credit for the population of Milwaukee which is 1,000 miles removed from OCS activities than for Santa Barbara County which borders the center of OCS development in the Pacific Region. Similarly coastline factors allow Michigan more credit than Louisiana.

Further Texas which does not have an approved coastal zone management program but has had 2,439 wells drilled in its adjacent OCS area will not be eligible to participate in the 40 percent of shared revenues allocated on shoreline or coastal population factors because these factors apply only to states with approved coastal zone management programs. In contrast, the Commonwealth of Puerto Rico, the Virgin Islands, Guam and the Northern Mariana Islands which have approved coastal programs will share in the 40 percent of the revenues which are allocated on coastal population and shoreline factors although the United States does not own any oil and gas resources which might be offshore of these territories. We do not believe participation in a coastal zone management program or in any Federally approved voluntary program should be a factor in determining the amount of a state's share of OCS funds.

Further, the bill allocates 20 percent of the shared revenues on the basis of the number of coastal related energy facilities, including electric generating plants, coal facilities, alternative ocean energy facilities and other facilities not related to OCS activity, which are located within a coastal state within a given year. The location of such unrelated energy facilities does not reflect OCS impacts and is inappropriate for consideration in any OCS revenue sharing scheme which is designed to compensate for such impacts.

Also, the formula gives 20 percent credit for the number of OCS lease sales within a coastal state's adjacent planning area which are scheduled to occur under the OCS leasing program but only 10 percent weight for the amount of acreage leased within the state's adjacent OCS planning area.

We suggest that leased acreage should be entitled to greater weight than scheduled sales. Leased acreage provides OCS revenues and confers the right to explore

and produce oil resources. Scheduling sales does neither. To encourage a state's support of OCS operations we recommend increasing the influence of leased acreage on a state's allocated share of revenues.

3. We believe that each state is capable of deciding how its share of OCS revenues would best benefit its people. We question the requirement in H.R. 5 that specifies that a state's share shall be used to fund various Federally conceived programs.

The problem that arose with permitting of an exploratory operations support base in San Luis Obispo County in central California provides an excellent example of how OCS revenue sharing could enhance exploration and development of the outer continental shelf. During the multi-year study process leading to Sale No. 53 in May of 1981, it became obvious that drilling off San Luis Obispo County would require a local base for crewboats, even in the exploratory phase. The nearest such base was 75 miles away near Santa Barbara. At a small local harbor, Port San Luis, plans for moderate expansion were stalled by the Coastal Commission and by lack of funds. When Sale No. 53 was held the federal government netted two-and-a-quarter billion dollars from leases off or near San Luis Obispo County. A hasty proposal for expansion of Port San Luis was rejected by the county and the Coastal Commission largely due to the lack of prior study by county planners. Drilling began off San Luis Obispo County in March of 1982. Fifteen exploratory wells have been drilled and five weeks ago a commercial discovery was announced just 15 miles south of Port San Luis. Crews are rotated to and from the drillship by helicopter; when adverse conditions preclude flying, the trip by crew boat requires 4 to 5 hours each way.

A group of volunteer citizens in San Luis Obispo County recently began a crewbase siting study. If it recommends this site, the county supervisors will need funds for detailed planning of the facilities. This is the planning which would better have been completed two years ago. An OCS revenue-sharing program should ensure that local governments such as San Luis Obispo have access to funds for projects such as this. We therefore suggest that some proportion of the funds allocated to each state should be passed along to local governents in coastal counties and communities, for projects related to OCS exploration and development.

In Alaska, the desirability of a pass-through of OCS revenues to local communities is especially evident. In the aftermath of OCS lease sales off various parts of Alaska, some coastal communities may need to expand facilities at their harbors or airstrips. A well-designed revenue-sharing program would ensure that such local communities have access to a share of OCS revenues for projects such as these.

Let me end my comments on this encouraging note. A well-designed revenue sharing program should reduce state and local opposition to OCS leasing and development. This in turn could lead to larger total bonus and royalty payments which would offset any loss in Federal revenues from a revenue sharing program. More important, the upturn in OCS activities expected from revenue sharing would increase our country's domestic oil supply, provide jobs and stimulate local economies, reduce the unfavorable balance of trade and further our national security interest by reducing our countries dependence on foreign oil.

Mr. D'AMOURS. Because Mrs. Boxer has an unavoidable scheduling conflict that she must rush off to attend, I will yield my opening question time to Mrs. Boxer.

Mrs. BOXER. Mr. Chairman, I really appreciate that.

I would like to point out that in your written statement it starts off, "Our WOGA members strongly support the OCS leasing program," and in your oral statement you said, "We generally support the offshore leasing program." I just wanted to point out that that is a substantial change, I think, in sentiment.

Does your membership strongly support the OCS leasing program or generally support it?

Mrs. ROURKE. I think that our organization supports OCS leasing.

Mrs. BOXER. Strongly or generally?

Mrs. ROURKE. Strongly and generally.

Mrs. BOXER. That is fine.

That clarifies it, Mr. Chairman.

You do spend a lot of time in your written testimony talking about my State of California. You say that, "In many cases our efforts have been blocked by the opposition of State and local government." Coming from a local government that strongly opposed, and was successful in court with the many other coastal counties and the State in stopping some of the tracts from being leased, let me ask you this: You criticize this in this report. Do you feel that State and local government have a legitimate interest in offshore oil drilling when they have great economic interest to protect, such as a fishing industry, a tourist industry, national parks, and so on? Do you think that there is a legitimate interest there?

Mrs. ROURKE. I think the States have a legitimate interest to protect. I think that is recognized in the coastal zone management program.

I think that your district has a very legitimate interest to protect in jobs in the Kaiser Steel Yard at Vallejo, in which the people there are engaged exclusively at this point in working on components for offshore drilling.

Mrs. BOXER. I am very aware of that, but it has nothing to do with this. That is 400 jobs that are going very well. It has nothing to do with this particular testimony, as I see it.

As you know, in California we do feel we have areas that can be legitimately drilled. You say that, "We are on record as opposing 80 percent of our coastline." What percentage of our coastline do you think we ought to open up to offshore oil drilling in the State of California?

Mrs. ROURKE. I think our record, our safety record, offshore—— Mrs. BOXER. I did not ask that. What percentage of our coastline do you think

Mrs. ROURKE. A hundred percent. I have no problems whatsoever with that.

Mrs. BOXER. Therefore, you are in full agreement with Mr. Watt on that, that you think 100 percent of the California coastline ought to be opened up to offshore oil drilling?

Mrs. ROURKE. I would have no problem with that, no.

Mrs. BOXER. OK. You criticize in your statement the California Coastal Commission for its actions in blocking offshore oil drilling. Did you know that the Coastal Commission was put into place by a vote of the people of California?

Mrs. ROURKE. Well, yes, of course.

Mrs. BOXER. Do you know what that vote was that set up our coastal act and the California Coastal Commission in the State? Are you aware of the yes vote on that proposal?

Mrs. ROURKE. Are you talking-oh, yes. Go ahead.

Mrs. BOXER. Well, I just wanted to know if you knew what that

was.

Mrs. ROURKE. That was some time ago, but I don't think that the present actions of the Commission are necessarily reflective of public sentiment in California.

Mrs. BOXER. I would like to point out that the people in California supported the formation of the Coastal Commission by an overwhelming vote somewhere in the 60 to 70 percent range, and there has been no move to repeal that act at all. I think it is very important that WOGA understands that the opposition to some of the