This Year of the Ocean document was prepared as a background discussion paper and does not necessarily reflect the policies of the U.S. Government or the U.S. Government agencies that participated in its preparation.

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A resolution adopted by the members of the United Nations proclaims 1998 as the International Year of the Ocean. The objective of this resolution is to focus the attention of the general public, governments, and decision makers on the importance of the ocean and marine environments as resources for sustainable development. In keeping with this focus, the Ocean Principals Group, an ad hoc group of federal government agencies with ocean research and management responsibilities, established three primary goals:

The purpose of this paper is to highlight the importance of domestic ocean energy and mineral¹ resources to the national economy and welfare. For example, although technological advances continue to enhance cost-effective recovery of ocean oil and gas resources, long-term development should be considered within a national energy policy that balances concern for the environment with energy security for present and future generations. Many resource development issues remain to be discussed among all stakeholders—federal, state, and local governments, industry, and the general public. Among these issues are Outer Continental Shelf leasing moratoria, royalty relief, revenue sharing with and impact assistance to coastal states, marine mineral mining, and environmental protection. It is important that stakeholders be actively involved in the process so that these important ocean resources are developed in a reliable, safe, and environmentally sound manner.

During this Year of the Ocean, it is important to evaluate the role of ocean energy and mineral resources to the United States and its citizens. To maintain a reliable and cost-effective supply of oil, natural gas, and other minerals from the ocean, the United States must move from conflict to consensus among all stakeholders. This paper presents issues and ideas for discussion at Year of the Ocean symposia and is intended to serve as a catalyst for important policy decisions that need to be made to ensure a sound energy future and economical and environmentally safe recovery of energy and non-energy mineral resources from the seafloor.

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¹The term "mineral" as used in this paper refers to hard minerals found on and in the seabed; examples are sand, gravel, and shell resources; metals such as manganese, gold, titanium, and polymetallic deposits; sulfide deposits; and phosphates.

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INTRODUCTION

The United States has sovereign rights over the exploration and development of non-living resources, including oil and gas, found in the seabed and subsoil of the continental shelf, which is defined to extend to 200 nautical miles from its coast or, where the continental margin extends beyond that limit, to the outer edge of the geological continental margin. This claim, made under the Truman Declaration of 1945, is confirmed in the 1982 Convention on the Law of the Sea. Currently, about 27 percent of the natural gas and 18 percent of the oil produced in the United States is from the federally managed Outer Continental Shelf (OCS).

The development of the OCS is projected to increase substantially over the next few years. Oil production in the Gulf of Mexico is expected to reach a level of 1.9 million barrels per day by the year 2000, with natural gas production at between 12 and 17.2 billion cubic feet of gas per day. Meanwhile, the federal government collects an average of $3 to 4 billion annually in bonuses, rents, and royalties from oil and gas-producing companies for OCS oil and gas leases. These funds are distributed to the general treasury, the Land and Water Conservation Fund and the National Heritage Fund. These conventional hydrocarbon resources will continue to be an important source of energy, revenue, and employment for the United States well into the next century.

The offshore oil and gas industry, in operation since 1947, has made significant progress in establishing a strong human and environmental safety record. Approximately 85,000 Americans are employed directly in the offshore oil and gas industry, with an equal number employed in supporting jobs. Technological advancements have substantially reduced hazardous working conditions and environmental impacts over what they were a few decades ago. Additionally, new technologies have enabled industry to identify and develop new reserves, both in shallow and deep water. In 1995, Congress passed the Deepwater Royalty Relief Act, which provided new economic incentives to industry to develop deep water areas in the Gulf of Mexico. The Act has contributed to a significant increase in the number of tracts leased and aggregate bonuses received, and it has spurred a surge in employment in the OCS oil and gas industry and supporting services.

The U.S. offshore energy resources are now being produced in water as deep as 5,376 feet using subsea systems. By the turn of the century, this production capability will extend to even greater water depths. However, development of these deep water resources presents new challenges, both technologically and environmentally. These include working under harsh conditions, geohazards, and dealing with irregular ocean bottom relief features. Moreover, deep water resource development places increased demands on coastal ports and communities for facilities and services.

In terms of potential alternative energy resources from the ocean, the vast deposits of methane hydrates found in deeper oceanic areas offer the greatest hope for future economical recovery and production. While technology exists for harnessing renewable and non-hydrocarbon energy sources such as tidal and wave power or thermal stratification, these energy sources

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are not now economically viable. However, they may become sources of energy in the future as technology advances, conventional hydrocarbons become depleted, and concerns for global climate change continue.

The ocean seafloor contains vast deposits of sand and gravel, phosphorites, and other minerals that are useful¾ both for public works and commercially. In recent years, severe coastal storms have caused rapid erosion of beaches and barrier islands. Maintaining beaches for tourism is an economic necessity for many coastal communities. Nearshore and offshore sand deposits are becoming important sources for beach renourishment by eastern seaboard coastal communities, and such resources are also being considered for barrier island restoration. Around the world, sand and gravel (marine aggregate) find extensive use in construction and account for the largest tonnage of minerals produced from the ocean. Industry is looking more and more to the ocean for these critical building materials as land supplies of sand and gravel are depleted. Marine aggregate is also used for capping contaminated sediments in estuaries, harbors, and waste dumps. As demand for these resources increases, policies and procedures must be developed to ensure their timely availability in a manner consistent with sound environmental practices.

Marine mining of strategic minerals such as manganese, gold, titanium, and other metals has not been economically viable in the United States. However, mineral extraction in marine areas is expected to begin long before land deposits become exhausted because of issues surrounding land-use priorities, clean-water requirements, and environmental considerations. Technology to extract these minerals economically is being developed, and policies for ocean mining will need to be considered.

The appendix to this paper provides an extensive overview of the federal laws and authorities for ocean energy and mineral resources. A more cursory presentation will be provided here. ""It should be noted at the outset that the term "Outer Continental Shelf" (OCS) is a legal delineation created by federal statute and is not the same as the continental shelf that is defined in the 1958 Geneva Convention on the Continental Shelf. Legally, the OCS comprises that part of the continental margin adjacent to the United States that remained subject to federal jurisdiction and control after enactment of the Submerged Lands Act of 1953.

The Submerged Lands Act established state jurisdiction over offshore lands within 3 miles of shore (or 3 marine leagues for Texas and the Gulf coast of Florida). The Act also reaffirmed the federal claim to the OCS, which consists of those submerged lands seaward of state jurisdiction, and limited states’ claims to inside the landward boundary of the OCS.

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The Outer Continental Shelf Lands Act established federal jurisdiction over submerged lands on the OCS and gave the Secretary of the Interior responsibility for administering energy and non-energy mineral exploration and development on the OCS. Additionally, it gave the federal government a mandate to develop OCS resources, explicitly stating that there was "an urgent need for further exploration and development of the oil and gas deposits of the submerged lands of the Outer Continental Shelf." It authorized the Secretary to lease the federal OCS for mineral exploration, development, and production and provided for limited state involvement.

The Outer Continental Shelf Lands Act amendments of 1978 included many new provisions such as consultation with coastal states and other interested parties, environmental assessment, studies programs, planning, remedies and penalties, and a process for developing leasing schedules in 5-year increments. While they include requirements for coordination and consultation with state and local governments concerning OCS activities, the amendments retained the Secretary of the Interior’s broad discretion in managing OCS resources. The national purposes and policies set forth in the 1978 amendments recognize the dual goals of environmental protection and expedited exploration and development.

On March 10, 1983, U.S. President Ronald Reagan signed Proclamation 5030, which established the U.S. Exclusive Economic Zone. This consists of those areas adjoining the territorial sea of the United States, the Commonwealth of Puerto Rico, the Commonwealth of the Northern Mariana Islands, and U.S. overseas territories and possessions. The U.S. Exclusive Economic Zone extends up to 370 km from the U.S. coastline. About 15 percent of this area lies on the geologic continental shelf and is shallower than 200 meters.

The 1985 OCS Lands Act amendments resolved a dispute over how the federal government shares nearshore revenues with affected states, as required in section 8(g) of the OCS Lands Act. The amendments mandated that 27 percent of all revenues from production within 3 miles seaward of the federal-state boundary be given to the states. They also set a schedule for distribution on revenues placed in escrow pending settlement of any jurisdictional disputes between the federal and state governments.

The 1994 OCS Lands Act amendments authorized the Secretary of the Interior to negotiate agreements (rather than conduct a competitive lease sale) for sand, gravel, and shell

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resources for use in projects undertaken by federal, state, or local governments for shore protection and beach or coastal wetlands restoration, or for use in other types of construction projects that are wholly or partly funded, or authorized, by the federal government.

Access to OCS hard minerals for purposes other than those specified in the amendments continues to be addressed through the competitive bidding process by granting a lease to the highest bidder for the extraction and use of any mineral.

Federal Agency Responsibilities

The Secretary of the Interior designated the Minerals Management Service (MMS) as the regulatory agency for managing mineral resources on the OCS. One of MMS’s goals is to ensure safe, environmentally sound operations during the production of oil, gas, and minerals from the OCS. This agency accomplishes that goal through a strong regulatory program while supporting research in offshore safety, oil-spill containment and cleanup, structural integrity, and blowout prevention. The continuation of these responsibilities plays a key role in protecting the ocean and ensuring safe, environmentally sound oil and gas development from the OCS.

History of Ocean Oil and Gas Development

This year marks the 51st anniversary of offshore oil and gas production. In November 1947, a discovery was made off the Louisiana coast, 12 miles from shore in water 16 feet deep. This represented the first successful commercial development to be made out of sight of land. It was also the first offshore well drilled from a mobile platform, thus initiating the technology that has subsequently been used to drill more than 20,000 offshore oil and gas wells in the submerged lands off the coasts of the United States. Previously, nearshore development was an extension of onshore fields and technology. The earliest nearshore production in the United States was off Summerland, California, in 1896, and was part of an onshore field. These early nearshore wells were drilled from wooden piers extending out from the shoreline. The next milestone occurred in the Gulf of Mexico in 1938 when a discovery in the Creole field, 1.5 miles from shore in 26 feet of water, marked the petroleum industry’s first successful venture into open, unprotected waters.

The need for production capability in deeper water depths further offshore has pushed the industry to develop new and better equipment and techniques. Conventional steel-jacketed production platforms stand in as much as 1,198 feet of water off the coast of southern California and in 1,350 feet off the Louisiana coast. In 1984, the drillship Discover Seven Seas drilled an exploratory well in 6,952 feet of water off the coast of New Jersey. In the often ice-bound waters of the Arctic, drilling units have evolved from single use artificial gravel islands to specially designed multi-use caisson-retained islands and ice-resistant mobile units of more conventional design. Historically, the 1,000 feet water depth barrier for installation of production platforms

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was broken in the Gulf of Mexico in 1976; recently, an exploration well in the Gulf has been drilled in 7,600 feet of water.

Since the enactment of the OCS Lands Act in 1953, outer continental shelf oil and gas production has increased greatly and contributes significantly to the total U.S. domestic production. In 1996, this production reached 18 percent of total domestic oil production and 27 percent of gas production. Between 1953 and 1995, the outer continental shelf has generated more than $110 billion in federal revenues. These contributions may be expected to continue to increase since the OCS is estimated to contain about 19 percent of the nation’s proven gas reserves, 15 percent of the proven oil reserves, and more than 50 percent of the nation’s remaining undiscovered oil and gas resources.

The federal OCS oil and gas program has provided significant benefits to the United States by helping to address its energy needs, contributing to its economic well-being, and by providing an important source of revenues for the U.S. Treasury. It is estimated that more than half of the nation’s undiscovered oil and gas lies on the outer continental shelf; thus, offshore energy resources may play an even more important role in meeting U.S. energy needs in the future. Currently, the United States imports about one-half of the petroleum necessary to meet its energy needs, and the Department of Energy projects this level will reach 61 percent by 2015.

The success of deep water exploration and development in the Gulf of Mexico, largely due to advances in 3-dimensional seismic and production technology, is reversing the long-term decline in domestic oil production. By the end of 1996, there were 26 rigs drilling in water depths greater than 1,000 feet, which compares with 9 such rigs in 1990. Oil production from the Gulf of Mexico increased by 10 percent in 1995, and most of the U.S. oil and gas reserve additions from new field discoveries (79 percent and 70 percent, respectively), and from new reservoir discoveries in old fields (91 percent and 68 percent), were in the Gulf.

The oil and gas industry employs tens of thousands of American workers. The average salary and benefits for workers of producing companies employed as a direct result of activity in the Gulf of Mexico was estimated to be $52,580 in 1992. Since then, a shortage of skilled labor due to the recent boom in industry activity has pushed earnings even higher. In addition to payroll expenditures, producers pay several billion dollars each year to vendors and contractors who support OCS activities. Expenditures by producing companies on employees, equipment, and support services in turn result in additional spending in communities near outer continental activities and throughout the nation. To cite some specific examples, Shell’s Auger project involved contractors in 30 states, and work on the Rowan No. 4 jack-up drilling rig involved contractors in 43 states.

Bonus bids, rents, royalties, and other revenues paid to the federal government for the rights to explore for and produce OCS energy resources average between $3-4 billion annually. Total revenues (unadjusted for inflation) are well above $110 billion since passage of the OCS

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Lands Act in 1953. Of the OCS revenues collected each year, up to $900 million is deposited in the Land and Water Conservation Fund (for state and federal projects); $150 million goes to the national Historic Preservation Fund; roughly $500-600 million is distributed to coastal states (in accordance with section 8(g) of the OCS Lands Act; and the remainder goes to the U.S. Treasury. Additional revenue is generated from taxes on industry profits and wages.

There are significant risks associated with oil and gas development. With respect to possible risks to humans, some major safety concerns are blowouts, explosions, fires, and vessel and helicopter accidents. Exploration, development, and production of oil and gas also may impact the marine, coastal, and human environments in several ways:

• physical disruption of the seafloor habitat and benthic communities;
• discharge of chemicals, drilling muds and cuttings, and produced waters;
• hydrocarbon air emissions from facilities, supply vessels, and helicopters;
• exploration and production noise impacts on marine mammals and fisheries stocks;
• impacts of explosive platform removals on fish species;
• socioeconomic impacts on coastal communities and ports—of special concern in Alaska are potential impacts on native Alaskan subsistence culture; and
• accidental oil spills.

Routine permitted activities are carefully monitored to minimize the risk of significant effects on the environment. Spills generally are viewed as much more threatening to the environment due to the immediate damage and disruption a large release can cause to ecological resources and to coastal livelihoods and activities that depend on those resources. The number of significant spills from oil production in state and federal waters has been low and the volume of oil spilled has, in general, continuously decreased over the years. There has not been a spill larger than 1,000 barrels from an OCS platform or rig since 1980. In fact, since 1980, OCS operators have produced some 5.5 billion barrels of oil of which only 61,500 barrels (or 0.001 percent) has been spilled. Natural seeps introduce about 100 times more oil into U.S. marine waters than have spills from OCS oil and gas activities. Increased precautions by industry, enhanced safety technology (e.g., blowout preventors and shut-in valves), and adherence to strict governmental regulations have all contributed to minimizing the risk of oil spills from offshore activities.

The MMS diligently strives to diminish environmental and human risks through its regulatory program, which places stringent environmental and human protection requirements on all OCS operators.

Through a broad range of environmental laws, the federal government has the responsibility¾ either on its own or in cooperation with states¾ to prevent or eliminate damage to the environment; to regulate pollution to restore and maintain the chemical, physical,

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and biological integrity of waterways; to protect and enhance air quality; and to protect and promote conservation of plants and animals listed as endangered or threatened.

With respect to development on the OCS, environmental impacts may vary in intensity due to such factors as different methods of transportation (pipeline or tanker) and distances from the shoreline. To address this and protect workers and the environment, the MMS tailors special stipulations as required into leases sold to companies developing the resources. Concerns raised by coastal states and communities, fishing groups, and other federal agencies are likewise addressed. Some concerns may require a study of the impact on local marine life. Studies may lead to requirements for special operating procedures covering such areas as training of personnel and the handling of waste discharges of mud and cuttings. Making existing regulations clearer is yet another approach used to safeguard the environment.

Over the last half century, significant technological improvements in operational safety on the OCS have occurred. Today, for example, computer systems monitor platform operations. Advances in blowout preventors and increased safety inspections have allowed the search for oil and gas to continue into deeper water without compromising safety.

Nevertheless, major concerns about operational maintenance and oil-spill prevention and clean-up remain. Continuous inspections and replacement of platform components and safety equipment are helping to relieve these concerns and ensure efficient and safe operation. Updated training and oil-spill contingency plans now allow for quick response and effective cleanup of a spill if it occurs. Remote sensing technology is being used to monitor oil slick movements more accurately.

Another way human and environmental safety has improved for OCS operations is through the implementation of the MMS’s Safety and Environmental Management Program (SEMP) and the U.S. Coast Guard’s Prevention Through People program. The SEMP advocates a voluntary, but systematic approach, to safety management by every company operating on the OCS and uses the American Petroleum Institute’s Recommended Practice 75 as the operating standard. This program supplements the traditional, compliance-based regulations of the MMS and further enhances its ability to prevent accidents that cause human injury and illness or environmental damage. Through SEMP, the MMS is working collaboratively with the offshore industry to refocus efforts on company safety and environment performance in addition to regulatory compliance. The Prevention Through People program initiated by the U.S. Coast Guard is intended to help elevate worker awareness of human involvement in accidents and to reduce the human error factor. This program differs from SEMP because it deals with vessels that are not stationary or fixed. Through these two programs, the federal government can better identify problem areas and heighten safety for both workers and the environment.

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Exploration and development have been moving to remote areas such as deep water provinces, Arctic areas, and isolated natural gas fields, where there has been limited drilling. Interest in OCS deep water areas has increased in recent years, especially in water depths greater than 800 meters, because of better technology, new discoveries in deep water, and the passage of the Deep Water Royalty Relief Act.

While the Arctic presents unique engineering and environmental challenges, there is potential for significant new discoveries on the North Slope of Alaska and in the Beaufort Sea. Proposed development of past discoveries has created an optimistic outlook for the future. Meanwhile, it must not be forgotten that oil and gas are being produced from the OCS offshore southern California. And although there is a current halt on leasing off the Pacific coast, the area holds vast reserves of oil and gas that may prove important to the nation in the future.

Three-dimensional seismic acquisition, modeling, and interpretation have greatly increased the efficiency of oil and gas exploration. As a result, fewer wildcat wells are being drilled, and more of them are discoveries. The renewed interest in deep water areas is being credited to better technology including three-dimensional seismic and horizontal drilling. For example, computers are now used to process geological and geophysical data and to create three-dimensional subsurface interpretations. This allows companies to identify reservoirs in progressively deeper water. Extended-reach or horizontal drilling has increased in the last 5 years due to higher production rates and greater recoveries from both new and existing wells. Horizontal drilling brings a larger portion of the reservoirs into contact with the wellbore, thereby increasing the flow rates. Besides the ability to increase recovery in borderline fields and protect environmentally sensitive areas, horizontal wells can provide geological information for sidelong distances up to 5,000 feet in a single formation. It is estimated that over the next 5 years, from one-third to two-thirds of all new wells will be horizontally drilled.

Within the last decade, research has shown that most continental margins are reservoirs for an unconventional energy deposit. Immense amounts of gas are concentrated in frozen, ice-like gas hydrates within the top several hundred meters of sediment in deep water on the continental margins of the United States, from the Gulf of Mexico to the Alaska arctic. The worldwide amount of methane in gas hydrate deposits is conservatively estimated to be the equivalent of at least 1 x 10⁴ gigatons of carbon. This is about twice the amount of carbon held in all conventional fossil fuels on earth. Gas hydrates may prove to be the only hydrocarbon resource that could significantly affect the future world energy mix. The production history of the Russian Messoyakha gas hydrate field demonstrates that gas hydrates can be produced by conventional methods. Gas from hydrate deposits may become a major energy resource if economically profitable techniques are devised to extract the methane.

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The time scale to renew fossil fuels by geochemical processes is long compared to the time in which the modern world can consume known fossil fuel reserves. Consequently, the world’s supply of fossil fuels is non-renewable for all practical purposes, and many nations are looking seriously at other alternative energy sources to provide part of their expanding energy needs. Many of the alternative energy sources are derived directly or indirectly from the radiant energy of the sun. The heat content of the world’s ocean and the mechanical energy manifested by the various ocean water motions (e.g., surface waves, tides, and mean currents) are among the renewable energy sources available to many countries. This section examines some of these oceanic alternative energy resources.

One way of using the abundant heat content of the surface ocean is to exploit the temperature difference between the warm surface layer of the ocean and the colder, deeper ocean lying below the penetration depth of sunlight. Engines operate between temperature differences by extracting heat from a higher temperature "reservoir" and ejecting "waste" heat into a lower temperature reservoir. The upper and lower layers of the ocean could function as the reservoirs for an engine that could, for example, power an electric generator. In this fashion, the heat of the surface ocean could be converted into a more usable form of energy (e.g., electricity).

The mechanical motions of the ocean such as surface waves and mean currents are indirect manifestations of solar energy and, like the heat content of the ocean, constitute a large source of energy potentially available for human use. This likewise applies to the gravitationally driven tidal motion of the sea. Engineers in many countries have developed various devices for generating electricity from these forms of mechanical energy. Specially designed turbines mounted in dams or on moorings can capture some of the energy manifested in elevated sea level or strong currents. Other mechanical devices move under the influence of surface waves and capture some of their energy. All of these modern devices are coupled with electric generators.

Coastal areas having large amplitude tides and narrow channels or embayments that can be dammed or support moorings with turbines are candidates for practical ocean energy conversion. Devices moored in persistent and strong ocean currents like the Gulf Stream could, in principle, also extract useful energy. Other coastal areas where the tidal energy may be small, but where high wave action is common, are candidates for wave energy conversion.

There are practical problems with mechanical energy converters. Not all coastal areas have the high tidal amplitudes or the frequency of high waves necessary to provide the needed amount of energy for conversion. Tides are periodic with quiescent periods one or two times per day, and high wave activity is not always present even in frequently windy areas. Energy storage thus becomes an important consideration for using some of these devices but also increases operating costs.

In addition, damming bays and straits significantly alters the circulation of water with possible adverse environmental consequences, and rapidly rotating turbines can kill fish,

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mammals, and freely floating marine invertebrates. Mooring turbines in open water rather than attaching them to dams, and placing streamlined protective housings around the turbine blades, greatly reduces these adverse environmental impacts. The consequent reduction in energy efficiency adds to their cost; nonetheless, many engineers still believe that these systems are commercially viable.

A wide variety of mineral resources are found on the seafloor. These resources fall into four general categories:

• granular sediments
• placer minerals
• hydrothermal deposits
• hydrogenetic minerals

Granular sediments are transported to the sea by rivers and glaciers and are sorted according to size by wave action on the coastline. They include quartz-rich sand and gravel, carbonate-rich sand, shell, silt, and clay. Gold, diamonds, platinum, tin, and titanium are among the most common placer minerals, as well as concentrations of heavy minerals and ores such as titanium oxide. Hydrothermal minerals are associated with volcanic activity and include sulfide deposits rich in copper, zinc, lead, gold, and silver. Hydrogenetic deposits form by precipitation from seawater under various conditions and host minerals such as phosphorite, salt, barite, and iron-manganese nodules, and crusts rich in cobalt, platinum, nickel, copper, and rare earth elements.

Both coarse sand and gravel and finer sand are extremely abundant on most continental shelves, with the coarsest materials (gravels) occurring closest to the coast and finer grained materials dominating the outer shelves and slopes. The thickest sand and gravel deposits are those formed as a result of glacial action in the northern and southern thirds of the globe. Placer minerals are also found nearest to the coast, usually in association with present or former river systems. Marine hydrothermal minerals are found in the deep ocean volcanos on oceanic ridges and island arc systems. Hydrothermal deposits form in association with underwater vents of mineral-rich hot water called "smokers.". Hydrothermal deposits also include phosphorite and barite accumulations on the continental shelves. The cobalt-rich manganese crusts found on the flanks of most of the 50,000-plus extinct volcanic seamounts in the Pacific Ocean are hydrogenetic deposits.

Sand and gravel, used primarily for construction aggregates, constitute the largest tonnage of any ocean mineral produced. These materials are essential resources for the expanding populations of coastal areas. Aggregates are used in nearly all residential and commercial construction

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and in most public works projects such as roads and streets, dams, airports, bridges, and tunnels. The exhaustion of existing reserves, zoning, government regulations, and competing land uses are increasingly restricting the production of construction aggregate from the land, and thus encouraging the use of offshore aggregate sources close to coastal population centers.

The greatest use in the United States of offshore sand and gravel is for beach renourishment and coastal restoration and protection. With increased development adjacent to or near the coastline, and the natural processes of landward migration over time, there has been a steady increase in the number and size of beach renourishment projects. Traditional approaches to prevent coastal erosion (e.g., jetties and groins) are no longer acceptable in many areas, having become too expensive, ineffective, or damaging to the environment. Beach renourishment, although expensive and short-lived in some cases, is now a widely accepted method of restoring an eroded coastline.

Recent changes in wetland regulation sometimes mandate the building of new wetlands to offset those that have been destroyed and much of the material to construct coastal wetlands will be supplied by offshore dredging. Marine sand may also be used for capping both recent and former offshore dump sites.

Portions of the OCS areas surrounding the United States, especially in the northeast, contain an abundant supply of sand and gravel, much of it near growing metropolitan areas where demand is greatest. The detailed distribution and characteristics of these resources is known in only a few areas. Resource characterization studies are needed to better understand the potential development of resources in specific localities.

Environmental and physical oceanographic studies are needed to better understand the possible impacts of dredging to ocean and seafloor life and the coast. Costs are generally greater for mining offshore sand and gravel than for onshore deposits, but these costs may be offset by lower transportation costs for the delivered product and by a possible reduction in environmental impacts onshore. These advantages have prompted commercial interests to examine further the feasibility of developing marine sand and gravel resources.

Offshore sand and gravel use is an established industry in several countries, most notably Japan, the United Kingdom, Denmark, and the Netherlands. Japan obtains most of its construction aggregates from offshore deposits, and the offshore dredging industry in the United Kingdom is growing steadily. The technology developed and the experience gained by these countries in dealing with economic and environmental issues should prove useful for future development of U.S. offshore sand and gravel resources. Major technological developments in dredging, coming largely from the Netherlands and Japan, have occurred over the past 10 years. Innovations include high-capacity underwater pumps and multiple-booster pumps, which enable operation in deeper water and the pumping of sand as far as 7 miles from the dredge to the shoreline.

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Although there are no commercial sand and gravel mining operations seaward of the 3-mile federal-state line, on the U.S. outer continental shelf, there have been a number of such operations in rivers, bays, and harbors over the years. One company currently produces construction aggregate from deepening and maintaining the Ambrose Channel across New York Bay, and the State of New York has prepared an Environmental Impact Statement addressing sand mining in other parts of the bay. The same company is seeking leases to dredge sand and gravel in federal waters off the northern New Jersey coast, an indication that economic conditions are favorable for a commercial operation in the New York-New Jersey area.

Sand from offshore deposits has been used for beach renourishment since 1922, when Coney Island Beach in New York City was rebuilt. Since then, hundreds of millions of cubic yards of marine sand have been placed on U.S. beaches. The offshore sand used for beach renourishment projects is generally from deposits within state waters but occasionally it comes from the federal OCS as far as 8 miles from the coast. Project sizes range from hundreds of thousands of cubic yards to 15-20 million cubic yards. To support publicly beneficial projects, a 1994 amendment to the OCS Lands Act (P.L. 103-426) authorized a negotiated agreement process in lieu of competitive bidding for governmental use of OCS sand, gravel, or shell. The amendment authorized fees to be assessed for use of these resources based on their value and the public interest served from their development. Each request to use OCS resources under a negotiated agreement is handled individually. To assist government agencies needing OCS resources, MMS developed procedures and guidelines to explain the National Environmental Policy Act and OCS Lands Act requirements, and the development of terms and conditions for removal of the resource. The MMS guidelines on assessing fees outlines the approach that will be used to determine appropriate fees that balance resource value with other public benefits for governmental shore protection and restoration projects.

To date, two coastal communities have obtained federal OCS sand through this new process, and several more negotiated agreements are in progress. Completed projects using federal sand include Duval County, Florida, where 1.2 million cubic yards of sand were placed on a 10-mile stretch of shoreline, and the U.S. Navy’s Fleet Combat Training Center at Dam Neck, Virginia, where 900,000 cubic yards were placed on the beach to protect the facility. New projects are being planned with the City of Myrtle Beach, South Carolina, for Surfside Beach; the State of Louisiana for restoration of the Isles Dernieres and Timbalier Island (two of the most rapidly eroding sections of the nation’s coast); the National Park Service for the northern end of the Assateague Island National Seashore in Maryland; and the City of Virginia Beach, Virginia, for Sandbridge Beach.

While offshore development of other hard minerals currently is not a significant activity in U.S. waters, active offshore mining of minerals other than sand and gravel worldwide include diamond recovery off the southwestern coast of Africa, tin offshore of Indonesia, and titanium offshore of western Australia. Diamond mining offshore Africa began in 1961 and has become a major contributor to the diamond market. Several companies, including the diamond giant De Beers,

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are operating offshore both Namibia and South Africa with very large dredges and at-sea processing plants. Diamonds are now dredged in water as deep as 180 meters and remotely operated bulldozers with large suction hoses connected to a processing ship have been tested for mining in even deeper water. A fleet of over 30 bucket-line dredges are currently working off Indonesia, processing over 40 million cubic meters a year of sediments to recover tin ore. Although no development of the metals-rich manganese nodule deposits has occurred to date, mining exploration licenses have been held since 1984 by several multinational companies in an area of the Pacific Ocean between Hawaii and Central America. There has also been recent interest by Japanese and Chinese firms in manganese nodules off the Cook Islands and other areas in the Pacific.

Mineral deposits in U.S. waters (other than sand and gravel) include massive phosphate beds beneath the continental shelf from North Carolina to northern Florida, titanium-rich heavy mineral sands off the East Coast from New Jersey to Florida, gold-bearing sand and gravel deposits offshore Alaska, barite deposits offshore southern California, manganese nodules on the Blake Plateau offshore South Carolina and Georgia, and the cobalt and platinum-rich crusts in the Hawaiian Exclusive Economic Zone area. Gold was recovered in state waters off Nome, Alaska, from 1986 to 1990 by the WestGold Corporation using the Bima, a converted Indonesian tin mining dredge. Despite the relatively rich deposits, the operation was closed mainly due to steadily declining gold prices.

From its beginning, the OCS program of the United States has faced controversy over the ownership and management of offshore oil and gas resources. Some of the controversy predates the inception of the federal program in 1954, as both the federal government and individual coastal states vied for jurisdiction over the nation’s offshore area, with the former eventually gaining title to the great majority of the continental shelf. Additional controversy has arisen over the years as concerns about the program’s environmental and socioeconomic impacts have increased. Some of this concern is attributable to a perceived imbalance in governmental and community benefits and costs occasioned by OCS development. In addition, the full range of benefits and costs—and those of alternatives, such as importing oil by supertanker—are not easily or readily identifiable.

The 1989 Exxon Valdez tanker oil spill that occurred in Prince William Sound, Alaska, profoundly affected the public’s perception of the OCS program even though the spill was not caused by OCS oil and gas drilling. That event, which rekindled concerns first raised after the Santa Barbara OCS oil spill in 1969, received intense and lengthy media coverage.

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This heightened concern about the possibility of similar accidents and strengthened negative perceptions about offshore oil development. Despite arguments that development of domestic resources is necessary and beneficial, as well as reassurances about the environmental soundness of the OCS program, a large segment of the population remains unconvinced.

While there is some OCS production activity offshore California, the OCS program at this time is mainly concentrated in the Central and Western Gulf of Mexico, with limited leasing and exploration activity offshore Alaska. Although Louisiana has expressed some concern and reservation about shouldering the bulk of the nation’s energy needs, offshore oil and gas are still viewed as important and integral parts of that region’s economy, relatively few residents are opposed to it, and extensive infrastructure and technological progress has led to a recent boom in activity in the Gulf.

Oil and gas activities on the OCS occur along with many other activities in the ocean, including commercial and sports fishing, tourism and recreation, vessel traffic, military and NASA operations, and non-energy marine mineral extraction. There also are areas of special concern, such as parks and sanctuaries and, in Alaskan areas, subsistence hunting and fishing activities. In addition to the "competition" for space, there is concern from many ocean and coastal user groups that routine oil and gas activities such as seismic surveys, drilling, and discharge of effluent waters and cuttings, may have adverse effects on the coastal and marine habitats and biota.

In the 1980s, state and local governments, dissatisfied with OCS policies that gave primary authority to the federal Executive branch, turned to the U.S. Congress to check this authority. Congress responded by adding "moratoria" riders to annual appropriations legislation prohibiting the use of funds for OCS leasing and related activities in much of the outer continental shelf .

In 1990, following analysis and recommendations by an interdepartmental OCS Oil and Gas Leasing Task Force, President Bush announced a series of decisions intended to balance energy production and environmental protection and to allow the OCS program to continue in the less controversial areas. Areas offshore California, southern Florida, the North Atlantic states, Washington, and Oregon were withdrawn from leasing consideration until after 2000. However, Congress continued to enact moratoria for the areas withdrawn by Presidential Order and even expanded prohibitions to some areas and activities that had not previously been restricted. The Clinton Administration has supported a continuation of most moratoria while underlying conflicts are resolved through consultation and negotiation among affected parties.

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In 1990, President Bush also directed the Secretary of the Interior to prepare a legislative initiative that would provide coastal communities directly affected by OCS development with a greater share of the financial benefits of new development and with a larger voice in decision making. In 1992, the Department of the Interior developed and submitted to the 102nd Congress a proposal for providing impact assistance to coastal states and communities located near OCS oil and gas activities. That proposal was adopted in a modified form by the Senate, but the energy legislation enacted by Congress in October 1992 excluded this and all other provisions relating to the OCS program.

Louisiana, along with some other coastal states and localities, continues to support legislation to provide federal revenues to mitigate onshore effects of OCS activities. The OCS Policy Committee, an advisory committee formed to advise the Secretary of the Interior on policy issues related to the OCS program, proposed an impact assistance plan in 1993. It renewed its support in 1997 and directed a working group to develop an implementation plan for such a proposal. In October 1997, the working group submitted to the full committee its report proposing a detailed program for providing a portion of OCS revenues to affected states and localities. The report was approved by the full OCS Policy Committee and forwarded to the Secretary of the Interior.

The National Energy Policy Plan, issued in 1995 and entitled Sustainable Energy Strategy, presents the Clinton Administration’s energy policy. The concept of sustainable development guides the energy policy process and motivates three strategic goals:

The environmentally sound development of the nation’s OCS resources will help further the achievement of each goal. As noted above, investments in and production of OCS oil and gas generate billions of dollars annually in bonuses, royalties, and taxes, and create thousands of well paying jobs throughout the U.S. economy. Offshore development under proper environmental safeguards poses less risk of large oil spills than does importing foreign oil in tankers. Expanded use of natural gas, including that produced on the OCS, has substantial environmental benefits over other fossil fuels. Production of oil and gas from the OCS directly reduces the amount of oil that must be imported from abroad, much of it from politically unstable regions, thereby lessening the threat to the U.S. economy posed by supply disruptions.

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The development of OCS oil and gas resources is a part of the Administration’s commitment to encourage the economically beneficial and environmentally sound expansion of diverse domestic energy resources. The National Energy Policy Plan promotes the production of oil and natural gas resources in deep water in the Gulf of Mexico as one of the nation’s best opportunities for adding large new oil reserves, providing new energy supplies for the future, spurring the development of new technologies, and supporting thousands of jobs in the oil and gas and affiliated industries.

Sand and gravel will continue to be the most sought after mineral commodities from the OCS. As previously mentioned, sand has been obtained from well beyond the 3-mile limit of state jurisdiction for beach renourishment, and demands for offshore sand and gravel will likely increase. Sand and gravel reserves on the OCS are immense, with estimates of over 2 trillion cubic meters on the Atlantic shelf alone. In spite of this large resource base, the higher costs and risks of marine dredges are impediments to offshore mining, and conflicts over access still occur. Because transportation cost is the largest factor in sand and gravel extraction and distribution, there could be competition for high quality deposits closest to the coast. Conflicts are also likely to arise with other ocean users, such as fishermen and clammers. However, the use of digital maps in geographic information systems promises to aid in managing both seafloor and water column utilization and minimize multiple-use conflicts.

OCS oil and gas development has been a contentious issue since its inception. Prior to the Submerged Lands Act of 1953, states and the federal government argued over who had authority over the seabed and its resources. After passage of the Act, states and other stakeholders believed that the federal government functioned too independently and was insensitive to state concerns when it came to holding offshore lease sales and approving oil and gas development and production activities off their coasts. Passage of the National Environmental Policy Act, the Coastal Zone Management Act, and the Outer Continental Shelf Lands Act Amendments gave states and other constituents a greater voice in offshore oil and gas development. However, the level of discord escalated in the mid-1970s, when concern over foreign oil embargoes and rapid rises in the price of gasoline and heating oil led the federal government to accelerate efforts to develop and produce offshore oil and gas.

Areawide leasing, leasing in frontier areas, as well as several large and highly publicized oil spills gave rise to the idea that human safety, environmental protection, and the socioeconomic well-being of coastal communities were being seriously jeopardized in favor of maximizing oil and gas production. States and others therefore turned to the political arena for relief in the form of Congressionally and Presidentially mandated moratoria. This situation continues today. In order to address public concerns, beginning in the late 1980s and expanding in the early 1990s, the federal government implemented a policy of involving the various

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stakeholders early in the planning stages, maintaining a meaningful dialogue, and assuring that non-federal concerns play an important and crucial role in the decision process. This new way of doing business and interacting with constituents has been characterized as "moving beyond conflict to consensus."

While disagreement and contention still exist today, involved parties are talking and interacting in a positive manner, and a general atmosphere of trust and respect is replacing the mistrust of only a few years ago. There is a need to build upon this new paradigm so that as the United States enters the 21st century, all parties will continue to work toward a national consensus on development of offshore oil and gas resources while being sensitive to regional and local issues and concerns. This also applies to the relatively new arena of using offshore sand and gravel resources for beach renourishment. As more and more coastal communities look to OCS sand for replenishing beaches and protecting property, and as the commercial sector becomes increasingly interested in OCS aggregate for building materials, it is likely that the issue will become highly contentious if the various stakeholders are not involved early in the decision process.

In October 1993, the OCS Policy Committee’s Subcommittee on OCS Legislation offered the following specific recommendations for forwarding the new paradigm of moving beyond conflict to consensus:

Implementation of these recommendations may go a long way toward ensuring that the OCS program continues to be a reliable and significant contributor to the energy supply and economic well-being of the United States. Involvement of all stakeholders in the planning and decision processes are important to ensure that development and production activities are carried out in a manner consistent with the highest standards of human safety and environmental protection. This approach can also serve as a blueprint for establishing successful OCS mineral programs.

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REFERENCES

Minerals Management Service. An Assessment of the Undiscovered Hydrocarbon Potential of the Nation’s Outer Continental Shelf. A Resource Evaluation Program Report; 1996. MMS 96-0034; 40 pp.

"Coastal Impact Assistance. A Report from the Coastal Impact Assistance Working Group to the Outer Continental Shelf Policy Committee." October, 1997; 23 pp.

"Environmental Studies in OCS Areas Under Moratoria: Findings & Recommendations. Report of the Subcommittee on Environmental Information for Select OCS Areas Under Moratoria."

May, 1997; 82 pp.

"Moving Beyond Conflict to Consensus. Report of the OCS Policy Committee’s Subcommittee on OCS Legislation." October, 1993; 71 pp.

Sustainable Energy Strategy: Clean and Secure Energy for a Competitive Economy. July, 1995; National Energy Policy Plan, Department of Energy,; ISBN 0-16-048183-X; 22 pp.

"U.S. Outer Continental Shelf Sand and Gravel Resources: Programs, Issues and Recommendations. Final Report of the OCS Policy Committee’s Subcommittee on OCS Sand and Gravel Resources." April, 1993; 42 pp.

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Ocean Energy and Mineral Resources

Federal Authorities Relating to Energy Resources

• Outer Continental Shelf Lands Act (43 U.S.C. § 1331 et seq.)
• OCS Deep Water Royalty Relief Act (Pub. L. 104-58)
• Ocean Thermal Energy Conversion Act (42 U.S.C. § 9101 et seq.)

Federal Authorities Relating to Mineral Resources

• Deep Seabed Hard Mineral Resources Act (30 U.S.C. § 1441 et seq.)

State Authorities Relating to Energy and Mineral Resources

• Under the Submerged Lands Act (43 U.S.C. § 1301 et seq.)

Improving Stakeholder Involvement

The legal regime covering this topic is based on a collection of important federal statutory authorities. The following is a brief description of some of those authorities relating to ocean energy and mineral resources. The list is selective and is designed to illustrate some major ocean energy and mineral resources acts. The list is not meant to be comprehensive.

I. OCEAN ENERGY AND MINERAL RESOURCES

The oceans contain significant energy and mineral resources that will become increasingly important as the availability of land-based sources diminishes. There are a number of domestic legal authorities governing ocean energy and mineral resources that involve responsibilities of different federal and state agencies. These domestic legal authorities often provide for a balancing of competing policy objectives. In particular, offshore development that addresses domestic energy and mineral needs must be balanced against the need to protect and conserve ocean and coastal resources and ecosystems. Domestic legal authorities also provide for consultation and coordination among stakeholders. However, the development of ocean energy resources has been controversial. Successful, sustainable development of ocean and mineral resources requires that we move from conflict to consensus among all stakeholders within the framework of a comprehensive management strategy.

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II. FEDERAL AUTHORITIES RELATING TO ENERGY RESOURCES

The United States claims one of the world’s largest and richest continental shelves. The outer continental shelf (OCS) accounts for 15 percent of U.S. crude oil production and 25 percent of U.S. natural gas output. The United States collected $3.0 billion in royalties and other revenues in 1994 ($2.8 billion in 1995; $4.3 billion in 1996 (preliminary)). Since 1954, the federal government has received more than $110 billion from the leasing and production of OCS oil and gas. The OCS has served as a source of about 12 percent of domestic oil production and more than 20 percent of domestic gas production. The Secretary of the Interior has designated the Minerals Management Service (MMS) as the agency responsible for the mineral leasing of submerged OCS lands and for the supervision of offshore operations after lease issuance. The principal federal legal authorities for the development of ocean energy resources are the Outer Continental Shelf Lands Act and the Deep Water Royalty Relief Act.²

Outer Continental Shelf Lands Act (OCSLA), 43 U.S.C. § 1331 et seq

The Outer Continental Shelf Lands Act (OCSLA), 43 U.S.C. § 1331 et seq., established federal jurisdiction over submerged lands on the OCS seaward of state boundaries. Under the OCSLA, the Secretary is responsible for the administration of mineral exploration and development of the OCS. The OCSLA empowers the Secretary to grant leases to the highest qualified responsible bidder(s) on the basis of sealed competitive bids and to formulate such regulations as necessary to carry out the provisions of the OCSLA. The OCSLA provides guidelines for implementing an OCS oil and gas exploration and development program, and authorities for ensuring that such activities are safe and environmentally sound. The basic goals of the OCSLA include the following:

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²The development of ocean energy and mineral resources is subject to a number of environmental laws in addition to the environmental protection requirements contained in the OCSLA. Other sections of the legal issue paper will address the legal regime to protect the environmental quality of the oceans. For example, see the Marine Environmental Quality section for a description of the Federal Water Pollution Control Act (also called the Clean Water Act).

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OCS Deep Water Royalty Relief Act (Pub. L. 104-58)

The OCS Deep Water Royalty Relief Act (DWRRA), contained in Pub. L. 104-58, provides new incentives to lease and develop in certain Gulf of Mexico deep water areas. Specifically, the DWRRA amends the Secretary of the Interior’s discretionary authority to grant royalty relief to include producing and non-producing leases in order to promote development, increase production, or encourage marginal production of certain deepwater leases in the Gulf of Mexico. The DWRRA also contains three other major provisions related to leases issued as a result of sales held before and after the date of the DWRRA’s enactment. The following is a summary of these three other major provisions:

There has been a revitalization of oil and gas exploration and development in the Gulf of Mexico and, with the advent of new deep water drilling technologies, a dramatic intensification of interest in developing the frontier deep water areas. Oil production should increase as much as 70-100 percent by the year 2000, with exploration pushing beyond the exclusive economic zone and product pipeline networks extending well off the continental shelf and down the continental slope.

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Ocean Thermal Energy Conversion Act,(42 U.S.C. § 9101 et seq.)

With regard to alternative energy sources from the ocean, the Ocean Thermal Energy Conversion Act (OTEC Act), 42 U.S.C. § 9101 et seq., established a licensing program for facilities and plantships that would convert thermal gradients in the ocean into electricity. The OTEC Act directed the Administrator of the National Oceanic and Atmospheric Administration (NOAA) to establish a stable legal regime to foster commercial development of OTEC. In addition, the OTEC Act directed the Secretary of the department in which the U.S. Coast Guard is operating to promote safety of life and property at sea for OTEC operations, prevent pollution of the marine environment, clean up any discharged pollutants, prevent or minimize any adverse impacts from construction and operation of OTEC plants, and ensure that the thermal plume of an OTEC plantship does no unreasonably impinge on and thus degrade the thermal gradient used by any other OTEC plantship or facility, or the territorial sea or area of national resource jurisdiction of any other nation unless the Secretary of State has approved such impingement after consultation with such nation. The OTEC Act also assigned responsibilities to the Secretary of State and the Secretary of Energy regarding OTEC plants.

There has been a low level of activity under the OTEC Act since its passage in 1980. Following NOAA’s initial environmental studies and implementation of a licensing program, NOAA has not received any license applications for OTEC facilities or plantships. The availability and relatively low prices of fossil fuels, coupled with the risks to potential investors, has limited the interest in commercial development of OTEC projects. The need to protect the environmental quality of ocean resources and ecosystems may outweigh the benefits of constructing OTEC facilities in certain areas. Moreover, OTEC projects have offered an unclear return on a significant investment.

III. FEDERAL AUTHORITIES RELATING TO MINERAL RESOURCES

The oceans contain valuable deposits of sand, gravel, and other minerals. Among other things, OCS sand deposits are important sources for beach renourishment for many coastal communities. As land supplies of sand and gravel become less available, industry is turning to the OCS as an alternate source of these important building materials. The OCS also contains deposits of strategic minerals such as gold, titanium and other metals which will become more important as an alternate source to land deposits.

The MMS’ marine minerals program manages exploration and development activities for federal offshore sand, gravel, and shell, and other mineral resources found on the OCS. The program has focused on six areas: (1) manganese crusts offshore Hawaii and Johnston Island (2) phosphorites offshore North Carolina, (3) heavy mineral placers and phosphorites offshore Georgia, (4) sand resources offshore the gulf coast states and the Atlantic, (5) heavy mineral placers offshore

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Alaska, and (6) black sand deposits offshore Oregon. The principal legal authority for the development of these resources falls under the OCSLA.

Section 8(k) of the OCSLA Amendments authorizes the Secretary of the Interior to lease minerals, other than oil, gas, and sulfur, on the OCS on the basis of competitive bidding and under such terms and conditions as may be prescribed at the time of the lease offering. Included within this authority is the Secretary’s responsibility to design, implement, and manage the OCS minerals policy and development. The basic goals of the MMS marine minerals program are to:

The MMS established a three-tiered regulatory regime for offshore minerals. These regulations govern prospecting activities, leasing activities, and operations on offshore mineral leases. Together, these rules outline the requirements for data and information gathering ventures associated with prospecting and scientific research. These regulations also establish leasing procedures, basic mineral lease conditions, and general procedures to govern discovery, development, and production activities on a lease.

With the cooperation of adjacent coastal states, joint federal-state task forces assess leasing potential of an offshore area. If leasing is determined to be economically feasible, resource and environmental studies follow. The task forces recommend appropriate action to the Secretary and the State Governor(s). Federal decisions to proceed to lease sales are made by the Secretary of the Interior, with review and comment from the Governor(s).

In addition, in 1994, Pub. L. 103-426 (Negotiated Agreements for OCS Sand, Gravel, and Shell Resources), which amends OCSLA sections 8(k) and 20(a), was signed into law. 43 U.S.C. § 1337 (2)(A). This law authorizes the Secretary of the Interior, through the MMS, to negotiate agreements for use of OCS sand, gravel and shell resources in projects undertaken by federal, state, or local governments for shore protection, beach or coastal wetlands restoration, or certain other construction projects. Once the MMS receives a request for OCS sand, gravel, or shell resources and the necessary supporting information, it determines the project’s eligibility under Pub. L. 103-426. Once eligibility is established, the conditions of the negotiated agreement are developed.

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Coastal states and local communities have been generally supportive of the MMS sand and gravel program and, in light of diminishing coastal and nearshore resources, recognize the need for access to OCS sand for beach nourishment and coastal restoration. The MMS sand and gravel program is active in a number of coastal areas:

With the passage of Pub. L. 103-426, the MMS anticipates an increase in requests for negotiated agreements. A wide range of qualified projects could emerge, including those congressionally authorized, federally sponsored, or state/locally sponsored. In addition, requests for OCS sand, gravel, and shell resources via competitive bidding could emerge as OCS mining activities become more commonplace.

Deep Seabed Hard Mineral Resources Act (DSHMRA), 30 U.S.C. § 1441 et seq

With regard to minerals on the deep seabed, seabed nodules contain nickel, copper, cobalt and manganese - minerals important to many industrial uses. No commercial deep seabed mining is currently conducted, nor is such activity anticipated in the near future. However, four licenses have been issued under the Deep Seabed Hard Mineral Resources Act (DSHMRA), 30 U.S.C. § 1441 et seq., for exploration of seabed areas in the Clarion-Clipperton zone of the south Pacific ocean.

The DSHMRA establishes an interim domestic legal regime for deep seabed mining pending adoption of an acceptable international regime. The Administration submitted the Convention and Agreement to the Senate for consent to accession and ratification in October, 1994 and it is pending in the Senate Committee on Foreign Relations. Since that time, the Convention has come into effect and over 123 nations are Parties. The Agreement addresses previously expressed

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concerns regarding the seabed mining portions of the Convention. The DSHMRA establishes a licensing regime that ensures protection of the marine environment, safety of life and property at sea, prevention of unreasonable interference with other uses of the high seas, and conservation of mineral resources. The DSHMRA encourages other nations that embark on ocean mining ventures to manage the activities of their nationals in a similar fashion and to respect licenses and permits issued under the DSHMRA. The DSHMRA also facilitates the transition from a domestic regime to an acceptable international regime.

The DSHMRA sets forth criteria that would need to be met for an international regime to be acceptable to the United States, namely: assured and non-discriminatory access for U.S. citizens, under reasonable terms and conditions, to deep seabed resources; and assured continuity in mining activities undertaken by United States citizens prior to entry into force of an international regime under terms, conditions, and restrictions which do not impose significant new economic burdens. The DSHMRA also recognizes that a treaty must be judged by the totality of its provisions. The Agreement to implement Part XI of the United Nations Convention on the Law of the Sea revises Part XI in a manner that satisfies these criteria.³ During the period of provisional application of the Agreement, the DSHMRA remains in effect and provides authority to implement likely United States obligations under the Agreement.

IV. STATE AUTHORITIES RELATING TO ENERGY AND MINERAL RESOURCES

Under the Submerged Lands Act, (43 U.S.C. § 1301 et seq.)

There are a number of state authorities, implemented by different state agencies, relating to energy and mineral resources. Under the Submerged Lands Act (SLA), 43 U.S.C. § 1301 et seq., the location of the energy and mineral resources determines whether or not they fall under state control. Specifically, the SLA granted states title to the natural resources located within three miles of their coastline (three marine leagues for Texas and the Gulf coast of Florida). For purposes of the SLA, the term "natural resources" includes oil, gas and all other minerals.

State authorities range in the nature and extent of their control over ocean energy and mineral resources on state submerged lands. The range depends on each state’s evaluation of different policy interests, such that activities may be restricted in certain areas and allowed in others. State management authority for oil and gas exploration and production on state submerged lands may be implemented by more than one state entity. Also, state management of energy and mineral resources is often addressed within the context of a broader state coastal management plan.

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³International legal authorities relating to ocean energy and mineral resources will be fully addressed elsewhere in the legal authorities issue paper.

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State policies also affect energy and mineral resource development on the OCS. As indicated above, federal authorities such as the OCSLA provide for consultation and coordination with affected coastal states. However, consultation and coordination can be difficult when there are a large number of stakeholders representing strong policy interests.

V. IMPROVING STAKEHOLDER INVOLVEMENT

Successful, sustainable development of ocean energy and mineral resources requires that we move from conflict to consensus among all stakeholders within the framework of a comprehensive management strategy. Stakeholders have blocked development of oil and gas resources in many areas of the OCS. Management of ocean energy and mineral resources can be difficult due to the number of stakeholders and the nature of their interests or responsibilities. Federal and state laws relating to energy and mineral resources often contain differing policy objectives that must be balanced. However, the Department of the Interior (DOI) has taken steps to solve conflicts in the application of its OCS program by working with stakeholders.

The history of the OCS program relating to energy resources shows that its expansion has been controversial. When federal management of the OCS began under the OCSLA, oil and gas activity was concentrated in the Gulf of Mexico off Louisiana and Texas, where the program was supported as a part of that region’s economy. Following commercial discoveries offshore southern California, the 1969 Santa Barbara Channel blowout and oil spill started opposition to offshore oil and gas development.

In response to the oil embargo of late 1973 and early 1974, the federal government expanded the OCS program to include areas where activities had not occurred before. The increased scope and pace of activity heightened concerns about the environmental and socioeconomic effects of offshore development. Citizens and governments in coastal areas demanded that they be consulted. As a result, the OCSLA was amended in 1978 to provide for environmental consideration and more substantive involvement of state and local governments and others in OCS decision making.

In 1979, oil supply disruptions and price increases renewed pressure for developing offshore energy resources. The federal government announced an area wide OCS leasing plan for frontier areas. The announcement of this plan sparked opposition. Even though the new provisions of the OCSLA called for increased consultation and coordination, many affected parties felt that their concerns and recommendations were not being adequately considered in OCS leasing and development decisions. As a result, the OCS program became the subject of congressional moratoria and administrative deferrals. In May 1992, certain congressional moratoria became the subject of litigation by oil companies under breach of contract and takings claims.

DOI has decided to resolve conflicts related to the OCS program relating to energy resources by working with stakeholders. As part of this approach, DOI endorsed existing congressional

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moratoria on lease sales in order to maintain the status quo while discussions on various OCS issues ensured. DOI began resolving disputes on existing leases through the settlement of litigation and is taking steps to establish working relationships among stakeholders in a move toward consensus decision making. The MMS has also increased stakeholders’ role in developing consensus on 5-Year program and lease sale decisions. DOI’s actions will help coordinate decision making, and facilitate comprehensive management of ocean resources.

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MMS Minerals Management Service

OCS outer continental shelf (particularly as defined jurisdictionally by the Submerged Lands Act of 1953 and subsequent amendments, etc.)

SEMP Safety and Environmental Management Program

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