UNITED STATES DEPARTMENT OF COMMERCE DRAFT ENVIRONMENTAL IMPACT STATEMENT RULES AND REGULATIONS FOR IMPLEMENTING THE COASTAL ENERGY IMPACT PROGRAM SECTION 308 THE COASTAL ZONE MANAGEMENT ACT OF 1972 AS AMENDED Prepared by: Office of Coastal Zone Management, NOAA 3300 Whitehaven Street, N.W. Washington, D. C. 20235 TABLE OF CONTENTS Summary I. Introduction I II. Description of Proposed Action -j. A. Proposed Federal Action B. Summary of the Coastal Energy Impact Program As Implemented by Regulation III. Description of the Environment Affected 5 IV. Relationship of the Proposed Action to Land Use Plans, Policies, and Controls for the Area c V. Probable Impact of Proposed Action and Reasonable Alternatives c A. Introduction B. Proposed Regulations and Alternatives 1. Study and Planning Grants - Subpart D 2. Financing Public Facilities and Services - Subpart E and F 3. Impacts of Grants for Unavoidable Losses of Coastal Environmental and Recreational Resources - Subpart G VI . Unavoidable Adverse Impacts 14 Appendix 1 - Coastal Zone Management Act amendments of 1976 (P.L. 94-370) Incorporated into the Coastal Zone Management Act of 1972 (P.L. 92-583) Appendix 2 - Draft Proposed Rules and Regulations for Implementation of the Coastal Energy Impact Program Digitized by the Internet Archive in 2012 with funding from LYRASIS Members and Sloan Foundation http://www.archive.org/details/draftenvirOOnati SUMMARY (X) Draft ( ) Final Environmental Statement U. S. Department of Commerce, National Oceanic and Atmospheric Administration, Office of Coastal Zone Management For additional information about this proposed action or this statement please contact: Joellyn Murphy Office of Coastal Zone Management National Oceanic and Atmospheric Administration Washington, D. C. 20235 Phone: 202/634-4232 1. Coastal Energy Impact Regulations (X) Administrative ( ) Legislative 2. The proposed action consists of promulgating rules and regulations governing administration of the Coastal Energy Impact Program (CEIP) established by section 308 of the Coastal Zone Management Act as amended. The CEIP provides financial assistance to meet the needs of coastal states and local communities resulting from specified activities. 3. Implementation of the CEIP, will mitigate the stresses placed on the coastal zone by energy develop- ment. The program will improve the decision-making process for managing the social, economic, and environmental consequences resulting from coastal energy activity, and it will lead to increased long- term protection of the Nation's coastal resources while at the same time encouraging rational and necessary energy development. Adverse impacts will be localized and will be limited to those associated with actual construction or operation of public facilities to be financed under sections 308(b) and (d) . 4. Alternatives considered: 1. No action; 2. Delay action; 3. Alternative regulation schemes. 5. List of all Federal, State, and local agencies and other parties from which comments have been re- quested: Federal Agencies All Federal agencies listed in Appendix II of the Council on Environmental Quality - Prepara - tion of Environmental Impact Statements Guidelines . U.S. Senate All U.S. Senators representing coastal states tepr "5F U.S. House of Representatives All U.S. House of Representatives delegates from districts which are partially or totally within the coastal zone State Agencies Alabama Alabama Development Office Office of the Governor Alaska Office of the Governor American Samoa Office of the Governor California California Coastal Conservation Commission Bay Conservation and Development Commission Office of the Governor Connecticut Department of Environmental Protection Office of the Governor Delaware State Planning Office Office of the Governor Florida Bureau of Coastal Zone Planning Office of the Governor Georgia Office of Planning and Budget Office of the Governor Guam Government of Guam Office of the Governor Hawaii Department of Planning and Economic Development Office of the Governor Illinois Illinois Coastal Zone Management Program Office of the Governor Indiana State Planning Services Agency Office of the Governor Louisiana State Planning Office Office of the Governor Maine State Planning Office Office of the Governor Maryland Department of Natural Resources Office of the Governor Massachusetts Executive Office of Environmental Affairs / Office of the Governor Michigan Department of Natural Resources Office of the Governor Minnesota State Planning Agency Office of the Governor Mississippi Mississippi Marine Resources Council Office of the Governor New Jersey Department of Environmental Protection Office of the Governor New Hampshire Office of Comprehensive Planning Office of the Governor New York Department of State Office of the Governor North Carolina Department of Natural and Economic Resources Office of the Governor Ohio Department of Natural Resources Office of the Governor Oregon Land Conservation and Development Commission Office of the Governor Pennsylvania Division of Outdoor Recreation Office of the Governor Puerto Rico Department of Natural Resources Office of the Governor Rhode Island Department of Administration Office of the Governor South Carolina Wildlife and Marine Resources Department Office of the Governor Texas Texas Coastal Management Program Office of the Governor Virginia Office of Commerce and Resources Office of the Governor Virgin Islands Virgin Islands Planning Office Office of the Governor Washington Department of Ecology Office of the Governor Wisconsin State Planning Office Office of the Governor Environmental Groups American Littoral Society American Shore and Beach Protection Association Center for Law and Social Policy Environmental Defense Fund, Inc. Environmental Policy Center Friends of the Earth Izaak Walton League National Audubon Society Natural Resources Defense Council National Wildlife Federation Nature Conservancy Sierra Club The Conservation Foundation The Wildlife Management Institute Wilderness Society Private Sector American Association of Port Authorities American Farm Bureau Federation ii American Mining Congress American Petroleum Institute American Right of Way Association American Waterways Operators Atlantic States Marine Fisheries Commission Atomic Industrial Forum Boating Industry Association Chamber of Commerce of the United States Chevron Oil Company Edison Electric Institute Gulf States Marine Fisheries Commission National Association of Conservation Districts National Association of Electric Companies National Association of Engine and Boat Manufacturers National Association of Home Builders National Association of Realtors National Association of State Boating Law Administration National Boating Federation National Canners Association National Coalition for Marine Conservation, Inc. National Environmental Development Association National Farmers' Union National Federation of Fishermen National Fisheries Institute National Forests Products National Ocean Industries Association National Recreation and Park Association National Security Industrial Association National Waterways Conference Pacific States Marine Fisheries Commission Saltwater Sportsmen Society of Real Estate Appraisers Sport Fishing Institute United Brotherhood of Carpenters and Joiners of America Western Oil and Gas Association World Dredging Association Professional American Fisheries Society American Institute of Architects American Institute of Planners American Society of Planning Officials National Parks and Conservation Association Public Interest Council of State Planning Agencies Coastal States Organization League of Women Voters of the United States National Association of Counties National Association of Regional Councils National Conference of State Legislators National Governors' Conference National League of Cities United States Conference of Mayors Individuals and Other Interested Parties Upon request copies have and will be sent to all individuals and other interested parties 111 I . INTRODUCTION In response to intense pressures upon, the conflicts within, and the importance of the coastal zone of the United States, Congress passed the Coastal Zone Management Act (P.L. 92-583; 86 Stat. 1280). Signed into law on October 27, 1972, the Act authorized a Federal program to be administered by the Secretary of Commerce, who in turn delegated this responsibility to the National Oceanic and Atmospheric Administration (NOAA) . The Coastal Zone Management Act (CZMA) was substantially amended by the Congress and the amendments were signed into law on July 26, 1976 (P.L. 94-370). The composite of the two Acts (Appendix 1) will be referred to herein as the CZMA. The CZMA affirms a National interest in effective management, beneficial use, protection, and development of the coast- al zone, and provides assistance and encouragement to coastal states to develop and implement rational programs for managing their coastal zones. Section 308 of the CZMA establishes a Coastal Energy Impact Program (CEIP) which provides financial assistance to meet the needs of coastal States and local governments which result from energy act affecting the coastal zone. Such financial assistance is to be used for: 1) planning for the social, economic, and environmental consequences in the coastal zone resulting from new energy development; 2) construction of public facilities and provision of public services, the need for which is attributable to increased population resulting from new and expanded coastal energy activity; 3) prevention, reduction, or amelioration of unavoidable damage or degradation of valuable environmental or recreational resources resulting from past or future coastal energy activity. II. DESCRIPTION OF PROPOSED ACTION A. Proposed Federal action The proposed Federal action consists of promulgating rules and regulations governing administration and coordination of the Coastal Energy Impact Program established by section 308 of the CZMA. The draft proposed regulations are in Appendix 2. The authority for promulgating regulations to implement the CEIP are contained in section 308(e) and section 308(a)(2) of the CZMA. B. Summary of the Coastal Energy Impact Program as implemented by regulations. Introduction . The CEIP provides financial assistance - loans, bond guarantees, and to help coastal States and local communities affected by new or expanded coastal energy actii i The program consists of two interlocking sources of financial assistance: (1) the Coastal Energy Impact Fund (the Fund) established under section 308(h) and authorized for $800 million over ten years; and (2) formula grants provided for in section 308(b) and authorized for $400 million over eight years. Assistance in the Fund is aimed at meeting State and local needs resulting from impacts caused by coastal energy activity. Coastal energy activity is defined in the CZMA to include three types of energy activity: (1) outer Continental Shelf (OCS) energy activity; (2) any transr . .. . ■ "i ■ sing of liquefied natural gas; and (3) any transportation, transfer, or s . . . natural gas. The various types of assistance provided through the CEIP are aimed at meeting . ; needs resulting from the impacts of the three types of energy activities in or affecting the coastal zone. First, grant assistance from the Fund is available to States to plan for the impacts in the coastal zone of new or expanded energy facilities, whether or not the facilities are actually located in the coastal zone. Second, credit and grant assistance from the Fund is available to meet State ' lo for public facilities and public services resulting from the thn • energy activity. Third, grant assistance from the formula grants is aimed even more narrowly; it is avi to meet the needs of States with OCS energy activities. Assistance under the CEIP takes four forms. First, the CEIP can provide planning grants to prepare for oncoming energy activity and for its socio-economic and environmental consequences. Second, the CEIP can help finance the new or improved public facilities and new or increased public services required because of population increases resulting from new coastal energy development. Third, the CEIP can provide repayment assistance - refinancing, modification of terms, sup- plemental loans, or repayment grants - to the borrowing government when it cannot meet its credit obligations because revenues from energy activity failed to materialize as expected. Fourth, the CEIP can provide grants to help prevent, reduce, or repair damage to valuable environ- mental or recreational resources when the costs involved cannot be internalized - that is, when the person or persons responsible for the damage cannot be identified or cannot be charged for that damage. To be eligible for assistance under the CEIP, a coastal State must have a coastal management program which has been approved under section 306 of the CZMA, or, it must be having satisfactory progress toward the development of a management program which is consistent with the policies set forth in section 303 of the CZMA. Philosophy and Objectives . The central objective of the CEIP is to provide coastal States and local communities financial assistance to deal with the effects of new or expanded coastal energy activity. The CEIP seeks to strike a balance between the national objective of achieving increased energy self-sufficiency and of protecting and managing the Nation's coastal resources. The implementation of a program as complex and potentially important as the CEIP must be based on a coherent policy framework. The framework underlying the OCZM's effort to design the CEIP can be expressed in terms of the following principles and objectives. (a) The primary responsibility for providing public facilities and public services should be at the State and local community level of government. They should be financed from the increased revenue base created by the new or expanded energy activity. Consequently, the Federal role should be only supplemental or secondary in nature. (b) To the extent that new energy activity directly benefits the entire Nation, as is the case with coastal energy activity as the CZMA defines it, the risks attached to accommodating the activity should be shifted in part from the State and local communities to the Federal government. This includes both fiscal risks and risks of environmental damage. (c) All those involved in exploiting energy resources should be aware of and should face the full cost of exploiting those resources. This means if exploiting the resource imposes external environmental and socio-economic costs, those who are exploiting the resource -- the energy companies, and ultimately, the end- users of energy -- should bear these costs. (d) Federal assistance should be provided in a form that acts as an incentive to States, local communities, and industry to work together to develop mechanisms to assure that money will reach the point of need at the time of need. In addition, the OCZM believes an impact assistance program should follow certain operating principles . (a) Moneys should be available only where needed so as to avoid both shortfalls and windfalls. (b) Moneys should be available when needed, i.e., ahead of the impacts, but no longer than actually needed. (c) Moneys should be 1 united to appropriate uses and appropriate amounts. (d) An assistance program should be as administratively simple as possible, with maximum dis- cretion and control retained by the State and local governments. (e) An impact assistance program for coastal energy activity must be linked to the coastal management programs and objectives of the coastal States. This framework, definition of the problem, and set of principles and objectives guided the OCZM's formulation of the CEIP regulations; and the following discussion hopes to show exactly how these ideas are reflected in the regulations. Sources and Uses of Section 308 Moneys . The CEIP is designed under the CZMA to have both a primary and a secondary source of assistance for each of the four purposes for which the assistance may be used: public facilities and public services, repayment assistance, environmental/recreational amelioration, and planning. The Fund is the primary source of assistance for three of the four purposes. Assistance for public facilities and public services would come first from loans and guarantees (Sections 308(d) (1) and (2)). Only when a State cannot qualify for credit assistance or has exhausted its entire allotment of credit assistance can the proceeds of formula grants (section 308(b)) be used for public facilities and public services. Similarly for repayment assistance. Refinancing, modification of terms and supplemental loans (sections 308(d) (A) through (C)) are the primary forms of repayment assistance. A repayment grant (sections 308(d)(3)(D) and 308(b)(4)(A)) is the secondary form of repayment assistance. In the case of a bond guarantee, source of the grant would first be the formula grants (section 308(b)(4) (A)) and then, if those moneys are insufficient, the Fund (section 308(d)(3)(D)). In the case of a loan, the repayment grant would be made from the Fund only (section 308(d)(3)(D)). For planning grants, the Fund (section 308(c)) is also the primary source of assistance. (Grants under this section would cover 80 percent of the costs of the projects.) If these moneys are insufficient, formula grants (section 308(b)(4)(B)) could be used for planning. (These grants would cover 100 percent of the costs of the projects.) Preventing, reducing, or repairing unavoidable damage to valuable environmental or recreational resources is the only one of the four purposes for which the proceeds of formula grants (Section 308 (b)(4)(C)) are to be the primary source. If these moneys are insufficient for that purpose (or if the State has no allotted formula grant, as will be the case for States without OCS energy activity off their coasts) , there are moneys available for environmental and recreational amelioration under the Fund (section 308(d)(4)). (The purposes for which CEIP assistance may be used, along with the primary and secondary sources of assistance for each purpose, are depicted in Figure 1.) Clearly, an important part of the regulations deals with the problem of defining when the sec- ondary source of assistance may be used for a given purpose, that is, when assistance is insuf- ficient or unavailable under the primary source. In the cases of planning, public facilities and public services, and environmental/recreational assistance, the determination of whether adequate moneys from the primary source are unavailable hinges on estimates of need for each purpose in each State calculated by the OCZM as part of the allotment process. If the need is greater than the amount allotted to the State under the primary source, the secondary source may be used. In the case of credit assistance, there is, however, another way in which funds might be "unavail- able" under the primary source: when a State or local government is prohibited from borrowing by some constitutional or statutory provision. It is the OCZM's intention to limit this avenue to the secondary source to cases in which the impediment to borrowing is truly insurmountable. If the State may legally encumber debt through any mechanism -- by, for example, a vote of the legislature -- the OCZM will not consider credit assistance as being legally unavailable to the State. In the case of repayment assistance, the move to the secondary source --a repayment grant -- will be made by OCZM after study of the fiscal data the borrower will be required to submit peri- odically. Administrative Procedures . In managing this somewhat complicated flow of moneys from sources to uses, the OCZM intends to keep procedures as simple as possible, and to leave to the States a great deal of discretion as to how funds are ultimately used. At the same time, the OCZM intends to mini- mize the likelihood that funds could be used for projects that are not in accord with the purposes of the CZMA. The reconciliation of these objectives lias been a central concern in formulation of the regula- tions. In large part, the application procedures envisaged in the regulations call for showings or certifications by the State or local government that there is, in fact, compliance with the requirements of the CZMA and regulations. The OCZM will retain review authority over these applica- tions, but will rely heavily, 'on both the incentives for proper compliance which have been built into the structure of the CEIP, as well as on auditing. 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D S. /\ -H c a TJ C a c> a +J ■a • r— i > n: +■> ■t- o V re re o >^ u en s_ S- a> a c 4-> i— c:^~ re i— re o 4-> re s--— c c C3 *-> QJ O ■3- E'r- re — - c +J i— '— o re 3 .0 s- ao E~— ••!- s- C 00 > o o o c CO U- CO ao s- / \ ■»-> c CO TJ e: CO a >> CO +J TJ ■r— 1 > re 4-> ■M O to re re o >> o en S- s- 01 o c 4- 01 •»» re i— •<- o re m o i- oo at > •!- (. U1 re > « w) c c 01 o 3 Ol S_ r— III. DESCRIPTION OF THE ENVIRONMENT AFFECTED The primary effects of the proposed action will occur in the coastal zones of the States affected. As defined by the CZMA, the coastal zone is "the coastal waters (including the lands therein and there- under) and adjacent shorelands (including the waters therein and thereunder) , sti-ongly influenced by each other and in proximity to the shorelines of the several coastal states, and includes islands, transitional and intertidal areas, salt marshes, wetlands, and beaches. The zone extends, in Great Lakes waters, to the international boundary between the United States and Canada and, in other areas, seaward to the outer limit of the United States territorial sea. The zone extends inland from the shorelines only to the extent necessary to control shorelands, the uses of which have a direct and significant impact on the coastal waters. Excluded from the coastal zone are lands the use of which is by law subject solely to the discretion of or which is held in trust by the Federal government, its officers or agents." IV. RELATIONSHIP OF THE PROPOSED ACTION TO LAND USE PLANS, POLICIES, AND CONTROLS FOR THE AREA Relationship of section 308 of the CZMA 1. To be eligible for section 308 assistance, a State must be receiving a grant under sections 305 or 306 or be making satisfactory progress, in the judgment of the Secretary of Commerce, towards a manage- ment program which is consistent with the policies set forth in section 303. 2. Use of the financial assistance under section 308 must be consistent with State coastal management programs approved under section 308 or be compatible with developing State coastal management programs. 3. The availability of funds under section 308 creates an incentive to expand the landward boundary of the coastal zone. 4. States with approved section 306 coastal management programs are excluded from planning assistance from the Coastal Energy Impact Fund under section 308(c) (to be referred to as the Fund) but are directly eligible for formula or planning grants section (308(b)(4)(B)). This produces an incentive for States with OCS activities to complete their 306 programs. 5. The proposed regulations prohibit use of planning assistance from the Fund required under Section 305(b)(8). However, planning assistance from the Fund may be used in the application of the planning process when the state is not receiving section 306 funds for that purpose. V. PROBABLE IMPACT OF PROPOSED ACTION AND REASONABLE ALTERNATIVES A. Introduction Neither the "no action" nor the "delayed action" alternative is considered reasonable. The CZMA mandates that rules and regulations be promulgated within 270 days of enactment of the CZMA, Therefore, these alternatives will not be discussed. Implementation of the CEIP under the proposed regulations will make available to coastal States and coastal communities financial assistance to mitigate the environmental impacts of coastal energy development. Specifically, appropriated funds are to be used for: (1) study and planning; (2) construction of public facilities/provision of public services; and (3) amelioration and prevention of damage to coastal environmental and recreational resources. The probable environmental impact of the proposed regulations will therefore depend on the amount of money expended for each particular purpose. Because funds authorized to be appropriated are known only in terms of maximum amounts for categorical purposes, specific impacts are difficult to project. In addition, the actual development of energy activity (whose effects the appropriated funds are to assist in mitigating) is dependent on many factors unrelated to the proposed action. The discussion of probable impacts will therefore focus on the general impacts of the proposed action, for any discussion of specific impacts would be highly speculative. There is, furthermore, a value in addressing impacts from this wider perspective. Indeed, many of the impacts of the CEIP -- such as its large-scale land use implications -- might be missed with a more myopic view. The CZMA allows some flexibility in establishing rules and regulations for disbursing moneys appro- priated under section 308. In developing proposed regulations, the OCZM has sought to utilize this flexibility to balance two recognized national objectives: (1) attaining a greater degree of energy self-sufficiency; and (2) protecting the Nation's coastal environmental and recreational resources. The proposed regulations achieve this balance through various criteria for determining eligibility for financial assistance, procedures for al Totting funds among coastal States, and limitations upon amounts of money to be spent for each purpose. The basic consideration in developing eligibility criteria, allotment formulas, and limitations on expenditures is the extent to which disbursement of funds is controlled by the OCZM. A hazard implicit in allowing unrestricted access to appropriated funds is that coastal development will be overstimulated, resulting in wasted resources and environmental damage. Extremely restricted access to financial assistance, on the other hand, may frustrate necessary development. The regulations are therefore structured to assure local decision-makers maximum flexibility in determining priorities for expenditures -- but also to assure that these expenditures are consistent with the environmentally sound development and induce only as much growth as needed because of coastal energy activity. Probable impacts of the proposed regulations and probable impacts of reasonable alternative regulation schemes will be discussed. The discussion will focus on those alternatives which may produce impacts different from impacts associated with the action as proposed. B. Proposed regulations and alternative regulation schemes. 1. Study and Planning Grants - Subpart D. (a) Introduction . Subpart D of the proposed regulations sets forth policies and requirements for planning and study grants made available under section 308(c) and 308(b)(4)(B) of the CZMA.. The objective of these grants is to assist coastal States and local governments in planning for and study of: (1) any economic, social, or environmental consequences resulting from new coastal energy activity which significantly affects the coastal zone; and (2) any new public facility or public service the need for which is a direct result of new OCS energy activity. The primary source of assistance for these puiposes is section 308(c). Section 308(b)(4)(B) grants become a source of funds only after section 308(c) moneys are exhausted -- and then only for purposes directly related to new OCS energy activity. (b) General Im p acts . The environmental impacts of providing coastal States with grants to plan for and study consequences in the coastal zone of energy development are positive. Study grants will provide information leading to a better understanding of the consequences resulting from coastal energy activity as well as of the interaction between sucli consequences and the environment. An improved understanding of the social, economic, and environmental effects of energy development will facilitate rational planning and iiraprove the management of coastal energy development. Therefore, the overall effect of implementing subpart D of the proposed regulations will be ncourage development of coastal energy activity in the most environmentally sound manner and to maximize the control States have over uses of the coastal zone by improving the decision-making process. For these reasons, the provision of planning and study grants will not likely induce over- development. A corollary benefit will be knowledge and experience gained by coastal States that can be applicable to a broad range of energy and non- energy development problems. (c) Impacts of reasonable alternative regulation schemes . (1) Purposes. Section 931.33 Within this part, 931. 33(b) of the proposed regulations defines, in broad, non- restrictive terms, the purposes for which planning and study grants may be used. This allows States to determine priorities for spending allotted funds based on local needs, thereby maximizing the State's potential for managing the consequences of coastal development. A stricter interpretation of the allowable purposes could only impose artificial constraints on a State's ability to react to energy development stresses and decreases the effectiveness of the allotted assistance. (2) Eligibility for study and planning grants . Section 931.55 (i) Section 308(c) ' The proposed regulations would deny section 308(c) grants to States with coastal management programs approved under section 306 of the CZMA. This restriction is not specified in the CZMA. One effect of this restriction is to allow a more equitable distribution of 308(c) funds among States which have yet to develop coastal management plans and are therefore less prepared to accommodate new or expanded coastal energy activity. Increasing the proportional share of funds allotted to States without 306 programs will maximize the assistance available to areas where the level of planning and preparedness for coastal energy development is low. In some cases, this restriction may deprive of 308(c) -planning and study funds those States with a high level of new energy activity. However, since States with approved 306 programs have established a planning process for anticipating and managing impacts of siting energy facilities in the coastal zone (section 305(b)(8) of the CZMA.), the net effect of depriving such states of 308(c) planning money (while increasing planning assistance to states without 306 programs) will probably be beneficial. The loss of 308(c) assistance to states with 306 programs is further mitigated because the proposed regulations allow those States to requisition 308(b)(4)(B) planning and study funds directly. The direct access to 308(b)(4)(B) funds for States with completed 306 programs also creates an in- centive for States with OCS activities to complete their 306 management programs because grants under 308(b)(4)(B) cover 100 percent of the cost rather than the 80 percent provided by 308(c) grants. A corollary result of excluding States with approved 306 plans from 308(c) assistance is an increase in the amount of money available for prevention, reduction, or amelioration of unavoidable environmental losses (section 308(d)(4) of the CZMA) because the total sum of money authorized to be appropriated under 308(c) and 308(d)(4) is fixed; i.e., money not spent for planning under J08(c) is available for environmental/recreational grants under 308(d)(4). The proposed regulations also provide energy facilities whose consequences are to be studied and planned for with section 308(c) moneys and are those energy facilities for which a major State or Federal license or permit has been applied. This restriction in eligibility is designed to assure that money is spent preparing for projects that have a high probability of realization. A relaxation of this restriction would increase the likelihood that appropriated money would often be spent to plan for consequences that will never occur. (ii) Section 308(b) (grants) If planning grants allotted a State in a given year from the Fund are insufficient, that State may requisition the proceeds of its allotted formula grant to finance additional planning pro- jects -- but these projects must be limited to planning for the provision of public facilities ■ and services directly required as a result of OCS energy activity (3) Allotment of assistance among coastal states . The CZMA does not mandate a mechanism for distributing 308(c) grants among coastal states. The proposed regulations provide for a] lotting 308(c) moneys bv formula based on (a) the number and type of proposed new or expanded energy facilities that motivate planning in a given year; and (b) standardized employment estimates for such facilities. This formula is based on an assumption that probable impacts associated with any new or expanded energy facility, and therefore planning need, will best; be approximated by the number of new employees required by a given facility. In some cases, this approach may penalize States in which non- labor -intensive energy faci- lities are planned in environmentally sensitive areas, resulting, perhaps, in environmental losses which may have been prevented with the help of a larger allotment of planning funds. However, be- cause it is difficult to formulate meaningful quantitative environmental criteria, and because the secondary impacts of population growth are, in general, much greater than primary construction impacts, the overall effect of the allotment, as proposed, will be to increase the likelihood of distributing funds based on actual need. (4) Limitations on amount of assistance . The proposed regulations place a limit on the amount of money available to eligible coastal states under 308(b)(4)(B) for planning and study --an amount not to exceed 5 percent of the total amount of credit assistance allotted from the Fund. This limitation seeks to strike a balance between money appropriated under 308(b) that is used for plr -.ing and study (308(b) (4) (B)) and the money that is left for other purposes under 308(b). OCZM has found tliat a 5 percent planning-to-capital investment ratio is roughly equal to the proportion allowed for planning under other Federal programs that support community development. An alternative to imposing an external constraint on the amount used for various purposes under 308(b) is to allow each state to determine its own priorities. While there are cetain benefits in allowing local control over priorities for spending allocated funds, the OCZM believes^ in this instance, that it is in the national interest and in keeping with Congressional intent to restrict the amount of funds that will be spent for planning, thereby reserving the formula grants to the use for which they are primary: ameliorating or preventing damage to environmental or recreational resources resulting from coastal energy development. The regulations also impose the limitation that moneys spent for planning and study related to the impacts of OCS and non-OCS energy activity be proportional to the employment equivalencies calculated as part of the allotment process associated with these activities. This restriction is based on the assumption the ratio of employent equivalences is a reasonable approximat on of relative impacts attributable to each activity, and is designed to insure allocated moneys are spent related to probable impacts. 2. Financing public facilities and public services -- Subparts E and F. (a) Introduction Subparts E and F of the proposed regulations set forth policies and requirements for financial assistance to coastal states and local governments under subsection 308(d)(1) and (2) and 308(b)(4) (B) of the CZMA, This assistance is for the provision of new or improved public facilities and public services required as a result of coastal energy activity, including those required as a direct result of new or expanded OCS energy activity. Subsections 308(d)(1) and (2) provide credit . assistance by making loans and bond guarantees available to coastal states while subsection 308(b)(4) (B) provides grants. The primary source of funds for financing public facilities and services is subsection 308(d)(1) and (2). Subsection 308(b)(4)(B) grants are a secondary source to be used only when section 308(d)(1) and (2) assistance has been exhausted and only to the extent that the public facilities and services financed are a direct result of OCS energy activity. The major environmental concerns related to the provisions of Subparts E and F involve the trade-off between the need to meet legitimate needs for facilities and services and the possibility of inducing unnecessary growth by allowing unrestricted access to Federal funds. The regulations insure that funds are disbursed only for those needs that are most pressing and cannot be met through other sources. Further, they encourage a thorough review at the State and local level of social , economiCj and environmental consequences of proposed facilities and services. (b) Loans and Bond Guarantees vs. Grants The potential exists for significant adverse environmental, social, and economic impacts from financial assistance provided under the CZMA if the availability of Federal funds is relatively unlimited and unrestricted. By encouraging increases in public facilities and services in excess of those necessary because of coastal energy activity, the CEIP could itself attract growth to the coastal zone. The availability of unused public facilities and services capacity could result in development beyond that necessitated by increased energy development. This could change the land-use character of the community -- and could generate its own socio-economic and environmental effects. These regulations have been drafted to minimize the likelihood of this by providing checks on unneeded expenditure for public facilities and public services. In addition to placing certain restrictions upon the availability of financial assistance for public facilities and services, the regulations provide other incentives for wise inventment in public facilities and services. In this regard, the moneys appropriated under section 308(d)(1) and (2) and section 308(b)(4)(B) will be available for a broad range of public facilities and services on the basis of actual need. The primary source of assistance for public facilities and services is loans and bond guarantees from the Fund (section 308(d)(1) and (d)(2)). The regulations require that a State or local community make use of the loans and guarantees provided by 308(d)(1) and (2) to finance public facilities and services before availing itself of grant moneys provided by 308(b)(4)(B). Thus, before "free" moneys can be used by a state, funds from loans and bonds (which carry an interest cost) must be used. And, presumably, a state would take extra care to use those latter funds on only priority needs. The proposed regulations provide that a State must exhaust its allotment for loan and bond guarantees under section 308(d)(1) and (d)(2) before receiving grants unless that State does not have constitutional or statutory authority to issue bonds or to negotiate loans (and such authority has never been created for special purposes in the past). The provision thus provides an important constraint on the use of grants for financing public facilities and public services. This in turn reduces the possibility of expenditures of financial assistance on projects which, if their financing actually imposed an interest charge on the borrower, would not be instituted. (c) Loans and Bond Guarantees 1. Application requisition for assistance . A coastal State applying for credit assistance under section 308(d)(1) or (d)(2) or requisition- ing a grant under section 308(b)(4)(B) will be required to provide as part of the standard applications process the following information: (1) certification that the application or requisition results from an equitable intrastate allocation of the State's overall allotted assistance; (2) certification that the purposes for which the assistance is requested are consistent with the State's coastal zone management program; (3) an assessment of the environmental impacts of new or improved public facilities and services for which assistance is to be used; (4) certification there is no duplication with other Federal assistance programs; and (5) the name of the State or local government entity which is to receive the assistance. The certification that the funds will be equitably distributed among local communities will insure moneys obtained by a State will be distributed according to actual need and will therefore be expended for projects that conform with the objectives of the CZMA. Certification that a request for assistance to construct or expand public facilities and services is consistent with a State's approved or developing coastal management program will ensure such development occurs with minimum damage to the environment. Each requisition of the proceeds of a grant under 308(b) or award of credit assistance under 308(d) may constitute a major Federal action significantly affecting the human environment within the meaning of the National Environmental Policy Act and thus require an environmental impact statement (EIS). The decision whether to prepare an EIS will be made on a case-by-case basis and will be based on an environmental assessment submitted by the States. Therefore, projects funded under section 308(b)(4)(B) and 308(d) (1) and (2) which significantly affect the coastal zone will be examined for their environmental effects. Certification that a proposed public facility or service cannot be funded by other Federal assistance programs reduces the chance for redundant or needless expenditures of CEIP funds. It also provides a basis for recovery of funds should it be subsequently found that other funds were in fact available. In addition to the above information, a coastal State or unit of general purpose local govern- ment applying for credit assistance must provide the OCZM with several pieces of information, including the following: (1) a certification that, if the applicant is not a State, the applicant qualifies as a unit of general purpose local government; (2) a description of the new or improved public facilities or public services, including costs on an annualized basis; (3) estimates of utilization of public facilities or public services similar to those for which financial assistance is being sought; (4) a description of the new or expanded coastal energy activity causing impacts for which credit assistance is requested; (5) a growth management schedule including such items as (i) new employment and population expected as a result of new or expanded coastal energy activity and (ii) expected taxes, user fees, and other revenues from new or expanded coastal energy facilities and related population. Requiring that the application for 308(d)(1) or (d)(2) financial assistance comprise the information described above will insure that the disbursement of moneys from the Fund follows consistent, clearly established procedures. In addition, the proposed application procedure motivates proper management of irreplaceable coastal resources , thereby encouraging the attain- ment of greater energy self-sufficiency with minimum environmental damage. Requiring each State to provide a growth management plan to prove that the public facility or service projects proposed are necessary because of new or expanded coastal energy activity has two important complementary objectives: (1) to provide financial data necessary for formulating appropriate repayment schedules; and (2) to assure moneys are spent in an environmentally and fiscally sound manner. 2. Repayment assistance under 308(d)(3) The objectives of the repayment assistance provision are to reduce the financial risk to coastal States and local government attendant on coastal energy development. Should the projected revenues not materialize, repayment assistance would provide for modification of terms, refinancing, supplemental loans, or, as a final alternative, grants to pay outstanding obligations. The basic premise of the CZMA is that coastal energy activities benefit the Nation as a whole, whereas a high proportion of the costs may be incurred by coastal States and communities. Therefore, should revenues projected under the growth management schedule prove to be insufficient, Federal funds from CEIP would remove from the local government the fiscal burden of a debt obligation the government incurred because of coastal energy activity. OCZM will make adjustments when necessary, to the repayment schedules of recipients of loans under section 308(d) (1) and to government entities receiving bond guarantees under section 308(d)(2) when the coastal energy activity and related population do not materialize or do not provide adequate revenues to meet credit obligations. By making necessary adjustments in the terms of credit on an individual case-by-case basis, tailored to the particular needs of the individual State or local government requesting such assistance, most fiscal losses can be avoided. At the same time, by making grants difficult to obtain for debt service, there will be an appropriate disincentive pro- vided to reduce the number of fiscally unsound public facilities and public services projects created. This will also help to insure that 308(b) money is available, to the maximum extent pos- sible, for ameliorating adverse environmental impacts arising from coastal energy activity. 3. Special requirements for loans . The interest rate on loans made by the OCZM to State governments under 308(d)(1) can be set no higher than the market rate on U. S. obligations of comparable maturities. Interest on State and local bonds is exempt from Federal and State income taxes. Thus, States may be able to issue their own bonds on more favorable terms than those under which they can borrow from the Fund. Reducing interest rates on loans from the Fund will increase the demand for 308(d)(1) financing. It is the intent of OCZM to set the interest rate at an appropriate level so as to be attractive to those State and local governments who are faced with the impacts of energy activity and have no easier access to front- end capital. 4. Special requirement for guarantees . Under section 308(d)(2), bonds issued by State and local governments can be guaranteed by OCZM, subject to provisions of section 308(f). The extent to which the guarantee provisions of 308(d) (2) will be used by various State and local governments depends upon: (1) the interest rates incurred when State and local governments issue non- guaranteed tax-free bonds; and (2) rates which State and local governments will pay on Federally guaranteed, taxable bonds. Normally, highly rated municipal tax-exempt bonds yield about two percent less to maturity to the holder than do Treasury bonds. Therefore, for the bond guarantee provision of 308(D)(2) to be attractive, a local or State government must be able to issue bonds at a premium because they will not be tax exempt. However, OCZM may pay a portion of this premium to the extent that the rate paid by the State or local government is greater than the interest rate on direct loans made from the Fund. 5. Scope of coverage . Requests for section 308 (d)(1) or (d)(2) loan and bond guarantees must meet certain criteria with respect to the types of coastal energy activities and public facilities and services which qualify for such credit assistance. In developing the allotment formula, the regulations specify that only those energy activities that have obtained major Federal permits, licenses, or leases will be considered in subsequent formu- lations. This will insure moneys will be used only for needs most likely to materialize. An alternative would be to include activities which have permits, licenses, or lease requests pending, or which are still in the planning stage. The result of this alternative would be to increase the likelihood that public facilities and services would be funded in anticipation of needs that may not occur, thereby creating excess public facilities capacity and a waste of resources. In order to qualify for assistance, a public facility must be new or improved. A public faci- lity is new or improved if constructed after July 26, 1976, in order to serve a new population or if expanded or renovated to increase measurably its capacity to serve new population resulting from new or expanded coastal energy activity. A public service is new or improved if the proposed type was not offered more than 90 days prior to application for section 308(d)(1) or (d)(2) assistance for such service and if this type of increased level of service is only for new population growth resulting from new or expanded coastal energy activity. The impact of these limitations is to 10 concentrate available funds under section 308(d)(1) and (d)(2) and 308(b)(4)(B) on those public facilities and public services demands arising from new or expanded energy activities. This serves to further the objective of increasing domestic energy production by providing incentives for increased coastal energy activity. To use this financial assistance to pay for public facilities and public services required as a result of past energy activity would not provide such incentives. Making financial assistance available for the improvement or expansion of existing public facilities minimizes adverse environmental impacts resulting from new construction. In addition, the commitment of resources over what would be necessary for new construction is reduced. 6. Grants . There are two conditions under which section 308(b)(4)(B) grants could be made available to provide financial assistance for public facilities or public services. The most likely condition to arise would be exhaustion of available moneys in the Fund through section 308(d)(1) and (d)(2) credit assistance. The second and less likely case would be the inability of a particular government entity to take advantage of for lack of needed constitutional or statutory authority. If either of these conditions is met by a State in a given year, the State may requisition from the OCZM the proceeds of its allotted formula grants. The following information must be provided when requisitioning such funds: (1) a description of the particular new or improved public facilities or public services, required as a direct result of new or expanded OCS energy activity, for which the proceeds are to be used, in- cluding costs on an annualized basis; (2) an estimate of current levels of utilization of any existing facilities or services similar to those for which the proceeds are to be expanded; and (3) a description of the new or expanded OCS energy activity causing the impacts for which the proceeds of the assistance are to be used. In providing this information, the State will have to examine in detail the purposes for which these proceeds will be used and to certify that a need for this expenditure exists. The requisition will also provide necessary information to allow OCZM to verify the need for the public facilities and services proposed and the overall eligibility of the State requesting the assistance. In addi- tion, the requisition process will better enable OCZM to assess whether the proposed public facilities and public services are of a type that meets the objectives of the CZMA. Grants, according to the CZMA, are available to provide financial assistance for new or improved public facilities and services which are required as a direct result of new or expanded OCS energy activity. Included in the definition of those public facilities and services required as a direct result of OCS energy activity are those necessitated by the workers and families of new employees of OCS lessees, their contractors, sub- contractors, and principal suppliers. Because of these strict limitations upon the use of formula grants, these grants will be less likely to result in the provision of an unwarranted amount of public facilities and public services. The result will be to insure that a higher proportion of the requests for assistance under CEIP is in the form of loans and bond guarantees. Because this implies an interest cost for the recipient, it is more likely that credit assistance available under the CZMA will be used only for those projects for which strong needs exist. 3. Impacts of Grants for Unavoidable Losses of Coastal Environmental and Recreational Resources - Subpart G (a) Introduction . Subpart G provides grant assistance for preventing, reducing, or* ameliorating unavoidable environmental and recreational losses resulting from coastal energy activity. This assistance is provided by two separate sections of the CZMA -- 308(b)(4)(C) and 308 (d)(4): The primary source of assistance for preventing, reducing, or ameliorating environmental/recreational losses resulting from coastal energy activity is the grant moneys provided for under section 308(b)(4)(C) and allotted to coastal States. When grant moneys allotted to a State under section 308(b) are insufficient, a coastal State may apply for the grant moneys under section 308(d)(4) that are allotted to it. States not eligible for 308(b) grants may apply directly for grants under section 308(d)(4). 11 (b) C oncept of unavoidable losses . The regulations have been developed to achieve the following objectives: (1) to encourage and help States and local governments prevent, reduce, or repair unavoidable damage caused to environmental and recreational resources by coastal energy activity; and (2) to encourage internal- ization of those environmental and recreational costs attributable to and chargeable against a specific person or persons. Two basic issues which must be dealt with to achieve these objectives are (1) how to deal with projected losses and (2) how to avoid subsidizing the damaging of resources. The concept of "unavoidable" losses' is central to both issues. The CZMA defines an unavoidable loss as one "the costs of whose prevention, reduction, or amelioration cannot be attributed to or charged against an identifiable person." Damage that occurred in the past from past energy activity will usually be eligible for grant assistance under the CZMA.. Since it would be extremely difficult to assess this damage against anyone now, it would be "un- avoidable" by this definition. Damage from activity expected to take place in the future is not similarly unavoidable, unless it cannot, for some reason, be attributed to an identifiable person. The reason behind this difference can be expressed as follows : whereas one can legitimately refrain from holding liable a corporation that caused damage in the past because the State or local government failed adequately to exercise its permitting or other police powers, one cannot similarly excuse the State or local government from an ongoing responsibility to effect the internalization of the cost of environmental or recreational damage. There is, therefore, a need to insure that the availability of Federal moneys for unavoidable losses does not provide a disincentive to State and local governments to take all steps at their disposal to internalize costs. The regulations provide an incentive to a State or locality to encourage internalization in three ways : (1) the use of grants to cover the transactional costs of internalization, (2) the provision of only 80 percent of the cost of unavoidable losses occurring after July 26, 1976, and (3) the recovery of accrued interest on any grant funds that are reclaimed by the Federal government because they were found to have been expended for inappropriate purposes. The use of grant funds to cover transactional costs would allow a State or local government to take the administrative or legal steps necessary to assign to the appropriate party the costs of existing or projected losses of environmental/recreational resources. Such transactional costs could include monitoring and policing activities, more detailed review of a proposed activity, and litigation. The provision of only 80 percent of the cost of unavoidable losses occurring after July 26, 1976, is an incentive to states first to take all steps at its disposal to internalize the cost by assigning 100 percent to an identifiable person. Further, the availability of funds to cover the transactional cost of doing this would provide an additional incentive to a state to internalize as much as possible. A provision to charge accrued interest on the principle of a grant subsequently recovered by the Federal government if expended for inappropriate purposes (i.e., a loss being certified as "unavoidable" when in fact it was avoidable) could provide incentive to a State to internalize costs before seeking 308 assistance. Without this provision, the grant could be considered an interest-free loan. An alternative to the proposed regulation would be to provide 100 percent of the cost of losses occurring after July 26, 1976. Under this situation, a State or locale receives no additional rewards for grant moneys under 308(b) and (d) because of increased efforts to internalize costs. Indeed, the effect may be just the opposite. If a State were to respond in a rigorous and con- scientious way under section 308 by internalizing the cost of all existing and projected losses, it would have no unavoidable impacts and could receive no moneys under section 308(b)(4)(c) or 308 (d)(4). Given no additional incentives to internalize costs, a State would be more likely first to seek Federal funds to cover a loss (by claiming unavoidability) than to force an industry to assume the costs. The State presumably has the power to do the latter apart from section 308. (c) Definitions . The terms "environmental resource," "recreational resource," and "loss" are defined in the regulations to strike a balance between excessively restrictive and entirely unrestricted coverage. To define these terms more exclusively would be to allow some environmental or recreational losses to go unrepaired; but, to define the terms too loosely would be to invite the subsidy of projects Congress had no intention of paying for. OCZM does not view the balance here as a tenuous one, and feels that the definitions allow flexibility to include unforeseen types of resources or resource losses, while excluding most obvious improprieties. 12 (d) Allotment process . The allotment process for the environmental/recreational grants from the Fund (section 308(d) (4)) is a modified version of the process used to allot credit assistance from the Fund (section 308(d)(1) and (d)(2)). The modification involves weighting the allotment toward non-OCS related energy activity; this is accomplished by removing OCS-related energy facilities from consideration during the allotment process. (This does not mean that 308(d)(4) money cannot be used for projects needed as a result of OCS activity.) The major impact of the regulation is to insure States without OCS activities have access to assistance to cope with unavoidable impacts. If, as in the alternative, the formula considered OCS activities, many States which do not have access to section 308(b)(4)(C) funds would not have significant funds available for relief. In addition, States with OCS activities would receive double allotments for the same impacts. (e) Requisition/ application process . A state requisitioning 308(b)(4)(C) proceeds or applying for section 308(d)(4) moneys must certify the loss was unavoidable as defined in the regulations; must estimate the value of the loss; and must describe in some detail the steps the State or locale proposes to take to prevent, reduce, or ameliorate the loss. The rationale and impact of these requirements are discussed below. 1. Certification . When a State certifies that the loss for which it is seeking a grant is unavoidable, it is, in essence, pledging to return those funds should it be subsequently determined the loss was, in fact, avoidable -- i.e., the State could have either internalized the cost or obtained funds from some other Federal source. The regulations provide that accrued interest be paid on any grant that a State is asked to return. A State, therefore, has an incentive to insure that the losses for which it seeks assistance are, indeed, unavoidable. Without the interest pro- visions, the State could consider the grant to be an interest-free loan. 2. Estimating the value of a loss . It is desirable that grant funds be applied in the most cost-effective manner to prevent, reduce, or ameliorate a loss. The regulations provide for a gen- eral comparison of the estimated value of the loss, in both economic and environmental terms, with the cost of the proposed project to rectify the loss. This should not be considered a rigorous cost/benefit analysis, but rather a check to insure that the most cost-effective steps are taken. 3- Description nf proposed .project to preve nt, reduce, or ameliorate loss . Each disburse- ment of a grant under section 308(b) (4) (C) or section 308(d)(4) may constitute a major Federal action significantly affecting the human environment (within the meaning of the National Environ- mental Policy Act) . and thus require an environmental impact statement. This determination must be made by the OCZM on a case-by-case basis. The description of the proposed project and potential impacts provided by a State will seive as a basis for this determination. Further, it will facilitate the OCZM's verification of the certification and of the cost- effectiveness of the action. (f) L imitations . Regulations limit the activites on what section 308(d)(4)(C) and section 308(d)(4) funds may be spent. Excluded are: (1) Any loss that results from the sale, lease, rental, or conversion to other uses of a publicly owned environmental or recreational resource. This limitation would prohibit use of funds for losses over which State/local government has obvious control. (2) Any loss not caused primarily by coastal energy activity. This would limit use of funds to intent of section 308(b)(4)(C) and section 308(d)(4). (3) Any recreational project whose cost exceeds the value of the resource loss the project would prevent, reduce, or ameliorate. (4) Any environmental project whose cost is incommensurate with the value of the environmental loss the project would prevent, reduce, or ameliorate. (5) Projects that would prevent, reduce, or ameliorate an unavoidable environmental loss by public facilities and public services of a type specified in the regulations. Assistance for such public facilities and public services should be sought under section 308(d)(1) and (2). 13 VI. UNAVOIDABLE ADVERSE IMPACTS For the purpose of this discussion the meaning of "unavoidable" is that used in the National Environmental Policy Act and not as used in the CZMA. The unavoidable adverse environmental impacts of the proposed regulations are expected to be minimal. The CZMA as implemented by the regulations provides financial assistance for planning, construction of facilities, the provision of public services, and the mitigation of environmental losses. Only the construction of public facilities is expected to have unavoidable adverse impacts (as construction always involves some unavoidable primary or secondary impacts) . Because the amount and location of construction activity is difficult to predict, it is not feasible to discuss the impacts of this activity in specific terms. These impacts are more properly discussed in the individual environmental impact statements on projects which receive financial assistance under section 308 when OCZM determines an environmental impact statement is required. (OCZM expects to prepare environmental impact statements on those projects -- whether for environ- mental/recreational amelioration or for the provision of public facilities -- that constitute major Federal actions. This does not mean that OCZM need prepare an impact statement to accompany every grant or other assistance it awards; many projects funded under section 308 will involve only routine activity in areas that are not particularly environmentally sensitive Also OCZM may prepare an area-wide impact statement that would consider the impacts of all the funds awarded for all projects in a specific impact area.) *> 14 APPENDIX 1 COASTAL ZONE MANAGEMENT ACT AMENDMENTS OF 1976 (P.L. 94-370) INCORPORATED INTO THE COASTAL ZONE MANAGEMENT ACT OF 1972 (P.L. 92-583) AN ACT To establish a national policy and develop a national program for the management, beneficial use, protection, and development of the land and water resources of the Nation's coastal zones, and for other purposes. Be it enacted by the Senate and House of Representatives of the United States of America in Congress assemoled , That the Act entitled "An Act to provide for a comprehensive, long-range, and coordinated national program in marine science, to establish a National Council on Marine Resources and Engineering Development, and a Commission on Marine Science, Engineering and Resources, and for other purposes", approved June 17, 1966 (80 Stat. 203), as amended (33 U.S.C. 1101-1124), is further amended by adding at the end thereof the following new title: TITLE III MANAGEMENT OF THE COASTAL ZONE SHORT TITLE Sec. 301. This title may be cited as the "Coastal Zone Management Act of 1972:." CONGRESSIONAL FINDINGS Sec. 302. The Congress finds that — (a) There is a national interest in the effective management, beneficial use, protection, and development of the coastal zone. (b) The coastal zone is rich in a variety of natural, commercial, recreational, ecological, industrial, and esthetic resources of immediate and potential value to the present and future well-being of the Nation. (c) The increasing and competing demands upon the lands and waters of our coastal zone occasioned by population growth and economic development, incluaing requirements for industry, commerce, residential developnent, recreation, extraction of mineral resources and fossil fuels, transportation and navigation, waste disposal, and harvesting of fish, shellfish, and other living marine resources, have resulted in the loss of living marine resources, wildlife, nutrient-rich areas, permanent and adverse changes to ecological systems, decreasing open space for public use, and shoreline erosion. (q) The coastal \Zone, and the fish, shellfish, other living marine resources, and wildlife therein, are ecologically fragile and consequently extrar.ely vulnerable to destruction by man's alterations. (e) Important ecological, cultural, historic, and esthetic values in the coastal zone which are essential to the well-being of all citizens are being .irretrievably damagea or lost. (f) Special natural and scenic characteristics are being damaged by ill-planned development that threatens these values. (g) In light of competing demands and the urgent need to protect and to give high priority to natural systems in the coastal zone, present state and local institutional arrangements for planning and regulating land and water uses in such areas are inadequate. (h) The key to more effective protection and use of the lana and water resources of the coastal zone is to encourage the states to exercise their full authority over the lands and waters in the coastal zone by assisting the states, in cooperation with Federal and local governments and other vitally affected interests, in developing land and water use programs for the coastal zone, including unified policies, criteria, standards, methods, and processes for dealing with land and water use decisions of more than local significance. (i) The national objective of attaining a greater degree of energy self- sufficiency would be advanced by providing Federal financial assistance to meet state ana local needs resulting from new or expanded energy activity in or affecting the coastal zone. DECLARATION OF POLICY Sec. 303. The Congress finds and declares that it is the national policy (a) to preserve, protect, develop, and where possible, to restore or enhance, the resources of the Nation's coastal zone for this and succeeding generations, (b) to encourage and assist the states to exercise effectively their responsibilities in the coastal zone through the development and implemention of management programs to achieve wise use of the land and water resources of the coastal zone giving full considera- tion to ecological, cultural, historic, and esthetic values as well as to needs for economic cevelopment, (c) for all Federal agencies engaged in programs affecting the coastal zone to cooperate and participate with state and local governments and regional agencies in effectuating the purposes of this title, and (d) to encourage the participation of the public, of Federal, state, and local governments and of regional agencies in the development of coastal zone management programs. With respect to implementation of such management programs, it is the national policy to encourage cooperation among the various state and regional agencies, including establishment of interstate and regional agreement^ cooperative procedures, and joint action particularly regarding environmental programs. DEFINITIONS Sec. 304. For the purposes of this title — (1) The term "coastal zone" means the coastal waters (including tee lands therein and thereunder) and the adjacent shorelands (including the waters therein and thereunder), strongly influenced by each other and in proximity to the shorelines of the several coastal states, and includes islands transitional and intertidal areas, salt marshes, wetlands, and beaches. The zone extends, in Great Lakes waters, to the international boundary between the United States and Canada and, in other areas, seaward to the outer limit of the United States territorial sea. The zone extends inland from the shorelines only to the extent necessary to control shorelanos, the uses ot which have a direct and significant impact on the coastal waters. Excluded from the coastal zone are lands the use of which is by law subject solely to the discretion of or which is held in trust by the Fecieral Government, its officers or agents. (2) The term "coastal waters" means (A) in the Great Lakes area, the waters within the territorial jurisdiction of the United States consisting of the Great Lakes, their connecting waters, harbors, road steads, and estuary-type areas such as bays, shallows, and marshes; and (B) in other areas, those waters, adjacent to the shorelines, which contain a measurable quantity or percentage of sea water, including, but not limited to, sounds, bays, lagoons, bayous, ponds, and estuaries. (3) The term "coastal state" means a state of the United States in, or bordering on, the Atlantic, Pacific, or Arctic Ocean, the Gulf of Mexico, Long Island Sound, or one or more of the Great Lakes. For the purposes of this title, the term also includes Puerto Rico, the Virgin Islands, Guam, and American Samoa. (4) The term "coastal energy activity" means any of the following activities if, and to the extent that (A) the conduct, support, or facilitation of such activity requires and involves the siting, construction, expansion, or operation of any equipment or facility; and (B) any technical requirement exists which, in the determination of the Secretary, necessitates that the siting, construction, expansion, or operation of such equipment or facility be carried out in, or in close proximity to, the coastal zone of any coastal state; (i) Any outer Continental Shelf energy activity; (ii) Any transportation, conversion, treatment, transfer, or storage of liquefied natural gas. (iii) Any transportation, transfer, or storage of oil, natural gas, or coal (including, but not limited to, by means of any deepwater port, as defined in section 3(10) of the Deepwater Port Act of 1974 (33 U.S.C. 1502(10)). For purposes of this paragraph, the siting, construction, expansion, or operation of any equipment cr facility shall be "in close proximity to" the coastal zone of any coastal state if such siting, construction, expansion, or operation has, or is likely to have, a significant effect on such coastal zone. (5) The term "energy facilities" means any equipment or facility which is or will be used primarily — (A) in the explo oration for, or the development, production, conversion, storage, transfer, processing, or transportation of, any energy resource; or (5) for the manufacture, production, or assembly of equipment, machinery, products, or devices which are involved in any activity described in subparagraph (A). The term includes, but is not limited to (i) electric generating plants; (ii) petroleum refineries and associated facilities; (iii) gasification plants; (iv) facilities used for the transportation, conversion, treatment, transfer, or storage of liquefied natural gas; (v) uranium enrichment or nuclear fuel processing facilities; (vi) oil and gas facilities, including platforms, assembly plants, storage depots, tank farms, crew and supply bases, and refining complexes; (vii) facilities, including deepwater ports, for the transfer of petroleum; (viii) pipelines and transmission facilities; and (ix) terminals which are associated with any of the foregoing. (6) The term "estuary" means that part of a river or stream or other body of water having unimparied connection with the open sea, where the sea water is measurably diluted with fresh water derived from land drainage. The term includes estuary-type areas of the Great Lakes. (7) The term "estuarine sanctuary" means a research area which may include any part or all of an estuary and island, transitional area, and upland in, adjoining, or adjacent to sucn estuary, and which constitutes to the extent feasible a natural unit, set aside to proviae scientists and students the opportunity to examine over a period of time the ecological relationships within the area. (8) The term "Fund" means the Coastal Energy Impact Fund established by section 308(h). (9) The term "land use" means activities which are conducted in, or on the shorelands within, the coastal zone, subject to the requirements outlined in section 307(g) . (10) The term "local government" means any political subdivision of, or any special entity created by, any coastal state which (in whole or part) is located in, or has authority over, such state's coastal zone and which (A) has authority to levy taxes, or to establish and collect user fees, or (B) provides any public facility or public service which is financed in whole or part by taxes or user fees. The term includes, but is not limited to, any school district, fire district, transportation authority, and any other special purpose district or authority. (11) The term "management program" includes but is not limited to, a comprehensive statement in words, maps, illustrations, or other media of communication, prepared and adopted by the state in accordance with the provisions of this title, setting forth objectives, policies, and standards to guide public and private uses of lands and waters in the coastal zone. (12) The term "outer Continental Shelf energy activity" means any exploration for, or any development or production of, oil or natural gas from the outer Continental Shelf (as cefined in section 2(a) of the Outer Continental Shelf Lands Act (43 U.S.C. 1331(a)), or the siting, construction, expansion, or operation of any new or expanded energy facilities directly required by such exploration, development, or production. (13) The term "person" means any individual, any corporation, partnership, association, or other entity organized or existing under the laws of any state; the Federal Government; any state, regional or local government; or any entity of any such Federal, state, regional, or local government. (14) The term "public facilities and public services" means facilities or services which are financed, in whole or in part, by any state or political subdivision thereof, including, but not limited to, highways and secondary roads, parking, mass transit, docks, navigation aids, fire and police protection, water supply, waste collection and treatment (including drainage), schools and education, and hospitals and health care. Such term may also include any other facility or service so financed which the Secretary finds will support increased population. (15) The term "Secretary" means the Secretary of Commerce. (16) The term "water use" means activities which are conducted in or on the water; but does not mean or include the establishment of any water quality standard or criteria or the regulation of the discharge or runoff of water pollutants except the standards, criteria, or regulations which are incorporated in any program as required by the provisions of section 307(f). MANAGEMENT PROGRAM DEVELOPMENT GRANTS Sec. 305. (a) The Secretary may make grants to any coastal state — (1) under subsection (c) for the purpose of assisting such state in the development of a management program for the land and water resources of its coastal zone; and (2) under subsection (d) for the purpose of assisting such state in the completion of the development, and the initial implementation, of its management program before such state qualifies for administrative grants under section 306. (b) The management program for each coastal state shall include each of the following requirements: (1) An identification of the boundaries of the coastal zone subject to the management program. (2) A definition of what shall constitute permissible land uses and water uses within the coastal zone which have a direct and significant impact on the coastal waters. (3) An inventory and designation of areas of particular concern within the coastal zone. (4) An identification of the means by which the state proposes to exert control over the land uses and water uses referred to in paragraph (2), including a listing of relevant cons ti cut ional provisions, laws, regulations, and judicial decisions. (5) Broad guidelines on priorities of uses in particular areas, including specifically those uses of lowest priority. (6) A description of the organizational structure proposed to implement such management program, including the responsibilities and interrelationships of local, areawide, state, regional, and interstate agencies in the management process. (7) A definition of the term "beach" and a planning process for the protection of, and access to, public beaches and other public coastal areas of environmental, recreational, historical, esthetic, ecological, or cultural value. (b) A planning process for energy facilities likely to be located in, or which may significantly affect, the coastal zone, including, but not limited to, a process for anticipating and managing the impacts from such facilities. (9) A planning process for (A) assessing the effects of shoreline erosion (however causea), and (B) studying and evaluating ways to control, or lessen the impact of, such erosion, and to restore areas adversely affected by such erosion. No management program is required to meet the requirements in paragraphs (7), (8), ana (9) before October 1, 1978. (c) The Secretary may make a grant annually to any coastal state for the purposes described in subsection (a)(1) if such state reasonably demonstrates to the satisfaction of the Secretary that such grant will be used to develop a manage- ment program consistent with the requirements set forth in section 306. The amount of any such grant shall not exceed 80 per centum of such state's costs for such purposes in any one year. No coastal state is eligible to receive more than four grants pursuant to this subsection. After the initial grant is made to any coastal state pursuant to this subsection, no subsequent grant shall be made to such state pursuant to this subsection unless the Secretary finds that such state is satisfacto- rily developing its management program. (d)(1) The Secretary may make a grant annually to any coastal state for the purposes described in subsection (a)(2) if the Secretary finds that such state meets the elibibility requirements set forth in paragraph (2). The amount of any such grant shall not exceed 80 per centum of the costs for such purposes in any one year. (2) A coastal state is eligible to receive grants under this subsection if it has — (A) developed a management program which — (i) is in compliance with the rules and regulations promulgated to carry out subsection (b), but (ii) has not yet been approved by the Secretary under section 306; (B) specifically icentified, after consultation with the Secretary, any deficiency in such program which makes it ineligible for approval by the Secretary pursuant to section 306, and has established a reasonable time schedule during which it can remedy any such deficiency; (C) specified the purposes for which any such grant will be used; (D) taken or is taking adequate steps to meet any requirement under section 306 or 307 which involves any Federal official or agency; and (E) complied with any other requirement which the Secretary, by rules and regulations, prescribes as being necessary and appropriate to carry out the purposes of this subsection. (3) No management program for which grants are made under this subsection shall be considered an approved program for purposes of section 307. (e) Grants under this section shall be made to, and allocated among, the coastal states pursuant to rules and regulations promulgated by the Secretary; except that — (1) no grant shall be made under this section in an amount which is more than 10 per centum of the total amount appropriated to carry out the purposes of this section, but the Secretary may waive this limitation in the case of any coastal state which is eligible for grants under subsection (d); and (2) no grant shall be made under this section in an amount which is less than 1 per centum of the total amount appropriated to carry out the purposes ot this section, but the Secretary shall waive this limitation in the case of any coastal state which requests such a waiver. (f) The amount of any grant (or portion thereof) made under this section which is not obligated by the coastal state concerned during the fiscal year for which it was first authorized to be obligated by such state, or during the fiscal year immediately following, shall revert to the Secretary who shall add such amount to the funds available for grants under this section. (g) With the approval of the Secretary, any coastal state may allocate to any local government, to any areawide agency designated under section 204 of the Demonstration Cities and Metropolitan Development Act of 1966, to any regional agency, or to any interstate agency, a portion of any grant received by it under this section for the purpose of carrying out the provision of this section. (h) Any coastal state which has completed the development of its management program shall submit such program to the Secretary for review and approval pursuant to section 306. Whenever the Secretary approves the management program of any coastal state under section 306, such state thereafter — (1) shall not be eligible for "grants under this section; except that such state may receive grants under subsection (c) in order to comply with the require- ments of paragraphs (7), (8), and (9) of subsection (b); and (2) shall be eligible for grants under section 306. (i) The authority to make grants under this section shall expire on September 30, 1979. Sec. 306. ADMINISTRATIVE GRANTS (a) The Secretary may make a grant annually to any coastal state for not more than 80 per centum of the costs of administering such state's management program if the Secretary (1) finds that such program meets the requirements of section 305(b), and (2) approves such program in accordance with subsections (c), (d), and (e). (b) Such grants shall be allocated to the states with approved programs based on rules and regulations promulgated by the Secretary which shall take into account the extent and nature of the shoreline and area covered by the plan, population of the area, and other relevant factors. Provided, that no annual grant made under this section shall be in excess of $2,000,000 for fiscal year 1975, in excess of $2,500,000 for fiscal year 1976, nor in excess of $3,000,000 for fiscal year 1977: Provided further, that no annual grant made under this section shall be less than 1 per centum of the total amount appropriated to carry out the purposes of the section: And provided further, That the Secretary shall waive the application of the 1 per centum minimum requirement as to any gcant unaer this section, when the coastal state involved requests such a waiver. (c) Prior to granting approval of a management program submitted by a coastal state, the Secretary shall find that: (1) The state has developed and adopted a management program for its coastal zone in accordance with rules and regulations promulgated by the Secretary, after notice, ana with the opportunity of full participation by relevant Federal agencies, state agencies, local governments, regional organizations, port authorities, and other interested parties, public and private, which is adequate to carry out the purposes of this title and is consistent with the policy declared in section 303 of this title. (2) The state has: (A) coordinated its program with local, areawide, and interstate plans applicable to areas within the coastal zone existing on January 1 of the year in which the state's management program is submitted to the Secretary, which plans have been developed by a local government, an areawide agency designated pursuant to regulations established under section 204 of the Demonstration Cities and Metropolitan Development Act of 1986, a regional agency or an interstate agency; and (B) established an effective mechanism for continuing consultation and coordination between the management agency designated pursuant to paragraph (5) of this subsection and with local government, interstate agencies, regional agencies, and areawide agencies within the coastal zone to assure the full participation of such local governments and agencies in carrying out the purposes of this title; except that the Secretary shall not find any mechanism to be "effective" for purposes of this subparagraph unless it includes each of the following requirements: (i) Such management agency is required, before implementing any management program decision which would conflict with any local zoning ordinance, decision, or other action, to send a notice of such management program decision to any local government whose zoning authority is affected thereby. (ii) Any such notice shall provide that such local government may, within the 30-day period commencing on the date of receipt of such notice, submit to the management agency written comments on such management program decision, and any recommendation for alternatives thereto, if no action is taken during such period which would conflict or interfere with such management program decision, unless such local government waives its right to comment. (iii) Such management agency, if any such comments are submitted to it, within such 30-day period, by any local government — (I) is required to consider any such comments, (II) is authorized, in its discretion, to hold a public hearing on such comments, and (III) may not take any action within such 30-day period to implement the management program decision, whether or not modified on the basis of such comments. (3) The state has held public hearings in the development of the management program. (4) The management program and any changes thereto have been reviewed and approved by the Governor. (5) The Governor of the state has designated a single agency to receive and administer the grants for implementing the management program required under paragraph (1) of this subsection. (6) The state is organized to implement the management program required under paragraph (1) of this subsection. (7) The state has the authorities necessary to implement the program, includ- ing the authority required under subsection (d) of this section. (8) The management program provides for adequate consideration of the national interest involved in planning for, and in the siting of, facilities (including energy facilities in, or which significantly affect, such state's coastal zone) which are necessary to meet requirements which are other than local in nature. In the case of such energy facilities, the Secretary shall find that the state has given such consideration to any applicable interstate energy plan or program. (9) The management program makes provision for procedures whereby specific areas may be designated for the purpose of preserving or restoring them for their conservation, recreational, ecological, or esthetic values. (d) Prior to granting approval- of the management program, the Secretary shall find that the state, acting through its chosen agency or agencies, including local governments, areawide agencies designated under section 204 of the Demonstration Cities and Metropolitan Development: Act of 1966, regional agencies, or interstate agencies, has authority for the management of the coastal zone in accordance with the management program. Such authority shall include power — (1) to administer land and water use regulations, control development in order to ensure compliance with the management program, and to resolve conflicts among competing uses; and (2) to acquire fee simple and less than fee simple interests in lands, waters, and other property through condemnation or other means when necessary to achieve conformance with the management program. (e) Prior to granting approval, the Secretary shall also find that the program provides: (1) for any one or a combination of the following general techniques for control of land and water uses within the coastal zone; (A) State establishment of criteria and standards for local implementation, subject to administrative review and enforcement of compliance; (6) Direct state land and water use planning and regulation; or (C) State administrative review for consistency with the management program of all development plans, projects, or land and water use regulations, including exceptions ana variances thereto, proposed by any state or local authority or private developer, with power to approve or disapprove after public notice and an opportunity for hearings. (2) for a method of assuring that local land and water use regulations within the coastal zone do not unreasonably restrict or exclude land and water uses of regional benefit. 10 (f) With the approval of the Secretary, a state may allocate to a local government, an areawide agency designated under section 204 of the Demonstration Cities and Metropolitan Development Act of 1966, a regional agency, or an interstate agency, a portion of the grant under this section for the purpose of carrying out the provisions of this section: Provided, that such allocation shall not relieve the state of the responsibility for ensuring that any funds so allocated are applied in furtherance of such state's approved management program. (g) Any coastal state may amend or modify the management program which it has submitted and which has been approved by the Secretary under. this section, pursuant to the required procedures described, in subsection (c). Except with respect to any such amendment which is made before October 1, 1978, for the purpose of complying with the requirements of paragraphs (7), (8), and (9) of section 305(b) no grant shall be made under this section to any coastal state after the date of such an amendment or modification, until the Secretary approves such amendment or modification. (h) At the discretion of the state and with the approval of the Secretary, a management program may be developed and adopted in segments so that immediate attention may be devoted to those areas within the coastal zone which most urgently need management programs: Provided, that the state adequately provides for the ultimate coordination of the various, segments of the management program into a single unified program and that the unified program will be completed as soon as is reasonably practicable. COORDINATION AND COOPERATION Sec. 307. (a) In carrying out his functions and responsibilities under this title, the Secretary shall consult with, cooperate with, and to the maximum extent practicable, coordinate his activities with other interested Federal agencies. (b) The Secretary shall not approve the management program submitted by a state pursuant to section 306 unless the views of Federal agencies principally affected by such program have been adequately considered. (c)(1) Each Federal agency conducting or supporting activities directly affecting the coastal zone shall conduct or support those activities in a manner which is, to the maximum extent practicable, consistent with approved state manage- ment programs. (2) Any Federal agency which shall undertake any development project in the coastal zone of a state shall insure that the project is, to the maximum extent practicable, consistent with approved state management programs. (3) (A) After final approval by the Secretary of a state's management program, any applicant for a required Federal license or permit to conduct an activity affecting land or water uses in the coastal zone of that state shall provide in the application to the licensing or permitting agency a certification that the proposed activity complies with the state's approved program and that such activity will be conducted in a manner consistent with the program. At the same time, the applicant shall furnish to the state or its designated agency a copy of the certification, with all necessary information and data. Each coastal state shall establish procedures for public notice in the case of all such certifications and, to the 11 extent it deems appropriate, procedures tor public hearings in connection therewith. At the earliest practicable time, the state or its designated agency shall notify the Federal agency concerned that the state concurs with or objects to the applicant's certification. If the state or its designated agency tails to furnish the required notification within six months after receipt of its copy of the applicant's certifica- tion, the state's concurrence with the certification shall be conclusively presumed. No license or permit shall be granted by the Federal agency until the state or its designated agency has concurred with trie applicant's certification or until, by the state's failure to act, the concurrence is conclusively presumed, unless the Secretary, on his own initiative or upon appeal by the applicant, finds, after providing a reasonable opportunity for detailed comments from the Federal agency involved and from the state, that the activity is consistent with the objectives of this title or is otherwise necessary in the interest of national security. (B) After the management program of any coastal state has been approved by the Secretary under section 306, any person who submits to the Secretary of the Interior any plan for the exploration or development of, or production from, any area which has been leased under the Outer Continental Shelf Lands Act (43 U.S.C. 1331, et seq .) and regulations under such Act shall, with respect to any exploration, development, or production described in such plan and affecting any land use or water use in the coastal zone of such state, attach to such plan a certification that each activity which is described in detail in such plan complies with such state's approved management program and will be carried out in a manner consistent with such program. No Federal official or agency shall grant such person any license or permit for any activity described in detail in such plan until such state or irs designated agency receives a copy of such certification ana plan, together with any other necessary data and information, and until — (i) such state or izs designated agency f in accordance with the procedures required co be established by such state pursuant to subparagraph (A), concurs with such person's certification and notifies the Secretary and the Secretary of the Interior of such concurrence; (ii) concurrence by such state with such certification is conclusively presumed, as provided for in subparagraph (A); or (iii) the Secretary finds, pursuant to subparagraph (A), that each activity which is described in detail in such plan is consistent with the objectives of this title or is otherwise necessary in the interest of national security. If a state concurs or is conclusively presumed to concur, or if the Secretary makes such a finding, the provisions of subparagraph (A) are not applicable with respect to such person, such state, and any Federal license or permit which is required to conduct any activity affecting land uses or water uses in the coastal zone of such state which is described in del . plan to which such concurrence or finding applies. If such state uc - j ation sac if the Secretary fails to make a finding under clause (iii) with respect to such certifica- tion, or if such person fails substantially to comply with such plan as submitted, such person shall submit an amendment to such plan, or a new plan, to the Secretary of the Interior. With respect to any amendment or new plan submitted to the Secretary of the Interior pursuant to the preceding sentence, the applicable time period for purposes of concurrence by conclusive presumption under subparagraph (A) is 3 months: and 12 (d) State and local governments submitting applications for Federal assistance under other Federal programs affecting the coastal zone shall indicate the views of the appropriate state or local agency as to the relationship of such activities to the approved management program for the coastal zone. Such applications shall be submitted and coordinated in accordance with the provisions of Title IV of the Intergovernmental Coordination Act or 1968 (82 Stat. 1096). Federal agencies shall not approve proposed projects that are inconsistent with a coastal state's management program, except upon a finding by the Secretary that such project is consistent with the purposes of this title or necessary in the interest of national security. (e) Nothing in this title shall be construed — (1) to diminish either Federal or state jurisdiction, responsibility, or rights in the field of planning, development, or control of water resources, submerged lands, or navigable waters; nor to displace, supersede, limit, or modify any interstate compact or the jurisdiction or responsibility of any legally established joint or common agency of two or more states or of two or more states and the Federal Government; nor to limit the authority of Congress to authorize and fund projects; (2) as superseding, modifying, or repealing existing laws applicable to the various Federal agencies; nor to affect the jurisdiction, powers, or prerogatives of the International Joint Commission, United States and Canada, the Permanent Engineering Board, and the United States operating entity or entities established pursuant to the Columbia River Basin Treaty, signed at Washington, January 17, 1961, or the International Boundary and Water Commission, United States and Mexico. (f) Notwithstanding any other provision of this title, nothing in this title shall in any way affect any requirement (1) established by the Federal Water Pollution Control Act, as amended, or the Clean Air Act, as amended, or (2) established by the Federal Government or by any state or local government pursuant to such Acts. Such requirements shall be incorporated in any program developed pursuant to this title and shall be the water pollution control and air pollution control requirements applicable to such program. (g) When any state's coastal zone management program, submitted for approval or proposed for modification pursuant to section 306 of this title, includes requirements as to shor elands which also would be subject to any Federally supported national land use program which may be hereafter enacted, the Secretary, prior to approving such program, shall obtain the concurrence of the Secretary of the Interior, or such other Federal official as may be designated to administer the national iano use program, with respect to that portion of the coastal zone manage- ment program affecting such inland areas. (h) In case of serious disagreement between any Eederal agency and a coastal state — (1) in the development or the initial implementation of a management program under section 305; or (2) in the administration of a management program approved under section 306; the Secretary, with the cooperation of the Executive Office of the President, shall seek to mediate ths differences involved in such disagreement. The process of such mediation shall, with respect to any disagreement described in paragraph (2), include public hearings which shall be conducted in the local area concerned. 13 COASTAL ENERGY IMPACT PROGRAM Sec. 308. (a)(1) The Secretary shall administer and coordinate, as part of the coastal zone management activities of the Federal Gov- ernment provided for under this title, a coastal energy impact program. Such program shall consist of the provision of financial assistance to meet the needs of coastal states and local governments in such states resulting from specified activities involving energy devel- opment. Such assistance, which includes — "(A) grants, under subsection (b), to coastal states for the purposes set forth in subsection (b)(4) with respect to conse- quences resulting from the energy activities specified therein: "(B) grants, under subsection (c), to coastal states for study of, and planning for, consequences relating to new or expanded energy facilities in, or which significantly affect, the coastal zone ; "(C) loans, under subsection (d) (1), to coastal states and units of general purpose local government to assist such states and units to provide new or improved public facilities or public serv- ices which are required as a result of coastal energy activity; "(D) guarantees, under subsection (d) (2) and subject to the provisions of subsection (f), of bonds or other evidences of in- debtedness issued by coastal states and units of general purpose local government for the purpose of providing new or improved public facilities or public services which are required as a result of coastal energy activity ; "(E) grants or other assistance, under subsection (d)(3), to coastal states and units of general purpose local government to enable such states and units to meet obligations under loans or guarantees under subsection (d) (1) or (2) which they are unable to meet as they mature, for reasons specified in subsection (d)(3); and "(F) grants, under subsection (d)(4), to coastal states which have suffered, are suffering, or will suffer any unavoidable loss of a valuable environmental or recreational resource; shall be provided, administered, and coordinated by the Secretary in accordance with the provisions of this section and under the rules and regulations required to be promulgated pursuant to paragraph (2). Any such financial assistance shall be subject to audit under section 313. "(2) The Secretary shall promulgate, in accordance with section 317, such rules and regulations (including, but not limited to, those required under subsection (e) ) as may be necessary and appropriate to carry out the provisions of this section. "(b) (1) The Secretary shall make grants annually to coastal states, in accordance with the provisions of this subsection. "(2) The amounts granted to coastal states under this subsection shall be, with respect to any such state for any fiscal year, the sum of the amounts calculated, with respect to such state, pursuant to subpara- graphs (A), (B), (C),and (D) : "(A) An amount which bears, to one-third of the amount appropriated for the purpose of funding grants under this subsec- tion for such fiscal year, the same ratio that the amount of outer Continental Shelf acreage which is adjacent to such state and which is newly leased by the Federal Government in the immedi- ately preceding fiscal year bears to the total amount of outer Continental Shelf acreage which is newly leased by the Federal Government in such preceding year. "(B) An amount which bears, to one-sixth of the amount appropriated for such purpose for such fiscal vear, the same ratio that the volume of oil and natural gas produced in the immediately preceding fiscal year from the outer Continental Shelf acreage which is adjacent to such state utrd which is leased by the Federal 14 Government bears to the total volume of oil and natural gas pro- duced in such year from all of the outer Continental Shelf acre- age which is leased by the Federal Government. "(C) An amount which bears, to one-sixth of the amount appropriated for such purpose for such fiscal year, the same ratio that the volume of oil and natural gas produced from outer Con- tinental Shelf acreage leased by the Federal Government which is first landed in such state in the immediately preceding fiscal year bears to the total volume of oil and natural gas produced from all outer Continental Shelf acreage leased by the Federal Government which is first landed in all of the coastal states in such year. "(D) An amount which bears, to one-third of the amount appropriated for such purpose for such fiscal year, the same ratio that the number of individuals residing in such state in the imme- diately preceding fiscal year who obtain new employment in such year as a result of new or expanded outer Continental Shelf energy activities bears to the total number of individuals residing in all of the coastal states in such year who Obtain new employment in such year as a result of such outer Continental Shelf energy activities. "(3) (A) The Secretary shall determine annually the amounts of the grants to be provided under this subsection and shall collect and evaluate such information as may be necessary to make such deter- minations. Each Federal department, agency, and instrumentality shall provide to the Secretary such assistance in collecting and evaluat- ing relevant information as the Secretary may request. The Secretary shall request the assistance of any appropriate state agency in collect- ing and evaluating such information. "(B) For purposes of making calculations under paragraph (2), outer Continental Shelf acreage is adjacent to a particular coastal state if such acreage lies on that state's side of the extended lateral seaward boundaries of such state. The extended lateral seaward boundaries of a coastal state shall be determined as follows : " (i) If lateral seaward boundaries have been clearly defined or fixed by an interstate compact, agreement, or judicial decision (if entered into, agreed to, or issued before the date of the enactment of this paragraph) , such boundaries shall be extended on the basis of the principles of delimitation used to so define or fix them in such compact, agreement, or decision. "(ii) If no lateral seaward boundaries, or any portion thereof, have been clearly defined or fixed by an interstate compact, agree- ment, or judicial decision, lateral seaward boundaries shall be determined according to the applicable principles of law, includ- ing the principles of the Convention on the Territorial Sea and the Contiguous Zone, and extended on the basis of such principles. " (iii) If, after the date of enactment of this paragraph, two or more coastal states enter into or amend an interstate compact or agreement in order to clearly define or fix lateral seaward bound- aries, such boundaries shall thereafter be extended on the basis of the principles of delimitation used to so define or fix them in such compact or agreement. "(C) For purposes of making calculations under this subsection, the transitional quarter beginning July 1, 1976, and ending Septem- ber 30, 1976, shall be included within the fiscal year ending June 30, 1976. 15 "(4) Each coastal state shall use the proceeds of grants received by it under this subsection for the following purposes (except that priority shall be given to the use of such proceeds for the purpose set forth in subparagraph ( A) ) : "(A) The retirement of state and local bonds, if any, which are guaranteed under subsection (d) (2) ; except that, if the amount of such grants is insufficient to retire both state and local bonds, priority shall be given to retiring local bonds. "(B) The study of, planning for, development of, and the carrying out of projects and programs in such state which are — "(i) necessary, because of the unavailability of adequate financing under any other subsection, to provide new or improved public facilities and public services which are required as a direct result of new or expanded outer Conti- nental Shelf energy activity; and "(ii) of a type approved by the Secretary as eligible for grants under this paragraph, except that the Secretary may not disapprove any project or program for highways and secondary roads, docks, navigation aids, fire and police pro- tection, water supply, waste collection and treatment (including drainage), schools and education, and hospitals and health care. "(C) The prevention, reduction, or amelioration of any unavoidable loss in such state's coastal zone of any valuable environmental or recreational resource if such loss results from coastal energy activity. "(5) The Secretary, in a timely manner, shall determine that each coastal state has expended or committed, and may determine that such state will expend or commit, grants which such state has received under this subsection in accordance with the purposes set forth in paragraph (4). The United States shall be entitled to recover from any coastal state an amount equal to any portion of any such grant received by such state under this subsection which — "(A) is not expended or committed by such state before the close of the fiscal year immediately following the fiscal year in which the grant was disbursed, or "(B) is expended or committed by such state for any purpose other than a purpose set forth in paragraph (4). Before disbursing the proceeds of any grant under this subsection to any coastal state, the Secretary shail require such state to provide adequate assurances of being able to return to the United States any amounts to which the preceding sentence may apply. "(c) The Secretary shall make grants to any coastal state if the Sec- retary finds that the coastal zone of such state is being, or is likely to be. significantly affected by the siting, construction, expansion, or oper- ation of new or expanded energv facilities. Such grants shall be used for the study of, and planning for (including, but not limited to, the application of the planning process included in a management pro- gram pursuant to section 305(b) (8) ) any economic, social, or environ- mental consequence which has occurred, is occurring, or is likely to occur in such state's coastal zone as a result of the siting, construction, expansion, or operation of such new or expanded energy facilities. The amount of any such grant shall not exceed 80 per centum of the cost of such study and planning. "(d) (1) The Secretary shall make loans to any coastal state and to any unit of general purpose local government to assist such state or unit to provide new or improved public facilities or public services, or 16 both, which are required as a result of coastal energy activity. Such loans shall be made solely pursuant to this title, and no such loan shall require as a condition thereof that any such state or unit pledge its full faith and credit to the repayment thereof. No loan shall be made under this paragraph after September 30, 1986. "(2) The Secretary shall, subject to the provisions of subsection (f), guarantee, or enter into commitments to guarantee, the payment of interest on, and the principal amount of, any bond or other evidence of indebtedness if it is issued by a coastal state or a unit of general purpose local government for the purpose of providing new or improved public facilities or public services, or both, which are required as a result of a coastal energy activity. "(3) If the Secretary finds that any coastal state or unit of general purpose local government is unable to meet its obligations pursuant to a loan or guarantee made under paragraph (1) or (2) because the actual increases in employment and related population resulting from coastal energy activity and the facilities associated with such activity do not provide adequate revenues to enable such state or unit to meet such obligations in accordance with the appropriate repayment sched- ule, the Secretary shall, after review of the information submitted by such state or unit pursuant to subsection (e)(3), take any of the following actions : "(A) Modify appropriately the terms and conditions of such loan or guarantee. "(B) Refinance such loan. "(C) Make a supplemental loan to such state or unit the pro- ceeds of which shall be applied to the payment of principal and interest due under such loan or guarantee. "(D) Make a grant to such state or unit the proceeds of which shall be applied to the payment of principal and interest due under such loan or guarantee. Notwithstanding the preceding sentence, if the Secretary — "(i) has taken action under subparagraph (A), (B),or (C) with respect to any loan or guarantee made under paragraph (1) or (2), and "(ii) finds that additional action under subparagraph (A), (B), or (C) will not enable such state or unit to meet, within a reasonable time, its obligations under such loan or guarantee and any additional obligations related to such loan or guarantee; the Secretary shall make a grant or grants under subparagraph (D) to such state or unit in an amount sufficient to enable such state or unit to meet such outstanding obligations. "(4) The Secretary shall make grants to any coastal state to enable such state to prevent, reduce, or ameliorate any unavoidable loss in such state's coastal zone of any valuable environmental or recreational resource, if such loss results from coastal energy activity, if the Secre- tary finds that such state has not received amounts under subsection (b) which are sufficient to prevent, reduce, or ameliorate such loss. "(e) Rules and regulations with respect to the following matters shall be promulgated by the Secretary as soon as practicable, but not later than 270 days after the date of the enactment of this section : "(1) A formula and procedures for apportioning equitably, among the coastal states, the amounts which are available for the provision of financial assistance under subsection (d). Such for- mula shall be based on, and limited to, the following factors : "(A) The number of additional individuals who are expected to become employed in new or expanded coastal 17 energy activity, and the related new population, who reside in the respective coastal states. "(B) The standardized unit costs (as determined by the Secretary by rule), in the relevant regions of such states, for new or improved public facilities and public services which are required as a result of such expected employment and the related new population. "(2) Criteria under which the Secretary shall review each coastal state's compliance with the requirements of subsection (g)(2). "(3) Criteria and procedures for evaluating the extent to which any loan or guarantee under subsection (d) (1) or (2) which is applied for by any coastal state or unit of general purpose local government can be repaid through its ordinary methods and rates for generating tax revenues. Such procedures shall require such state or unit to submit to the Secretary such information which is specified by the Secretary to be necessary for such evaluation, including, but not limited to — "(A) a statement as to the number of additional indi- viduals who are expected to become employed in the new or expanded coastal energy activity involved, and the related new population, who reside in such state or unit; "(B) a description, and the estimated costs, of the new or improved public facilities or public services needed or likely to be needed as a result of such expected employment and related new population ; "(C) a projection of such state's or unit's estimated tax receipts during such reasonable time thereafter, not to exceed 30 years, which will be available for the repayment of such loan or guarantee ; and "(D) a proposed repayment schedule. The procedures required by this paragraph shall also provide for the periodic verification, review, and modification (if necessary) by the Secretary of the information or other material required to be submitted pursuant to this paragraph. "(4) Requirements, terms, and conditions (which mav include the posting of security) which shall be imposed by the Secretary, in connection with loans and guarantees made under subsections (d) (1) and (2), in order to assure repayment within the time fixed, to assure that the proceeds thereof may not be used to pro- vide public services for an unreasonable length of time, and other- wise to protect the financial interests of the United States. "(5) Criteria under which the Secretary shall establish rates of interest on loans made under subsections (d) (1) and (3). Such rates shall not exceed the current average market yield on out- standing marketable obligations of the United States with remaining periods to maturity comparable to the maturity of such loans. In developing rules and regulations under this subsection, the Secre- tary shall, to the extent practicable, request the views of, or consult Avith, appropriate persons regarding impacts resulting from coastal energy activity. "(f) (1) Bonds or other evidences of indebtedness guaranteed under subsection (d)(2) shall be guaranteed on such terms and conditions as the Secretary shall prescribe, except that — "(A) no guarantee shall be made unless the indebtedness involved will be completely amortized within a reasonable period, not to exceed 30 years ; 18 "(B) no guarantee shall be made unless the Secretary determines that such bonds or other evidences of indebtedness will— "(i) be issued only to investors who meet the requirements prescribed by the Secretary, or, if an offering to the public is. contemplated, be underwritten upon terms and conditions approved by the Secretary ; "(ii) bear interest at a rate found not to be excessive by the Secretary ; and "(iii) contain, or be subject to, repayment, maturity, and other provisions which are satisfactory to the Secretary; "(C) the approval of the Secretary of the Treasury shall be required with respect to any such guarantee, unless the Secretary of the Treasury waives such approval; and "(D) no guarantee shall be made after September 30, 1986. "(2) The full faith and credit of the United States is pledged to the payment, under paragraph (5), of any default on any indebted- ness guaranteed under subsection (d) (2). Any such guarantee made by the Secretary shall be conclusive evidence of the eligibility of the obligation involved for such guarantee, and the validity of any such guarantee so made shall be incontestable in the hands of a holder of the guaranteed obligation, except for fraud or material misrepre- sentation on the part of the holder, or known to the holder at the time acquired. (3) The Secretary shall prescribe and collect fees in connection with guarantees made under subsection (d) (2). These fees may not exceed the amount which the Secretary estimates to be necessary to cover the administrative costs pertaining to such guarantees. "(4) The interest paid on any obligation which is guaranteed under subsection (d) (2) and which is received by the purchaser thereof (or the purchaser's successor in interest), shall be included in gross income for the purpose of chapter 1 of the Internal Revenue Code of 1954. The Secretary may pay out of the Fund to the coastal state or the unit of general purpose local government issuing such obligations not more than such portion of the interest on such obligations as exceeds the amount of interest that would be due at a comparable rate determined for loans made under subsection (d) (1). "(5) (A) Payments required to be made as a result of any guaran- tee made under subsection (d)(2) shall be made by the Secretary from sums appropriated to the Fund or from moneys obtained from the Sec- retary of the Treasury pursuant to paragraph (6). "(B) If there is a default by a coastal state or unit of general pur- pose local government in any payment of principal or interest due under a bond or other evidence of indebtedness guaranteed by the Secretary under subsection (d) (2), any holder of such bond or other evidence of indebtedness may demand payment by the Secretary of the unpaid interest on and the unpaid principal of such obligation as they become due. The Secretary, after investigating the facts presented by the holder, shall pay to the holder the amount which is due such holder, unless the Secretary finds that there was no default by such state or unit or that such default has been remedied. "(C) If the Secretary makes a payment to a holder under subpara- graph (B) , the Secretary shall — "(i) have all of the rights granted to the Secretary or the United States by law or by agreement with the obligor ; and " (ii) be subrogated to all of the rights which were granted such holder, by law, assignment, or security agreement between such holder and the obligor. 19 Such rights shall include, but not be limited to, a right of reimburse- ment to the United States against the coastal state or unit of general purpose local government for which the payment was made for the amount of such payment plus interest at the prevailing current rate as determined by the Secretary. If such coastal state, or the coastal state in which such unit is located, is due to receive any amount under sub- section (b), the Secretary shall, in lieu of paying such amount to such state, deposit such amount in the Fund until such right of reim- bursement has been satisfied. The Secretary may accept, in complete or partial satisfaction of any such rights, a conveyance of property or interests therein. Any property so obtained by the Secretary may be completed, maintained, operated, held, rented, sold, or otherwise dealt with or disposed of on such terms or conditions as the Secretary prescribes or approves. If, in any case, the sum received through the sale of such property is greater than the amount paid to the holder under subparagraph (D) plus costs, the Secretary shall pay any such excess to the obligor. "(D) The Attorney General shall, upon the request of the Secretary, take such action as may be appropriate to enforce any right accruing to the Secretary or the United States as a result of the making of any guarantee under subsection (d)(2). Any sums received through any sale under subparagraph (C) or recovered pursuant to this subpara- graph shall be paid into the Fund. "(6) If the moneys available to the Secretary are not sufficient to pay any amount which the Secretary is obligated to pay under para- graph (5), the Secretary shall issue to the Secretary of the Treasury notes or other obligations (only to such extent and in such amounts as may be provided for in appropriation Acts) in such forms and denomi- nations, bearing such maturities, and subject to such terms and con- ditions as the Secretary of the Treasury prescribes. Such notes or other obligations shall bear interest at a rate determined by the Secre- tary of the Treasury on the basis of the current average market yield on outstanding marketable obligations of the United States on com- parable maturities during the month preceding the issuance of such notes or other obligations. Any sums received by the Secretary through such issuance shall be deposited in the Fund. The Secretary of the Treasury shall purchase any notes or other obligations issued under this paragraph, and for this purpose such Secretary may use as a public debt transaction the proceeds from the sale of any securities issued under the Second Liberty Bond Act, as now or hereafter in force. The purposes for which securities may be issued under that Act are extended to include any purchase of notes or other obligations issued under this paragraph. The Secretary of the Treasury may at any time sell any of the notes or other obligations so acquired under this paragraph. All redemptions, purchases, and sales of such notes or other obligations by the Secretary of the Treasury shall be treated as public debt transactions of the United States. "(g) (1) No coastal state is eligible to receive any financial assist- ance under this section unless such state — "(A) has a management program which has been approved under section 306 ; "(B) is receiving a grant under section 305(c) or (d) ; or "(C) is, in the judgment of the Secretary, making satisfactory progress toward the development of a management program which is consistent with the policies set forth in section 303. 20 "(2) Each coastal state shall, to the maximum extent practicable, provide that financial assistance provided under this section be appor- tioned, allocated, and granted to units of local government within such state on a basis which is proportional to the extent to which such units need such assistance. "(h) There is established in the Treasury of the United States the Coastal Energy Impact Fund. The Fund shall be available to the Sec- retary without fiscal year limitation as a revolving fund for the purposes of carrying out subsections (c) and (d). The Fund shall consist of — " ( 1 ) any sums appropriated to the Fund ; "(2) payments of principal and interest received under any loan made under subsection (d) (1) ; "(3) any fees received in connection with any guarantee made under subsection (d) (2) ; and "(4) any recoveries and receipts under security, subrogation, and other rights and authorities described in subsection (fj. All payments made by the Secretary to carry out the provisions of subsections (c), (d), and (i) (including reimbursements to other Government accounts) shall be paid from the Fund, only to the extent provided for in appropriation Acts. Sums in the Fund which are not currently needed for the purposes of subsections (c) , (d) , and (f ) shall be kept on deposit or invested in obligations of, or guaranteed by, the United States. "(i) The Secretary shall not intercede in any land use or water use decision of any coastal state with respect to the siting of any energy facility or public facility by making siting in a particular location a prerequisite to, or a condition of, financial assistance under this section. " ( j ) The Secretary may evaluate, and report to the Congress, on the efforts of the coastal states and units of local government therein to reduce or ameliorate adverse consequences resulting from coastal energy activity and on the extent to which such efforts involve adequate consideration of alternative sites. "(k) To the extent that Federal funds are available under, or pur- suant to, any other law with respect to — " ( 1 ) study and planning for which financial assistance may be provided under subsection (b) (4) (B) and (c),or "(2) public facilities and public services for which financial assistance may be provided under subsection (b) (4) (B) and (d), the Secretary shall, to the extent practicable, administer such sub- sections — "(A) on the basis that the financial assistance shall be in addi- tion to, and not in lieu of, any Federal funds which any coastal state or unit of general purpose local government may obtain under any other law ; and "(B) to avoid duplication. "(1) As used in this section — "(1) The term 'retirement', when used with respect to bonds, means the redemption in full and the withdrawal from circula- tion of those which cannot be repaid by the issuing jurisdiction in accordance with the appropriate repayment schedule. "(2) The term 'unavoidable', when used with respect to a loss of any valuable environmental or recreational resource, means a loss, in whole or in part — "(A) the costs of prevention, reduction, or amelioration of which cannot be directly or indirectly attributed to, or assessed against, any identifiable person ; and "(B) cannot be paid for with funds which are available under, or pursuant to, any provision of Federal law other than this section. " (3) The term 'unit of general purpose local government' means any political subdivision of any coastal state or any special entity created by such a state or subdivision which (in whole or part) is located in, or has authority over, such state's coastal zone, and which (A) has authority to levy taxes or establish and collect user fees, and (B) provides any public facility or public service which is financed in whole or part by taxes or user fees.". 21 INTERSTATE GRANTS Sec. 309. (a) The coastal states are encouraged to give high priority — (1) to coordinating state coastal zone planning, policies, and programs with respect to contiguous areas of such states; and (2) to studying, planning, and implementing unified coastal zone policies with respect to such areas. Such coordination, study, planning, and implementation may be conducted pursuant to interstate agreements or compacts. The Secretary may make grants annually, in amounts not to exceed 90 per centum of the cost of such coordination, study, or implementation, if the Secretary finds that the proceeds of such grants will be used for purposes consistent with sections 305 and 306. (b) The consent of the Congress is hereby given to two or more coastal states to negotiate, and to enter into, agreements or compacts, which do not conflict with any law or treaty of the United States, for — (1) developing and administering coordinated coastal zone planning, policies, and programs pursuant to sections 305 and 306; and (2) establishing executive instrumentalities or agencies which such states deem desirable for the effective implementation of such agreements or compacts. Such agreements or compacts shall be binding and obligatory upon any state or party thereto without further approval by the Congress. (c) Each executive instrumentality or agency which is established by an interstate agreement or compact pursuant to this section is encouraged to adopt a Federal-State consultation procedure for the identification, examination, and cooperative resolution of mutual problems with respect to the marine and coastal areas which affect, directly or indirectly, the applicable coastal zone. The Secretary of the Interior, the Chairman of the Council on Environmental Quality, the Administrator of the Environmental Protection Agency, the Secretary of the department in which the Coast Guard is operating, and the Administrator of the Federal Energy Administration, or their designated representatives, shall participate ex officio on behalf of the Federal Government whenever any such Federal-State consultation is requested by such an instrumentality or agency. (d) If no applicable interstate agreement or compact exists, the Secretary may coordinate coastal zone activities described in subsection (a) and may make grants to assist any group of two or more coastal states to create and maintain a temporary planning and coordinating entity to — (1) coordinate state coastal zone planning, policies, and programs with respect to contiguous areas of the states involved; (2) study, plan, and implement unified coastal zone policies with respect to such areas; and (3) establish an effective mechanism, and adopt a Federal-State consultation procedure, for the identification, examination, and cooperative resolution of mutual problems with respect to the marine and coastal areas which affect, directly 22 or indirectly, the applicable coastal zone. The amount of such grants shall not exceed 90 per centum of the cost of creating and maintaining such an entity. The Federal officials specified in subsection (c), or their designated representatives, shall participate on behalf of the Federal Government, upon the request of any such temporary planning and coordinating entity. RESEARCH AND TECHNICAL ASSISTANCE FOR COASTAL ZONE MANAGEMENT Sec. 310. (a) The Secretary may conduct a program of research, study, and training to support the development and implementation of management programs. Each department, agency, and instrumentality of the executive branch of the Federal Government may assist the Secretary, on a reimbursable basis or otherwise, in carrying out the purposes of this section, including, but not limited to, the furnishing of informa- tion to the extent permitted by law, the transfer of personnel with their consent and without prejudice to their position and rating, and the performance of any research, study, and training which does not interfere with the performance of the primary duties of such department, agency, or instrumentality. The Secretary may enter into contracts or other arrangements with any qualified person for the purposes of carrying out this subsection. (b) The Secretary may make grants to coastal states to assist such states in carrying out research, studies, and training required with respect to coastal zone management. The amount of any grant made under this subsection shall not exceed 80 per centum of the cost of such research, studies, and training. (c)(1) The Secretary shall provide for the coordination of research, studies, and training activities under this section with any other such activities that are conducted by, or subject to the authority of, the Secretary. (2) The Secretary shall make the results of research conducted pursuant to this section available to any interested person. PUBLIC HEARINGS Sec. 311. All public hearings required under this title must be announced at least thirty days prior to the hearing date. At the time of the announcement, all agency materials pertinent to the hearings, including documents, studies, and other data, must be made available to the public for review and study. As similar materials are subsequently developed, they shall be made available to the public as they become available to the agency. REVIEW OF PERFORMANCE Sec. 312. (a) The Secretary shall conduct a continuing review of — (1) the management programs of the coastal states and the performance of such states with respect to coastal zone management; and (2) the coastal energy impact program provided for under section 308. 23 (b) The Secretary shall have the authority to terminate any financial assistance extended under section 306 and to withdraw any unexpended portion of such assistance if (1) he determines that the state is failing to adhere to and is not justified in deviating from the program approved by the Secretary; and (2) the state has been given notice of the proposed termination and withdrawal and given an opportunity to present evidence of adherence or justification for altering its program. RECORDS AND AUDITS Sec. 313. (a) Each recipient of a grant under this title or of financial assistance under section 308 shall keep such records as the Secretary shall prescribe, including records which fully disclose the amount and disposition of the funds received under the grant and of the proceeds of such assistance, the total cost of the project or undertaking supplied by other sources, and such other records as will facilitate an effective audit. (b) The Secretary and the Comptroller General of the United States, or any of their duly authorized representatives, shall — (1) after any grant is made under this title or any financial assistance is provided under section 308(d); and (2) until the expiration of 3 years after — (A) completion of the project, program or other undertaking for which such grant was made or used, or (B) repayment of the loan or guaranteed indebtedness for which such financial assistance was provided, have access for purposes of audit and examination to any record, bco<, document, and paper which belongs to or is used or controlled by, any recipient of the grant funds or any person who entered into any transaction relating to such financial assistance and which is pertinent for purposes of determining if the grant funds or the proceeds of such financial assistance are being, or were, used in accordance with the provisions of this title. ADVISORY COMMITTEE Sec. 314. (a) The Secretary is authorized and directed to establish a Coastal Zone Management Advisory Committee to advise, consult with, and make recommendations to the Secretary on matters of policy concerning the coastal zone. Such committee shall be composed of not more than fifteen persons designated by the Secretary and shall perform such functions and operate in such a manner as the Secretary may direct. The Secretary shall insure that the committee membership as a group possesses a broad range of experience and Knowledge relating to problems involving management, use, conservation, protection, and development of coastal zone resources. (b) Members of the committee who are not regular full-time employees of the United States, while serving on the business of the committee, including travel time, may receive compensation at rates not exceeding $100 per diem; and while so serving away from their homes or regular places of business may be allowed travel expenses, 24 including pec diem in lieu of subsistence, as authorized by section 5703 of title 5, United States Code, for individuals in the Government service employed inter- mittently. ESTUARINE SANCTUARIES AND BEACH ACCESS Sec. 315. The Secretary may, in accordance with this section and in accordance with such rules and regulations as the Secretary shall promulgate, make grants to any coastal state for the purpose of — (1) acquiring, developing, or operating estuarine sanctuaries, to serve as natural field laboratories in which to study and gather data on the natural and human processes occurring within the estuaries of the coastal zone; and (2) acquiring lands to provide for access to public beaches and other public coastal areas of environmental, recreational, historical, esthetic, ecological, or cultural value, and for the preservation of islands. The amount of any such grant shall not exceed 50 per centum of the cost of the project involved; except that, in the case of acquisition of any estuarine sanctuary, the Federal share of the cost thereof shall not exceed $2,000,000. ANNUAL- REPORT Sec. 316. (a) The Secretary shall prepare and submit to the President for transmittal to the Congress not later than November 1 of each year a report on the administra- tion of this title for the preceding fiscal year. The report shall include but not be restricted to (1) an identification of the state programs approved pursuant to this title during the preceding Federal fiscal year and a description of those programs; (2) a listing of the states participating in the provisions of this title and a description of the status of each state's programs and its accomplishments during the preceding Federal fiscal year; (a) an itemization of the allocation of funds to the various coastal states and a breakdown of the major projects and areas on which these funds were expended; (4) an identification of any state programs which have been reviewed and disapproved or with respect to which grants have been terminated under this title, and a statement of the reasons for such action; (5) a listing of all activities and projects which, pursuant to the provisions of subsectio (c) or subsection (d) of section 307, are not consistent with an applicable approved state management program; (6) a summary of the regulations issued by the Secretary or in effect during the preceding Federal fiscal year; (7) a summary of a coordinated national strategy and program for the Nation's coastal zone including identification and discussion of Federal, regional, state, and local responsibilities and functions therein; (8) a summary of outstanding problems arising in the administration of this title in order of priority; (9) a description of the economic, environmental, and social consequences of energy activity affecting the coastal zone and an evaluation of the effectiveness of financial assistance under section 308 in dealing with such consequences; (10) a description and evaluation of applicable interstate and regionl planning and coordination mechanisms developed by the coastal states; (11) a summary and evaluation of the research, studies, and training conducted in support of coastal zone management; and (12) such other information as may be appropriate. (b) The report required by subsection (a) shall contain such recommendations for additional legislation as the Secretary deems necessary to achieve the objectives of this title and enhance its effective operation. 25 RULES AND REGULATIONS Sec. 317. The Secretary shall develop and promulgate, pursuant to section 553 of title 5, United States Code, after notice and opportunity for full participation by relevant Federal agencies, state agencies, local governments, regional organizations, port authorities, and other interested parties, both public and private, such rules and regulations as may be necessary to carry out the provisions of this title. AUTHORIZATION OF APPROPRIATIONS Sec. 318. (a) There are authorized to be appropriated to the Secretary — (1) such sums, not to exceed $20,000,000 for each of the fiscal years ending September 30, 1977, September 30, 1978, and September 30, 1979, respectively, as may be necessary for grants under section 305, to remain available until expended; (2) such sums, not to exceed $50,000,000 for each of the fiscal years ending September 30, 1977, September 30, 1978, September 30, 1979, and September 30, 1980, respectively, as may be necessary for grants under section 306, to remain available until expended; (3) such sums, not to exceed $50,000,000 for each of the 8 fiscal years occurring during the period beginning October 1, 1976, and ending September 30, 1984, as may be necessary for grants under section 308(b); (4) such sums, not to exceed $5,000,000 for each of the fiscal years ending September 30, 1977, September 30, 1978, September 30, 1979, and September 30, 1980, respectively, as may be necessary for grants under section 309, to remain available until expended; (5) such sums, not to exceed $10,000,000 for each of the fiscal years ending September 30, 1977, September 30, 1978, September 30, 1979, and September 30, 1980, respectively, as may be necessary for financial assistance under section 310, of which 50 per centum shall be for financial assistance unaer section 310(a) and 50 per centum shall be for financial assistance under section 310(b), to remain available until expended ; (6) such sums, not to exceed $6,000,000 for each of the fiscal years ending September 30, 1977, September 30, 1978, September 30, 197^, and September 30, 1980, respectively, as may be necessary for grants under section 315(1), to remain available until expended; (7) such sums, not to exceed $25,000,000 for each of the fiscal years ending September 30, 1977, September 30, 1978, September 30, 1979, and September 30, 1980, respectively, as may be necessary for grants under section 315(2), to remain available until expended; and (8) such sums, not to exceed $5,000,000 for each of the fiscal years ending September 30, 1977, September 30, 1978, September 30, 1979, and September 30, 1980, respectively, as may be necessary for administrative expenses incident to the administration of this title. 26 (b) There are authorized to be appropriated until October 1, 1986, to the Fund, such sums, not to exceed $800,000,000 for the purposes of carrying out the provisions of section 308, other than subsection (b), of which not to exceed $50,000,000 shall be for purposes of subsections (c) and (d)(4) of such section. (c) Federal funds received from other sources shall not be used to pay a coastal state's share of costs under section 305, 306, 309, or 310. Contained in P.L. 94-370 but not Incorporated Directly into the CZMA Sec. 15. ADMINISTRATION. (a) There shall be in the National Oceanic and Atmospheric Administration an Associate Administrator for Coastal Zone Management, who shall be appointed by the President, by and with the advice and consent of the Senate. Such Associate Administrator shall be an individual who is, by reason of background and experience, especially qualified to direct the implementation and administration of the Coastal Zone Management Act of 1972 (16 U.S.C. 1451, et seq .). Such Associate Administrator shall be compensated at the rate now or hereafter provided for level V of the Executive Schedule Pay Rates (5 U.S.C. 5316). (b) Section 5316 of title 5, United States Code, is amended by adding at the end thereof the following new paragraph: "(140) Associate Administrator for Coastal Zone Management, National Oceanic and Atmospheric Administration." (c) The Secretary may, to carry out the provisions of the amendments made by this Act, establish, and fix the compensation for, four new positions without regard to the provision of chapter 51 of title 5, United States Code, at rates not in excess of the maximum rate for GS-18 of the General Schedule under section 5332 of such title. Any such appointment may, at the discretion of the Secretary, be made without regard to the provisions of such title 5 governing appointments in the competitive service. Sec. 16. SHELLFISH SANITATION REGULATIONS. (a) The Secretary of Commerce shall — (1) undertake a comprehensive review of all aspects of the molluscan shellfish industry, including, but not limited to, the harvesting, processing, and transportation of such shellfish; and (2) evaluate the impact of Federal law concerning water quality on the molluscan shellfish industry. The Secretary of Commerce shall, not later than April 30, 1977, submit a report to the Congress of the findings, comments, and recommendations (if any) which result from such review and evaluation. (b) The Secretary of Health, Education, and Welfare shall^not promulgate final regulations concerning the national shellfish safety program before June 30, 1977. At least 60 days prior to the promulgation of any such regulations, the Secretary of Health, Education, and Welfare, in consultation with the Secretary of Commerce, shall publish an analysis (1) of the economic impact of such regulations on the domestic shellfish industry, and (2) the cost of such national shellfish safety program relative to the benefits that it is expected to achieve. APPENDIX 2 PART 931 -- COASTAL ENERGY IMPACT PROGRAM Subpart A -- Objectives Sec. 931.1 931.2 931.3 931.4 931.5 Subpart Sec. 931.9 931.10 931.11 931.12 931.13 931.14 931.15 931.16 931.17 931.18 931.19 931.20 931.21 931.22 931.23 931.24 Overall objectives. Public facilities and public services assistance. Repayment assistance. Environmental and recreational grants. Planning grants. B -- General Definitions Index to definitions. Act. Coastal zone. Fund. Coastal energy activity. Significantly affected. New or expanded coastal energy activity. Outer Continental Shelf. Outer Continental Shelf energy activity. New or expanded outer Continental Shelf activity. Energy facility. New or expanded energy facilities. Impact area. Unit of general purpose local government. OCZM. Associate Administrator. Subpart C -- Basic Eligibility 931.25 Eligibility requirements. 931.26 Designation of State agencies. Subpart D -- Planning for the Consequences of Energy Facilities 931.30 General. 931.31 Objectives. 931.32 Definitions. 931.33 Purposes. 931.34 Sources. 931.35 Eligibility. 931.36 Allotment of financial assistance among eligible coastal States. 931.37 Application procedure. 931.38 Limitations. Subpart E -- Financing Public Facilities and Public Services 931.40 General. 931.41 Objectives. 931.42 Definitions. 931.43 Purposes. 931.44 Sources. 931.45 Eligibility. 931.46 Allotment of section 308(d)(1) and (d)(2) credit assistance among coastal States. 931.47 Allotment of section 308(b) formula grants. 931.48 Application and requisition procedures. 931.49 [Reserved] 931.50 Special requirements for section 308(d)(1) loans. 931.51 Special requirements for section 308(d)(2) Federal Guarantees. 931.52 Special project cost requirements. 931.53 Limitations. Subpart F -- Repayment Assistance Under Sections 308(d)(1) and 308(d)(2) of the Act 931.60 General. 931.61 Objectives. 931.62 Definitions. 931.63 Purpose. 931.64 Sources 931.65 General eligibility. 931.66 Application update. 931.67 Review for repayment assistance. 931.68 Application for, and award of, repayment assistance. Subpart G -- Grants for Unavoidable Losses of Coastal Environmental and Recreational Resources Sec. 931.70 General. 931.71 Objectives. 931.72 Definitions. 931.73 Sources. 931.74 Purposes. 931.75 Eligibility. 931.76 308(b) allotment. 931.77 308(d)(4) allotment. 931.78 Requisition and application procedures. 931.79 Limitations. Subpart H -- Lateral Seaward Boundaries 931.80 General 931.81 Existing agreements. 931.82 Establishment of demarkation lines when no agreement exists between States. 931.83 Later agreements between States. 931.84 Allotment of 308(b) grants held in escrow. Subpart I -- Records and Audit 931.90 Records. 931.91 Audit. Subpart J -- Recovery of Funds 931.100 General. 931.101 Adequate assurances. 931.102 Procedures for the recovery of funds. Subpart K -- Intrastate Allocation of Financial Assistance 931.110 General. 931.111 Objectives. 931.112 Process required for intrastate allocations. 931.113 Pass-through of assistance. 931.114 0CZM review. Subpart L -- Coordination with Other Federal Agencies 931.120 General. 931.121 Allowable uses of assistance in conjunction with other Federal agencies. AUTHORITY: Sec. 308, Coastal Zone Management Act of 1972 (Pub. L. 92-583, 86 Stat. 1280, 15 U.S.C. 1451 et. seq.), as amended by Pub. L. 94-370 (90 Stat. 1013) Subpart A -- Objectives 931.1 Overall objectives. (a) The central objective of the Coastal Energy Impact Program (CEIP) established under section 308 of the Act is to provide to coastal States and local communities financial assistance to deal with the effects of new or expanded coastal energy activity. (b) A second objective of the CEIP is to strike a balance between two major national objectives: (1) to encourage development of domestic energy resources, and thus to further the objective of increased energy self-sufficiency; and (2) to protect and manage the nation's coasts in a manner consistent with the coastal zone management programs and objectives of the individual States. (c) Another objective of the CEIP is to provide assistance in a manner that is administratively simple and that permits the State and local governments involved a high degree of control and discretion. 931.2 Public facilities and public services assistance. The objectives of assistance for public facilities and public services required as a result of new or expanded coastal energy activity are: (a) to help coastal States and units of general purpose local government build the public facilities and provide the public services needed because of the coastal energy development; (b) to avoid unwarranted Federal subsidies to impacted governments by providing front-end, financing that is to be repaid later from revenues generated by the new or expanded energy activity; and (c) to prevent overdevelopment in the coastal zone by creating incentives to build only those public facilities and services actually needed because of the incoming energy activity. 931.3 Repayment assistance. The objectives of providing repayment assistance under the CEIP are: (a) to shift to the Federal government some of the risk born by coastal States and units of general purpose local governments in whose jurisdictions new or expanded coastal energy activity is expected to take place; and (b) to ensure that defaults of such governments can be avoided and that the presence of a new or expanded coastal energy activity does not cause net fiscal losses to such governments. 931.4 Environmental and recreational grants. The objectives of providing grants for the prevention, reduction, or amelioration of unavoidable losses of valuable environmental or recreational resources are: (a) to help coastal States and units of general purpose local government prevent, reduce or repair environmental degradation and recreational losses in the coastal zone when these losses are the result of coastal energy activity; and (b) to encourage internalization of those environmental and recreational social costs that can be attributed to, and charged against, a specific person. 931.5 Planning grants. The objective of providing planning assistance under the CEIP is to encourage rational, timely, and thorough planning for the management of energy facility siting and the impacts of energy resource development. Subpart B — General Definitions. 931.9 Index to definitions. The following listing includes all terms defined in Part 931 of this title keyed to the section or paragraph where they are defined. Term Act Section nj • . 931.10 Associate Administrator 931 24 Borrower 931. '62(a) Coastal Energy Activity 931.13 Coastal Zone 931 111 Current Rates and Methods 931.62(f) Eligible Energy Facility 931.32 Energy Facility 931 ! 19 Environmental Resource 931 72(c) First Landed 93K72(g) Fund 931.12 Growth Management Schedule g 3 -| '48(c) Impact Area 931.21 Loss 93l!72(b) New Employment 931.72(f) New or Expanded Coastal Energy Activity 931 ! 15 New or Expanded Energy Facility 931.20 New or Expanded OCS Energy Activity 931.18 New or Improved Public Facility 931.42(c) New or Improved Public Service 931.42(d) OCZM 931.23 Outer Continental Shelf 931.16 Outer Continental Shelf Energy Activity 931.17 Overall Projected Revenues 931.62(e) Person 931.72(h) Projected Revenues 931.62(d) Public Facility 931.42(a) Public Service 931.42(b) Public Facilities and Services Required as a Result of Coastal Energy Activity 931.42(e) Public Facilities and Services Directly Required as a Result of OCS Energy Activities 931.42(f) Recreational Resource 931.72(d) Revenues 931.62(c) Section 931.10(b) Significantly Affected 931.14 Total Revenues 931.62 b Unavailability of Credit Assistance 931.42(g) Unavoidable 931.72(a) Unit of General Purpose Local Government 931.22 Valuable 931.72(e) 931.10 Act. (a) The term "Act" means the Coastal Zone Management Act of 1972, Pub. L. 92-583, 86 Stat. 1280, as amended by Pub. L. 93-612, 88 Stat. 1974, and by Pub. L. 94-370, 90 Stat. 1013. (b) The term "section" means a section of the Coastal Zone Management Act of 1972, as amended. 931.11 Coastal zone. The term "coastal zone" is that area of land and water whose boundaries are determined by a State under 8920.11 of this chapter for purposes of the development of a coastal zone management program under section 305, or under S923.ll of this chapter for purposes of administering a coastal zone management program under section 306,or as part of a management program which is consistent with the policies set forth in section 303. Such boundaries must be approved by the Associate Administrator. 931.12 Fund. The term "Fund" means the Coastal Energy Impact Fund established under section 308(h). 931.13 Coastal energy activity. (a) The term "coastal energy activity" is limited to the following activities; (1) any outer Continental Shelf activity; (2) any transportation, conversion, treatment, transfer, or storage of liquefied natural gas; (3) any transportation, transfer, or storage of oil, natural gas, or coal (including, but not limited to, by means of any deepwater port, as defined in section 3(10) of the Deepwater Ports Act of 1974 (33 U.S.C. 1502(10)). (b) An activity is a "coastal energy activity" only to the extent that; (1) the conduct, support, or facilitation of such activity requires and involves the siting, construction, expansion, or operation of any equipment or facility, and (2) the Associate Administrator determines that a technical requirement exists which necessitates that such siting, construction, expansion, or operation be carried out in, or in close proximity to, the coastal zone of any coastal State. (c) Such technical requirements are limited to; (1) the necessity of using coastal waters; (2) safety; (3) State and Federal siting regulations; or (4) project economics, to the extent that the energy activity could not feasibly be sited or operated outside of the coastal zone when the following are taken into consideration: (i) geographic location of demand; (ii) geographic location of resources used as inputs; and (iii) environmental and recreational opportunity costs. (d) For purposes of this section, the siting, construction, expansion, or operation of any equipment or facility shall be "in close proximity to" the coastal zone of any coastal State if such siting, construction, expansion, or operation has or is likely to have a significant effect on such coastal zone. 931.14 Significantly affected. The coastal zone of a coastal State is "significantly affected" by the siting, construction, expansion, or operation of an energy facility if such siting, construction, expansion or operation: (a) causes population influxes in any area under the jurisdiction of a unit of general purpose local government; (b) changes employment patterns in the coastal zone, including those in fishing and tourism; (c) makes necessary new or improved public facilities or services in the coastal zone; or (d) damages or threatens to damage any valuable environmental or recreational resource in the coastal zone, including degradation of air or water quality. 931.15 New or expanded coastal energy activity. The term "new or expanded coastal energy activity" means any coastal energy activity (as defined in 8931.13) provided that the siting, construction, expansion, or initial operation of any equipment or facility required by the conduct, support, or facilitation of such activity takes place after July 26, 1976. 931.16 Outer Continental Shelf. The term "outer Continental Shelf" or "OCS" means all submerged lands lying seaward and outside of the area of lands beneath navigable waters as defined in 43 U.S.C. 1301 and of which the subsoil and seabed appertain to the United States and are subject to its jurisdiction and control. 931.17 Outer Continental Shelf energy activity. The term "outer Continental Shelf energy activity" is limited to: (a) any exploration for, or any development or production of, oil or natural gas from the outer Continental Shelf; or (b) the siting, construction, expansion, or operation of any new or expanded energy facilities that are owned or operated by OCS lessees or their contractors, subcontractors or principal suppliers, and have technical requirements (as described in S 931.13) which necessitate their location in the coastal zone. The term is limited to: (1) exploratory and development drilling rigs; (2) platforms, subsea completions, and subsea production systems; (3) the following components of marine pipeline systems: (i ) pressure source, (ii) gathering lines, (iii) pipelines, (iv) intermediate pressure boosting facilities, and (v) landfall sites; (4) the following facilities are also included but only to the extent they serve outer Continental Shelf energy activity: (i) offshore storage and loading facilities of oil and gas, (ii) marine terminals, (iii) construction yards of platforms, (iv) pipe coating yards, (v) bases supporting platform and pipeline installation, (vi) electric generating plants, (vii) temporary service bases used in exploration phase, (viii) permanent service bases used in development phase, (ix) helicopters, and (x) vessels, limited to tug boats, crew boats, supply boats, production utility boats, ocean and seismic vessels, barges and "spread" vessels. 931.18 New or expanded outer Continental Shelf energy activity. The term "new or expanded outer Continental Shelf energy activity" means any outer Continental Shelf energy activity (as defined in 5931.17) which supports exploration or development according to plans that receive approval by the U.S. Department of the Interior after July 26, 1976. 931 .19 Energy facility. (a) The term "energy facility" means any equipment or facility which is or will be used primarily: (1) in the exploration for, or the development, production, conversion, storage, transfer, processing, or transportation of, any energy resource; or (2) for the manufacture, production, or assembly of equipment, machinery, products, or devices which are involved in any such activity. (b) The term is limited to: (1) electric generating plants; (2) petroleum refineries and associated facilities; (3) gasification plants; (4) facilities used for the transportation, conversion, treatment, transfer, or storage of liquefied natural gas; (5) uranium enrichment or nuclear fuel processing facilities; (6) facilities to separate the oil, water and gas; (7) drilling rigs, platforms, subsea completions and subsea production systems; (8) construction yards of platforms, pipe coating yards, bases supporting platforms and pipeline installation, and crew and supply bases; (9) oil and gas storage facilities; (10) marine pipeline systems including pressure course, gathering lines, pipeline, inter- mediate pressure boosting facilities, landfall sites; (11) oil and gas processing facilities; (12) tanker or barge transportation systems; |13) facilities, including deepwater ports, for the transfer of petroleum; [14) terminals which are associated with any of the foregoing. 931. 20 New or expanded energy facilities. The term "new or expanded energy facilities" refers to those energy facilities whose siting, construction, expansion of output, or replacement, in whole or in part, takes place after July 26, 1976. 931 .21 Impact area. The term "impact area" means an area composed of one or more counties or regions, as designated by the coastal State, in which the siting, construction, expansion, or operation of facilities required by a new or expanded coastal energy activity: (a) causes population influxes; (b) changes employment patterns; or (c) makes necessary new or improved public facilities and public services. 931.22 Unit of general purpose local government. (a) The term "unit of general purpose local government" means: (1) any political subdivision of any coastal State that (in whole or in part) is located in or has authority over such State's coastal zone; or (2) any political subdivision of any coastal State that is located within a political subdivision of such coastal State that (in whole or in part) is located in or has authority over such State's coastal zone; or (3) any special entity created by such coastal State or political subdivision that (in whole or in part) is located in or has authority over such State's coastal zone. (b) the term "unit of general purpose local government" is limited to those entities described in paragraph (a) of this section that: (1) have authority to levy taxes or establish and collect user fees; and (2) provide any public facility or public service that is financed in whole or in part by taxes or user fees. 931.23 OCZM. The acronym "OCZM" means the Office of Coastal Zone Management of the National Oceanic and Atmospheric Administration, U. S. Department of Commerce. 931.24 Associate Administrator. "Associate Administrator" refers to the Associate Administrator for Coastal Zone Management, National Oceanic and Atmospheric Administration, U. S. Department of Commerce. Subpart C — Basic Eligibility 931.25 Eligibility requirements. (a) No coastal State is eligible to receive any financial assistance under this part unless such State: (1) has a management program which has been approved under section 306; or (2) is receiving a grant under section 305(c) or (d); or (3) is making, in the judgment of the Associate Administrator, satisfactory progress toward the development of a management program which is consistent with the policies set forth in section 303. (b) With respect to coastal State eligibility under paragraph (a)(3) of this section, the Associate Administrator shall judge that a State is making satisfactory progress toward the development of a management program which is consistent with the policies set forth in section 303 if one of the following conditions is met: (1) a coastal State has exhausted its eligibility for program development funding under section 305 without achieving program implementation of a management program consistent with the policies set forth in section 303; or (2) a coastal State's eligibility for program development funding under section 305 has been suspended, but the State is making adequate efforts to reacquire eligibility under section 305 and is still pursuing development and implementation of a management program consistent with the policies set forth in section 303. (c) Development of a management program shall be judged to be consistent with the policies set forth in section 303 if it incorporates: (1) State policies which provide for the preservation, protection, development and, where possible, the restoration or enhancement of the resources of the State's coastal zone; (2) a system and a timetable to implement these policies with respect to management of coastal land and water resources: (3) a demonstration that Federal agencies which have interests affecting the State's coastal zone have been afforded an opportunity to participate in the development of the State's management program and that land and water uses of national interest are not arbitrarily restricted or excluded in State policies or management mechanisms developed pursuant to the State's program; (4) a demonstration that local governments, State and regional agencies, and the general public have been afforded an opportunity to participate in the development of the State's management program; (5) a demonstration that a coastal boundary has been established which identifies the coastal area to be subject to management and which is capable of being delineated; (6) a demonstration that permissible land and water uses are defined: (7) a demonstration that the State or its appropriate subdivisions authorities and organizational structures to effectuate management over identified coastal land and water uses and areas; anc i (8) a demonstration that the State's management program achieves wise use of the land and water resources of the coastal zone, giving full consideration to ecological, cultural, historic and esthetic values as well as to needs for economic development. 931.26 Designation of State agencies. (a) No coastal State is eligible to receive any financial assistance under this part unless the Governor of such State has designated a State agency or agencies: (1) to submit applications and requisitions for financial assistance under section 308; (2) to assure, to the maximum extent practicable, that financial assistance provided under section 308 is apportioned, allocated, and granted to units of local government within such State on a basis which is proportional to the extent to which such units need such assistance; and (3) to certify that the uses of assistance are compatible with a State coastal zone manage- ment program which is consistent with the policies set forth in section 303, if there is no State agency designated under section 923.23 or section 920.42 of this chapter. (b) It is not required that a single State agency actually perform all three functions stated in paragraph (a) of this section. Nor is it required that the State coastal zone manage- ment agency designated under section 923.23 or section 920.42 be an agency which performs one or both functions stated in paragraph (a)(1) and (2) of this section,, . . • . ... However, the State agency designated under paragraph (a)(1) of this section shall be responsible for assuring coordination among the other State agencies designated under paragraph (a) of this section and with the State coastal zone management agency if they are different agencies, and for assuring that the necessary certifications required in this part from the various State agencies have been made. Subpart D - Planning for the Consequences of Energy Facilities 931.30 General. This subpart sets forth policies and requirements for planning assistance to coastal States under sections 308(c) and 308(b). This subpart also states the overall objectives, the purposes for which the assistance may be used, and the basic eligibility requirements. It also describes procedures for allotting section 308(c) moneys among eligible coastal States for applying section 308(c) assistance, and for requisitioning the proceeds of section 308(b) grants. Procedures for the allotment of section 308(b) assistance are described in section 931.76. 931.31 Objectives. The objectives of assistance under this subpart are: (a) to assist the coastal States in planning for economic, social, or environmental con- sequences resulting from the siting or operation of new or expanded energy facilities that significantly affect the coastal zone; (b) to encourage rational, timely, and thorough planning for the management of energy facility siting and the impacts from energy resources development; and (c) to provide additional assistance to the coastal States to study and plan for public facilities and services directly required as a result of new or expanded 0CS energy activity. 931.32 Definitions. "Eligible energy facility" means a new or expanded energy facility (as defined in section 931.20) that significantly affects the coastal zone and (1) for which a major State or Federal license or permit has been applied for; or (2) which will be required as a result of a Federal lease sale scheduled by the U.S. Department of the Interior to occur no more than two years from the date of application for planning assistance. ( 1) in: 931.33 Purposes. (a) Section 308(c) grants are to be used for the study of and planning for, those economic, social, or environmental consequences in a State's coastal zone that result or are expected to result from the siting, construction, expansion, or operation ofan eligible energy facility. '1) Such study includes, but is not limited to: collecting data and taking physical measurements; ) making projections of employment, population, public facility and public service needs and costs, and tax and user fee revenues; (iii) comparing the consequences of alternative energy facility types or sites; (iv) examining private industry or government siting policies; and (v) conducting analyses required for coastal State or local government regulatory decisions, including licenses, leases, permits, and zoning ordinances. (2) Such planning includes, but is not limited to; (i) devising methods of protecting recreational or environmental resources in the coastal zone (as defined in 931.72); (ii) devising strategies for recovering compensation from appropriate parties for any adverse impacts caused by the energy activity involved; (iii) preparing for the provision of new or improved public facilities and public services required as a result of new or expanded coastal energy activity, including those required as a direct result of OCS energy activity; (iv) designing and carrying out an equitable intrastate allocation process as required under section 308(g)(2); and (v) devising strategies for the public purchase of land upon or near which energy-related development is to take place in order to capture the benefits of the increased value of such land or to contain such development. (3) Such economic, social, or environmental consequences include, but are not limited to; (i) increased population; (ii) changed employment patterns, including those in fishing and tourism; (iii) changed demand for public facilities, public services, and housing; !iv) local price inflation; v) changed patterns of tax or user fee revenues or intergovernmental transfers; vi) effects on fishing resources; (vii) effects on beaches and sand dunes; (viii) shoreline erosion; (ix) effects on air and water quality; and (x) ecological effects. (b) The proceeds of section 308(b) grants may be also used for the study of and planning for new or improved public facilities and public services directly required as a result of new or ex- panded OCS energy activity (as defined in section 931.18). 931.34 Sources. The primary source of assistance for the purposes set forth in section 931.33 is section 308 (c) grants that have been allotted to eligible coastal States. If such moneys, plus the neces- sary matching share of the State, are insufficient in any fiscal year for the purposes set forth in section 931.33(b), section 308(b) grants that have been allotted according to section 931.76 become a source of assistance. 931.35 Eligibility. (a) To be eligible for section 308(c) grants, a State: (1) must meet the basic eligibility requirements of subpart C of this part, and (2) must not be receiving a grant under section 306. (b) To be eligible for use of section 308(b) grants, a State must meet the basic eligibility requirements of subpart C of this part, and (1) must have a program approved under section 306, or (2) must show that its allotment under section 923.36 is insufficient for the purposes of 8931.33(b). ( Comment : There is no provision in section 306 or 308 of the Act which prohibits the State from receiving grants under both sections 306 and 308(c). 0CZM decided to impose this restriction for two reasons. First,i'c provides an incentive to States to complete their coastal zone management programs, because States wilt be directly eligible for section 308(b) grants to plan for public facilities and services directly required by OCS energy activities. Such grants are 100 percent rather than 80 percent funding. Second, the restriction is intended to reserve, to the maximum extent practicable, moneys under section 308(d)(4) for environmental or recreational needs. Section 318(b) limits moneys from the Fund for sections 308(c) and (d)(4) to $50,000,000. Divided evenly ever ten years, only $5,000,000 per year can be apportioned among all eligible States. Since States without OCS energy activity do not qualify for section 308(b) grants, their only source of assistance for environmental or recreational needs is section 308(d)(4). Thus, by routing OCS States with approved 306 programs directly to section 308(b) grants, more money will be available under section 308(d)(4) for non-OCS States. Although the restriction facilitates the access of both OCS and non-OCS States with approved section 306 programs to the planning grants of section 308(b) and environmental/recreational grants of section 308(d)(4), it precludes their access to section 308(c) planning grants. However, the financial impact of the restriction is slight on a State by State basis, because of the limited funds available for planning grants under section 308(c). Furthermore, these States have access to section 306 grants for the administration of their management programs. 923.36 Allotment of financial assistance among eligible coastal States. (a) Moneys appropriated in any fiscal year to the Fund for the purposes of section 308(c) will be allotted by formule among eligible coastal States according to the procedures of this subpart. Moneys allotted to a coastal State will remain available for award to such State until the end of the fiscal year following the fiscal year in which the allotment took place. Allotted moneys not disbursed by that time will be returned to the Fund. (b) The following general process will be used to allot section 308(c) moneys. (A more detailed description of the process will be provided in guidelines.) (1) The Associate Administrator will establish and publish in the FEDERAL REGISTER stand- ardized estimates of temporary and permanent employees generally associated with the various energy facilities at their various levels of output. (2) The Associate Administrator will draw up and publish in the FEDERAL REGISTER an annual list for each coastal State of eligible energy facilities for which section 308(c) moneys have not been previously allotted and expended. Coastal States will have 30 days to submit comments to the Associate Administrator on these lists. The Associate Administrator will then revise the lists, taking into account the State comments. ( Comment : The State comment period is intended to bring to the attention of 0CZM those energy facilities for which the State or a locality within the State wishes to initiate planning but which were not included in the list drawn up by 0CZM. The State must present evidence that each facility it wishes to add has a reasonable probability of construction. Examples of facilities that may not be included on OCZM's list, but which might be brought to light during the comment period, include energy facilities whose construction is expected to resume (under an old permit) after a period of dormancy, and facilities whose character has changed in a way that does not demand a permit but nevertheless motivates renewed planning efforts.) (3) 0CZM will then apply the standardized employment estimates described in paragraph (b)(1) of this section to the list described in paragraph (b)(2) of this section to obtain a total employment equivalency for each coastal State. Each eligible coastal State will then be allotted a proportion of the total section 308(c) moneys appropriated to the Fund for that fiscal year equal to the State's employment equivalency divided by the sum of the employment equivalencies of all the eligible coastal States. (c) Procedures for allotment of section 308(b) assistance are discussed in section 931.76. 931.37 Application procedure. (a) An eligible coastal State may submit its application to the Associate Administrator for award of the section 308(c) moneys allotted to it as soon as it is notified of the amount of the allotment and until 45 days prior to the end of the fiscal year after the fiscal year 1n which the allotment took place. The application for section 308(c) assistance is to be made by the State entity designated by the Governor under section 931.26(a)(1). An eligible coastal State may requisition proceeds of grants allotted to it under section 308(b) as soon as it is notified of the amount of the allotment. The requisition is to be made by the State entity designated under section 931.26(a)(1). (b) Such applications and requisitions for assistance are subject, prior to their submission to the Associate Administrator, to the Project Notification and Review System established by Office of Management and Budget Circular No. A-95 (Part IV). (c) Applications for section 308(c) planning assistance or requisitions for section 308(b) planning assistance must: (1) name the State or local government entities within the State that are ultimately to receive the planning assistance; and (2) contain a certification that the planning assistance has been allocated within the State in accord with the equitable intrastate allocation system required under subpart K of this part. (d) Applications for section 308(c) assistance must contain: (1) a description of the new or expanded energy facilities because of which section 308(c) assistance is being sought; (2) a description of the proposed study or planning and a breakdown of estimated costs; and (3) a description of the benefits likely to result from the proposed study or planning. (e) Re quisitions for the proceeds of section 308(b) grants must contain: (1) a certification that the new or improved public facilities or public services for which the study or planning assistance is- to be used are directly required as a result of new or expanded 0CS energy activity; (2) a description of the proposed study and planning activities and a breakdown of costs; (3) a showing, if the State does not have a program approved under section 306, that the costs of study and planning for the consequences in the coastal zone of the energy activities are greater than: (i) the amount of section 308(c) grants allotted to the State in the previous fiscal year which have not been awarded; plus (ii) the amount of section 308(c) grants allotted to the State in the current fiscal year; (4) such adequate assurances as are required by subpart J of this part; and (5) a certification by the State agency designated under 5920.42 or §923.23 of this chapter, orvunder 5931.26(a)(3), that the -noneys will be used in a manner which is consis- ,,, tent with the State's develqninn or anorovert costal zone ^aQe^Snt-.prcqranu (f ) To the maximum extent practicable, the ratio of the costs attributable to DCS energy activities to the costs attributable to non-OCS energy activities must be equal to the ratio of the total employment equivalencies associated with the above activities respectively. ( Comment : An example might clarify this limitation. Assume that the total employment equiva- lency of a State, as determined by OCZM under paragraph (b), is 100. This can be further broken down into employment equivalencies associated with OCS activities and non-OCS activities. Suppose further that 70 is the employment equivalency associated with non-OCS activities. When a State applies for or requisitions planning assistance, the ratio of the coasts attributable to OCS energy activities to the costs attributable to non-OCS energy activities must, to the maximum extent prac- ticable, be equal to the ratio of the OCS employment equivalency to the non-OCS employment equivalency, i.e., 30/70. This limitation assures that the total amount of section 308 assistance for planning will be spent proportional to OCS and non-OCS needs. A more detailed description of the methodology and numerical examples will be provided in guidelines.) 931.38 Limitations. (a) Section 308(c) moneys awarded to a coastal State may not exceed 80 percent of the actual cost of the study or planning. Proceeds of section 308(b) grants, however, may be used to pay 100 percent of the actual cost of the study or planning. (b) Section 308(c) or 308(b) planning assistance may not be used (1) to duplicate the development of the general planning process for coastal energy facilities required of management programs under section 305(b)(8); or (2) for general energy studies or plans divorced from actual, proposed, or likely energy facilities. (Comment: According to the Act, States may use section 305 grants to develop the general planning process for coastal energy facilities required under section 305(b)(8). (c) In the event that the siting, construction, expansion or replacement of an eligible energy facility is cancelled, unexpended assistance for study or planning is to be returned to the Fund for reallotment among all the coastal States. To simplify administration, however, the Associate Administrator will use the following procedure. (1) If such assistance is less than the State's allotment for the subsequent year, the State will keep the unexpended assistance; but, the Associate Administrator will retain from the subsequent year's allotment for that State a sum equal to the held-over assistance. This amount retained from the subsequent year's allotment will then be reallotted among all the coastal States. (2) If such assistance is greater than the State's allotment for the subsequent year, the State will keep an amount equal to the allotment and will return the remainder of such assistance to the Associate Administrator. An amount equivalent to the subsequent allotment plus the amount returned to the Associate Administrator will be reallotted among all the States. (d) A coastal State may not use for the purposes set forth in section 931.33(b), an amount of the assistance provided to it under section 308(b) that exceeds five percent of the total amount of credit assistance allotted it under section 308(e)(1). (Comment: The purpose of the above restriction is to limit the amount of section 308(b) grants which can be used for the planning of public facilities and services required as a direct result of new or expanded OCS energy activity. This amount is comparable to planning allowances provided under several other Federal programs. Subpart E -- Financing Public Facilities and Public Services 931.40 General. This subpart sets forth policies governing assistance to coastal State and local governments under sections 308(d)(1) and (2) and 308(b). This assistance is for the provision of new or improved public facilities and public services required as a result of new or expanded coastal energy activity, including those required as a direct result of new or expanded OCS energy activity. This subpart states the objectives of providing this assistance, the purposes for which it may be used, and the sources from which it will be drawn. This subpart also describes the procedures for allotting credit assistance among coastal States, for applying for credit assistance from the Fund (section 308(d)(1) and (2)j, and for requisitioning the proceeds of formula grants (section 308(b)). 931.41 Objectives. The objectives of assistance under this subpart are: (a) to advance the national objective of attaining a greater degree of energy self-sufficiency by providing assistance to meet those State and local needs resulting from new or expanded coastal energy activity, giving priority to those activities involving domestic resources; (b) to avoid unwarranted Federal subsidies and outlays by providing to impacted coastal State and local governments front-end financing that is to be repaid later from the additional tax revenues and user fees generated by the new or expanded coastal energy activity; (c) to assure that necessary development in coastal areas is consistent with State coastal zone management objectives, including the safeguarding of valuable national coastal environmental and recreational resources. 10 931.42 Definitions. (a) The term "public facility" includes only the following facilities to the extent that they are financed, in whole or in part, by any State or unit of general purpose local government, meet the requirements of section 931.52, and do not primarily serve industrial facilities, except if the public facilities are wholly owned by a unit of general purpose local government and if indus- trial user charges from the facilities are a primary source of revenue included in the growth management schedule (as described in section 931.48(c)(5)): (1) Education . Day care centers; primary, secondary, and general vocational schools, and school equipment; libraries, including books and equipment; (2) Environmental Protection . Facilities and equipment used for air or water quality monitoring or to ensure continued viability of existing environmental resources; (3) Government administration . Facilities and equipment essential for local general government administration; (4) Health care . Ambulances and associated equipment, clinic and hospital building and equipment; (5) Public safety . Detention centers, police equipment and stations, fire stations and fire- fighting equipment; (6) Recreation . Facilities and equipment for amateur sports, community recreational centers, local parks and playgrounds; (7) Transportation . Streets, roads, bridges, road maintenance equipment, parking associated with public facilities, docks, navigation aids, air terminals in remote areas, mass transit limited to local bus systems; (8) Pub! ic utilities . Local electric generating plant and distribution systems and local natural gas distribution systems; solid waste systems; waste collection and treatment systems (including drainage); and local water supply systems. (b) The term "public services" means the salaries of essential personnel for the operation and maintenance of only the following public facilities, to the extent that these services are financed, in whole or in part, by any State or unit of general purpose local government, meet the requirements of section 931.52, and are not utilized primarily by industrial facilities: (1) public safety; (2) health care; (3) environmental protection; (4) education; (5) public utilities; and (6) transportation. (c) A public facility is "new or improved" if, after July 26, 1976, it is constructed in order to serve new population, or it is expanded or renovated to increase significantly its capacity in order to serve new population. (d) A public service is "new or improved" if the proposed type or increased level of service was not offered more than 180 days prior to the application or requisition for assistance for such service and if this type or increased level of service serves new population. (e) A public facility or public service is "required as a result" of new or expanded coastal energy activity if the increase in its utilization due to the population influxes resulting from that activity plus population increases resulting from normal growth is greater than its unutilized capacity prior to the undertaking of the coastal energy activity, and if the unutilized capacity is greater than that required for the population increases from normal growth. (f) A public facility or public service is required as a direct result of new or expanded OCS energy activity if the increase in its utilization due to individuals newly employed by OCS lessees (and their contractors, subcontractors, and principal suppliers) for new or expanded OCS energy activities plus population increases from normal growth is greater than the amount of its unutilized capacity prior to the undertaking of the OCS activity, and if the unutilized capacity is greater than that required for the population increases from normal growth. (g) Adequate credit assistance is "unavailable" to a coastal State in a fiscal year only if: (1) there is no institutional process which has ever been used and could have been used as of July 26, 1976, or which is now permitted, or which was permitted under constitutional or statutory authority as of July 26, 1976, through which credit assistance from the Fund could be obtained by the State or a unit of general purpose local government therein to finance projects or programs necessary to provide a new or irmoroved public facility or public service which isrequired as a direct result of new or expanded CCS energy activity; or (2) the state's total need factor (as defined in section 931.46) is greater than the credit assistance from the Fund available to the coastal State for that year (as computed according to section 931.46) plus any credit assistance that is available in the Fund and can be allotted to the State. 931.43 Purposes. (a) Credit assistance from the Fund (sections 308(d)(1) and (2)) is to help meet State and local needs to finance new or improved public facilities or public services required as a result of new or expanded coastal energy activity. (b) Grant assistance from formula grants (section 308(b)) is to help meet needs for new or im- proved public facilities and public services that are required as a direct result of new or expanded OCS energy activity. 11 931.44 Sources. (a) The primary source of assistance for purposes set forth in section 931.43(a) is the allotments of credit assistance from the Fund (sections 308(d)(1) and (2)). If adequate credit assis- tance is unavailable (as defined in section 931.42(g) from the Fund, the formula grants (section 308(b)) become a source of assistance for the purposes set forth in section 931.43(b). 931.45 Eligibility. (a) To be eligible for credit assistance from the Fund or formula grants, a coastal State must meet the basic eligibility requirements of section 931.25 and must submit an application for credit assistance under section 931.48 or a requisition for the proceeds of formula grants under section 931.48. (b) Coastal States and units of general purpose local government therein are eligible to receive credit assistance from the Fund. (c) Only the coastal State agency designated in accordance with section 931.26(a)(1) is eligible to requisition the proceeds of formula grants, but units of local government are eligible to receive such proceeds from the designated State agency. 931.46 Allotment of section 308(d)(1) and (2) credit assistance among coastal States. (a) Credit assistance available in any fiscal year through the Fund, as specified in appropria- tions Acts, will be allotted in each fiscal year among coastal States according to the procedures of this section. (b) The Associate Administrator will compile an annual list of new or expanded coastal energy activities for which major Federal permits or licenses have been obtained, or for which exploration or development plans have been approved by the U.S. Department of Interior during the preceding year. The Associate Administrator will use these data (in a methodology to be described in guidelines) to estimate the increase in each coastal State of temporary and permanent population requiring new or improved public facilities and public services. (c) The Associate Administrator will determine standardized per capita costs for public facilities and public services for new temporary and permanent population in the relevant coastal impact areas. These costs will be adjusted annually according to an area's existing population, its population growth rate, and the regional cost differences. (d) The Associate Administrator will furnish to the States the data developed pursuant to paragraphs (b) and (c). Coastal States will have 30 days to comment. The Associate Administrator will consider the State comments and will revise the data if necessary. He/she will then calculate State need factors using the procedures of paragraph (e) of this section. (e)(1) The Associate Administrator will compute a need factor for each impact area. A State need factor will then be computed for each coastal State by summing the need factors for the impact areas of that State. A national need factor will be computed by summing all of the State need factors. Finally, a relative need factor will be calculated for each coastal State by dividing the State's need factor by the national need factor. (2) In the process of determining the need factors of this paragraph, the Associate Adminis- trator will also compute for each coastal State a direct OCS need factor and a total OCS need factor. These factors will be used in determing whether or not adequate credit assistance from the Fund is available to a coastal State (as defined in section 931.42(g)). The direct OCS need factor will be computed by using OCS employees and their families but not using secondary population. The total OCS need factor will be computed using all OCS-related employment and secondary population. (f) The Associate Administrator will then compute the allotment for each coastal State and notify the coastal States of their respective allotments. (1) The total amount allotted among the coastal States in any fiscal year will be the lesser of the following amounts: (i) the national need factor as computed according to paragraph (e) of this section; or (ii) the total amount of new credit assistance appropriated for that year. If the amount in paragraph (f)0)(i) if !ess than the amount in paragraph (f)(l)(ii), the extra credit assistance will be retained in the Fund for use in subsequent years. (2) The Associate Administrator will compute each coastal State's allotment of credit assistance in proportion to that State's relative need factor. To the maximum extent practicable, allotments will reflect proportionately each State's OCS and non-OCS needs. (g) After being notified of its allotment, a coastal State may submit to the Associate Adminis- trator applications (as described in seetion 931.48) for loans and guarantees from this allotment during the remainder of the fiscal year and the succeeding two fiscal years. Allotted credit assis- tance not awarded to a coastal State or its units of general purpose local government by the end of the second fiscal year after the fiscal year in which the allotment was established will be subject to reallotment among all the coastal States. The Associate Administrator may extend the period of availability of an allotment if he/she determines that delays in coastal energy activity warrant such an extension. 931.47 Allotment of section 308(b) formula grants. The annual allotment of formula grants among coastal States is described in section 931.76. 12 931.48 Application and requisition procedures. (a) A coastal State submitting applications for credit assistance or requisitioning the proceeds of formula grants must submit to the Associate Administrator, as part of that application or requisi- tion, the following information in a format to be specified by the Associate Administrator: (1) The State or unit of general purpose local government which is to receive the assistance; (2) a certification by the State entity in section 931.26(a)(2) that the request results from an equitable intrastate allocation of the State's overall available assistance as described in subpart K of this part; (3) a certification by the State agency designated under section 923.23 or 920.42 of this chapter or section 931.26(a)(3) that the moneys will be used in a manner which is consistent with the State's developing or approved coastal zone management program; (4) the environmental impacts of the new or improved public facilities and public services for which the assistance is to be used, including alternatives and their estimated different impacts on monetary costs; (5) a certification by the State agency designated in accordance with section 931.26(a)(1), that the State or unit of general purpose local government has considered other sources of Federal assistance for the project and used them where possible; (6) a description of the area to be impacted by the new or expanded coastal energy activity; and (7) for any assistance requested for a new or improved public service, a certification that either: (i)revenues (as defined in section 931.62) to pay for services will lag behind expenditures; or (ii) such revenues will be inadequate to meet the costs of services because the portion of revenues which will accrue from the energy facilities is less than the portion of total revenues which normally accrue to the jurisdiction from commercial and industrial sources. (b) Such applications and requisitions for assistance are subject, prior to their submission, to the Project Notification and Revieu System established by the Office of Management and Budget Circular A-95 (Part IV). (c) A coastal State or unit of general purpose local government requesting credit assistance from the Fund must submit an application that contains: (1) a certification that, if the recipient is not the State, the recipient qualifies as a unit of general purpose local government (as defined in section 931.22); (2) a description of the particular new or improved public facilities or public services, required as a result of new or expanded coastal energy activity, for which the assistance is sought, including costs on an annualized basis; (3) an estimate of current levels of utilization of public facilities or public services which are similar to those for which assistance is sought; (4) a description of the new or expanded coastal energy activity causing impacts Because of *hich the credit assistance is sought; (5) a growth management schedule comprised of the following information and annualized projections: (i) new temporary and permanent direct and secondary jobs resulting from the new or expanded coastal energy activity; (ii) population increases resulting from th e new or expanded coastal energy activity, both overall and within the recipient's jurisdiction; (iii) energy facilities expected to impact the recipient's jurisdiction; (iv) estimates of taxes, user fees, and other revenues, assuming current fiscal methods and rates (as defined in section 931.62(f), which accrue to the recipient and the State government from the new or expanded coastal energy activities and related population; (v) estimates of taxes, user fees, and other revenues anticipated to accrue to the recipient and the State from the adoption of new fiscal methods or rates applicable to the new or expanded coastal energy activities and related population; and (vi) a statement of fiscal condition, including revenues and expenditures for the past ten years. (d) A coastal State may requisition in any fiscal year the proceeds of its allotted formula grants for the purposes of section 931.43(b) after it has been notified of its credit assistance allot- 2?? „o? r ^ * year ' lf adec * uate credit assistance from the Fund is unavailable (as defined in section 931.4Z(g)) for such purposes. This requisition must be submitted along with the pertinent applications for credit assistance from the Fund. (1) In requisitioning the proceeds of formula grants, the coastal State must provide the Associate Administrator with the following items: (i) a description of the new or improved public facilities or public services, required as a direct result of new or expanded OCS energy activity, for which the proceeds are to be used, including costs on an annualized basis; (ii) an estimate of current levels of utilization of any existing facilities or services similar to those for which the proceeds are to be expended; (iii) a description of the new or expanded OCS energy activity causing the impacts because of which the proceeds are to be used; and (iv) such adequate assurances as are required by section 931.101. v2) Before disbursing the proceeds of formula grants, the Associate Administrator will- i) review the requisitions and verify the certifications submitted pursuant to section 931 48- (n determine whether credit assistance under the Fund is unavilable (as defined in section 931.42(g)); and (iii) determine that the State has provided such adequate assurances as are required bv section 931.101. J 13 931.50 Special requirements for section 308(d)(1) loans. (a) Interest rate . The Associate Administrator will calculate every three months an interest rate for loans he/she awards from the Fund. ( A description of the methodology to be used in calculating the interest rate will be provided in later explanatory material.) The interest rate shall not exceed the current average market rate for United States obligations of comparable maturity at the time of the calculation. (b) Maturity of loans . Loans must be repaid within the minimum reasonable time which the Associate Administrator finds to be consistent with the revenue projections of the borrower. In no event will a loan, including extensions and renewals thereof, be made with a maturity exceeding 30 years from the date of the award of the loan. (c) Security . The Associate Administrator retains the option of requiring security, including the pledge of futures revenues or user charges from the public facility, from the borrower before awarding a loan from the Fun... However, no loan will require as a condition that a State or unit of general purpose local government pledge its full faith and credit to repayment. (d) Disbursement of loan funds . The Associate Administrator will disburse loan funds on a phased basis, with each phase tied to the completion of a specific part of the project for which the loan moneys are to be used. Disbursement schedules will be determined by the Associate Administrator on a case-by-case basis. 931.51 Special requirement for section 308(d)(2) Federal guarantees. (a) Eligibility . The Associate Administrator will consider eligible for guarantees under the Fund any legal debt of any eligible borrower (as defined in section 931.63) if the Secretary of the Treasury approves such debt and it meets other requirements set forth in section 308(f). (b) Competition requirements . The Associate Administrator will not guarantee any bond that is offered to the market by private placement, or any bond for which there are fewer than three indepen- dent bids, except if placed through a State-sponsored marketing arrangement for local bonds, if the State-sponsored marketing arrangement meets these requirements. (c) Federal Financing Bank . Bonds guaranteed under the Fund are eligible for purchase by the Federal Financing Bank. (d) Fees for guarantees . The Associate Administrator will levy a fee, not to exceed one percent per annum of the amount outstanding, for providing a Federal guarantee. This fee will be set on the basis of the administrative costs incurred in providing and monitoring such guarantee. The fee may be waived in the event repayment assistance (as described in subpart F of this part) is required. (e) Default procedures and guarantee incontestability . If a borrower defaults on a bond or other evidence of indebtedness guaranteed under the Fund, the holder of the bond or other indebtedness may demand payment from the Associate Administrator of the principal and accrued interest of the obligation in accordance with section 308(f)(5)(B). The validity of such a guarantee shall be considered incon- testable, except when the holder of the obligation is guilty of fraud or misrepresentation or was aware of fraud or misrepresentation at the time he purchased the obligation. 931.52 Special project and cost requirements. Projects to provide new or improved public facilities under this subpart are subject to the res- trictions and criteria of this section. (a) Restrictions and limitations . To be eligible for assistance, a project must adhere to the following requirements: (1) Project costs must be calculated and recorded using generally accepted accounting principles. (2) Design and performance criteria must conform to professionally recognized national standards. Costs must be reasonable and comparable to the costs of similar work awarded through open competi- tive bidding in the geographical area of the project. (3) It is the Associate Administrator's policy to require the utilization of fixed price or cost- ceiling contracts. Agreements allowing compensation to the architect/engineer based on a percen- tage-of-construction-cost type of fee contract are generally not acceptable. (b) Project costs . Projects to provide new or improved public facilities under this subpart will receive assistance only for those costs which are allowable under this section. (1) Project costs must meet the following general criteria; (i) costs must be necessary and reasonable for the project; (ii)costs must be authorized or not prohibited by applicable Federal, State, or local laws or regulations; (iii) costs must not be allocable to or included as a cost of any other Federally financed project in either the current or a prior period. (2) Non-allowable project costs . Expenditures for the following are not acceptable costs: (Pro- jects including such costs may still be eligible under this section, but assistance shall be no more than the total project costs less the non-allowable project costs.) (i) assets acquired prior to submission of the application or requisition for assistance, except for purchase options; (ii) bad debts, including any losses arising from uncollectible accounts and other claims, and related costs; (iii) costs resulting from changes in project scope; (iv) contributions and donations; (vl entertainment; 14 (vi) fines and penalties, including costs resulting from violation of, or failure to comply with, Federal, State, and local laws and regulations; (vii) interest and other financial costs unless specifically allowable by the Associate Adminis- trator; (viii) Governor's expenses and Chief Executive's expenses; and (ix) legislative expenses. (3) Allowable project costs . Expenditures for the following are acceptable costs when they are reasonable and necessary for the successful completion of an eligible project, as specified in this subsection: (i) land acquisition, easements, and rights-of-way; (ii) architectural, engineering, and other necessary technical services fees; (iii) legal fees necessary as part of issuing bonds or for other project purposes; (iv) administrative expenses, including the cost of maintaining financial records and performing audits; (v)lease or rental of essential machinery; (vi) construction expenses, including construction materials, fixtures, appurtenances, and fixed machinery and equipment; (vii) site preparation and improvement; (vi inadequate contingency reserves, not to exceed 10 percent of total project costs. 931.53 Limitations. Total moneys available to all the States pursuant to this subpart for public facilities and public services cannot exceed four times the amount of total moneys available to all the States pursuant +~ subpart G of this part for the prevention, reduction, or amelioration of any unavoidable loss of valuable environmental or recreational resources. ( Comment : This limitation represents an effort to maintain a careful balance in the CEIP between financial assistance which can be made available for public facilities and public services and that which can be made available for environmental or recreational needs. OCZM feels that this limitation is necessary to implement the basic policies and structure of the overall program which provides financial assistance tailored to changing needs of coastal communities and to different types of impacts from energy development. For instance, financial assistance for public facilities and public services is balanced in section 308 between loans and bond guarantees under certain conditions, and formula grants under more narrow conditions. Another example of the balance struck in the CEIP is the availability of assistance for different categories of projects which address different kinds of energy impacts: i.e. the need for public facilities and public services and for environmental and recreational projects. In setting a maximum level of financial assistance for public facilities and public services, OCZM has struc- tured a balance which insures at least a minimum level of assistance for environmental and recreational projects. This limitation will be enforced by OCZM on a State by State basis in a manner which takes into account the State's needs for public facilities and public services resulting from OCS and non-OCS energy activities, and the availability of grant and credit assistance in a given year. ( A description of the methodology and numerical examples will be given in guidelines.)^ Subpart F — Repayment Assistance Under Sections 308(d)(1) and 308(d)(2) of the Act 931.60 General. This subpart sets forth policies and procedures for awarding various forms of repayment assistance under sections 308(d)(3) and 308(b)(4)(A). The purpose of this assistance is to enable a coastal StStI to a unit of general purpose local government therein, to meet the obligations of a section 308(d)(1) loan, or a bond or other obligation guaranteed under section 308(d)(2) when the coastal energy activity and related population do not provide adequate revenues and there is an inability to repay. 931.61 Objectives. The objective of the repayment assistance is to reduce the risk to those coastal States and units of general purpose local government in whose jurisdiction new or expanded coastal enerqy activity takes place by ensuring that: . (a) Credit obligation will be modified and tailored according to ability to repay so that defaults can be avoided; and (b) The coastal energy activity will not cause net fiscal losses to the State or units of general purpose local government. 3 931.62 Definitions. For the purposes of this subpart, (a) The term "borrower" refers to a State or a unit of general purpose local Government that has been awarded credit assistance under section 308(d)(1) or (d)(2). (b) The term "total revenues" refers to income accruing to 'the borrower from: (1) taxes; (2) special assessments; (3) fees and other user charges; (4) intergovernmental transfers; and (5) other revenues normally accruing to the borrower. 15 (c) The term "revenues" refers to that part of the total revenues accruing to a borrower that is the sum of: (1) that income resulting from new or expanded coastal energy activity and the related new population, assuming current rates and methods; plus (2) income that results from any increase in rates or improvements in existinq methods or from adootion by the borrower of new methods of qenerating income. (d) The term "projected revenues" refers to those revenues as defined in paragraph (c) of this section that are projected from the growth management schedule described in section 931.48(b)(6). (e) The term "overall projected revenues" refers to the set of annual projected revenues for a specified number of years. (f) The term "current rates and methods" refers to the highest tax rates and most gainful income- producing measures effected by the borrower between July 26, 1976, and the date of application for section 308(d)(1) or (d)(2) credit assistance. 931.63 Purposes. (a) The purpose of repayment assistance under section 308(d) (3) (A-C) of the Act is to enable a coastal State or unit of general purpose local government to accommodate temporary shortfalls in revenues available for meeting credit assistance obligations in a particular year or years, as calculated from the revised growth management schedule. (b) Disbursement of proceeds of grants under section 308(b)(4)(A) are to enable a coastal State or unit of general purpose local government to meet a shortfall in overall projected revenues for guaranteed bond obligations, as calculated from a revised growth management schedule. (c) Repayment grants under section 308(d)(3)(D) are to enable a coastal State or unit of general purpose local government to meet a shortfall in overall predicted revenues for meeting loan and guaranteed bond obligations, as calculated from a revised growth management schedule, when section 308(b) grants are not available. 931.64 Sources. (a) The primary sources of repayment assistance are modification of credit assistance terms and conditions under section 308(d)(3)(A), refinancing of a loan under section 308(d)(3)(B), or making a supplemental loan under section 308(d)(3)(C) for meeting a loan or guarantee obligation. (b) After one or more of these primary sources have been used at least once, and then the Associate Administrator determines that there is a shortfall in overall projected revenues, the secondary sources of repayment assistance may be used to meet obligations. These secondary sources are section 308(b) grants for guaranteed bonds and section 308(d)(3)(D) repayment grants for loans and for guaranteed bonds when section 308(b) grants are insufficient. 931.65 General eligibility. (a) A coastal State or unit of general purpose local government is eligible for repayment assistance only if: (1) it has been awarded a loan under section 308(d)(1) or a guarantee under section 308(d)(2); (2) it has updated its original growth management schedule according to the procedures of section 931.66, at least every two years from the date such loan or guarantee was awarded; and (3) projected new or expanded energy facilities and projected new population resulting from these energy facilities fail to materialize as projected and fail to provide adequate revenues as projected so that the borrower experiences a temporary shortfall or a shortfall in overall projected revenues. (b) A borrower does not have to be in default before qualifying for repayment assistance. The default of a borrower will nevertheless automatically occasion review for repayment assistance by the Associate Administrator. 931.66 Application update. Every two years after submitting its original credit assistance application, and until the full redemption of its loan or guaranteed obligation, the borrower shall revise its growth management schedule (as described in section 931.48(b)(6)), and shall submit its revised schedule to the Associate Administrator. The Associate Administrator shall review each such submission, and may modify the growth management schedule (in communication with the borrower). This revised schedule should contain whatever new information the borrower has received and can document concerning the coastal energy activity and its likely effects on revenues and expenditures. 931.67 Review for repayment assistance. (a) At the request of a borrower, the Associate Administrator will undertake a review for repayment assistance. If such request is made at a time other than the regularly scheduled submission of a revised growth management schedule by the borrower, the borrower must provide with the request an updated growth management schedule. On the basis of that schedule, the Associate Administrator will revise the projection of the borrower's revenues. He/she will also examine in detail the data and projections contained in the growth management schedule, particularly those relating to the status and effects of the coastal energy activity; he/she may also examine, subject to audit, or otherwise analyze the fiscal records and management practices of the borrower related to the loan or guaranteed credit obligation. 16 (b) Within 45 days after the request for review and the submission of the updated growth manage- ment schedule, the Associate Administrator will recommend, if warranted, one or more of the following courses of action. (1) Extension of Payback Period . In the case of loans awarded under section 308(d)(1), the payback period may be extended as necessary for the borrower to meet the loan obligations. The payback period may not, however, exceed 30 years from the date of the awarding of the original loan. (Such an extension will automatically require a modification of the repayment schedule, as discussed in para- graph (b)(2) of this section.) (2) Modification of Terms . The repayment schedule tailored to the borrower's original projected revenues (as described in section 931.48) may be retailored in similar fashion to the revised revenue projections, including by means of refinancing. (3) Supplemental Loans If the Associate Administrator determines that projected revenues will be temporarily insuffici entto meet the borrower's guaranteed bond or other obligations or to meet a loan repayment schedule, even after the payback period has been extended and the repayment schedule has been modified, he/she may offer to make a supplemental loan to the borrower. (4) Repayment Grants . If the Associate Administrator determines that overall projected revenues will be insufficient to meet the borrower's obligations, even after the payback period has been extended, the repayment schedule modified, or a supplemental loan awarded, he/she may authorize a repayment grant. In the case of a bond guaranteed under section 308(d)(2), this grant must be from the proceeds of the State's allotted section 308(b) grant. If the State's allotment under section 308(b) is insufficient to retire all the State and local bonds requiring a repayment grant in that year, the repayment grant may be from the Fund. In the case of loans made under section 308(d)(1), the fraction of the original loan that cannot be repaid from projected revenues will be forgiven according to the provisions of section 308(d)(3)(D). ( Comment : The repayment assistance remedies in paragraphs (1) through (4) of this section are numbered in order of increasing severity of the problem. 0CZM will extend a payback period or reshare a repayment schedule whenever projected revenues change. A supplemental loan, as a repayment remedy, is intended primarily for a borrower who holds a guaranteed bond but cannot make one or more payments in full because of temporarily insufficient revenues. Nevertheless, 0CZM may recommend a supplemental loan to a borrower who has a loan awarded under section 308(d)(1) if 0CZM determines that an accurate projection of revenues cannot be made because of uncertainties in the status of the expected coastal energy activity. A repayment grant -- whether an outright grant under section 308(b) or (d) or forgiveness under section 308(d) -- will be viewed by 0CZM as a last resort, an action initiated only when 0CZM is satisfied that the expected coastal energy activity, the related population, and/or the attendant revenues have not materialized as expected.) 931.68 Application for, and award of, repayment assistance. (a) If, after the review for repayment assistance, the Associate Administrator recommends an action involving an extension of a payback period, a modification of a repayment schedule, or a supplemental loan, the borrower may submit a formal request for that repayment assistance as soon as the borrower receives the recommendation. The assistance will be considered in effect as soon as the borrower receives from the Associate Administrator a notice that its formal request has been received. (b) If, after the review for repayment assistance, the Associate Administrator recommends forgiveness of some fraction of the principal of and/or interest on a loan awarded under section 308(d)(1), the borrower may submit a formal request for this forgiveness. The forgiveness, and the related modification of terms for the remaining fraction of the loan, will be considered in effect as soon as the borrower receives from the Associate Administrator a notice that its formal request has been received. (c) If, after the review for repayment assistance, the Associate Administrator recommends that a repayment grant be given the borrower for the purpose of retiring bonds guaranteed under section 308(d)(2), the borrower shall notify the State agency designated under subpart C to receive the proceeds of section 308(b) grants. The State may immediately requisition the proceeds of section 308(b) grants for this purpose. (d) If the section 308(b) grants allotted the State in a given year is insufficient for all the bond retirement recommended by the Associate Administrator in that year, the State shall indicate which bonds it wishes to retire with the available section 308(b) proceeds, giving priority to local bonds in accordance with section 308(b)(4)(A). Those borrowers whose bonds the State has indicated it cannot retire in that year with the proceeds of section 308(b) grants may request immediately repayment grants under section 308(d)(3)(D). Borrowers in States that have no allotted section 308(b) grant may request immediately repayment grants under section 308(d). Subpart G — Grants for Unavoidable Losses of Coastal Environmental and Recreational Resources 931.70 General. This subpart sets forth policies and requirements for awarding environmental and recreational grants to coastal States under sections 308(b) and 308(d)(4). These grants are to help coastal States and units of local government prevent, reduce, or ameliorate any unavoidable damage to a valuable environmental or recreational resource in the coastal zone. This subpart describes the objectives of awarding these moneys, the purposes for which they may be used, and the sources from which they will be drawn. In addition, this subpart defines and details eligibility requirements. 17 931.71 Objectives. The objective of providing Federal moneys under sections 308(b) and 308(d)(4) are: (a) to help States and units of local government prevent, reduce or ameliorate unavoidable damage to valuable environmental or recreational resources resulting from coastal energy activity, and (b) to encourage payment of the full cost of those environmental and recreational losses resulting from coastal energy activity by the person responsible for the loss. 931.72 Definitions. For the purposes of this subpart: (a) the term "unavoidable" refers to a loss of, or damage to, an environmental or recreational resource that: (1) cannot be attributed, in whole or in part, to any identifiable person; or, (2) cannot be prevented, reduced, or ameliorated, in whole or in part, through the implementation or enforcement of the existing regulatory authority of the State, or of any political subdivision of the State, to assess the loss against any identifiable person; and, (3) cannot be paid for with moneys from any other Federal program. (b) The term "loss" refers to any damage to or degradation of an environmental or recreational resource, including the loss of public access to that resource. (c) The term "environmental resource" refers to: (1) areas of land and/or water that are or have been largely in a natural state and have not been significantly modified by human activities; or whose value derives primarily from ecological considera- tions; and (2) important animal and plant populations, their habitat and areas of human use; and (3) air quality. (d) The term "recreational resource" refers to an area of land and/or water that has characteris- tics making it desirable for one or more types of recreation activities, and which has, in fact, been in use for such activities. (e) The term "valuable" refers to value including all relevant benefits, both quantifiable and non-quantifiable, attributable to the resource being valued. (f) The term "new employment" means those persons newly employed by the U.S. Department of Interior's OCS lessees, as well as new employees of contractors, subcontractors or principal suppliers of those OCS lessees. (g) The term "first landed" in a particular State refers to oil and gas produced from the OCS that is first unloaded from tankers or barges at ports within that State, or is brought to shore in pipelines that first touch land in that State. (h) The term "person" means any individual; any corporation, partnership, association, or other entity organized or existing under the laws of any State; the Federal Government; any State, regional or local government; or any entity of any such Federal, State, regional, or local government. 931.73 Sources. (a) The primary source of assistance for preventing, reducing, or ameliorating environmental or recreational losses resulting from coastal energy activity is the grant provided under section 308(b) (4)(C) and allotted to coastal States according to section 931.76. (b) When grant moneys allotted to a State under section 308(b) are insufficient, a coastal State may apply for the grant moneys under section 308(d)(4) that are allotted to it according to section 931.77. States that are not eligible for 308(b) grants may apply directly for grants under section 308(d)(4). 931.74 Purposes. (a) Assistance provided for in sections 308(b)(4)(C) and 308(d)(4) is to help States and units of local government prevent, reduce or ameliorate environmental and recreational losses in the coastal zone resulting from. past or new coastal energy activity, regardless of when the loss occurred. The grant moneys are available only if there is no feasible way to recover the cost of prevention, reduction, amelioration, in whole or in part, from an identifiable person causing the loss, or from another Federal program. (b) Assistance under this subpart is also intended to pay administrative costs of prevention incurred in meeting the requirements of section 931.78(d) for assessment of losses. 931.75 Eligibility. (a) To be eligible for environmental or recreational grants under sections 308(b)(4)(C) and 308(d)(4), a coastal State must meet the basic eligibility requirements described in subpart C of this part. (b) To be eligible for grants under section 308(d)(4), a State must not have sufficient moneys allotted to it under section 308(b). 931.76 308(b) Allotment. Moneys appropriated in any fiscal year for the purposes of section 308(b) of the Act will be allotted among eligible coastal States according to the following procedures. Allotments will be made as soon as is practicable, and no later than 90 days, after moneys are appropriated in each fiscal year. The proceeds of grants requisitioned by and disbursed to a State in 18 any fiscal year must be expended or committed by the end of the fiscal year after the fiscal year in which the proceeds were disbursed. Grant proceeds not requisitioned remain available for disbursement until the ned of fiscal year 1984, at which time proceeds not disbursed will be returned to the United States Treasury. (a) At the end of each fiscal year, the Associate Administrator will gather from appropriate Federal and other agencies the following data: (1) the amount, by adjacent coastal State, of OCS acreage leased in that fiscal year; (2) the amount, by adjacent coastal State, of oil and natural gas produced from the OCS that year; (3) the amount of oil and natural gas produced from the OCS that is first landed in each coastal State that year; (4) the number of resident individuals, by coastal State, who gain new employment that year as a result of new or expanded OCS energy activity. (b) The Associate Administrator will provide these data to the States as soon as the data are collected. The States will have a comment period of 30 days in which to present evidence of errors in the data. At the end of the 30 day period, the allotment - incorporating any revised data - will be made. (c) The data for each State in paragraphs (a)(1) through (a)(4) of this section, when divided by the sum of each data for all States, constitute a set of weighting coefficients which will be applied in the following manner to the amount appropriated for the purpose of section 308(b): (1) the set of State coefficients derived from the data of paragraph (a)(1) of this section will be applied to one-third of the amount appropriated; (2) the set of coefficients derived from the data of paragraph (a)(2) of this section will be applied to one-sixth of the amount appropriated; (3) the set of coefficients derived from the data of paragraph (a)(3) of this section will be applied to one-sixth of the amount appropriated; and (4) the set of coefficients derived from the data of paragraph (a)(4) of this section will be applied to one-third of the amount appropriated. (d) The procedure above will result in four separate amounts for each coastal State. The sum of these four amounts is the allotment for each State of the moneys appropriated for the purposes of section 308(b). 931.77 308(d)(4) Allotment. Moneys appropriated for the purposes of section 308(d)(4) will be allotted to the States according to the procedures outlined in subpart E of this part for allotting section 308(d)(1) and (2) assistance, with the following changes: (a) The list drawn up as described in subpart E of this part will be modified by removing those energy facilities directly related to the exploration or development of or production from the OCS. (b) Moneys allotted a State under section 308(d)(4) that are not expended or committed within two fiscal years following the fiscal year in which the allotment was made will be returned to the Fund for reallotment. The Associate Administrator will extend the period of availability of an allotment if he/she determines that there are extenuating circumstances that justify retention by the State of all or part of that allotment. 931.78 Requisition and application procedures. (a) An eligible coastal State may requisition disbursement of its section 308(b) grant for the purposes set forth in §931.74 as soon as it is notified of the amount of its allotment. If the proceeds are insufficient, the State may apply for section 308(d)(4) moneys up to its allotment. (b) The requisitions and applications must be made by the State entity designated by the governor of the State in accordance with §931. 26(a)(1) . Such applications and requisitions for assistance are subject, prior to their submission to the Associate Administrator, to the Project Notification and Review System established by the Office of Management and Budget Circular Number A-95 (Part IV). (c) Requisitions for proceeds under section 308(b) and applications for moneys under section 308(d) must: (1) name the State or local government entities within the State that are to be the ultimate users of the assistance; (2) include certification by the State entity designated by the Governor under §931. 26(a)(2) that the disbursement of the moneys within the State will be in accord with the intrastate allocation system required under section 308(g)(2) and as described in subpart K of this part; (3) contain a certification by the agency designated under 3923.23 or 3920.42 of this chapter, or 9931.26(a)(3), that the moneys will be used in a manner that is consistent with the State's developing or approved coastal zone management program; (4) contain a description, including maps or photographs, of the environmental or recreational loss or area of expected future loss, as well as an explanation of why the resource loss fits the definitions of 3931.72. (5) contain a description of the project proposed to prevent, reduce, or ameliorate the loss, including a breakdown of costs; and (6) contain an assessment of the value of the resource loss, including a comparison of the costs of the project described in paragraph (c)(5) of this section with this resource value. (d) Requisitions for proceeds under section 308(b) and applications for moneys under section 308(d)(4) must be accompanied by a certification that the loss is "unavoidable," as defined in 3931.72(a) because the loss cannot be paid for with moneys from any other Federal program; and either: 19 (1) the loss cannot be attributed, in whole or in part, to any identifiable person; or (2) the loss cannot be prevented, reduced, or ameliorated, in whole or in part, through the implementation or enforcement of the existing regulatory authority — such as water pollution, zoning, and subdivision controls -- of the State, or any political subdivision of the State, to assess the loss against any identifiable person. (e) Applications for moneys under section 308(d)(4) must also contain a certification that the costs of the proposed prevention, reduction or amelioration cannot be met with funds from the proceeds of the section 308(b) grant allotted the State according to §931.76. (f) Prior to being notified of any allotment under section 308(b), a coastal State entity designated under section 931.26(a)(1) may submit to the Associate Administrator proposals for projects to reduce or ameliorate the loss or damage of valuable environmental /recreational resources that has resulted from coastal energy activity. Such proposals must contain information and certifications required under sections 931.78(c) and (d) and must have been submitted to the Project Notification and Review System established by the Office of Management and Budget Circular A-95 (Part IV). Upon completion of the Associate Administrator's review, verification, and environmental impact assessment, and after the State has been notified of its allotment under section 308(b), the State may requisition in any year proceeds of section 308(b) grants for such projects without submission of any further review and verification by the Associate Administrator. 931.79 Limitations. The proceeds of grants under section 308(b) and moneys under section 308(d)(4) may not be used: (a) for the prevention, reduction, or amelioration of any loss that results from the sale, lease, rental, or converion to other uses of a publicly owned environmental or recreational resource. (b) for the prevention, reduction, or amelioration of any loss that is not caused primarily by coastal energy activity. (c) to pay for any'recreational project whose cost exceeds the value of the recreational resource loss the project would prevent, reduce, or ameliorate. (d) to pay for any environmental project whose cost is incommensurate with the value of the environmental loss the project would prevent, reduce, or emeliorate. (e) for any prevention, reduction, or amelioration of an unavoidable environmental loss by means of a public facility or public service of the types specified in 3931.42(a) and §931.42(b) { and (f) to pay more than 80 percent of the cost of a project to prevent, reduce, or ameliorate any loss that occurred subsequent to July 26, 1976. Subpart H -- Lateral Seaward Boundaries 931.80 General. For the purpose of making calculations under sections 931.76(a)(1) and 931.76(a)(2), Outer Continental Shelf acreage is adjacent to a particular coastal State if such acreage lies on that State's side of the extended lateral seaward boundaries of each State. Demarcation lines extending the lateral seaward boundaries of a coastal State for the purpose of calculation under sections 931.76(a)(1) and 931.76(a)(2) shall be determined according to the procedures of this subpart. 931.81 Existing agreements. If lateral seaward boundaries have been clearly defined or fixed by an interstate compact, agreement, or judicial decision (if entered into, agreed to, or issued before July 26, 1976) demarca- tion lines extending such boundaries shall be based on the principles used to delimit or define lateral seaward boundaries in such compact, agreement, or decision. Copies of such compacts, agree- ments or decisions must be submitted before calculations of State allotments are made. 931.82 Establishment of demarcation lines when no agreement exists between States. If no lateral seaward boundaries, or any portion thereof, have been clearly defined or fixed by an interstate compact, agreement, or judicial decision, demarcation lines establishing lateral seaward boundaries for the purpose of calculations under sections 931.76(a)(1) and 931.76(a)(2) shall be determined as follows: (a) Demarcation lines shall be established by agreement between States based on equitable principles including but not limited to the principles contained in the Convention on the Territorial Sea and the Contiguous Zone. Where demarcation is based on the principles of equidistance as contained in the Convention, the baseline used shall be the plane of mean low water established in accordance with methodology used by the National Ocean Survey, National Oceanic and Atmospheric Administration, U. S. Department of Commerce, and depicted on large-scale nautical charts. Demarca- tion lines established by States under this section shall be defined and appropriately documented by such States no later than one year from the date of publication of these regulations. Appropriate documentation shall include data sufficient to locate demarcation lines to within plus or minus five- tenths of a nautical mile. Such documentation may include but is not limited to maps, geographic positions, computations, and written descriptions. (b) Failing agreement between States within one year from the date of publication of these regulations, demarcation lines shall be established by the Associate Administrator based on equitable principles including those contained in the Convention on the Territorial Sea and the Contiguous Zone. Prior to the establishment of demarcation lines, the Associate Administrator shall allow a six month period during which the States failing to agree may file written statements setting forth principles 20 for demarcation they feel should be used, with justification in support of their respective positions. Within three months of the expiration of the period allowed for written submission by States, the Associate Administrator shall establish demarcation lines between those States. The provisions of this paragraph may be invoked at any time prior to the expiration of one year from the date of publication of these regulations, provided the States concerned agree to seek such a determination. 931.83 Later agreements between States. If, after July 26, 1976, two or more coastal States enter into or amend an interstate compact or agreement in order to clearly define or fix lateral seaward boundaries, demarcation lines extending such boundaries shall be based on the principles used to delimit or define lateral seaward boundaries in such compact or agreements. However, demarcation lines so extended shall not affect grants previously made in accordance with calculations made according to sections 931.76(a)(1) and 931.76(a) (2). 931.84 Allotment of section 308(b) grants held in escrow. Allotments to an individual State in accord with calculations made pursuant to sections 931.76(a)(1) and 931.76(a)(2) shall not be made until complete demarcation lines extending or defining lateral seaward boundaries for the purpose of such calculations have been established and documented for the State concerned. The moneys which have been appropriated for purposes set forth in section 308(b), but which cannot be allotted to individual States in accor with calculations made pursuant to sections 931.76(a)(1) and 931.76(a)(2) because the lines of demarcation have not been established, shall be held in escrow until such time as the demarcation lines have been established. ( Comment : The amount to be held in escrow will be only one-half of the amount of the formula grants for any States that do not have lines of demarcation fixed at the time of an allotment under section 308(b). This one-half is the amount which depends on the amount of acres leased adjacent to a State and the production from wells adjacent to a State.) Subpart I -- Records and Audit. 931.90 Records. (a) All initial recipients of financial assistance under section 308 shall keep and preserve, and shall require each recipient of assistance which is passed through the initial recipient to keep and preserve detailed project control records reflecting acquisitions, work progress, expenditures, and commitments, indicating in each instance their relationship to estimated costs and schedules. Such records shall be retained until: (1) completion of the project, program or other undertaking for which a grant was made or used, and thereafter for a period of at least three years? or (2) full repayment of a loan or guaranteed indebtedness for which such financial assistance was provided, and thereafter for a period of at least three years. (b) All recipients described in paragraph (a) of this section shall keep and preserve such full written financial records, accurately disclosing the amount and the disposition of the assistance, together with the amounts and disposition of other funds applied to the project, program, or other undertaking, as shall adequately establish compliance with the requirements of section 308, the terms and conditions upon which such financial assistance was made, and the standards for financial manage- ment systems contained in Attachment G to Federal Management Circular (FMC) 74-7. (1) Recipients of grant assistance shall retain such financial records until completion of the project, program>or other undertaking for which such grant was made or used and thereafter for a period of at least three years. (2) Recipients of loans or guarantees shall retain such financial records until complete repay- ment of the loan or guaranteed indebtedness for which such financial assistance was provided and thereafter for a period of at least three years. 931.91 Audit The Associate Administrator shall have access for purposes of audit and examination to any records, books, documents, and papers which belong to, or are used or controlled by, any recipient of the assistance or any person who entered into any transaction relating to such financial assistance and which is pertinent for purposes of determining if such financial assistance is being or was used in in accordance with section 308, the terms and conditions upon which such financial assistance was received, and FMC 74-7. Subpart J -- Recovery of Funds 931.100 General. Subpart J sets forth requirements and procedures in accordance with section 308(b)(5) to insure that grant proceeds received by States under section 308(b) may be recovered by the Associate Administrator if such proceeds have been expended or committed for improper purposes or if they have not been expended or committed before the close of the fiscal year immediately following the fiscal year in which the grant proceeds were di sbursed. 931.101 Adequate assurances. (a) Each requisition for the proceeds of section 308(b) grants submitted by a State under subparts D, E, F, and G shall contain a written statement that: 21 (1) the State agency requisitioning the proceeds possesses the legal authority to requisition the proceeds of the grant; (2) the State agency has established or will establish fiscal control and fund accounting procedures which assure proper further disbursement of and accounting for grant proceeds; (3) the State will repay to the United States, with interest at the rate established for loans made under section 308(d)(1) at the same time the proceeds of section 308(b) grants were disbursed, any amount of a grant which has been determined by the Associate Administrator to have been expended or committed for purposes other than those set forth in sections 931.33(b), 931.43(b), 931.63(b) and 931.74; and (4) the State wilt repay to the United States any amount of a grant which has been determined by the Associate Administrator not to have been expended or committed before the close of the fiscal year immediately following the fiscal year in which the grant proceeds were disbursed. (b) If a State has received a written request for repayment under section 931.103, the Associate Administrator may require such additional assurances as he/she. finds necessary to protect the interests of the United States in the making of grants to the State. 931.102 Procedures for the recovery of funds. (a) Upon receipt from the Associate Administrator of a written request for repayment which contains a finding that the proceeds of a grant received by the State under section 308(b) have been expended or committed for purposes other than those set forth in sections 931.33(b), 931.43(b), 931.63(b), and 931.74, have not been expended or committed before the close of the fiscal year immediately following the fiscal year in which the grant proceeds were disbursed, such State shall provide a written response within 15 days to the Associate Administrator to either refute or admit such findings. (b) The Associate Administrator shall make a determination that repayment by the State will or will not be required, and shall notify the State of this determination no later than 45 days from the receipt by the State of the request for repayment described in paragraph (a). (c) If the Associate Administrator determines that repayment is required, the State shall have 30 days from the date of receipt of such determination to file a request for reconsideration with the Associate Administrator. (1) If the State's request for reconsideration is denied, the State shall have 15 days from the date of such denial to make a repayment by check in the amount determined to be owed to the United States. (2) If, as a result of the State's request for reconsideration, the Associate Administrator modified his determination of the amount required to be repaid by the State, such State shall have 15 days from the date of such modification to make the repayment, if any, by check. (d) If no request for reconsideration is filed, the State shall have 30 days from the date of receipt of the Associate Administrator's dete- ^nation to make a repayment by check in the amount stated in such determination. (e) If no repayment is received with the time periods established by paragraphs (c)(1), (c)(2) and (d) of this section, whichever is appropriate, the Associate Administrator shall take necessary action to recover the amount due. Methods of recovery may include, but are not limited to: (1) the modification or termination of a grant being received by such State under section 308(b) of the Act; (2) the modification or termination of financial assistance under sections of the Act other than section 308(b); (3) the withholding of future financial assistance to the State under any section of the Act; and (4) the modification or termination of financial assistance being received by such State under other programs administered by the Department of Commerce, or the withholding of future financial assistance to such State under these programs. (f) Actions taken under paragraph (e) of this section shall not in any way prejudice any rights of the Associate Administrator to pursue such other remedies as may be legally available and appropriate under the circumstances, including the referral of the claim against the State to the Department of Justice. Subpart K -- Intrastate Allocation of Financial Assistance 931.110 General. This subpart sets forth policies, requirements, and criteria required by section 308(e)(2) and (g)(2) and related to the intrastate allocation of financial assistance provided under section 308. 931.111 Objectives. The objective of these requirements is to assure, to the maximum extent feasible, that section 308 assistance which is allotted to coastal States is distributed among units of local government in amounts which are proportional to need and in a manner which is equitable. 931.112 Process required for intrastate allocations. Each coastal state must establish a process to allocate its allotted section 308 assistance among State agencies and units of local government based upon need for such assistance. This process must be approved by the Associate Administrator and must: 22 (a) specify the respective roles of State and units of local government in determining the intrastate allocation of section 308 assistance; (b) indicate the state agency designated under section 931.26 which will assume a lead role for the process; (c) describe the means to be used to define, determine, and evaluate the needs for financial assistance resulting from coastal energy activity and from uter Continental Shelf energy activity; (d) describe the means to be used to allocate financial assistance: (e) assure a reasonable level of public participation by affected State agencies and local govern- ments; (f) include a method of assigning priority to projects for which assistance is not otherwise available from Federal, State or private sources. fg) include a method of assigning priority'to projects required for reasons of health and safety; (h) preserve local autonomy; (i) establish a coordination mechanism to prevent overlapping or conflicting activities, and (j) provide for formal notification of and comment by affected units of local government. 931.113 Pass-through of assistance. (a) States that are allotted grants under section 308 must pass this assistance through to State agencies and units of local government in the form of grants. (b) States that are allotted credit assistance under section 308(d)(1) and (d)(2) must pass this assistance through to State agencies and units of local government using one of the following methods: (1) State agencies may borrow to provide public facilities and services needed to meet either State or local needs; (2) State agencies may borrow to reloan or to grant this assistance to units of local government for public facilities and public services needed to meet local needs; (3) Units of general purpose local government may borrow to provide public facilities and services needed to meet their needs through an application submitted by the State. 931.114 OCZM review. (a) OCZM will review annually the State's intrastate allocation of section 308 assistance to determine: (1) to what extent the process used to make the allocation complied with the requirements set forth in section 931.112, and (2) whether the allocation process resulted in a distribution of assistance which, to the maximum extent practicable, is proportional to need. (b) In making this latter determination for section 308(d)(1) and (d)(2) assistance, the Associate Administrator will compare the proportion of the State's relative need factor (as described in section 931.46) which was originally computed for each impact area with the proportion of the State's allotment under Section 931.46 which has been allocated by the State for use within each impact area. (c) If there is substantial discrepancy between these two proportions, the State agency designated under section 931.26(a)(2), responsible for the intrastate allocation process, will be asked to submit a justification. (d) If the Associate Administrator finds that the State has not made the allocation in accord with the approved process, section 308 assistance will be withheld ijntil the State reallocates the assistance in accord with the approved process. Subpart L — Coordination with Other Federal Agencies 931.120 General. No financial assistance for studying and planning provided under sections 308(b)(4)(B) and (c), for public facilities and public services provided under sections 308(b)(4)(B) and (d), or for environmental and recreational projects provided under sections 308(b)(4)(c) and (d)(4), shall be awarded or disbursed if other Federal funds are available for such ourooses, unless the Associate Admin- istrator is assured that the Federal assistance to be received under section 308: (a) is to be used in addition to, and not in lieu of, any Federal funds which any coastal State or unit of general purpose local government may obtain under any other law; and (b) is not duplicative of other funding assistance. 931.121 Allowable uses of assistance in conjunction with other Federal agencies (a) Subject to the qualifications set forth in section 931.120 above, financial assistance provided under section 308 may be utilized in conjunction with other Federal agency funds, including, joint, funding proposals. . Furthermore, credit assistance provided by sections 308(d)(1) and (d)(2) may be used to fulfill State or local government matching requirements for any other Federal program, provided that the Federal agency or agencies administering such program(s)do not preclude section 308 assistance to be used in such a manner. (b) assurances to the Associate Administrator that the criteria in section 931.120 have been satisfied shall be provided by the use of information developed in: (1) the Office of Management and Budget Circular A-95 notification and review process (41 FR 2052 (1976)); (2) Environmental Impact Statements issued by OCZM or other relevant lead Federal agencies; or (3) any other presently existing or newly developed Federal government notification and review process. 23 GPO 909-265 frU.S. GOVERNMENT PRINTING OFFICE: 1976 240-848/29 1-; 'IlliiT AD00070^qoim ! i