Activity review of US regulation, legislation

A major function of NOIA is to provide U.S. teachers with the information and tools needed to educate children about oil and gas operations. Here, a group is escorted through the Offshore Energy Center in Galveston, where NOIA hosted a reception [35,336 bytes].
Robert Rose, 1997 Chairman of NOIA, talks to a New Orleans television reporter about the positive results of US OCS Lease Sale No. 169, held in March 1998 [12,034 bytes].
Only 18% of US continental waters are available for leasing, explains Robert Stewart, in a discussion with petroleum investment analysts [9,961 bytes].
Hugh Depland, Manager of External Affairs for BP Exploration and NOIA Public Affairs Chairman, explains some of the functions of drilling equipment at the Offshore Energy Museum in Galveston [23,374 bytes].

EPA REGION 4 PROPOSED PERMIT

Issue EPA Region 4 published a notice (December 9, 1996) that it was reissuing a draft National Pollutant Discharge Elimination System (NPDES) general permit for the Eastern Gulf of Mexico OCS. The proposed general permit and the draft Environmental Impact Statement (EIS) would regulate discharges into federal waters from existing and new sources located offshore Mississippi, Alabama and Florida. The EPA Region 4 jurisdictional area covers the MMS Eastern Gulf of Mexico Planning Area and a small section of the Central Gulf of Mexico Planning Area off Alabama and Mississippi.

Background
In its December proposal, EPA Region 4 would require facilities located in waters greater than 200 meters in depth to be covered by a general permit, while facilities shoreward of the 200 meter isobath would be subject to individual permitting. This, NOIA argued, could require all plans of exploration and development and other NPDES-related permits and technical reviews to be subject to extensive notice, hearing, and comment requirements. The result would be considerable time and dollar expenditure by both the offshore industry and the EPA region with little or no environmental benefit.

NOIA held a series of educational visits with members and staff from the Alabama and Mississippi Congressional delegations. The visits resulted in two delegation letters to EPA Administrator Carol Browner raising questions and concerns over the proposed individual permitting regime for offshore facilities. In addition, NOIA visited with both House and Senate appropriations committees seeking a strong congressional directive to EPA Region 4 about the terms of its OCS permit. On Oct. 27, 1998, the President signed the FY 1998 EPA spending bill. Included in the measure was NOIA advanced report language that "directs" EPA Region 4 to abandon its individual permitting proposal and adopt a general permitting regime "substantially similar" to that used successfully in the Central and Western Gulf of Mexico by EPA Region 6.

Activity
On January 7, 1998, EPA Region 4 published a revised draft of its permit for the Eastern Gulf of Mexico. The revised permit proposes a general permit regime to cover facilities that are in both: (1) the MMS Central Planning Area and (2) waters for which Region 4 has jurisdiction and that are not designated as Areas of Biological Concern. Facilities located in waters shallower than 200 meters in the MMS Eastern Planning Area would need to apply for an individual permit. The revised permit provides relief to facilities in just a limited geographic area, including Mobile and Viosca Knoll leases.

The revised permit conditions go half-way to meeting the directions provided by Congress. NOIA intends to update the congressional delegations on the Region's activities and seek further improvements in the Eastern Gulf of Mexico permit proposal.

GLOBAL CLIMATE CHANGE

Issue In December 1997, the United States agreed to the "Kyoto Protocol" to expand the scope of the 1992 United Nations Framework Convention on Global Climate Change. If implemented now as structured, the treaty would require the United States to reduce emissions of greenhouse gases by seven percent from 1990 levels during the period of 2008 to 2012, with potentially larger emission reductions after that. Developing countries, such as Brazil, India, Mexico, Indonesia and China, are not committed to any schedule of emissions reductions of greenhouse gases.

Background
Although the Clinton Administration has indicated it will not submit a treaty on global warming for U.S. Senate ratification until next year, Congress has wasted no time in examining the overall terms, objectives, implementation and costs of the agreement signed in Kyoto, Japan.

Undersecretary of State for Economic Affairs Stuart Eizenstat told the Senate Foreign Relations Committee Feb. 11 that the White House probably will not submit its global climate treaty for Senate ratification until at least March 1999. The intervening time will be spent trying to garner developing country participation in the treaty - a condition expressed in Senate Resolution 98, which passed 95-0. According to Eizenstat, the administration's negotiation strategy for getting developing world participation will include coaxing from regional and multilateral groups of developed nations and convincing the World Bank and the International Monetary Fund to emphasize loans for energy-efficient projects.

The House Science Committee held two hearings in February to examine the Kyoto agreement Chairman F. James Sensenbrenner, Jr., (R-Wis.), who lead the House delegation to the climate change talks in Kyoto, has made clear his views on the treaty. In a statement before the committee Feb. 12, Sensenbrenner said he believed the treaty to be "so seriously flawed that it cannot be salvaged. In short, the treaty is based on immature science, costs too much, leaves too many procedural questions unanswered, is grossly unfair because developing countries are not required to participate, and will do nothing to solve the speculative problem it is intended to solve."

The House Science committee held a third hearing March 5 to examine the State Department's perspective on the treaty. Other hearings included the House Energy and Power Subcommittee, chaired by Dan Schafer (R-Colo.) and the Senate Agriculture, Nutrition and Forestry Committee, chaired by Richard Lugar (R-Ind.).

Activity
The NOIA's grassroots network, the Domestic Energy Advocates, organized a call-to-action prior to the international treaty discussions expressing concerns with the treaty, the proposed U.S. position and the potential impacts to American Businesses and workers. The District Advocates called on the President to oppose the treaty if it is detrimental to the nation's economy and does not apply to developing countries. Through their efforts, 42 letters were sent to the President with more than 70 copies forwarded to members of the Texas and Louisiana delegations. The NOIA grassroots network will continue to monitor and respond to administrative activity and legislative proposals related to the Climate Change treaty and its provisions.

G&G RULEMAKING

Issue In February 1997, MMS set out to amend the rules dealing with the collection, processing and disposition of geological and geophysical (G&G) data and information. While MMS indicated that the proposal's central purpose was to require researchers to give notice of intent when conducting G&G research on the OCS, industry believed aspects of the proposal would result in serious impacts to the offshore energy industry.

MMS issued a final rule covering requirements for the collection, processing and disposition of OCS geological and geophysical (G&G) data and information.

Background
The agency rulemaking effort had been an issue of great concern to the offshore industry. A coalition of energy trades, including NOIA, IAGC, IPAA, OOC and Mid-Continent Oil and Gas Association, provided extensive comments on the MMS regulatory proposal and worked on Capitol Hill to seek some measure of regulatory relief.

On Capitol Hill, the energy trades were able to have Senators Kay Bailey Hutchison (R.Texas) and John Breaux (D. Louis.) discuss the adverse impacts the MMS proposal during debate on the Department of Interior appropriations bill. The Senators urged "MMS to abandon the current rulemaking proceeding and to negotiate immediately with the affected parties to avoid placing the OCS leasing program in jeopardy." Senator Hutchison noted "the threat to sensitive business data could ultimately threaten the success of the OCS leasing program."

Senator Breaux, an original author of the OCS Lands Act, stated that "a great deal of time and effort was spent to develop a law that would result in the information, data and interpretation remaining confidential. Any steps that would put that confidentiality at risk are contrary to the spirit and intent of what we were trying to accomplish in 1972."

In written comments to MMS, NOIA along with IAGC, IPAA, OOC and Mid-Continent, voiced strong concerns over the proposal. NOIA stated that the MMS proposal has the potential to change the competitive nature of the offshore industry adversely, cause the release of proprietary technology, and "upset the business foundation upon which a balanced and predictable federal offshore leasing and development program has been developed." NOIA concluded that the MMS proposal may "jeopardize competitive interests and compromise exploration and core business strategies in the offshore industry."

Activity
While MMS did make some changes to its final G&G rule in response to industry comments, there are sections of the rule where industry and MMS remain in opposition. Namely, the final rule's position concerning the notification and data submission obligations of a G&G permit and their application to any third party that obtains data and information collected under a G&G permit.

MMS also noted that it "has always considered a license agreement a form of transfer or exchange" between and permittee and a third party and that it may issue a written request to permittees to identify third parties who have obtained data and information under licensing agreements.

Regarding industry concerns over the potential release of proprietary technology, MMS responded that it "requires only the information, including a detailed format, necessary to load digital data and information. MMS does not request nor seek proprietary software or procedures to prepare the data and information." Generally, descriptions of new equipment, techniques, computer software do not need to be given to MMS. However, the rule states that if they "were used to produce G&G data which must be submitted to MMS, it may be necessary to provide some explanatory information"

MMS also has announced plans to conduct a meeting in the near future to help industry in understanding MMS plans for implementation of the final rule. The final rule became effective January 28, 1998.

INTERNATIONAL YEAR OF THE OCEAN

Issue The United Nations has declared 1998 as the International Year of the Ocean (YOTO). The overall objective of this international proclamation is "to focus and reinforce attention of the public, governments, and decision makers on the importance of the oceans and the marine environment as resources for sustainable development."

Background
In 1993, the Intergovernmental Oceanographic Commission of the United Nations Education Science and Cultural Organization (UNESCO) passed a resolution calling for an International Year of the Ocean. The U.N. General Assembly formally adopted the proposal through a Resolution designating 1998 as the international Year of the Ocean.

In April 1997, the U.S. organized a federal agency Ocean Principles Group to further the federal government's contribution to this international initiative. The National Oceanic and Atmospheric Administration (NOAA) is leading this federal effort. Also participating in the Ocean Principals Group are senior decision-making officials accountable for ocean-related programs from: the Minerals Management Service, National Security Council, U.S. Navy, U.S. Army Corps of Engineers, Department of Energy, Department of State, U.S. Coast Guard, Department of the Interior (Office of Water and Science), U.S. Geological Survey, EPA, and NASA.

In mid-1997, seventy-seven members of Congress wrote to President Clinton asking him to convene a special White House Conference on the Oceans. They suggested the proposed meeting as a means to tie U.S. efforts with YOTO. The letter urged the U.S. to take a leading role for a "cleaner, healthier marine environment" and that the U.S. should stand out as a leader in "creating and implementing sustainable development plans for our seas."

Activity
NOAA contracted with the Heinz Center in July 1997 to convene a multi-sector, group of stakeholders and involve them in the U.S. planning efforts related to YOTO. In September of 1997, the U.S. Year of the Ocean steering committee was formed. The committee, co-chaired by NOAA and MMS, consists of 18 members including representatives from federal agencies, states, NGOs, industry and the academic sector. The offshore oil and gas industry.is represented by Paul Kelly, Rowan Companies and a member of the OCS Policy Committee.

The steering committee has worked to identify major ocean themes (i.e., energy and mineral ocean resources, transportation, national security, marine environmental quality) and has prepared a series of issue papers on each. The committee also has held three topical workshops: Ocean Science and Technology - The Next 25 Years; The Challenge of Sustainable Coasts; and Restoring Fisheries and Conserving Marine Living Resources.

On January 28, 1998, Commerce Secretary William Daley formerly launched the U.S. "celebration" of the Year of the Ocean with the announcement of plans for a national conference to be held later this year. The conference is expected to rely heavily upon the major issue themes and papers developed by the steering committee.

NOIA will work with the steering committee to ensure that ocean energy interests are represented and considered during any Year of the Ocean related activities or initiatives.

OCEANS ACT OF 1997

Issue In response to the international Year of the Ocean proclamation, there have been several measures advanced on Capitol Hill calling for the creation of federal commissions and councils to conduct a comprehensive review of ocean and coastal activities and issue recommendations on long-range strategies for improving U.S. ocean policies.

Background
In September 1997, two legislative proposals were introduced that seek to develop and maintain a coordinated, comprehensive, and long-range national policy with respect to ocean and coastal activities. The bills, S. 1213 and H.R. 2547, differ slightly, but both call for an assessment of national ocean policy similar to that performed by the Stratton Commission over thirty years ago. The Stratton Commission, which submitted 126 recommendations in a 1969 report to Congress entitled Our Nation and the Sea, led to the creation of the National Oceanic and Atmospheric Administration (NOAA) and led to the enactment of the Coastal Zone Management Act.

S. 1231, the Oceans Act of 1997, introduced by Sen. Fritz Hollings (D-SC) and 14 cosponsors, including Senators Stevens (R-AK), Breaux (D-LA), and Murkowski (R-AK), was considered in committee and subsequently amended and passed by the Senate on November 13, 1997. The bill directs the President to:

Develop a long-range national ocean policy
Review Federal agencies' ocean and coastal activities
Plan and implement an integrated and cost-effective program to coordinate agency activities
Designate federal responsibility for funding and conducting ocean and coastal activities
Ensure cooperation and resolve differences arising from laws and regulations.

S. 1213 establishes a 16-member Commission on Ocean Policy that is to include representatives from "industry." The membership is balanced with Commission appointments coming from individual recommendations made by the Senate majority and minority leaders and the Speaker and minority leader of the House.

The commission is to prepare a report within 18 months and issue its recommendations to Congress. The commission would sunset after submission of its final report. The bill also establishes a high-level federal interagency working group, National Oceans Council, to advise the President and assist in policy development, implementation and coordination of federal ocean and coastal activity budgets. Membership on the Council consists of 12 named seats, (others may be added) including department Secretaries from DOI, State, DOD and Commerce and EPA, CEQ, OMB and the National Economic Council. The council is to sunset one year after the Commission has submitted its final report.

H.R. 2547, the Oceans Act of 1997, establishes a 15-member commission and directs it to issue a report and recommendations to Congress on implementing a coordinated national ocean policy. The commission comprises individuals drawn from "federal and state governments, industry, academic and technical institutions, and public interest organizations involved with ocean and coastal activities." Federal government representation is limited to three individuals. The bill also forms a four-member congressional advisory committee to assist the commission. The commission does not sunset but is to report at least once every five years on the progress made in meeting the objectives of the act. H.R. 2547 does not create a federal-agency National Ocean Council.

H.R. 2547 requires the President to issue a biennial report to Congress describing the ocean and coastal activities of all agencies and requires each administration budget submitted to Congress to identify those agency and department budget elements that contribute to the implementation of a national ocean and coastal policy.

Activity
NOIA met with House Fisheries, Wildlife and Oceans subcommittee staff in late 1997 to discuss plans related to H.R. 2547 and voice industry concerns with elements of the bill. On March 19, the subcommittee held a hearing to examine both the Senate and House bills and a new bill introduced by subcommittee chairman Rep. Jim Saxton,(R-NJ).

NOIA testified on behalf of five other energy trades and questioned the need for the new commission, but stated that if one was created it should include all stakeholders and provide a balanced examination of all aspects of ocean policy. NOIA expressed concern that congressional action was being driven by the belief that current policies are failing, where environmentally and economically successful offshore development policies have realized many benefits in the Gulf of Mexico.

NOIA intends to meet with both subcommittee and full committee staff in an effort to ensure that any measure approved will not adversely effect the offshore oil and gas industry.

OCS DEEPWATER ROYALTY RELIEF ACT

Issue The Outer Continental Shelf Deep Water Royalty Relief Act, Public Law 104-58, was a significant legislative victory for the NOIA membership. Since its enactment, the association has been involved in discussions with MMS regarding the implementation of the Act's provisions.

Background
The OCS Deep Water Royalty Relief Act (DWRRA) established a royalty suspension program for both new and existing deep water leases in the Gulf of Mexico. The MMS has published three regulations to implement provisions of this Act. While several were issued as interim final rules to satisfy statutory mandates, MMS has continued to work with NOIA, collect comments and develop a final rule.

February 1996: The MMS published a final rule modifying the bidding systems that can be used to offer OCS tracts for lease. This rule established the regulatory authority to offer tracts for lease with royalty suspensions.
March 1996: The MMS published an interim final rule specifying the terms under which MMS makes royalty suspensions available on new deep-water leases.
May 1996: The MMS published another interim final rule, which implemented the Act's provisions for granting royalty suspension to Gulf deep-water leases that were issued before November 28, 1995, the date of enactment.
January 1997: MMS issued a call for comments on whether and how MMS should implement its new authority to grant royalty relief on nonproducing leases in any water depth.
June 1997: MMS announced its first grant of deep water royalty relief for an existing field. MMS granted relief to Tatham Offshore, Inc., for its offshore field Sunday Silence. With this action, Tatham is exempt from paying royalties on its first 52.5 million BOE.

MMS also released an extensive set of guidelines to help leaseholders in preparing complete applications for royalty relief on pre-enactment deepwater leases. The guidelines spell out the data that will need to be included in the application and the standard that MMS will apply to determine if royalty relief is to be granted and if so, how much.

Activity
On January 16, 1998, MMS published its DWRRA final rules in two parts. First, a final rule for producing leases and certain deep water leases issued before the enactment of DWRRA. The second part contains the final rules for royalty relief for deep water issued after the enactment of DWRRA.

Regarding relief for existing leases, NOIA had suggested that MMS establish minimum economic field sizes by water depth and development system that would automatically qualify fields for royalty relief. This industry recommendation was rejected as "too impractical and difficult to develop and maintain."

Industry also argued that the proposed requirement that an approved DOCD be part of a complete application would push the request for royalty relief too late into the development process to be useful. MMS agreed and removed the DOCD requirement from the final rule. They also adopted industry's suggestion for a process that would give applicants an early indication of the prospects for royalty relief being granted. The final rule modified regulations governing relief for new deep water leases by:

Allowing appeals of field designations; clarifying when the cumulative royalty-suspension volume ends
Describing how MMS will establish and allocate royalty-suspension volumes in fields with both new and existing leases; and adjusting the provision for the conversion of natural gas to oil equivalency.

The provisions of the Deep Water Royalty Relief Act have helped contribute to recent record-breaking lease sales. The past two Central Gulf lease sales (166 and 157) together attracted high bids of over $1.3 billion, while Western Gulf sales (168 and 161) generated over $968 million in high bids. On March 18, Lease Sale 169 netted over $810 million in high bids. NOIA will continue to distribute information on sale results and the benefits of OCS energy development to members of Congress, congressional committee staff and to the administration.

OCS IMPACT ASSISTANCE

Issue Since the inception of the federal offshore oil and gas leasing program, states have sought a greater share of the economic benefits resulting from OCS activity. The National Ocean Industries Association (NOIA) historically has supported the concept of providing impact assistance to coastal states and communities with oil and natural gas exploration and development activities occurring off their shores. This year both Senator Mary Landrieu, D.La., and Senator Frank Murkowski, R. Alaska, have expressed an interest in introducing OCS impact assistance proposals. Background Congress and the administration have considered and advanced numerous proposals addressing OCS revenue sharing and impact assistance. In 1976, Congress enacted the Coastal Energy Impact Program (CEIP), a program of grants and loans designed to assist coastal states in addressing infrastructure needs and environmental impacts caused by OCS activity. The Reagan Administration stopped funding the CEIP and Congress has since repealed the program.

The House, on four separate occasions, has passed OCS block grant legislation that would allocate funding to all coastal states for the management of coastal resources and to remedy any adverse impacts that result from coastal-related energy facilities.

In 1984, the Senate Commerce Committee reported by a vote of 15 to 1 legislation authored by Sen. Stevens, R. Alaska, to share a percentage of OCS revenues with States for various ocean and coastal re-source activities. The proposal was included in a House-Senate Conference report that covered a broad range of fisheries and coastal matters but was killed in the Senate when the administration opposed it. It was during this time, that the NOIA Board of Directors adopted a resolution supporting an OCS revenue sharing program.

In 1986, Congress amended section 8(g) of the OCS Lands Act, to compensate states for drainage of oil and gas from state lands and other impacts related to OCS activity. Revenues (27%) are shared only for the first 3 miles seaward of state waters.

In 1991, the Department of Interior developed an impact assistance proposal at the request of President Bush. It attempted to link size and distribution of payments more closely to the local impact of OCS activities. Coastal states and communities within 200 miles of a producing tract were eligible to receive funds.

The most recent legislative consideration of OCS impact assistance was during debate on the 1992 National Energy Policy Act proposal. The House and Senate conferenced to discuss competing versions of an impact assistance program, which were contained in a much broader OCS legislative package. The impact assistance provisions were eventually deleted and died in conference.

Activity
After Congress dropped the impact assistance provisions from the National Energy Policy Act, the Department of Interior's OCS Policy Committee created a subcommittee to examine the issue. In October 1997, the Committee approved the subcommittee's report and called on the Secretary of the Interior to "take timely action to prepare and support legislation to implement the recommendations" of the report.

The report recommends that an OCS impact assistance and ocean/coastal resource protection program be added to, and an accompanying increase in OCS revenues be transferred to, a revised and enhanced Land and Water Conservation Fund (LWCF). The report contains ten specific proposals regarding the structure and disposition of the funds to coastal states, territories and local governments affected by OCS activity.

The amount of additional money to be available from the LWCF each year for distribution to coastal states and territories would be 27% of new OCS revenues. Authorization of the proposed impact assistance program as an entitlement would be preferable to authorization subject to appropriations.

All coastal states, including those bordering the Great Lakes, and territories would be eligible to receive revenue. Coastal counties, and local governments that State governors identify as affected by OCS activity, would be eligible and would receive payments directly (rather than passed through the State). The amount for which each State is eligible would be determined by a formula giving weighted consideration to OCS production (50%), shoreline miles (25%) and population (25%). Each coastal state with an approved coastal management plan would receive a minimum of 0.5% of the funds available, and those lacking such a plan would receive a minimum of 0.25% of available funds.

Eligible local governments of states within 200 miles of OCS production could receive 50% of the funds allocated to the State. Local governments in States not within 200 miles could negotiate with the State for a share of up to 33% of the funds paid to the State.

Acceptable uses of the funds include mitigating the impacts of OCS activities and projects relating to onshore infra-structure and public services. States and counties eligible to receive funds would be required to submit plans and reports concerning their use of the money. The Secretary of the Interior would administer the program.

On October 28, 1997, Senator Mary Landrieu announced her intention of introducing legislation to realign the disbursement of OCS revenues to "reflect a more fair and more just allocation." She stated that "since Louisiana has to bear the expenses associated with offshore activity, it only stands to reason that it get a greater share of the revenue to help offset those costs." Senator Landrieu's current plans are to introduce her OCS revenue sharing proposal early in 1998.

Throughout the history of congressional and administrative action, NOIA has supported the incorporation of several principles into any OCS impact assistance program. These are:

Only new revenue streams should be employed to provide impact assistance payments
Sufficient funds should be directed to local coastal jurisdictions to enable them to address impacts occurring locally
Impact aid should be concentrated in those areas with new leasing exploration and production.

SYNTHETIC DRILLING FLUIDS

Issue NOIA is leading an industry effort of more than thirty operators and mud companies to seek EPA clarification of the regulatory treatment of offshore discharges of synthetic-based drilling fluids and cuttings.

Background
Since 1993, NOIA has facilitated a broad-based industry effort to obtain regulatory clarification from EPA over the discharge of cuttings when using synthetic drilling fluids. With assistance from DOE and MMS, industry was able to raise the issue within EPA and succeeded in obtaining new regulatory definitions for synthetic fluids in offshore permits. The industry effort resulted in the formation of several working groups, which include EPA participants. The working groups have been focusing on the development of tests for monitoring the toxicity of synthetics, identifying protocols for determining if any crude oil contamination has occurred, review of cuttings retention technology, and the collection and analysis of the fate and effect of synthetic drilling fluid materials on the seafloor and in the marine environment.

In January 1998, EPA announced its intention to develop effluent limitation guidelines and standards for four industrial categories including synthetic drilling fluids. NOIA held a meeting in February with officials from EPA, the Minerals Management Service and the Department of Energy to discuss the EPA's recent decision to prepare guidelines and standards for the use and discharge of synthetic based drilling fluids.

The guidelines are national regulations setting numerical limits for specific pollutants. This regulatory development project will establish limitations for synthetic-based drilling fluids that are used in lieu of oil-based drilling fluids in certain high performance drilling operations.

The effort will involve a new "presumptive rulemaking" process, where EPA, with input from stakeholders, "presumes" what the requirements should be and publishes this for comment and feedback. The process is to employ "cooperative stakeholder involvement," "better utilization of existing data," and is viewed by EPA as an "expedited" rulemaking effort.

The main driver behind the recent EPA announcement was a consent decree between EPA and the Natural Resource Defense Council, which required EPA to prepare a certain number of guidelines for new "industries" by 1999. Given the amount of work already completed on synthetics, the existing group of stakeholders and the consensus regarding an overall objective of regulatory clarification, EPA suggested that synthetics seemed to "fit the need."

Activity
EPA intends to issue a draft regulatory proposal by Dec. 28, 1998 and stated that a final rule will be issued by December 2000. At present, industry is working to provide EPA a set of priorities for the development of technology options and data gathering for engineering and economic analyses. Industry has also provided EPA its recommendations for establishing a peer review process for the scientific data and information generated through the "presumptive" rulemaking process.

U.S. - MEXICO MARITIME BOUNDARY TREATY

Issue As oil and gas operations move into ever deeper water in the Gulf of Mexico, a clearly established boundary between the United States and Mexico takes on new significance. In 1978, the United States and Mexico signed a maritime boundary treaty that fixed the boundary between the two nations off the Pacific Coast and in the Gulf of Mexico. Mexico promptly ratified the treaty, and close to two decades later, the U.S. Senate has ratified the international agreement.

Background
On Oct. 23, the U.S. Senate ratified the U.S. - Mexico Maritime Boundary Treaty. The treaty will make permanent the provisional boundary that now extends between the U.S. and Mexico, from the coastline out to 200 miles. Beyond 200 miles lie the two "gap" areas or "donut holes" that the Treaty does not address. The Clinton Administration informed the Senate that with ratification, it intends to initiate negotiations with Mexico to delimit the continental shelf portion of the "western gap." Delimitation of the western gap has become increasingly important to U.S. interests as petroleum exploration has moved into deeper waters. During Western Gulf Sale 168, the MMS received bids on tracts in the northern portion of the western gap.

Activity
NOIA participated in a joint energy trade association effort pushing for expedited ratification of the maritime boundary treaty. Elements of this joint-trade association effort included correspondence with Secretary of State Madeleine Albright urging her to make ratification of the treaty a high priority matter. The Department of State responded by classifying the treaty as one for which there is an urgent need for approval.

The energy trades also developed and circulated a letter for signature by Gulf Coast Senators to Senator Jesse Helms (R. N.C.), Chairman of the Senate Foreign Relations Committee, asking for fast committee consideration of the treaty. This and industry visits with the Congressional leadership and the Foreign Relations Committee helped move the treaty quickly through the Senate.

On December 11, Interior Secretary Bruce Babbitt and Mexican Foreign Secretary Angel Gurria announced their intentions to commence discussions to resolve continental shelf boundary in the western gap. In light of this announcement, and after consultation with the Department of State, MMS will return all unopened bids on tracts in the gap made during Sale 168. For the same reason, MMS withdrew tracts in the western gap area for the March 18 Sale 169.

The U.S. and Mexican delegations met in Washington March 26 and 27, 1998 to begin discussions on delimiting the boundary of the Western Gap. Indications are that the Mexican Government is interested in resolving the matter expeditiously, but the State Department does not expect to conclude the negotiations at the first meeting. As stated in the past, the U.S. will press for a treaty delimiting the boundary based upon the principles of equidistance.

OTHER ISSUES

Other issues being followed by the NOIA include Clean Water Re-Authorization, Endangered Species Act, National Ambient Air Quality Standards, National Marine Fisheries Act - Essential Fish Habitat, OCS Moratoria, Regulatory Reform, the Oil Pollution Act of 1990, and the Toxic Release Inventory Program. More information on these issues, and those presented above, can be obtained by contacting NOIA in Washington D.C.

The National Ocean Industries Association staff reports to its members on US regulatory and legislative issues that impact the offshore petroleum industry. A brief summary of the most important issues, NOIA's outlook on the issues, and actions taken and planned to deal with the issue are presented below.