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PLEASE NOTE: The following transcript is a portion of the official hearing record of the Committee on Transportation and Infrastructure. Additional material pertinent to this transcript may be found on the web site of the Committee at [http://www.house.gov/transportation]. Complete hearing records are available for review at the Committee offices and also may be purchased at the U.S. Government Printing Office.







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MARCH 28, 1996

Printed for the use of the

Committee on Transportation and Infrastructure


BUD SHUSTER, Pennsylvania, Chairman

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WILLIAM F. CLINGER, Jr., Pennsylvania
THOMAS E. PETRI, Wisconsin
HOWARD COBLE, North Carolina
JOHN J. DUNCAN, Jr., Tennessee
WILLIAM H. ZELIFF, Jr., New Hampshire
BILL BAKER, California
JAY KIM, California
STEPHEN HORN, California
BOB FRANKS, New Jersey
PETER I. BLUTE, Massachusetts
JOHN L. MICA, Florida
ZACH WAMP, Tennessee
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RANDY TATE, Washington
RAY LaHOOD, Illinois

NICK J. RAHALL II, West Virginia
ROBERT A. BORSKI, Pennsylvania
ROBERT E. WISE, Jr., West Virginia
BOB CLEMENT, Tennessee
ELEANOR HOLMES NORTON, District of Columbia
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PAT DANNER, Missouri
JAMES E. CLYBURN, South Carolina
BOB FILNER, California
FRANK MASCARA, Pennsylvania
GENE TAYLOR, Mississippi

Subcommittee on Coast Guard and Maritime Transportation

HOWARD, COBLE, North Carolina, Chairman

TILLIE K. FOWLER, Florida, Vice-Chairwoman
BILL BAKER, California
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BUD SHUSTER, Pennsylvania
(Ex Officio)

BOB CLEMENT, Tennessee
ROBERT A. BORSKI, Pennsylvania
GENE TAYLOR, Mississippi
(Ex Officio)

Subcommittee on Water Resources and Environment

SHERWOOD L. BOEHLERT, New York, Chairman

ZACH WAMP, Tennessee, Vice-Chairman
THOMAS E. PETRI, Wisconsin
WILLIAM H. ZELIFF, Jr., New Hampshire
STEPHEN HORN, California
BOB FRANKS, New Jersey
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BUD SHUSTER, Pennsylvania
(Ex Officio)

ROBERT A. BORSKI, Pennsylvania
ROBERT E. WISE, Jr., West Virginia
ELEANOR HOLMES NORTON, District of Columbia
BOB FILNER, California
GENE TAYLOR, Mississippi
(Ex Officio)

    Canny, Joseph, Deputy Assistant Secretary, Transportation Policy, U.S. Department of Transportation, Washington, DC, accompanied by Captain Robert L. Skewes, Chief, Operating and Environmental Standards, U.S. Coast Guard, Washington, DC
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    Hayes, Hon. Jimmy a Representative in Congress from Louisiana

    Jacobson, Michael J., Chairman of the Board and President, Petroport, Inc., Houston, TX

    James, Thomas P., Secretary and General Counsel, Louisiana Offshore Oil Port (LOOP) Inc., New Orleans, LA

    Walker, Nathalie, Managing Attorney, Sierra Club Legal Defense Fund, New Orleans, LA


    Borski, Hon. Robert A., of Pennsylvania
    Costello, Hon. Jerry F., of Illinois
    Hayes, Hon. Jimmy, of Louisiana
    Menendez, Hon. Robert, of New Jersey


    Canny, Joseph

    Jacobson, Michael J

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    James, Thomas P

    Walker, Nathalie


Canny, Joseph, Deputy Assistant Secretary, Transportation Policy, U.S. Department of Transportation, revised language for Section 8, Marine Environmental Protection and Navigational Safety

Hayes, Hon. Jimmy, a Member in Congress from Louisiana, letter from Frank M. Denton, Secretary, State of Louisiana Department of Transportation, March 28, 1996

    Jacobson, Michael J., Chairman and President, Petroport, Inc., Houston, TX, supplemental statement

    Walker, Nathalie, Managing Attorney, Sierra Club Legal Defense Fund, New Orleans, LA, Louisiana Offshore Terminal Authority Act


    Foster, William C., Patton, Boggs, L.L.P., supplemental statement from Woodward-Clyde, March 26, 1996

    Herring, Joe L., Secretary, State of Louisiana Department of Wildlife and Fisheries, two letters, October 2 and 19, 1995
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U.S. House of Representatives,

Subcommittee on Water Resources and Environment,

Subcommittee on Coast Guard and Maritime Transportation,

Committee on Transportation and Infrastructure,

Washington, DC.

    The subcommittees met, pursuant to notice, at 3:36 p.m. in room 2167, Rayburn House Office Building, Hon. Sherwood L. Boehlert (chairman of the Subcommittee on Water Resources and Environment) presiding.

    Mr. BOEHLERT. Welcome to the Transportation and Infrastructure Committee. That's a pretty good opening, isn't it?

    Today the Water Resources and Environment Subcommittee and the Coast Guard and Maritime Transportation Subcommittee meet to hold a joint hearing on H.R. 2940, the Deepwater Port Modernization Act.
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    Before I go further, I'd like to mention that holding a joint hearing in this institution can be quite an effort. I think that's very apparent. It takes a lot of coordination, cooperation, and leadership; therefore, I'd like to personally thank and commend Mr. Borski, the ranking democrat of the Water Resources and Environment Subcommittee, Chairman Howard Coble and Ranking Democrat Bob Clement of the Coast Guard and Maritime Transportation Subcommittee, and, of course, Chairman Bud Shuster and Ranking Democrat Jim Oberstar of the full committee for all of their efforts.

    Twenty-two years ago Congress enacted the Deepwater Port Act as a direct response to the economic and environmental needs of this Nation. Congress could foresee increased crude oil tanker traffic along our coast and increased risk to navigation safety and the environment.

    The response was to enact the Deepwater Port Act, a broadly supported approach to help meet energy and transportation needs in a balanced, environmentally protective way that respects the rights and prerogatives of affected coastal States.

    However, a lot can change in two decades. Some of the assumptions and forecasts on which the Deepwater Port Act was developed proved to be wrong. In fact, Congress found the need to amend the act in 1984 and removed provisions related to rate regulation and tariff filing.

    Since then, Congress has not revisited the act in any meaningful way, except in the context of the Oil Pollution Act, which consolidated various oil spill liability and funding laws.
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    Today, as proponents of H.R. 2940 will tell you, there is a clear need to revisit and review the 1974 act. As with other laws, the Deepwater Port Act should be open to efforts aimed at fine-tuning and removing unnecessary red tape.

    For example, only one deepwater port is licensed and operates under the act—LOOP, the Louisiana Offshore Oil Port, which is approximately 18 miles off the coast.

    LOOP plays an important role in meeting the country's energy needs. Over the last 3 years, LOOP has transported about 12 percent of total U.S. crude oil imports.

    Deepwater ports can provide an array of environmental and economic benefits, and we should do more to promote these innovative facilities.

    The primary thrust of H.R. 2940 is to remove various obstacles and disincentives involving the current statutory and regulatory framework that applies to LOOP and to future deepwater ports.

    The bill also clarifies the ability of deepwater ports to receive and transport outer continental shelf oil.

    I recognize that some aspects of H.R. 2940 will need revision, and some of our witnesses today will discuss specific improvements to the bill. The goal should be to move forward with a reasonable bipartisan approach that improves and reforms the act, while leaving in place the components that have proven so successful over the years.
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    H.R. 2940 is a good starting point. I appreciate the efforts of the bill's cosponsors, and I look forward to working with them, my committee colleagues and colleagues on the Judiciary Committee, the Administration, State, local, and environmental interests, and others. That's quite a crew to get together to work on this.

    Now it's my pleasure to ask the chairman of our Coast Guard and Maritime Transportation Subcommittee, Mr. Coble, for any opening remarks he may wish to make.

    Mr. COBLE. Thank you, Mr. Chairman. I'll be very brief.

    I support H.R. 2940, the Deepwater Port Modernization Act. Since the Deepwater Port Act of 1974 was enacted, only one deepwater port has been licensed, the Louisiana Offshore Oil Port, known as LOOP, off the coast of Louisiana. Under current law LOOP is, in my opinion, unreasonably restricted in its ability to transport oil from the outer continental shelf, and is in some instances over-regulated by the Department of Transportation, as well as the Coast Guard.

    I believe we should make some appropriate legislative changes to respond to these problems.

    Under section 1004 of the Oil Pollution Act of 1990, the Secretary of Transportation was required to conduct a study of the relative operational and environmental risks of all floating oil and deepwater ports versus other ports. The study included a review of the four principal modes of water-borne delivery of crude oil into the United States, which are: direct vessel deliveries, offshore lightering, discharging at deepwater ports, and discharging at offshore moorings.
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    The Secretary released the deepwater port study in 1993. In that study, the Secretary found that, on a relative basis, deepwater ports are the least environmentally risky of the four modes of delivering oil to the United States. That is because cargo transfer operations take place offshore, where minor spills have a good opportunity to disperse naturally before adversely affecting the environment. Furthermore, pipeline transfer of the cargo poses lower risks than vessel deliveries.

    For these reasons, the Secretary initiated a rulemaking that lowered the limit of liability for oil spill damages for LOOP from $350 million to $62 million.

    Obviously, we should not overburden LOOP with unnecessary layers of regulation when the same result can be accomplished in a much simpler, less complex manner.

    I commend the gentleman from Louisiana, Mr. Hayes, for introducing the bill, and look forward, Mr. Chairman, to hearing the testimony of the witnesses today.

    Mr. BOEHLERT. Thank you very much, Chairman Coble.

    Now the ranking member of the Subcommittee on Water Resources and the Environment, Mr. Borski of Pennsylvania.

    Mr. BORSKI. Thank you, Mr. Chairman. I would ask unanimous consent that my complete statement be made part of the record.

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    Mr. BOEHLERT. Without objection, so ordered.

    Mr. BORSKI. Let me just note, Mr. Chairman, you've mentioned, indeed, the desire to work in a bipartisan manner, and clearly we would like to do that with you. If the case is made on the need for legislation to help deepwater ports, I would be most happy to work with you, Mr. Chairman, to develop legislation that will help the ports, while protecting the environment.

    If we reach that stage, I would also urge that we obtain the view of the State environmental officials.

    I note, Mr. Chairman, that the Administration has also made some proposals for change in the bill, which should be addressed.

    Again, I look forward to working with you in a bipartisan manner.

    Mr. BOEHLERT. Thank you very much.

    [The prepared statements of Mr. Borski, Mr. Costello, and Mr. Menendez follow:]

    [Insert here.]

    Mr. BOEHLERT. Mr. Clement, do you have anything?

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    Mr. CLEMENT. Yes, Mr. Chairman.

    This hearing is important concerning H.R. 2940, the Deepwater Port Modernization Act. I support this legislation.

    The purpose of the Deepwater Port Act of 1974 was to promote the safe development of offshore oil unloading facilities so super tankers would not have to enter our ports.

    At the time of its enactment, we had no such facilities in the United States; therefore, Congress chose to take a very cautious approach to ensure maximum safety for these facilities and protection for oil producers and refiners from discrimination by deepwater terminal operators. Now we've had 22 years of experience on which to base the safety and economic regulatory system.

    Similarly, the original statute only envisioned the port would be used as a loading or unloading facility. It did not foresee the possibility that the port's pipelines may be used to transport oil from other OCS production platforms in the area.

    I look forward to the hearing testimony to be presented by the witnesses today so that we may improve the utilization of these types of facilities, while maintaining a safe and environmentally sound deepwater port system.

    Mr. BOEHLERT. OK. Thank you.

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    Now here's the problem. In fairness to Mr. Hayes, who is a principal to this whole hearing, there is a vote expected momentarily on the floor. He is programmed to be the first witness. We can go ahead with the second witness, and I think I'm inclined to do that, or else we're going to be here for a long time. And it's unfair to call over now and ask Mr. Hayes to dash back, because he's over there waiting. It's very complicated, but I think you all understand.

    Why don't we start then with the Honorable Joseph Canny, Deputy Assistant Secretary for transportation policy. He will be accompanied by Captain Robert L. Skewes, chief of operating and environmental standards for the U.S. Coast Guard.

    Your statement will appear in the record in its entirety. We ask that you try to summarize it.

    Excuse the somewhat unusual proceeding, but I think in the interest of time for all we should continue, and then following your testimony and before we go to the next panel we'll have Mr. Hayes.

    Mr. Canny.


    Mr. CANNY. Thank you, Mr. Chairman. It's a pleasure to be here.
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    You and your colleagues gave a good history of the Deepwater Port Act, and I won't get into that. I should say, however, that from the perspective of the Department of Transportation our working relationship with the Louisiana Offshore Oil Port has been a very good one. They are a responsible, well-managed organization, and they have operated in a safe and environmentally sound manner.

    We, for our part, have tried to be flexible and responsive to their needs as the oil market and other factors have changed over a period of time, as you have alluded to.

    In summary, the Administration supports the main thrust of H.R. 2940, as well as a number of its specific provisions. We support clarifying the Act to permit the transportation of domestically produced oil, including oil from the outer continental shelf.

    We support lifting existing restrictions on the handling of commodities other than oil and on the use of deepwater ports to handle commodities for export. The current structure of the industry makes it unwise and unnecessary to restrict these types of service by statute.

    We believe it is in the national interest to permit owners of deepwater ports wider discretion to make the most economically efficient use of their facilities.

    While we recognize the desirability of affording deepwater ports wider discretion to make business decisions, there is still a high degree of national interest in many aspects of their design and operations. These interests include safety and pollution prevention, as well as ensuring that licensees are managerially and financially willing and able to responsibly construct, maintain, and operate the facilities.
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    In these regards, the Administration believes that the existing Deepwater Port Act is basically sound. The Department of Transportation must retain, as section 4.E of the bill provides, the authority to approve any proposed amendment, transfer, or reinstatement of a deepwater port license.

    Similarly, we must retain appropriate authority to regulate aspects of design and operations affecting safety and pollution prevention.

    Primary responsibility for assuring that safety and environmental protection requirements are met has been assigned to the Coast Guard. The Coast Guard's regulations provide the industry with a known set of technical standards for developing design and operation manuals for deepwater ports. Changes to these standards are appropriately made by regulation, where interested parties, including industry and the public, can have a role in their development.

    We are ready and willing to work with industry to revise any standards or criteria that may be outdated or unnecessary.

    In light of these considerations, the Department believes that it is essential that we retain the authority contained in section 10 of the Act to regulate aspects of design and operations affecting safety and pollution prevention. Consequently, we urge that section 8 of the bill be deleted.

    With respect to the advisability of section 6 of the bill, which would strike existing antitrust review provisions in section 7 of the Act, the Department of Transportation defers to the views of the Department of Justice. The Department of Justice opposes the proposed repeal of section 7 of the Act.
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    And with respect to section 5 of the bill, which would clarify limits in section 5 of the act on fees for State environmental monitoring requirements, we defer to the affected coastal States.

    Mr. Chairman, attached to my statement for the record are some additional technical changes to the bill, which we believe are necessary to accomplish the public interest goals which I have outlined above.

    We would be pleased to work with the Committee on implementing any of these particular changes and on the final shape of the bill, and we would be pleased to respond to any questions that you might have at this time.

    Thank you.

    Mr. BOEHLERT. Thank you very much.

    Could you elaborate more on LOOP's track record over the years? Have they done a good job in meeting the Deepwater Port Act and other environmental requirements? And how many times have there been oil spills at the LOOP facilities?

    Mr. CANNY. We think they have done a very good job over the years in meeting their requirements. They have kept us informed of changes in their operations. They work with the Coast Guard, the Captain of the Port in Morgan City, Louisiana, to assure the safety of their operations.
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    They have had a few spills. I think they all would be classified as minor. Captain Skewes might be able to respond more directly on that.

    Capt. SKEWES. In the last 2 years the records that we have indicate there have been, I think, in the last year 12 gallons were spilled, and the year before that, 10. Beyond that, I don't have any other data with me today.

    Mr. BOEHLERT. So you would characterize that as a good record?

    Capt. SKEWES. Absolutely. Yes, sir.

    Mr. BOEHLERT. That's pretty impressive.

    Capt. SKEWES. Yes, sir.

    Mr. BOEHLERT. OK. One of LOOP's basic complaints regards the overlapping regulatory licensing and control regime under the current act. Could you elaborate on the degree to which the act results in duplicative or overly burdensome requirements? And to what extent are the Department of Transportation and the Coast Guard working to coordinate the existing system of licensing, operation manuals, and regulations?

    Mr. CANNY. There is some degree of duplication and overlap among the varying levels—the statute, the license provisions, the regulations, and the operatons manual—but we think those are relatively minor.
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    In the day-to-day operations, the Operations Manual is the guiding document. The Coast Guard has recently completed significant revisions to the Operations Manual, working closely with LOOP. Those changes have been accepted by the Captain of the Port in Morgan City and are in effect.

    And we think that we generally can work with LOOP under the existing regime to provide them the flexibility they need.

    At the same time, there are some elements of duplication that come about as a result of the statute being initiated in the 1970's with the kind of history which you alluded to, and there are undoubtedly some streamlining and reduction in duplication measures that might be taken along the lines suggested in H.R. 2940.

    Mr. BOEHLERT. Finally, before turning it over to Chairman Coble, do you support or oppose H.R. 2940's provisions on environmental monitoring? Do they represent an adequate balance between the need for continued environmental protection and safeguards and wise use of scarce economic resources?

    Mr. CANNY. As my statement mentioned with respect to the fee collection and so on, we would like to leave that to the testimony of the adjacent coastal States. But, as we suggested earlier, we think that LOOP has had a very enviable environmental record. We think that the provisions in the Act, even as amended by this bill, would provide us with sufficient environmental authority and ability to oversee and monitor and assure safe operations.

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    Mr. BOEHLERT. So that's support, not opposition; is that correct?

    Mr. CANNY. Yes. That's support.

    Mr. BOEHLERT. All right. Thank you.

    Chairman Coble.

    Mr. COBLE. Thank you, Mr. Chairman.

    Captain, good to have you and Mr. Canny here.

    Mr. Canny, in your statement you indicated that you would recommend deleting section 8. Can you elaborate or talk a little more in detail about that?

    Mr. CANNY. We have had concerns with section 8. We've discussed these both with Committee staff and with representatives of LOOP. We're concerned that section 8 of the bill, as it is currently drafted, would remove regulatory authority, which we think we need both in relation to LOOP and to possible future deepwater ports.

    There may be other ways to achieve that, and I understand that counsel for LOOP and the Coast Guard have been discussing alternate approaches. We'd be happy to work with them and with the committee to see if we can achieve their objectives, while still protecting authority to carry out our necessary regulatory responsibilities.
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    We would retain sufficient authority to carry out these responsibilities with language such as follows:

    [Insert here.]

    Mr. COBLE. I was hoping that would be your response. They're trying to compromise whereby nobody's completely happy, but nobody's completely dissatisfied, I take it. Hopefully that will be the result, anyway.

    Mr. Canny, if you will, talk to us a little bit in more detail about the 1993 deepwater port study, and specifically the follow-up rulemaking that lowered the limit of oil spill liability from $350 million to $62 million.

    Mr. CANNY. You summarized the study very well. The rulemaking, which we initiated after that, was based upon a detailed technical study undertaken by the Coast Guard to assess what the maximum credible—I believe that was the term, or maximum likely oil spill—occurring from the LOOP facilities would be. And, based upon an assessment of what that spill would be, with an estimate of cleanup costs and damage costs based on other oil spills, Coast Guard was able to estimate that the maximum likely damage occurring from any spill occurring at LOOP would be at the $62 million range, which you mentioned.

    Mr. COBLE. Could this process be used in the future for similar oil spill liability issues? I don't see why it couldn't be.

    Mr. CANNY. Yes, sir. In fact, we have been approached by representatives of Petroport, that is a corporation which is investigating the possibility of establishing a deepwater port off the coast of Texas. At their request, we did a preliminary review and assessment of their plans, and were able to give them a preliminary estimate that their liability limits would probably not exceed those that we had established for LOOP. That's, of course, subject to a more-refined review of their plans when they are developed, but we can use that general approach, as you suggested.
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    Mr. COBLE. I understand.

    Thank you, Mr. Canny, Captain. Thank you, Mr. Chairman.

    Mr. BOEHLERT. Thank you, Mr. Chairman.

    Mr. Clement.

    Mr. CLEMENT. Mr. Secretary, the Department is also recommending that amendments to Operations Manuals but not licenses be exempted from the Administrative Procedures Act. Do you believe this will still decrease the time required to approve most of the facility and operational changes that LOOP seeks?

    Mr. CANNY. No. First, we think that it is unlikely that there will be many changes, if any, to the license, itself. But the license, as the basic governing document, is something that we believe ought to be subject to public scrutiny, and if there are changes there, they ought to be in a reasonably formal, open process.

    The Operations Manual gets down into a lot of operating detail. It deals with the day-to-day movements, not only of cargo, but even of personnel on the offshore platform and so on. Those are operating details which we think can be worked out. They're at a very technical level, and they can be developed and approved by the Coast Guard without going through a full public process.

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    Mr. CLEMENT. How long does it take for you to approve substantial changes to the LOOP facility, either to their physical structure or to their operating procedures? And how much do you think this process will be shortened if H.R. 2940, as introduced, is enacted?

    Mr. CANNY. If you're talking about substantial changes, we, as I suggested before, will still need to go through some kind of open process, but many of the changes which are needed in order to increase their operating flexibility would not meet a definition of ''substantial.'' They are day-to-day operating things, and in those cases we can make the changes on a much more informal basis.

    I'd be reluctant to give you an estimate that you'd save 2 weeks or 2 months, but the timeframe can be abbreviated.

    Mr. CLEMENT. If H.R. 2940 is enacted, what will happen to the existing Coast Guard regulations on deepwater ports? Will they simply become guidance for the preparation of an Operation Manual for the port?

    Mr. CANNY. As I suggested, we don't agree with the proposal in section 8 of the bill that would essentially eliminate our regulatory authority in that area. We think that we need to retain that authority, and hope that we can do that.

    Mr. CLEMENT. All right. Thank you.

    Mr. COBLE [assuming Chair]. Thank you, Mr. Clement. I see no one else.
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    Folks, we're sort of doing this piece meal. I do not see Mr. Hayes in the audience, and—I stand corrected. Mr. Ehlers, I didn't see you. Do you have questions, the gentleman from Michigan?

    Mr. EHLERS. Thank you, Mr. Chairman. I have no questions at this time.

    Mr. COBLE. Thank you. Sorry I overlooked you, Mr. Ehlers.

    The bell just has been sounded, so why don't we go into a brief recess, Mr. Clement and Mr. Ehlers, and return immediately, and then we'll hear from the next panel and Mr. Hayes.

    We'll stand in recess.


    Mr. COBLE. I still don't see Congressman Hayes, so the other panel—Mr. James, Mr. Jacobson, and Ms. Walker—if you all will come forward, then we will hear from Mr. Hayes when he returns from the floor.

    We'll hear from: Mr. Thomas P. James, secretary and general counsel, Louisiana Offshore Oil Port, Inc.; Mr. Michael J. Jacobson, president of Petroport, Inc.; and Ms. Nathalie Walker, managing attorney for the Sierra Club Legal Defense Fund.
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    It's good to have you all with us. Mr. James, why don't I start from my right, moving to the left, if you'll go first—or however you want to do it. It makes no difference.

    Mr. JAMES. That's fine.


    Mr. JAMES. Thank you. My name is Thomas P. James, and I am secretary and general counsel of LOOP, otherwise known as Louisiana Offshore Oil Port. We are pleased to appear before you today to support H.R. 2940, the Deepwater Port Modernization Act.

    LOOP, as you know, is a deepwater port located in the Gulf of Mexico. Our facilities are located 18 miles off the Louisiana coast in about 120 feet of water.

    The facility includes control and pumping platforms, three adjacent mooring buoys, and a 48-inch varied pipeline.

    When crude oil tankers arrive at LOOP's marine terminal, they moor at one of the three mooring buoys to off-load their cargo of crude oil, which is then moved via pipeline to the storage terminal, which has a capacity of 35 million barrels of oil. Oil is then distributed to refineries in both Louisiana and in the midwest.
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    During the past 3 years, LOOP has averaged about 700,000 barrels of crude oil per day. That number is about 12 percent of the total U.S. imports of crude oil today. We can handle up to 1.2 million barrels of crude oil per day; however, our current utilization is at about 60 percent of capacity.

    The very nature of LOOP's operations have a distinct environmental advantage in the trans-shipment of crude oil. This is supported by a 1993 United States Coast Guard study required by the Oil Pollution Act of 1990. That study measured the relative risk of off-loading crude oil at deepwater ports versus other modes of delivering oil.

    As a result of that study, the liability limit for LOOP was reduced from $350 million to $62 million.

    There are four parts of the proposed bill that I would like to elaborate on.

    In recent years, the source of crude oil imports into the United States has been diversified from the Middle East to closer sources such as South America and the Gulf of Mexico. Production of oil in the Gulf of Mexico is increasing.

    Congress has already taken steps to promote the exploration and the development of the reserves in the Gulf of Mexico by the enactment of legislation to grant royalty relief to OCS oil production. We believe that LOOP can act as an important link in the transportation network that will bring this OCS oil to shore.
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    While the Deepwater Port Act does not prohibit the use of deepwater ports in the transportation of oil from the outer continental shelf, neither does it explicitly authorize it. One of the principal purposes of H.R. 2940 is to make it clear that deepwater ports may transport that oil.

    A second point is the overlapping nature of the current regulatory scheme and the outdated restrictions associated with the law.

    Deepwater ports are presently regulated under four tiers of regulation. There is a detailed license, there are extensive regulations, there is an Operations Manual, and then there is a requirement that deepwater port activities not deviate in any significant manner from the detailed application that LOOP filed in 1978 with its application for the license.

    We believe the act should be amended to make it clear that a given subject should be addressed in one source of regulation, not in two or three that overlap.

    A third area of concern to LOOP is the restrictive nature of the oversight provided by the Department of Justice and the Federal Trade Commission on the activities of LOOP.

    In authorizing the construction of deepwater ports, Congress, fueled by concerns from the Department of Justice and the Federal Trade Commission, was apprehensive over the potential anti-competitive impacts on the crude oil markets by deepwater ports. For this reason, the Deepwater Port Act imposed rigorous antitrust review during the licensing process and numerous constraints in the form of license conditions were added to LOOP's license to protect the public from these perceived anti-competitive abuses.
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    LOOP's 15 years of operation have demonstrated that LOOP is subject to rigorous competition, and the fear that LOOP would operate as a monopoly has not materialized.

    To this end, H.R. 2940 would delete mandatory requirement that the Secretary consult or notify the Justice Department and the Federal Trade Commission. We believe that removal of these provisions, in addition to the other changes made by the statute, will allow for an amendment to LOOP's license to delete the conditions imposed as a result of the agency's involvement in LOOP's license issuance.

    The final area of concern is the extent of environmental monitoring that was deemed necessary 20 years ago.

    Prior to the beginning of operations, LOOP was obliged to undertake a thorough environmental study of the potential impacts of its operations upon the environment. Many of these studies continue today. During the 15 years of conducting such monitoring, no significant impact on the environment has been detected.

    H.R. 2940 would change the requirement in the current law for deepwater ports to continue monitoring during the term of the license and limit environmental monitoring to a period of 3 years unless the data collected shows that further monitoring is required.

    In conclusion, deepwater ports are an asset to the Nation's transportation infrastructure system. The Deepwater Port Act was enacted to promote the construction and operation of deepwater ports in order to provide for a cost-effective distribution of crude oil in an environmentally sound manner.
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    LOOP has answered that call; however, it has not been without difficulties. The Deepwater Port Act should be modernized, based on the lessons and experiences that have been gained over the span of 20 years since enactment of the original act.

    We believe that the changes to the act are not only useful, but are necessary to our continued operations.

    We thank the committee for allowing us to address it today. Thank you, sir.

    Mr. BOEHLERT. Thank you, Mr. James.

    Mr. Jacobson, if you and Ms. Walker will bear with me, we have fractured parliamentary procedure this afternoon, and I see the late Mr. Hayes has joined us. With your permission, Mr. Hayes has another meeting on the Senate side, do you not, Jim? If you all will just give way for a moment or two, we will resume after Mr. Hayes completes his statement.

    Mr. Hayes, it's good to have you here.


    Mr. HAYES. Thank you. I won't take but a moment.

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    I first want to ask unanimous consent that the letter which the staff, I believe, already has from the Louisiana Department of Transportation and Development be entered into the record.

    The staff has already been supplied with the statement which I would like inserted in the record and, with unanimous consent, would like that to be included, as well.

    Mr. BOEHLERT. Without objection.

    Mr. HAYES. Quite frankly, I'm guilty of being early rather than being late, because I got here prior to the first vote and then in between, with the motions to recommit bouncing back and forth.

    I'm not going to give a statement that's any more than a minute or two. It boils down to this: in the years when the offshore platform was developed, there was no such thing as real deepwater drilling in the Gulf of Mexico. The technology was never dreamed to reach the levels 3,000 feet and below, gigantic levels that we have today. So when the oil port came along, the concept was one in which the technology of the time placed it under a legislative program that might have functioned for those years.

    With current technology, it becomes apparent that the bureaucracy we've created applies antitrust concepts that are not necessary fo the offshore port and environmental niceties that might have appeared very, very good at the time the Deepwater Port Act was originally passed more than 20 years ago but that today are recognized as beyond what's required to protect the environment. We need to update and modernize the Act and substitute for those procedures to bring the law's provisions in tune with today's modern technology and the movement of oil products through the 48-inch pipeline from this 18-mile offshore facility.
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    With that in mind, what we've done is draft a piece of legislation that we would like to simply replace what is now 2 decades old with more modern concepts, and in so doing we have brought in the State of Louisiana's departments and agencies. They will make some recommendations to this committee, which I will support.

    I might mention that in no way are we suggesting that there should not be strong and protective environmental monitoring, and we expect some recommendations from the State on that subject, as well, and those would be recommendations that I would again urge this committee to support.

    Having looked at the letter filed an environmental organization, I must actually say that I concur with their goal, and I believe we'll be able to accomplish that at the time this bill is marked up.

    With that, I would conclude my testimony and thank you for having this hearing and open it up to any questions that the Chair or others may have.

    Mr. BOEHLERT. Mr. Hayes, I appreciate your being here and your testimony regarding this very significant bill, and I think it is significant.

    I am confident that we can work out the details of this legislation, and hopefully get it moving rather quickly.

    Again, I thank you for having appeared before this subcommittee.
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    The gentleman from Tennessee?

    Mr. CLEMENT. I've got one question. I know you submitted for the record from the Governor of Louisiana, and a statement was made in the letter from the Governor, ''We defer comment on environmental provisions of the bill at this time. Comments will be offered at a later date.'' What's the later date?

    Mr. HAYES. Within the next few weeks.

    By explanation, let me say there was a draft attorney general's opinion that is aimed at rectifying some inter-agency confusion and statutory clarification as to what is done by Department of Transportation and what might be done by Fish and Wildlife in our State.

    Based upon those clarifications, they will then be submitted to the committee, some recommendations that are more specific.

    But it is not a lack of support for the bill, the legislation, or its goals; it is merely waiting upon the attorney general to do the clarifications, and those independent agencies will make some specific requests as a consequence of that clarification.

    I didn't submit the draft opinion in the record because I felt it would not be appropriate until that had been finalized by the attorney general's office.

    Mr. CLEMENT. Thank you.
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    Mr. COBLE. Mr. Ewing, the gentleman from Illinois.

    Mr. EWING. Mr. Hayes, I guess the question I would have: the economic impact of revising the regulatory process, do you have any figures on that?

    Mr. HAYES. You may have some other witnesses that can give you a dollar and cents figure, but I can tell you that the economic impact to the Nation is gigantic in two ways. One—and, in fact, this is where I would ask those with the environmental community to join me here—if we keep moving oil at longer and longer distances, based upon our growing reliance upon foreign imports, we're going to do two things: we're going to affect price at some point. We've been lucky that price has been kept low. But we're going to increase the likelihood of accidents, and the economic consequences of those accidents is mammoth, as you've seen with some of the spills in other parts of the country.

    Louisiana has had some minor spills, and that's a fact, but when you compare pipeline and distance with the kind of shipping and vessels that go across the world moving importation into this country from longer and longer distances, then you can see a magnitude of the problem of a greater order.

    Second, I am sure there are those with either the State of Louisiana or with LOOP, itself, that can give you the economic impact of some of the regulatory relief, as well as the consumer benefits of being able to add to the competitiveness, not tied down by antitrust provisions that, quite frankly, no longer apply in the current competitive marketplace, as technology has advanced it.
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    Mr. EWING. Is it your goal to make these changes, and yet do it in a way that continues to protect the environment?

    Mr. HAYES. There's no question. That's why we will be forwarding the recommendations made by the agencies, and I'm certain that the committee and the committee staff will find that those recommendations are not only in accordance and furtherance to the environmental goals, but that probably place into the hands of those who understand both this industry and the manner in which it operates better than the folks here, 1,500 miles away from the gulf sites, would understand it.

    And I do not believe that we will have difficulty with either Chairman Boehlert or Mr. Coble today or others in recognizing that that balance has been achieved, and without giving up any environmental safeguards or concerns for either safety, health, or the environment.

    Mr. EWING. One final question. Are there environmental groups that support and are there ones that oppose any changes in the——

    Mr. HAYES. I have not looked at your filing. The letter I read was the Sierra Club letter, and actually I was not at all in opposition to what was contained therein. The Sierra Club had made an observation that there had not been many problems here, but that they would like to have information. They were also concerned about some language relating to the 3-year period of time could be read to mean that nothing could be required to gain information after 3 years. That was not the intent.
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    The intent is to simply put a timeframe down of 3 years at the time the permit is given to be able to lay out at that time what you expect, what data you want, what you require. And then the language was actually intended to behelpful. It only discontinued if there was not a basis during this 3-year period of monitoring in which to compel specific further monitoring.

    What I would say is that, having read the letter from the Sierra Club, I believe that the language contained in the final bill is language which they would be opposed to, based upon the criteria they laid out, because I don't believe that there is any difference of opinion in what the goal ought to be. Perhaps the language can reflect both their concern and our desires to have both a time table and a basis for monitoring.

    It is certainly my wish, and nothing in their letter would lead me, at this time, to believe otherwise.

    Mr. EWING. Fine. I think that's very important, and I appreciate your comments.

    Mr. HAYES. Thank you very much. Thank you, Mr. Coble.

    Mr. COBLE. I thank the gentleman.

    Mr. Horn, the gentleman from California.

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    Mr. HORN. No questions, Mr. Chairman.

    Mr. COBLE. Thank you, Mr. Hayes.

    Mr. HAYES. Thanks again for your indulgence.

    [The prepared statement of Mr. Hayes and the letter from the Louisiana Department of Transportation and Development follow:]

    [Insert here.]

    Mr. BOEHLERT. We will now resume the questioning or the testimony from the panel if Ms. Walker, Mr. James, and Mr. Jacobson would return to the table. We will hear from Mr. Jacobson.

    Mr. JACOBSON. I thank you for the opportunity to address you on revisions to the Deepwater Port Act of 1974.

    I am Michael Jacobson, Chairman, President, and Chief Executive Officer of Petroport, Incorporated. We're based in Houston.

    Petroport is a wholly owned subsidiary of Blue Dolphin Energy Company. Blue Dolphin Energy Company is involved in the exploration and production of oil and natural gas on the outer continental shelf in the Gulf of Mexico, and in pipeline transportation activities, also—crude oil and natural gas—offshore on the outer continental shelf in the Gulf of Mexico. We've been involved in those activities since 1986.
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    In 1995, Blue Dolphin established Petroport. It was our belief that the time was right for the development of a second deepwater port to serve the refining and petrochemical industries along the Texas coast.

    Our facility is planned for the western Gulf of Mexico, approximately 45 miles off the coast of Freeport, Texas, with a pipeline serving the upper Texas gulf coast.

    We're prepared preliminary designs at this point of our surface and subsurface facilities, including estimated locations where we would be coming ashore.

    We've made fairly detailed presentations to the Department of Transportation and the U.S. Coast Guard explaining what our plans were and requesting that the Department of Transportation and the U.S. Coast Guard assist us in the determination of the risks that the Petroport facility, as proposed today, would face.

    We've been very encouraged by what we have found up through this point in time. We have retained outside consultants to assist in the development of a very detailed engineering plan that can serve as the basis for construction of a facility, and submissions under the application process for obtaining a license under the 1974 act. We've also been involved in development and fine-tuning of the commercial profile for the facility.

    Blue Dolphin Energy Company is not a refiner. We are not a crude oil marketer. The facility is going to have to be a commercially stand-alone successful project financed through the marketplace, the marketplace being investors. And, as such, it's very important to us that we have a stand-alone facility; we have no investments from the vessel traffic, which would be providing input to the system, or the importers, which are the refiners receiving the product that would come through the system.
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    Through the preliminary stages of the project at this time, it's obvious that we don't have operational experience with a deepwater port; however, we're seriously committed to the project. We've spent quite a bit of money on the project up through this point, and we believe that a deepwater port serving the Texas gulf coast is necessary, can be commercially viable, and is the environmentally preferred means of providing crude oil to the refineries and petrochemical complexes along the Texas gulf coast.

    The Deepwater Port Act of 1974 has been in existence for over 20 years. Several applications have been submitted, and its my understanding that actually three licenses have been granted. There has also been one deepwater port in operation for about 15 years.
    I must say, as an independent oil company, which is what we are at Blue Dolphin, we did not start this process by first picking up the 1974 Act and looking at it and saying, ''OK, here's what we have to do.'' We came up with the concept of a deepwater port through our understanding of the dynamics of the oil business and the necessity for improving the methodology and modes of bringing crude oil into the United States, especially the Texas gulf coast.

    If the Petroport facility were to average 600,000 barrels per day, which is below what the LOOP volumes are right now, that would eliminate in excess of 200 million barrels of crude oil from passing through the bays and estuaries of the Texas gulf coast, which are where this crude is moving right now in tankers. It would eliminate over 400 tankers per year.

    It's essential for us that, with the act being over 20 years old and with 15 years of experience, that the time would seem to be right to update the act to reflect the experience and current conditions.
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    From our standpoint, the existing proposal in front of the Congress to amend the Deepwater Port Act should address issues of simplifying the regulatory process. It should allow a deepwater port to be competitive, and the primary competition is actually lightering. We would not be in competition with LOOP. We serve different markets.

    It also seems, having been in the oil business for almost 30 years, myself, that the individual components of the deepwater port are quite similar, and actually not dissimilar to existing infrastructure on the OCS. The pipeline systems—there are many thousands of miles of pipeline existing on the OCS right now. There are in excess of 1,000 platforms, many of which are currently larger than the proposed Petroport platforms and larger than the existing LOOP platforms.

    Technology has evolved tremendously over the past 15 or 20 years. The risks posed by a deepwater port are by far much lower, on a relative basis, than the other modes of delivery of crude to U.S. shores and the other activities currently ongoing in the Gulf of Mexico right now.

    H.R. 2940 is designed to achieve an objective, as we see it, of simplification and permitting responsiveness to a changing market. I had mentioned the relative nature of the risks of a deepwater port, and the key word is ''relative.'' It is not without risks, and there must be appropriate monitoring to safeguard the environment. We fully agree with that and we are fully supportive of that.

    We must take into account experience over the past 20 years with the act and the many license applications that have been submitted. There have been seven or eight. Three license applications were, in fact, approved, and one port built, but the fact remains—there is only one port. Why is only one port out there?
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    It has to do with the marketplace. The facility must be commercially viable or it's not going to be constructed.

    We support H.R. 2940 to achieve the objective of simplification but prudence in the management or the administration of deepwater ports. Legislation should support deepwater ports' ability to compete.

    The two other items I'll mention very briefly.

    OCS—I think a port should be able to handle crude oil produced on the outer continental shelf. It's one less pipeline that would have to be built. It can only be beneficial for all involved.

    It will provide a baseload for a port. A deepwater port right now can only receive volumes by vessel. There are periods of time that throughput is not going through that pipeline. Create a baseload. Ensure the viability, the commercial viability, of the environmentally preferred means of getting crude oil to shore. It would seem to be a win/win situation for everyone.

    Antitrust review—the last item I have is on antitrust review. Deepwater port is not a monopoly. There is only one. There have not been any others that are constructed because they can't make any money in the existing environment—economic environment and regulatory environment. Very difficult to make money.

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    We think we can, because of some design characteristics that we have in our facility that will very much lower the capital cost associated with construction of the facility.

    Unlike the monopolies that exist on the OCS, which are the long transmission pipelines that are out there—and there are many of them where monopolies have been granted in market areas—therefore those pipeline systems, in fact, do have obligations to the public and they cannot discriminate and should not. They've been granted monopolies in where their products go.

    A deepwater port, that's not the case. A deepwater port has ample competition. There is existing crude oil delivery infrastructure right now. And, again, from my vantage point, I think it is important to regulate deepwater ports. There is no question about that. There is nothing magical about a deepwater port. The individual components of deepwater ports exist, they're out there. There are thousands of platforms on the OCS, thousands of miles of pipeline on the OCS.

    I think the time is right, with the experience that we do have, to update, to revisit the act, and amend the act by our experiences.

    Thank you.

    Mr. COBLE. Thank you, Mr. Jacobson.

    I don't think Mr. Boehlert mentioned this when he convened this committee. We try to comply as closely as we can to a 5-minute rule. That doesn't mean, folks, when the red light illuminates that you'll be keel-hauled, but when the red light appears, if you can sort of try to work it down.
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    Ms. Walker, we'll be glad to hear from you.

    And that was not your fault, Mr. Jacobson. I don't think anybody told you that.

    Mr. JACOBSON. I'm sorry. Thank you.

    Mr. COBLE. That's OK.

    Ms. WALKER. Thank you. Good afternoon, Chairman Boehlert and Chairman Coble.

    I'm Nathalie Walker, the managing attorney for the Sierra Club Legal Defense Fund's New Orleans Office, and we're not the Sierra Club.

    Thank you for inviting us to be here today to discuss our opposition to H.R. 2940, the Deepwater Port Modernization Act. H.R. 2940 has been presented to us as primarily a measure to give deepwater ports relief from antitrust laws, but, in fact, this bill is actually a major piece of anti-States' rights, anti-environmental, and anti-public-participation legislation.

    If the only major effect of H.R. 2940 were to provide antitrust relief to deepwater ports, we would not be here opposing this bill today.

    We have three major problems with this bill.
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    First, it completely undermines the adjacent coastal States' right to impose environmental monitoring on a deepwater port.

    Second, it severely weakens environmental monitoring requirements.

    Third, it essentially eliminates the public from participating in the governance of deepwater ports in this country.

    While our comments focus on Louisiana, home to what is currently the Nation's only deepwater port, LOOP, the impacts of H.R. 2940 extend well beyond Louisiana and LOOP. This legislation also will apply to future deepwater ports such as those currently under consideration for the Texas coast.

    Louisiana is home not only to LOOP; we're also home to several of the country's top fisheries ports, and we're the second highest seafood producer in the Nation. To protect these resources, the State of Louisiana has required environmental monitoring of LOOP since the port began.

    The Louisiana Department of Wildlife and Fisheries is on record as strongly supporting comprehensive, ongoing environmental monitoring, and I would like to submit copies of supporting documents from the Department for the record on this point.

    Recently, however, LOOP has attempted, at the State level, to get environmental monitoring reduced to virtually nothing. H.R. 2940 would do just that at the Federal level for LOOP and for any future deepwater port.
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    H.R. 2940 prohibits the adjacent coastal State from recovering the cost of environmental monitoring of not only coastal waters, but also of the port's pipeline and on-shore facilities. In this way, H.R. 2940 clearly undermines Louisiana law.

    If a State chooses to impose more stringent environmental protection measures than the Federal Government, we believe the State should have the right to do so. These decisions should be made by the citizens of Louisiana and all other affected States through their State governments, not by the U.S. Congress. This bill is entirely at odds with the very States' rights that this Congress is supposed to champion.

    In addition, under H.R. 2940 the Secretary of the Department of Transportation is given the discretion to prescribe what, if any, environmental monitoring will be required in a port's license. Environmental monitoring to any extent is assured only for 3 years after port operations begin. Any environmental monitoring after that must be justified by what the bill calls ''data demonstrating a clear need.'' This provision indicates a regrettable lack of understanding of the purposes of environmental monitoring, which is to identify potential problems before they become disastrous. Without meaningful ongoing monitoring, environmental and ecological problems will not be discovered until they are so severe as to be painfully obvious. Such complacency puts valuable coastal resources needlessly at risk.

    Finally, H.R. 2940 excludes citizens of any State from the management of deepwater ports off their shores. This bill goes so far as to direct that rulemaking procedures, which require public notice and comment, be avoided to the maximum extent possible. Instead, this bill directs that the port's license and Coast Guard approved Operations Manual control environmental monitoring requirements.
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    But the license and manual are essentially exempted from public review. Although the public can comment on the initial license application, we found no authority suggesting that the public may comment on the initial Operations Manual. And, more importantly, under H.R. 2940 the Secretary and the Coast Guard have the authority to amend both the license and the Operations Manual at any time without public notice and comment; therefore, any initial public participation is entirely negated and rendered meaningless.

    In this way, the governance of deepwater ports is completely shielded from public scrutiny under H.R. 2940. This bill gives the transportation secretary and the Coast Guard far too much discretion, while simultaneously avoiding public scrutiny. Thus, the stage would be set for the Department of Transportation and the Coast Guard to be captured by the entities they are entrusted to regulate.

    Public participation, a hallmark of democracy, would be entirely thwarted by 2940. To enact Federal legislation which will put valuable coastal resources at risk without State control or public input is a gross injustice to the citizens of the States surrounding the Gulf of Mexico and to Louisianians, in particular.

    We strongly oppose the Deepwater Port Modernization Act.

    Thank you for your time and attention. I'll be glad to respond to any questions.

    Mr. COBLE. Thank you, Ms. Walker.
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    At the outset, Ms. Walker, you said you were not Sierra Club. Did I incorrectly introduce you?

    Ms. WALKER. Representative Hayes made reference to the letter from the Sierra Club. In fact, it was the letter from the Sierra Club Legal Defense Fund.

    Mr. COBLE. OK. So I did correctly identify you at the outset?

    Ms. WALKER. I believe so.

    Mr. COBLE. OK. What is the difference?

    Ms. WALKER. We are a nonprofit environmental law firm. We're an entirely separate organization. We don't have overlapping directors or anything else. We represent environmental citizens groups all across the country. Sometimes it's the Sierra Club, but we're lawyers for the environmental movement, in general.

    Mr. COBLE. All right. We'll start the round of questioning.

    Mr. James, if you will, explain to me or to the panel, to the subcommittee, why you believe that we should revise the current approach to environmental monitoring at LOOP, question No. 1.

    Question No. 2, for our information, what type of action do your employees routinely perform to minimize the risk of environmental problems?
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    Mr. JAMES. The basis for the change, Mr. Chairman, is the 15 years of environmental monitoring that we have conducted, and we've not found any impact to the environment through our operations.

    I think there is some misconception that we are asking that environmental monitoring be totally eliminated. There is continuous monitoring by our company through continuous monitoring of the pipeline operation. We look at the pressures that are present in the pipeline. Through that method, we're able to check for leaks and disruptions in the pipeline. We also fly the pipeline. We do that once a week. We are mandated by the Office of Pipeline Safety to do that. We, in fact, fly it several times a week as we move people from offshore from our operations center in Galiano. We will intentionally overfly the pipeline and watch it for any signs of leaks or any unusual occurrences.

    Mr. COBLE. During your operation, Mr. James, have you all had any serious casualties or fatalities that have occurred?

    Mr. JAMES. No, sir. We've not had any fatalities, no serious casualties. I believe that the Coast Guard did suggest earlier that our spill record, the amount of crude oil that has actually been released in the environment as a result of our operation, has been minimal.

    We have, over the 15 years that we've been in operation, moved more than 3.5 billion barrels of crude oil, 3.5 billion barrels, and we have released into the environment, through a number of small leaks, less than 1,000 barrels.
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    Mr. COBLE. The Department of Transportation spokesman testified that the Administration generally believes that the existing Deepwater Port Act is basically sound. Are you in agreement with that? And can you explain or share with us any problems that you may have encountered in your efforts to prepare an application to operate a deepwater port.

    Mr. JACOBSON. Yes. At the stage of development that the Petroport project is at at this time, we are involved in pre-licensing activities. We've not submitted an application at this time.

    We have found, through our beginning analysis of the Deepwater Port Act of 1974, and working with both DOT and the Coast Guard, that since it had been so many years since an application had been submitted, that those groups had, in fact, disbanded the application review groups within those departments. Therefore, there was some difficulty initially in determining exactly what we would need to do in the development process for submission of the application.

    That's been remedied, and we have had nothing but very good experiences working with DOT and the Coast Guard in educating us, and within those departments resurrecting the capability of processing a license application.

    Your question, do I agree that the 1974 act is basically sound, I believe in 1974 the 1974 act was basically sound, and I believe it now should be revised. It would be appropriate to take into account experience and current conditions.

    Mr. COBLE. Ms. Walker, is it your belief that we should encourage the development of deepwater ports as an environmentally sound alternative to other modes of transportation transporting oil into this country?
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    Ms. WALKER. Do I——

    Mr. COBLE. And, if so, what would be your recommendations?

    Ms. WALKER. Do I get to say first that we ought to reduce our overall use of oil?

    Clearly there are environmental advantages to having deepwater ports, and I think years ago, when the Louisiana Offshore Oil Port was being discussed, I believe that there were environmentalists who publicly acknowledged those advantages. It prevents vessels from coming right up into our coastal areas loaded with crude oil.

    Mr. COBLE. I have other questions, but I will take the next round.

    I'm going to recognize the gentleman from Tennessee, Mr. Clement.

    Mr. CLEMENT. Thank you, Mr. Chairman.

    Mr. James, the Department of Transportation is recommending that section 8 of the bill be struck to ensure that the Coast Guard's Captain of the Port has sufficient authority to regulate the design and operation of the facility in a way that protects safety and prevents pollution. Do you agree to this change?

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    Mr. JAMES. We have worked with the committee on that change and we have also had discussions with the Department of Transportation. It was our intent that the Secretary be given some discretion as to whether matters go in the license, which currently is quite detailed and which currently has matters which we believe, and I believe the Department of Transportation believes, ought to be in the Operations Manual.

    But we have been working toward a solution to that, and I believe that, with the committees' help, that we will arrive with a consensus agreement with the Department as to what the appropriate level of oversight and regulation by that Department is.

    Mr. CLEMENT. Mr. Jacobson, the Department of Transportation has recommended several changes to H.R. 2940. If these amendments are included, do you believe that H.R. 2940 will still make your construction and operation of the deepwater port easier and more financially viable?

    Mr. JACOBSON. I think my understanding of H.R. 2940 and the—I have not seen a copy of the DOT's statement. I think any movement, however, to accomplish the basic objectives of H.R. 2940 we would be supportive of.

    Mr. CLEMENT. Ms. Walker, how does the environmental monitoring conducted on LOOP compare to environmental monitoring conducted on other OCS platforms in the gulf?

    Ms. WALKER. I don't know in detail. I do know that the other platforms are monitored, and I do know that under H.R. 2940 we'd be talking about a drastic reduction, at best, and close to elimination of—clearly the possibility of total elimination of—environmental monitoring.
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    Now, if that's not what was intended, then the bill needs to be changed, because that's what the bill says.

    Mr. CLEMENT. Ms. Walker, the Department of Transportation has recommended that a deepwater port license be subject to the Administrative Procedures Act, but not the port's Operations Manual. This would be similar to tankers, where the public has input on regulations on double-hull tankers, but the Coast Guard's supervision of the actual engineering and construction of the ship is not subject to the APA.

    Do you believe that this would improve H.R. 2940 by providing safeguards and input for the public in the licensing process?

    Ms. WALKER. Not necessarily, because I have seen no conclusive evidence that what goes into the Operations Manual is merely technical, design, and/or engineering types of information that would be of no concern to the public, who might be interested in the environmental monitoring aspects of LOOP.

    Mr. CLEMENT. Mr. James, to what extent do you believe that you will bring in oil from other OCS production facilities rather than from off-loading tankers?

    Mr. JAMES. The production in the Gulf of Mexico is projected to increase approximately 600,000 or 700,000 barrels a day over its current level. That will happen over the next three to 5 years.

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    We believe that we have an opportunity to attract and bring through our facility 200,000 to 300,000 barrels per day of that oil if this legislation is passed and we're allowed to do that.

    Mr. CLEMENT. To what extent are you currently subject to State law concerning safe operations and environmental monitoring of your facility?

    Mr. JAMES. We operate under a license from the Offshore Terminal Authority, which is an agency of the State of Louisiana. There are extensive environmental concerns in the license, and we are subject to an environmental protection plan that was published by the State in 1980 through which the environmental monitoring plan which we are currently conducting was approved by the State.

    Mr. CLEMENT. All right. Thank you.

    Mr. COBLE. Thank you, Mr. Clement.

    The gentleman from New York, Mr. Boehlert.

    Mr. BOEHLERT. Thank you, Mr. Chairman.

    Ms. Walker, I notice in your testimony you make this statement: ''Because our efforts to obtain information from the Federal Government about LOOP's environmental and safety record have been thwarted—'' and I'd like to know who the thwarters were—''we are unable to include in this presentation any official information regarding LOOP's record.'' I'm concerned about that, and I'm proud of my record of protecting the environment, and I noted Secretary Canny was very laudatory in his statement about LOOP's safety record, that type of thing.
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    One, who's been thwarting your efforts to get information? I mean, who has rejected that?

    Ms. WALKER. The Coast Guard. In January we sent a Freedom of Information Act request to the Coast Guard asking for documents that would pertain to the environmental record of LOOP. We didn't get a timely response. Finally, in March we got a telephone call from the Coast Guard informing us that, ''Oh, well, that information was contained in a data base that is a nationwide data base for all environmental monitoring, oil spills, etc., and if we wanted it, it would cost us money and it wouldn't pertain to just LOOP.'' When we asked if, as a nonprofit, we could have that fee waived, we were told no, that we couldn't—maybe a $20 reduction would be possible—and that they would not extract the information pertaining to LOOP for us.

    We have since enlisted the help of Representative Bill Jefferson, because the Coast Guard indicated, ''Well, they might extract it for an elected official.'' Mr. BOEHLERT. Would you have any reason to believe the record is other than as portrayed by everyone?

    Ms. WALKER. We know there have been spills there.

    Mr. BOEHLERT. I mean, there are spills everywhere. I understand that. But Mr. Canny, particularly, from an Administration that takes great pride in pointing out that it's the defender of the environment, you wouldn't think he would misrepresent something, would you? I mean, he's——
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    Ms. WALKER. It may not be a matter of misrepresentation. In fact, a review of the data might surprise us all. It's not a misrepresentation to say that the record has been good if, in fact, there is something in the record that you've never seen, that someone has not brought to your attention. But we do know that there have been spills out there.

    Really, the most important thing to keep in mind when we're talking about their environmental record is that, under State law, we have a very significant environmental monitoring program, which is probably a significant part of the reason that their record is what it is, whatever it is, and this bill is going to preempt that State law.

    Mr. BOEHLERT. I can understand your concern. I certainly wouldn't want to walk away from any monitoring. But, on the other hand, I wouldn't want to have monitoring that might be deemed excessive or unnecessary. I mean, you're not opposed to any change in the statute, are you?

    Ms. WALKER. I can't imagine that we would be opposed to any change; it's just that this bill, as proposed, so fundamentally changes the program as it now exists and turns environmental protection policy on its head that we're very alarmed. But we would love to work to change the bill to get these really egregious provisions out right now.

    Chief among our concerns—and we agree with the Administration that the APA, the Administrative Procedures Act, has got to apply to the license, and maybe, in fact, has got to apply to the Operations Manual, as well, since it may well—the Operations Manual may well have something to do with environmental issues.
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    Mr. BOEHLERT. I must confess I'm not expert in this matter, and I really didn't spend a heck of a lot of time prior to assuming the chairmanship of the subcommittee that I have, Water Resources and the Environment, dealing with offshore oil ports, but the more I get into it, the more enamored I am with the concept, because, as one who is proud of his environmental record, I see this as probably the best source of transporting the oil in terms of looking out for the interests and being environmentally sensitive.

    Would you agree with that general concept?

    Ms. WALKER. Sure. And we're not here today saying LOOP is a bad thing and shut it down and don't ever build deepwater ports. That's not what we're saying at all.

    We are simply here to remind everyone that we are talking about super tankers coming within 18 miles of our coast, and the need for—as a matter of common sense, the need for environmental monitoring.

    Mr. BOEHLERT. No one—I don't know anyone who would be against common sense, but—and my time has expired, but just let me ask this one concluding question.

    Oftentimes there is confrontation rather than cooperation. As the Sierra Club Legal Defense Fund, do you feel you have open communication with LOOP officials, or is it an adversarial situation?

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    Ms. WALKER. It's not adversarial. We haven't had much contact with them until just a couple of months ago, and that contact really has been in the form of meetings that we have attended, and we've simply been observers.

    Mr. BOEHLERT. Would you characterize those meetings as positive, not confrontational?

    Ms. WALKER. I don't think there has been much in the way of verbal exchanges at all, if I'm recalling correctly. We've simply attended meetings. I don't think there is any basis to say that the relationship is hostile.

    Mr. BOEHLERT. OK. That's good. All right.

    Thank you very much, Mr. Chairman.

    Mr. COBLE. Thank you, Mr. Boehlert.

    The gentleman from Illinois, Mr. Ewing.

    Mr. EWING. Thank you, Mr. Chairman.

    Ms. Walker, do you represent—who do you represent besides your law firm here today? What clients?

    Ms. WALKER. Where's my letter? We sent a letter in to, I hope, everyone on both subcommittees earlier this week, and that letter was sent in on behalf of American Oceans Campaign, Baton Rouge Audubon Society, Citizens for a Clean Environment, Houston Audubon Society, Louisiana Audubon Council, Louisiana Environmental Action Network, National Audubon Society, Natural Resources Defense Council——
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    Mr. COBLE. Ms. Walker, excuse me. I was talking to Mr. Boehlert. Repeat your—I didn't hear what your question was.

    Mr. EWING. I asked what clients she represented, what her law firm represented.

    Mr. COBLE. OK.

    Mr. EWING. Is it in the two-page—all in this two-page, multi-page——

    Ms. WALKER. No. I am, in fact, referring to a letter that was signed off on by a number of environmental groups, including ours. At our suggestion, these groups were informed about the bill, the letter was drafted, and we orchestrated getting it here to all the members of both subcommittees.

    Mr. EWING. That was sent to our offices then?

    Ms. WALKER. Yes. And I do know some representatives got it. If you didn't, I apologize and we'll certainly——

    Mr. EWING. I don't know. It could have. Possibly you could send me another one so I'll have that.

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    Ms. WALKER. Certainly.

    Mr. EWING. Are your clients opposed to any expansion of the deepwater port as far as the amount of oil that they bring in there?

    Ms. WALKER. That has simply not been our focus. We are simply alarmed by the reduction, if not eradication, of environmental monitoring and taking citizens entirely out of this process, and preempting Louisiana law.

    Mr. EWING. Have you made any suggestions, or could you make suggestions to this committee as to how you believe this legislation could be improved to make it acceptable?

    Ms. WALKER. Absolutely.

    Mr. EWING. You have or you could?

    Ms. WALKER. I can. I believe I have in my written testimony. I can say very succinctly that the APA needs to be applicable to both the license and, I believe, the Operations Manual. I believe that the Louisiana State law that currently governs environmental monitoring ought to continue. And I think that that environmental monitoring ought not be reduced in any significant way.

    Mr. EWING. I think what many of us, as we serve on this committee and other committees that deal with environmental legislation, realize that some of these laws have been on the books for quite a while. Things do change. Situations change. We even have a history of how the law has worked and whether it has protected the environment or whether we think it has or whether it hasn't.
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    I guess my point is that I think, in this situation, what we need is to be working together to see what we can do, unless there is just opposition to any change in the law, to make this law work better, make it work better for our economy, make it work better to get the oil in that we need, and yet to continue to provide protection.

    I'm sure that's going to take some give and take on both sides, but I appreciate your testimony.

    I appreciate, Mr. James, your testimony, and I have one question for you. A question was asked about any injuries. I think it was based on injuries. I'd be as much interested, too, as to what the record has been as far as mishaps which have damaged the environment.

    Mr. JAMES. Again, I'll go back to the testimony of Mr. Canny and the Coast Guard, and a statement that I made also. Our record in the area of oil spills—and I think, Mr. Ewing, that's what you're addressing. There have been oil spills. They have been operational-type oil spills where a gasket has leaked. There have been a number of them, and I could provide that number to you.

    But over the course of 15 years, the total quantity of oil that has been released into the environment has been less than 1,000 barrels, and we have handled more than 3.5 billion barrels of oil over that 15-year period.

    Mr. EWING. What is your response to Ms. Walker's suggestion that monitoring is extremely important and we can't do away with it?
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    Mr. JAMES. I believe that it is important. I believe that it was important for us, as a deepwater port, when we commenced operation to look at our operations to see if there was an impact on the environment. We have done that for 15 years.

    I'll again say that we're talking about the level of monitoring. We have been in discussions with the State. There is not a suggestion by the State or by us that it be completely eliminated. We're talking about the level.

    We believe that our record would support a reduction in that, and a significant reduction in that.

    And I might add that that's on the State side, but on the Federal side there are separate Federal requirements for environmental monitoring. The Coast Guard looks at the level of monitoring that we do, and they have agreed with recommendations of a third party, a consultant that was brought in by the State of Louisiana, to significantly reduce the monitoring required on the Federal side.

    Mr. EWING. One final question, Mr. Chairman.

    Are the State authorities in opposition to elimination of their oversight in monitoring in this matter?

    Mr. JAMES. We are having discussions with them about their oversight over the monitoring. We believe that we will, with the committee's help, arrive at a solution that will be acceptable to the State in that area.
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    Mr. EWING. Thank you.

    Mr. COBLE. The gentleman from California, Mr. Horn.

    Mr. HORN. Thank you very much, Mr. Chairman.

    Ms. Walker, I'm sympathetic with your comment that Louisiana law, when it has stronger standards than the Federal Government, should not be overcome by a subsequent Federal law. As a Californian, we faced exactly that in two areas—one is air pollution, where we do have an exception to have a tougher standard. The one where we've been clobbered is our frozen chicken criteria. Apparently my colleagues in the House, by a majority vote, prefer their chicken to be frozen and unfrozen and thus poisonous, and we in California don't like it that way, but right now we haven't won that battle. So the fact is, Congress can make an exception in these areas.

    Now, on the Louisiana laws, I'm curious. I heard Mr. Jacobson and Mr. James mention the fact that, out of the 3.5 billion barrels that came through that port—was it 3.5 billion, with a B?

    Mr. JAMES. Yes, sir.

    Mr. HORN. A real billion—that less than 1,000 barrels affected the environment. Well, was that a spill or was that burned off? What are we talking about?
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    Mr. JAMES. Now, sir. There were—and I should have that number in front of me, but there were probably 200 incidents where there would be a pint of oil, a gallon of oil, or a barrel, spread out over that 15 years. Calling from memory, I think that the largest spill that occurred at our facility was in the range of 140 barrels, but I'm calling that from memory, Mr. Horn.

    I can provide that information to the committee if you'd like, sir, but that would be the largest single spill.

    And to answer your question with respect to what happened to that oil, typically an accident will—when an accident occurs, the weather, the waves in the gulf—the gulf is quite active—will dissipate that oil and no cleanup is required. We do, however, have oil spill response equipment on our platform, and when there is a discharge that equipment is deployed. We do respond to that spill. Very infrequently do we recover any oil because it dissipates in a short period of time.

    Mr. HORN. Yes. Let me ask you, Ms. Walker. I'm told there's a Coast Guard study around 1993 where they looked at deepwater ports, and that was mandated under the Oil Pollution Act. Have you ever had an opportunity to review that study at all?

    Ms. WALKER. No.

    Mr. HORN. You have not. Because I'd be curious if you thought it was a credible study, the point presumably being that they found that the deepwater ports presented a ''least environmentally risky mode of transporting crude oil.'' So the question comes: if you must have oil, where is the best place to have it unloaded? Is it best to have it unloaded within the breakwaters, as often occurs in the ports of the United States, or is it best to have it unloaded out at sea where, if an incident affects the environment, it might be dealt with a lot more easily than if it's inland and destroying the beaches, destroying the waters around a city?
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    Do you have any feelings on that one way or the other as to where's the best siting for a port to get the oil in—in the city/harbor area, or out to sea?

    Ms. WALKER. I really think, as a matter of common sense, deepwater ports do make sense, but that doesn't mean that we should not be monitoring them for their environmental impacts.

    And we do need to keep in mind that we're not just talking about oil spills, as bad as those could be. If the facility is expanded, if new pipelines are constructed, in Louisiana that could mean significant wetlands loss, which is such a terrible problem for us. So there are other impacts associated potentially.

    Mr. HORN. Given existing Louisiana law, what particular parts of that law do you feel this act, if passed as it is, would endanger? What type of reports, monitoring, so forth?

    Ms. WALKER. Well, the Louisiana Offshore Terminal Authority Act is quite specific with respect to environmental monitoring. I mean, there are several sections in the act that clearly and in detail dictate what must be done.

    Now, we know under this bill that the environmental monitoring that must be done is left to the discretion of the Secretary. That's the kind of legislation that generally makes groups like ours a little bit nervous. We'd like to have a better feel for what an environmental monitoring program is going to look like, with some detail.
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    Mr. HORN. Well, if you wouldn't mind, you might file for the record at this point just what are the specifics of the Louisiana law, or insert the appropriate document. We'll leave that space open, Mr. Chairman, if we might.

    [The information received follows:]

    [Insert here.]

    Mr. COBLE. Thank you, Mr. Horn.

    The gentleman from California, Mr. Baker.

    Mr. BAKER. Thank you very much, Mr. Chairman.

    I'll continue, I think, where Steve was heading.

    Ms. Walker, the APA study that he was referring to, which was part of a rulemaking, required a study of deepwater ports, including a full public hearing. Did you participate?

    Ms. WALKER. This was conducted in which year, the public hearing?

    Mr. BAKER. Somewhere between 1992 and 1993. The report was finished in 1993.
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    Ms. WALKER. No. My office would have been in about its second year of operation, and we weren't looking at offshore oil port matters at all.

    Mr. BAKER. I was interested in your—again, because these public hearings go on all the time, but very few people participate, and that's why it's important that the Department of Transportation and the Coast Guard represent your interests, and I was interested in your comment that the Coast Guard and the Department of Transportation might be coopted under this bill. What does that mean?

    Ms. WALKER. Well, we're all human. If I am to regulate an industry and I talk just to industry and maybe to a co-agency that also regulates that industry, I think before too long decisions that aren't quite as objective as they ought to be happen. I think that's why we have public participation rules in this country, so that other perspectives can be considered.

    If you're going to regulate an industry, you need to be communicating not only with that industry, you need to be communicating with all of the other stakeholders that are affected by that industry.

    Mr. BAKER. As you mentioned in your own testimony, we hold these public hearings, and it's not exactly standing room only, and we have to depend on them for day-by-day monitoring.

    You mentioned that there might be lessening of the testing required. Doesn't the law suggest that after 3 years of close monitoring that the Coast Guard can adjust the monitoring required?
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    Ms. WALKER. No. What the bill says right now is that Louisiana's law is preempted, because the final provision of this bill says that any cost that a State wants to impose on, for example, LOOP are deemed unreasonable unless they comport with the section that says the only environmental monitoring that can happen is what the Secretary says.

    Mr. BAKER. All right. Well, this Administration is not known for its wild abandonment of the environment. What would make you think the Coast Guard would stop monitoring?

    Ms. WALKER. Because the language of the bill, as it currently exists, says that there will not be continuing monitoring 3 years after commencement of operation. In LOOP's case that means it's gone.

    Again, if that wasn't the intention of the bill, then the language needs to be changed, because that is what is says now.

    And after 3 years——

    Mr. BAKER. Doesn't it say that after 3 years the Coast Guard may alter? It doesn't say that it will be gone.

    Ms. WALKER. After 3 years a demonstration that there is a clear need for environmental monitoring must be made if any environmental monitoring is to continue.

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    I find that a very unusual provision. Again, as a matter of common sense, why would we need a demonstration of need for environmental monitoring when we're talking about a facility that deals with super tankers?

    Now, we can all have different opinions about what the environmental monitoring ought to look like, but to suggest as a baseline that, unless you can demonstrate something clear and convincing, a facility that deals with super tankers perhaps doesn't need any environmental monitoring?

    Mr. BAKER. I served in the Coast Guard, as did the chairman of the committee, and the word ''super tanker'' doesn't bother me because there are ships of all kinds and sizes. The alternative is to do what they do in the bay area, and that's off-load the lighters.

    Ms. WALKER. No. We're not——

    Mr. BAKER. That's more dangerous.

    Ms. WALKER. No. We're not suggesting that lightering vessels are a better alternative to LOOP. We're saying LOOP is there and let's just be sure that LOOP operates appropriately and with appropriate environmental monitoring. And if lightering vessels are not regulated appropriately with respect to environmental concerns, then they ought to be. It would really be a sad mistake for us to recognize that one segment of the industry is not regulated sufficiently and therefore lower our standards so that everybody can operate at that low level.
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    Mr. BAKER. OK. After 15 years of record with 1,000 barrels, or one for every 3.5 million transferred being spilled, are we going to waive the reporting requirements so if there is a spill they don't have to report to the Coast Guard or Transportation? Is it in the bill? Does the port authority have to report spills?

    Ms. WALKER. Yes, under other legislation.

    Mr. BAKER. We didn't waive that?

    Ms. WALKER. Right. No. But, as I said earlier, we've got other concerns other than just spills from the facility. Additional construction is going—could have potential impacts on our wetlands.

    Mr. BAKER. But in order to prevent lighters and other alternatives means, we do have to expand the port, don't we? Don't we have to construct?

    Ms. WALKER. It's my assumption that that is in the—that is part of the game plan. Yes.

    Mr. BAKER. You wouldn't object to that?

    Ms. WALKER. Not if it's done in an appropriate fashion.

    Mr. BAKER. I'm having trouble finding out what the objection is, then. Are we going to waive some kind of environmental laws while they're constructing?
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    Ms. WALKER. This bill preempts Louisiana environmental monitoring right now. There is no corollary.

    Mr. BAKER. But the Federal Government is not short of environmental laws, either.

    Ms. WALKER. Pardon?

    Mr. BAKER. The Federal Government is not short of environmental laws.

    Let me ask the gentleman from the port authority, Mr. James, what would we be waiving during construction time that might be a danger to the environment?

    Mr. JAMES. I think the Congressman is correct that the National Environmental Policy Act—there are significant environmental laws that would come to bear. An environmental impact statement possibly would be required, depending upon the size of the project.

    I believe that were there construction, I feel confident on the Federal side that there would be environmental regulations that would need to be complied with, and on the State side, again, calling from memory, I believe that our license may just only address the original facility that is there now. I'm calling from memory again.

    But if we were to expand, I believe we would be required to go back to the State and get approval from them for that construction.
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    And outside of our license, there are others. The Department of Natural Resources with the State of Louisiana that has jurisdiction over pipelines being laid through that area, we would have to go to them. We would have to—and I'll bounce back to the Corps of Engineers on the Federal side. You'd have to go talk to them.

    So I think there are probably significant laws outside the Deepwater Port Act that one would have to comply with.

    Mr. BAKER. Do you agree, Ms. Walker?

    Ms. WALKER. I do not agree that there are corollaries to what we currently have in the Louisiana Offshore Terminal Authority Act, which is Louisiana revised statutes 34, section 3101, et. seq. There are specific provisions there that are not duplicated at the Federal level.

    Mr. BAKER. All right. But are there provisions that would require them to hold an EIR and build constructions within reasonable environmental guidelines?

    Ms. WALKER. It is not clear at all that an EIS would be required. First, we would have to categorize this as some sort of major Federal action before we could even begin to argue that NEPA would require an EIS.

    Mr. BAKER. Expanding this port for super tankers wouldn't be a major construction?
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    Ms. WALKER. Well, I've often been surprised at the things that I argued were major Federal actions under NEPA and the court has told us we were wrong.

    Mr. BAKER. The court has?

    Ms. WALKER. Yes. There, unfortunately, is lots of case law where citizens' groups do argue that an action will be a major Federal action and the court declines to agree.

    Mr. BAKER. All right.

    Mr. Chairman, back to you.

    Mr. COBLE. Thank you, Mr. Baker.

    Folks, as we say in the rural south, it's getting close to supper time, so we're going to wrap this up very, very quickly.

    I appreciate you all being here.

    Ms. Walker, I wanted to ask you if you can give us specific examples of deepwater ports' management decisions that ought to be subject to public scrutiny.

    Ms. WALKER. An environmental protection plan clearly should be subject to public scrutiny. It's everyone's environment, and that's why citizens' groups are so careful to try and protect public input when it comes to the environmental impacts of a facility.
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    Mr. COBLE. Any additional—anything beyond that?

    Ms. WALKER. Well, we come to you today really expressing our environmental concerns, and, in fact, our concerns about Federal preemption of State law.

    Mr. COBLE. Well, I'll assume, Ms. Walker, that when you contend that this bill before us preempts Louisiana law, you are referring to section 4 and 5?

    Ms. WALKER. Yes.

    Mr. COBLE. Both sections 4 and 5?

    Ms. WALKER. Clearly—section 5 is clear preemption, and I—well, section 4 and 5 you have to read together? Yes.

    Mr. COBLE. Well, I think that may well be subject to interpretation, and we may have to define preemption with clarity, but I have some doubts that this bill preempts Louisiana law in the final sense, but we can argue—we can discuss that at a later time.

    I think this has been a good hearing. Ms. Walker, you mentioned the application of common sense. Chairman Boehlert mentioned the desirability of avoiding confrontation in lieu of cooperation. Mr. James, and you and Mr. Jacobson addressed the simplification of regulatory process.
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    If we could apply these, Mr. Clement and gentleman, Mr. Baker, we could resolve this problem if we could take these three rules of thumb.

    I am not—and I'm speaking just for me. I don't want to bind Mr. Baker or Mr. Clement nor the subcommittee—I am not averse to regulations. I am, indeed, averse to fierce over-regulation, and I think the line that we must pursue is very delicate and very fragile.

    When we apply reasonable regulation and then take one step beyond there, then it becomes unreasonable, it becomes onerous. I think we have to be careful to avoid the latter.

    I think that we'll—some good came from this hearing today. I feel good about it.

    Mr. Clement or Mr. Baker, do you all have anything further to say?

    Mr. BAKER. No. I am concerned about the wetlands aspect, and I think if the pipe goes through the wetlands you're going to see the Corps there, you're going to see 404 hearings, you're going to see the world come down on you. I can't imagine either the Federal Government, the Department of Transportation, the Coast Guard, or the State of Louisiana is going to want to ruin their cost just because of their oil industry, because they have to do this balancing act within the State Legislature between their economic needs and their environmental safeguards.
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    So I'm with you, Mr. Chairman. I want to simplify this, but I don't want to destroy wetlands or the industry, either, in the making.

    Last, let me just observe, when people come here year after year demanding that we preempt all the States, and then all of the sudden become States' righters, I get a little nervous, too. So let's figure out which we want. Do we want a uniform law in the area of environment, or do we want to let the States go wild? I'll be happy to go either way, because, as a republican, we love States' rights.

    Mr. COBLE. Well, we will chew on this very thoroughly and very deliberately subsequently, but I thank the witnesses for what I believe is valuable testimony, and the Members for their questions. The members of the subcommittees may have some additional questions, however, for the witnesses, and we will ask you to respond to those in writing. The hearing record will be held open for these responses and for additional statements that are submitted for the hearing record.

    If there is no further business, the Chair again thanks the members of the subcommittee and our witnesses, and the subcommittee stands adjourned.

    [Whereupon, at 5:43 p.m., the subcommittees were adjourned, to reconvene at the call of their respective Chairs.]

    [Insert here.]