Impact of Regulations--After Federal Leasing--On Outer Continental Shelf Oil and Gas Development

After industry acquires outer continental shelf (OCS) lands, several federal and state permits or approvals are needed before any drilling activity may begin. With the Outer Continental Oil Shelf Lands Act Amendments of 1978, Congress sought to interject a balance between development of oil and gas resources and preservation of other coastal water resources. GAO evaluated the effects of requirements stemming from the amendments and other legislation on industry efforts to explore and develop oil and gas resources after leases are awarded.

The real impact of the amendments is still largely unknown because new rules and regulations have not been fully tested in any of the OCS areas. Before any activity can take place on leases on the OCS, the Geological Survey must approve industry's plans for exploration and development. Regulations instituted by the Survey significantly increased the time required for approval in the Gulf of Mexico region. Revised regulations implemented to meet the mandated timeframes specified in the amendments have improved the Survey's responsiveness, but processing times will probably never return to pre-1978 lengths. Four federal agencies primarily are involved in issuing permits before exploration or development activities can proceed. A delay by one can hold up the entire process. The most serious delays have been caused by agencies where timeframes to issue permits are not legislatively mandated. The Environmental Protection Agency (EPA) drilling discharge permits are the most time consuming and have had perhaps the greatest effect on OCS operations. Agencies generally have not actively monitored, enforced, or evaluated the effectiveness of regulatory requirements. The increased role of state and local governments does not have to delay operations, but that potential exists. Despite the regulatory process, GAO found a credible record by industry in pursuing offshore oil and gas.

Recommendations

Our recommendations from this work are listed below with a Contact for more information. Status will change from "In process" to "Open," "Closed - implemented," or "Closed - not implemented" based on our follow up work.

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