« PreviousContinue »
address either environmental questions or questions of routing, the decisional authority for which is vested by existing law in the Secretary of the Interior or other parties.
The ruling by the circuit court, on what must be considered a technical defect, should be met by a matching technical amendment to the Mineral Leasing Act of 1920. We agree with the view implicit in the Chairman's bill that the effect of the court's ruling has been to cast doubt on the feasibility now and in the future of constructing various pipelines and high-tension electrical transmission lines and even on occasion to repair and maintain existing lines where they cross public lands.
Mr. Chairman, there are several oil and gas pipelines already operating in Alaska in connection with Swanson River and Cook Inlet fields which cross Federal lands. The continued security of these lines has been threatened by the circuit court decision. If the decision is affirmed on appeal, it a pears doubtful that the operators of these lines could be granted adequate access in all instances for repairs and maintenance of these lines. Without having specific knowledge, I must assume that similar conditions prevail for hundreds of other lines operating in the contiguous States. In hamstringing the reasonable authority of the Secretary to provide, through special land-use permits, for the most progressive technology and most feasible access, it would appear that the circuit court has rendered a decision with accidental implications which are profoundly antienvironmental.
I also believe that the views of proponents of a Canadian route are not relevant to the question to which this committee should give priority consideration. Regardless of environmental questions about the pipeline, and regardless of questions about alternate routes through Alaska or Canada or alternate methods of shipment, a narrowly drawn bill establishing the right of the Secretary of the Interior to grant special land-use permits will be needed for the construction of pipelines out of Prudhoe Bay—and for the construction of pipelines and powerlines in other parts of the Nation.
The State of Alaska has decided to seek Supreme Court review of the circuit court's decision concerning special land-use permits and its failure by a 4-3 vote to decide the environmental issues in the Trans-Alaska pipeline case. We are being joined in our petition by both Alyeska Pipeline Service Co. and the Federal Government.
But in view of the importance to Alaska and the Nation of pipeline construction without further unnecessary delay, we feel it would be appropriate for the Congress to enact legislation eliminating restriction on the issuance of special land-use permits as an issue in the law suit and an obstacle to pipeline construction. If Congress fails to act on the right-of-way question until it sees if the Supreme Court will act on the matter, such inaction may create a half year to a year of further delay before the right-of-way question is resolved and the courts can proceed with the environmental question.
Construction of the Trans-Alaska pipeline is very important to the State of Alaska, as I will explain. But more is at stake here than a project that will benefit one State.
The United States already has to import more than 25 percent of the oil it requires, a level that was not expected to be reached until 1980, and the import demand continues to grow steadily. It has been estimated that foreign dependency for oil could soar to 65 percent in 1985. Interior Secretary Rogers Morton has said it will take "nothing short of a superhuman effort” to meet our energy needs up to that time.
If our dependency on foreign oil-mainly from the Mideast-does reach the 65 percent estimate, the U.S. trade deficit for oil alone would be a staggering $20 billion a year. The deficit already is $4 billion.
Construction and operation of the Trans-Alaska pipeline would lessen America's growing dependence on imported oil, especially from the Middle East, and as a consequence it would help to reduce our increasing balance-of-payments problem. Others will amplify, I am sure, on the need for Alaskan oil production to fill the energy requirements of the Nation without further tipping the foreign imbalance in our balance-of-payments situation.
On a related topic, Chairman Arthur Burns, of the Federal Reserve Board, just last week expressed grave concern to me about the burgeoning monetary clout of the Arab states, due to their huge oil exports. Mr. Burns said the oil sheikdoms soon will be able, if they so desire, to take over any U.S. industry they might want simply by going to the stock market and buying up control of it. In Saudi Arabia alone, among the Mideast oil-producing countries, it is estimated that foreign currency holdings will rise to $30 billion by 1980. In comparison, the United States today has only $13 billion in monetary reserves. Perhaps of gravest concern is the possibility that through investment some Middle Eastern countries may assert control over the domestic American energy industry itself with which it now competes.
Alaskan oil coming into production, Mr. Burns told me, would have a great psychological effect on any financial manipulations because it would begin reducing our steadily increasing dependence on Mideast oil. And, as he noted, Alaska is the only area in the Nation containing oil reserves in the amounts necessary to have this kind of favorable impact.
Here at home, our Nation is facing a serious energy emergency, and Alaskan oil can greatly ease that situation. The Trans-Alaska pipeline alone, for example, even at its present design capacity, could supply one-eighth of the oil that our Nation presently requires daily. I am convinced, as are many others, that tens of billions of additional barrels could easily be developed in northern and western Alaska.
The following statistics reveal how Alaskan oil could ease the Nation's growing energy problem. The United States is now using about 6 billion barrels of oil a year. Of that total, the Trans-Alaska pipeline could, at the planned production of 2 million barrels of oil a day, supply 730 million barrels a year, or about one-eighth of the required 6 billion barrel consumption. This Alaskan production would also reduce the U.S. balance-of-payments deficit by at least $2.5 billion a year.
Using the most conservative estimate regarding the amount of recoverable oil in the Prudhoe Bay field on Alaska's North Slope, that
one field alone could supply enough oil to meet the entire Nation's total requirements for nearly 2 years. Using the upper-range estimates of recoverable oil at Prudhoe Bay, production from that one field could meet the entire Nation's requirements for up to 4 years. It is important to remember that Prudhoe Bay is just one field. Lands in the vicinity also hold high promise for future years. The reserves of naval petroleum reserve No. 4 to the westward have no meaningful value without the construction of this line because of the years of leadtime otherwise necessary to bring that area into production.
To put Prudhoe Bay production into a more immediate perspective, it is estimated that approximately 114 million barrels of imported oil a day will be required this year to meet the west coast petroleum demand in district 5. If North Slope oil were available on the west coast this year, the executive branch could redirect this 114 million million barrels of oil a day to the more energy-starved Midwest without increasing the balance-of-payments deficit.
Alyeska Pipeline Service Corp., is ready to begin work on the TransAlaska pipeline within 90 days of an official go-ahead and will take between 21/2 and 3 years to have its line in operation. Engineering and construction of a Canadian line would take years longer than that.
Given growing energy demands all over our Nation, this means that the most effective way to ease the situation in the West as well as affording some relief to the Midwest is to build and operate the TransAlaska pipeline as soon as possible. Should any group subsequently wish to build another line from Prudhoe Bay and the McKenzie Delta area across Canada to the Midwest, or a transcontinental line from the west to east coast or any other additional transportation mode or route. Alaska would then give reasonable consideration to support such a proposal. It is possible that there will ultimately be found sufficient oil in northern Alaska and Canada to justify consideration of such a second line some years in the future.
As I indicated earlier, exploration of problems relating to the circuit court's ruling on the use of public land over pipeline right-of-way for construction purposes has brought to light the fact that construction activity has taken place in the past on Federal lands beyond the ultimate right-of-way and that it must do so in the future if modern facilities are to be built at all.
The court's decision means, in effect, that petroleum pipeline systems of contemporary design can no longer be built over Federal lands. This is an impossible situation. So long as the National Environmental Policy Act is applicable, providing for environmental cost-benefit analysis, no expanded restriction is necessary or desirable prohibiting such construction. It is especially serious in oil transportation questions involving the Western States and preeminently Alaska where the need for transporting fuel over long distances is great and where a large portion of the land area is held by the Federal Government.
The State of Alaska agrees with the circuit court when it said that Congress could amend the Mineral Leasing Act to eliminate the anomaly that the court read into it. Indeed, appropriate congressional action may be imperative. It will facilitate the construction of
other much-needed pipelines and electrical transmission lines throughout the Nation. This will help to meet the growing national need for energy, but it will do so in a way that still preserves the national responsibility for the environment.
Mr. Chairman, it is crucial to Alaska's future well-being as well as the Nation's that the Trans-Alaska pipeline project move ahead.
When Alaska became a State in 1959 it did not have the extensive agriculture, manufacturing, transportation, industry, trade, and commerce, and population that have been the greatest sources of revenues to other States in our Nation. In conferring statehood, Congress acted recognizing that Alaska could become a self-sustaining economic unit only by the careful management and timely develop ment of her rich natural resource potential. The promise of statehood was not only a promise that Alaskans would be free from the yoke of a territorial form of government in shaping their destiny; it was also a promise by Alaska to the Federal Government that Alaska could develop her resources wisely, so that she would not always be the poor stepchild of the States, but could stand on her own, independent of an extraordinary amount of Federal support.
While we have made a substantial amount of progress toward that end since 1959, the need for providing Government services, both State and Federal, remains particularly acute in Alaska. The very lack of the usual agricultural, commercial, and industrial underpinnings of a modern economy has resulted in a continuing battle against unemployment, poverty, and human misery, as well as a continuing effort to offer all Alaskans the opportunity to have a quality of life equal to that available in the other States.
By Social Security Administration standards, 14 percent of Alaskan families, and 50 percent of Alaska's Native families had incomes below the poverty level in 1969. Alaska remains an Arctic and subArctic area, generally undeveloped economically in comparison to the rest of the country, in which much remains to be done.
Over the years, the State's expenditures have grown under the pressure of human needs that cannot be met except by Government. Education, the administration of justice and welfare absorb more than 75 percent of the State's budget. Alaskans are not slow to make their own out-of-pocket contributions. Alaska's State income tax, for instance, is fully 16 percent of the Federal level. Under pressure from the transfer of responsibilities borne by the Federal Government before statehood, the annual general fund expenditures of Alaska's State government have grown from $41 million in 1959 to more than $300 million in 1972. Without adding any significant new programs, that figure is projected to reach $581 million in 1981, merely to meet inflation and population growth.
In itself that may not seem either impressive or serious to those of you familiar with the budgets of larger States. But because of Alaska's general lack of a developed, diversified economy upon which to build a tax base, it has meant a serious problem for us since 1969, a problem that threatens to grow worse at a perilous rate as construction of a Trans-Alaska pipeline is postponed.
Since 1969 there has been a growing gap between State expenditures and the State's recurring revenues, generated by State taxes and fees.
In the current year alone, Alaska is operating with a $118 million deficit. This growing deficit is being financed with the principal and interest in the $900 million the State received in the 1969 North Slope oil lease sale. But the principal is declining, the amount of interest income shrinking, and the deficit growing at an inevitably alarming rate. If the deficit continues to grow as projected, the State's ability to offset it with money from bonus sale fund will be extremely precarious in the later part of 1977.
We have been hoping that we would be relieved of a budgetary catastrophe by revenues from the State's royalty interest in and soverance tax on North Slope oil. To realize those revenues within the next few years, the Trans-Alaska pipeline must be built and put into operation, moving North Slope oil to market. Delay in construction of the line increases the danger-eventually to the point of a certainty—that Alaska will be forced into a fiscally intolerable position.
At the present moment, substantial reduction in State expenditures is nearly unthinkable, for Alaska's already serious problems are aggravated by cutbacks and threatened further cutbacks in Federal spending. Revenue sharing does not provide anything near the amount Alaska needs in Federal support of human resource programs. The Nation's largest State is also the least populous with the highest per capita costs. Revenue sharing and the proposed so-called special revenue sharing in place of categorical grants would leave Alaska, large in area and needs, with an untenable reduction in funding necessary to meet those needs.
As only one example, we appear to face a cut of perhaps $12 million to $14 million in Federal impact funds for education. If educational programs and other vital programs are only to be maintained at their present level, Alaska must pick up the slack and spend more, not less, in the near future. Whatever our budgetary hopes, our State's economy remains closely tied to the Federal budget, and we suffer more than other States in a period of wholesale Federal budget reductions.
Delay in construction of the Trans-Alaska pipeline will force painful cuts in many vital areas where human needs are only beginning to be met adequately. Delay will also reduce the revenues that the State ultim receives, since the State's North Slope revenues are calculated on “well-head value," which is the price of oil at the refinery, less the cost of transporting it from the North Slope to market. Delay in construction, with its attendant increases in the expected cost of construction, has already shrunk of the revenues that the State can fairly expect, and the amount could become still less as further delay forces pipeline costs higher.
Finally, Alaska's neediest-probably the Nation's neediest-group will suffer particularly from further delay in constructing the pipeline. I am speaking of Alaska's Natives. Under the Alaska Native Člaims Settlement Act, our State's Native peoples are to receive $500 million from the State as part of the extinguishment of their aboriginal land claims. This sum is to be paid from a 2 percent overriding royalty on States leases of mineral resources, including the North Slope oil resources.
Under current plans Alaska's Natives would realize $5,575,000 from the North Slop oil production in fiscal year 1976, $21,625,000 in fiscal
93-145 0 - 73 - 8