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year 1977, and $27,273,000 in fiscal year 1978. Considering the past pace of progress on the project, a delay in production until at least fiscal year 1977 is a reasonable estimate. This means a postponement of $5,575,000 of their anticipated income over the expectation of a year ago. A 2-year delay would mean the postponement of $27,200,000, while a three-year delay
would amount to $54,473,000. Alaska's Native groups have already begun to organize effectively to take greater control over their own future and to improve the lot of some of their people. You cannot really appreciate the conditions in which some rural Alaskans live unless you have seen them, as you have Senator Jackson; poor housing, no running water or sewers, no electricity, an inadequate diet gained mostly from subsistence hunting and fishing. A delay in receiving anticipated North Slope revenues puts a serious strain on these people's hopes of improving their own condition. Each additional year will seem twice as long as the year before, while the amount of the deferred income shrinks and is able to buy less and less. The congressional commitment to Alaska's Natives in the Alaska Native Claims Settlement Act is a commitment to reasonably prompt mineral production as we testified to in hearings on the Settlement Act so that these people may start to receive a more useful share of the compensation due to them.
While, as I said earlier, I do not think the Canadian route is germane to the legislative purpose recommended to this committee, since it will come up some note might be made of the impact on Alaska of the Canadian route proposal. First of all, the effects of delay on State finances and on moneys due Alaska's Natives would be magnified tremendously. The engineering for a line three times as long as the TransAlaska pipeline has not even been started, let alone completed. The actual time of construction would be greater, and the possibility of delay while the claims of Canadian natives to aboriginal title are resolved could protract. things even further. A Canadian line might well take as much as 7 years longer to come into use than the TransAlaska line.
There are also other effects besides those caused by delay. It is a certainty that Canada will require a substantial part of the capacity
Trans-Canadian line for Canadian oil. Some Canadian officials have said that part will be 51 percent, so that Canada may retain control of the line. This would mean that the maximum flow of Alaskan oil to the United States could be held to 49 percent of the pipeline's capacity.
This lower capacity would mean a lower rate of North Slope production, yielding Alaskan Natives and the State of Alaska perhaps half the yearly amount of revenue now anticipated, over twice as long a period of time. For the State, this would further aggravate a potentially precarious fiscal position.
In addition, the cost of a Canadian oil line will be much higher than one crossing Alaska, since the length is far greater and much of the terrain is similar to the most costly segment of the Alaskan line, the Permafrost Crossing. Mr. William P. Wilder, chairman of Canadian Arctic Gas Study Ltd., in late February put the price of a gasline from the North Slope and the MacKenzie Delta to the United States
at $5 billion. Because of the different thermal and hydraulic characteristics, an oil pipeline can be expected to cost much more. The State has estimated the cost of a Trans-Canadian oil line at between roughly $7.5 billion and $8 billion. Since the market price for oil in the Midwest is not enough higher than the west coast to offset the much greater cost of such a line, this can only have a negative effect on the State's and the Native's anticipated revenues from North Slope production. A higher transportation cost, deducted from an only slightly higher market price, means significantly less revenue because of the manner in which royalty and severance tax are calculated.
Mr. Chairman, I was pleased to see that the press noted the announcement of your introduction of general legislation to an energy transportation corridor network in the United States. It is certainly in keeping with your continuing work in the formulation and articulation of national energy policy and other work on materials policy upon which the future of our children depends. This effort is of invaluable significance to the Nation, and a national corridor program deserves careful consideration.
It is my hope as we move toward these ultimate goals and their implementation that the existing process for making development decisions, complex, sensitive, and laborious as it is, will not choke up before we have a working, comprehensive substitute. The technical and restrictive interpretation by the circuit court of the Secretary's special land-use permit authority has had such a choking effect. We now need your help in removing this impediment without disturbing the process of environmental review and without ad hoc disruption of the market allocation process.
I appreciate the opportunity of being able to appear before you here today to discuss this matter, which is so very crucial to Alaska's future well-being and has implications for the well-being of the Nation as a whole.
If you have any questions I will be happy to answer them.
I want to say again, Mr. Chairman, that I hope the remarks I have made-I hope it is understood that they are in the context for the need to the amendment of the 1920 Mineral Leasing Act.
Mr. Chairman, I have Senator Clifford Groh, who is the chairman of our State Senate Finance Committee, and I wonder if he could be heard as a courtesy.
Senator HASKELL (presiding). Certainly. STATEMENT OF CLIFFORD GROH, CHAIRMAN, ALASKA SENATE
FINANCE COMMITTEE Mr. GROH. Thank you, very much.
I will only take a very few minutes, as a designated representative of the legislature of the State of Alaska, to add the weight of State legislative opinion to what Governor Egan has stated so well.
The mood throughout the State, reflected in unanimous State legislature opinion, is frustration with seemingly endless procedural obstacles which bear little visible relation to the environment and carry the suspicion of invisible relation to economic forces inimicable to Alaska.
We will continue to comply with the procedures of the Environmental Policy Act as interpreted by the courts for so long as this seems reasonable to you and the Nation, but we need your helping hand now in removing a technical obstacle which has been discussed.
I hope that that can be done cleanly and quickly without accidentally raising new obstacles of interpretation, but this is certainly a matter for your expert legislative judgment
Let me assure you that the people of Alaska and we in the State legislature will be deeply grateful for anything you can do to bring this project to a safe and early fruition.
I can only add parenthetically, as the Governor has, that with the problems that we have in Alaska, which are very substantial, and we plead with many of my environmentalist friends legislating these issues to come to Alaska and help us endeavor to develop that country rather than do it in the courts here.
Thank you, very much.
To block a project merely because of a 25-foot limitation put in, in 1920, doesn't seem reasonable.
I am making absolutely no judgment at all on the relative merits of the Alaskan pipeline versus any other pipeline.
We have four bills before us two by the administration, one by Senators Fannin and Hansen, and one by Senator Jackson.
I understand, Governor, that somebody from your office will submit for the record a technical analysis of these bills and recommendations.
Mr. Egan. Yes, we have with us today John Havelock, the attorney general. He will evaluate all the bills from the technical standpoint.
Senator HASKELL. Thank you very much, Mr. Havelock, have you anything you would like to say?
Mr. HAVELOCK. No, sir; I think it would be better if I submitted a written statement within the next few days.
Senator HASKELL. We would appreciate it very much.
[Subsequent to the hearing Mr. Havelock submitted the following statement:]
March 27, 1973
U. S. SENATE COMMITTEE ON INTERIOR AND INSULAR AFFAIRS
STATEMENT OF JOHN E. HAVELOCK
ATTORNEY GENERAL FOR THE STATE OF ALASKA
ON S. 1041, TITLE IV, AND ON S. 1081.
As Alaska's Governor William A. Egan advised the
Committee in his testimony of March 9, the State of Alaska
has significantly more at stake in the deliberations on these bills than does any other state. Continuing delays
on the Trans-Alaska Pipeline System ("TAPS") are having a
crippling impact upon the State's revenue position and upon its ability to plan coherently for the future.
We feel that the Committee's several objectives in preparing amendatory legislation need examination and
separate articulation. The first legislative priority
at this time is to correct what we view as
tation of the Secretary's authority under existing law
by the United States Court of Appeals for the District of
Columbia Circuit which has blocked the construction of
critical pipeline facilities and threatens other utility projects which must traverse federal lands. Such an act should also be designed to protect existing pipelines occupying federal rights-of-way whose legal basis may be
jeopardized by the recent Circuit Court decision.
There are a number of other laudable objectives
which are evidently under consideration.
It is undoubtedly
true that the accumulated laws of the past century with
respect to the authority of the Secretary of Interior and of other departments to grant right-of-way interests
in public land are in need of revision, a painstaking task
requiring a careful review of those laws and a myriad of
that the nation would be well served by the establishment
of a system of energy and right-of-way corridors throughout
the nation in the interest of conservation.
Each of these
greater policy issues engages a variety of interests and
concerns that is unique.
Each stretches well beyond the need
of getting the Trans-Alaskan Pipeline project underway.
We are concerned that the fate of the Trans-Alaskan
Pipeline may be caught up in the engagement of differing
views and national interests to which it is only tangentially
On the other hand, we are concerned that if
their fortunes are tied together, hastily considered national
policies of great long term import will, from the urgency of TAPS, be carried into law. Nor is it appropriate to view