Page images

Alaskan oil is one such indigenous resource.

It is available, and

although it will not, by itself, solve our long-term petroleum supply problem it

nonetheless is a major new domestic reserve.

Naturally, it is a competitor of coal

and we must be prepared to meet it in the market place. It is domestic competition, however, and the alternative more foreign oil is a circumstance we believe

is clearly not in the public interest.

Our basic concern here is the recent decision by the Circuit Court of

Appeals for the District of Columbia which has blocked the timely development of

an essential domestic energy resource.

The thrust of that action is clearly at

odds with the best interests of energy consumers, the nation's fuel industries,

their employees, and we believe, the nation at large.

The action of the court in this case is directly parallel to similar

actions taken against the energy industries in recent years.

For example, there

is currently pending before the U.s. Supreme Court a lower court ruling which,

if upheld, would prevent the construction and operation of coal fired power plants.

Combined with other events, such as the non-degradation suit now before

the Supreme Court, the Alaskan oil pipeline decision could severely cripple

America's indigenous energy resource base.

As the members of this committee are

well aware, such a series of events would place this country in a subservient role

to foreign fuel suppliers, thereby subjecting the security of our energy supply

to the whims of foreign nations, and the uncertainties of international politics.

In many respects, coal, oil, natural gas, uranium, oil shale, and

water power are inextricably intertwined as part of the energy ba se upon which

America must grow.

That is why we are here today in support of legislative efforts to

permit the timely construction of the Alaskan pipeline.

For the record we have attached a statement by the associations

representing America's major fuel interests.

This statement sets forth the

elements which we feel should be included in a unified energy program.

This was done because the associations involved recognized a mutual

interest in indigenous resource development even though we must and should

compete for our individual shares of America's energy market.


We would now like to comment upon bills being considered by the

committee today.

We agree with and urge passage of legislation which would allow the

use of sufficient land to permit the construction, operation, and maintenance

of new pipelines across federal lands.

Such construction and operation

should be within the context of proper environmental safeguards. We do not

profess to be experts in what those safeguards should be, nor can we suggest

to you what must be done to protect the environment in the instance of the pipeline

under discussion.

We do believe, however, that narrowly construed width

restrictions do not justify forestalling the development of needed energy distribution


Coal, 11ke all other forms of energy which have the potential to be

transported by pipeline, must concern itself with the apparent initial intent

of this legislation, mainly that of recognizing that in most instances the 50-foot

"right-of-way" is insufficient to cope with construction equipment and techniques

for any pipeline of reasonable size.

We would like to comment briefly on certain specific sections of S. 1081.

Without certain revisions, we believe the legislation as it is now written can

have a serious and adverse long-term impact on the viability of the developing

coal industry, especially in the West.

The act gives inordinate power to the Secretary of the Interior to

a pprove and renew "right-of-way" licenses.

As such, the entire economic structure

upon which transportation systems are based rests solely with the discretion of

the Secretary.

For example, in Section 7(a) the Secretary may suspend or terminate

any "right-of-way" grant if he feels such action is "appropriate." Obviously,

potential investors in coal gasification, coal liquefaction, and mine-mouth

power stations will require more certainty than this if they are to invest the

huge long-term capital needed for such plants.

The vital importance of "tenure of lease" is evident when the financial

requirements of a single coal gasification project are considered.

One plant and

ancillary facilities will cost more than $400 million with a life expectancy of

20 to 30 years.

This magnitude of investment will be impossible to obtain if the

transportation of the gas produced can be shut off by regulatory fiat.

In addition, the holders of "right-of-way" must bear full liability

under Section 5(8) for any damage incurred in connection with the activities

conducted on the "right-of-way." While we do not suggest that the public and

government should not be protected against personal and property losses, we feel that such liability should be limited. For example, there is no provision for

limitation because of war, insurrection, a clear-cut act of God, or other such

11mitations standard in most Insurance policies.

Section 3(c)(1) adds the words "and other lands." This subsection

would vest new authority in the Secretary over all forms of energy produced on

state or private lands without establishing guidelines or standards for the

exercise of that authority. He could determine the proportionate

hares of

non-federal energy that must be transported for each shipper, even if the line

crossed a relatively small area of public land.

This new authority duplicates

the jurisdiction of the Interstate Commerce Commission and the Federal Power

Commission to prevent unlawful discrimination and preferences and could cause

legal conflicts between the agencies.


The immediate question before this committee today is the construction

of the trans-Alaskan oil pipeline. This is a matter which must be resolved

expeditiously so that the vast oil reserves of the Prudhoe Bay area can be made

available to American consumers.

We fully support expeditious action on this particular problem as part

of a national program for indigenous energy resource development.

However, the bill introduced by Senator Jackson, S.1081, addresses

itself to a much broader problem than the trans-Alaskan pipeline. The bill's scope extends to the development of every energy resource which must be transported

across federal lands and even, in certain instances, across state and private


The ramifications of this extension are far reaching and touch the very

vitals of every form of energy in the U.S., raising questions of broad public policy.

At 18 sue certainly 18 the environmental impact of transmission systems. Such impacts should be evaluated with the aim of protecting America's environment

and, equally important, developing our indigenous resources.

[blocks in formation]

economic and political structure within which resource development will take place

and the legal parameters which will impinge upon and direct the thrust of resource


In addition, legislation of this scope, unless extremely carefully

drawn, could result in a proliferation of endless legal actions with the

resultant critical delays to indigenous resource development.

What is before you, therefore, is whether or not America can develop

her vast indigenous energy resources, how those resources will be developed and

the production, distribution and consumption patterns which will maximize resource

value in the national interest.

On the basis of the foregoing, the National Coal Association recommends

the following program:

First, specific legislation should be passed promptly to correct the

Court of Appeals restricted interpretation of Section 28 of the Mineral Leasing

Act by permitting the use of such areas as are necessary to construct pipelines.

In addition, as an alternative to tying broad policy issues involved

in the movement of energy across federal lands to the immed late issue

of the

Alaskan pipeline, we suggest that the National Academy of Sciences or the National

Academy of Engineering should be directed to undertake a detailed interdisciplinary

study of all the ramifications involved in the transportation of energy resources

across federal lands. This study should delve into all of the points we have

discussed above, including but not limited to the economic, political, legal,

sociological and environmental consequences of such distribution.

Its findings

should be made available to all responsible congressional committees, to

governmental agencies involved in land use planning, to persons concerned primarily

with environmental impact and to affected industries. Input to this study

should be sought from government, both state and federal, industry, and environmental

groups, along with others, so that a proper empirical framework and rationale for

future regulatory action can be established.

The National Coal Association offers our fullest cooperation to

this committee and others involved in this all-important endeavor.

« PreviousContinue »