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Secretary of Interior to make public the data and analyses supporting his decision to issue the pipeline permits, and has allowed scientists,

environmentalists, economists, and others to scrutinize the data and the


As a result several serious questions have been raised about the

Impact Statement, and the Secretary's decision has been sharply questioned

on several grounds.

I wish to emphasize three major points with respect to the Impact


First, despite its limitations, the data and information

contained in the Impact Statement have made a substantial contribution to

public debate on this issue.

The Impact Statement is th

most important

single source of information on the proposed pipeline and its likely

environmental and economic effects.

To illustrate the importance and

significance of the Impact Statement, I would call your attention to my

review and evaluation. My analysis was based primarily on data from the

Impact Statement, yet I reached quite different conclusions, namely: that

a weighing of all environmental factors together favored development of a

Canadian corridor over TAPS: and that a weighing of economic and security

factors also tended to favor the Canadian corridor.

This second conclusion was highly tentative, however, because of a

major shortcoming of the Impact Statement. My second major point is that

the Impact Statement was inadequate in its consideration of alternatives

to TAPS.

Specifically the most glaring weakness is the absence of data

and analysis concerning a common corridor through Canada for both oil and

natural gas pipelines. This appears to be an attractive alternative. And

on the basis of the data in the Impact Statement, one cannot rule out the

possibility that the common corridor through Canada might be superior to

TAPS on both environmental and economic grounds.

Third the Impact Statement fails to meet the NEPA requirements in that

it does not integrate environmental and economic information and analysis.

NEPA requires both a careful analysis of the economic benefits and costs

and a comparison and weighing of the economic gains with the environmental


The economic analysis in the Impact Statement is haphazard and in

many places plain wrong; and there was no effort made to bring the economic

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framework was to show what kinds of additional information were most

critically needed in order to arrive at sound decisions which could permit

the appropriate development of economic resources and provide maximum pro

tection of environmental values.

Now that the pipeline issue appears to have come to Congress for its

ultimate resolution, Congress has a unique opportunity to compiete the

important work begun in the Impact Statement.

It can assure that no final

decision is made until the most relevant alternatives, especially the common corridor through Canada, are given thorough, searching and unbiased


In the spirit of NEPA, Congress can require that it be presented

with adequate information on the relevant alternatives, and that this

information be presented in a framework which facilitates comparison, and

Identifies the crucial tradeoffs.


One step in the application of an integrated analytical framework

is the summarization of data on environmental damages and risks. Ideally

one would want a single index or measure

of environmental hart for each


But in reality there are many forms of non-commensurable

environmental damages.

The principal environmental hazards of an artic

pipeline are related to the wilderness character of the territory to be

traversed, the fragile nature of the ecological systems, and the uncer

tainties and risks associated with constructing and operating a pipeline

carrying hot oil across permafrost and through earthquake zones.


further concern has been the threat of oil pollution associated with tanker

and terminal operations and possible disasters of the Torrey Canyon


The Alaskan and Canadian routes are quite different in the kinds of

environmental damages and risk associated with them.

In attempting to

Talk the two routes on the basis of environmental harm, ore must weigh the

greater overland distance of the Canadian route and the dijruption associa

ted with it against the hazards of marine transportation and the risks of

earthquake damage accompanying TAPS.

The Department of Interior's own
The Impact Statement concluded that,

analysis reflects these difficulties.

"No single generalized route appears to be superior in all (environmental)

respects to any other." However in all but one of six categories of

environmental harm, the Impact Statement ranked the Canadian alternative

above TAPS.

The issue reduces to how important is the one category

favoring TAPS relative to the five categories favoring the Canadian route?

In my Evaluation I developed a framework which can help decision

makers such as Congress make informed judgments on questions such as


I identified the effects of marine oil pollution from tanker

operations and the threat of earthquake damage to the pipeline as the

critical factors affecting the relative ranking of TAPS and the Canadian

route on the basis of environmental risk.

Since the Canadian route had

no tanker phase, and did not traverse a seismic zone, it was strongly

preferred on these two factors.

And as a consequence, one had to place

a very low weight on these factors in order to justify a judgment that

TAP was preferred to the Ca

ian route on environmental grounds.

other words, unless one was willing to say that marine oil pollution and

earthquake hazards were un important elements of environmental damage, he

was compelled to favor the Canadian route.


My economic analysis of the two alternatives focused on four main


the net economic benefits or resource savings, differences in

national security, the economic costs of delay, and impacts on the balance

of international payments.

The net economic benefit or resource cost

saving is the difference between the resource cost of delivering Mid-East

oil to a particular market and the

st of delivering an

amount of

Alaskan oil to the same point. For both routes, the cost of delivering

Alaskan oil is substantially below the cost of the imported oil it would

replace indicating substantial economic benefits from development. The

relevant question is which alterative has the higher net economic benefit

95-290 O. 73 - 14

for society. Although the cost of delivering Alaskan oil to the Mid

West is greater than the cost to the West Coast, the cost of the imported

alterative is higher in the Mid-West, too.

And although there is great

uncertainty in the data, on the basis of the figures provided in the Impact

Statement, the net economic benefits of the alternatives are approximately

equal, with a possible slight preference going to the Canadian route.


might add that my colleague, Professor Charles Cicchetti has made a year

long study of this issue.

And on the basis of independent data and a more

careful analysis than is possible with the data in the Impact Statement, he

has concluded that the Canadian route is definitely superior to TAPS on

economic grounds.

There are two points to be made concerning this conclusion.


first is that there has been no adequate analysis of the economics of

a common corridor for oil and gas.

It seems likely that the cost of

the oil pipeline would be reduced if the oil and gas lines could be

built through the same corridor.

If this is so, the economic superiority

of the Canadian route would be well established.

As I said before a

major shortcoming of the Impact Statement is that it did not analyze

this possibility.

The second point concers the likelihood that the Canadians would

require that part of the capacity of the line be reserved for Canadian oil.

This would in no way alter the economic benefits per barrel of oil delivered

to the U.S.

If the full capacity of the pipeline cannot be used for Alaskan

oil, the relevant question becomes:

should additional capacity be planned

and built along the same corridor?

The answer is probably "yes". The present

plan for TAPS does not call for full use of pipeline capacity until the 8th

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