[House Report 104-139]
[From the U.S. Government Publishing Office]
104th Congress Rept. 104-139,
HOUSE OF REPRESENTATIVES
1st Session Part 1
_______________________________________________________________________
EXPORTS OF ALASKAN NORTH SLOPE OIL
_______________________________________________________________________
June 15, 1995.--Committed to the Committee of the Whole House on the
State of the Union and ordered to be printed
_______
Mr. Young of Alaska, from the Committee on Resources, submitted the
following
R E P O R T
together with
ADDITIONAL AND DISSENTING VIEWS
[To accompany H.R. 70]
[Including cost estimate of the Congressional Budget Office]
The Committee on Resources, to whom was referred the bill
(H.R. 70) to permit exports of certain domestically produced
crude oil, and for other purposes, having considered the same,
report favorably thereon with an amendment and recommend that
the bill as amended do pass.
The amendment is as follows:
Strike out all after the enacting clause and insert in lieu
thereof the following:
SECTION 1. EXPORTS OF ALASKAN NORTH SLOPE OIL.
Section 28 of the Mineral Leasing Act (30 U.S.C. 185) is amended--
(1) by amending subsection (s) to read as follows:
``exports of alaskan north slope oil
``(s)(1) Subject to paragraphs (2) through (6) of this subsection and
notwithstanding any other provision of law (including any regulation),
any oil transported by pipeline over right-of-way granted pursuant to
section 203 of the Trans-Alaska Pipeline Authorization Act (43 U.S.C.
1652) may be exported unless the President finds that exportation of
this oil is not in the national interest. In evaluating whether the
proposed exportation is in the national interest, the President--
``(A) shall determine whether the proposed exportation would
diminish the total quantity or quality of petroleum available
to the United States;
``(B) shall conduct and complete an appropriate environmental
review of the proposed exportation, including consideration of
appropriate measures to mitigate any potential adverse effect
on the environment, within four months after the date of the
enactment of this subsection; and
``(C) shall consider whether anticompetitive activity by a
person exporting crude oil under authority of this subsection
is likely to cause sustained material crude oil supply
shortages or sustained crude oil prices significantly above
world market levels that would cause sustained material adverse
employment effects in the United States or that would cause
substantial harm to consumers in noncontiguous States.
The President shall make his national interest determination within
five months after the date of enactment of this subsection or 30 days
after completion of the environmental review, whichever is earlier. The
President may make his determination subject to such terms and
conditions (other than a volume limitation) as are necessary or
appropriate to ensure that the exportation is consistent with the
national interest.
``(2) Except in the case of oil exported to a country with which the
United States entered into a bilateral international oil supply
agreement before November 26, 1979, or to a country pursuant to the
International Emergency Oil Sharing Plan of the International Energy
Agency, any oil transported by pipeline over a right-of-way granted
pursuant to section 203 of the Trans-Alaska Pipeline Authorization Act
(43 U.S.C. 1652) shall, when exported, be transported by a vessel
documented under the laws of the United States and owned by a citizen
of the United States (as determined in accordance with section 2 of the
Shipping Act, 1916 (46 U.S.C. App. 802)).
``(3) Nothing in this subsection shall restrict the authority of the
President under the Constitution, the International Emergency Economic
Powers Act (50 U.S.C. 1701 et seq.), or the National Emergencies Act
(50 U.S.C. 1601 et seq.) to prohibit exportation of the oil.
``(4) The Secretary of Commerce shall issue any rules necessary for
implementation of the President's national interest determination
within 30 days of the date of such determination by the President. The
Secretary of Commerce shall consult with the Secretary of Energy in
administering the provisions of this subsection.
``(5) If the Secretary of Commerce finds that anticompetitive
activity by a person exporting crude oil under authority of this
subsection has caused sustained material crude oil supply shortages or
sustained crude oil prices significantly above world market levels and
further finds that these supply shortages or price increases have
caused sustained material adverse employment effects in the United
States, the Secretary of Commerce, in consultation with the Secretary
of Energy, may recommend to the President appropriate action against
such person, which may include modification of the authorization to
export crude oil.
``(6) Administrative action under this subsection is not subject to
sections 551 and 553 through 559 of title 5, United States Code.''; and
(2) by striking subsection (u).
SEC. 2. GAO REPORT.
(a) Review.--The Comptroller General of the United States shall
conduct a review of energy production in California and Alaska and the
effects of Alaskan North Slope crude oil exports, if any, on consumers,
independent refiners, and shipbuilding and ship repair yards on the
West Coast and in Hawaii. The Comptroller General shall commence this
review two years after the date of enactment of this Act and, within
six months after commencing the review, shall provide a report to the
Committee on Energy and Natural Resources of the Senate and the
Committee on Resources of the House of Representatives.
(b) Contents of Report.--The report shall contain a statement of the
principal findings of the review and recommendations for Congress and
the President to address job loss in the shipbuilding and ship repair
industry on the West Coast, as well as adverse impacts on consumers and
refiners in Hawaii, that the Comptroller General attributes to Alaska
North Slope crude oil exports.
Purpose of the Bill
The purpose of H.R. 70 is to permit exports of certain
domestically produced crude oil.
Background and Need for Legislation
In 1973, contemporaneously with the Arab-Israeli War and
the first oil embargo, Congress adopted the Trans-Alaska
Pipeline Authorization Act, which authorized construction of a
pipeline to move the oil from Alaska's North Slope to an
accessible port at Valdez, Alaska. The legislation also
established export restrictions on all domestically produced
crude oil carried over a Federal right-of-way by adding a new
section 28(u) to the Mineral Leasing Act (MLA). As amended, the
MLA permitted exports of domestically produced crude oil--
including Alaskan North Slope (ANS) crude oil--only if the
President determined the exports would be in the national
interest, would not diminish the total quality or quantity of
petroleum available to the United States, and would be done in
accordance with licensing provisions of the Export
Administration Act of 1969.
In 1979, following the second major oil shock, Congress
effectively banned exports of ANS crude oil. Today, ANS crude
oil is the only domestically produced crude oil subject to an
export ban. As a result, Alaska--the largest oil producing
State in the nation--is the only one subject to an export ban.
The world oil situation has changed fundamentally since the
1970s when the United States faced continuing supply threats.
In 1973, for example, Middle East countries boycotted the
United States at the outbreak of the war. Thereafter, OPEC was
able to ratchet up prices repeatedly, as demand for oil seemed
essentially inelastic and energy demand appeared to be growing
geometrically. The enormously flexible U.S. economy, however,
reacted to the anticipated shortage through rapid gains in
energy efficiency. Net imports of oil actually declined between
1978 and 1993. Not until last year did imports surpass the
previous all-time high, principally as a result of falling
domestic oil production.
At the same time that demand pressure moderated, world
crude oil supplies greatly expanded and diversified. The United
States established a Strategic Petroleum Reserve, which today
contains nearly 600 million barrels of crude. Moreover, a
pronounced shift towards more reliable sources of supply
occurred. The United States, for example, no longer imports any
crude oil from Iran, Iraq or Libya. Today, Canada and Mexico
are among our largest suppliers. In short, the United States no
longer faces the supply threats that it faced in the 1970s.
Today, approximately 1.6 million barrels of crude oil are
carried daily through the Trans-Alaska Pipeline System. The
majority of oil is carried by tanker to the West Coast and
Hawaii. With the ban in place, the surplus must be delivered to
the Gulf Coast, the Midwest, and the Virgin Islands. The added
cost of moving the oil this considerable distance reduces the
net payback to producers in Alaska. The export ban also creates
a glut on the West Coast market, depressing the price of ANS
crude and heavy oil produced in California. Although not
intended, the export restrictions have actually reduced
domestic production by discouraging production in Alaska and
California.
North Slope production has now entered a period of
sustained decline. As a result, many of the tankers built at
considerable expense to carry the oil to market are laid up or
headed for the scrap heap. With increased production in Alaska
and California, these militarily useful tankers would have new
employment opportunities, as would the skilled mariners who
crew the vessels. Moreover, shipbuilding and ship repair yards
on the West Coast would have new business opportunities.
In an effort to ascertain whether authorizing ANS exports
would be in the national interest and to quantify the benefits
(as well as possible costs) of lifting the ban, the Department
of Energy conducted, in June 1994, a comprehensive study and
issued a report. In ``Exporting Alaskan North Slope Crude Oil--
Benefits and Costs,'' the Department concluded that ``there
would be a significant number of benefits from allowing the
export of ANS crude.'' By the end of the decade, those benefits
would include: increasing domestic oil production by up to
110,000 barrels per day, creating up to 25,000 oil industry
related-jobs, preserving as many as 3,300 direct and indirect
maritime jobs, and raising approximately $2 billion in Federal
and State revenues. The Department concluded that ``[l]ittle,
if any, increase in consumer petroleum prices would be likely''
and stated that ``[n]o significantly negative environmental
implications were found.'' The Department specifically found
that ``[l]ifting the ban will reduce overall tanker movements
in U.S. waters.'' The Department, however, did find that
independent refiners on the West Coast were expected to incur
slightly higher crude oil acquisition costs as the West Coast
surplus eased.
The Committee concurs with the Department's findings with
respect to West Coast refiners. These refiners often purchase
ANS crude on the spot market, below world market prices, at as
much as a $3 per barrel discount and do not pass the savings on
to consumers. The Committee, therefore, does not feel that it
is inappropriate that West Coast refiners incur higher crude
oil acquisition costs.
In the view of the Committee, the ban no longer makes
sense. By authorizing exports, Congress could spur domestic
energy production, create or preserve jobs, help maintain an
independent tanker fleet essential to national defense, raise
State and Federal revenues, and reduce our nation's net
dependence on imports. The Committee believes exports of ANS
crude are in the national interest. The Committee therefore
urges the President to make the required findings and his
national interest determination as quickly as possible
following enactment of the legislation.
Committee Action
H.R. 70 was introduced on January 4, 1995, by Congressmen
Thomas, Young of Alaska, Rohrabacher, Doolittle, Dooley,
Gallegly, and Archer. The bill was referred to the Committee on
Resources. On May 9, 1995, the Committee held a hearing on H.R.
70, at which Congressman Thomas, the Administration, the State
of Alaska, oil producers, maritime labor, and others testified
in favor of the bill. Representatives of independent refiners,
shipbuilders, and a refinery union testified in opposition. In
expressing general support for the bill, the Administration
indicated that it should be amended (1) to provide for an
appropriate environmental review; (2) to allow the Secretary of
Commerce to sanction any anti-competitive behavior by
exporters; and (3) to establish a licensing system.
On May 17, 1995, the Full Resources Committee met to mark
up H.R. 70. An amendment in the nature of a substitute was
offered by Congressman Dooley and Tauzin. Eight amendments were
offered to the amendment in the nature of a substitute.
By voice vote, the Committee adopted an amendment offered
by Congressman Abercrombie that would require the President, in
making his national interest determination, to consider whether
anti-competitive activity by a person exporting ANS crude oil
is likely to cause sustained material crude oil supply
shortages or sustained crude oil prices significantly above
world market levels that would cause sustained material adverse
employment effects in the United States or that would cause
substantial harm to consumers in noncontiguous States. The
Committee is sensitive to concerns that consumers in Hawaii
might face slightly higher gasoline prices. The Committee
therefore felt it appropriate to require the President to
undertake this analysis prior to making his national interest
determination.
By a voice vote, the Committee adopted an amendment offered
by Congresswoman Smith of Washington to require the Comptroller
General to conduct a study to review energy production in
California and Alaska as well as the effects of ANS exports, if
any, on consumers, independent refiners, shipbuilding and ship
repair yards on the West Coast and in Hawaii. Based on the
testimony received at the hearing, the Committee is of the view
that enactment of the bill is likely to provide more ship
building and repair work than would be lost with declining ANS
production. Recognizing the concern in particular of Members
from the Pacific Northwest and Hawaii, the Committee felt it
important that an independent examination be conducted, but not
until the market has had a reasonable opportunity to adjust to
exports.
Congressman Miller of California, Congressman Metcalf, and
Congressman Abercrombie offered an amendment that would have
required additional licensing procedures and conditions.
Congressman Vento offered an amendment which would have
required a formal environmental impact statement be completed
before exports occurred. Congressman Abercrombie offered an
amendment which would have explicitly required the use of U.S.-
built vessels to carry ANS exports. All three amendments failed
on a voice vote. In addition, Congressmen Miller of California,
Metcalf and Abercrombie offered an amendment which would have
imposed a volume limitation on exports. The amendment was
defeated by a rollcall vote of 11-24, as follows:
h.r. 70--miller amendment no. 1
----------------------------------------------------------------------------------------------------------------
Yeas Nays Present Yeas Nays Present
----------------------------------------------------------------------------------------------------------------
Mr. Young (Chairman)..... ........ X ........ Mr. Miller............... X ........ ........
Mr. Hansen............... ........ X ........ Mr. Rahall............... ........ ........ ........
Mr. Saxton............... ........ X ........ Mr. Vento................ X ........ ........
Mr. Gallegly............. ........ X ........ Mr. Kildee............... X ........ ........
Mr. Duncan............... ........ ........ ........ Mr. Williams............. ........ ........ ........
Mr. Hefley............... ........ X ........ Mr. Gejdenson............ X ........ ........
Mr. Doolittle............ ........ X ........ Mr. Richardson........... ........ X ........
Mr. Allard............... ........ X ........ Mr. DeFazio.............. X ........ ........
Mr. Gilchrest............ ........ X ........ Mr. Faleomavaega......... X ........ ........
Mr. Calvert.............. ........ X ........ Mr. Johnson.............. ........ ........ ........
Mr. Pombo................ ........ X ........ Mr. Abercrombie.......... ........ ........ ........
Mr. Torkildsen........... ........ X ........ Mr. Studds............... ........ X ........
Mr. Hayworth............. ........ X ........ Mr. Tauzin............... ........ X ........
Mr. Cremeans............. ........ X ........ Mr. Ortiz................ ........ X ........
Mrs. Cubin............... ........ X ........ Mr. Dooley............... ........ X ........
Mr. Cooley............... ........ ........ ........ Mr. Romero-Barcelo....... ........ ........ ........
Mrs. Chenoweth........... X ........ ........ ......................... ........ ........ ........
Mrs. Smith............... X ........ ........ Mr. Hinchey.............. X ........ ........
Mr. Radanovich........... ........ ........ ........ Mr. Underwood............ ........ X ........
Mr. Jones................ ........ X ........ Mr. Farr................. X ........ ........
Mr. Thornberry........... ........ X ........ ......................... ........ ........ ........
Mr. Hastings............. ........ X ........ ......................... ........ ........ ........
Mr. Metcalf.............. X ........ ........ ......................... ........ ........ ........
Mr. Longley.............. ........ ........ ........ ......................... ........ ........ ........
Mr. Shadegg.............. ........ X ........ ......................... ........ ........ ........
Total.............. 11 24 ........
----------------------------------------------------------------------------------------------------------------
Congressman Miller also offered an amendment which would
have required the Secretary of the Interior to certify that
potential exporters were in compliance with a certain right-of-
way agreement. This amendment also failed on a rollcall vote of
11-28, as follows:
h.r. 70--miller amendment no. 7
----------------------------------------------------------------------------------------------------------------
Yeas Nays Present Yeas Nays Present
----------------------------------------------------------------------------------------------------------------
Mr. Young (Chairman)..... ........ X ........ Mr. Miller............... X ........ ........
Mr. Hansen............... ........ X ........ Mr. Rahall............... X ........ ........
Mr. Saxton............... ........ X ........ Mr. Vento................ X ........ ........
Mr. Gallegly............. ........ X ........ Mr. Kildee............... X ........ ........
Mr. Duncan............... ........ ........ ........ Mr. Williams............. ........ ........ ........
Mr. Hefley............... ........ X ........ Mr. Gejdenson............ X ........ ........
Mr. Doolitte............. ........ X ........ Mr. Richardson........... ........ X ........
Mr. Allard............... ........ X ........ Mr. DeFazio.............. X ........ ........
Mr. Gilchrest............ ........ X ........ Mr. Faleomavaega......... X ........ ........
Mr. Calvert.............. ........ X ........ Mr. Johnson.............. ........ ........ ........
Mr. Pombo................ ........ X ........ Mr. Abercrombie.......... X ........ ........
Mr. Torkildsen........... ........ X ........ Mr. Studds............... ........ X ........
Mr. Hayworth............. ........ X ........ Mr. Tauzin............... ........ X ........
Mr. Cremeans............. ........ X ........ Mr. Ortiz................ ........ X ........
Mrs. Cubin............... ........ X ........ Mr. Dooley............... ........ X ........
Mr. Cooley............... ........ X ........ Mr. Romero-Barcelo....... ........ ........ ........
Mrs. Chenoweth........... ........ X ........ ......................... ........ ........ ........
Mrs. Smith............... ........ X ........ Mr. Hinchey.............. X ........ ........
Mr. Radanovich........... ........ ........ ........ Mr. Underwood............ X ........ ........
Mr. Jones................ ........ X ........ Mr. Farr................. X ........ ........
Mr. Thornberry........... ........ X ........ ......................... ........ ........ ........
Mr. Hastings............. ........ X ........ ......................... ........ ........ ........
Mr. Metcalf.............. ........ X ........ ......................... ........ ........ ........
Mr. Longley.............. ........ X ........ ......................... ........ ........ ........
Mr. Shadegg.............. ........ X ........ ......................... ........ ........ ........
Total.............. 11 28 ........
----------------------------------------------------------------------------------------------------------------
Finally, Congressman Farr offered an amendment extending an
outer continental shelf oil and gas leasing moratorium off the
coast of California. This amendment was ruled nongermane.
By voice vote, the Committee then adopted the Dooley-Tauzin
amendment in the nature of a substitute, as amended. An
explanation of the amendment in the nature of a substitute is
set forth in the section-by-section analysis.
The bill as amended was then ordered favorably reported, by
a voice vote, to the House of Representatives, in the presence
of a quorum.
Section-by-Section Analysis
section 1. exports of alaskan north slope oil
Section 1 of the bill would amend section 28 of the Mineral
Leasing Act to authorize ANS oil exports unless the President,
within a prescribed period of time, deemed them not to be in
the national interest.
Under this section, ANS oil exports would be authorized,
unless the President determined (within five months of the date
of enactment) that they were not in the national interest.
Before making his national interest determination, the
President would be required to complete an appropriate
environmental review (within four months of enactment).
Consistent with the original 1973 legislation, the President
also would be required to determine that exports would not
diminish the total quantity or quality of petroleum available
to the United States. In making his national interest
determination, the President could impose terms and conditions,
other than a volume limitation, on the exports. The Secretary
of Commerce then would be required, within 30 days, to issue
any rules necessary to implement the President's national
interest determination.
This section requires, with limited exceptions, that ANS
oil exports be carried on U.S.-flag and U.S.-owned vessels. The
only exceptions would be exports to Israel and to a country
pursuant to the International Emergency Oil Sharing Plan of the
International Energy Agency.
This section further preserves the authority of the
President to prohibit ANS exports in an emergency.
The Secretary of Commerce is directed to issue any rules
necessary to govern ANS exports within 30 days of the
President's national interest determination.
This section provides that, if the Secretary of Commerce
later finds that anti-competitive activity by an exporter has
caused sustained material oil shortages or sustained prices
significantly above the world level and that the shortages or
high prices had caused sustained material job losses, the
Secretary could recommend appropriate action to the President
against the exporter, including modification of the authority
to export.
This section provides that administrative action would not
be subject to notice and comment rulemaking requirements or
other requirements of the Administrative Procedures Act.
section 2. gao study
Section 2 of the bill would require a Government Accounting
Office report analysing the effects of ANS exports, if any, on
consumers, independent refiners, shipbuilding and ship repair
on the West Coast and in Hawaii, to be submitted 2\1/2\ years
after the date of enactment.
Committee Oversight Findings and Recommendations
With respect to the requirements of clause 2(l)(3) of rule
XI of the Rules of the House of Representatives, and clause
2(b)(1) of rule X of the Rules of the House of Representatives,
the Committee on Resources' oversight findings and
recommendations are reflected in the body of this report.
Inflationary Impact Statement
Pursuant to clause 2(l)(4) of rule XI of the Rules of the
House of Representatives, the Committee estimates that the
enactment of H.R. 70 will have no significant inflationary
impact on prices and costs in the operation of the national
economy.
Cost of the Legislation
Clause 7(a) of rule XIII of the Rules of the House of
Representatives requires an estimate and a comparison by the
Committee of the costs which would be incurred in carrying out
H.R. 70. However, clause 7(d) of that Rule provides that this
requirement does not apply when the Committee has included in
its report a timely submitted cost estimate of the bill
prepared by the Director of the Congressional Budget Office
under section 403 of the Congressional Budget Act of 1974.
Compliance With House Rule XI
1. With respect to the requirement of clause 2(l)(3)(B) of
rule XI of the Rules of the House of Representatives and
section 308(a) of the Congressional Budget Act of 1974, H.R. 70
does not contain any new budget authority, spending authority,
credit authority, or tax expenditures. The bill will increase
revenues to the Federal Government by estimated $50 million
over the next five years.
2. With respect to the requirement of clause 2(l)(3)(D) of
rule XI of the Rules of the House of Representatives, the
Committee has received no report of oversight findings and
recommendations from the Committee on Government Reform and
Oversight on the subject of H.R. 70.
3. With respect to the requirement of clause 2(l)(3)(C) of
rule XI of the Rules of the House of Representatives and
section 403 of the Congressional Budget Act of 1974, the
Committee has received the following cost estimate for H.R. 70
from the Director of the Congressional Budget Office.
Congressional Budget Office Cost Estimate
U.S. Congress,
Congressional Budget Office,
Washington, DC, May 24, 1995.
Hon. Don Young,
Chairman, Committee on Resources,
House of Representatives, Washington, DC.
Dear Mr. Chairman: The Congressional Budget Office has
reviewed H.R. 70, a bill to permit exports of certain
domestically produced crude oil, and for other purposes, as
ordered reported by the House Committee on Resources on May 17,
1995. We estimate that enacting this bill would reduce federal
outlays by about $50 million over the next five years. These
savings would take the form of increased offsetting receipts as
the result of slightly higher oil prices for crude oil produced
and sold from federal lands in certain regions. Administrative
provisions in the bill are expected to involve costs of less
than $1 million over the 1996-2000 period, subject to the
availability of appropriated funds.
Because H.R. 70 would affect direct spending by increasing
offsetting receipts, the bill would be subject to pay-as-you-go
procedures.
Bill purpose
H.R. 70 would amend the Mineral Leasing Act to allow
exports of Alaskan North Slope (ANS) oil under certain
conditions. No later than five months after enactment of the
bill, the President would have to determine whether such
exports are in the national interest based on a review of
market factors, employment impacts, and environmental
considerations. An environmental review of such exports would
have to be completed within four months after enactments.
Within 30 days after a presidential determination that ANS oil
exports are in the national interest, the Secretary of Commerce
would have to issue rules necessary for such exports. Any oil
exported would have to be transported by vessels documented
under the laws of the United States and owned by a U.S. citizen
(unless subject to other international oil supply agreements).
The bill also includes provisions regarding potential
market impacts of ANS oil exports. Within two years after
enactment, the General Accounting Office (GAO) would have to
review the effects of such exports on consumers, independent
refiners, and shipbuilding and ship repair yards on the West
Coast and Hawaii. The bill also would authorize the Secretary
of Commerce to recommend that the President take actions to
address anticompetitive activities if they caused sustained
adverse effects on employment in the United States.
For the purposes of this estimate, CBO assumes that H.R. 70
will be enacted by July 1, 1995, that the President will decide
in favor of allowing ANS exports, and that the presidential
determination will be completed within the time specified in
the bill. Under these assumptions, exports could commence
within six months after the bill is enacted.
Federal budgetary impact
If this bill is enacted, CBO expects that some ANS oil
would be exported to Japan and possibly other Pacific Rim
countries and that such exports would reduce the supply of oil
flowing from Alaska to the U.S. West Coast. Based on
information from the Department of Energy and industry sources,
we estimate that this reduction in supply would increase the
price of oil paid to producers on the West Coast by
approximately 50 cents per barrel. The effect on oil prices is
likely to decrease over time, however, as California's demand
for oil and refined products increases while ANS oil production
decreases.
Higher West Coast oil prices would produce additional
income to the federal government from the sale of oil from
federally owned reserves and from royalties on federal leases.
About two-thirds of the estimated $50 million increase in
receipts over the 1996-2000 period (or $33 million) would be
derived from receipts for the sale of oil from the Naval
Petroleum Reserve in Elk Hills, California. The remaining $17
million would result from higher royalty income paid to the
government on leases of both onshore and offshore federal lands
in California and Alaska.
The increases in both Elk Hills receipts and federal lease
royalties are likely to be greater in the first year and
diminish over time. In total, we estimate that the increase in
receipts would be $13 million in fiscal year 1996 (reflecting
higher prices for the last three-quarters of the year) and
would gradually decline to $6 million by 2000.
Assuming the appropriation of the necessary amounts, the
administrative provisions in the bill would increase costs by
less than $1 million over the next five years. Based on
information from the Department of Commerce, we estimate that
the cost of completing the environmental review and other
proceedings leading to the presidential determination would be
less than $500,000 and would be incurred beginning in fiscal
year 1995. Another $400,000 would be needed in fiscal year 1997
to cover the cost of the GAO review.
Impact on State and local governments
Analyses by DOE and industry sources have suggested that
allowing exports of ANS crude oil could result in additional
revenues for state and local governments in Alaska and
California from higher royalties, tax receipts, and other
sources. While some increase in income is likely under the
assumptions used in this estimate, CBO cannot estimate the
amounts that would accrue to these states and localities.
Previous CBO estimates
On January 30, 1995, CBO provided an estimate of H.R. 70 as
introduced. On March 22, 1995, we transmitted an estimate of S.
395 as ordered reported by the Senate Committee on Energy and
Natural Resources, Title II of which included language
identical to that in the introduced version of H.R. 70. This
estimate differs slightly from the two earlier estimates
primarily because the earlier bills did not include provisions
requiring a presidential determination and related reviews.
Those provisions would delay the start of potential exports;
hence we project that the increase in federal offsetting
receipts for fiscal year 1996 would be about $3 million less
than previously estimated.
If you wish further details on this estimate, we will be
pleased to provide them. The CBO staff contact is Kathleen
Gramp.
Sincerely,
James L. Blum
(For June E. O'Neill, Director).
Departmental Reports
The Committee has received no departmental reports on H.R.
70.
Changes in Existing Law Made by the Bill, as Reported
In compliance with clause 3 of rule XIII of the Rules of
the House of Representatives, changes in existing law made by
the bill, as reported, are shown as follows (existing law
proposed to be omitted is enclosed in black brackets, new
matter is printed in italic, existing law in which no change is
proposed is shown in roman):
SECTION 28 OF THE MINERAL LEASING ACT
grant of authority
Sec. 28. (a) * * *
* * * * * * *
[right-of-way corridors
[(s) In order to minimize adverse environmental impacts and
to prevent the proliferation of separate rights-of-way across
Federal lands, the Secretary shall, in consultation with other
Federal and State agencies, review the need for a national
system of transportation and utility corridors across Federal
lands and submit a report of his findings and recommendations
to the Congress and the President by July 1, 1975.]
exports of alaskan north slope oil
(s)(1) Subject to paragraphs (2) through (6) of this
subsection and notwithstanding any other provision of law
(including any regulation), any oil transported by pipeline
over right-of-way granted pursuant to section 203 of the Trans-
Alaska Pipeline Authorization Act (43 U.S.C. 1652) may be
exported unless the President finds that exportation of this
oil is not in the national interest. In evaluating whether the
proposed exportation is in the national interest, the
President--
(A) shall determine whether the proposed exportation
would diminish the total quantity or quality of
petroleum available to the United States;
(B) shall conduct and complete an appropriate
environmental review of the proposed exportation,
including consideration of appropriate measures to
mitigate any potential adverse effect on the
environment, within four months after the date of the
enactment of this subsection; and
(C) shall consider whether anticompetitive activity
by a person exporting crude oil under authority of this
subsection is likely to cause sustained material crude
oil supply shortages or sustained crude oil prices
significantly above world market levels that would
cause sustained material adverse employment effects in
the United States or that would cause substantial harm
to consumers in noncontiguous States.
The President shall make his national interest determination
within five months after the date of enactment of this
subsection or 30 days after completion of the environmental
review, whichever is earlier. The President may make his
determination subject to such terms and conditions (other than
a volume limitation) as are necessary or appropriate to ensure
that the exportation is consistent with the national interest.
(2) Except in the case of oil exported to a country with
which the United States entered into a bilateral international
oil supply agreement before November 26, 1979, or to a country
pursuant to the International Emergency Oil Sharing Plan of the
International Energy Agency, any oil transported by pipeline
over a right-of-way granted pursuant to section 203 of the
Trans-Alaska Pipeline Authorization Act (43 U.S.C. 1652) shall,
when exported, be transported by a vessel documented under the
laws of the United States and owned by a citizen of the United
States (as determined in accordance with section 2 of the
Shipping Act, 1916 (46 U.S.C. App. 802)).
(3) Nothing in this subsection shall restrict the authority
of the President under the Constitution, the International
Emergency Economic Powers Act (50 U.S.C. 1701 et seq.), or the
National Emergencies Act (50 U.S.C. 1601 et seq.) to prohibit
exportation of the oil.
(4) The Secretary of Commerce shall issue any rules necessary
for implementation of the President's national interest
determination within 30 days of the date of such determination
by the President. The Secretary of Commerce shall consult with
the Secretary of Energy in administering the provisions of this
subsection.
(5) If the Secretary of Commerce finds that anticompetitive
activity by a person exporting crude oil under authority of
this subsection has caused sustained material crude oil supply
shortages or sustained crude oil prices significantly above
world market levels and further finds that these supply
shortages or price increases have caused sustained material
adverse employment effects in the United States, the Secretary
of Commerce, in consultation with the Secretary of Energy, may
recommend to the President appropriate action against such
person, which may include modification of the authorization to
export crude oil.
(6) Administrative action under this subsection is not
subject to sections 551 and 553 through 559 of title 5, United
States Code.
* * * * * * *
[limitations on export
[(u) Any domestically produced crude oil transported by
pipeline over rights-of-way granted pursuant to section 28 of
the Mineral Leasing Act of 1920, except such crude oil which is
either exchanged in similar quantity for convenience or
increased efficiency of transportation with persons or the
government of an adjacent foreign state, or which is
temporarily exported for convenience or increased efficiency of
transportation across parts of an adjacent foreign state and
reenters the United States, shall be subject to all of the
limitations and licensing requirements of the Export
Administration Act of 1979 (50 U.S.C. App. 2401 and following)
and, in addition, before any crude oil subject to this section
may be exported under the limitations and licensing
requirements and penalty and enforcement provisions of the
Export Administration Act of 1979 the President must make and
publish an express finding that such exports will not diminish
the total quantity or quality of petroleum available to the
United States, and are in the national interest and are in
accord with the provisions of the Export Administration Act of
1979: Provided, That the President shall submit reports to the
Congress containing findings made under this section, and after
the date of receipt of such report Congress shall have a period
of sixty calendar days, thirty days of which Congress must have
been in session, to consider whether exports under the terms of
this section are in the national interest. If the Congress
within this time period passes a concurrent resolution of
disapproval stating disagreement with the President's finding
concerning the national interest, further exports made pursuant
to the aforementioned Presidential findings shall cease.]
* * * * * * *
ADDITIONAL VIEWS OF NEIL ABERCROMBIE
The committee reported version of H.R. 70 contains an
amendment which I offered that was adopted by voice vote. The
purpose of the amendment is to require the President to make a
determination prior to the exporting of crude oil from the
Alaska North Slope that the activity will not have an effect
which is likely to harm consumers in noncontiguous states.
Hawaii has an energy market that is uniquely different from
all the other states in the Union. The State of Hawaii depends
on imported oil for over 92 percent of its energy supply, a
large share of which comes from Alaska. Currently, Hawaii leads
the nation in energy costs. A recent survey found that the
average price for a gallon of gasoline in Hawaii was $1.76. The
nationwide average was $1.33. In addition, the neighbor islands
already have some of the highest costs in terms of electricity
production. In particular, Maui and the Big Island rely heavily
on fuel oil processed from the Alaska North slope.
In June 1994, the U.S. Department of Energy (DOE) released
a study on ``Exporting Alaskan North Slope Crude Oil: Benefits
and Costs.'' It is my understanding that the study concludes
that permitting exports would benefit the U.S. economy. Yet,
Hawaii was not even mentioned in the report. Thus any attempt
to make assumptions on Hawaii's consumers and economy based on
the DOE study would be inaccurate and misleading.
Senator Murray offered an amendment that contained language
similar to the Abercrombie amendment. The Murray amendment
requires the President in consultation with the Attorney
General and the Secretary of Commerce to examine the effects of
exporting crude oil on independent refiners and adverse
employment consequences in the United States. The Murray
amendment was adopted in the Senate. However, there was not
sufficient time to review the Senate language prior to the
mark-up of H.R. 70 in the House Committee on Resources. The
Murray amendment did not address harm to consumers.
The Abercrombie amendment is a work in progress. The
Dooley/Tauzin substitute was not available until the day before
the full Committee mark-up preventing any consensus on final
language of the amendment. It is my understanding that the
delay in making the language available was caused by the
Administration. The substitute is a good faith effort,
particularly resulting from the actions of Chairman Young, to
accommodate the concerns of committee members.
In offering the amendment I was given an assurance by
Chairman Young that we would continue working together on the
amendment language. I am committed to working with Chairman
Young to protect Hawaii's consumers.
Under the Dooley/Tauzin substitute the Secretary of
Commerce, by the authority from the Export Administration Act,
will administer the export licensing of Alaska North Slope
crude oil. This should be a continual monitoring process. It is
important that one of the conditions attached to the export of
crude oil at the front end include that the activity will not
have an effect which is likely to harm consumers in
noncontiguous states. The crucial element in arriving at an
equation which allows for export is equity for mainland and
Pacific region consumers in terms of supply. Language ensuring
this resolution of this issue is vital.
Neil Abercrombie.
DISSENTING VIEWS OF REPRESENTATIVE GEORGE MILLER
In the Majority's rush to judgement on this legislation,
the potential for higher energy prices and negative impacts to
the economy of the West Coast take a back seat to an apparent
zeal to supply Japan, South Korea and Taiwan with oil produced
in the U.S. and currently used by U.S. consumers. The only sure
winners in this endeavor are British Petroleum and the State of
Alaska who are likely to profit at the expense of energy
consumers in Washington, Oregon, California, Hawaii, Arizona,
and Nevada (``West Coast'').
The substitute adopted by the Committee is an improvement
over H.R. 70 as introduced. By requiring a process for a
Presidential finding that the export of Alaska North Slope
(``ANS'') oil is in the national interest as a pre-condition
for authorizing exports, the substitute implicitly recognizes
that the economic issues involved are complex and that the
potential costs and benefits have yet to be fully and fairly
evaluated by the Administration.
Since Congress enacted the Trans-Alaska Pipeline
Authorization Act 22 years ago, ANS oil has been used to meet
domestic energy needs. Today, ANS oil constitutes nearly 25
percent of total U.S. oil production. Opening the vast Alaskan
wilderness on the North Slope to oil development was very
controversial, with the Vice President casting a vote to break
a deadlock in the Senate in 1973. As part of the congressional
``deal'' to allow for the expedited construction of the
pipeline system, the TAPS Act expressly reserved ANS oil for
the U.S. market. Since 1977, ANS production has provided the
majority of oil delivered to refineries in Washington,
California and Hawaii and tens of thousands of jobs are
directly dependent upon that delivery system.
Much of the blame for the failure to thoroughly consider
the risks of changing the system which has been in place for
last two decades rests with the Department of Energy (``DOE'').
Instead of providing dispassionate information for Congress to
fairly evaluate the pros and cons of allowing exports, DOE has
played the role of an uncompromising advocate for exports,
predicting benefits which appear to be exaggerated and
illusory.
DOE's 1994 study in support of exports is based on the
premise that the price of ANS oil is depressed on the West
Coast because of an oversupply caused by the export
restrictions. While there is historical evidence to support
DOE's price and supply assessments, DOE's conclusions that
allowing exports would provide substantial benefits in the
future without any downside to West Coast consumers are
questionable in light of new evidence of current and projected
ANS price parity and the rapidly diminishing West Coast supply
``glut.''
As the State of Alaska's Department of Revenue observed in
a recent 1995 report, ANS oil ``prices at parity can be
expected to occur more often in the future as ANS production
declines and the most expensive transportation route to the
Gulf Coast via Panama loses tanker traffic.'' This new
information indicates that the 1994 DOE study, which projects
that ANS exports would lead to more oil production in both
California and Alaska, the creation of up to 25,000 jobs, and
an increase in state and federal revenues--without costs to
consumers since DOE assumes the West Coast refiners will not
pass along higher crude oil prices--relies on outdated ANS oil
price and West Coast supply data.
Among the other dubious assumptions of DOE's 1994 study is
the projection that British Petroleum will reinvest 100 percent
of their additional profits from exports in Alaska operations.
Based on this assumption, DOE projects an increase in Alaska
production of between 200 and 400 million barrels. However, in
response to my written questions, British Petroleum failed to
guarantee that they would reinvest all the profits in Alaska or
to disclose the amount of profits they expect (Copy attached as
Appendix A).
If the sanguine projections in DOE's study prove to be
wrong, and exports are nonetheless authorized by the President,
the potential for negative consequences to the economies of the
West Coast states is significant. Testimony submitted by Tosco
Corporation at the May 9, 1995 committee hearing explained
concerns shared by independent refiners and others:
British Petroleum produces approximately 800,000
barrels per day at ANS oil, which is roughly one-half
of total ANS production. Because the other ANS
producers generally process their ANS oil in their own
refiners, British Petroleum is the sole spot seller of
ANS oil to independent refiners. By controlling the
volume of oil delivered to the West Coast and Gulf
Coast markets, British Petroleum can effectively
control the supply of ANS on the West Coast. This gives
British Petroleum considerable market power over the
price of ANS oil.
Since 1991, the price of ANS oil has increased by
almost $3.00 per barrel relative to the world benchmark
price of West Texas Intermediate (``WTI'') crude oil.
The result is that ANS oil is currently selling on the
West Coast at a price that is effectively at world
market parity.
However, if Congress allows unrestricted exports of
ANS oil, the price will be bid up above world price
parity because some refiners cannot readily import
substitute foreign oil. These refiners lack deep water
terminal facilities and storage needed to accommodate
large tankers and would have to use more costly and
environmentally risky lightering operations.
Furthermore, they may be unable to procure foreign
crude oil which is comparable to ANS oil and suitable
for their refinery processes.
In light of these costs associated with importing
foreign oil, British Petroleum would be able to extract
a premium for ANS oil above world price parity. Thus
legislation to allow exports of ANS crude oil would
simply strengthen the ability of a major foreign
company to exercise its considerable market power over
the supply and pricing of ANS oil in the West Coast
market at the expense of independent refiners and
ultimately consumers on the West Coast.
Unfortunately, the Majority chose to reject several
amendments in the Committee markup which would have
significantly alleviated concerns that exports will hurt the
economy, the environment and consumers in the West Coast. The
most important safeguard was contained in my amendment to limit
exports only to the ANS production which is in excess of the
current needs on the West Coast (any production over 1.35
million barrels per day). My amendment was a reasonable
compromise which would have allowed the 140,000 barrels per day
projected by DOE and the State of Alaska to be exported (at the
current production levels of 1.6 million barrels per day) while
at the same time assuring that U.S. needs would be taken care
of first in the event there is a supply shortage in the future.
Without thorough consideration, the Majority also rejected
my amendment which would have required that the Secretary of
the Interior determine whether Alyeska Pipeline Service Company
(majority owned by British Petroleum) is operating the Trans-
Alaska Pipeline System in compliance with the Agreement and
Grant of Right-of-Way made pursuant to the Trans-Alaska
Pipeline Authorization Act. Under the amendment, authority to
export ANS oil would be conditioned on compliance with the
right-of-way agreement which is designed to ensure safe and
environmentally sound operation of the oil delivery system.
Significant management and hardware problems at Alyeska
have been identified by past investigations of this Committee
and the Oversight Subcommittee of the Energy and Commerce
Committee, the GAO, and through comprehensive audits by both
the Department of the Interior and Alyeska's owner companies.
As British Petroleum acknowledged in their May 16th response to
my questions (see Appendix A) at least $300 million is being
allocated to Alyeska to address these problems and ``[i]t is
true that of the 4,920 audit action items, there are several
that have Right of Way implications, such as the audit findings
dealing with the quality program and the employment of Alaska
Natives.'' My amendment does not place any additional legal
requirements on Alyeska or its owners; it simply requires that
they abide by their contract with the American people in order
to obtain the benefits of ANS exports.
Geo Miller.
APPENDIX A
----------
Representative George Miller's Hearing Questions for British Petroleum
1. Alyeska. British Petroleum (BP) is the majority owner of
the Alyeska Pipeline Service Company (Alyeska) which operates
the Trans-Alaska Pipeline System. A combination of
congressional investigations and Department of the Interior and
owner company audits have revealed significant management and
hardware problems in the pipeline system.
(a) Before the Committee votes on H.R. 70--which would
provide substantial benefits to BP by allowing the export of
Alaska North Slope oil--what assurances can you provide the
Committee that BP and the other Alyeska owners are committed to
both to fixing the problems already identified with the
pipeline system and operating the system in a safe and
environmentally sound manner in the future? What specific
actions have and will be taken which support this commitment?
(b) One of the deficiencies identified in the audits is the
fact that Alyeska has not been operating in compliance with the
pipeline right-of-way agreement with the Department of the
Interior. What steps have been taken to bring Alyeska into
compliance? What specific areas remain in non-compliance? What
additional efforts will be made to bring Alyeska into full
compliance and when will compliance be achieved?
2. Oil Spill Response. Subsequent to the Exxon Valdez oil
spill in 1989, Alyeska adopted the public position that it is a
``voluntary response contractor'' in the event of an oil spill
from tankers carrying Trans-Alaska Pipeline System (TAPS) oil
within state of Alaska waters in Prince William Sound. The
House of Representatives disagreed and adopted an amendment to
comprehensive energy legislation (Section 2462 of H.R. 776) on
May 20, 1992 which reiterated Alyeska's statutory duty to
respond to and clean up TAPS oil spills. (See: H.Rept. 102-474,
Part 8, pages 123-124).
(a) Does Alyeska have a statutory duty under federal or
state law to respond to spills from tankers chartered by BP
while travelling in state of Alaska waters?
(b) If not, what are BP's contractual arrangements with
Alyeska which will assure oil spill response and cleanup?
3. Tankers. As introduced, H.R. 70 provides that any
exports of ANS crude must be on U.S.-flag tankers (currently
under the Jones Act, tankers in the TAPS trade must be U.S.
built).
(a) If the Congress allows Alaska North Slope (ANS)
exports, which specific tankers does BP intend to use? Are
these tankers built in the U.S.? Are they double hulled? How
large are they? How old are they? How long will they be
chartered for? Will repair work be done in the U.S.?
(b) How many of the tankers chartered by BP to carry TAPS
oil are due to be scrapped or reconstructed between now and the
year 2000 either because of their structural condition or
because of the double hull requirement of the Oil Pollution Act
of 1990? Where is the repair work done currently on these
vessels?
(c) What tanker routes does BP intend to use to the Far
East? How far will tankers stay off the Alaska coast once out
of Prince William Sound?
(d) If fewer BP chartered tanker trips to the terminal in
Valdez are expected, does this mean that the tankers exporting
oil will be larger than those currently in the TAPS trade?
(e) What oil spill or emergency response equipment will be
necessary to be in place on Kodiak Island or in western Alaska?
4. Maritime Workers. The Seafarers International Union has
reversed its long-standing opposition to ANS exports and
reportedly has an arrangement with BP so that they will be
provided jobs on tankers carrying ANS oil for exports.
(a) How many new jobs will be provided for the maritime
unions if exports are allowed?
(b) Is this arrangement a binding contract even if Congress
fails to include a U.S.-flag or Jones Act requirement but
allows oil to be exported?
5. ANS West Coast Market Control. BP exercises significant
influence over the market for ANS oil because it controls about
one-half of the ANS production volume. Unlike other ANS
producers, BP does not have its own refineries and currently
sells its oil to other U.S. refineries.
(a) Does this substantial control over the open market ANS
volume give BP the power to restrict the supply and increase
the price for purchases by independent refineries on the West
Coast?
(b) Since California heavy crude is not a direct substitute
for ANS crude, will independent refiners be forced to import
more oil on foreign tankers if BP diverts the ANS crude for
export?
(c) Will any less ANS oil be available to independent
refineries or will the price of ANS on the West Coast increase
if exports are allowed?
(d) The DOE study predicts that higher ANS crude oil prices
caused by ANS exports will be absorbed by West Coast refiners.
Will West Coast consumers pay more for gasoline or other crude
oil products if ANS exports are allowed?
6. Alaska Production. DOE's 1994 study predicts that
between 200 and 400 million barrels of additional reserves in
Alaska will occur if exports of ANS crude are allowed.
(a) Does BP intend to invest 100 percent of its increased
revenue from ANS oil exports in Alaska production as is assumed
in the DOE production forecasts?
(b) If there is no such assurance, are the 1994 DOE study's
projections of additions to Alaska reserves overstated? What
additions to Alaska reserves will occur if exports are allowed?
(c) What revenue gain for BP will accrue if exports are
allowed?
(d) Since 1991, the price of ANS oil has risen about $3 per
barrel relative to the benchmark West Texas Intermediate price.
How much of an increase in Alaska production has resulted from
this price increase?
7. ANS Price Parity. According to the State of Alaska
Department of Revenue's Sources Book for Spring 1995, ``the
price difference between West and Gulf Coast [oil] has narrowed
considerably over the last eight months. The average difference
was $.28/bbl over this time period which included the three-
month period of October, November, and December when prices
were essentially the same in both markets. Prices at parity can
be expected to occur more often in the future as ANS production
declines and the most expensive transportation route to the
Gulf Coast via Panama loses tanker traffic. * * * Over the next
few years, as demand on the West Coast grows and ANS production
declines, ANS will not be sold for delivery to the Gulf Coast.
At that time, West Coast ANS prices will be determined by the
price of foreign sour crude oil imported into that market.''
(a) Does BP agree with the Department of Revenue's analysis
that ANS prices are at or near parity with Gulf Coast prices
and that the supply ``glut'' is disappearing on the West Coast?
(b) Are the DOE's projections--which were based on data
showing a historic ``depressed price'' of ANS crude--of job
creation, greater oil production and substantially increased
federal and state revenues, accurate? Specifically, does BP
agree with DOE that up to 25,000 new oil industry jobs,
including many in California, will be created by the year 2000?
(c) If the West Coast surplus of ANS crude is disappearing,
how much of BP's oil currently going to the West Coast will be
diverted for export if Congress approves H.R. 70?
8. Environmental Issues. DOE's position is that, prior to
any export of ANS crude, a full environmental review must be
done consistent with the National Environmental Policy Act.
(a) If the NEPA review includes an accurate analysis of the
condition of the tanker fleet currently engaged in the TAPS
trade, should it conclude that the fleet is in better or worse
safety condition than at the time of the 1989 Exxon Valdez oil
spill?
(b) What are the most significant environmental concerns of
BP that should be addressed in the NEPA analysis?
------
BP America Inc.,
Washington, DC, May 16, 1995.
Hon. George Miller,
Committee on Resources,
House of Representatives, Washington, DC.
Dear Congressman Miller: It was a privilege to appear
before the U.S. House of Representatives Committee on Resources
to address H.R. 70, legislation to lift the ban on the export
of Alaska North Slope oil.
Attached are BP's responses to questions submitted from you
to me in your letter of May 11, 1995.
I look forward to working with you.
Sincerely,
Linda Adamany,
Senior Vice President, BP Oil Shipping.
response to rep. miller's questions
(1) (a) In testimony before the House Subcommittee on
Oversight and Investigations, on November 10, 1993, the chief
executives representing the three major owners of the Trans-
Alaska Pipeline System (TAPS) made specific commitments to
correct the problems identified by the various audits of TAPS.
Richard Olver of BP stated, ``I commit to you today to provide
the necessary human resources that are required to put this
plan into place and to back that up about [sic] all the
necessary and appropriate financial resources.''
The Owners have reaffirmed this commitment on several
occasions as demonstrated by the number of human and financial
resources they have provided Alyeska since those hearings. This
commitment was reaffirmed again in meetings that Alyeska and
the TAPS Owners had just last week with various congressmen,
senators, and staff in Washington, D.C.
The most apparent example of the Owners commitment is the
$220 million spent to address audit findings in 1994, with an
additional $80 million being spent on findings this year. By
the end of 1995, 85 to 90 percent of the audit findings will
have been addressed. By December 1996 all but a handful of the
audit items will have been resolved. Plans are in hand to
address outstanding long lead issues, e.g. control systems.
(b) There have been no findings of non-compliance with the
Agreement and Grant of Right of Way. It is true that of the
4,920 audit action items, there are several that have Right of
Way implications, such as the audit findings dealing with the
quality program and the employment of Alaska Natives. Alyeska
is working to address all audit action items to closure and the
Joint Pipeline Office is reviewing and approving closures based
on their priority.
Alyeska undertook a self-assessment in November, 1993, with
regard to meeting the Right of Way requirements. Areas needing
improvement are included in the Audit Compliance Tracking
database and are being tracked by Alyeska and the Bureau of
Land Management to closure. Alyeska will audit its adherence to
Right of Way requirements periodically in the future. The
Company has initiated a training program designed to inform
people about what they must do in order to meet the Right of
Way requirements.
(2) (a and b) Alaska H.B. 540 requires Alyeska to respond
to oil spills from TAPS trade tankers, en route to and from the
Valdez Marine Terminal while in Prince William Sound, for at
least the first 72 hours following a spill. BP has a contract
in place with each owner/operator (responsible parties) of its
chartered vessels to act as their Response Action Coordinator.
BP also has in place a contract with Alyeska, for Alyeska to
act as its Primary Response Action Contractor for at least the
first 72 hours or until both the federal and state on-scene
commanders have approved the plan for transitioning the
management and control of the spill from Alyeska to BP acting
for the responsible party.
(3) (a) Given that actual exports levels would vary with
market conditions, we cannot state with any certainty how many
or which particular vessels will carry ANS exports. There
appears to be ample Jones Act tonnage already under charter or
in layup to carry the anticipated increase in tonnage demands
that exports would require. The Jones Act vessels available to
BP for potential export, either through current long term
charters or U.S. independent shipowners, range from 60,000 dwt
to over 188,000 dwt. Precise charter durations must remain
proprietary for competitive reasons. All vessels were built or
rebuilt in the United States from the mid-1970's or later.
Among these vessels, three have double hulls, and six have
double bottoms.
Given its proximity to Alaska and its world class
facilities, the Port of Portland should continue to be a
preferred site for repairs as long as it remains competitive.
(b) With the exception of a few ships chartered through
U.S. independent shipowners, none of the balance of the fleet
chartered by BP are expected to be retired before the year 2000
under the Oil Pollution Act of 1990. Individual ships are
always subject to retirement prior to the year 2000 should an
owner/operator so choose depending on a specific ship's
operating condition.
Repair work is currently carried out in either Portland,
Oregon or San Francisco, California.
(c) BP has had discussions with various agencies, including
the U.S. Coast Guard, as well as other parties concerned about
issues regarding shipping routes in the event exports proceed.
BP and the various shipowners/operators have agreed that their
vessels would proceed to a point 300 miles due south of Cape
Hinchinbrook Light before shaping a course to the west. This
initial course and distance will place the vessels in
international waters beyond the U.S. Exclusive Economic Zone
(EEZ).
(d) As we anticipate using vessels currently in the trade
or in layup, tankers carrying the crude in the export market
will not be larger than those currently in the TAPS trade.
(e) The intended route to the Far East, discussed earlier,
takes the vessels no closer to Kodiak Island than currently. BP
and the other shippers have a U.S. Coast Guard approved oil
spill response plan covering appropriate areas of the Gulf of
Alaska. The Far East route will not take the vessels into any
new area not presently covered. Therefore, we see no necessity
to place additional equipment on Kodiak Island.
4. (a) According to the Department of Energy's
comprehensive study, up to approximately 3,300 direct and
indirect maritime industry jobs will be lost with declining
production or exports on foreign-flag vessels. By stimulating
additional production and requiring the use of U.S.-flag
vessels, the proposed legislation is expected to preserve most,
if not all, of those jobs. The exact number will ultimately
depend on the amount of ANS oil available, as well as on the
amount of foreign demand that might develop for the oil.
(b) for competitive and proprietary reasons, BP's long-
standing policy is to not disclose specific terms or conditions
that might exist under any of our contractual arrangements. The
decision of the Seafarers International Union to support the
legislation rests, we believe, on the preference it provides
for American-flag ships, which are manned by American seamen.
For insight into their thinking, we would refer you to Mr.
Sacco's eloquent written statement submitted to the Committee.
5. (a) We do not agree with the stated premise that BP
exercises substantial control over the market. All crude oil
prices, including ANS, are subject to the numerous and complex
fundamentals of supply and demand. The export of Alaskan crude
oil merely allows it to be subject to global factors rather
than be subject to local distortions created through artificial
barriers.
(b) Any exports of ANS will be more than adequately met
through a combination of California and foreign crudes.
According to the Department of Energy's comprehensive study,
lifting the export ban will reduce overall tanker movements in
U.S. waters. This is not only because of an expected increase
in onshore California production (which is delivered by
pipeline), but also due to the elimination of movements of ANS
crude oil to the Gulf Coast that involves multiple loading and
unloading operations.
(c) ANS crude will be available to independent refiners at
the world market price. This price is expected to be marginally
higher than the artificially depressed export ban-induced price
that has prevailed in recent years.
(d) According to the Department of Energy's comprehensive
study, consumers will not see any discernible impact on prices.
Whether prices at the pump will rise depends ultimately on
gasoline market supply and demand fundamentals. In testimony
before the Senate Banking Committee last year, an independent
refiner stated that it would pass on higher crude costs to
consumers. More recently, the same refiner appears to have
concluded that it may not be able to do so. In the final
analysis, consumer prices on the West Coast are determined by
numerous factors in a highly competitive marketplace.
6. (a) It is not possible for BP to guarantee future
investments in any of its businesses.
(b) However, the export of ANS will allow it to be a truly
global crude, and as such compete on a global basis for future
investment. Currently Alaska, and therefore the United States,
is at a competitive disadvantage with an ever-increasing number
of international oil production opportunities. Lifting the ban
on the export of Alaskan crude oil removes a major barrier to
developing U.S. reserves.
(c) Revenue gains cannot be determined until the markets
have a chance to recalibrate once artificial constraints are
removed.
(d) We find it unusual to choose 1991 as the starting point
for comparison of ANS to West Texas Intermediate. The year 1991
represents an anomaly given the shock to the crude oil markets
as a result of the Gulf Crisis with Iraq. Actual gains against
WTI, when taken over a more reasonable period that strips out
the effects of the Gulf Crisis, are substantially less and
still do not place ANS on a level playing field to compete
globally for investment opportunities.
7. (a) As with previous question, it is not appropriate to
extract conclusions from the three month period of the fourth
quarter of 1994 when the Gulf Coast and West Coast prices were
essentially the same. For example, the second and third quarter
of 1994 and the first quarter of 1995 both had the West Coast
price of ANS at approximately $0.50 per barrel less than the
Gulf Coast. However, rather than use such statistics to draw
definite conclusions, we would hold to the basic premise that
ANS value cannot be determined until artificial trade barriers
are removed.
(b) We do not see any conclusions in the DOE report that
would appear unreasonable.
(c) It is not possible to determine export volumes of ANS
until artificial barriers to trade are removed and the markets
have time to recalibrate to their efficient equilibrium.
8. (a) Any objective review of the TAPS tanker trade will
indicate that measures have been enacted to further enhance the
prevention of oil spills. These include numerous oversight
committees and enhanced operating practices both in Prince
William Sound and at the discharging ports in the Lower 48.
(b) BP does not believe that the export of ANS requires a
supplemental environmental review. None the less, the
Administration intends to conduct an appropriate environmental
review and we will work closely with the Administration to
ensure that all potential environmental concerns are addressed.
APPENDIX B
----------
Statement of William H. White, Deputy Secretary of Energy Before the
Committee on Resources, House of Representatives, May 9, 1995
Mr. Chairman, it is a pleasure for me to appear before the
Committee today to discuss permitting the export of Alaskan
North Slope (ANS) crude oil. I am pleased to report that the
Administration supports this initiative and hopes to work with
the Congress toward enactment of legislation to permit the
exportation of Alaskan North Slope crude oil.
The export of Alaskan North Slope crude oil is an important
component of this Administration's energy policy because it has
broad implications for the nation and for the states of Alaska
and California. The benefits (discussed below in more detail)
include:
increased federal and state revenues;
more oil production from fields in Alaska and
California while additional reserves are created;
more jobs in the oil sector and indirectly in the
broader economy, while saving jobs in the maritime
industry; and
little or no impact on the environment or on consumer
prices for gasoline.
We have reached these conclusions after studying the
impacts of permitting export of ANS crude oil and issuing a
detailed report on June 30, 1994. Copies of that report have
been provided to the Committee.
Fundamentally, the existing export restriction distorts the
crude oil markets in Alaska and the West Coast in
counterproductive ways. The benefits of permitting export of
ANS crude oil, according to our analysis, are significant:
Revenues to State governments would rise during 1994-2000
by:
$180 to $230 million for California from Federal
royalties and state and local taxes;
$700 million to $1.6 billion for Alaska from
severance taxes and royalties.
Federal receipts related to royalties and sales of Elk
Hills oil production would total between $99 and $180 million.
Oil production-related employment would increase by a net
of 10,000 to 25,000 jobs nationally; many would be in
California oil production. This takes into account a small
number of job losses (less than 500) in the maritime sector.
Refining employment overall would not be affected; history
shows that refinery capacity, and therefore refining industry
employment, is determined by U.S. petroleum consumption.
In Alaska alone, reserve additions could be in the 200 to
400 million barrel range by the year 2000, a size that roughly
equates to the known reserves in major North Slope fields such
as Point McIntyre and Endicott.
Incremental oil production would be between 30,000 and
50,000 barrels per day in California by the year 2000, and
50,000 to 70,000 barrels per day in Alaska.
The Department has consulted with the broad range of
interested parties. We held public meetings in San Francisco
and Anchorage in March of 1994, at which more than 50
organizations presented their views. We had a great deal of
comment on our draft report. Since the report's release last
June, the Secretary of Energy, I, and both our staffs have met
many times with members of Congress, various associations and
interest groups, and the public on this issue. I believe that
this process has helped all of us understand the concerns of
all the interested parties.
Based on this extensive consultation process, the
Administration is convinced that there are significant economic
and energy benefits that can be gained from permitting exports
of ANS crude. In the course of our review, however, the
Administration identified five requirements that must be
addressed in the legislation:
1. Retain Emergency Authority.--The President must retain
the authority he has under current law, including the
Constitution, the International Emergency Economic Powers Act,
and the National Emergencies Act, to reinstate the ban should
exports be found to be contributing to adverse energy, economic
or environmental conditions, or otherwise threatening the
national economic security.
2. Require Export in U.S.-Flag Vessels.--All ANS oil must
be exported in U.S.-flagged and U.S.-crewed vessels. Reforms
should not transfer existing seafarer employment abroad.
Legislation must provide substantial protection of seafarer
employment opportunities for American workers.
3. Review Environmental Effects.--Before any oil is
exported, an environmental review must be undertaken,
consistent with the National Environmental Policy Act of 1970.
Environmental resources must be fully protected.
4. Assure Supplies for U.S. Refineries.--U.S. refineries
must have continued access to adequate supplies of crude oil,
including crude oil at prevailing market prices. Refiners must
be protected from anticompetitive activity that would threaten
that supply. If evidence of such anticompetitive behavior
develops--such as sustained crude supply shortages on the West
Coast or price increases significantly above world market
levels--appropriate enforcement action should be taken,
including the denial or suspension of crude oil export
licenses.
5. Appropriate Export Administration.--Any export of ANS
crude oil made pursuant to this bill should be approved and
administered through the appropriate export licensing process
that gives the President authority to impose such terms and
conditions on exports as are necessary or appropriate.
Licensing will assure the monitoring and enforcement of all
conditions under which the exports are permitted. Any export
license will be processed on an expedited and user-friendly
process that is consistent with obligations to consider
environmental and energy security impacts.
H.R. 70, Mr. Chairman, already contains provisions
corresponding to the first and second elements on this list. In
addition to these requirements, key factors that must be
addressed as legislative action is pursued include:
1. Consumers Protection.--Exports must not cause
substantial increases to retail gasoline or other petroleum
product prices. Our assessment is that the product price
impacts of permitting ANS crude oil exports would be minimal or
nonexistent.
2. Job Growth and Protection.--Any proposal to permit ANS
exports should reasonably be expected to expand employment
opportunities in the U.S. economy, without causing undue job
loss in sectors currently dependent on ANS production and
transportation.
Employment in the Oil Production and Refining Industries.
DOE's analysis concludes that permitting ANS exports would
result in increased oil industry employment of between 10,000
and 25,000 jobs. Reforms should permit the crude oil market to
operate more efficiently. We would anticipate that ANS crude
oil will continue to be made available to West Coast
refineries, but that the price would adjust to prevailing
market prices. We believe that the abundant worldwide supply of
crude oil will ensure that prices for ANS crude sold to U.S.
refiners will not rise above world market levels.
Employment for U.S. Seafarers. Reforms should not transfer
seafarer employment opportunities abroad.
Employment for U.S. Shipbuilders. The Administration is
engaged in ongoing efforts to enhance competitive opportunities
for U.S. shipyards by opening foreign markets to U.S.
shipbuilders. In October 1993, the Clinton Administration
announced a comprehensive plan to strengthen the U.S.
shipbuilding industry. This plan includes the following
elements: (1) ensuring fair international competition; (2)
improving competitiveness through increased research and
development funding; (3) eliminating unnecessary government
regulation; (4) financing ship sales through Title XI loan
guarantees; and (5) assisting international marketing.
Consistent with this plan, on December 21, 1994, the United
States, along with other major shipbuilding nations, signed an
agreement that requires signatories to eliminate subsidies and
other trade distorting measures, including ``home-build''
requirements, to the commercial shipbuilding and repair
industry. The Agreement was negotiated under the auspices of
the Organization for Economic Cooperation and Development
(OECD). This multilateral agreement will eliminate foreign
shipbuilding subsidies and other distortive trade practices
that limit competitive opportunities for U.S. shipyards.
3. Adherence to International Trade Commitments.--Of
course, any conditions imposed on exports must be consistent
with established U.S. international trade policies. A home-
build requirement for ANS crude exports raises legal issues of
concern vis-a-vis U.S. international trade obligations.
Thus, we oppose any requirement that ANS oil exports be
carried on U.S.-built vessels.
There has been concern expressed that requiring U.S. flag
vessels to carry exports of ANS crude oil would set a dangerous
precedent with respect to extending cargo preference in
shipping trade. The Administration views the requirement of
flag-preference for ANS crude as unique, since there is the
very real danger of lost seafarer jobs resulting from the
displacement of shipments now carried in the coastwide trade.
This action should not be viewed as opening further
possibilities for extending cargo preference.
4. Environmental Protection.--Environmental resources must
be fully protected. DOE analyzed potential environmental
impacts in our June 1994 study. In the course of that initial
review, we found no plausible evidence of any direct, negative
environmental impacts. There would be no need to expand the
Trans-Alaska Pipeline, and the number of overall tanker
movements in U.S. waters would be reduced. Moreover, indirect
effects, such as changes in California refinery activity and
increased California production, would be strictly regulated
under existing regulatory regimes.
All shipping that occurs as a result of permitting ANS
exports, including exports from Alaska and offsetting imports
into the U.S., will have to meet all prevailing U.S.
environmental protection requirements, including the new
provisions of the Oil Pollution Act of 1990.
Nonetheless, before any export of ANS crude oil is
permitted, an environmental assessment consistent with the
requirements of the National Environmental Policy Act of 1970
should be undertaken.
Legislation to permit export of ANS crude oil should not be
linked to a change in status of the Arctic National Wildlife
Refuge. The Administration has not altered its opposition to
exploration and development of any oil resources that may be
under the coastal plain of the Arctic National Wildlife Refuge.
Further, the Refuge will continue to be managed for its
wildlife and wilderness values.
5. ANS Export Policy Monitoring.--Interested parties should
review ANS export activities periodically. Once ANS exports
have begun, appropriate federal agencies should consult with
affected state and local governments, interested industry and
worker representatives, and environmental organizations to help
ensure that the policy is implemented consistent with all
license terms and any other applicable energy, economic, and
environmental criteria. Moreover, we are prepared to track
petroleum market and refining activities in the period
following Congressional modification of the ban.
Mr. Chairman, I believe that H.R. 70 provides a vehicle for
permitting Alaskan North Slope crude oil exports consistent
with these principles. We believe the bill would be
substantially improved by requiring an appropriate
environmental assessment before approving export activities and
by providing for appropriate enforcement action, including
revoking permission to export, in the event of anticompetitive
behavior that injures U.S. industry.
Some argue that allowing exports of ANS crude oil will
increase product costs to consumers. We believe the export of
ANS crude oil should not affect consumers adversely. Our
evaluations indicate that ANS oil exports might raise the
market prices of California and Alaskan crude oil by as much as
$1.20 and $1.60 per barrel. More than half ANS crude oil and 75
percent of California crude oil is produced by refiners that
process it themselves, or trade it for more convenient
supplies. When this is taken into account, the average cost
increase to refiners is slightly over one cent per gallon of
crude.
We examined historical price movements on the West Coast
and discovered that small movements in West Coast crude oil
prices were much less a determinant of gasoline and diesel fuel
prices than were prices for these products in other markets
such as the Gulf Coast. We concluded that plentiful supplies of
petroleum products would make it impossible for retailers to
increase gasoline or other product prices above those market
levels. Accordingly, we anticipate that higher refiner ANS
crude acquisition costs will not be passed through to
consumers. As stated earlier, we also believe that plentiful
crude supplies will prevent refiners' crude costs from rising
above market levels.
Those who are concerned about the potential environmental
effects of permitting exports fear that ``replacement crude''
will be imported into environmentally fragile areas of the West
Coast on poorly maintained foreign flag vessels. Assuming West
Coast refiners are willing to pay world market prices--as all
other U.S. refiners now do--they should continue to have access
to ANS crude. Therefore, we do not believe there will be
significant additional shipments of crude brought into the West
Coast, beyond quantities they currently import, as a result of
ANS exports. In any event, any tanker traffic will of course
have to meet rigorous national environmental safety standards,
including Oil Pollution Act of 1990 regulations, just as they
do now.
In conclusion, Mr. Chairman, I want to reiterate the
Administration's support for a policy that permits export of
Alaskan North Slope crude oil in a manner that is consistent
with the five principles listed above.
APPENDIX C
----------
House of Representatives,
Committee on Resources,
Washington, DC, May 24, 1995.
Hon. Bud Shuster,
Chairman, Committee on Transportation and Infrastructure, Rayburn House
Office Building, Washington, DC.
Dear Bud: On May 17, 1995, the Committee on Resources
ordered H.R. 70, a bill to permit the export of certain
domestically produced crude oil, reported to the House of
Representatives. This bill was referred primarily to the
Committee on Resources, with the Committee on International
Relations receiving an original sequential referral.
Section 1 of H.R. 70 requires that oil exported from
Alaska's North Slope be transported on vessels documented under
the laws of the United States and be owned by a U.S. citizen,
as determined in accordance with the Shipping Act, 1916. I
believe that this provision may lie in the jurisdiction of the
Transportation and Infrastructure Committee under Rule X(q) (7)
and (12) of the Rules of the House of Representatives.
The lifting of the export ban on Alaska oil is of great
personal importance to me, and the benefits from enacting H.R.
70 are immense: Increasing domestic oil production by 110,000
barrels per day, creating up to 25,000 oil industry-related
jobs, preserving as many as 3300 direct and indirect maritime
jobs, and raising approximately $2 billion in Federal and State
revenues over ten years.
Because the Leadership has an interest in scheduling H.R.
70 for consideration by the House of Representatives in early
June, I would very much appreciate if the Committee on
Transportation and Infrastructure would not seek a sequential
referral of this bill. The Senate has already passed a smiliar
measure in the context of a larger bill, and I hope to be able
to take up the Senate bill and ask for a conference. I would
certainly support your request to the Speaker to be represented
on the conference on this bill.
Thank you for your consideration of my request. I look
forward to working with you on this issue and many others in
the coming months.
Sincerely,
Don Young, Chairman.
------
House of Representatives,
Committee on Transportation and Infrastructure,
Washington, DC, May 25, 1995.
Hon. Don Young,
Chairman, Committee on Resources, Longworth House Office Building,
Washington, DC.
Dear Don: Thank you for your letter regarding H.R. 70, a
bill to permit the export of certain domestically produced
crude oil.
I agree that the Committee on Transportation and
Infrastructure has a jurisdictional claim to Section 1 of the
bill, which requires Alaska North Slope oil to be transported
on vessels documented under the laws of the United States and
owned by United States citizens. However, knowing of your
strong interest in this bill, and not wanting to impede its
rapid consideration by the House of Representatives when we
return from the Memorial Day recess, I will agree not to seek a
sequential referral of the bill.
I ask that our exchange of letters on this matter be made
part of the legislative history of H.R. 70 and look forward to
working with you soon on the House-Senate Conference on this
bill.
With warm regards, I remain
Sincerely,
Bud Shuster, Chairman.
------
House of Representatives,
Committee on Resources,
Washington, DC, May 23, 1995.
Hon. Benjamin A. Gilman,
Chairman, Committee on International Relations, Rayburn House Office
Building, Washington, DC.
Dear Chairman Gilman: I am respectfully requesting your
cooperation in scheduling H.R. 70, a bill to permit exports of
certain domestically produced crude oil, for consideration by
the House of Representatives in early June. H.R. 70 was
primarily referred to the Committee on Resources and
sequentially referred to your Committee.
H.R. 70 amends the Mineral Leasing Act to lift a ban on the
export of oil produced on Alaska's North Slope. In addition,
H.R. 70 also recognizes the authority of the President to
prohibit export of the oil under the Constitution and the
International Emergency Economic Powers Act and the National
Emergencies Act. Finally, with certain exceptions involving
international oil supply agreements, H.R. 70 requires the
transportation of this oil on U.S. flag and U.S. owned vessels.
A ban on the export of Alaska North Slope crude oil is also
in place under the Trans-Alaska Pipeline Authorization Act. The
Committee on Resources exercises jurisdiction over activities
under these statutes under Rule X of the Rules of the House of
Representatives. Under the Export Administration Act, a statute
over which the Committee on International Relations exercises
jurisdiction under Rule X, a similar ban was in place; however,
this authority expired in 1994, but was extended by executive
order. The Committee on International Relations also exercises
general authority over export control under clause (4) of Rule
X(i) of the Rules of the House and over the International
Emergency Economic Powers Act, mentioned above.
Because the House Leadership has an interest in scheduling
H.R. 70 for consideration by the House of Representatives the
first week in June, I would greatly appreciate if the Committee
on International Relations would waive its full sequential
authority over the measure and allow it to be discharged
without amendment to expedite consideration of the bill. The
Senate has already passed a similar measure in the context of a
larger bill. We hope to be able to take up the Senate measure
and ask for a conference. I would certainly support your
request to the Speaker to be represented on the conference on
this bill.
The lifting of the export ban for Alaska oil is of great
personal importance to me, and I deeply appreciate your
willingness to cooperate on this issue. The benefits from
enacting this bill are immense: increasing domestic oil
production by 110,000 barrels per day, creating up to 25,000
oil industry-related jobs, preserving as many as 3300 direct
and indirect maritime jobs, and raising approximately $2
billion in Federal and State revenues over ten years.
I look forward to future cordial working relations between
our Committees, and thank you once again for considering this
proposal.
Sincerely,
Don Young, Chairman.
------
House of Representatives,
Committee on International Relations,
Washington, DC, June 8, 1995.
Hon. Don Young,
Chairman, Committee on Resources,
House of Representatives, Washington DC.
Dear Don: I understand that the Committee on Resources on
May 17 ordered reported H.R. 70, a bill amending the Mineral
Leasing Act to allow the export of Alaskan North Slope (ANS)
crude oil under certain conditions. The bill includes a
provision that falls within the jurisdiction of the Committee
on International Relations pursuant to House Rule X(i) relating
to export controls.
Section 7(d) of the Export Administration Act of 1979, as
amended, prohibits the export of ANS crude oil during non-
emergency periods subject to a Presidential waiver.
In recognition of your committee's desire to bring this
legislation expeditiously before the House of Representatives,
the Committee on International Relations will not seek a
sequential referral of the bill as a result of including this
provision, without, of course, waiving or diminishing the
Committee's jurisdiction over the provision in question. This
committee will reserve its right to seek to have conferees
appointed for this provision during any House-Senate
Conference.
I would appreciate your including this letter as a part of
the report on H.R. 70 and as part of the record during
consideration of this bill by the House.
Thank you for your assistance and prompt attention to this
matter.
With best wishes.
Sincerely,
Benjamin A. Gilman, Chairman.
------
House of Representatives,
Committee on Commerce,
Washington, DC, June 14, 1995.
Hon. Don Young,
Chairman, Committee on Resources, Longworth House Office Building,
Washington, DC.
Dear Mr. Chairman: On May 17, 1995, the Committee on
Resources ordered reported H.R. 70, a bill permitting exports
of Alaskan North Slope oil, and for other purposes.
As you know, H.R. 70, as ordered reported by the Resources
Committee, affects statutory provisions within the jurisdiction
of the Commerce Committee. For example, under Section 103 of
the Energy Policy and Conservation Act (EPCA), the President is
authorized to restrict exports of crude oil and natural gas
produced in the United States when required by the national
interest. Similarly, Section 7 of the Export Administration Act
of 1979 authorizes the President to restrict exports of any
commodity when necessary to protect the domestic economy from
excessive drain of scarce materials and to reduce the serious
inflationary impact of foreign demand. By its terms, H.R. 70
would exempt the export of Alaskan North Slope oil from these
safeguards.
Our staffs have worked out amendments to H.R. 70 that will
allow for the export of certain Alaskan crude oil while
preserving the Commerce Committee's jurisdiction over energy
issues pursuant to Rule X of the Rules of the House. It is my
understanding that these changes will be offered as Committee
amendments to the bill on the House floor.
As a result of our agreement on these issues, and knowing
of your strong desire to move this legislation expeditiously, I
will not seek a sequential referral of the bill. By agreeing
not to seek a sequential referral, the Commerce Committee does
not waive its jurisdiction over these provisions. In addition,
the Commerce Committee reserves its authority to seek equal
conferees on these and any other provisions of the bill that
are within the Commerce Committee's jurisdiction during any
House-Senate conference that may be convened on this
legislation.
I appreciate your consideration in accommodating the
interests of the Commerce Committee.
Sincerely,
Thomas J. Bliley, Jr., Chairman.
------
House of Representatives,
Committee on Resources,
Washington, DC, June 14, 1995.
Hon. Thomas J. Bliley, Jr.,
Chairman, Committee on Commerce, Rayburn House Office Building,
Washington, DC.
Dear Tom: Thank you for your letter in support of
expediting floor consideration of H.R. 70, a bill to permit
exports of certain domestically produced crude oil, for
consideration by the House of Representatives in June. H.R. 70
was primarily referred to the Committee on Resources but
contains matters within the jurisdiction of the Committee on
Commerce.
H.R. 70 amends the Mineral Leasing Act to lift a ban on the
export of oil produced on Alaska's North Slope while
recognizing the authority of the President to prohibit export
of the oil under certain circumstances.
Under clause (e) of Rule X of the Rules of the House of
Representatives, the Committee on Commerce has jurisdiction
over measures relating to the exploration, production, storage,
supply, marketing, pricing, and regulation of energy resources,
including all fossil fuels and national energy policy
generally. In addition, the Committee has jurisdiction over the
Energy Policy and Conservation Act, governing the export of
fossil fuels. Therefore, based on discussions with the
Parliamentarian, I believe that the Committee on Commerce has a
jurisdictional interest in H.R. 70.
Because the House Leadership wants to schedule H.R. 70 for
consideration by the House of Representatives in June, I
greatly appreciate your offer to waive the Committee on
Commerce's sequential authority over the measure. The Senate
has already passed a similar measure in the context of a larger
bill. We hope to be able to take up the Senate measure and ask
for a conference. I would certainly support your request to the
Speaker to be represented on the conference on this bill.
The lifting of the export ban for Alaska oil is of great
importance to me, and I deeply appreciate your willingness to
cooperate on this issue. The benefits from enacting this bill
are immense: increasing domestic oil production by 110,000
barrels per day, creating up to 25,000 oil industry-related
jobs, preserving as many as 3,300 direct and indirect maritime
jobs, and raising approximately $2 billion in Federal and State
revenues over ten years.
I look forward to future cordial working relations between
our Committees, and thank you once again for agreeing to this
proposal.
Sincerely,
Don Young, Chairman.