Statements on Intorduced Bills and Joint Resolutions

Floor Speech

STATEMENTS ON INTRODUCED BILLS AND JOINT RESOLUTIONS -- (Senate - April 11, 2007)

By Ms. MURKOWSKI (for herself and Mr. Stevens):

S. 1089. A bill to amend the Alaska Natural Gas Pipeline Act to allow the Federal Coordinator for Alaska Natural Gas Transportation Projects to hire employees more efficiently, and for other purposes; to the Committee on Energy and Natural Resources.

Ms. MURKOWSKI. Mr. President, I rise today to introduce legislation that should allow the entity we created just 2 1/2 years ago to oversee and expedite construction of a gas line to bring Alaska's huge reserves of natural gas to markets in the lower 48 States to work better and function more smoothly and quickly.

I, and Senator Ted Stevens who is co-sponsoring this legislation, are introducing this bill in an effort to help speed the full functioning of the Office of Pipeline Coordinator, the entity that we created in fall 2004 to oversee the permitting, design and then construction of an Alaska Natural Gas Pipeline project, intended to bring Alaska's reserves of gas to a Nation in need of additional natural gas supplies.

In 2004 we passed two sets of provisions. The first in that year's Military Construction Appropriations Act, H.R. 4837, P.L. 108-324/15 U.S.C. 720, set up an Office of Federal Pipeline Coordinator to oversee the 15 Federal agencies that will have a role to play in construction and financing of a pipeline system. The bill also set up a streamlined permitting and expedited court review process to limit unnecessary delays in the project--and hopefully prevent costly delays from driving up the project's price. That bill also included an $18 billion Federal loan guarantee. The second of that year's pipeline related bills, the FSC-ETI Act (H.R. 4520/P.L. 108-357) provided the Federal financial incentives expected to be needed to aid financing of the project. They included a tax credit for the cost of the pipe in Alaska and a tax credit for the cost of construction of an Alaskan North Slope gas conditioning plant. The two credits were believed to produce about three-quarters of a billion dollars of benefit to the project.

The project itself involves building a system, either an overland pipeline through Canada or a pipeline through Alaska leading to a natural gas liquefication facility at tidewater in Alaska, to move gas to markets in the lower 48 States. Alaska has 35 trillion cubic feet of known gas in the Prudhoe Bay oil field and likely holds another 150 to 200 trillion cubic feet of gas both on and offshore in northern Alaska. Getting that gas to market would help to meet a likely gas shortage in the lower 48 States within a decade, helping to keep the United States from becoming even more dependent on imported LNG from foreign suppliers.

Currently Alaska's new Governor is in the process of calling for proposals from gas producers, pipeline companies and others interested in building the project, one currently estimated to cost between $30 billion and about half that amount--depending on whether the line through Canada or an LNG project is deemed most economic.

Congress last year funded the creation of the Federal Coordinator's office to begin the process of bringing Federal and State agencies together to oversee the permitting, design, and construction of a pipeline. The Office of the Federal Coordinator was funded for fiscal year 2007 initially with a $403,000 transfer of funds from the Department of Energy, with perhaps another $450,000 to $500,000 soon to be transferred. A coordinator, Alaskan former State Senate President Drue Pearce, was also named, confirmed and is now at work, and the office has reached an agreement with all of the 15 Federal agencies it will oversee on how a pipeline is to be permitted.

The Bush administration has proposed $2.3 million in its fiscal year 2008 budget request to better fund the Coordinator's Office. But development of the office has shown three problems that need corrective action by Congress, the first immediately.

First, the 2004 act made the Coordinator follow Federal personnel law, specifically Title 5 that is a slow and cumbersome personnel process. This bill grants a waiver to Title 5 hiring procedures so that the Federal Coordinator can hire and fire her staff, based on their competence. That should cut the time needed to staff the office with experts in pipeline construction by 6 to 9 months. Given how important it is that the agency has specialists quickly to assist the State of Alaska in its efforts to select a pipeline builder, passing legislation to speed the hiring of Office staff is vital.

The waiver, also is common practice for smaller Federal agencies as a host of agencies, from the Election Assistance Commission to the Vietnam Education Foundation, enjoy the hiring waiver.

Second, the bill gives the coordinator the ability to establish reasonable permit filing and service fees and charges to defray the cost of regulating and the oversight of any pipeline project. While the proposed budget may pay for a half dozen to a dozen employees, nearly 400 were employed in oversight of construction of the

Trans-Alaska Oil Pipeline, some 30 years ago. The bill copies the structure that is currently employed by the Bureau of Land Management's oil and gas leasing division, FLP&MA Section 304, so that it follows a known process in allowing the Federal Coordinator to set and collect fees.

Third, the bill in its Section 2 clarifies part of the original 2004 act's Section 107. That section set up an expedited review process so that any suit concerning the pipeline under its enabling legislation or concerning its compliance with the National Environmental Policy Act would go first to the U.S. Circuit Court of Appeals, D.C. Circuit. All cases would have to be filed within 60 days of an action and the court would have to ``expedite'' decisions on all such cases. This action simply also adds that suits stemming from the pipeline's permitting or construction that relates to the Administrative Procedures Act, the Endangered Species Act, and the National Historic Preservation Act, besides NEPA, would also go to the D.C. Circuit for expedited review. It clearly follows the original intent of the 2004 act, but does not limit litigation unfairly.

The goal of this legislation, if it can be approved quickly by this Congress, would be to help the Pipeline Coordinator staff her office more quickly and then to provide the office the possibility of a more readily available source of funding, should a pipeline applicant move to proceed: The bill also will clarify the legal process for review of a pipeline, helping to speed the project and reduce the chances for cost overruns in construction of potentially the largest private capital construction project in the world's history.

This is a vital project. It has the ability to move from 4.5 to 6 billion cubic feet of gas a day, about 5 percent of the Nation's total gas needs in 2018--the first year the pipeline could go into service, if a final overland project was selected and proposed within the next year. It would likely produce about a third of that initially, if an LNG project was selected to be built.

This should not be a controversial measure. It should have no nonappropriated costs involved in carrying out its provisions. Section 2 of the bill will save the Nation untold millions of dollars in overseeing permitting and construction of a pipeline, once a firm project is selected. Some will say that the bill is not needed since the State of Alaska has yet to reach final agreement with Alaska North Slope gas producers on a firm agreement to build a line. I would argue, however, that this bill needs to pass now to provide additional assistance to help the State hammer out such an agreement and so the regulatory process is clearly in place, once such an agreement is reached. The Coordinator's Office is already involved in a host of discussions and actions relating to a pipeline and the pace is likely to quicken in coming months, provided the office has the expertise it needs to provide technical information to further a project.

I hope the Senate and the Congress will review and approve this bill quickly.

The Alaska gas line project is too important for this Nation's energy future, for our energy security, for our national security and for our balance of payments deficit for it to be delayed needlessly. These changes will likely speed the process of proceeding with a pipeline.

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