COMMITTEE ON SMALL BUSINESS NINETY-NINTH CONGRESS FIRST SESSION WASHINGTON, DC, JUNE 18, 1985 Printed for the use of the Committee on Small Business CONTENTS Page 1 Battese, Andrew W., Director, Division of Special Pipeline Rates, Office of Pipeline and Producer Regulation, Federal Energy Regulatory Commis- Chisholm, Phillip R., executive vice president, Petroleum Marketers Asso- Damon, E. Kent, Jr., vice president, planning and control, ARCO Trans- Love, James P., research associate, Center for Study of Responsive Law..... Maynard, Robert M., assistant attorney general, State of Alaska, Depart- ment of Law; accompanied by Mark Wittow, associate director for Alaska Governor Sheffield's Washington, DC, office.... O'Connell, Quinn, Connole & O'Connell, on behalf of British Petroleum Sisk, Marcus W., Jr., attorney at law, Bowman, Conner, Touhey & Pe- Battese, Andrew W., Director, Division of Special Pipeline Rates, Office of Pipeline and Producer Regulation, Federal Energy Regulatory Commis- Blum, Jack A., attorney at law, Blum, Nash & Railsback, on behalf of the Love, James P., research associate, Center for Study of Responsive Law: Evidence memorandum titled: Background Regarding Effects of Oil Mavroules, Hon. Nicholas, chairman, Subcommittee on General Over- sight and the Economy: Letter sent to and response of the Department Sisk, Marcus W., Jr., attorney at law, Bowman, Conner, Touhey & Pe- trillo, on behalf of Tosco Corp.: Tosco's motion to intervene 32 APPENDIXES Page A. H.R. 245-Bill to determine methodology for TAPS tariff rates.. B. Additional correspondence with Department of Justice C. Prepared statement submitted by EXXON Pipeline Co., Houston, TX.. E. Comments submitted by Arctic Slope Regional Corp., re TAPS proceeding F. ARCO opinion on Williams Pipeline case re settlement. G. State of Alaska opinion on Williams Pipeline case re settlement 185 194 198 ...... 203 205 233 235 H. Additional information submitted by James P. Love, research associate, 252 H.R. 245 AND TRANS-ALASKAN PIPELINE SYSTEM TARIFFS TUESDAY, JUNE 18, 1985 HOUSE OF REPRESENTATIVES, AND THE ECONOMY, Washington, DC. The subcommittee met, pursuant to notice, at 9:40 a.m., in room 2359-A, Rayburn House Office Building, Hon. Nicholas Mavroules (chairman of the subcommittee) presiding. OPENING STATEMENT OF CHAIRMAN MAVROULES Mr. MAVROULES. The hearing will now come to order. This morning the Small Business Subcommittee on General Oversight and the Economy meets to explore the questions surrounding the correct methodology for determining the tariffs for the Trans-Alaskan Pipeline System. Since 1977, the tariffs established by the pipeline owners have been under dispute. Although several recommendations for just and reasonable tariff rates have been made by a FERC administrative law judge, a U.S. appellate court, and even the State of Alaska, there has been no resolution of this issue. We are concerned that the high tariffs now being charged have reduced competition and diminished incentives among producers to explore, develop, and produce petroleum on Alaska's North Slope and effectively kept out the small and independent shippers and oil companies. We have before us one proposal for a TAPS methodology put forth by my colleague, Berkley Bedell, which calls for the use of an original cost methodology. Furthermore, the State of Alaska recently reached an agreement with ARCO and British Petroleum which is intended to be the basis for calculating any refunds owed and determining maximum tariff rates for the life of the pipeline. Just and reasonable tariffs are our ultimate goal. And coming as I do from a region of the country which is heavily dependent on oil, I am concerned that we promote competition and domestic exploration in order to alleviate our own unhealthy reliance on foreign oil. Also, in these times of fiscal austerity, we need to review the impact any of these methodologies will have on the U.S. Treasury and ultimately on all consumers of oil. It is my hope that today's hearing will give all parties directly and indirectly affected by the tariffs an opportunity to express (1) |