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SUBCOMMITTEE ON GENERAL OVERSIGHT
AND THE ECONOMY
WASHINGTON, DC, JUNE 18, 1985
Printed for the use of the Committee on Small Business
U.S. GOVERNMENT PRINTING OFFICE
WASHINGTON : 1985
COMMITTEE ON SMALL BUSINESS
PARREN J. MITCHELL, Maryland, Chairman NEAL SMITH, Iowa
JOSEPH M. McDADE, Pennsylvania JOSEPH P. ADDABBO, New York
SILVIO O. CONTE, Massachusetts HENRY B. GONZALEZ, Texas
WILLIAM S. BROOMFIELD, Michigan JOHN J. LAFALCE, New York
ANDY IRELAND, Florida BERKLEY BEDELL, Iowa
JOHN HILER, Indiana HENRY J. NOWAK, New York
VIN WEBER, Minnesota THOMAS A. LUKEN, Ohio
DAVID DREIER, California IKE SKELTON, Missouri
D. FRENCH SLAUGHTER, JR., Virginia CHARLES W. STENHOLM, Texas
JIM KOLBE, Arizona ROMANO L. MAZZOLI, Kentucky
WILLIAM W. COBEY, JR., North Carolina NICHOLAS MAVROULES, Massachusetts ROBERT C. SMITH, New Hampshire CHARLES HATCHER, Georgia
HOWARD COBLE, North Carolina RON WYDEN, Oregon
JOSEPH J. DIOGUARDI, New York DENNIS E. ECKART, Ohio
JAN MEYERS, Kansas GUS SAVAGE, Illinois
DEAN A. GALLO, New Jersey BUDDY ROEMER, Louisiana
J. ALEX MCMILLAN, North Carolina NORMAN SISISKY, Virginia
JOHN E. GROTBERG, Illinois
MAJOR L. CLARK III, Staff Director
Lois LIBERTY, Publications Specialist
SUBCOMMITTEE ON GENERAL OVERSIGHT AND THE ECONOMY
NICHOLAS MAVROULES, Massachusetts, Chairman BERKLEY BEDELL, Iowa
SILVIO O. CONTE, Massachusetts NORMAN SISISKY, Virginia
DAVID DREIER, California JIM COOPER, Tennessee
JOSEPH J. DIOGUARDI, New York JIM OLIN, Virginia
JIM KOLBE, Arizona JOSEPH P. ADDABBO, New York
CATHLEEN GARMAN, Subcommittee Staff Director
Hearing held on June 18, 1985...........
Bedell, Hon. Berkley, a Representative in Congress from the State of
Damon, E. Kent, Jr., vice president, planning and control, ARCO Trans-
tation, Sohio Oil Co..............
ment of Law; accompanied by Mark Wittow, associate director for
Alaska Governor Sheffield's Washington, DC, office....................
Additional material supplied for the hearing record:
Battese, Andrew W. Director, Division of Special Pipeline Rates, Office of
Pipeline and Producer Regulation, Federal Energy Regulatory Commis-
Independent Gasoline Marketers Council: Prepared statement ............
ciation of America: List of Petroleum Marketers Association members...
Maynard, Robert M., assistant attorney general, State of Alaska, Depart-
ment of Law: Prepared statement with attachments.........
trillo, on behalf of Tosco Corp.: Tosco's motion to intervene
Page 185 194 198
A. H.R. 245—Bill to determine methodology for TAPS tariff rates.........
Center for Study of Responsive Law ...
H.R. 245 AND TRANS-ALASKAN PIPELINE
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