Transporting North Slope Gas to Market: The Process for Approving a Second Alaska Pipeline

Four years ago, the policy to increase domestic energy production clashed with the desire to preserve large areas of pristine Alaskan wilderness over the question of constructing the Trans-Alaska Pipeline to bring oil from the large deposits on the North Slope at Prudhoe Bay to the ice-free port of Valdez. The controversy over the oil pipeline raged in the courts¹ and in Congress before it was finally resolved by legislation.² Although the litigation over the original pipeline did delay construction, it elucidated serious environmental impacts that had been overlooked or understimated and resulted in several environmentally crucial design changes and mitigation measures.³ These same concerns for increased energy production and conservation of the Alaskan wilderness are colliding again, this time on the issue of constructing a second pipeline to transport natural gas from the Prudhoe Bay field to the lower 48 states.

The Alaska Natural Gas Transportation Act

The first two private proposals for Alaskan gas pipelines were filed with the Federal Power Commission (FPC) in 1974, and another followed in 1976. Wishing to avoid the strife, delay, and haphazard manner for arriving at the most suitable design which afflicted approval of the Trans-Alaska oil pipeline, the 94th Congress passed the Alaska Natural Gas Transportation Act of 1976.⁴ Designed to provide an orderly process for selecting the best transportation system for the delivery of Alaskan gas to markets in the gas-short lower 48 states, the Act essentially creates a one-time exception to existing law. Normally the FPC makes the final decision on interstate gas pipeline proposals in individual administrative proceedings, and the ultimate FPC decision is then open to judicial review. The Act, however, establishes a four-step process in which all three pipeline proposals can be evaluated at one time by not only the FPC but the President and Congress as well. Once this process is completed, judicial review of the final decision is strictly limited. Designation and construction of the best system would thus theoretically be expedited.⁵

The first step in this process was completed in less than decisive fashion on May 1, 1977 when an equally divided FPC failed to make a formal recommendation in favor of any one proposal to the President.⁶ In the second stage, other federal agencies, state governors, and interested members of the public have an opportunity to submit comments on the FPC's recommendation to the President until July 1, 1977. The Council on Environmental Quality (CEQ) is given a special role at this stage of the process. The Act specifies that CEQ is to hold hearings on the environmental impact statements (EISs) for each of the alternative transportation systems and to comment formally to the President by July 1, 1977 on their legal and factual sufficiency.

The President, in the third step of the decision-making process, has until September 1, 1977 (or December 1 if he believes additional environmental data are required or that the delay is necessary to make a sound decision) to determine whether any system should be built and, if so, to designate such a system in light of the FPC recommendation. Congress, in the fourth step, will then review the President's decision under expedited procedures. For the decision to take effect, a joint congressional resolution approving it must be enacted within 60 days of its receipt. Failing such approval, the President would have 30 days to make and submit a new decision, which Congress would again consider under the same expedited procedures and requirements. If congressional approval is not forthcoming on this second attempt, the Act would expire and the power to make the final decision under normal procedures would revert to the FPC.

Once congressional approval has been given, however, all the necessary federal permits must be issued as soon as possible. Judicial review of these federal agency actions would be available only in the Court of Apeals for the District of Columbia Circuit, and the court's jurisdiction would be strictly limited to claims alleging violations of constitutional rights or administrative actions in excess of [7 ELR 10104] statutory authority.⁷ The Act specifies that congressional approval of a particular system would conclusively establish the sufficiency of its environmental impact statement, and the court would thus quite clearly have no jurisdiction to consider claims that the EIS is inadequate, even, apparently, if CEQ's report to the President supports this view of the impact statement.

Proposed Gas Pipeline Routes

Given the vivid illustration of the current natural gas shortage provided by the bitter winter of 1976-77, the real question at this point seems to be not whether a gas pipeline will be built but which of the three proposed routes it will follow. The first route, suggested in the Arctic Gas consortium proposal, runs east from Prudhoe Bay across the North Slope, including the Arctic National Wildlife Range, to the Mackenzie River delta in Canada, then south to Calgary, at which point one leg would go across the Rockies to California and the other south into the Midwest. Part of the attraction of this alternative is that, should Canada decide to exploit its gas reserves in the Mackenzie delta, the Canadian gas could also be transported by the existing pipeline.

The second proposal takes a different tack. The El Paso Alaska Company suggests a pipeline paralleling the existing oil pipeline all the way from Prudhoe Bay to Valdez. The gas would then be liquified and shipped by cryogenic tanker to an as yet to be sited and constructed facility in southern California where it would be regasified and fed into an existing pipeline system reaching all the way to Texas. The third proposal, from Northwest/Alcan Pipeline Corporation, envisions a route paralleling the oil pipeline to Fairbanks and then following the Alcan highway into Canada, with a fork north of Dawson Creek and another near Calgary. This route would make maximum use of existing pipeline and highway corridors and, like the Arctic Gas proposal, would have legs extending south to the West Coast and the Midwest.

Environmental Impacts

As construction of the Trans-Alaska oil pipeline demonstrated, the permafrost ecology present in much of Alaska is extremely fragile and can be badly damaged by a major construction and excavation project and the road building and heavy vehicle traffic that goes with it.⁸ Close attention must thus be paid to designing the project ultimately chosen so as to minimize environmental impacts and to devising and implementing mitigation measures for unavoidable adverse effects.

All three of the gas pipeline proposals would entail general adverse impacts to the permafrost, but two, the El Paso and Arctic Gas projects, present additional risks of environmental harm. The El Paso plan for trans-shipment of liquified gas to a newly-constructed facility in southern California raises either the possibility of a major catastrophe in the form of a tanker or storage terminal explosion in a heavily populated area or the prospect of heavy industrial development on one of the few remaining undeveloped stretches of coastline in that part of the state.The Arctic Gas route, on the other hand, traverses the entire width of the Arctic National Wildlife Range, a fact which has led the State of Alaska, as well as a number of environmental and conservation groups, including the Sierra Club, the Wilderness Society, Friends of the Earth, and the national Audubon Society, to oppose this alternative.⁹ These groups discount as being totally unrealistic the sponsor's contention that construction through the range can be completed in one winter without the need for building permanent roads.

The FPC Decision

On May 2, 1977 the FPC split evenly¹⁰ between endorsing an administrative law judge's decision¹¹ in favor of the Arctic Gas proposal and recommending approval of a revision of the Alcan proposal. The four Commissioners (one seat on the Commission is vacant) did agree that either of these land route alternatives would be more reliable and entail less environmental damage than El Paso's plan for marine transport of liquified gas. Apparently not wishing to burn its bridges, however, the Commission went on to say that the El Paso route would merit congressional approval if both the Arctic and Alcan proposals were rejected.

The FPC's present cost estimates in 1975 dollars for the Alcan and Arctic Gas systems were virtually identical — $6.76 billion and $6.73 billion, respectively. One noteworthy aspect of the decision was the indication by the two commissioners favoring the Arctic Gas route, with a scheduled completion date of 1983, that they would switch their support to Alcan, to be completed in 1982, if Canada should decision not to allow gas production from the Mackenzie delta.

CEQ's Special Role

In view of the limitations placed upon judicial review of the environmental impact statement for the proposal that is ultimately approved, the Alaska Natural Gas Transportation Act assigned special duties, including the holding of public hearings, to CEQ to assure that the requirements of the National Environmental Policy Act (NEPA) with respect to each of the proposals are met. The hearings, which were held in Anchorage (on May 16 and 17) and in Washington, D.C. (on May 23 and 24), constituted an extensive examination of all potential environmental impacts of the three proposals.

The Alaska Natural Gas Transportation Act also [7 ELR 10105] directs CEQ to submit to the President by July 1, 1977 a report summarizing the data developed and views presented at the hearings and giving the Council's own assessment of the legal and factual sufficiency of each of the environmental impact statements. In giving CEQ this additional responsibility, the Act implicitly recognizes the Council's authoritative position in interpreting NEPA's requirements and in evaluating the sufficiency of attempts at compliance by other federal agencies. Moreover, the required report on the sufficiency of the impact statements for these three proposals could serve as a vehicle for the Council to enunciate broad advisory principles on needed changes in the form and content of impact statements, such as less voluminous description and more incisive analysis of costs and benefits.

The President's Decision

With submission of CEQ's report and the views or comments of other federal agencies on July 1, the stage will be set for President Carter's decision this fall on which proposal to recommend for congressional approval. Since only the proposal recommended by the President can receive formal congressional consideration, the lobbying by proponents and opponents of all three proposals is likely to be hot and heavy until Mr. Carter makes his decision.

Two political considerations of which some account must be taken are the positions of the State of Alaska and Canada. The Alaska Natural Gas Transportation Act does not purport to preempt state permit, authorization, or rights-of-way requirements so Alaska does have some practical leverage over the ultimate gas pipeline route. The state supports the El Paso proposal basically because it minimizes environmental impacts by following the existing oil pipeline corridor and because it would make possible delivery and use of the state's royalty gas¹² in Fairbanks and Anchorage. Alaska finds the Arctic Gas proposal unacceptable, on the other hand, because of its much greater environmental impacts (crossing the Arctic National Wildlife Range) and the fact that it would make the state's royalty gas unavailable to theFairbanks and Anchorage population centers.

The Canadian government has not yet determined its position on the two possible Trans-Canada routes, but it is expected to do so by late summer, Clearly both the Arctic Gas and Alcan proposals depend on the acquiesence of both the national government and the governments of the provinces through which the pipeline would travel. An additional factor is that some of the lands that each of these routes would cross within Canada are the subject of as yet unresolved territorial claims by Indian tribes that are outspokenly opposed to construction of such a pipeline.

The President's decision on which proposal to recommend to Congress may, once approved by joint resolution, exert an impact on the ecological, economic, and social fabric of Alaska and northwestern Canada almost as profound as that wrought by construction of the original oil pipeline. The decision will also be noteworthy, however, as a highly visible indication of the kind of environmental trade-offs that President Carter is willing to make in order to further domestic energy production.

1. Wilderness Society v. Hickel, 325 F. Supp. 422, 1 ELR 20160 (D.D.C. 1970) (preliminary injunction issued); 2 ELR 20583 (D.D.C. 1972) (injunction dissolved); Wilderness Society v. Morton, 479 F.2d 842, 3 ELR 20085 (D.C. Cir. 1973) (remanded with directions to grant permanent injunction), cert. denied, 411 U.S. 917 (1973).

2. Federal Lands Rights-of-Way Act of 1973, P.L. 93-153, amending the Mineral Leasing Act of 1920, 30 U.S.C. § 185, ELR 41427; Trans-Alaska Pipeline Authorization Act, 42 U.S.C. §§ 1651-1655, ELR 41431.

3. Wilderness Society v. Morton, 495 F.2d 1026, 1033, 4 ELR 20279, 20282 (D.C. Cir. 1974), rev'd on other grounds sub nom. Alyeska Pipeline Service Co. v. Wilderness Society, 421 U.S. 240, 5 ELR 20286 (1975).

4. P.L. 94-586, 15 U.S.C. § 719, ELR 41282.

5. 1976 U.S. Code Cong. & Admin. News 6649.

6. Federal Power Commission, Recommendation to the President — Alaska Natural Gas Transportation Systems (May 1, 1977).

7. These standards are embodied in the Administrative Procedure Act, 5 U.S.C. § 706(2)(B) and (C), and are to be distinguished from the "arbitrary, capricious, and abuse of discretion" test of § 706(2)(A) and the "without observance of procedure required by law" test of § 706(2)(D).

8. The environmental effects of pipeline construction in a permafrost area are set out in Center for Natural Areas, The Decision to Transport Alaskan Natural Gas From Prudhoe Bay: Issues and Decisionmakers 102 et seq. (1976). This study, which was done under contract for the Environmental Protection Agency, examines the institutional as well as the environmental issues surrounding construction of a pipeline to bring North Slope gas to United States markets.

9. 123 CONG. REC. H3699, 3700 (daily ed. Apr. 27, 1977) (Report by Rep. Roncalio on Delivery of Alaskan Natural Gas to the Lower 48 United States).

10. Supra note 6.

11. Alaskan Arctic Pipeline Co., No. CP75-96 (Feb. 1, 1977). The 430-page opinion is summarized at 10 FPC News No. 5, at 2 (Feb. 4, 1977).

12. Alaska will receive 12.5 percent of the natural gas extracted from the Prudhoe Bay field as its royalty share. The state can either sell this gas back to the pipeline company or keep it for residential or industrial use within the state.