Paragraph 14: Legislation

This Paragraph commits both Governments to seek expeditiously all legislative authorities which might be required to implement the Agreement and to facilitate timely and efficient construction of the Pipeline. This provision specifically refers to legislation to remove delays to construction of the Pipeline.

Paragraph 15: Entry into force

This paragraph provides that the Agreement will become effective upon signature, and will continue in effect for 35 years and thereafter until terminated on 12 month's notice by either Government. The provisions of the Agreement which required legislative action will become effective when the required legislative action has been completed.

At the end of the agreement there are several Annexes which append specific information or explain a particular feature of the Agreement in more detail.

Annex I: Description of the route

(Self-explanatory).

Annex II: Zones for the pipeline in Canada

This Annex specifically identifies the zones for cost allocation under the method described in Paragraph 6. It gives the boundaries of the zones.

Annex III: Cost allocation in Zone 11

This Annex describes the cost allocation agreement for the Dawson Spur, which was outlined in Paragraph 6, in more detail. In particular, the computation of the ceiling on U.S. shippers' liability for the cost of service on the Dawson Spur is set forth in some detail.

The Annex also contains detailed specification of the filed capital costs for Canadian portions of the system which will be used to determine cost overruns for the purposes of cost allocation for the Dawson Spur. Possible adjustments of those costs in limited circumstances are also covered.

Annex IV: Direct charges by public authorities

This Annex is a list of typical direct cost items for use with the limitation on direct charges by public authorities in Canada; the limitation is in Paragraph 11 of the Agreement.

Annex V: Statements by the provincial governments

Public statements by the Governments of the three western provinces are attached in which they agree to the principles of the Transit Pipeline Treaty. Each also undertakes to work out with the Canadian Government a Federal-Provincial Agreement.

CHAPTER XII-SUMMARY OF COMMENTS RECEIVED

Throughout the period during which an Alaska natural gas transportation system has been under consideration, many comments concerning the decision have been sent to the various Feder

al agencies involved in the decision process. Comments have come from all parts of the American public, including private citizens, businesses, labor unions, municipalities, legislators and Governors. They ranged from expressions of support for a specific proposal to suggestions of alternative and often innovative methods of building a gas delivery system.

By far, the majority of comments were received within the past few months in response to a Federal Register notice on June 14, 1977, advising the public of Section 6(b) of the Alaska Natural Gas Transportation Act of 1976 which invites comments from Governors, municipalities, and other interested parties. Letters soliciting comments were written to the Governors of all the States, and meetings were held on several occasions with a committee of State Public Utility Commissioners.

The comments received in the period since the FPC's Recommendation to the President have been of two basic types-those supporting a specific proposal, and those commenting on certain aspects of the FPC recommendations. Almost all the letters received favored the delivery of the North Slope gas to the lower-48 states. Very few suggested that construction of a delivery system be significantly delayed or that no system be built.

Arctic gas

COMMENTS ON SPECIFIC PROJECTS

The supporters of Arctic Gas most often cited Arctic's claims of lower cost of service and fuel use; ability to connect Prudhoe Bay and Mackenzie Delta reserves with one pipeline; and the opportunity to maintain Canadian gas exports once the Mackenzie Delta reserves were connected.

The unfavorable comments generally concerned the environmental impacts of crossing the Arctic National Wildlife Range (ANWR); higher potential for delay and cost overrun due to winter construction, use of snowroads, and regulation by two countries. The unsettled status of the Canadian native land claims was stressed as a factor which would cause delays or preclude construction.

Before the July 4th Canadian NEB decision, the Arctic Gas proposal received support from municipalities and businesses in the Midwest and California; the Governors of Arkansas, Kansas, Wisconsin, Minnesota, Massachusetts, Ohio, Maryland, Illinois; and many private citizens from all parts of the country. The Governors of California and Montana also supported an overland route. El Paso

Support for the El Paso proposal was primarily based on the fact that El Paso would lie entirely within the United States. According to its supporters, this fact would result in greater domestic employment, higher tax payments, better security of supply, and regulatory control by one country. Another favorable point for El Paso cited was that it used the existing Alyeska transportation corridor and facilities.

The principal negative comments concerned El Paso's higher cost of service; the location of its LNG plant in active seismic zones; dif

ficulty of siting the regasification plant in Southern California; and the possibility that it would foreclose delivery of additional Canadian gas supplies.

Support for the El Paso proposal came from various state AFLCIO offices, maritime labor unions, some private citizens, and the Governors of Alaska, New Mexico, Arizona, Texas, Alabama, New York and Washington.

Alcan

Alcan's supporters often cited this proposal as an example of the success of the National Environmental Policy Act (NEPA) because the proposal developed as an alternative which achieved the economies of scale of a pipeline while avoiding the environmentally sensitive ANWR and Arctic regions. Alcan also received support because it generally follows existing transportation corridors. It seemed even greater after the NEB selected the Alcan proposal and stated that construction of a Trans-Canadian pipeline would facilitate maintenance of Canadian gas exports.

The negative comments on Alcan were that it had a less developed hearing record; would incur more delays by being subject to regulation by two countries; would lack adequate pre-construction planning, would require settlement of Canadian Native claims in southern Yukon; and would need additional environmental studies. Concerns were raised about the conditions imposed by the NEB, such as the socioeconomic impact fund and the requirement to increase capacity to carry Canadian gas in the system.

Support for the Alcan proposal has come from the major environmental organizations and the Governors of Wyoming, Nevada, Oregon, Colorado, and Utah.

COMMENTS ON SPECIFIC FPC RECOMMENDATIONS

Formula wellhead pricing

The producers and the State of Alaska strongly opposed the FPC recommendation for "formula pricing" of the wellhead price. They contended that this approach forced the producers to share the risk of the project—even if they were not investors. This would serve to inhibit further exploration for gas in northern Alaska. They also argued this proposal would reduce the sponsor's incentive to manage the project properly.

Minimum throughput requirements

The producers also opposed this recommendation because contending that throughput should be established by the behavioral characteristics of the reservoir and by the State of Alaska.

Widespread distribution of gas

The members of the Artic Gas Consortium strongly opposed this recommendation. They argued that this requirement would be a disincentive for prospective members to join the consortium; would be unfair and discriminatory to companies who could purchase more than the maximum; and would result in discriminatory treatment of Alaskan gas compared with other fuel sources. Alcan, however, supported the widespread distribution requirement.

Western Leg

The FPC recommendation to delay the decision on the Western Leg was opposed by Arctic, Alcan and the State of California. It was argued that this recommendation is inconsistent with the requirements of Alaska Natural Gas Transportation Act. They also felt that new facilities will be required to deliver Alaska gas to the West.

ALASKA NATURAL GAS TRANSPORTATION SYSTEM:

WAIVERS OF LAW

Waivers of Law.-The President submitted to the Congress findings and proposed waivers of law on October 15, 1981. The President's proposed waiver was approved by Public Law 97-93 (Dec. 15, 1981; 95 Stat. 1204) pursuant to the procedures of section 8 of the Alaska Natural Gas Transportation Act of 1976.