West-to-East Crude Oil Transportation System White House Statement on the President's Approval of the Pipeline System.

Pursuant to the congressional directive expressed in Title V of the Public Utility and Regulatory Policies Act of 1978, the President is required to evaluate a number of criteria and consult with various Federal agency heads in order to determine whether any of the applicants for a crude oil transportation system that would serve Northern Tier and inland States is in the national interest. Based on his concern for the potential crude oil supply deficiencies in the Northern Tier States and economic and energy security factors, the President has decided that a west-to-east transportation system is in the national interest.

The President has decided to accept the recommendation of Secretary of the Interior Andrus and approve the proposal of the Northern Tier Pipeline Company, for purposes of Sections 508, 509, 510, and 511 of Title V. These sections confer special procedural and other opportunities on Northern Tier while it seeks the financial backing and throughput agreements to permit the system's construction. If Northern' Tier is unable to secure adequate financial support within a year from the date of the President's approval, or 6 months following the Washington State Energy Facility Siting and Evaluation Council's decision (if it is favorable), whichever is longer, the Trans Mountain Oil Pipeline Corporation will be given an opportunity to take advantage of the same Title V provisions and secure financing for its proposed system.

Trans Mountain's proposal is an attractive alternative which also, on balance, would be in the public interest. Although it does not yet have formal Canadian Energy Board approval, it will require fewer permits in the United States and thus has less need for Title V treatment.

This decision has been made following a thorough review and analysis of reports prepared by the Department of the Interior, the Department of Energy, the Federal Trade Commission, and the Council on Environmental Quality, as well as consultations with the Secretaries of the Interior, Energy, and Transportation, and the Canadian Government. This process has also involved substantial public input over the last several months and congressional consultations.

The President's approval of the Northern Tier Pipeline system confers the opportunity to obtain an expedited review and issuance of permits, and limited judicial review. It does not assure the ultimate construction of either the Northern Tier or Trans Mountain proposal. The Federal Government will not be financing or constructing these proposed pipelines. No Federal funds are or will be involved.

The ultimate decision as to whether or not a west-to-east crude oil transportation system will be constructed cannot be made by the President, but will be a decision arrived at solely by private financial markets. The proper role of the Federal Government in this case is to make certain that public concerns are being looked after, specifically those concerns related to the environment, national energy and economic security, and the maintenance of competitive markets. During the last several months, the Government has ensured that the major issues of the public welfare have been properly addressed.

The President's selection of the Northern Tier proposal is based on the public interest concerns we have mentioned. The system routing could move Alaskan, California, and foreign crude oil to Northern Tier refineries which will in the next decade suffer a deficit in refinery stock without additional transportation capacity. This proposal is the only one which has the advantage of a capability to transport indigenous Northern Tier oil from the Williston Basin and Overthrust Belt areas.

The Northern Tier proposal provides the greatest energy transportation flexibility since it not only can receive oil from the greatest number of sources, but it also possesses the largest volume capacity. The location of the line entirely within the United States also provides a national security advantage. The Northern Tier could be operational sooner than any other proposal and would provide employment for thousands of Americans as well as spurring business opportunity and enhancing local tax bases.

The Canadian Government strongly supported the all-land Northwest Energy Company (Foothills) proposal. Secretary Andrus recommended that the President not approve the Foothills all-land proposal, because it is the least flexible alternative system in view of the fact that it relies entirely on Alaskan crude oil and was not economically viable. The President agreed with that assessment and so informed the Canadian Government. Canada then informed us of its strong support (subject to approval of the Canadian Energy Board) for the Trans Mountain system and strongly urged its approval.

The President's approval of the Northern Tier proposal is conditional on one significant system modification: the pipeline company will be required to make the pipeline physically available to the four major Puget Sound refineries by constructing the necessary connecting lines. The Justice Department questions the President's authority to require a hookup. Therefore the President strongly urges the refineries to agree to this hookup, because it will significantly reduce tanker traffic in the interior of the Sound and thus diminish significant potential environmental hazards to both American and Canadian waters and their rich marine resources. If necessary, the administration will support legislation to achieve this condition.

If the Trans Mountain proposal is eventually approved for purposes of Title V, the conditions that have been specified concerning the pipeline hookup to the refineries and affirmative action plans will be applicable.

In his initial recommendation to the President Secretary Andrus proposed that the Northern Tier Pipeline Company's approval be conditioned on the relocation of the port facility to some point west of Port Angeles, based on environmental concerns. After Secretary Andrus' initial recommendation, several facts came to his attention which convinced him that Port Angeles may be as acceptable a location for a marine terminal as any potential site westward of that location. The Environmental Protection Agency agrees with this finding. While the Washington Energy Facility Site Evaluation Council may properly find that relocation of the port is necessary, we will not impose such a condition.

Prior to issuance of any right-of-way, the President is also requesting the Secretary of the Interior to ensure, by stipulation in the grant of right-of-way, if necessary, that the integrity of the Dungeness Spit and the Dungeness Spit National Wildlife Refuge is maintained.

The President has also determined that it is in the national interest to require the Northern Tier Pipeline Company to assure equal opportunity, through affirmative action in employment and business participation by minorities.

The President's decision in no way preempts the laws of any State in which the Northern Tier pipeline proposal crosses. Nor should this decision be viewed as preeruptive of the ongoing deliberations of the Washington Energy Facility Site Evaluation Council, particularly with respect to the port location.

There is a high degree of uncertainty in regard to the economic factors to be considered in arriving at a decision to build a west-to-east crude oil pipeline. For example, both the size of crude oil deficits that Northern Tier refineries will experience and the size of the west coast surplus of Alaska North Slope, California, and foreign crude oil are in question. It is unlikely that additional study or analysis of these economic uncertainties by Federal agencies will provide reliable answers. These are ultimately factors the private financing markets must take into account.

We are submitting the report prepared by the Department of the Interior describing the findings for each of the criteria specified in Title V. It is now time for the marketplace to determine whether a major west-to-east pipeline will be constructed. The Department of the Interior, under the able leadership of Secretary Andrus, will implement this decision and ensure that the conditions specified are carried out.