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Special Event

Transportation Secretary Slater, EPA Administrator Browner Testify Before House Energy Subcommittee on High Gas Prices

Aired June 28, 2000 - 9:23 a.m. ET

THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.

DARYN KAGAN, CNN ANCHOR: And we want to take you live right now to Washington, a hearing from the House Commerce Committee. That is Carol Browner, from the EPA, talking about what is on the minds of many of this summer: high gas prices.

(JOINED IN PROGRESS)

CAROL BROWNER, EPA ADMINISTRATOR: ... be required to sell cleaner gasoline. The oil companies were put on notice in 1990 that they would be selling cleaner gasoline in certain regions of the country. EPA entered into a six-month process with the oil companies in 1993 as to what the specifics of that cleaner gasoline recipe would be. We reached a final agreement with the oil companies seven years ago as to what kind of gasoline, the recipe for cleaner gasoline that they would be required to deliver to consumers June 1 of this year, seven years notice to the oil companies of what they were required to do.

The Federal Trade Commission, I assume, and from the words of the chairman who joins us here today, does not take investigations lightly. And as we understand it, the FTC stated before launching its formal investigation that it too could find no explanation for these price spikes that plague the people of this region. And that is why we believe that they have honored the request from Secretary Richardson and me to find out what is behind these price spikes.

In recent weeks, EPA has received some requests to waive the cleaner gasoline burning program. Let me assure you we take these requests very, very seriously, and let me also assure you that we leave all options on the table while we continue to monitor gasoline supplies. Our first commitment is to bring fair prices at the pump to the people of the Midwest, particularly Chicago, Milwaukee areas. That is why waivers must be applied responsibly.

Since supplies of cleaner burning gasoline already are in the system, they're in the pipeline, they're in the terminals, they're in the tanks, the trucks, since they are already in the system, the granting of waivers actually could send the cost of gasoline back upwards, yet again we could see gasoline prices in the Midwest rising.

Since the cleaner burning gasoline program began five years ago -- this is the second phase of the program, the first phase actually began five years ago -- it has resulted in annual reductions of 105,000 tons of smog-forming pollutants and 24,000 tons of toxic air pollutants. This is equivalent to eliminating the smog-forming pollution generated by 16 million cars.

As a result of this program, the health of tens of thousands of people is being protected every summer from respiratory disorders, particularly children who are very, very vulnerable to asthma attacks. That is why we want to make sure that the people of Chicago, the people of Milwaukee, receive fair treatment both at the pumps in terms of gas prices and -- I'm finishing up -- and in terms of receiving the full protection of their health from air pollution.

People in many other markets throughout the U.S. are receiving these benefits. We believe the people of Chicago and Milwaukee deserve the same. We know that cleaner burning gasoline is not the problem. We know that ethanol is not the problem. We are grateful that prices at the pump seem to be dropping, but we still deserve an adequate explanation from the oil companies that serve Chicago and Milwaukee about why prices there have been so high.

Thank you, Mr. Chairman.

UNIDENTIFIED MALE: Thank you. Secretary Slater.

RODNEY SLATER, TRANSPORTATION SECRETARY: Thank you, Mr. Chairman.

Mr. Chairman, members of the committee, I am pleased to join Secretary Richardson, Administrator Browner, and Chairman Patofsky (ph) here today.

I personally am pleased to have the opportunity to provide to the committee information regarding the status of our efforts at the U.S. Department of Transportation to ensure the safe and efficient transport of motor fuels to consumers nationwide. The administration is fully committed to a sound comprehensive approach to energy policy across the federal government. We are prepared to take whatever steps are necessary to promote a sound energy policy that keeps transportation moving and our economy growing.

Just yesterday, the president announced good news regarding our nation's strong economy: a budget surplus of more than $211 billion this year and a projected surplus over the next 10 years that will be over $1 trillion more, larger than the forecast just four months ago. President Clinton, working with this Congress and working with the American people, has set a new economic course of fiscal discipline, expanded trade, greater investment in our people and in our future.

And clearly, transportation and the fuels concerns that we are here to discuss today will have an impact on this overall question. Our efforts to date, though, have produced the longest economic expansion in our nation's history. Our commitment is to continue that.

At the U.S. Department of Transportation, we have a transportation policy with energy security as an essential component. It is balanced by an approach that recognizes our role in regulating the transport of resources in influencing the aggregate demand by transportation users. One element of regulating the transport of energy resources is ensuring the safe, reliable and environmentally sound operation of the nation's pipeline transportation system, including more than 150,000...

BILL TUCKER, CNN ANCHOR: Live from the floor of the New York Stock Exchange, that's the opening bell, you just caught it live right here. Again, the Fed watch continues, that's at 2:15 Eastern time, a little less than five hours from now. We'll see what impact that may have on stocks.

In the meantime, though, back to Rodney Slater on Capitol Hill.

SLATER: ... the supply of gasoline in the Midwest.

To ensure, though, the safe operation and enforcement of our regulations covering the design, construction, inspection testing and operation of the -- and the maintenance of our pipelines is a top concern of the department and this administration. We achieved compliance with our regulations through our own programs and we work in partnership with state agencies to oversee intrastate pipelines.

The administration introduced, as you know, the most comprehensive pipeline safety bill ever produced in the country and it is now before the committee and the Congress. And we thank you for your support and consideration of this marriage here, and we are hopeful that we will have it as a matter of law by the end of this congressional session.

The Research and Special Programs Administration is keeping close watch on two gasoline trends, emission pipelines in particular, which are currently operating at a 20 percent pressure reduction because of potential problems with pipeline integrity as corrective efforts are pursued. These are the Wolverine pipeline operating between the Chicago area and Detroit, and the Explorer pipelines surveying St. Louis and Chicago. If I may, Mr. Chairman, I would like to just give a little information about the current status of both of those pipelines.

The Wolverine pipeline, as you know, failed June 7, releasing some 1,700 barrels of gasoline, and was out of service for several days. The operator has reduced operating pressure by 20 percent until it can check the wells and -- of the pipeline. We anticipate that the operator will complete this work and resume normal operations within three weeks. Operating and -- at reduced pressure, however, Wolverine is currently meeting the pre-failure level of demand in the eastern part of Michigan, and I underscore that. They are currently meeting the pre-failure level, even with the reduction. Supply in the western part of the state was not affected. Again, any restrictions here have not affected service in the Midwest.

As relates to Explorer, a pipeline failed on March 7 in Texas, releasing approximately 12,000 barrels due to failure in a longitudinal scene. The operator reduced the operating pressure by 20 percent and developed a plan to address the safety issues that may have played a role in the failure. Although the Explorer pipeline continues to operate at a 20 percent reduction in operating pressure, the addition of drag-reducing agents to the products in the pipeline has enabled the operator to maintain most of its normal volume despite the pressure reduction.

Again, it -- there is no evidence that either of these pipelines, though they have reduced pressure, have not been able to meet the needs of the American people, and especially in the Midwest. The company reports Explorer that its tanks in the St. Louis area are at capacity and that it is meeting the shipper's demand for reformulated gasoline as well.

KAGAN: We've been listening to Transportation Secretary Rodney Slater, also to EPA Administrator Carol Browner. They are before the House subcommittee, once again the subject is high gas prices, especially as it affects the Midwest this summer. Ms. Browner talking about what many blame, that in states like Illinois and Wisconsin they have to have cleaner gas, blaming that for high gas prices. She says that that shouldn't be the case because the gas companies had seven years to get ready for that. And Rodney Slater talking about another possibility, the problems with pipelines delivering that oil and fuel to that region.

Looks like Energy Secretary Bill Richardson is due to speak before that committee. We are monitoring that, as another committee that is expected to hear from the governors of Wisconsin and Illinois. When they speak, and if they make news, you will see it right here on CNN.

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