§ 1500.304 - Approval of systems, plans, and design.

All significant systems, plans, and design are subject to OFI scrutiny, as a precondition to commencement of construction (Section 5 of the Decision and Section 102(h)(3) of the Reorganization Plan). Without listing every approval requirement, the following are the most significant:

(a) Management plans. Prior to final certification, the ANGTS applicants must provide a “detailed overall management plan” for OFI approval (Section 5 of the Decision, Condition I.1.). Thus, at the outset the applicant's overall strategy for executing the proj-ect will be scrutinized.

(b) Execution contracts. Several aspects of the contracts with execution contractors (the prime contractor for any given pipeline spread) must be approved by the OFI (Section 5 of the Decision, Conditions I.2, I.3, I.7, and I.8). These include contract form (if other than fixed-price), bonding and other prequalification requirements, labor relations procedure, and dispute procedures.

(c) Cost and schedule control. The applicants must provide the OFI with detailed “cost and schedule control techniques” (Id., Condition I.4.). This entails, for example, manpower, material, logistical, and equipment planning.

(d) Operating strategies. The OFI must approve the applicants’ operating strategies. Equipment supply, repair facilities, and spare-part inventories are among the items to be reviewed (Id., Condition I.6.).

(e) Design review. The OFI's technical oversight is manifested most in approving the “final design, design-cost estimate, and construction schedule” for the ANGTS applicants (Id., Condition I.5.). Because construction may not start until final design is approved, this review is perhaps the OFI's primary means for assuring proper design and planning, as well as assuring the reasonableness of the design-cost estimate.

(f) Quality control and assurance. The OFI must approve the procedures proposed for quality control and quality assurance during construction (Id., Condition I.9.). Apart from these procedures, the OFI must approve technical construction specifications and seismic monitoring systems, to assure pipeline safety and integrity of design, as well as approve plans to assure environmental protection (Id., Safety and Design Conditions II.2 and II.6; Environmental Condition III.2.).

(g) Procurement review. As part of the bilateral agreement with Canada relative to ANGTS, the OFI, along with the Northern Pipeline Agency in Canada, is charged with endeavoring “to ensure that the supply of goods and services to (ANGTS) will be on generally competitive terms” (Decision, Section 7, paragraph 7(a)). Because sanctions for violation include reopening bids, procurement review occurs during the planning process, not after-the-fact. This review is accomplished through detailed reciprocal procedures, which were established by a “diplomatic exchange of notes” and subsequently given regulatory approval by the FERC.