HB 120: "An Act authorizing the negotiation for the lease, sale, or other disposal of state land with a contract carrier that is engaged in the intrastate transportation of natural gas by pipeline; and relating to regulation of certain contract carriers."
00 HOUSE BILL NO. 120 01 "An Act authorizing the negotiation for the lease, sale, or other disposal of state land 02 with a contract carrier that is engaged in the intrastate transportation of natural gas by 03 pipeline; and relating to regulation of certain contract carriers." 04 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF ALASKA: 05 * Section 1. AS 19.40.200(b) is amended to read: 06 (b) The prohibition on disposal of state land under (a) of this section does not 07 apply to a disposal 08 (1) to a contract carrier that is engaged in the intrastate 09 transportation of natural gas by pipeline, a licensed public utility, or a licensed 10 common carrier under AS 38.05.810(e); 11 (2) for the reauthorization of leases that were in effect on January 1, 12 1994, for nonresidential purposes within the following development nodes: 13 (A) Coldfoot: 14 Township 28 North, Range 12 West, Fairbanks Meridian
01 Sections 3 - 4 02 Sections 9 - 10 03 Sections 15 - 16 04 Sections 20 - 22 05 (B) Yukon River Crossing: 06 Township 12 North, Range 10 West, Fairbanks Meridian 07 Sections 6 - 7 08 Township 12 North, Range 11 West, Fairbanks Meridian 09 Sections 1 - 2 10 Section 12 11 Township 13 North, Range 10 West, Fairbanks Meridian 12 Sections 29 - 32 13 Township 13 North, Range 11 West, Fairbanks Meridian 14 Section 22 15 Sections 25 - 27 16 Sections 34 - 36 17 (3) for nonresidential development within the following development 18 nodes: 19 (A) Deadhorse: 20 Township 10 North, Range 14 East, Umiat Meridian 21 Township 10 North, Range 15 East, Umiat Meridian 22 Section 8 23 Sections 17 - 20 24 Section 30 25 (B) Coldfoot: 26 Township 28 North, Range 12 West, Fairbanks Meridian 27 Sections 3 - 4 28 Sections 9 - 10 29 Sections 15 - 16 30 Sections 20 - 22 31 Township 29 North, Range 12 West, Fairbanks Meridian
01 Sections 23 - 27 02 Sections 34 - 35 03 (C) Franklin Bluffs: 04 Township 4 North, Range 14 East, Umiat Meridian 05 Sections 3 - 4 06 Sections 9 - 10 07 Sections 15 - 16 08 (D) Happy Valley: 09 Township 3 South, Range 14 East, Umiat Meridian 10 Sections 19 - 20 11 Sections 29 - 30 12 (E) Yukon River Crossing: 13 Township 12 North, Range 10 West, Fairbanks Meridian 14 Sections 6 - 7 15 Township 12 North, Range 11 West, Fairbanks Meridian 16 Sections 1 - 2 17 Section 12 18 Township 13 North, Range 10 West, Fairbanks Meridian 19 Sections 29 - 32 20 Township 13 North, Range 11 West, Fairbanks Meridian 21 Section 22 22 Section 25 - 27 23 Section 34 - 36; or 24 (4) necessary for 25 (A) an oil and gas lease or gas only lease under AS 38.05.180; 26 (B) exploration, development, production, or transportation of 27 oil and gas north of 68 degrees north latitude; or 28 (C) a state lease or materials sale for 29 (i) exploration, development, production, or 30 transportation of oil or gas; 31 (ii) reconstruction or maintenance of state highways; or
01 (iii) construction or maintenance of airports. 02 * Sec. 2. AS 38.05.810(e) is repealed and reenacted to read: 03 (e) The lease, sale, or other disposal of state land at appraised fair market 04 value may be negotiated by the director with a contract carrier that is engaged in the 05 intrastate transportation of natural gas, a licensed public utility, or a licensed common 06 carrier, if the interest in state land is required for the conduct of the business of the 07 public utility, common carrier, or contract carrier. In this subsection, 08 (1) the lease, sale, or other disposal of state land is subject to approval 09 by the commissioner; and 10 (2) "contract carrier" means a person that owns or operates a pipeline 11 for which the transport of natural gas is negotiated by individual contracts or 12 agreements. 13 * Sec. 3. AS 38.35.120(a) is amended to read: 14 (a) A noncompetitive lease of state land for a right-of-way for an oil or natural 15 gas pipeline valued at $1,000,000 or more may be granted only upon the condition that 16 the lessee expressly covenants in the lease, in consideration of the rights acquired by it 17 under the lease, that 18 (1) it assumes the status of and will perform all of its functions 19 undertaken under the lease as either a common carrier or contract carrier and will 20 accept, convey, and transport without discrimination crude oil or natural gas, 21 depending on the kind of pipeline involved, delivered to it for transportation from 22 fields in the vicinity of the pipeline subject to the lease throughout its route both on 23 state land obtained under the lease and on the other land; it will accept, convey, and 24 transport crude oil or natural gas without unjust or unreasonable discrimination in 25 favor of one producer or person, including itself, as against another but will take the 26 crude oil or natural gas, depending on the kind of pipeline involved, delivered or 27 offered, without unreasonable discrimination, that the Regulatory Commission of 28 Alaska shall, after a full hearing with due notice to the interested parties and a proper 29 finding of facts, determine to be reasonable in the performance of its duties as a 30 common carrier or contract carrier; however, a lessee that owns or operates a natural 31 gas pipeline
01 (A) subject to regulation either under the Natural Gas Act (15 02 U.S.C. 717 et seq.) of the United States or by the state or political subdivisions 03 with respect to rates and charges for the sale of natural gas, is, to the extent of 04 that regulation, exempt from the common carrier or contract carrier 05 requirement in this paragraph; 06 (B) that is a North Slope natural gas pipeline (i) is required to 07 operate as a common carrier only with respect to the intrastate transportation of 08 North Slope natural gas, as that term is defined in AS 42.06.630, and (ii) is not 09 required to operate as a common carrier as to a liquefied natural gas facility or 10 a marine terminal facility associated with the pipeline, and is not otherwise 11 required to perform its functions under the lease as a common carrier; for 12 purposes of this subparagraph, "North Slope natural gas pipeline" means all the 13 facilities of a total system of pipe, whether owned or operated under a contract, 14 agreement, or lease, used by a carrier for transportation of North Slope natural 15 gas, as defined by AS 42.06.630, for delivery, for storage, or for further 16 transportation, and including all pipe, pump, or compressor stations, station 17 equipment, tanks, valves, access roads, bridges, airfields, terminals and 18 terminal facilities, including docks and tanker loading facilities, operations 19 control centers for both the upstream part of the pipeline and the terminal, 20 tanker ballast treatment facilities, fire protection system, communication 21 system, and all other facilities used or necessary for an integral line of pipe, 22 taken as a whole, to carry out transportation, including an extension or 23 enlargement of the line; this subparagraph does not apply to a lessee that is 24 authorized to operate as a contract carrier by the Regulatory Commission 25 of Alaska under AS 42.06.140(a)(11); 26 (2) it will interchange crude oil or natural gas, depending on the kind 27 of pipeline involved, with each like common carrier or contract carrier and provide 28 connections and facilities for the interchange of crude oil or natural gas at every 29 locality reached by both pipelines when the necessity exists, subject to rates and 30 regulations made by the appropriate state or federal regulatory agency; 31 (3) it will maintain and preserve books, accounts, and records and will
01 make those reports that the state may prescribe by regulation or law as necessary and 02 appropriate for purposes of administration of this chapter; 03 (4) it will accord at all reasonable times to the state and its authorized 04 agents and auditors the right of access to its property and records, of inspection of its 05 property, and of examination and copying of records; 06 (5) it will provide connections, as determined by the Regulatory 07 Commission of Alaska under AS 42.06.340, to facilities on the pipeline subject to the 08 lease, both on state land and other land in the state, for the purpose of delivering crude 09 oil or natural gas, depending on the kind of pipeline involved, to persons (including 10 the state and its political subdivisions) contracting for the purchase at wholesale of 11 crude oil or natural gas transported by the pipeline when required by the public 12 interest; 13 (6) it shall, notwithstanding any other provision, provide connections 14 and interchange facilities at state expense at the [SUCH] places the state considers 15 necessary if the state determines to take a portion of its royalty or taxes in oil or 16 natural gas; 17 (7) it will construct and operate the pipeline in accordance with 18 applicable state laws and lawful regulations and orders of the Regulatory Commission 19 of Alaska; 20 (8) it will, at its own expense, during the term of the lease, 21 (A) maintain the leasehold and pipeline in good repair; 22 (B) promptly repair or remedy any damage to the leasehold; 23 (C) promptly compensate for any damage to or destruction of 24 property for which the lessee is liable resulting from damage to or destruction 25 of the leasehold or pipeline; 26 (9) it will not transfer, assign, or dispose of in any manner, directly or 27 indirectly, or by transfer of control of the carrier corporation, its interest in a right-of- 28 way lease, or any rights under the lease or any pipeline subject to the lease to any 29 person other than another owner of the pipeline (including subsidiaries, parents, and 30 affiliates of the owners), except to the extent that the commissioner, after 31 consideration of the protection of the public interest (including whether the proposed
01 transferee is fit, willing, and able to perform the transportation or other acts proposed 02 in a manner that will reasonably protect the lives, property, and general welfare of the 03 people of Alaska), authorizes; the commissioner shall not unreasonably withhold 04 consent to the transfer, assignment, or disposal; 05 (10) it will file with the commissioner a written appointment of a 06 named permanent resident of the state to be its registered agent in the state and to 07 receive service of notices, regulations, decisions, and orders of the commissioner; if it 08 fails to appoint an agent for service, service may be made by posting a copy in the 09 office of the commissioner, filing a copy in the office of the lieutenant governor, and 10 mailing a copy to the lessee's last known address; 11 (11) the applicable law of this state will be used in resolving questions 12 of interpretation of the lease; 13 (12) the granting of the right-of-way lease is subject to the express 14 condition that the exercise of the rights and privileges granted under the lease will not 15 unduly interfere with the management, administration, or disposal by the state of the 16 land affected by the lease, and that the lessee agrees and consents to the occupancy 17 and use by the state, its grantees, permittees, or other lessees of any part of the right- 18 of-way not actually occupied or required by the pipeline for the full and safe 19 utilization of the pipeline, for necessary operations incident to land management, 20 administration, or disposal; 21 (13) it will be liable to the state for damages or injury incurred by the 22 state caused by the construction, operation, or maintenance of the pipeline, and it will 23 indemnify the state for the liabilities or damages; 24 (14) it will procure and furnish liability and property damage insurance 25 from a company licensed to do business in the state or furnish other security or 26 undertaking upon the terms and conditions the commissioner considers necessary if 27 the commissioner finds that the net assets of the lessee are insufficient to protect the 28 public from damage for which the lessee may be liable arising out of the construction 29 or operation of the pipeline. 30 * Sec. 4. AS 42.06.140(a) is amended to read: 31 (a) The commission
01 (1) shall regulate pipelines and pipeline carriers in the state; 02 (2) may investigate, upon complaint or its own motion, the rates, 03 classifications, rules, regulations, prices, services, practices, and facilities of pipeline 04 carriers, and the performance of obligations under and compliance with the terms of 05 leases issued by the state; 06 (3) may make, prescribe, or require just, fair, and reasonable rates, 07 classifications, regulations, practices, services, and facilities for pipeline carriers; 08 (4) may require pipeline carriers and affiliated interests to file with the 09 commission reports and other information and data required or permitted to be 10 required by other provisions of this chapter; 11 (5) may adopt regulations that are necessary and proper to the 12 performance of its duties under this chapter, including regulations governing practices 13 and procedures of the commission; the regulations may not be inconsistent with state 14 law; 15 (6) shall, during normal business hours, have access to and may 16 designate any of its employees, agents, or consultants to inspect and examine the 17 accounts, financial and property records, books, maps, inventories, appraisals, 18 valuations, and related reports kept by a pipeline carrier, or kept for it by others, that 19 directly affect the interests of the state and directly relate to pipelines located in the 20 state; 21 (7) may initiate, intervene in, and appear personally or by counsel and 22 offer evidence in and participate in, any proceedings involving a pipeline carrier, and 23 affecting the interests of the state, before any officer, department, board, commission, 24 or court of this state; 25 (8) shall require permits for the construction, enlargement in size or 26 operating capacity, extension, connection and interconnection, operation, or 27 abandonment of any oil or gas pipeline facility or facilities, subject to necessary and 28 reasonable terms, conditions and limitations; 29 (9) may prescribe the system of accounts and regulate the service of an 30 oil or gas pipeline facility; 31 (10) shall provide all reasonable assistance to the Department of Law
01 in intervening in, offering evidence in, and participating in proceedings involving a 02 pipeline carrier or affiliated interest and affecting the interests of the state, before an 03 officer, department, board, commission, or court of another state or the United States; 04 (11) may authorize a person to own or operate an intrastate 05 natural gas pipeline as a contract carrier, notwithstanding any other provision of 06 law. 07 * Sec. 5. AS 42.06.140 is amended by adding a new subsection to read: 08 (c) In this section, "contract carrier" has the meaning given in 09 AS 38.05.810(e). 10 * Sec. 6. AS 42.06.630(16) is amended to read: 11 (16) "pipeline" or "pipeline facility" means all the facilities of a total 12 system of pipe, whether owned or operated by a pipeline carrier under a contract, 13 agreement, or lease, in this state used by a pipeline carrier for transportation, for hire 14 and as a contract carrier engaged in the intrastate transportation of natural gas 15 or common carrier, of oil, gas, coal, or other mineral slurry for delivery, storage, or 16 further transportation, and including all pipe, pump and compressor stations, station 17 equipment, and all other facilities used or necessary for an integral line of pipe to 18 effectuate the transportation from point to point, excluding, however, gas processing 19 plants, treaters, and separators;