04/18/2001 01:30 PM House RES

SB 143-RIGHT-OF-WAY LEASING:PREAPPLICATION COSTS                                                                              
                                                                                                                                
CO-CHAIR MASEK announced  that the first order  of business would                                                               
be SENATE  BILL NO.  143, "An Act  authorizing the  Department of                                                               
Natural  Resources to  enter  into agreements  with  a person  or                                                               
persons desiring to  own an oil or natural  gas pipeline proposed                                                               
to be  located on state  land for  the purposes of  providing for                                                               
payment  of  the  reasonable  costs  incurred  in  preparing  for                                                               
activities  before receipt  of an  application  under the  Alaska                                                               
Right-of-Way  Leasing  Act and  for  activities  relating to  the                                                               
processing of  an application under  that Act; and  providing for                                                               
an effective date."                                                                                                             
                                                                                                                                
Number 0159                                                                                                                     
                                                                                                                                
SENATOR  JOHN TORGERSON,  Alaska State  Legislature, came  before                                                               
the  committee  on  behalf of  the  Senate  Resources  Committee,                                                               
sponsor, to  give an overview of  SB 143.  He  explained that the                                                               
bill would  allow the  Department of  Natural Resources  (DNR) to                                                               
start  collecting fees  for  its  pre-application work  regarding                                                               
pipeline [right-of-way  leases].  Currently, people  must have an                                                               
application  on  file before  the  department  can enter  into  a                                                               
memorandum of agreement.                                                                                                        
                                                                                                                                
SENATOR TORGERSON mentioned looking at  a $10 million fiscal note                                                               
from  [Governor   Knowles]  for  work  the   governor  wants  his                                                               
administration to do  next year regarding the  pipeline.  Senator                                                               
Torgerson told the  committee although a lot of  that would still                                                               
be reimbursable  after an  application is  filed, he  believes it                                                               
would be better  to authorize [DNR] to enter  into agreements now                                                               
for pre-application work.  He explained:                                                                                        
                                                                                                                                
     First of all, we're not  going to be out spending money                                                                    
     on  things that  they don't  want, because  they're not                                                                    
     going to  be willing  to pay  for something  unless ...                                                                    
     it's  work that  they actually  deem necessary  to have                                                                    
     done,  or, through  our negotiations,  we tell  them it                                                                    
     needs to be done.                                                                                                          
                                                                                                                                
     But  in  any  event,  it   leads  to  an  agreement  of                                                                    
     understanding between the parties  of what work will be                                                                    
     done.   And then, the  ... producers who ...  happen to                                                                    
     have  the  application  or  route  under  consideration                                                                    
     would sign the  agreement and write us a  check for the                                                                    
     work that we're going to do.                                                                                               
                                                                                                                                
SENATOR TORGERSON pointed out that  the bill sunsets December 31,                                                               
2003.   He said  he doesn't  necessarily want  the administration                                                               
cutting  deals on  pipeline routes  indefinitely.   [Legislators]                                                               
know that  the subject  is gas  lines and  are familiar  with the                                                               
[proposed] routes  and the major  players, so there won't  be any                                                               
major surprises in  the next couple of years;  however, the issue                                                               
should be  brought back before  the legislature in order  to have                                                               
better control over it, even in the pre-application stage.                                                                      
                                                                                                                                
SENATOR TORGERSON  addressed the  fiscal note, reporting  that it                                                               
shows that DNR estimates at  least 50 percent of the reimbursable                                                               
cost  would  be  captured  through this  agreement;  however,  he                                                               
believes  that   number  would  actually  be   much  higher  when                                                               
negotiations  are  made regarding  which  duties  the state  will                                                               
perform and  which studies are needed  during the pre-application                                                               
stage.                                                                                                                          
                                                                                                                                
Number 0435                                                                                                                     
                                                                                                                                
REPRESENTATIVE FATE moved to report  SB 143 out of committee with                                                               
individual  recommendations and  the  accompanying fiscal  notes.                                                               
There  being no  objection, SB  143 was  moved out  of the  House                                                               
Resources Standing Committee.