Legislature(2001 - 2002)
04/10/2001 05:30 PM House O&G
| Audio | Topic |
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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
ALASKA STATE LEGISLATURE
HOUSE SPECIAL COMMITTEE ON OIL AND GAS
April 10, 2001
5:30 p.m.
MEMBERS PRESENT
Representative Scott Ogan, Chair (via teleconference)
Representative Hugh Fate, Vice Chair
Representative Fred Dyson
Representative Mike Chenault
Representative Vic Kohring
Representative Gretchen Guess
Representative Reggie Joule
MEMBERS ABSENT
All members present
COMMITTEE CALENDAR
SENATE BILL NO. 164
"An Act prohibiting leases under the Right-of-Way Leasing Act on
state land in or adjacent to the Beaufort Sea; and providing for
an effective date."
- MOVED HCS SB 164(O&G) OUT OF COMMITTEE
SPONSOR SUBSTITUTE FOR SENATE BILL NO. 76
"An Act relating to the Alaska Right-of-Way Leasing Act; and
providing for an effective date."
- MOVED SSSB 76 OUT OF COMMITTEE
CS FOR SENATE BILL NO. 156(RES)
"An Act amending the Alaska Land Act to clarify the requirement
of a single written best interest finding required for the sale,
lease, or other disposal of state land or resources or an
interest in them, and relating to certain disposals involving
multiphased development; and providing for an effective date."
- MOVED CSSB 156(RES) OUT OF COMMITTEE
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."
- MOVED SB 143 OUT OF COMMITTEE
PREVIOUS ACTION
BILL: SB 164
SHORT TITLE:NO GAS PIPELINE OVER BEAUFORT SEA
SPONSOR(S): SENATOR(S) TORGERSON
Jrn-Date Jrn-Page Action
03/23/01 0786 (S) READ THE FIRST TIME -
REFERRALS
03/23/01 0787 (S) RES
03/28/01 (S) RES AT 3:30 PM BUTROVICH 205
03/28/01 (S) Moved Out of Committee
MINUTE(RES)
03/29/01 0856 (S) RES RPT 7DP
03/29/01 0856 (S) DP: TORGERSON, TAYLOR,
HALFORD, PEARCE,
03/29/01 0856 (S) KELLY, LINCOLN, ELTON
03/29/01 0856 (S) FN1: ZERO(DNR)
03/30/01 (S) RLS AT 10:45 AM FAHRENKAMP
203
04/02/01 0903 (S) RULES TO CALENDAR 4/2/01
04/02/01 0906 (S) READ THE SECOND TIME
04/02/01 0906 (S) ADVANCED TO THIRD READING
UNAN CONSENT
04/02/01 0906 (S) READ THE THIRD TIME SB 164
04/02/01 0907 (S) PASSED Y18 N- A1 E1
04/02/01 0907 (S) EFFECTIVE DATE(S) SAME AS
PASSAGE
04/02/01 0908 (S) TRANSMITTED TO (H)
04/02/01 0908 (S) VERSION: SB 164
04/03/01 0821 (H) READ THE FIRST TIME -
REFERRALS
04/03/01 0821 (H) O&G, RES
04/03/01 0831 (H) CROSS SPONSOR(S): CROFT,
WHITAKER
04/10/01 (H) O&G AT 5:00 PM CAPITOL 124
BILL: SB 76
SHORT TITLE:RIGHT-OF-WAY LEASING ACT: TERM & RENEWAL
SPONSOR(S): SENATOR(S) THERRIAULT
Jrn-Date Jrn-Page Action
02/07/01 0301 (S) READ THE FIRST TIME -
REFERRALS
02/07/01 0301 (S) RES
03/29/01 0859 (S) SPONSOR SUBSTITUTE
INTRODUCED-REFERRALS
03/29/01 0859 (S) RES
04/02/01 (S) RES AT 3:30 PM BUTROVICH 205
04/02/01 (S) Moved Out of Committee
MINUTE(RES)
04/03/01 0919 (S) RES RPT 3DP 2NR
04/03/01 0919 (S) DP: TORGERSON, PEARCE,
HALFORD;
04/03/01 0919 (S) NR: LINCOLN, ELTON
04/03/01 0919 (S) FN1: INDETERMINATE(DNR)
04/04/01 0932 (S) RULES TO CALENDAR 4/4/01
04/04/01 (S) RLS AT 10:45 AM FAHRENKAMP
203
04/04/01 0943 (S) READ THE SECOND TIME
04/04/01 0943 (S) ADVANCED TO THIRD READING
UNAN CONSENT
04/04/01 0943 (S) READ THE THIRD TIME SSSB 76
04/04/01 0943 (S) PASSED Y19 N- E1
04/04/01 0943 (S) EFFECTIVE DATE(S) SAME AS
PASSAGE
04/04/01 0946 (S) TRANSMITTED TO (H)
04/04/01 0946 (S) VERSION: SSSB 76
04/05/01 0852 (H) READ THE FIRST TIME -
REFERRALS
04/05/01 0852 (H) O&G, RES
04/05/01 0870 (H) CROSS SPONSOR(S): HARRIS
04/10/01 (H) O&G AT 5:00 PM CAPITOL 124
BILL: SB 156
SHORT TITLE:BEST INTEREST FINDING UNDER AK LAND ACT
SPONSOR(S): RESOURCES
Jrn-Date Jrn-Page Action
03/21/01 0756 (S) READ THE FIRST TIME -
REFERRALS
03/21/01 0756 (S) RES
03/28/01 (S) RES AT 3:30 PM BUTROVICH 205
03/28/01 (S) Moved CS(RES) Out of
Committee
MINUTE(RES)
03/29/01 0855 (S) RES RPT CS 5DP 2NR SAME TITLE
03/29/01 0855 (S) DP: TORGERSON, TAYLOR,
HALFORD, PEARCE,
03/29/01 0855 (S) KELLY; NR: LINCOLN, ELTON
03/29/01 0855 (S) FN1: ZERO(DNR)
03/30/01 (S) RLS AT 10:45 AM FAHRENKAMP
203
04/02/01 0903 (S) RULES TO CALENDAR 4/2/01
04/02/01 0905 (S) READ THE SECOND TIME
04/02/01 0905 (S) RES CS ADOPTED UNAN CONSENT
04/02/01 0905 (S) ADVANCED TO THIRD READING
UNAN CONSENT
04/02/01 0905 (S) READ THE THIRD TIME CSSB
156(RES)
04/02/01 0906 (S) PASSED Y14 N4 A1 E1
04/02/01 0906 (S) EFFECTIVE DATE(S) SAME AS
PASSAGE
04/02/01 0906 (S) ELLIS NOTICE OF
RECONSIDERATION
04/03/01 0922 (S) RECONSIDERATION NOT TAKEN UP
04/03/01 0923 (S) TRANSMITTED TO (H)
04/03/01 0923 (S) VERSION: CSSB 156(RES)
04/04/01 0836 (H) READ THE FIRST TIME -
REFERRALS
04/04/01 0836 (H) O&G, RES
04/10/01 (H) O&G AT 5:00 PM CAPITOL 124
BILL: SB 143
SHORT TITLE:RIGHT-OF-WAY LEASING ACT:APPLICATION COST
SPONSOR(S): RESOURCES
Jrn-Date Jrn-Page Action
03/14/01 0659 (S) READ THE FIRST TIME -
REFERRALS
03/14/01 0659 (S) RES, FIN
03/19/01 (S) RES AT 3:30 PM BUTROVICH 205
03/19/01 (S) Moved Out of Committee
MINUTE(RES)
03/20/01 0733 (S) RES RPT 4DP 1NR
03/20/01 0733 (S) DP: TORGERSON, TAYLOR,
PEARCE, KELLY;
03/20/01 0733 (S) NR: ELTON
03/20/01 0733 (S) FN1: INDETERMINATE(DNR)
03/28/01 0837 (S) FIN RPT 6DP 2NR
03/28/01 0837 (S) DP: DONLEY, KELLY, GREEN,
AUSTERMAN,
03/28/01 0837 (S) WILKEN, LEMAN; NR: HOFFMAN,
OLSON
03/28/01 0838 (S) FN1: INDETERMINATE(DNR)
03/28/01 (S) FIN AT 9:00 AM SENATE FINANCE
532
03/28/01 (S) Moved Out of Committee
MINUTE(FIN)
03/30/01 (S) RLS AT 10:45 AM FAHRENKAMP
203
04/02/01 0902 (S) RULES TO CALENDAR 4/2/01
04/02/01 0904 (S) READ THE SECOND TIME
04/02/01 0904 (S) ADVANCED TO THIRD READING
UNAN CONSENT
04/02/01 0904 (S) READ THE THIRD TIME SB 143
04/02/01 0904 (S) PASSED Y18 N- A1 E1
04/02/01 0905 (S) EFFECTIVE DATE(S) SAME AS
PASSAGE
04/02/01 0908 (S) TRANSMITTED TO (H)
04/02/01 0908 (S) VERSION: SB 143
04/03/01 0820 (H) READ THE FIRST TIME -
REFERRALS
04/03/01 0820 (H) O&G, RES, FIN
04/10/01 (H) O&G AT 5:00 PM CAPITOL 124
WITNESS REGISTER
SENATOR JOHN TORGERSON
Alaska State Legislature
Capitol Building, Room 427
Juneau, Alaska 99801
POSITION STATEMENT: Testified as the sponsor of SB 164; as
chairman of the Senate Resources Standing Committee, presented
the sponsor statement for SB 143 and answered questions.
MICHAEL J. HURLEY, Government Relations
North American Natural Gas Pipeline Group
601 West 5th Avenue, Suite 500
Anchorage, Alaska 99501
POSITION STATEMENT: Testified in opposition to SB 164 because
it limits routing options; answered questions.
WILDA RODMAN, Staff
to Senator Gene Therriault
Alaska State Legislature
Capitol Building, Room 121
Juneau, Alaska 99801
POSITION STATEMENT: Presented SSSB 76 on behalf of Senator
Therriault, sponsor.
WILLIAM G. BRITT, JR., Pipeline Coordinator
Office of the Commissioner
Department of Natural Resources (DNR)
411 West Fourth Avenue, Second Floor
Anchorage, Alaska 99501-2343
POSITION STATEMENT: Testified in support of SSSB 76; testified
on SB 143 that clarification of the DNR's authority is
beneficial, but expressed concern about the sunset clause in
Section 2.
STEVEN JONES, Manager
Trans-Alaska Pipeline System (TAPS) Right-of-Way Renewal
Alyeska Pipeline Service Company
1835 South Bragaw Street
Anchorage, Alaska 99512
POSITION STATEMENT: Testified in support of SSSB 76.
SENATOR DRUE PEARCE
Alaska State Legislature
Capitol Building, Room 119
Juneau, Alaska 99801
POSITION STATEMENT: As vice chair of the Senate Resources
Standing Committee, presented the sponsor statement for CSSB
156(RES) and clarified the intent of page 2, lines 21-26.
CAROL CARROLL, Director
Division of Support Services
Department of Natural Resources (DNR)
400 Willoughby Avenue, Fifth Floor
Juneau, Alaska 99801-1724
POSITION STATEMENT: Testified on behalf of the DNR and the
administration in support of CSSB 156(RES).
JUDY BRADY, Executive Director
Alaska Oil and Gas Association
121 West Fireweed Lane
Anchorage, Alaska 99503
POSITION STATEMENT: Testified in support of CSSB 156(RES);
asked about intent on page 5, lines 21-26.
ACTION NARRATIVE
TAPE 01-27, SIDE A
Number 0001
VICE CHAIR HUGH FATE called the House Special Committee on Oil
and Gas meeting to order at 5:30 p.m. Members present at the
call to order were Representatives Fate, Dyson, Chenault, and
Joule. Representatives Guess, Ogan (via teleconference), and
Kohring joined the meeting as it was in progress.
SB 164 - NO GAS PIPELINE OVER BEAUFORT SEA
[Contains discussion relating to HB 83]
Number 0100
VICE CHAIR FATE announced the first order of business, SENATE
BILL NO. 164, "An Act prohibiting leases under the Right-of-Way
Leasing Act on state land in or adjacent to the Beaufort Sea;
and providing for an effective date."
Number 0120
VICE CHAIR FATE requested a motion to adopt the proposed
committee substitute (CS), Version J [22-LS0809\J, Chenoweth,
4/5/01], as a work draft. [Representative Chenault subsequently
said "yes," which was taken as a motion; no objection was
stated, and Version J was treated as adopted.]
VICE CHAIR FATE explained that on page 2 of Version J, language
was added on lines 17-25. However, an amendment was needed on
page 3, lines 7-11, subparagraph (B), to remove language
regarding capacity that doesn't fit in the bill in this
particular area.
[Adopted as a work draft at the 4/2/01 hearing on HB 83 was a
proposed CS, Version L; the original HB 83 had been gutted and
had language from SB 164 put into it, and Version L retained the
employment language and language dealing with pipeline capacity.
Senator Torgerson, sponsor of SB 164, had testified at the
4/2/01 hearing on HB 83, indicating he had no problem with the
employment wording, but felt the pipeline capacity language did
not fit in the bill. Therefore, when SB 164 was to be heard by
the House Special Committee on Oil and Gas, a new proposed CS
ordered by the committee was to include the employment language
from Version L of HB 83, but not the capacity language; however,
the resulting proposed CS for SB 164, Version J, mistakenly
included the capacity language.]
Number 0400
SENATOR JOHN TORGERSON, Alaska State Legislature, came forward
to testify as sponsor of SB 164. He explained that the thrust
of SB 164 is to eliminate the "over-the-top" [gas pipeline]
route, rather than to talk about [pipeline] capacities. The
bill talks about eliminating a choice by making the legislative
finding that [the "over-the-top" route] isn't in the best
interests of the state because it wouldn't include value-added
uses, for example. Referring members to subparagraph (A) [page
3], Senator Torgerson emphasized that the capacity question just
doesn't fit within the context of the bill.
Number 0545
REPRESENTATIVE DYSON moved to adopt a conceptual amendment to
Version J, page 3, "taking out (A) on line 4, and ... everything
from line 7 through line 12." There being no objection,
conceptual Amendment 1 was adopted.
[A motion to move the bill from committee was made, but was
withdrawn in order to hear testimony.]
Number 0709
MICHAEL J. HURLEY, Government Relations, North American Natural
Gas Pipeline Group, came forward to testify, noting that
committee members had his written testimony. He emphasized the
group's opposition to the bill, saying it is inappropriate at
this point to be taking options off the table.
Number 0796
REPRESENTATIVE CHENAULT asked whether looking at alternative
routes is a requirement of the FERC [Federal Energy Regulatory
Commission] or something that the group has decided to do on its
own.
MR. HURLEY specified that a section in the U.S. regulations, 18
C.F.R. 380.12, sets out the requirements for an application to
the FERC. Section 12 of 18 C.F.R 380 outlines one of the
appendices required for a filing, which includes an alternative
analysis and specifies that it must look at alternative costs,
environmental impacts, and so forth.
Number 0934
REPRESENTATIVE OGAN said right now there is no pipeline;
therefore, [the legislature] is choosing a preferred route. He
added that Congress already has chosen a route. He suggested
that the policy call is similar to whether the State of Alaska
wants to invest in "fast ferries" or a road out of Juneau. It
isn't prohibiting something that already exists, he said, but is
making a policy call regarding the route.
MR. HURLEY restated his belief that it is premature for anyone
to make those kinds of determinations before having the
information.
VICE CHAIR FATE asked whether there were questions of William
Britt, Jr., Pipeline Coordinator, Department of Natural
Resources, who was on teleconference; none were offered.
Number 1168
REPRESENTATIVE DYSON made a motion to move HCS for SB 164,
version 22-LS0809\J, Chenoweth, 4/5/01, as amended, out of
committee with individual recommendations and the zero fiscal
note. There being no objection, HCS SB 164(O&G) was moved out
of the House Special Committee on Oil and Gas.
SB 76 - RIGHT-OF-WAY LEASING ACT
VICE CHAIR FATE announced the next order of business, SPONSOR
SUBSTITUTE FOR SENATE BILL NO. 76, "An Act relating to the
Alaska Right-of-Way Leasing Act; and providing for an effective
date."
Number 1258
WILDA RODMAN, Staff to Senator Gene Therriault, Alaska State
Legislature, presented SSSB 76 on behalf of Senator Therriault,
sponsor, explaining the changes it makes to the 1972 Alaska
Right-of-Way Leasing Act. In Section 1, it increases the
maximum term of right-of-way lease renewals from the current 10
years to 30 years; this changes the length of terms for renewals
only, not the length of the original lease terms. Therefore,
the renewal process for pipelines with leases that expire in
2004, including the Trans-Alaska Pipeline System (TAPS), will
proceed uninterrupted.
MS. RODMAN reported that Section 2 places in statute a provision
allowing for the extension of leases under their existing terms
if the lessee has applied for renewal but the terms of the lease
are still under negotiation on the date of expiration. She
explained that the language proposed in AS 38.35.110 states that
the lease will be continued until the commissioner issues a
final determination on renewal.
MS. RODMAN noted that Section 3 requires lessees under new and
renewed right-of-way leases to reimburse the state for costs
associated with monitoring the operation, maintenance, and
termination of pipelines. Under current statute, they reimburse
for costs associated with the monitoring of construction. This
adds operation, maintenance, and termination, which Ms. Rodman
said she understands to be the status quo, written into
individual leases and contracts currently; therefore, this just
puts into statute what is already being done.
Number 1385
MS. RODMAN explained that Section 4 amends the definition of
"state land" for purposes of the Alaska Right-of-Way Leasing
Act. She said in talking to Bill Britt, state pipeline
coordinator for the Department of Natural Resources (DNR), this
is more a preventive measure than to address a current
situation. She said as Mr. Britt explains it, if the state were
to purchase a highway easement across private property under the
current terms of the Act, prospective pipeline owners would have
to apply for a lease under the Act. However, the DNR doesn't
have authority for a Department of Transportation and Public
Facilities easement. Therefore, this restricts the definition
of "state land" to say that pipeline owners only have to apply
for a right-of-way permit over lands in which the state has
sufficient interest to grant the right-of-way lease.
MS. RODMAN turned attention to Section 5, noting that it allows
for existing pipeline leases to be amended, upon request, to
incorporate the new provision for renewal periods of up to 30
years; she reiterated that this applies to the renewal period
only.
Number 1529
WILLIAM G. BRITT, JR., Pipeline Coordinator, Office of the
Commissioner, Department of Natural Resources, responded via
teleconference to a question by Representative Dyson. He said
the bill is a good idea. He also indicated the DNR has worked
with Senator Therriault's office as well as with the TAPS owners
to craft language that they all support.
Number 1580
STEVEN JONES, Manager, Trans-Alaska Pipeline System (TAPS)
Right-of-Way Renewal, Alyeska Pipeline Service Company, came
forward to testify on SSSB 76. Voicing support for the bill,
Mr. Jones concurred with Mr. Britt's comment that this
represents a joint effort to work out language on what are
basically some administrative changes to the Alaska Right-of-Way
Leasing Act.
VICE CHAIR FATE asked whether there were any questions; none
were offered.
Number 1611
REPRESENTATIVE DYSON made a motion to move SSSB 76 from
committee [with individual recommendations and an indeterminate
fiscal note]. There being no objection, SSSB 76 was moved out
of the House Special Committee on Oil and Gas.
SB 156 - BEST INTEREST FINDING UNDER AK LAND ACT
TAPE 01-28, SIDE A
Number 0047
VICE CHAIR FATE announced the next order of business, CS FOR
SENATE BILL NO. 156(RES), "An Act amending the Alaska Land Act
to clarify the requirement of a single written best interest
finding required for the sale, lease, or other disposal of state
land or resources or an interest in them, and relating to
certain disposals involving multiphased development; and
providing for an effective date."
Number 0081
SENATOR DRUE PEARCE, Alaska State Legislature, presented the
sponsor statement for SB 156, noting that the bill was
introduced by the Senate Resources Standing Committee [of which
she is vice chair]. She explained that the bill amends the
Alaska Land Act to clarify the requirement that the Department
of Natural Resources (DNR) prepare a single written best
interest finding for multiphase development projects.
SENATOR PEARCE provided some history. In 1994, the legislature
passed SB 308 in reaction to a series of decisions by the Alaska
Supreme Court concerning what the court characterized as DNR's
"phasing" of its review of various mining and oil and gas
projects; that bill explicitly allowed project phasing and
precisely defined the scope of the best interest finding
determination. At the time, the legislature was aware that the
post-disposal phases - exploration, development, and
transportation - would be subjected to numerous federal, state,
and local laws, as well as regulations, policies, and
ordinances; would be reviewed by numerous agencies; and would be
subject to public review and comment.
SENATOR PEARCE explained that while the legislature did intend
that there would be a detailed review of the project at any
later phase, the legislature did not intend that the DNR would
have to issue another best interest finding as part of that
review. However, the Alaska Supreme Court recently declared
that the DNR is obliged, at each phase of development, to issue
an entire best interest finding relating to that phase before
the proposed development may proceed.
SENATOR PEARCE told members [CSSB 156(RES)] is intended to make
it clear that, first, no other best interest finding is required
after the disposal phase; second, the best interest finding
shall be based upon known information or information made
available to the director, even if all potential cumulative
impacts of the project are not known; and, third, public notice
and the opportunity to comment shall be provided at each phase
of an oil and gas project. The intent is that the phases
subject to this notice are exploration, development, and
transportation. She noted that the Division of Oil & Gas (DNR)
had testified before the Senate Resources Standing Committee
that the administration is in support of the bill.
Number 0336
SENATOR PEARCE pointed out that beyond the time required to
develop a best interest finding at every phase of a project, the
best interest finding also could be costly. A typical best
interest finding for a lease disposal, for example, costs the
Division of Oil & Gas approximately $75,000; this doesn't
include costs for other agencies such as the Department of
Environmental Conservation (DEC) or the Alaska Department of
Fish & Game (ADF&G).
SENATOR PEARCE said although the division has never issued a
best interest finding for an exploration well, it estimates a
minimum cost of $50,000; with approximately 15 wells planned for
the 2000-2001 drilling season on state land, the division would
have spent an extra $750,000 if required to do a best interest
finding for each well. Although the division hasn't estimated
the cost for doing a best interest finding for the development
phase, it would likely be at least as expensive as for an
exploration well.
SENATOR PEARCE informed members that present to answer questions
was Patrick Coughlin, special counsel to the Senate Resources
Standing Committee, who had experience working with the division
when SB 308 was passed. She noted that Jim Eason, former
Division of Oil & Gas director, had worked on SB 308, as had Ken
Boyd, director of the division at the time, who had brought the
problem [to the attention of the Senate Resources Standing
Committee] last fall before he left the division.
Number 0583
CAROL CARROLL, Director, Division of Support Services,
Department of Natural Resources, came forward on behalf of the
DNR. She advised the committee that the administration supports
this bill and agrees there should be only one best interest
finding, at the disposal phase when doing a disposal. She noted
that the DNR does a preliminary best [interest] findings and
gives the public many opportunities to participate before the
findings and the disposal are finalized.
MS. CARROLL pointed out that the bill provides that in order to
phase oil and gas activities, post-disposal phases also must be
subject to public notice and participation. Furthermore, the
DNR believes [the bill] requires the Division of Oil & Gas to
promulgate regulations in order to provide to the public both
notice and the means to participate. Ms. Carroll noted that
online to answer technical questions was Bill Van Dyke from the
Division of Oil & Gas.
Number 0720
REPRESENTATIVE OGAN asked why the zero fiscal note [from the
DNR] doesn't reflect a cost savings.
MS. CARROLL answered that it reflects what the DNR is doing now,
which is what is stated in the bill. She explained that as a
result of the court case in the year 2000, the department had
not yet started doing best interest findings for each phase of
development; therefore, there is no fiscal impact.
Number 0848
JUDY BRADY, Executive Director, Alaska Oil and Gas Association
(AOGA), testified via teleconference in support of the bill,
noting that AOGA had testified on the Senate side as well. She
characterized this as an important step forward to make clear
what the legislature has always intended regarding the best
interest findings.
MS. BRADY said AOGA continues to struggle with the language on
page 5, lines 21-26, however. She expressed the need to assure
the public and to ensure there are public notice and comment
allowed for major changes regarding major phases of oil and gas
development. She expressed her understanding that under that
language, if there is an oil and gas project outside of coastal
zones, the DNR will [promulgate] regulations so that those
phases that normally would be noticed under the Alaska Coastal
Management Plan (ACMP) program will be noticed instead by DNR.
MS. BRADY continued, offering that [AOGA's] experience with
language involving public notice and regulations in the past has
been that if there is any possible way to misconstrue the
language, someone will do so. She said [AOGA] is trying to work
now with the offices of Senator Pearce and Senator Torgerson
[chair of the Senate Resources Standing Committee] to ensure
that everyone's understanding is clearly reflected in the
language [of the bill]. She indicated those efforts are
continuing.
Number 1054
SENATOR PEARCE suggested there is no need to change the
language, but said her own intent, as the bill is passed on the
House floor, is to read into the record the intent just stated
by Ms. Brady, along with "the best interest findings intentions"
that she herself had stated. She clarified that the intent of
the paragraph [page 5, lines 21-26] is to make sure that there
is public notice; it will either be given pursuant to the
coastal zone management program or pursuant to the regulations
adopted by the department [DNR], but will not impose additional
work under the coastal zone management program.
SENATOR PEARCE reiterated the intent of streamlining the
process, as was intended with [SB] 308 in 1994. In response to
Vice Chair Fate, she specified that she wouldn't provide a
letter of intent but would just provide a statement on the House
floor when the bill passed.
Number 1157
REPRESENTATIVE OGAN asked whether it would be appropriate to add
language to the "purpose" section of the bill, to provide
clarification.
SENATOR PEARCE said no. She explained that the language had
been worked in every direction possible, and the more words
there were, the more confusion would exist and the more words
there would be for a third party to try to decide what [the
legislature] intended. She reiterated her preference of stating
on the House floor what the bill does and doesn't do.
MS. BRADY, in response to Representative Ogan, said she thinks
Senator Pearce's reading the intent into the record would go a
long way towards clarifying it to the court, any other party,
and the agencies. She agreed with Senator Pearce that "we have
been struggling with language and so far have not come up with
any brilliant solutions." In further response, she highlighted
the dilemma: Alaska has a dual set of regulations, through the
ACMP process and the agencies as well; in fact, on the North
Slope, local borough regulations are also overriding. There is
almost no way to make that clear in the statute itself.
REPRESENTATIVE OGAN suggested perhaps the committee should
discuss the supreme court's "clear statement doctrine" rulings
and look at perhaps incorporating language into some bills that
give the administration the ability to interpret regulations.
Number 1521
SENATOR PEARCE stated that there is a very clear interest on the
part of the Senate Resources Standing Committee to make sure
there is pubic notice; part of the reason the committee had
struggled over this paragraph [on page 5] was to make it clear
that there is to be proper public notice, but not to have it
fall under two different regulatory regimes - the coastal zone
management program and the areas outside of that, both of which
the [statutory] language must fit when regulations are
promulgated. Therefore, the intent is to have public notice be
pursuant to one or the other, and not to impose any additional
work under the coastal zone management program.
Number 1583
REPRESENTATIVE OGAN recalled that the Cook Inlet areawide lease
sale went through perhaps the most extensive public process in
the state's history, after which the governor created the
"stakeholders' group" and opened it up to another process that
was, in some people's minds, outside the scope of the statutes
and regulations. Noting that the department has testified in
favor of this bill, he asked whether the bill would affect
something like the additional public process in that instance.
SENATOR PEARCE responded that she herself was "one of the most
vocal detractors" of that stakeholders' process, not because she
didn't think it was useful to have people get together to talk
through the questions and concerns, but because she believes
there was no statutory authority to incorporate the
recommendations from that process into regulations, for example.
If one good thing came out of the stakeholders' process, she
said it was a clear understanding by some concerned people that
even if SB 308 was being implemented, there would still be the
right to public comment at every step.
SENATOR PEARCE explained that when there is a lease sale, the
successful company brings a proposal for an exploration well,
after which there is another opportunity for public comment
during the permitting process. Under CSSB 156(RES), there would
not be another best interest finding, but would be public
comment. She stated her belief that members of the
stakeholders' group who represented the commercial fisheries in
Cook Inlet, in particular, had felt more comfortable with the
areawide lease sale after realizing they would have the
opportunity for public comment at every step. Noting that it
was the "environmental community" opposing the lease sale, she
suggested it is important to have the language in the bill that
talks about the public process "because that's how we've helped
other users reach a comfort level."
Number 1798
REPRESENTATIVE OGAN asked whether Senator Pearce believes the
bill will help to mitigate future "stakeholder-group-type
scenarios."
SENATOR PEARCE replied, "We do not have any power over whether
or not the third floor decides to pull together another
stakeholder group; as a matter of fact, I would say that the
pipeline council that they put together is somewhat the same."
VICE CHAIR FATE asked whether there was further testimony or
discussion; none was offered.
Number 1851
REPRESENTATIVE DYSON made a motion to move CSSB 156(RES) out of
committee with individual recommendations and the attached zero
fiscal note. There being no objection, CSSB 156(RES) was moved
out of the House Special Committee on Oil and Gas.
SB 143 - RIGHT-OF-WAY LEASING ACT:APPLICATION COST
Number 1890
VICE CHAIR FATE announced the final order of business, 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 1930
SENATOR JOHN TORGERSON, Alaska State Legislature, came forward
as the chairman of the Senate Resources Standing Committee,
sponsor of SB 143. He explained that under current Alaska law,
the state cannot start charging for applications costs on right-
of-way leasing for pipelines until after an application is
actually filed. Therefore, SB 143 says the department can enter
into a memorandum of understanding with pipeline owners or
producers during the preapplication period, for example, to put
a pipeline in and then collect the costs of the assessments
until the application is filed.
SENATOR TORGERSON informed members that this is in response to
the $10 million fiscal note from the governor's office for
pipeline work that [the governor] wants to do this next year.
He characterized it as a "pay-as-you-go" bill, noting that its
sunset date of December 31, 2003, could be extended easily, if
so desired; he cautioned, however, against having these pipeline
agreements come before [the legislature] "forever."
Number 2050
WILLIAM G. BRITT, JR., Pipeline Coordinator, Office of the
Commissioner, Department of Natural Resources (DNR), testified
via teleconference, explaining that the DNR fairly routinely
enters into agreements for reimbursement of preapplication
costs. He noted that he is in the process of working with both
the producers and Foothills [Pipe Lines Ltd.] to craft such
agreements for the gas pipeline. Acknowledging that there is
some disagreement over whether the DNR has existing authority to
do so, he said clarifying the existence of that authority is
certainly beneficial.
MR. BRITT expressed concern, however, that the sunset clause in
Section 2 has the potential of precluding [the DNR] from doing
what it has routinely done, and what appears to be good policy
for the state, after December 31, 2003. He agreed with Senator
Torgerson that [the sunset date] is not difficult to undo, but
said the existing standard operating procedure within the DNR's
Pipeline Coordinator's office of seeking reimbursement prior to
an application - as well as the rest of the bill, which
indicates the DNR has the ability to do so - appears to be good
public policy that should not expire on that date.
Number 2141
REPRESENTATIVE OGAN responded, saying it seems the idea of the
sunset date is to set a timeline for this particular proposed
project to come to fruition. He brought attention to the large
amount of gas available in the Lower 48. He said perhaps having
a deadline expresses the legislature's intent to expedite [the
pipeline]; the longer [Alaska] waits, the more gas wells will be
drilled [elsewhere] and the less likely it is that the project
will be built.
REPRESENTATIVE OGAN also suggested the same argument could be
used regarding this project that has been used about an LNG
[liquefied natural gas] project, since this [proposed gas]
pipeline would be more than 2,000 miles long, into a market that
already has a lot of gas that is closer and cheaper to develop.
He said time is of the essence, which is the message that he
believes the sunset date sends.
SENATOR TORGERSON replied that it is part of it; he believes,
however, that if the department is charging people for
preapplication costs, it is currently against the law. He noted
that Foothills [Pipe Lines Ltd.] has an application in, even if
it is an old one. He stated:
I know [they] entered into an agreement with Alyeska
on renewal of that pipeline, but you could argue that
there's been enough correspondence, although not
necessarily an application in writing, ... to
certainly say that that was the intent, to go forward
with that .... I think we all know they're not going
to pick that pipeline up and leave in three years when
their renewal is up. But the law clearly states that
you cannot start charging until ... an application is
filed. ...
I'm not here to pick on what they have done in the
past, but as far as the gas line is concerned, ... and
the amount of money that's being asked for us to spend
upfront on this gas line, I believe the producers
should pay for it. Anything that's reimbursable ...
within regular business terms that we have done in the
past, they should pony up the money as they go along.
And that's what the intent of this bill is.
And in any event, a lot of this stuff is after the
application is filed; there's a "look-back" period
where you can ... charge the money that you've already
spent on a preapplication, but it'd only be on one
route. Now, we can all assume that we have one route,
but we also know there's looking at other routes; and
I certainly hope that they don't pick one in
particular, but there are ... other routes that
they're looking at, ... and I don't know if we're
going to spend the money on it or not. But, in any
event, if we do, we ought to get paid back, or paid in
advance, and this bill calls for that.
VICE CHAIR FATE thanked Senator Torgerson and asked whether
there was further testimony; none was offered.
Number 2359
REPRESENTATIVE JOULE made a motion to move SB 143 out of
committee with individual recommendations and attached fiscal
notes. There being no objection, SB 143 was moved out of the
House Special Committee on Oil and Gas.
ADJOURNMENT
There being no further business before the committee, the House
Special Committee on Oil and Gas meeting was adjourned at 6:27
p.m.
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