00 HOUSE BILL NO. 83 01 "An Act relating to natural gas pipelines, providing a statutory definition for the portion 02 of the constitutional statement of policy on resource development as applicable to the 03 development and transportation of the state's natural gas reserves, amending Acts 04 relating to construction of natural gas pipelines to require conformance to the 05 requirements of the statutory definition, and amending the standards applicable to 06 determining whether a proposed new investment constitutes a qualified project for 07 purposes of the Alaska Stranded Gas Development Act; and providing for an effective 08 date." 09 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF ALASKA: 10  * Section 1. AS 38.05.910 is amended by adding a new subsection to read: 11 (b) Consistent with the statements of general state policy guiding resource 12 development set out in art. VIII, sec. 1, Constitution of the State of Alaska, that the 01 resources of the state be developed "by making them available for maximum use 02 consistent with the public interest" that appears in (a) of this section, and set out in art. 03 VIII, sec. 2, Constitution of the State of Alaska, directing that provision shall be made 04 by the legislature for "the utilization, development, and conservation of all natural 05 resources belonging to the State . . . for the maximum benefit of its people," it is the 06 policy of this state that the overall strategy for development, use, and control of a 07 project or projects to develop and transport the state's substantial natural gas resources 08 be directed 09 (1) to enhance the standard of living of state residents by 10 (A) ensuring that, in conjunction with out-of-state market- 11 driven commercial demand for the natural gas, state residents and businesses 12 will have access, direct or indirect, to that portion of the gas that will meet the 13 reasonably foreseeable in-state demands for it, including substitution of the 14 natural gas for depleting gas reserves in order to maintain a low-cost domestic 15 and industrial energy source, and that the pipeline or pipelines for the 16 transportation of the natural gas will be designed and located to be responsive 17 to these requirements; 18 (B) making the maximum contribution to the development of 19 job opportunities in this state by providing direct short-term construction and 20 long-term operation- and maintenance-related employment on the pipeline or 21 pipelines and by providing necessary support services; and 22 (C) adding significant long-term property value to the tax base 23 of the state and its local governments, thereby providing the means to support 24 public education, public health, transportation, and other essential state and 25 local government projects and services; 26 (2) to ensure that the design, location, and construction of a pipeline or 27 pipelines of natural gas from this state to North American markets through connection 28 to the North American natural gas pipeline network does not foreclose implementation 29 of gas delivery using alternative technologies and the construction of other pipelines to 30 accommodate delivery of natural gas to tidewater for delivery to foreign and domestic 31 markets; and 01 (3) to ensure construction of a pipeline or pipelines consistent with 02 careful protection of the state's natural environment, with minimum environmental 03 degradation, to the greatest extent possible, and with protection of fish, wildlife, and 04 biotic resources for the use of persons who depend upon them, by using available 05 transportation infrastructure to initiate and complete project construction and 06 maintenance and by avoiding duplication of facilities. 07  * Sec. 2. AS 38.35.100(a) is amended to read: 08 (a) The commissioner shall promptly determine, in a written finding, on an 09 application filed under AS 38.35.050, whether the applicant is fit, willing, and able to 10 perform the transportation or other acts proposed in a manner that will be required by 11 the present or future public interest. For a natural gas pipeline, the commissioner  12 shall also promptly determine, in a written finding, on an application filed under  13 AS 38.35.050, whether the applicant's proposed use of the right-of-way will  14 comply with the overall strategy for development, use, and control of a project or  15 projects to develop and transport the state's natural gas resources set out in  16 AS 38.05.910(b). In making a determination the commissioner shall consider whether 17 or not 18 (1) the proposed use of the right-of-way will unreasonably conflict 19 with existing uses of the land involving a superior public interest; 20 (2) the applicant has the technical and financial capability to protect 21 state and private property interests; 22 (3) the applicant has the technical and financial capability to take 23 action to the extent reasonably practical to 24 (A) prevent any significant adverse environmental impact, 25 including but not limited to erosion of the surface of the land and damage to 26 fish and wildlife and their habitat; 27 (B) undertake any necessary restoration or revegetation; and 28 (C) protect the interests of individuals living in the general area 29 of the right-of-way who rely on fish, wildlife, and biotic resources of the area 30 for subsistence purposes; 31 (4) the applicant has the financial capability to pay reasonably 01 foreseeable damages for which the applicant may become liable on claims arising 02 from the construction, operation, maintenance, or termination of the pipeline; 03 (5) the applicant has agreed that, in the construction and operation of a 04 pipeline within the right-of-way, 05 (A) the applicant will comply with, and require contractors and 06 their subcontractors to comply with, applicable and valid laws and regulations 07 regarding the hiring of residents of the state then in effect or that take effect 08 subsequently, and  09 (B) for a project or projects to develop and transport the  10 state's natural gas resources, the applicant will also use the applicant's  11 best efforts to contract with qualified contractors and firms in this state  12 for work to be performed, including the fabrication and installation of  13 required facilities; in this subparagraph, a contractor or firm is  14 considered as qualified if the contractor or firm qualifies as an Alaska  15 bidder under AS 36.30.170(b);  16 (6) for a North Slope natural gas pipeline, as that term is defined  17 in AS 42.06.630, the applicant voluntarily agrees to use the applicant's best  18 efforts to employ residents of this state, consistent with law; for purposes of this  19 paragraph, a person is considered a resident if the person is physically present in  20 the state with the intent to remain in the state indefinitely and has a home in the  21 state. 22  * Sec. 3. AS 38.35.100(b) is amended to read: 23 (b) If the commissioner makes the determinations under (a) of this section 24 favorably to the applicant, then the commissioner may grant the whole or part of the 25 application. If the commissioner makes the determinations under (a) [(a)(1) - (5)] of 26 this section favorably to the applicant but determines that the applicant is not then fit, 27 willing, and able to perform under the application, the commissioner may grant the 28 application under a conditional lease subject to conditions established by the 29 commissioner that will ensure that the applicant will, within a prescribed period of 30 time not exceeding 10 years, establish that the applicant is fit, willing, and able, under 31 (a) of this section, to perform the transportation or other acts that will be required by 01 the present or future public interest. An applicant is not entitled to a notice or 02 authorization to proceed to construction, or its equivalent, under a conditional lease 03 until the commissioner determines in writing that the applicant has satisfactorily 04 established that the applicant is then fit, willing, and able to perform under (a) of this 05 section. Otherwise, the commissioner shall deny the application. 06  * Sec. 4. AS 42.06.310(d) is amended to read: 07 (d) To reduce the time and cost of future connections for the injection and  08 removal of gas from the main North Slope natural gas pipeline in order to  09 maintain and facilitate access to a portion of the gas for use in intrastate  10 commerce to meet the reasonably foreseeable in-state demands for it, including  11 substitution of the natural gas for depleting gas reserves in order to maintain a  12 low-cost domestic and industrial energy source, the [THE REQUIREMENT OF 13 (c) OF THIS SECTION DOES NOT APPLY TO A NORTH SLOPE NATURAL 14 GAS PIPELINE CARRIER TO THE EXTENT THAT THE CAPACITY OF THE 15 CARRIER'S NORTH SLOPE NATURAL GAS PIPELINE DOES NOT ALLOW 16 FOR EXPANDED CAPACITY, AND DOES NOT APPLY TO REQUIRE A 17 NORTH SLOPE NATURAL GAS PIPELINE CARRIER TO ENLARGE OR 18 EXTEND ITS NORTH SLOPE NATURAL GAS PIPELINE SYSTEM. 19 HOWEVER, THE] commission 20 (1) shall, notwithstanding the criteria applicable under (c) of this  21 section, [MAY] require a North Slope natural gas pipeline [CARRIER] to be  22 designed and constructed in size and operating capability beyond the capacity, as  23 measured by the average daily volume throughput, sufficient to provide gas in  24 interstate commerce, and shall enter other appropriate orders under  25 AS 42.06.340(b); and  26 (2) may otherwise require a North Slope natural gas pipeline  27 carrier to expand, enlarge, or extend its North Slope natural gas pipeline system if, 28 after notice and opportunity for hearing, the commission determines that 29 (A) [(1)] a person making a request for expanded, enlarged, or 30 extended service by a North Slope natural gas pipeline carrier has made a firm 31 contractual commitment to the North Slope natural gas pipeline carrier to 01 transport North Slope natural gas; and 02 (B) [(2)] the expansion, enlargement, or extension will not 03 result in 04 (i) [(A)] substantial injury, including economic injury, 05 to the North Slope natural gas pipeline facility or its customers; 06 (ii) [(B)] substantial detriment to the services furnished 07 by the North Slope natural gas pipeline facility; or 08 (iii) [(C)] the creation of safety hazards. 09  * Sec. 5. AS 43.82.100 is amended to read: 10 Sec. 43.82.100. Qualified project. Based on information available to the 11 commissioner, the commissioner may determine that a proposal for new investment is 12 a qualified project under this chapter only if the project 13 (1) [IS A PROJECT FOR THE EXPORT OF LIQUEFIED 14 NATURAL GAS; 15 (2)] would produce at least 500,000,000,000 cubic feet of stranded gas 16 within 20 years from the commencement of commercial operations; and 17 (2) complies with the overall strategy for development, use, and  18 control of a project or projects to develop the state's natural gas resources set out  19 in AS 38.05.910(b) [(3) IS CAPABLE, SUBJECT TO APPLICABLE 20 COMMERCIAL REGULATION AND TECHNICAL AND ECONOMIC 21 CONSIDERATIONS, OF MAKING GAS AVAILABLE TO MEET THE 22 REASONABLY FORESEEABLE DEMAND IN THIS STATE FOR GAS WITHIN 23 THE ECONOMIC PROXIMITY OF THE PROJECT]. 24  * Sec. 6. AS 42.06.240(f) is repealed. 25  * Sec. 7. This Act takes effect immediately under AS 01.10.070(c).