2001-01-12                     Senate Journal                      Page 0066
SB 32                                                                                             
SENATE BILL NO. 32 BY THE SENATE RULES COMMITTEE                                                    
BY REQUEST OF THE GOVERNOR, entitled:                                                               
                                                                                                    
              "An Act relating to the Right-of-Way Leasing Act;                                    
          and providing for an effective date."                                                     
                                                                                                    
was read the first time and referred to the Resources and Finance                                   
Committees.                                                                                         
                                                                                                    
The following fiscal information was published today:                                               
 Fiscal Note No. 1, zero, Department of Natural Resources                                           
                                                                                                    
Governor's transmittal letter dated January 12:                                                     
                                                                                                    
Dear President Halford:                                                                             
                                                                                                    
The Right-of-Way Leasing Act, enacted in 1972, provides the                                         
authority to the Department of Natural Resources to lease state land                                
for oil and gas pipelines. Leases for the several pipelines, the Trans-                             
Alaska Pipeline System (TAPS), Endicott, Kuparuk, Oliktok and                                       
Milne Point, are all due to expire in May 2004. In anticipation of these                            
expirations, now is the time to make needed changes to the Leasing                                  
Act as proposed in this bill I transmit today.                                                      
                                                                                                    
This bill increases the maximum term of right-of-way lease renewals                                 
from the current 10 years to 30 years, making the renewal term                                      
consistent with that of federal grants of right-of-way for oil and gas                              
pipelines. Longer renewal periods will result in significant savings of                             
time and money to industry and the state.                                                           

2001-01-12                     Senate Journal                      Page 0067
The current broad definition of "state land" in the Leasing Act could                               
require the state to issue a pipeline right-of-way lease over land in                               
which the state does not have fee ownership, such as a state highway                                
right-of-way over private land. Additionally, some land that is                                     
technically within the definition of "state land" is owned or managed                               
by authorities other than the Department of Natural Resources, such as                              
the University of Alaska, the Alaska Railroad Corporation, or the                                   
Department of Transportation and Public Facilities. This bill removes                               
the potential for conflicts by specifying that land owned or                                        
administered by a state authority other than the Department of Natural                              
Resources is not subject to the Right-of-Way Leasing Act. Rights-of-                                
ways in those areas would be handled by the respective owners or                                    
managers.                                                                                           
                                                                                                    
Finally, this bill would require 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                                 
on state right-of-way leases. The public demands that the state and                                 
federal governments thoroughly oversee Alaska pipelines. Though                                     
state law does not now require such reimbursement, the pipeline                                     
owners in the state have voluntarily reimbursed the state for such costs                            
for TAPS and the newer pipelines for the last several years. This                                   
change also makes the state involvement with lessees consistent with                                
our federal counterparts who already have the authority to require                                  
lessee reimbursement for monitoring operations, maintenance and                                     
termination activities.                                                                             
                                                                                                    
It is timely that we make these changes to our Right-Of-Way Leasing                                 
Act as soon as possible.                                                                            
                                                                                                    
       Sincerely,                                                                                   
       /s/                                                                                          
       Tony Knowles                                                                                 
       Governor