Legislature(2001 - 2002)
04/11/2001 01:10 PM House RES
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* first hearing in first committee of referral
+ teleconferenced
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+ teleconferenced
= bill was previously heard/scheduled
SB 76 - RIGHT-OF-WAY LEASING ACT CO-CHAIR MASEK announced that the next order of business would be 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 1295 WILDA RODMAN, Staff to Senator Gene Therriault, Alaska State Legislature, gave a brief overview of the bill by paraphrasing the sponsor statement, which read: Senate Bill 76 makes three important changes to the 1972 Alaska Right-of-Way Leasing Act, which gives the Department of Natural Resources [DNR] the authority to lease state land for oil and gas pipelines. First, SB 76 increases the maximum term of right-of- way lease renewals from the current 10 years to 30 years. Leases for several pipelines, including the Trans-Alaska Pipeline System, Endicott, Kuparuk, Oliktok and Milne Point all expire in May, 2004. SB 76 changes the length of terms for renewals only, not the length of the original lease term, so the renewal process for the pipelines with leases that expire in 2004 will proceed uninterrupted. The 30-year term of renewal is consistent with that of federal grants of right-of-way for oil and gas pipelines, and will result in significant savings of time and money to industry and the state. A section of the bill allows for existing leases to be amended, upon request, to incorporate the new provision for renewal periods of up to 30 years. The bill also 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 at the date of expiration. The language proposed in AS 385.110(b) states that the leases shall be continued until the commissioner issues a final determination on renewal. Although current statutes give the commissioner leeway to extend a right-of-way lease or grant an interim lease pending finalization of a renewal determination, I believe the procedure for extending a lease pending renewal needs to be set out in statute. Although DNR believes it can adhere t a self-imposed deadline for renewing leases before they expire, I think such rationale injects unnecessary uncertainty into the renewal process. Second, the bill amends the definition of "state land" for purposes of the right-of-way leasing Act to include only land in which the interest owned by the state is sufficient to permit the state to lease it under the authority of the Department of Natural Resources. Third, the bill requires lessees under new and renewed right-of-way leases to reimburse the stated for costs associated with monitoring the operation, maintenance and termination of pipelines on state right-of-way leases. The bill requires the commissioner to use best efforts to reach agreement with the lessee on the cost reimbursement and to provide the lessee with an annual estimate of the projected costs and scope of the work. Number 1021 STEVEN (ph) JONES, Manager, TAPS [Trans Alaska Pipeline System] Right-of-Way Renewal Project, thanked the committee for considering the bill. He said SSSB 76 contains language agreed upon among TAPS, the administration, and the DNR. He offered that SSSB 76 is "a good solution to a few relatively minor administrative issues that we had on renewal." Number 0965 REPRESENTATIVE GREEN asked Mr. Jones if renewals in other states are typically of this magnitude, and rather than being every ten years, are over an extended period of time. MR. JONES replied that he could not say what the common situation is in other states; however, the federal provisions, which have frequently been used over the years for renewal in the Lower 48, are for a maximum 30-year period. REPRESENTATIVE GREEN said it has been rumored - because of the concern about environment-related challenges - that if there isn't an EIS [environmental impact statement] prepared, there could be court challenges and [the process] could get "tied up." He asked Mr. Jones whether he thought that if the renewal period were over a lesser period of time - ten years, for example - "this same sort of thing would have to be gone through every time." He stated his understanding that "multiple millions of dollars" are involved in getting this renewal. MR. JONES said the reason there is a need to go through NEPA [National Environmental Policy Act of 1969] compliance is because of a federal requirement. He stated his understanding that the Secretary of the Interior has determined an EIS would be necessary. He noted there is no state requirement to do an EIS or comply with NEPA. He continued: The federal rules, again, provide for a 30-year renewal, so ... depending on the determination that was made by, in this case, the Bureau of Land Management, [which] administers the federal grant, we could have to go through another renewal in a lesser period of time than 30 years; but that's one of the decisions that the Secretary has to make in determining whether or not to renew the right-of-way, is the duration of the lease. The main reason that we ... suggested the amendment to the state statute is because we're regulated by the Joint Pipeline Office, which, of course, is a combined federal and state office. And really it was just to put the two offices on similar footing, so that we didn't have the state looking at a renewal over a more frequent period of time than the federal renewal period, since the two of them work together and we work together with them. Number 0662 REPRESENTATIVE KERTTULA asked how long TAPS is projected to run and what the production levels are projected to be for the next 30 years. MR. JONES answered that "we" plan to submit an application called a "duration report." He offered the belief - based upon reports from the U.S. Department of Energy, for example, and just associated with the existing areas, not ANWR [Arctic National Wildlife Refuge] or NPRA [National Petroleum Reserve of Alaska] - that "we'll" have sufficient oil in commercial qualities to transport off the Slope, through TAPS, for at least another 30 years. He added, "Granted, no one can predict the price of oil, so this is with some caveat there." Number 0490 REPRESENTATIVE FATE noted that Mr. Jones had mentioned the request of the Secretary of the Interior for an EIS. He asked if that had been under a different administration and whether there had been an opportunity to reverse that. MR. JONES replied that the decision had been made under a different administration by, he believed, an assistant secretary. He said there was also a solicitor's opinion issued on the applicability of NEPA to the renewal decision. It is a decision that was made and that is subject to review by the new Secretary [of the Interior]; however "we" have to comply with the existing one made in 1999. REPRESENTATIVE FATE said based upon Representative Green's earlier suggestion, it might be more prudent to do the EIS, rather than to run the risk of eventual environmental litigation. Number 0299 REPRESENTATIVE FATE moved to report SSSB 76 out of committee with individual recommendations and the accompanying fiscal notes. There being no objection, SSSB 76 was moved out of the House Resources Standing Committee.
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