04/10/2001 05:30 PM House O&G

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.