04/18/2001 05:09 PM House O&G

SB 121 - RIGHT-OF-WAY LEASING ACT                                                                                             
                                                                                                                                
Number 0090                                                                                                                     
                                                                                                                                
VICE  CHAIR FATE  announced the  first item  of business,  CS FOR                                                               
SENATE BILL  NO. 121(RES),  "An Act adding,  for purposes  of the                                                               
Alaska  Right-of-Way Leasing  Act, a  definition of  'substantial                                                               
change' as applied to an  amended right-of-way lease application;                                                               
and providing for an effective date."                                                                                           
                                                                                                                                
Number 0129                                                                                                                     
                                                                                                                                
ANNETTE KREITZER, Staff to Senator  Loren Leman, presented SB 121                                                               
on  behalf  of  the  sponsor.    She  requested  that  Jim  Eason                                                               
[lobbyist on  behalf of  Foothills Pipe Lines  Ltd.] join  her at                                                               
the witness table.   She then explained that  Senator Leman wants                                                               
to remove real and potential  roadblocks to the commercialization                                                               
of  Alaska's North  Slope  gas.   Therefore,  SB  121 provides  a                                                               
definition  of  the  term  "substantial change"  as  used  in  AS                                                               
38.35.050(c), which reads:                                                                                                      
                                                                                                                                
          (c) Any amendment to an application filed under                                                                       
     this section which constitutes  a substantial change in                                                                    
     the application  is subject to  all provisions  of this                                                                    
     chapter applying to an original application.                                                                               
                                                                                                                                
MS. KREITZER pointed  out that currently whether  an amendment to                                                               
a pipeline  is or isn't  a substantial  change is decided  by the                                                               
Department of  Natural Resources  (DNR) on a  case-by-case basis.                                                               
The concern isn't that, but is  the challenge to that decision on                                                               
a case-by-case basis  in which the court would  make the decision                                                               
instead of its being a policy [decision] of the department.                                                                     
                                                                                                                                
MS. KREITZER  noted that the  following would be  consistent with                                                               
existing department policy,  and under SB 121  would constitute a                                                               
substantial  change  that  would require  restarting  the  entire                                                               
process:  a 10 percent net  increase in state acreage beyond what                                                               
was   in   the   original   application;   using   less-effective                                                               
environmental or safety-mitigation measures  than proposed in the                                                               
original application;  or proposing  a fundamental change  in the                                                               
route as proposed in the original application.                                                                                  
                                                                                                                                
Number 0284                                                                                                                     
                                                                                                                                
MS. KREITZER  drew attention  to page 2  of the  bill, suggesting                                                               
that  the language  about  the  acreage not  included  in the  10                                                               
percent net  increase may  be somewhat  confusing.   She reminded                                                               
members that if it is a  10 percent net increase in state acreage                                                               
beyond  what was  in  the  original application,  it  would be  a                                                               
"substantial  change" under  this  bill.   However, not  included                                                               
would  be  acreage attributed  to  an  amendment to  an  existing                                                               
right-of-way lease across federal  lands originally issued by the                                                               
federal government -  regardless of whether the  state or federal                                                               
government administers the land -  or land under a federal right-                                                               
of-way   grant   that   is   transferred   to   the   state   for                                                               
administration.                                                                                                                 
                                                                                                                                
MS. KREITZER  explained the reason for  the foregoing exceptions.                                                               
When  there  are right-of-way  leases  across  federal and  state                                                               
lands,  federal  rights-of-way are,  by  law,  50 feet  plus  the                                                               
amount  of  the  improvement  -  typically about  80  feet.    By                                                               
contrast, state  rights-of-way are 100  to 150 feet, and  most of                                                               
the  North Slope  rights-of-way  are 150  feet.   This  provision                                                               
allows for  alignment of those rights-of-way  without making them                                                               
subject to the 10 percent net increase.                                                                                         
                                                                                                                                
MS. KREITZER  concluded by  saying SB  121 provides  an increased                                                               
measure  of certainty  and will  minimize unnecessary  challenges                                                               
and  delays in  processing, approving,  and issuing  right-of-way                                                               
leases.                                                                                                                         
                                                                                                                                
Number 0432                                                                                                                     
                                                                                                                                
JAMES  E.   EASON,  Lobbyist  for  Foothills   Pipe  Lines  Ltd.,                                                               
testified in support of SB 121,  noting that [he and the company]                                                               
had worked  closely with  the sponsor  to draft  legislation that                                                               
would meet the  requirements of DNR's pipeline office  as well as                                                               
comport with  what they  believe to  be the  traditional criteria                                                               
that the department looks to  in determining whether an amendment                                                               
to an application is or is not considered substantial.                                                                          
                                                                                                                                
MR. EASON  agreed that the  concern is not with  the commissioner                                                               
or  the  pipeline  office;  instead,   lacking  a  definition  of                                                               
"substantial change" for the purposes  of the statute, the courts                                                               
ultimately will make that decision  on a case-by-case basis, if a                                                               
project has  a high enough  profile so that someone  challenges a                                                               
decision  by the  commissioner or  the pipeline  office regarding                                                               
whether a  change is  substantial.  Mr.  Eason suggested  that is                                                               
not in the best interest of  either the state or a company trying                                                               
to  commercialize gas  on behalf  of  the state.   He  encouraged                                                               
adoption of  the policy  suggested by  the bill,  as well  as the                                                               
definitions,  in  order  to  give  guidance  to  the  court,  the                                                               
commissioner,  and the  commissioner's  staff  in processing  and                                                               
adjudicating applications.                                                                                                      
                                                                                                                                
Number 0555                                                                                                                     
                                                                                                                                
VICE  CHAIR FATE  asked whether  anyone else  wished to  testify;                                                               
there was no response.                                                                                                          
                                                                                                                                
REPRESENTATIVE OGAN remarked  that the bill has some  of the most                                                               
common-sense, unambiguous language he has  seen.  He suggested it                                                               
is timely and that it should be moved from committee.                                                                           
                                                                                                                                
Number 0641                                                                                                                     
                                                                                                                                
REPRESENTATIVE DYSON  made a  motion to  move CSSB  121(RES) from                                                               
committee  with individual  recommendations and  the zero  fiscal                                                               
note.  There  being no objection, CSSB 121(RES) was  moved out of                                                               
the House Special Committee on Oil and Gas.