Legislature(2001 - 2002)
04/20/2001 01:50 PM House RES
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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
SB 121-RIGHT-OF-WAY LEASING ACT CHAIR MASEK announced that the next order of business would be 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." ANNETTE KREITZER, Staff to Senator Loren Leman, Alaska State Legislature, explained that Senator Leman wanted to remove real or potential road blocks to the commercialization of Alaska's North Slope gas. She paraphrased the sponsor statement, which reads as follows: Senate Bill 121 provides a statutory definition of "substantial change" as that term is used in AS 38.35.050(c). This section provides that "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." The statutes provide no guidance to applicants, the Department of Natural Resources, or other interested parties as to what is or is not a substantial change. The difficulty with the language as it exists is that any or all changes to an original pipeline right-of- way lease application could be argued to be substantial. MS. KREITZER added that the concern surrounds what happens when that decision is challenged in court and the court, by default, makes the decision. She continued: This legislation establishes that: 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 would be substantial enough to require restarting the entire administrative process for obtaining a right-of-way lease across state lands. MS. KREITZER noted that the reason for the exceptions is the difference between federal and state rights-of-way. She explained that federal rights-of-way are 50 feet, plus the amount of the improvement, which equals approximately 80 feet, whereas, state rights-of-way range from 100 to 150 feet. She said the state rights-of-way should not be included in the 10 percent net increase, because, essentially, the route of the pipeline is not being changed, rather the leases are being aligned. She continued with the sponsor statement: This legislation will not foreclose on opportunities for the public and affected agencies to review and comment on subsequent amendments to initial lease applications. It will, however, provide an increased measure of certainty and will minimize unnecessary challenges and delays in processing, approving and issuing right-of-way leases. Number 0590 JAMES EASON, Lobbyist, Foothills Pipe Lines, Ltd. (Foothills), explained that Foothills is a company owned jointly by trans Canada pipeline and West Coast Energy, which are the two largest pipeline companies in Canada. He stated that Foothills is the managing partner for the Alaska Natural Gas Transportation System (ANGTS), which, hopefully will be the system that brings Alaska gas to the Lower 48 market. Mr. Eason said Foothills has put most of its permits in place over the years, including the federal right-of-way in Alaska, as well as rights-of-way across Canada and the "pre-bill" system for parts of the Lower 48 states. He added that the "missing piece" of that is the state right-of-way. He said [Foothills] has expended a considerable amount of effort and money, since approximately 1984 to keep its application for that right-of-way active. Furthermore, [Foothills] has recently begun the process of finishing the rights-of-way lease for the rest of the system. MR. EASON stated that [Foothills] views [SB 121] as an important piece of a necessary framework to assure that that permitting takes place and does so in a way that is open to full public review, while at the same time providing some valuable protections. He stated [Foothill's] belief that [SB 121] is important to any proponent for a gas pipeline that might be a high profile project, which might invite litigation. MR. EASON indicated that the problem, as described by Ms. Kreitzer in previous testimony, is that the statutes - the right-of-way leasing act - have contained a term, which has had important implications for the act, since it was first adopted. He continued: That term, "substantial change," was never defined. And as a practical matter, the Department of Natural Resources has faced questions, involving what is or is not a substantial change for the purposes of retriggering all the provisions of the act on several occasions, and they have successfully resolved those issues without litigation. Our concern, however, is that it's not the department that ultimately makes the decision. If someone is interested in delaying or blocking a project, it's simply a matter of watching the project's permitting unfold over a year and a half or two years, and if there are any changes in the application, today or tomorrow, by the applicant or by the state, it's arguable that someone can raise a claim that those are substantial changes. The commissioner, we hope, would make the same types of decisions they always have - they've been decisions we think are right. But, at the same time, if they are challenged in court, it's not the commissioner's decision that matters, it's be the court's decision. And so, this bill is very important, because it provides the legislature the opportunity to provide some common sense guidelines that will help guide, not only the applicants, but the state in the adjudication of permits. And it will also help the public to understand how the permits are going to be ... adjudicated. ... We would encourage you to consider the bill favorably and move it out of committee. Number 0761 REPRESENTATIVE GREEN described the following possible scenario: A pipeline is routed toward "community A" and deviated around it. Then, for whatever reason, "they" want to go closer or impact "community A" more. The impact would be less than 10 percent deviation from the original permit. Representative Green asked Mr. Eason, "would that, in your estimation .. or would this definition cover that, as far as a 'significant change?'" MR. EASON responded that there were two events at issue. If there was a 10 percent or above increase in acreage involved, that would automatically be considered a substantial change. In that case "you" would go through all the provisions of the chapter again. Regarding the routing itself, Mr. Eason referred to page 2, lines 3 and 4, which read: (C) a fundamental change in the general route as set out in the original application; He said "we" struggled and worked with numerous people to develop language that would "capture the sense of the magnitude of the change, which should trigger substantial change." He stated that everyone realizes that there will be changes in the alignment of a pipeline from the time it's applied for, until it's actually in place. However, those changes would generally be technical in nature, such as having to change the routing of a pipeline for engineering, environmental, political, or social reasons, for example. MR.EASON explained that "you" have to maintain the flexibility to respond to the wishes of the public, as well as to the critical habitat or subsistence issues of the agencies, of which "you" may be unaware when you make the application. As the two or more years pass, while [the application] is under review those issues will become known and "you" will need the flexibility to rearrange the [pipeline] route to accommodate that. He described a clear-cut situation in which everyone would believe a substantial change had occurred: when someone applies [for a permit] to [build a pipeline] from Prudhoe Bay to Valdez, but a year and a half later says, "I'm going to go to the Lower 48, instead." He mentioned finding the middle ground; accommodate engineering, ground effects, or environmental issues, while providing certainty that a company won't try to gain pipelines by suggesting one route and then changing it. Number 0929 REPRESENTATIVE GREEN stated that his concern was of a more subtle nature. He restated his example to describe a situation in which a pipeline was originally routed in one direction. However, a concern develops during involvement in the process and people realize "this is a habitat, or it's bad soil," for example. Therefore, it becomes necessary to change a route. There would be far less than 10 percent change in acreage, but it could have a significant impact. He asked if there was language somewhere else in statute that would cover that example. Number 0975 MR. EASON responded as follows: My belief is that this purposely would not accommodate that; it would not consider that a substantial change for the purposes of retriggering all of the provisions of the chapter. But there's a distinction that I think [is] important: It doesn't mean that that change won't be publicly .. that people will not receive notification of it, or that the agencies in the public won't have an opportunity to influence that change. But, there's a difference under the statutes and the procedures, between keeping everyone informed of what changes have to happen, and why, and letting people participate in that decision. And taking the step as is required now, if there's a dispute, of going back and ... literally retriggering all the provisions, which means go back and refile the application, and again, all ... the procedural parts of the chapter. And so, ... there is that tension. ... I think it's more in people's way they view what substantial change does for ... an application. Number 1030 REPRESENTATIVE GREEN said: I appreciate that. ... The reason I ask is that this, in your estimation, either word-wise or intent-wise, is not an effort to avoid this little community, or this little thing, it just doesn't trigger the whole two-or three-thousand miles of pipeline. MR. EASON answered correct. REPRESENTATIVE GREEN asked if this kind of modification or description has been used anywhere else. MR. EASON noted that he hasn't researced that question. However, he doubted that this type modification or description has been used elsewhere because he understood the state's right- of-way leasing act to be modeled after the federal right-of-way leasing act; therefore, he expected this kind of uncertainty to be embodied in both statutes. The issue is whether anyone has challenged it and tried to use it as a tool to force delay, he said. Number 1085 CO-CHAIR MASEK announced that Bill Britt, Pipeline Coordinator, DNR, and Carol Carroll, Director, Division of Support Services, DNR, were available by teleconference and in person, respectively. Number 1098 REPRESENTATIVE KERTTULA referred to page 2, [line 3] of the bill and asked Mr. Eason for his interpretation of the intent of the language, "a fundamental change in the general route". Number 1126 MR. EASON replied that it would encompass a change between origin and destination. It would not include the changes along the route that were proposed to accommodate the routine eventualities relating to environmental reasons or public and agency reasons. Number 1185 MS. KREITZER provided the committee with information regarding the different sizes of federal and state pipeline rights-of-way, which could be viewed as a substantial change. The information also noted where "substantial" is defined elsewhere in Alaska statute. Number 1237 REPRESENTATIVE FATE moved to report CSSB 121(RES), [version 22- LS0477\L] out of committee with individual recommendations and the accompanying zero fiscal note. There being no objection, CSSB 121(RES) was moved out of the House Resources Standing Committee.
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