SENATE BILL NO. 143 "An Act authorizing the Department of Natural Resources to enter into agreements with a person or persons desiring to own an oil or natural gas pipeline proposed to be located on state land for the purposes of providing for payment of the reasonable costs incurred in preparing for activities before receipt of an application under the Alaska Right-of- Way Leasing Act and for activities relating to the processing of an application under that Act; and providing for an effective date." DARWIN PETERSON, STAFF, SENATOR JOHN TORGERSON, testified in support of the legislation on behalf of the sponsor. He observed that the legislation was introduced to facilitate the state's effort to issue right-of-way leases for a gas pipeline project. Any sponsor of the pipeline project would have to obtain a right-of-way lease across state lines. The legislation would authorize the state to be reimbursed by work performed by the State Pipeline Coordinator's Office in processing an application for a right-of-way lease. The current law allows the collection of a fee for submitted applications. The legislation would allow the reimbursement for fees before an application has actually been filed. There must be agreement by the pre-applicant and the department. The state incurs a financial burden from the preliminary activities of processing of a right-of-way application before it is issued. The legislation lifts the burden from the state and facilitates the process by allowing the applicant to pay in advance for what they would have to pay for anyway. Co-Chair Williams asked the type of work that would be required. Mr. Peterson explained that the work would be for technical assistance and consultation. He referred to the fiscal note by the Department of Natural Resources and noted that costs include work to establish a Gas Pipeline Office, provide technical assistance to proponents, reimburse efforts related to permit process streamlining, and consultation with the state's federal and Canadian counterparts. BILL BRITT, STATE PIPELINE COORDINATOR, DEPARTMENT OF NATURAL RESOURCES, ANCHORAGE, testified via teleconference. He observed that there are a variety of activities that occur before the permit application is received; all are directed toward receiving a complete permit application. The better the application the faster the processing. It is in the interest of all parties to resolve questions before the application is received. TAPE HFC 01 - 108, Side A  Co-Chair Williams asked what would happen if the application were not granted. Mr. Peterson clarified that the state would keep any money given to the State Pipeline Coordinator's Office for pre-application work. In response to a question by Representative Lancaster, Mr. Peterson observed that the practice has already occurred and is supported by industry. Representative Whitaker asked if existing gas pipeline permits and leases are in place. Mr. Britt stated that the pre-application agreements have been related to all the oil and gas lines on the North Slope in the last 5 - 7 years. He observed that there is one conditional state right-of-way in place, which is held by Yukon Pacific Lines for the tag lines. He clarified that Foothills Pipe Lines Alaska Inc. went through an extensive amount of processing but has not completed the process or been given a state right-of-way for the alignment. They completed the federal process and were granted a federal right-of-way. The state would probably enter into a pre-application agreement with the gas producer's consortium and Foothills Pipe Lines Alaska Inc. He did not anticipate an agreement with the Yukon Pacific Lines. Representative Lancaster MOVED to report SB 143 out of Committee with the accompanying fiscal note. There being NO OBJECTION, it was so ordered. SB 143 was REPORTED out of Committee with a "do pass" recommendation and with a new fiscal impact note from the Department of Natural Resources.