HB 215 - JUDICIAL REVIEW OF PIPELINE PROJECT/ROW 1:07:34 PM CHAIR GATTO announced that the first order of business would be HOUSE BILL NO. 215, "An Act relating to the judicial review of a right-of-way lease or the development or construction of an oil or gas pipeline on state land." 1:08:31 PM REPRESENTATIVE THOMPSON moved to adopt the proposed committee substitute (CS) for HB 215, Version 27-LS0741\I, Bullock, 4/5/11, as the working document. REPRESENTATIVE HOLMES objected for the purpose of discussion. 1:10:11 PM REPRESENTATIVE CHENAULT, as the sponsor, explained that the objective of HB 215 is to prohibit the filing of lawsuits that have the potential to delay construction of intrastate natural gas pipelines. Proposing to modify current statute, HB 215's provisions would only apply to right-of-ways on state land. Under the bill, claims may be filed only by an applicant, a competing applicant, or a person who has a direct financial interest affected by the lease of a right-of-way; the requests for judicial review must be filed within 60 days of the publication of notice for a right-of-way lease application; judicial review may only be granted for claims challenging the validity of the statute, or claims [asserting] a denial of rights [provided by] the Alaska State Constitution; any claim not filed within the 60-day timeframe would be barred; and all claims must be filed with the Alaska Superior Court, which would have exclusive jurisdiction to determine the proceeding but no jurisdiction to grant any injunctive relief with the exception of the issuance of a final judgment. House Bill 215 was modeled after 43 U.S.C. 1652(d) - the federal Trans-Alaska Pipeline Authorization Act (TAPAA) adopted in 1973 - and is similar to legislation passed in 1973 - that being Senate Bill 3. CHAIR GATTO, noting that [both existing and proposed AS 38.35.200(a)] would allow those who have a direct financial interest affected by the lease of a right-of-way to seek judicial review, asked whether environmental groups or the American Civil Liberties Union (ACLU) would be considered to have such an interest. 1:13:43 PM TOM WRIGHT, Staff, House Majority Office, Alaska State Legislature, on behalf of the sponsor, Representative Mike Chenault, Speaker, House of Representatives, offered his understanding that such entities wouldn't have standing to seek such a review. He then went on to explain that Version I incorporates a change suggested by the Alaska Gasline Development Corporation (AGDC). Specifically, Section 1 of Version I, by altering AS 38.34.050(c)(3), would exempt the AGDC - as a subsidiary of the Alaska Housing Finance Corporation (AHFC) - from having to include in its right-of-way lease certain of the covenants outlined in proposed AS 38.35.120 related to common carriers; this change would ensure that the AGDC's proposed natural gas pipeline, as a contract-carrier pipeline, could obtain a right-of-way lease under AS 38.35. He characterized the existing statutory language as redundant and prohibitive towards the development of an intrastate natural gas pipeline. MR. WRIGHT explained that Sections 2-4 provide conforming changes to AS 38.35.100(d) and AS 38.35.120(a) and (b) related to Section 1's proposed changes. In response to a question, he offered his understanding that an intrastate natural gas pipeline would fall under the purview of the Regulatory Commission of Alaska (RCA), and that HB 215 would not apply to the proposed natural gas pipeline authorized under the Alaska Gasline Inducement Act (AGIA). He then went on to explain that Version I's Section 5 would ensure that only the applicant, a competing applicant, or a person who has a direct financial interest affected by the lease of a right-of-way would have standing to seek a judicial review, with the applicant himself/herself being able to seek such a review at any time; this is intended to limit the ability of those who are simply opposed to the construction of natural gas pipelines to stop such necessary projects in Alaska. MR. WRIGHT explained that Section 6 - again, modeled on the TAPAA - is intended to preclude lawsuits against any phase of development or construction after a right-of-way has been issued. Under Section 6, [claims] must be brought within 60 days from the [date of the particular action in question], and must be filed with the Alaska Superior Court, which, except in conjunction with the issuance of a final judgment, would have no jurisdiction to grant injunctive relief, whether it be in the form of a temporary restraining order, a preliminary injunction, a permanent injunction, or a stay against the issuance of a right-of-way, permit, lease, certificate, license, or other authorization. MR. WRIGHT, in conclusion, added that conforming changes were made throughout Version I such that the bill would apply to the construction of all natural gas pipelines within the state. 1:20:41 PM REPRESENTATIVE HOLMES sought clarification regarding whether such pipelines must be entirely within the state in order for the bill to apply. REPRESENTATIVE CHENAULT offered his understanding that that would be the case: HB 215 would only apply to state-issued right-of-ways on state land. REPRESENTATIVE PRUITT sought clarification that the bill could also apply in situations involving a natural gas pipeline's "spur line" if that spur line were entirely within Alaska. REPRESENTATIVE CHENAULT indicated that that would be the case. Regardless of how any interstate natural gas pipeline project is progressing, in terms of resource development in Alaska, HB 215 would allow the state to control [its intrastate natural gas pipelines]. 1:29:14 PM JOHN HUTCHINS, Assistant Attorney General, Oil, Gas & Mining Section, Civil Division (Juneau), Department of Law (DOL), in response to a question, offered his understanding that under existing [AS 38.35], any pipeline right-of-way lease must include certain covenants, one of them being that the pipeline shall be a common carrier. Under HB 215, that covenant would not be required in the AGDC's right-of-way lease pertaining to its proposed natural gas pipeline. 1:32:00 PM TINA M. GROVIER, Attorney at Law, Birch Horton Bittner & Cherot, in response to further questions, explained that natural gas pipelines, in contrast to oil pipelines, tend to be contract carriers, which allows contracting shippers to send a specified amount of their natural gas through the pipeline without having their "interests" diminished. 1:34:03 PM DANIEL R. FAUSKE, President, Alaska Gasline Development Corporation (AGDC), Alaska Housing Finance Corporation (AHFC), Department of Revenue (DOR); CEO/Executive Director, Alaska Housing Finance Corporation (AHFC), Department of Revenue (DOR), indicated that HB 215 is one of two pieces of legislation that would help the AGDC to continue working on its proposed natural gas pipeline project. The main issue [the AGDC and the AHFC] wanted addressed pertained to common carriers versus contract pertaining to state-leased lands, [has been addressed via Version I]. In conclusion, he indicated that [the AGDC and AHFC are] in support of HB 215. REPRESENTATIVE HOLMES sought clarification regarding Section 6's proposed repeal and reenactment of AS 38.35.200(b). MS. GROVIER reiterated that the language of Section 6's proposed subsection (b) was derived largely from the TAPPA - specifically 43 U.S.C. 1652(d) - and indicated that that language, although altered to address state issues instead of federal issues, would essentially limit the types of lawsuits that could be brought against [an intrastate natural gas pipeline] and the types of relief that could be received via such litigation. In response to a question, she explained that the language on page 6, lines 25-29, sets out both the aforementioned 60-day timeframe and the stipulations that a judicial review may only be granted for claims challenging the validity of the statute, or claims asserting that a particular action [would result or had resulted] in a denial of rights provided by the Alaska State Constitution. REPRESENTATIVE HOLMES surmised, then, that under Section 6's proposed AS 38.35.200(b), failure to follow the procedures outlined in AS 38.35 would no longer be grounds for judicial review. MS. GROVIER concurred. In response to another question, she offered her understanding that due to energy shortages and the desire to make the resources of the North Slope available in order to meet the country's urgent energy needs, the language of the TAPPA precluded judicial review based on such a challenge. She said she presumes that similar motivations regarding natural gas engendered Section 6's proposed removal of such grounds from existing AS 38.35.200(b). In response to other questions, she indicated that Section 5 would apply to both oil pipelines and natural gas pipelines - though predominately oil pipelines - and that Section 6 would apply only to natural gas pipelines; and surmised that those sections primarily address pipeline right- of-ways because that's what AS 38.35 pertains to. CHAIR GATTO questioned whether Section 6's proposed 60-day deadline for bringing a claim alleging the invalidity of AS 38.35 was constitutional. MS. GROVIER surmised that if the court finds that restriction to be unconstitutional, then it would allow such claims to be brought forth. In response to a further question, she offered her belief that HB 215 would not change any existing statutory or constitutional notification requirements pertaining to the disposal/lease of state lands or interests therein. REPRESENTATIVE HOLMES questioned whether the adoption of HB 215 would raise primacy issues. 1:51:15 PM HAROLD HEINZE, Chief Executive Officer, Alaska Natural Gas Development Authority (ANGDA), Office of the Commissioner, Department of Revenue (DOR), mentioned that he'd not yet had a chance to review Version I of HB 215; offered his understanding of what the original version of the bill would do; and, describing what the ANGDA went through several years ago with regard to a proposed spur line, characterized the state's existing process for obtaining a lease for an intrastate pipeline right-of-way as a very good, comfortable, [appropriate,] and effective process. He also noted that existing AS 38.35.200(b) already provides a very limited basis for challenges, and indicated that the ANGDA hasn't any problem with that provision because the ANGDA's intention is to follow the process, thereby precluding any such legal challenges from being brought forth to begin with. In response to a question, Mr. Heinze agreed to provide additional comments on HB 215 once he's had a chance to read Version I. REPRESENTATIVE HOLMES removed her objection to the motion to adopt Version I as the working document. There being no further objections, Version I was before the committee. CHAIR GATTO relayed that HB 215, Version I, would be held over.