Legislature(2003 - 2004)
03/16/2004 03:15 PM O&G
* first hearing in first committee of referral
= bill was previously heard/scheduled
= bill was previously heard/scheduled
SB 264-REPEAL PIPELINE PREAPPLICATION DEADLINE CHAIR KOHRING announced that the first order of business would be SENATE BILL NO. 264, "An Act repealing the time limitation on the authority of 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 providing for an effective date." [SB 264 was sponsored by the Senate Rules Standing Committee by request of the governor.] Number 0135 MARTY RUTHERFORD, Deputy Commissioner, Office of the Commissioner, Department of Natural Resources (DNR), presented SB 264 and testified in support of it. She explained that its purpose is to repeal the sunset date in AS 38.35.145(c), a statute that allows DNR to enter into agreements with prospective lessees to recover the costs for their preliminary work, which DNR calls "preapplication work," on a pipeline right-of-way lease application. This particular provision ended December 31, 2003. MS. RUTHERFORD noted that pipeline right-of-way lease applicants must submit detailed applications; this requires significant engineering and design work, at a significant cost. Applicants have found it very useful to have agencies involved in the preapplication process so they are fully aware of permitting issues at an early stage and can address them in their applications. Furthermore, [DNR] has found that such agency participation ultimately expedites project review and approval. She said this provision was used recently for preapplication work on the Point Thomson project before it was delayed and on the Kenai Kachemak Pipeline extension. MS. RUTHERFORD listed examples of agency assistance: identification and explanation of applicable state laws and regulations and the regulatory process; identification of state, federal, and private land ownership; identification of restrictions on affected state lands that might interfere with authorizing a right-of-way lease or might hinder an applicant's construction, including third-party interests such as a utility right-of-way or even the existence of an archeological site; identification of potential environmental issues such a difficult stream crossings; assistance when an applicant reaches out to other affected parties such as utilities or other land owners so the applicant better understands the third-party interests and issues; and assistance with actual development of the project application. And for a large project, she said the ability to enter into a reimbursement agreement for preapplication work allows [DNR] to "staff up" the Joint Pipeline Office in a timely fashion. MS. RUTHERFORD emphasized that this preapplication is completely applicant-initiated; an applicant may initiate a request for preapplication services, but is under no obligation to do so. Without this legislation, however, DNR cannot work with an applicant until it receives the application. She said the fiscal impact of the bill is zero, whereas the impact of not passing it would be rather significant. Without it, [DNR] cannot enter into reimbursement agreements with applicants in a "preapplication mode" and has no general funds available to provide this assistance. Number 0539 REPRESENTATIVE HEINZE mentioned stranded gas and related money being sent [to DNR]. She asked whether any of that work would be in this application. MS. RUTHERFORD replied no; that work is totally focused on analyzing and developing a fiscal contract under the stranded gas Act, and none of the people who put in applications under the stranded gas Act are at the point of being prepared to move a right-of-way application forward. REPRESENTATIVE HEINZE asked whether DNR has the staff to handle these applications and do this work. MS. RUTHERFORD answered that it depends on the size of the project. For a very large one, it would be critical [for DNR] to have this vehicle available if an applicant chose to work with [DNR] on three applications, for example, in order to be able to staff up; a [major] gas line is the type of project that would require hiring new staff. For a reasonably small project such as the Kenai Kachemak Pipeline, however, [DNR] can handle it with staff that aren't focused on either another project or TAPS [Trans-Alaska Pipeline System] oversight activity. CHAIR KOHRING announced the arrival of Representative Crawford. Number 0677 CHAIR KOHRING requested confirmation that this just removes the date of December 31, 2003, from statute and leaves it open- ended. MS. RUTHERFORD said that's the proposal in the bill. CHAIR KOHRING surmised that it's legally acceptable to do this retroactively, even though the deadline has passed. MS. RUTHERFORD replied that removing that date allows [DNR] to once again accept reimbursement agreements and work preapplication activities. During the period between December 31 and now, it hasn't been doing so, and removing that date simply gives [DNR] the authorization without any end date. CHAIR KOHRING asked whether anyone else wished to testify. [There was no response.] He said he'd like to move the bill. Number 0800 REPRESENTATIVE HEINZE moved to report SB 264 out of committee with individual recommendations and the accompanying [zero fiscal note]. There being no objection, SB 264 was reported from the House Special Committee on Oil and Gas.