Legislature(2003 - 2004)
03/22/2004 01:10 PM RES
* first hearing in first committee of referral
= bill was previously heard/scheduled
= bill was previously heard/scheduled
SB 264-REPEAL PIPELINE PREAPPLICATION DEADLINE CO-CHAIR MASEK announced that the final 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." Number 2239 RICHARD LeFEBVRE, Deputy Commissioner, Office of the Commissioner, Department of Natural Resources (DNR), testified, and stated support for SB 264. He explained that the purpose of the bill is to repeal the sunset date in AS 38.35.145(c). This statute allows DNR to enter into agreements with prospective lessees to recover the costs of preliminary work or "preapplication work" on a pipeline right-of-way lease application. He said the provision ended on December 31, 2003. Mr. LeFebvre offered some background on the subject by explaining that the pipeline right-of-way lease applicants must submit very detailed applications that require significant engineering, detail and design work. The requirement for that is under AS 38.35.050 and .100. He said in doing this the [applicant] must invest significant financial resources into a project just to complete the application. He said applicants have found that this is very useful, to have agencies involved in pre-application phase, so [DNR] is aware of the permitting issues at an early stage, and can address those issues in the applications. MR. LeFEBVRE said it provides both sides, the applicant and the agencies, to get a good feel for what the requirements will be for the final application. He explained that DNR has also found that the preapplication participation of agencies expedites the review and approval of the project. It also provides for more certainty up front and less uncertainty further into the process, he noted. MR. LeFEBVRE said the aforementioned provision has been used most recently in a preapplication work done on the Point Thompson project before it was delayed, and was also used on the Kenai-Kachemak pipeline extension. He explained that the types of assistance that are provided at the preapplication stage include identification and explanation of applicable state laws and regulatory requirements, as well as explanation of the regulatory process itself. Mr. LeFebvre said the identification of land ownership, including state, federal, and private land, affects the applicant and must be dealt with. He said it benefits both sides to get a good feel exactly where the alignment is or the corridor may be, and how that interaction and interface would be with either the private sector, federal agencies, or state agencies. Number 2380 MR. LeFEBVRE explained that the identification of any restrictions that exist on the affected state lands that might interfere with authorizing the right-of-way or hinder the applicant's construction itself might include third-party interests such as utility rights-of-ways or other outside influences such as possibly archeological sites. He said [DNR] also gets into the identification of potential environmental issues such as stream crossings and how those will be handled. He said it is beneficial to both sides to resolve those issues in a preapplication period instead of having to do modifications to the applications later on or something to that effect. He explained that the preapplication process could also include assistance in reaching out to other affected parties such as the utilities themselves, other landowners, or competing applicants who understand the issues, and to help resolve them. He said DNR also provides assistance with development of the application's initial project description and application. MR. LeFEBVRE explained that it also allows DNR to staff up in a timely fashion, so when the applicant does turn in the application; DNR is ready to move quickly into the project and through the process. He pointed out that the preapplication work is completely applicant initiated and voluntary, and he explained that an applicant may initiate the request for the preapplication services but are under no obligation to do so. However, he said without this legislation DNR is not able to work with applicants until an application is received. MR. LeFEBVRE said DNR uses the funds it receives to allow the staff to participate in that particular project. He said there is no fiscal impact for having this legislation, but the impact of not passing it is significant because without it [DNR] cannot enter into the reimbursable agreements with the applicants desiring the preapplication assistance [DNR] offers. Mr. LeFebvre noted that DNR does not have any general funds available to use to provide this preapplication assistance. Number 2498 REPRESENTATIVE STEPOVICH asked if this new legislation would have sped up the Point Thompson project and how long ago that occurred. He also asked how often the applications are done. MR. LeFEBVRE asked for clarification. REPRESENTATIVE STEPOVICH clarified that he was asking how many applications were submitted with regard to the Point Thompson project. MR. LeFEBVRE said [ExxonMobil Corporation] submitted one application related to the Point Thompson project. He said a total of approximately six applications have been received on pipeline right-of-way leases. REPRESENTATIVE STEPOVICH asked if these applications are part of the unitization process. MR. LeFEBVRE replied that it is totally separate and is part of the development process "once they have all their other paperwork in order and they want to go ahead and actually do the development work." He said there were two portions to the Point Thompson project - the right-of-way lease itself to the pipeline, which would go from Point Thompson to Prudhoe Bay, and the authorizations that were being sought for the project development itself right at Point Thompson. Number 2581 CO-CHAIR MASEK, upon determining no one else wished to testify, closed public testimony. Number 2586 CO-CHAIR DAHLSTROM moved to report SB 264 out of committee with individual recommendations and the accompanying fiscal notes. There being no objection, SB 264 was reported from the House Resources Standing Committee.