HOUSE BILL REPORT

HB 1688

BYRepresentatives K. Wilson, Belcher and Beck

Changing lease and contract requirements for tidelands, shorelands, and beds of navigable waters.

House Committe on Natural Resources & Parks

Majority Report:  The substitute bill be substituted therefor and the substitute bill do pass. (9)

      Signed by Representatives Belcher, Chair;K. Wilson, Vice Chair; Beck, Ranking Republican Member; Brumsickle, Dellwo, Ferguson,R. Fisher, Fuhrman and Raiter.

House Staff:Jean Kelley McElroy (786-7196)

AS REPORTED BY COMMITTEE ON NATURAL RESOURCES & PARKS

FEBRUARY 17, 1989

BACKGROUND:

The Department of Natural Resources (DNR) has the authority to sell or lease state-owned tidelands or beds of navigable waters.  The contracts for the purchase or lease of these lands are assignable by the contract holder.  Currently, DNR must approve the assignment, and the person to whom the contract or lease is assigned is subject to the same laws and has the same rights as the original contract holder.

Since some of these leases and contracts are for as long as 30 years, there have been some changes in conditions for the use of aquatic lands.  The current law is ambiguous as to whether the department can condition approval of an assignment on having the contract or lease updated.

SUMMARY:

SUBSTITUTE BILL:  The Department of Natural Resources is specifically given the authority to change the terms and conditions of a contract or lease as a condition of approving an assignment of that contract or lease.  This authority applies only to leases and contracts entered into after the effective date of this bill, and to existing leases and contracts where this authority has been specifically included as a term of the lease or contract.  The department's approval of an assignment cannot be unreasonably withheld.

SUBSTITUTE BILL COMPARED TO ORIGINAL:  The original bill applied to all existing and future leases and contracts.  The bill as amended applies only to future leases and contracts and to existing leases and contracts where the department's authority to change terms was stated in the lease or contract.

Fiscal Note:      Not Requested.

House Committee ‑ Testified For:    Stan Byles, Department of Natural Resources; Nick Handy, Department of Natural Resources.

House Committee - Testified Against:      Vern Lindskog, Washington State Petroleum Association.

House Committee - Testimony For:    Currently, leases can last for up to 30 years.  Regulations for the leased lands are changing. The department must have the authority to change the terms when leases and contracts are assigned in order to ensure that those regulations are met.

House Committee - Testimony Against:      The bill as originally drafted lessens the value of existing leases and contracts because the terms can be changed upon assignment.  In many cases, this was not what the original parties bargained for when negotiating the lease or contract terms.