02/26/1997 01:10 PM House JUD

 HCR 11 - NORTHSTAR AGREEMENT LITIGATION                                     
 Number 0010                                                                   
                                                                               
 CHAIRMAN GREEN announced the first item on the agenda was HCR 11,             
 Urging the Attorney General of the State of Alaska to use every               
 appropriate resource and due diligence to defend the state's                  
 interests in the civil action filed against the state challenging             
 the 1996 revisions of the Northstar unit leases, and respectfully             
 requesting the Superior Court of the State of Alaska to give                  
 expeditious consideration to the matter.                                      
                                                                               
 Number 0028                                                                   
                                                                               
 REPRESENTATIVE GAIL PHILLIPS, sponsor of HCR 11, said on February             
 13, 1997, British Petroleum announced they would immediately stop             
 production work on their Northstar oil field development project.             
 The company indicated the reason for the work stoppage was their              
 concern about a lawsuit challenging revisions to the Northstar                
 lease terms ratified by the Alaska legislature and signed into law            
 by the Governor last year.  She said HCR 11 asks the attorney                 
 general of the state of Alaska to use every appropriate resource              
 and due diligence to defend the state's interest in this case.  It            
 also respectfully requests the superior court to expedite                     
 consideration of appending legislation so that work on the project            
 can resume as quickly as possible.                                            
                                                                               
 REPRESENTATIVE PHILLIPS said, in 1996, the legislature authorized             
 the commissioner of natural resources to revise the Northstar unit            
 oil and gas leases.  At the time there was a strong commitment to             
 Alaska hire, Alaska build and Alaska buy in the development of the            
 field.  Following the revised lease agreement, construction of                
 modules for the Northstar project began in Anchorage.  Several                
 Alaskan construction and oil service companies made preparations              
 for the increased work load.  People were hired and plans were put            
 into place.  The lawsuit has directly resulted in many Alaskans               
 losing their jobs.  In the interest of all Alaskans, this case must           
 be resolved quickly.  The resolution simply asks the court to act             
 as expeditiously as possible on the hearing, in order to put                  
 Alaskan families back to work.                                                
                                                                               
 REPRESENTATIVE PHILLIPS said there is a work draft before the                 
 committee.  She said committee changes were incorporated in the               
 work draft, but she had one other suggestion.  Referring to page 2,           
 line 16, of the work draft, she recommended that line 16 be amended           
 from "would ask" to "has asked" in light of the newspaper article             
 which said that the Governor had asked the judge to toss out the              
 lawsuit on Northstar.  She said HCR 11 will go hand in glove with             
 the Governor's request.  Both the legislature and the Governor                
 would ask the courts, while fully recognizing the separation of               
 powers, to act as expeditiously as possible in this matter.                   
                                                                               
 Number 0267                                                                   
                                                                               
 DALE BONDURANT testified next via teleconference from Kenai.  He              
 said that this state will non-competitively give away the Northstar           
 royalty provision is another bump in the present legislative                  
 giveaway program of Alaska's own resources for the real purpose of            
 increasing industry profit at the expense of the public's long term           
 benefits.  Even after industry enters into and are successful in              
 the open and competitive bidding process, they come back and demand           
 self-interest changes in their contractual commitments.  He said              
 industry is saying they can't have any more restrictive                       
 regulations, but are readily demanding lower than their contractual           
 commitments, including their refusal to voluntarily pay their                 
 royalty debts.                                                                
                                                                               
 MR. BONDURANT said this resolution and the voluntary changes of the           
 industry's bidding contract liability is just another example of              
 the numerous pending bills intended to lower responsibility of                
 environmental protection, resource conservation and the public                
 trust rights as owner of Alaska's common property resource.  The              
 1997 legislature's attitude flies in the face of the first                    
 statement on HCR 11, "Whereas a majority of Alaskans support safe             
 and responsible oil development in the state".  He ended there and            
 challenge the sponsor to add the following statement, "as proof of            
 this responsibility we offer the examination of the intent of the             
 following pending regulations which include HB 28, HB 29, HB 4, HB
, HB 57, HB 58, HB 31, HB 60, HB 68, HB 109, HB 128."                       
                                                                               
 MR. BONDURANT said industry's continued demand for more favorable             
 financial climate shows their self-interest attitude by extending             
 its lobby of a reduction in state budget funding for education and            
 sports.  This includes a reduction of commitment for                          
 extracurricular activities such as sports, music, crafts and social           
 activities as well as cutting health care for the young and                   
 elderly.                                                                      
                                                                               
 Number 0543                                                                   
                                                                               
 JERRY McCUTCHEON testified next via teleconference from Anchorage.            
 He asked why BP (Alaska) Inc. started the Northstar modules knowing           
 that they were going to be sued.  He said Badami is going to go on-           
 line before Northstar, the crews from Badami will transfer to                 
 Northstar.  He questioned why Northstar modules were started before           
 work began on the Badami modules, especially when the modules are             
 the same.  He asked why the Badami modules are going to be built in           
 Calgary and why BP was in such a hurry to get the Northstar modules           
 started.  He further questioned why BP didn't bother to check with            
 the Department of Transportation and Public Facilities (DOT/PF) as            
 to the adequacy of the three bridges to get the modules across of             
 which there will be four by the end of summer.  Given all those               
 questions, it is rather obvious that BP started the Northstar                 
 modules for the simple purpose of cancelling them.                            
                                                                               
 Number 0710                                                                   
 REPRESENTATIVE CON BUNDE made a motion that the committee adopt the           
 committee substitute O-LS0615\B, dated February 26, 1997, as the              
 committee's working document.  Hearing no objections, CSHCR 11(JUD)           
 was before the committee.                                                     
                                                                               
 Number 0756                                                                   
                                                                               
 REPRESENTATIVE BRIAN PORTER made a motion to adopt Amendment 1,               
 located on page 2, line 16, deleting the words "would ask" and                
 replacing them with "has asked" to CSHCR 11(JUD).  Hearing no                 
 objection Amendment 1 was adopted.                                            
                                                                               
 Number 0794                                                                   
                                                                               
 REPRESENTATIVE BUNDE made a motion to move CSHCR 11(JUD) from                 
 committee with individual recommendations as amended.  Hearing no             
 objection CSHCR 11(JUD) was moved from the House Judiciary Standing           
 Committee.