Legislature(2001 - 2002)
04/10/2001 05:30 PM O&G
* first hearing in first committee of referral
= bill was previously heard/scheduled
= bill was previously heard/scheduled
SB 156 - BEST INTEREST FINDING UNDER AK LAND ACT TAPE 01-28, SIDE A Number 0047 VICE CHAIR FATE announced the next order of business, CS FOR SENATE BILL NO. 156(RES), "An Act amending the Alaska Land Act to clarify the requirement of a single written best interest finding required for the sale, lease, or other disposal of state land or resources or an interest in them, and relating to certain disposals involving multiphased development; and providing for an effective date." Number 0081 SENATOR DRUE PEARCE, Alaska State Legislature, presented the sponsor statement for SB 156, noting that the bill was introduced by the Senate Resources Standing Committee [of which she is vice chair]. She explained that the bill amends the Alaska Land Act to clarify the requirement that the Department of Natural Resources (DNR) prepare a single written best interest finding for multiphase development projects. SENATOR PEARCE provided some history. In 1994, the legislature passed SB 308 in reaction to a series of decisions by the Alaska Supreme Court concerning what the court characterized as DNR's "phasing" of its review of various mining and oil and gas projects; that bill explicitly allowed project phasing and precisely defined the scope of the best interest finding determination. At the time, the legislature was aware that the post-disposal phases - exploration, development, and transportation - would be subjected to numerous federal, state, and local laws, as well as regulations, policies, and ordinances; would be reviewed by numerous agencies; and would be subject to public review and comment. SENATOR PEARCE explained that while the legislature did intend that there would be a detailed review of the project at any later phase, the legislature did not intend that the DNR would have to issue another best interest finding as part of that review. However, the Alaska Supreme Court recently declared that the DNR is obliged, at each phase of development, to issue an entire best interest finding relating to that phase before the proposed development may proceed. SENATOR PEARCE told members [CSSB 156(RES)] is intended to make it clear that, first, no other best interest finding is required after the disposal phase; second, the best interest finding shall be based upon known information or information made available to the director, even if all potential cumulative impacts of the project are not known; and, third, public notice and the opportunity to comment shall be provided at each phase of an oil and gas project. The intent is that the phases subject to this notice are exploration, development, and transportation. She noted that the Division of Oil & Gas (DNR) had testified before the Senate Resources Standing Committee that the administration is in support of the bill. Number 0336 SENATOR PEARCE pointed out that beyond the time required to develop a best interest finding at every phase of a project, the best interest finding also could be costly. A typical best interest finding for a lease disposal, for example, costs the Division of Oil & Gas approximately $75,000; this doesn't include costs for other agencies such as the Department of Environmental Conservation (DEC) or the Alaska Department of Fish & Game (ADF&G). SENATOR PEARCE said although the division has never issued a best interest finding for an exploration well, it estimates a minimum cost of $50,000; with approximately 15 wells planned for the 2000-2001 drilling season on state land, the division would have spent an extra $750,000 if required to do a best interest finding for each well. Although the division hasn't estimated the cost for doing a best interest finding for the development phase, it would likely be at least as expensive as for an exploration well. SENATOR PEARCE informed members that present to answer questions was Patrick Coughlin, special counsel to the Senate Resources Standing Committee, who had experience working with the division when SB 308 was passed. She noted that Jim Eason, former Division of Oil & Gas director, had worked on SB 308, as had Ken Boyd, director of the division at the time, who had brought the problem [to the attention of the Senate Resources Standing Committee] last fall before he left the division. Number 0583 CAROL CARROLL, Director, Division of Support Services, Department of Natural Resources, came forward on behalf of the DNR. She advised the committee that the administration supports this bill and agrees there should be only one best interest finding, at the disposal phase when doing a disposal. She noted that the DNR does a preliminary best [interest] findings and gives the public many opportunities to participate before the findings and the disposal are finalized. MS. CARROLL pointed out that the bill provides that in order to phase oil and gas activities, post-disposal phases also must be subject to public notice and participation. Furthermore, the DNR believes [the bill] requires the Division of Oil & Gas to promulgate regulations in order to provide to the public both notice and the means to participate. Ms. Carroll noted that online to answer technical questions was Bill Van Dyke from the Division of Oil & Gas. Number 0720 REPRESENTATIVE OGAN asked why the zero fiscal note [from the DNR] doesn't reflect a cost savings. MS. CARROLL answered that it reflects what the DNR is doing now, which is what is stated in the bill. She explained that as a result of the court case in the year 2000, the department had not yet started doing best interest findings for each phase of development; therefore, there is no fiscal impact. Number 0848 JUDY BRADY, Executive Director, Alaska Oil and Gas Association (AOGA), testified via teleconference in support of the bill, noting that AOGA had testified on the Senate side as well. She characterized this as an important step forward to make clear what the legislature has always intended regarding the best interest findings. MS. BRADY said AOGA continues to struggle with the language on page 5, lines 21-26, however. She expressed the need to assure the public and to ensure there are public notice and comment allowed for major changes regarding major phases of oil and gas development. She expressed her understanding that under that language, if there is an oil and gas project outside of coastal zones, the DNR will [promulgate] regulations so that those phases that normally would be noticed under the Alaska Coastal Management Plan (ACMP) program will be noticed instead by DNR. MS. BRADY continued, offering that [AOGA's] experience with language involving public notice and regulations in the past has been that if there is any possible way to misconstrue the language, someone will do so. She said [AOGA] is trying to work now with the offices of Senator Pearce and Senator Torgerson [chair of the Senate Resources Standing Committee] to ensure that everyone's understanding is clearly reflected in the language [of the bill]. She indicated those efforts are continuing. Number 1054 SENATOR PEARCE suggested there is no need to change the language, but said her own intent, as the bill is passed on the House floor, is to read into the record the intent just stated by Ms. Brady, along with "the best interest findings intentions" that she herself had stated. She clarified that the intent of the paragraph [page 5, lines 21-26] is to make sure that there is public notice; it will either be given pursuant to the coastal zone management program or pursuant to the regulations adopted by the department [DNR], but will not impose additional work under the coastal zone management program. SENATOR PEARCE reiterated the intent of streamlining the process, as was intended with [SB] 308 in 1994. In response to Vice Chair Fate, she specified that she wouldn't provide a letter of intent but would just provide a statement on the House floor when the bill passed. Number 1157 REPRESENTATIVE OGAN asked whether it would be appropriate to add language to the "purpose" section of the bill, to provide clarification. SENATOR PEARCE said no. She explained that the language had been worked in every direction possible, and the more words there were, the more confusion would exist and the more words there would be for a third party to try to decide what [the legislature] intended. She reiterated her preference of stating on the House floor what the bill does and doesn't do. MS. BRADY, in response to Representative Ogan, said she thinks Senator Pearce's reading the intent into the record would go a long way towards clarifying it to the court, any other party, and the agencies. She agreed with Senator Pearce that "we have been struggling with language and so far have not come up with any brilliant solutions." In further response, she highlighted the dilemma: Alaska has a dual set of regulations, through the ACMP process and the agencies as well; in fact, on the North Slope, local borough regulations are also overriding. There is almost no way to make that clear in the statute itself. REPRESENTATIVE OGAN suggested perhaps the committee should discuss the supreme court's "clear statement doctrine" rulings and look at perhaps incorporating language into some bills that give the administration the ability to interpret regulations. Number 1521 SENATOR PEARCE stated that there is a very clear interest on the part of the Senate Resources Standing Committee to make sure there is pubic notice; part of the reason the committee had struggled over this paragraph [on page 5] was to make it clear that there is to be proper public notice, but not to have it fall under two different regulatory regimes - the coastal zone management program and the areas outside of that, both of which the [statutory] language must fit when regulations are promulgated. Therefore, the intent is to have public notice be pursuant to one or the other, and not to impose any additional work under the coastal zone management program. Number 1583 REPRESENTATIVE OGAN recalled that the Cook Inlet areawide lease sale went through perhaps the most extensive public process in the state's history, after which the governor created the "stakeholders' group" and opened it up to another process that was, in some people's minds, outside the scope of the statutes and regulations. Noting that the department has testified in favor of this bill, he asked whether the bill would affect something like the additional public process in that instance. SENATOR PEARCE responded that she herself was "one of the most vocal detractors" of that stakeholders' process, not because she didn't think it was useful to have people get together to talk through the questions and concerns, but because she believes there was no statutory authority to incorporate the recommendations from that process into regulations, for example. If one good thing came out of the stakeholders' process, she said it was a clear understanding by some concerned people that even if SB 308 was being implemented, there would still be the right to public comment at every step. SENATOR PEARCE explained that when there is a lease sale, the successful company brings a proposal for an exploration well, after which there is another opportunity for public comment during the permitting process. Under CSSB 156(RES), there would not be another best interest finding, but would be public comment. She stated her belief that members of the stakeholders' group who represented the commercial fisheries in Cook Inlet, in particular, had felt more comfortable with the areawide lease sale after realizing they would have the opportunity for public comment at every step. Noting that it was the "environmental community" opposing the lease sale, she suggested it is important to have the language in the bill that talks about the public process "because that's how we've helped other users reach a comfort level." Number 1798 REPRESENTATIVE OGAN asked whether Senator Pearce believes the bill will help to mitigate future "stakeholder-group-type scenarios." SENATOR PEARCE replied, "We do not have any power over whether or not the third floor decides to pull together another stakeholder group; as a matter of fact, I would say that the pipeline council that they put together is somewhat the same." VICE CHAIR FATE asked whether there was further testimony or discussion; none was offered. Number 1851 REPRESENTATIVE DYSON made a motion to move CSSB 156(RES) out of committee with individual recommendations and the attached zero fiscal note. There being no objection, CSSB 156(RES) was moved out of the House Special Committee on Oil and Gas.