Legislature(2001 - 2002)

04/18/2001 01:30 PM RES

Audio Topic
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
SB 156-BEST INTEREST FINDING UNDER AK LAND ACT                                                                                
Number 0500                                                                                                                     
CO-CHAIR MASEK  announced that the  next order of  business would                                                               
be 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 0531                                                                                                                     
CHRISTY  TIBBLES,  Staff to  Senator  Drue  Pearce, Alaska  State                                                               
Legislature, came  before the committee  on behalf of  the Senate                                                               
Resources  Committee,  sponsor  of  SB   156,  to  give  a  brief                                                               
overview.  She  presented the sponsor statement  [included in the                                                               
committee packet], which read as follows:                                                                                       
     Senate Bill 156  amends the Alaska Land  Act to clarify                                                                    
     the   requirement  that   the  Department   of  Natural                                                                    
     Resources  prepare  a  single,  written  best  interest                                                                    
     finding  for  multiphased  development  projects.    In                                                                    
     1994,  the  legislature  passed SB  308  to  amend  the                                                                    
     Alaska  Land Act  in  response  to several  unfavorable                                                                    
     Alaska  Supreme  Court  decisions that  threatened  the                                                                    
     state's leasing program.                                                                                                   
     The legislation explicitly  allowed project phasing and                                                                    
     precisely  defined  the  scope  of  the  best  interest                                                                    
     finding  determination.    Since  its  passage,  recent                                                                    
     court decisions have continued  to threaten the program                                                                    
     and have concluded that the  department is "obliged, at                                                                    
     each phase  of development,  to issue a  best interests                                                                    
     finding ... relating to that  phase before the proposed                                                                    
     development may proceed."                                                                                                  
     Under   SB   308,   the   original   legislation,   the                                                                    
     legislature  intended  that  a  Best  Interest  Finding                                                                    
     would be  prepared for the  first phase;  the disposal,                                                                    
     and  subsequent   phases  would   be  subject   to  the                                                                    
     "department's  approval"  and  to separate  reviews  by                                                                    
     extensive  permitting  processes  that  include  public                                                                    
     input and scrutiny of other agencies.                                                                                      
     The  legislature  did  not   intend  "approval"  to  be                                                                    
     defined  as a  best interest  finding determination  as                                                                    
     the  courts  have   misinterpreted.    The  legislature                                                                    
     intended  the department  to exercise  their discretion                                                                    
     to  impose  conditions  in the  best  interest  finding                                                                    
     determination,  issued for  the  disposal, which  would                                                                    
     minimize  future  impacts.     Preparation  of  a  Best                                                                    
     Interest  Finding determination  for every  phase would                                                                    
     be a very costly and time-consuming process.                                                                               
     Senate  Bill 156  elaborates  the legislative  findings                                                                    
     for phasing  under the  Alaska Land  Act and  amends AS                                                                    
     38.05.035 so  that it is  clear that the  Department of                                                                    
     Natural  Resources  is  required   to  issue  a  single                                                                    
     written  best  interest  finding for  the  disposal  of                                                                    
     state   land.     It  also   ensures  the   public  the                                                                    
     opportunity to comment  at the exploration, production,                                                                    
     and transportation phases of a project.                                                                                    
     By  clarifying the  legislature's  original intent,  SB                                                                    
     156    will    overturn     the    courts'    erroneous                                                                    
     interpretation.     Senate  Bill  156   provides  clear                                                                    
     guidance  to  the  courts regarding  the  legislature's                                                                    
     policy and  will result in the  avoidance of protracted                                                                    
     litigation and associated delays  or disruptions of the                                                                    
     state's  leasing  program  and development  of  already                                                                    
     leased acreage.                                                                                                            
MS. TIBBLES informed members she was available to answer                                                                        
questions, as were people from the Division of Oil & Gas.                                                                       
Number 0698                                                                                                                     
SUSAN  SCHRADER,   Conservation  Advocate,   Alaska  Conservation                                                               
Alliance  and Alaska  Conservation Voters  (ACA/ACV), paraphrased                                                               
her written  testimony [included in the  committee packet], which                                                               
read as follows:                                                                                                                
     Alaska  Conservation Alliance  and Alaska  Conservation                                                                    
     Voters are sister  nonprofit organizations dedicated to                                                                    
     protecting   Alaska's    environment   through   public                                                                    
     education and  advocacy.   Our 44  member organizations                                                                    
     and   businesses  represent   over  35,000   registered                                                                    
     Alaskans,  many of  whom participate  in public  notice                                                                    
     and comment opportunities during  the state's review of                                                                    
     development  projects of  all types.   This  ability of                                                                    
     concerned  citizens   to  meaningfully   express  their                                                                    
     opinion about  activities that involve the  disposal of                                                                    
     state land or an interest  in state land is a protected                                                                    
     right under our Alaska constitution.                                                                                       
     In   essence,  CSSB   156,  in   an  effort   to  avoid                                                                    
     inconvenience and  cost for the  oil and  gas industry,                                                                    
     significantly limits  the public's ability  to evaluate                                                                    
     disposals of state land.   Why shouldn't DNR be obliged                                                                    
     to  take a  "big picture"  hard look  and issue  a best                                                                    
     interest finding  at subsequent phases of  a multiphase                                                                    
     project that may span six years or more?                                                                                   
     This  legislation   provides  for  public   notice  and                                                                    
     comment  on   subsequent  phases  through   the  Alaska                                                                    
     Coastal Management Program  (ACMP) process for projects                                                                    
     within coastal  districts.  For  projects outside  of a                                                                    
     coastal district,  the bill is  unclear whether  or not                                                                    
     DNR will adopt  new regulations.  The  ACMP process for                                                                    
     public  participation is  not a  reasonable alternative                                                                    
     to  a best  interest  finding process.   The  Byzantine                                                                    
     ACMP  process is  extremely difficult  to navigate  for                                                                    
     any Alaskan  who is not  familiar with  the intricacies                                                                    
     of state law.                                                                                                              
     ACV  encourages committee  members, through  amendments                                                                    
     to SB 156, to provide DNR  some direction as to what to                                                                    
     include   in  the   new  public   notice  and   comment                                                                    
     regulations  the  agency  may adopt  for  projects  not                                                                    
     covered by  the ACMP.   Unless SB  156 requires  DNR to                                                                    
     adopt  rules that  truly  allow  Alaskans a  meaningful                                                                    
     opportunity to evaluate  subsequent phases of multiyear                                                                    
     projects both within and  outside of coastal districts,                                                                    
     ACV  urges  you  to  oppose this  legislation  for  the                                                                    
     simple  reason  that  while  it   may  be  in  the  oil                                                                    
     industry's  interests,   it  clearly  is  not   in  the                                                                    
Number 0961                                                                                                                     
REPRESENTATIVE FATE  said the timeline in  the permitting process                                                               
has been  shortened in [SB  156].  He  asked Ms. Schrader  if she                                                               
believes it is  not in the public's best interest  to shorten the                                                               
timeline  of permitting.   He  gave  a case-in-point  of the  gas                                                               
pipeline, which  people having  been awaiting for  20 years.   He                                                               
said there are  other situations in which  thorough public input,                                                               
"accompanied  by  the  rapidity  of  which  permitting  can  take                                                               
place," is in the public's best interest.                                                                                       
MS. SCHRADER offered  that if shortening a  permitting process to                                                               
make it  more efficient comes  at the expense of  public comment,                                                               
it  would not  be  in Alaskans'  best  interest to  do  so.   She                                                               
indicated  many states,  as well  as Congress,  have passed  laws                                                               
that  allow an  opportunity for  public comment,  because history                                                               
has shown that many impacts of  a project will be overlooked when                                                               
there is no pubic comment.                                                                                                      
REPRESENTATIVE FATE  asked Ms.  Schrader if  she was  saying that                                                               
there is no opportunity for public input in this.                                                                               
MS. SCHRADER clarified that she  was suggesting the opportunities                                                               
outlined in SB 156, particularly  in the beginning where required                                                               
permits  are listed,  do not  substitute for  the type  of public                                                               
comment period that is included with the best interest finding.                                                                 
Number 1101                                                                                                                     
CO-CHAIR SCALZI  asked Ms. Schrader  to clarify  what "Byzantine"                                                               
means to her.                                                                                                                   
MS. SCHRADER answered, "Very complex and convoluted."                                                                           
CO-CHAIR  SCALZI  read that  section  of  her written  statement,                                                               
substituting the  word "complex"  for "Byzantine."   He  said his                                                               
tendency  would be  to disagree.   Having  served on  the Coastal                                                               
Policy Council "back when [SB]  308 first came through," Co-Chair                                                               
Scalzi  said a  lot of  public comment  inundated the  system and                                                               
overwhelmed him as a member.   He also stated his belief that the                                                               
people who testified  were well informed.  He  asked Ms. Schrader                                                               
to cite an  example that would specifically outline  why [SB 156]                                                               
would be detrimental to the public process.                                                                                     
MS. SCHRADER  responded that she has  commented, mainly regarding                                                               
local  and Southeast  [Alaska] issues,  through the  ACMP process                                                               
"on consistency  determination."   Although not an  attorney, she                                                               
is relatively well-versed in state law.                                                                                         
MS. SCHRADER  said private  citizens of  Alaska who  comment upon                                                               
developments that  may impact their businesses  and neighborhoods                                                               
shouldn't be required to quote  statutes and regulations in their                                                               
testimony.  Those who routinely  comment through the ACMP process                                                               
typically are professionals  familiar with the laws,  or they are                                                               
attorneys.    She  said  many   of  [ACA/ACV's]  small  volunteer                                                               
organizations have  to seek the  advice of an attorney  to assist                                                               
with  the comment  process through  the ACMP.   She  believes the                                                               
best  interest finding  process is  much more  user-friendly than                                                               
the ACMP process.                                                                                                               
Number 1264                                                                                                                     
CO-CHAIR SCALZI  noted the  ACMP is  made up of  lay people.   He                                                               
stated  his belief  that the  input from  the public  was "pretty                                                               
much  well-received  by  the  council   members."    He  said  he                                                               
disagreed with Ms. Schrader's comment.                                                                                          
Number 1300                                                                                                                     
REPRESENTATIVE KERTTULA noted that she  had been the attorney for                                                               
the  Coastal Policy  Council  at that  time  and had  information                                                               
about how  it all came  about.   She informed the  committee that                                                               
she had just  checked with the Office of the  Attorney General to                                                               
see whether there was any  ethical problem with her participating                                                               
in the  hearing.  She  reported, "None  of us believe  that there                                                               
is."  She then stated:                                                                                                          
     The  way  that  I'm  understanding  the  bill,  if  the                                                                    
     director only has to prepare  a single written finding,                                                                    
     there still would have to  be, before a next phase, ...                                                                    
     a chance  of public notice and  opportunity to comment,                                                                    
     and it  looks like  under regulations that  are already                                                                    
     provided  before  the   department,  unless  there's  a                                                                    
     consistency  review.     Is  that  the   way  that  you                                                                    
     understand ... the bill works?                                                                                             
MS.  SCHRADER answered  that she  believed  so.   She stated  her                                                               
belief  that   testimony  in  the  Senate   regarding  this  bill                                                               
suggested that there  would be new regulations  for public notice                                                               
and comments,  adopted by  DNR, for those  projects outside  of a                                                               
coastal district.  In a coastal  district, it would be covered by                                                               
the ACMP.                                                                                                                       
REPRESENTATIVE KERTTULA noted that  since she and Co-Chair Scalzi                                                               
were involved  with the Coastal  Policy Council, there  have been                                                               
some radical  changes regarding how  public comment is  taken and                                                               
the ACMP.   She asked Ms.  Schrader to briefly describe  how that                                                               
has changed.                                                                                                                    
MS. SCHRADER  responded that she  probably could  not effectively                                                               
[describe the change], because "my  frustration was trying to get                                                               
comments."  She recounted one  instance, before she served in her                                                               
present position,  when she  had submitted  comments but  had not                                                               
quoted the  correct statutes or  regulations; therefore,  she was                                                               
told she  would have to  redo her  comments before they  could be                                                               
considered.   She reiterated that  she thought that was  too much                                                               
to ask most Alaskans to do in their spare time.                                                                                 
Number 1501                                                                                                                     
MARK MEYERS, Director, Division of Oil & Gas, Department of                                                                     
Natural Resources (DNR), testified via teleconference:                                                                          
     Just a few comments:   One is, the division understands                                                                    
     the  need and  the department  understands the  need to                                                                    
     promulgate   regulations    for   dealing    with   the                                                                    
     development outside of the (indisc.)  area.  So, that's                                                                    
     truly  our  intention;  that's our  understanding  that                                                                    
     that's the legislative intention of the bill ....                                                                          
     The second  issue is, just  in terms  of implementation                                                                    
     of  a program:    If  we were  to  do  a best  interest                                                                    
     finding at each stage  of exploring the development and                                                                    
     transportation -  if we  took a quick  look at  some of                                                                    
     the costs involved, the issues  involved, and looked at                                                                    
     progress  going on  this year  that  would qualify  for                                                                    
     that - I come  up with a list of a  minimum of at least                                                                    
     12  projects, major  projects that  would involve  that                                                                    
     best interest finding.                                                                                                     
     They're  finding  a  significant increase  in  staffing                                                                    
     size.   We estimate  about eleven  people.   That would                                                                    
     include  six  best-interest   writers;  a  couple  [of]                                                                    
     vendors, one  of them being a  supervisor; a permitting                                                                    
     coordinator, to make sure things  were in line with the                                                                    
     permitting  processes  that  are   listed  out  in  the                                                                    
     legislation; and (indisc.).                                                                                                
     So  we'd have  a  ... significant  expansion; in  fact,                                                                    
     we're  going  to  have  a much  larger  staff  than  we                                                                    
     currently  do, but  that might  near what  the Minerals                                                                    
     Management  Service  has  ....  So, we  would  have  to                                                                    
     significantly  enlarge  our staff  ...  if  we were  to                                                                    
     implement  ... best  interest findings  at each  of the                                                                    
     phases.  And that, of  course, ... is something that we                                                                    
     have not ... done at this point in time.                                                                                   
     The  other issue  is:    Could we  do  it  in a  timely                                                                    
     manner?   It would be  very difficult, in terms  of the                                                                    
     exploration   phase,   because   our   exploration   is                                                                    
     currently a very  narrow window within the  winter.  To                                                                    
     come up with  a multiple plan, even by  area, we'd have                                                                    
     to  really have  contract workers,  in addition  to the                                                                    
     staff, ...  to be able to do that.                                                                                         
     [It's]  the same  thing with  development projects:   I                                                                    
     think  we  would  see a  significant  slowdown  of  the                                                                    
     process of permitting and  development because of this,                                                                    
     simply because it's an additional  demand on our staff;                                                                    
     it's  an  additional  review  of  the  other  committee                                                                    
     processes that would go on.                                                                                                
     And I just mentioned some  of the things that affect us                                                                    
     in the Division  of Oil & Gas that also  have an effect                                                                    
     on  other organizations  that  input  into the  current                                                                    
     permitting processes, including  DEC [the Department of                                                                    
     Environmental Conservation] and  [the Alaska Department                                                                    
     of] Fish and Game.                                                                                                         
Number 1669                                                                                                                     
MR. MEYERS, in  response to a question  from Representative Fate,                                                               
     At the  disposal phase, we  ... have the  best interest                                                                    
     finding currently.   If we  were to implement -  as the                                                                    
     Kachemak Bay  position suggests  - one  at each  ... of                                                                    
     the  major phases  of development,  that's  what I  was                                                                    
     discussing in  terms of the additional  personnel costs                                                                    
     and time and (indisc.) involved.                                                                                           
CO-CHAIR MASEK  pointed out  a copy of  the Alaska  Supreme Court                                                               
opinion in  Kachemak Bay Conservation Society  v. State [included                                                             
in the committee packet].                                                                                                       
Number 1724                                                                                                                     
REPRESENTATIVE KERTTULA  asked how Mr. Meyers'  review would work                                                               
at every stage as  a safe process if he didn't have  to do a best                                                               
interest  finding.    She  also  asked how  he  would  deal  with                                                               
cumulative impacts  of a project  and how the  coastal management                                                               
program review would work if he were  not doing it.  She said she                                                               
wanted to clearly  understand how he would take  into account all                                                               
the  court-ruled considerations  regarding  impacts and  projects                                                               
being "phased."                                                                                                                 
MR.  MEYERS responded  that  currently [DNR]  doesn't  do a  best                                                               
interest finding at later phases, and  the bill would add to what                                                               
[DNR] is currently doing regarding  public input and process.  He                                                               
mentioned  a   permitting  process   for  gold   exploration  and                                                               
development  projects.    He  said, "In  addition,  we  have,  of                                                               
course,  the unitization  processes, which  do have,  in fact,  a                                                               
public comment period."                                                                                                         
MR. MEYERS noted  that much of [DNR's] information  comes via its                                                               
permitting  process.   Additional information  comes through  the                                                               
typical    requirement    for   environmental    assessment    or                                                               
environmental  impact   statement  that   goes  along   with  the                                                               
development stage,  "which does deal with  issues like cumulative                                                               
impact that you had suggested."  He added:                                                                                      
     Again, I think part of  our concern ... with not having                                                                    
     this  clarification in  the bill  is the  redundancy of                                                                    
     the  other  processes,  as  relating  to  what  a  best                                                                    
     interest finding  would add in  value.   There probably                                                                    
     are  some areas  that you've  mentioned in  cumulative,                                                                    
     that if  there were not an  EA or EIS, or  a noticeable                                                                    
     borough review  of the process  - which,  again, occurs                                                                    
     on North  Slope projects -  there might be a  few areas                                                                    
     there  that we  do  not cover,  that  would be  covered                                                                    
     under best interest  finding.  I think  those areas are                                                                    
     relatively minimal, and the  cost of implementing those                                                                    
     and the effort and delay [are] pretty severe.                                                                              
Number 1887                                                                                                                     
REPRESENTATIVE KERTTULA stated  that "we" know the  lineup of the                                                               
cases,  which  originally  stood  at no  phasing.    Then  phased                                                               
projects  were allowed.   She  remarked, "The  danger of  that is                                                               
that if  you're not  looking at cumulative  impact, you  can miss                                                               
important things."   She  asked Mr.  Meyers how  [the department]                                                               
would  ensure that  it would  be reviewing  for those  cumulative                                                               
impacts at the  following stages.  She asked if  the EISs and EAs                                                               
would be  reviewed, or  other information  would be  relied upon.                                                               
She also asked if public testimony would be allowed.                                                                            
MR.  MEYERS stated  his belief  that Representative  Kerttula had                                                               
answered the  question.  He said  "we" rely heavily on  the other                                                               
processes.   He mentioned issuing permits  for exploration wells,                                                               
for  example.    He  said  that  is  one  of  the  time-consuming                                                               
challenges.   That information is integrated  into the permitting                                                               
process.   In addition, any  public information that  is provided                                                               
is taken  into account.  He  said it perhaps isn't  as direct and                                                               
straightforward  as it  would  be  in terms  of  a separate  best                                                               
interest  finding, but  in  most areas  it  overlaps heavily  the                                                               
(indisc.) committee process and DNR's review of those permits.                                                                  
Number 1984                                                                                                                     
REPRESENTATIVE  KERTTULA  asked  Mr.  Meyers  about  the  coastal                                                               
management  review  and  whether  there would  be  just  the  one                                                               
written finding "and then continuing at each phase."                                                                            
MR. MEYERS replied with the following:                                                                                          
     Right now  ... there's  a single best  interest finding                                                                    
     done  after this  whole (indisc.).  ... Assuming  there                                                                    
     [are]  additional operations  - seismic  operations, as                                                                    
     well  as  drilling operations,  development  (indisc.),                                                                    
     that's for  initial phase of  development, unitization,                                                                    
     [and] participating areas - then  in that process there                                                                    
     is ... another review.   And in some of those processes                                                                    
     right now - not all of  them - we have a public comment                                                                    
     I think  this bill  requires us, especially  when we're                                                                    
     outside  the   coastal  zone,  to   add  a   number  of                                                                    
     additional public comment periods,  external to what we                                                                    
     currently have.   So, again, I think  we strengthen the                                                                    
     input that we  get into the ... decisions  that we then                                                                    
     write  for units,  or for  (indisc.) areas  for permits                                                                    
     for a well.   I think, as far as  the ... ACMP process,                                                                    
     it's  best  to  have   DGC  [Division  of  Governmental                                                                    
     Coordination]  describe  it,  since  they're  the  real                                                                    
     drivers in that.                                                                                                           
Number 2079                                                                                                                     
REPRESENTATIVE  KERTTULA  asked,  "Will  you  make  more  written                                                               
findings, after the  public comment period, that  you're going to                                                               
consider in the subsequent phases?"                                                                                             
MR. MEYERS  stated his  belief that at  this point  [DNR] doesn't                                                               
intend on doing additional written  comments, but would integrate                                                               
[existing] written comments into the current processes.                                                                         
REPRESENTATIVE KERTTULA  asked how  anyone would appeal  if there                                                               
were no written decision.                                                                                                       
Number 2113                                                                                                                     
MR. MEYERS  indicated public input  would go into the  process of                                                               
deciding whether to  issue the permit.  In that  process [DNR] is                                                               
reviewing additional  information from all sources  available, in                                                               
order  to  evaluate  the  following  processes:    permits,  unit                                                               
applications, participating-area  decisions, and exploration-well                                                               
permitting, for example.                                                                                                        
REPRESENTATIVE KERTTULA clarified that  concerns would be brought                                                               
out at the end of the permit process.                                                                                           
MR.  MEYERS concurred.   He  added that  the public  would always                                                               
have  the ability  to appeal  a process  or permit  decision, for                                                               
CO-CHAIR MASEK closed public comment.                                                                                           
Number 2185                                                                                                                     
REPRESENTATIVE KERTTULA  stated concern  that no one  was present                                                               
to describe  how the ACMP  process, with  which she has  not been                                                               
involved in four years, would work if it were not done by DNR.                                                                  
Number 2226                                                                                                                     
JIM EASON came before the  committee, noting that he formerly was                                                               
the director of the Division of  Oil & Gas during the period when                                                               
the initial  legislation - SB 308  - was drafted.   He stated his                                                               
understanding that [SB  165] will in no way  affect the operation                                                               
of the ACMP; whatever review  processes are underway or have been                                                               
underway, since the initial bill was passed, will continue.                                                                     
MR.  EASON   explained  that  this   only  affects   the  court's                                                               
determination  that DNR  has to  draft a  separate best  interest                                                               
finding for every phase.  Based  upon his experience at the time,                                                               
he said  it was clear that  the intent, as expressed  in statute,                                                               
has always  been that there be  one best interest finding  at the                                                               
disposal phase.   He explained that the disposal phase  of an oil                                                               
and gas lease bill is at [the  time of] the decision to offer the                                                               
lease to a person.                                                                                                              
MR.  EASON told  members that  the series  of court  cases, which                                                               
triggered  the need  to come  back  to clarify  or reinforce  the                                                               
decision that  the legislature made  in passing SB 308,  began to                                                               
graft  onto  the initial  process  of  a disposal  best  interest                                                               
finding  the  requirement  that  separate  findings  be  done  in                                                               
separate phases.  He stated  his understanding that [SB 156] will                                                               
not affect  the ACMP process.   There will  be an ACMP  review of                                                               
the  disposal and  of the  best interest  finding process  at the                                                               
lease sale.  Additionally, there  are ACMP reviews of permits for                                                               
exploration,  as  well  as development,  that  will  continue  as                                                               
Number 2339                                                                                                                     
REPRESENTATIVE  FATE  moved  to   report  CSSB  156(RES)  out  of                                                               
committee  with individual  recommendations and  the accompanying                                                               
zero fiscal  note.  There  being no objection, CSSB  156(RES) was                                                               
moved out of the House Resources Standing Committee.                                                                            

Document Name Date/Time Subjects