Legislature(2011 - 2012)BARNES 124
03/14/2011 01:00 PM RESOURCES
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HB 174-EXTENDING STAYED PERMITS 1:46:25 PM CO-CHAIR SEATON announced that the next order of business is HOUSE BILL NO. 174, "An Act relating to the period in which a permit authorizing activities in the state related to mineral resources, oil or gas, or transportation projects is valid when activities authorized by the permit have been stayed by a court or administrative order." 1:46:35 PM CO-CHAIR FEIGE, speaking as the sponsor HB 174, explained that HB 174 seeks to limit the tactic that has been used to try to discourage development in the state. Alaska's permitting system is used by various departments and resource managers to oversee the myriad of projects throughout the state. He characterized Alaska's permitting system as one of the most comprehensive in the world that is used as a checklist to ensure that all the municipal, state, and federal laws are followed. However, over the years there have been many cases in which the development of a project has resulted in a lawsuit in which the judge has issued a stay. Therefore, the project is essentially put on hold. 1:48:13 PM CO-CHAIR FEIGE explained that HB 174 allows any permits already issued for the activity, prior to the stay, to be placed on hold. Most permits have a time period associated with them and one tactic has been to obtain a stay on the permit and force the company to continue to update the permit even while it can't engage in the activity. He informed the committee that in the process of review of HB 174 by applicable departments, a number of issues/comments were raised and may require some tweaks. However, all [the applicable] departments have indicated the legislation is something they would like. Therefore, he hasn't requested public testimony from the departments. Co-Chair Feige announced that it will take a while for HB 174 to reach its final form. 1:49:54 PM REPRESENTATIVE GARDNER inquired as to how much of a problem is permitting at the state level as compared to the federal level, for which there have been many delays. She then related her understanding that if there is a lawsuit and a court issues a stay, under HB 174 the time line remains valid. However, there could still be revocations if the lawsuit is successful. CO-CHAIR FEIGE replied that would be correct. For further clarity, he pointed out that the permit is up to the permitting agency to grant or not. If a state-issued permit is granted for four years and only one year has passed when the stay is issued, then three years would remain whenever the stay is lifted. 1:51:25 PM REPRESENTATIVE GARDNER inquired as to how problematic are lawsuits and appeals at the state level. In discussing challenges with permits and time delays with permits, she opined that everyone is likely familiar with cases that deal with federal permits. However, she inquired as to how much of a problem it is at the state level. 1:52:18 PM WYN MENEFEE, Acting Director, Division of Mining, Land and Water, Department of Natural Resources, answered that there are occasionally situations in which people are sued and it creates delays. Depending upon the type of authorization given, the permit or authorization may or may not be issued at the point of the stay being issued. Typically, as the end of the stay is reached, the department will extend the permits as the department has the authority to do so. Under a disposal of interest decision, the department wouldn't have issued the authorization at the point of appeal, but by the time it reached the conclusion court hearings, the department would [likely] be at the point at which it could issue 25 years from that point forward. With regard to delays, Mr. Menefee confirmed that there are delays and there are delays because of lawsuits and appeals. 1:53:51 PM REPRESENTATIVE GARDNER inquired as to the reasoning behind a time limit on the permit. 1:54:04 PM MR. MENEFEE said that there are limits on all the department's authorizations. For instance, permits issued under AS 38.05.850 have a maximum limit of five years since the permits are supposed to be short-term in nature. However, long-term disposal of interest, such as material sales and leases, can be issued for longer periods of time. He attributed those longer periods of time to the need for individuals seeking loans or investments to make the project viable to have control of the state land or the right of interest in order to ensure that any investment can be amortized out. 1:55:09 PM REPRESENTATIVE KAWASAKI acknowledged that the department already does this administratively, and then questioned whether it needs to be written in statute. Therefore, he questioned whether there has ever been a time when HB 174 would've been of value to the department as a permitting agency. MR. MENEFEE clarified that he isn't going to say it doesn't need to be done. However, he did point out that the department does have situations in which the department has the authority to adjust. There are cases, such as the Kensington Mine, in which there is an existing authorization, the court implements a stay, and a deadline is reached. He related a recent situation in the North Slope in which the department extended the authorization to deal with a deadline that arose. Mr. Menefee related his understanding that HB 174, placing in statute [the department's ability to deem valid activities authorized by a permit that have been stayed by a court or administrative order], provide surety that the extension would be granted versus the possibility that the department would extend it. Furthermore, placing this in statute sends those who might be suing for the purposes of delay that there will be an extension granted. 1:56:58 PM REPRESENTATIVE KAWASAKI surmised then that the department extended the North Slope permit administratively through regulations. MR. MENEFEE responded yes, according to the department's authority under AS 38.05.850. That North Slope permit was a temporary authorization that went year to year. While under delay, the department has the right to redo the terms. He explained that the idea was trying to lease the parcels, therefore the stay came due to the lease. However, the permit was still valid and the department extended it to keep them operating until a decision was made regarding the leases. 1:57:50 PM REPRESENTATIVE KAWASAKI surmised that for large projects there would be multiple permits from multiple agencies. How does the division currently track all of these permits, he asked. He further asked how the division would track each of the permits it extends when there is a stay. MR. MENEFEE answered that under a stay, the extensions would be handled by each authorizing agency responsible for a particular permit, which he understood the legislation to do as well. For a large project that used the state's large project team under the Office of Project Management and Permitting, then there would be a project manager who would review it and coordinate it. For those projects that don't use the division's coordinating services, each individual entity it authorizes would be responsible. 1:59:50 PM REPRESENTATIVE P. WILSON asked whether there is anyone else in the state, other than those listed in HB 174, which authorizes permits that should be added. MR. MENEFEE pointed out that the location of the various citations in HB 174 fall under different statutes that are used by specific agencies. For instance, an oil and gas [permit] falls under the jurisdiction of the Oil and Gas Conservation Commission for an authorization for drilling. However, theirs may not be the only authorization. There could be many different authorizations required from different agencies. Mr. Menefee clarified that it takes into account more agencies than are listed in the proposed HB 174. Due to the definition of "permit" outlined in the proposed statute, it does cast a broad net that would apply to any entity that authorizes or provides a certificate for those operations. 2:02:12 PM REPRESENTATIVE P. WILSON asked then if the use of the term "permit" allows other agencies to take responsibility. Since each section of the legislation addresses a different agency, she questioned whether additional language is necessary. She said she really likes HB 174, but asked if it should be broadened to cover other areas. CO-CHAIR SEATON reminded the committee that the sponsor has said he will work on this legislation for some time. 2:03:08 PM CO-CHAIR SEATON then questioned whether this legislation would also apply to municipalities that have [authorized] a permit. MR. MENEFEE read the bill such that it would affect municipalities and would have to adhere to the automatic extensions as well. 2:04:27 PM CO-CHAIR SEATON asked whether HB 174 includes leases, such as oil leases. He further asked if this legislation would lengthen the term of an oil lease also or is the legislation speaking strictly to an authorizing permit. MR. MENEFEE, directing attention to the definition of "permit" in Section 3, opined that it sets a very broad net. Therefore, the legislation requires anything that needs to be obtained from any state agency or municipality. The aforementioned means that [this legislation would apply to] any authorization or certificate that's required, and thus would include leases, rights-of-way, material sales, and permits. 2:05:48 PM CO-CHAIR SEATON posed a scenario in which someone has an expiring oil and gas lease, and asked if one of the partners of the lease could file a suit and thus automatically extend the lease if a stay was issued. Therefore, the lease wouldn't return to the state, he surmised. 2:06:44 PM CAMERON LEONARD, Senior Assistant Attorney General, Natural Resources Section, Civil Division (Fairbanks), Department of Law, confirmed that could be a possible interpretation of the legislation since the term "authorization" is very broad. 2:07:28 PM CO-CHAIR FEIGE interjected that there would still have be a stay from the court or an administrative order in order to cease work on the project. He asked if Co-Chair Seaton is talking about the possibility of artificially extending a lease. CO-CHAIR SEATON clarified that he is just considering other implications in terms of oil and gas leases that are issued over a specified term under a specified plan and term of development. He said that he's in favor of the concept of HB 174, but he wanted to be sure there aren't unintended consequences. 2:08:43 PM REPRESENTATIVE MUNOZ asked whether HB 174 could also apply to federal projects within the state. MR. LEONARD answered that he didn't believe so because the definition of "permit" doesn't reach that broadly. Furthermore, the state doesn't have jurisdiction to effect the duration of a federal permit. 2:09:18 PM REPRESENTATIVE GARDNER requested examples of when the lack of the provision proposed in HB 174 has adversely impacted a leaseholder or permittee. 2:09:54 PM CO-CHAIR SEATON announced that HB 174 would be held over. 2:10:23 PM The committee took an at-ease from 2:10 p.m. to 2:12 p.m.