Legislature(2003 - 2004)

03/28/2003 03:40 PM Senate RES

Audio Topic
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
            HB 69-REGULATION OF SHALLOW NATURAL GAS                                                                         
                                                                                                                              
CHAIR  OGAN  told  members  that  he had  assigned  HB  69  to  a                                                               
subcommittee chaired by Senator Dyson.  He declared a conflict of                                                               
interest with  HB 69 and asked  to be excused from  taking action                                                               
on it.                                                                                                                          
                                                                                                                                
SENATOR BEN STEVENS objected.                                                                                                   
                                                                                                                                
CHAIR OGAN  then stated that  Vice Chair Tom Wagoner  would chair                                                               
the meeting.                                                                                                                    
                                                                                                                                
SENATOR ELTON asked Chair Ogan to describe his conflict.                                                                        
                                                                                                                                
CHAIR OGAN  said he works during  the interim for a  company that                                                               
will be directly affected by this legislation.                                                                                  
                                                                                                                                
VICE-CHAIR  WAGONER  told  members   that  a  proposed  committee                                                               
substitute, Version C, was before the committee.                                                                                
                                                                                                                                
SENATOR SEEKINS moved to adopt  Version C as the working document                                                               
of the committee.                                                                                                               
                                                                                                                                
VICE-CHAIR WAGONER noted without objection, the motion carried.                                                                 
                                                                                                                                
SENATOR DYSON moved  the adoption of Amendment 1,  which reads as                                                               
follows.                                                                                                                        
                                                                                                                                
                      A M E N D M E N T  1                                                                                  
                                                                                                                                
Page 3, line  26, after "laws" delete all  language through lines                                                               
31 and replace with:                                                                                                            
                                                                                                                                
     If  DNR   clearly  demonstrates  an   overriding  state                                                                    
     interest, waiver  of local planning  authority approval                                                                    
     and the  compliance requirement may  be granted  by the                                                                    
     commissioner.  The  commissioner shall  issue  specific                                                                    
     findings giving reasons for granting any waiver under                                                                      
     this section.                                                                                                              
                                                                                                                                
Page 4, line 2, after (o)  delete all language through line 6 and                                                               
replace with:                                                                                                                   
                                                                                                                                
     If  DNR   clearly  demonstrates  an   overriding  state                                                                    
     interest, waiver  of local planning  authority approval                                                                    
     and the  compliance requirement may  be granted  by the                                                                    
     commissioner.  The  commissioner shall  issue  specific                                                                    
     findings giving  reasons for granting any  waiver under                                                                    
     this section.                                                                                                              
                                                                                                                                
SENATOR  OGAN explained  that Amendment  1  articulates that  the                                                               
state has a  vested interest in that subsurface right  and if the                                                               
local regulations  are so onerous, the  commissioner can override                                                               
them. He said  he personally believes it is good  state policy to                                                               
protect  state subsurface  rights.  Currently,  in other  states,                                                               
cases  have  arisen  in  which   local  governments  have  passed                                                               
regulations  that  prevented   developers  from  accessing  state                                                               
subsurface property.                                                                                                            
                                                                                                                                
SENATOR  SEEKINS said  he supports  this language  because it  is                                                               
just  a restatement  of a  truism. The  state has  certain rights                                                               
under the Constitution; Amendment 1 reserves those rights.                                                                      
                                                                                                                                
SENATOR  ELTON asked  if  a precedent  for  this language  exists                                                               
anywhere else in statute.                                                                                                       
                                                                                                                                
SENATOR OGAN said  there is a precedent in the  section on public                                                               
projects.                                                                                                                       
                                                                                                                                
SENATOR  ELTON stated  the  original language  in  Version C  was                                                               
problematic for the Alaska Municipal  League (AML) and questioned                                                               
whether AML supports Amendment 1.                                                                                               
                                                                                                                                
SENATOR OGAN said it does and  that a representative from the AML                                                               
was available to testify.                                                                                                       
                                                                                                                                
VICE-CHAIR  WAGONER  asked  if any  of  the  public  participants                                                               
wanted to testify on Amendment 1. There was no response.                                                                        
                                                                                                                                
SENATOR BEN STEVENS asked if the sponsor endorses Amendment 1.                                                                  
                                                                                                                                
VICE-CHAIR  WAGONER  asked  that  the  record  reflect  that  the                                                               
sponsor nodded affirmatively in support of Amendment 1.                                                                         
                                                                                                                                
SENATOR OGAN informed members the citation for the waiver for                                                                   
public projects is AS 35.30.030.                                                                                                
                                                                                                                                
With no further objection to the adoption of Amendment 1, VICE-                                                                 
CHAIR WAGONER announced the motion carried.                                                                                     
                                                                                                                                
SENATOR  DYSON  moved  to  adopt Amendment  2,  proposed  by  the                                                               
Department of  Law. He told  members Department of Law  staff has                                                               
advised that the language in  Amendment 2 is more consistent with                                                               
existing statutory  language and  will help to  avoid litigation.                                                               
Amendment 2 reads as follows.                                                                                                   
                                                                                                                                
                      A M E N D M E N T  2                                                                                  
                                                                                                                                
OFFERED IN THE SENATE RESOURCES              BY SENATOR DYSON                                                                   
     COMMITTEE                                                                                                                  
                                                                                                                                
TO: SCS HB 69  (23-LS0428\C)                                                                                                    
                                                                                                                                
Page 1, line 7                                                                                                                  
     Delete "unconventional"                                                                                                    
     Insert "shallow"                                                                                                           
                                                                                                                                
Page 1, lines 7-8                                                                                                               
     Delete ", including coal bed methane,"                                                                                     
                                                                                                                                
Page 1, line 9                                                                                                                  
     Delete "unconventional"                                                                                                    
     Insert "shallow"                                                                                                           
                                                                                                                                
Page 1, line 12                                                                                                                 
     Delete "unconventional"                                                                                                    
     Insert "shallow"                                                                                                           
                                                                                                                                
Page 2, line 3:                                                                                                                 
     Delete "unconventional"                                                                                                    
     Insert "shallow"                                                                                                           
                                                                                                                                
Page 2, line 7, following "as"                                                                                                  
     Delete "unconventional"                                                                                                    
     Insert "shallow"                                                                                                           
                                                                                                                                
Page 2, line 15                                                                                                                 
     Delete "unconventional"                                                                                                    
     Insert "shallow"                                                                                                           
                                                                                                                                
Page 2, line 17                                                                                                                 
     Delete "unconventional"                                                                                                    
     Insert "shallow"                                                                                                           
                                                                                                                                
Page 2, line 21                                                                                                                 
     Delete "unconventional"                                                                                                    
     Insert "shallow"                                                                                                           
                                                                                                                                
Page 2, line 22                                                                                                                 
     Delete ", including coal bed methane"                                                                                      
                                                                                                                                
Page 2, line 25                                                                                                                 
     Delete "unconventional"                                                                                                    
     Insert "shallow"                                                                                                           
                                                                                                                                
     Delete ",including coal bed methane,"                                                                                      
                                                                                                                                
Page 2, line 26, following "and, if so,"                                                                                        
     Delete "establish the response"                                                                                            
     Insert "whether the volume of oil encountered will be of                                                                   
     such quantities that an oil discharge prevention and                                                                       
     contingency plan will be required."                                                                                        
                                                                                                                                
Page 2, lines 27-28                                                                                                             
     Delete all material.                                                                                                       
                                                                                                                                
Page 3, line 2                                                                                                                  
     Delete "unconventional"                                                                                                    
     Insert "shallow"                                                                                                           
                                                                                                                                
Page 3, line 25                                                                                                                 
     Delete "unconventional"                                                                                                    
     Insert "shallow"                                                                                                           
                                                                                                                                
Page 3, line 30                                                                                                                 
     Delete "unconventional"                                                                                                    
     Insert "shallow"                                                                                                           
                                                                                                                                
Page 3 lines 30-31                                                                                                              
     Delete ", including coal bed methane,"                                                                                     
                                                                                                                                
Page 4, line 1                                                                                                                  
     Delete "title"                                                                                                             
     Insert "chapter"                                                                                                           
                                                                                                                                
Page 4, line 1                                                                                                                  
     Insert a new bill section to read:                                                                                         
"*Sec.5 AS 31.05.170 is amended by adding a new paragraph to                                                                  
read:                                                                                                                           
          (15) "shallow natural gas" means coal bed methane,                                                                    
natural  gas  drilled   for  under  a  lease   authorized  by  AS                                                               
38.05.177,  or natural  gas  drilled  for in  a  well whose  true                                                               
vertical depth is 4,000 feet or less."                                                                                          
                                                                                                                                
Renumber the following bill sections accordingly.                                                                               
                                                                                                                                
Page 4, line 1:                                                                                                                 
     Delete "AS 38.05.177"                                                                                                      
     Insert "AS 38.05"                                                                                                          
                                                                                                                                
     Delete "subsection"                                                                                                        
     Insert "section"                                                                                                           
                                                                                                                                
Page 4, line 2                                                                                                                  
     Delete "(o)"                                                                                                               
     Insert "Sec. 38.05.178. Regulation of shallow natural gas;                                                                 
relationship of chapter to other laws."                                                                                         
                                                                                                                                
Page 4, line 13                                                                                                                 
     Delete "unconventional"                                                                                                    
     Insert "shallow"                                                                                                           
                                                                                                                                
Page 4, lines 13-14                                                                                                             
     Delete ", including coal bed methane,"                                                                                     
                                                                                                                                
Page 4, line 6                                                                                                                  
     Insert "For purposes of this section, 'shallow natural gas'                                                                
has the meaning given in AS 31.05.170"                                                                                          
                                                                                                                                
Page 4, line 13                                                                                                                 
     Delete "unconventional [SHALLOW]                                                                                           
     Insert "shallow"                                                                                                           
                                                                                                                                
Page 4, lines 13-14                                                                                                             
     Delete "including coal bed methane gas,"                                                                                   
                                                                                                                                
Page 4, line 15, following "determines"                                                                                         
     Insert "under AS 31.05.030(j) that"                                                                                        
                                                                                                                                
Page 4, line 16, following "(1)"                                                                                                
     Delete "under AS 31.05.030(j) that"                                                                                        
                                                                                                                                
Page 4, line 16, following "for"                                                                                                
     Delete "unconventional"                                                                                                    
     Insert "shallow"                                                                                                           
                                                                                                                                
Page 4, line 19, following "plan"                                                                                               
     Delete "with an appropriate response planning standard                                                                     
described in"                                                                                                                   
                                                                                                                                
Page 4, line 20                                                                                                                 
     Delete "AS 46.04.030(k)"                                                                                                   
                                                                                                                                
Page 4, following line 22                                                                                                       
     Insert a new bill section to read                                                                                          
"*Sec.8. AS  46.04.900 is  amended by adding  a new  paragraph to                                                             
read:                                                                                                                           
          (30) "shallow natural gas" has the meaning given in AS                                                                
31.05.170"                                                                                                                      
                                                                                                                                
Renumber the following bill sections accordingly.                                                                               
                                                                                                                                
Page 4, line 26                                                                                                                 
     Delete "unconventional"                                                                                                    
     Insert "shallow"                                                                                                           
                                                                                                                                
Page 4, line 26                                                                                                                 
     Delete "unconventional"                                                                                                    
     Insert "shallow"                                                                                                           
                                                                                                                                
Page 4, following line 30                                                                                                       
     Insert a new bill section to read:                                                                                         
"*Sec.10 AS  46.40.210 is  amended by adding  a new  paragraph to                                                               
read:                                                                                                                           
          (10) "shallow natural gas" has the meaning given in AS                                                                
31.05.170."                                                                                                                     
                                                                                                                                
Renumber the remaining bill section accordingly.                                                                                
                                                                                                                                
                                                                                                                                
SENATOR OGAN objected for the purpose of discussion.                                                                            
                                                                                                                                
VICE-CHAIR  WAGONER asked  Mr.  Mintz to  explain  the intent  of                                                               
Amendment 2 to the committee.                                                                                                   
                                                                                                                                
MR. ROBERT  MINTZ, Assistant Attorney General,  Department of Law                                                               
(DOL), explained to  members that Amendment 2 was  drafted by the                                                               
DOL  after consultation  with representatives  of the  Alaska Oil                                                               
and Gas  Conservation Commission  (AOGCC), Department  of Natural                                                               
Resources   (DNR),   and    the   Department   of   Environmental                                                               
Conservation (DEC). It is intended to do three things.                                                                          
                                                                                                                                
   · The term "unconventional natural gas" was changed to                                                                       
     "shallow natural gas" throughout  the legislation. The title                                                               
     of the bill uses the term  "shallow natural gas" so the term                                                               
     was made  consistent to avoid  a potential problem  with the                                                               
     title not  describing the  subject of  the bill.  The common                                                               
     understanding of  "unconventional natural gas"  includes gas                                                               
     at deep depths.                                                                                                            
   · It provides a statutory definition of "shallow natural                                                                     
     gas."  DOL felt that  inclusion was important because as the                                                               
     bill has  been developed, it  actually affects not  only the                                                               
     AOGCC statute,  but also DEC  and DNR. The  definition makes                                                               
     clear what  projects would and  would not be covered  by the                                                               
     bill.                                                                                                                      
                                                                                                                                
MR. MINTZ  told members  that an AOGCC  member would  explain the                                                               
definition to members.                                                                                                          
                                                                                                                                
MR.  DAN SEAMOUNT,  Alaska Oil  and Gas  Conservation Commission,                                                               
said  both the  AOGCC and  DNR discussed  ways to  define shallow                                                               
natural gas  and agreed on  this definition.  Any one or  more of                                                               
three  criteria  is  sufficient   to  meet  the  definition.  One                                                               
criterion  is coal  bed  methane. Because  there  is a  practical                                                               
depth limitation involved, coal can  be squeezed to a point where                                                               
gas cannot flow out of it  at that depth, probably at about 4,000                                                               
feet. The second criterion could be  covered by a DNR shallow gas                                                               
lease, under  AS 38.05.177.  The third  criterion is  natural gas                                                               
drilled for  in a well  with a true  vertical depth (TVD)  of not                                                               
more than 4,000 feet. Both the  AOGCC and DNR felt these criteria                                                               
would cover the types of  projects the committee intends to cover                                                               
under this legislation.                                                                                                         
                                                                                                                                
MR. MINTZ then told members the  third change in Amendment 2 will                                                               
correct an inconsistency  in the language between  what the AOGCC                                                               
is expected  to do under  Section 6 of  the bill (related  to oil                                                               
spill contingency plans)  and what the AOGCC is  authorized to do                                                               
under   Section  2   of  the   bill  (the   AOGCC's  powers   and                                                               
responsibilities). Using  the language from Section  6 in Section                                                               
2 will  avoid any  uncertainty about the  AOGCC's authority.   In                                                               
addition, a superfluous phrase was deleted.                                                                                     
                                                                                                                                
MR. MINTZ noted  a fourth change in Amendment 2  is technical and                                                               
relates to Section  5. As written, the  committee substitute adds                                                               
a new  subsection to  Section 177  of AS  38.05, the  shallow gas                                                               
leasing statute.  Because the  coverage of  Section 5  is broader                                                               
than shallow gas  leasing and the concept of  shallow natural gas                                                               
is broader than  what is provided for under  the leasing statute,                                                               
DOL thought placing Section 5  in the shallow gas leasing section                                                               
could cause  confusion. DOL instead  suggested it be placed  in a                                                               
new section by itself. Amendment 2 adds that new section.                                                                       
                                                                                                                                
SENATOR OGAN referred to page 2,  lines 22-25 of Amendment 2, and                                                               
asked if  the intent of  that language  is to prevent  AOGCC from                                                               
playing the role traditionally played by DEC.                                                                                   
                                                                                                                                
MR. MINTZ said  that is a policy call for  the committee to make.                                                               
He said Section  2 is only supposed to  provide express authority                                                               
for the AOGCC  to do what Section  6 asks it to  do. The language                                                               
on lines  22-25 would make  the language consistent  with Section                                                               
6.                                                                                                                              
                                                                                                                                
SENATOR OGAN asked if AS 31 is the AOGCC statute.                                                                               
                                                                                                                                
MR. MINTZ said that is correct.                                                                                                 
                                                                                                                                
SENATOR  OGAN asked,  "So  you  don't want  AOGCC  to  be in  the                                                               
business of  establishing a  response? That's more  what DEC  - I                                                               
mean  is that  why  we're  doing this  basically  -  the DEC  job                                                               
description?"                                                                                                                   
                                                                                                                                
MR. RANDY RUEDRICH, AOGCC, told  members that two sections of the                                                               
bill were  inconsistent. Section 6 contained  the requirements to                                                               
provide  information,   which  are  left  unchanged.   Section  2                                                               
required the  AOGCC to do  the task  described in Section  6. The                                                               
amendment attempts  to make  consistent what  the AOGCC  is being                                                               
asked to  do with  what it is  doing. He said  the AOGCC  will be                                                               
defining  the likely  flow  rates  to give  to  the  DEC for  the                                                               
establishment of a spill contingency plan.                                                                                      
                                                                                                                                
SENATOR OGAN asked  if the line number changes on  page 4 reflect                                                               
the adoption of the committee substitute.                                                                                       
                                                                                                                                
MR. MINTZ  said that  is correct. He  explained that  Amendment 2                                                               
was  originally drafted  to  apply to  Version  B. However,  when                                                               
Version  C was  introduced,  handwritten revisions  were made  to                                                               
apply  to Version  C.  He acknowledged  that  because of  limited                                                               
time, he cannot  assure that all of the  necessary revisions were                                                               
included. [Amendment  2 as typed  above contains  the handwritten                                                               
revisions provided by Mr. Mintz that apply to Version C.]                                                                       
                                                                                                                                
VICE-CHAIR WAGONER  announced that  with no further  questions or                                                               
objections, CSHB  69(RES) [Version C]  as amended was  before the                                                               
committee.                                                                                                                      
                                                                                                                                
SENATOR OGAN  moved that  the bill  drafter be  able to  make any                                                               
technical conforming  changes necessary to  incorporate Amendment                                                               
1 as he believed some clean-up changes may be required.                                                                         
                                                                                                                                
VICE-CHAIR WAGONER suggested  that the motion allow  the chair to                                                               
make sure  the changes are  technical in nature before  the draft                                                               
is considered finalized.                                                                                                        
                                                                                                                                
SENATOR  BEN  STEVENS  asked  Senator  Ogan  to  clarify  why  he                                                               
believes Amendment 1 will require a technical correction.                                                                       
                                                                                                                                
SENATOR OGAN said  he is concerned the heading  will not conform.                                                               
He added that  he is only asking the committee  to give the legal                                                               
drafter   the  ability   to  make   technical  corrections,   not                                                               
substantive  changes.  He  said   the  legal  drafter  made  that                                                               
suggestion because he did not draft Amendment 1.                                                                                
                                                                                                                                
SENATOR ELTON commented that if  any technical amendments need to                                                               
be made, he would also like a copy.                                                                                             
                                                                                                                                
SENATOR OGAN indicated  the legislation could also  be changed on                                                               
the Senate floor, if necessary.                                                                                                 
                                                                                                                                
There  being  no  further discussion  or  objections,  VICE-CHAIR                                                               
WAGONER  announced  the motion  carried  and  that the  committee                                                               
would take public testimony.                                                                                                    
                                                                                                                                
MR. MATT  DAVIDSON, representing the Alaska  Conservation Voters,                                                               
expressed concern that  the public has had very  little chance to                                                               
review  the changes  to HB  69  made in  the Senate.  He said  he                                                               
agrees that the  development of coal bed methane  and shallow gas                                                               
drilling has huge potential for  the development of energy across                                                               
the state, especially in rural  areas where energy costs are very                                                               
high. Unfortunately,  the bill does  not recognize  the potential                                                               
risks of this type of  development to groundwater, surface water,                                                               
community development and  public and private lands.  The bill is                                                               
lacking  in that  it does  not instruct  the agencies  to take  a                                                               
proper look at  these impacts. He asked that  the bill recognize,                                                               
in its  findings section,  the potential  impacts to  the waters,                                                               
neighborhoods  and  communities  of   the  state  from  coal  bed                                                               
methane.                                                                                                                        
                                                                                                                                
MR. DAVIDSON said  the bill erroneously implies  that the impacts                                                               
of coal  bed methane  developments are  less of  a threat  to the                                                               
resources  of the  state. He  agrees they  differ from  deep well                                                               
drilling,  but  the impacts  to  private  landowners and  surface                                                               
waters in  the Rocky Mountains  have been very big.  He described                                                               
the  process  of  coal   bed  methane  development,  particularly                                                               
reinjection, and problems associated  with salinity, seepage, and                                                               
groundwater levels  and contamination.  He repeated  the findings                                                               
section should reflect those risks  and that AOGCC should develop                                                               
regulations to address them.                                                                                                    
                                                                                                                                
MR. DAVIDSON  said he believes  it is inappropriate to  leave the                                                               
variance provision  in Sections 1 and  3 of the bill.  A variance                                                               
will not be necessary once  regulations are developed to properly                                                               
manage coal  bed methane  production. He  urged the  committee to                                                               
add the sunset provision to the variance language.                                                                              
                                                                                                                                
MR. DAVIDSON said  he also believes it is  inappropriate that the                                                               
public notice  of the variances  continues to be included  in the                                                               
legislation. There  has been  no compelling  testimony as  to why                                                               
the variances  are necessary. The  AOGCC is  currently processing                                                               
some of  the variances requested  by Evergreen Drilling.  He said                                                               
he continues to object to  the language limiting local government                                                               
planning in  Sections 4  and 5. Coal  bed methane  has tremendous                                                               
impacts  on private  land.  A local  government  should have  the                                                               
right to tell the producer and the  state that it does not want a                                                               
compressor station  built next to  a school. His final  point was                                                               
that  the  exemption  to  coastal   zone  consistency  review  is                                                               
inappropriate because  coal bed  methane produces  wastewater and                                                               
has  the potential  to  affect marine  and  other ecosystems  and                                                               
should not be exempted.                                                                                                         
                                                                                                                                
SENATOR  OGAN told  Mr.  Davidson that  the  subcommittee held  a                                                               
number of  meetings and publicly  noticed each one. He  then told                                                               
Mr. Davidson,  regarding ground and surface  water contamination,                                                               
the  plans  that  Evergreen  Resources  submitted  to  the  AOGCC                                                               
contain double  protection to ensure no  aquifer infiltration. He                                                               
said  water is  not actually  injected to  produce the  well. The                                                               
water  is drawn  down to  lower  the pressure  in the  reservoir,                                                               
which makes the methane to rise.  He said some of that water does                                                               
have low salinity  levels. That is reinjected below  the level of                                                               
production  into bedrock.  It is  virtually  impossible for  that                                                               
water to infiltrate  the aquifer. He also told  Mr. Davidson that                                                               
the boroughs  will be able to  say they do not  want a compressor                                                               
station  next to  a school  through land  use and  planning. This                                                               
bill  does   not  remove   that  ability;   it  does   allow  the                                                               
commissioner to  waive local  requests if  there is  a compelling                                                               
issue but he believes those  mitigating concerns can be addressed                                                               
in the permit.                                                                                                                  
                                                                                                                                
SENATOR  OGAN  said  he  believes Mr.  Davidson  must  have  been                                                               
referring to  a New York  Times article about methane  seepage in                                                             
the  Powder  River Basin.  He  said  the  methane seepage  was  a                                                               
natural seepage that had been  there forever. He pointed out that                                                               
methane is  non-toxic. He has  seen friends in the  Mat-Su Valley                                                               
turn on  their faucets, hold a  match and light a  fire. He noted                                                               
the coal  is very shallow  in some  places in the  Mat-Su Valley.                                                               
Those people are actually drawing  water out of coal. Their water                                                               
wells produce gas.                                                                                                              
                                                                                                                                
SENATOR ELTON  commented that it is  easy to talk about  a lot of                                                               
these  issues as  if the  public  has the  same understanding  of                                                               
them. Often what gets in the way  is a lack of knowledge. He said                                                               
the issue is that at one  end the bill constricts the possibility                                                               
of public  notice, at the  other end, communities are  being told                                                               
they have  no say.  That sets  up a  situation where  no rational                                                               
discussion  will take  place because  there will  be no  forum in                                                               
which to  do so.  He asked  whether situations  in the  past have                                                               
occurred that warrant the new sections in the bill.                                                                             
                                                                                                                                
SENATOR OGAN asked to respond to  a previous comment and said the                                                               
only  thing  this bill  does  is  to  change public  notices  for                                                               
technical  changes made  by the  AOGCC,  basically for  down-hole                                                               
operations. He said a technical  change might be requested when a                                                               
company  wants to  make minor  changes to  its plan  of operation                                                               
because  it   encountered  a  slightly  different   geology  than                                                               
expected. He said  the public still has plenty  of opportunity to                                                               
comment on  the leasing issue  itself and mitigating  measures on                                                               
the overall plan. He pointed out  to date, no one has requested a                                                               
public hearing on any of those technical changes.                                                                               
                                                                                                                                
SENATOR ELTON  asked if  any situation  has arisen  that requires                                                               
the kind of relief this bill seeks.                                                                                             
                                                                                                                                
SENATOR OGAN said, to the best  of his knowledge, there have been                                                               
no requests  on these technical  down-hole issues, and  that they                                                               
have  all been  public noticed  with the  AOGCC. He  told members                                                               
that  someone  who wants  to  delay  a  project could  request  a                                                               
hearing,  which requires  a 30-day  notice. That  could force  an                                                               
operation to  shut down over  a technical  change to a  plan that                                                               
the  AOGCC commissioners  are capable  of  deciding upon  without                                                               
harming  the  public.   He  said  he  believes   this  change  is                                                               
consistent  with   the  Governor's  attempt  to   streamline  the                                                               
regulatory process.                                                                                                             
                                                                                                                                
SENATOR  ELTON   maintained  that  one  can   always  envision  a                                                               
situation  in  which  public notice  and  public  hearings  could                                                               
create problems, even if they haven't in the past.                                                                              
                                                                                                                                
MR.  DAVIDSON  told  members  that  he  testified  at  the  first                                                               
subcommittee  hearing,   at  which   time  the   first  committee                                                               
substitute was  introduced. That  was the first  time he  saw the                                                               
municipal  language  and  called  the Mat-Su  Borough  to  inform                                                               
staff. Since  then, the  chair of the  subcommittee asked  him to                                                               
hold his  comments and bring  them before the full  committee. He                                                               
said  he  appreciates  Senator   Ogan's  knowledge  of  coal  bed                                                               
methane. He  noted that  the State of  Montana just  considered a                                                               
bill  to regulate  the discharge  of  water drawn  from coal  bed                                                               
methane. The farmers and ranchers  want it regulated because they                                                               
cannot use  that water on  their operations. He pointed  out that                                                               
neither the  state nor  the AOGCC  has a  lot of  experience with                                                               
coal  bed  methane production  or  drilling  so  he feels  it  is                                                               
appropriate to discuss potential issues in communities.                                                                         
                                                                                                                                
SENATOR OGAN said  he agrees that other states  have had problems                                                               
with water  discharges. However, in  some areas of  Colorado, the                                                               
water is so  pure it is drinking water quality.  Ranchers love it                                                               
because they  can get a  water supply  they did not  have before.                                                               
However, there  are problems with  salinity in other  areas. That                                                               
is  not  the  case  in   Alaska  because  that  water  cannot  be                                                               
discharged  on the  ground;  it must  be  reinjected below  4,000                                                               
feet.                                                                                                                           
                                                                                                                                
MR.  DAVIDSON  told members  his  goal  is that  the  legislation                                                               
recognize  that  impacts from  coal  bed  methane production  can                                                               
occur. He asked  the committee to consider the  comments from the                                                               
Mat-Su Borough  because placing limits  on Title  29 authorities'                                                               
ability to zone these production wells is important.                                                                            
                                                                                                                                
VICE-CHAIR  WAGONER  said  he  thought   the  committee  had  the                                                               
concurrence of the Mat-Su borough on the bill as amended.                                                                       
                                                                                                                                
TAPE 03-18, SIDE B                                                                                                              
                                                                                                                                
SENATOR OGAN invited  Mr. Davidson to contact  staff at Evergreen                                                               
Resources who would be glad to  give him a tour and explain their                                                               
operations. He said  he believes Mr. Davidson  would be impressed                                                               
with how conscientious Evergreen is about its operations.                                                                       
                                                                                                                                
MR. DAVIDSON  said he  is not  arguing Evergreen's  intentions or                                                               
that this legislation is a back  door way to do business, he just                                                               
believes the public deserves to recognize the potential impacts.                                                                
                                                                                                                                
VICE-CHAIR  WAGONER  announced  a  10-minute  at-ease.  When  the                                                               
committee  reconvened, he  said he  would entertain  a motion  to                                                               
move the legislation from committee.                                                                                            
                                                                                                                                
SENATOR SEEKINS  said he  would like to  express support  for the                                                               
rally going  on in front of  the Capitol Building to  support our                                                               
troops  and President  Bush.  He then  moved  SCSHB 69(RES)  with                                                               
individual recommendations.                                                                                                     
                                                                                                                                
SENATOR ELTON objected and asked what the original motion was.                                                                  
                                                                                                                                
VICE-CHAIR WAGONER said the original  motion was to adopt Version                                                               
C and then the committee adopted two amendments.                                                                                
                                                                                                                                
SENATOR  ELTON  asked  for  an  explanation  of  the  differences                                                               
between Versions B and C.                                                                                                       
                                                                                                                                
SENATOR  DYSON  explained that  when  the  subcommittee sent  its                                                               
proposal to  the legal drafters,  it had  a line drawn  through a                                                               
few words  but the drafter  did not exclude those  words. Senator                                                               
Dyson did  not notice  that the words  remained when  he reviewed                                                               
the  draft committee  substitute. He  said those  words kept  the                                                               
municipalities from  having any  say, which the  subcommittee did                                                               
not intend. Those words were removed  in Version C and, as far as                                                               
he knows, that  is the only difference between  the two versions.                                                               
He  said  he  takes  total   responsibility  for  the  error  and                                                               
apologized for the mistake.                                                                                                     
                                                                                                                                
SENATOR  ELTON  removed  his  objection  and  VICE-CHAIR  WAGONER                                                               
announced that without objection, the motion carried.                                                                           

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