Legislature(2001 - 2002)
03/28/2001 03:35 PM RES
* first hearing in first committee of referral
= bill was previously heard/scheduled
= bill was previously heard/scheduled
SB 164-NO GAS PIPELINE OVER BEAUFORT SEA CHAIRMAN TORGERSON announced SB 164 to be up for consideration. He explained that SB 164 makes legislative findings saying, "We want the North Slope gas for the highest utilization to be made for in- state usage to the maximum - jobs and opportunities that are within the state for value-added opportunities and adding significant long-term property base for the state and the bill concludes with making a legislative Best Interest Finding that prohibit the Commissioner from issuing a lease for the right-of-way over the top until a line is built south." MR. MICHAEL HURLEY, North American Natural Gas Pipeline Group, said the three companies in the group are BP, ExxonMobil, and Phillips and they are, "working diligently to develop an economically viable project to commercialize North Slope natural gas by pipeline through Canada to the Lower 48 markets." FERC, before it issues a Certificate of Public Convenience and Necessity, requires them to analyze alternative pipeline route options as part of the application process. This project has the potential to be the largest energy project in North America and will require capital investments in the billions of dollars. He said their energies are used for a thorough evaluation of alternatives and an understanding of their relative strengths, weaknesses, risks and rewards. Their efforts are, "focused on creating and understanding opportunities, not prematurely discarding them. This legislation would do the later." MR. HURLEY said that limiting options would discourage other investors in Alaska projects. Any Alaskan projects, "must be able to deliver products to the market at a competitive cost in order to succeed. There are many other competing sources of supply and buyers will go elsewhere if a project fails in that regard. While our work may show that a southern route does offer the best combination of benefits and economic viability to Alaskans, it must be realized that efforts to prohibit the consideration of other development options, such as a northern route, may impede an Alaska natural gas project from moving forward." MR. HURLEY said they were listening to the views of the Alaskan legislature and Alaskan citizens and were evaluating the alternatives on the basis of seven criteria: · Overall project economics · Alaskan access to gas · Jobs for Alaskans · Revenue to the State · Safety · Environmental protection · Project timing We do not feel that we have enough information, yet, to make a route decision. That is the reason for our aggressive work program this year. The effect this legislation will have on FERC and other agency permit applications is as yet unknown. SENATOR TAYLOR asked how this legislation would preclude them from analyzing all the routes. MR. HURLEY answered that they don't think that; they don't know what FERC will require of them as a result of its passage. CHAIRMAN TORGERSON said he, "Found it difficult to believe FERC is going to make you look at options when the President of the United States and Congress has picked one. FERC doesn't have a dog in this fight." He thought not wanting the southern route was an intercompany policy. MR. HURLEY replied that they are approaching this as a green field application that would require an alternative analysis as part of the backup of the application. CHAIRMAN TORGERSON asked if they were ignoring the authorized route. MR. HURLEY replied that the lack of clarity about how the old laws applied and whether they still apply has caused them to push forward as if it were a green field application. SENATOR LINCOLN said that she was a bit offended by his testimony today. "To me it suggests that we have not been diligent in our analysis of the different routes and what's in the best interests of the state." She didn't think there had ever been any question about the dedication of Alaskans' access to gas and jobs, revenues to the state, safety and environmental protection. As far as timing, "We would like to see that done as quickly as possible…" SENATOR LINCOLN continued: "This Chair, I've given him great kudos for really taking the Resources Committee through all of the routes, to hearing the public testimony, hearing from the producers, to hearing from the different groups that have an interest in this." MR. HURLEY apologized and said it wasn't intended to offend. MR. BILL BRITT, Alaska State Pipeline Coordinator, strongly supported SB 164. The over-the-top route is not in the state's best interests for the reasons sighted nor do they believe it would be cheaper or faster due to a variety of design and permitting considerations. However, a brief legal review has revealed some possible legal and constitutional issues, especially related to separation of powers. He said they needed more time to examine the issue. They are concerned about the precedent of this very prescriptive statute. They agree with the policy, but feel that they would be led to the same result without the prohibition in section (b), page 3. CHAIRMAN TORGERSON asked what the separation of powers issue he was concerned with. Number 1800 MR. JACK GRIFFIN, Supervisor of the Oil and Gas Division in the Department of Law, said their legal review has been cursory, but on the face of the bill there is a separation of powers concern. While the legislature clearly has the constitutional authority to establish land use policy in the first instance, as a rule it establishes that policy on laws of general applicability and leaves the implementation of that policy to the executive branch. That's the approach the legislature has chosen and is reflected in the current Right-of-Way Leasing Act. SB 164, on the other hand, starts off with the general and very legitimate policy consideration articulated by the legislature, but then in subparagraph (b), directs the commissioner to exercise the discretion in the event the commissioner sees application for a particular project in a particular area. The problem here is not really what the bill would do, but how it would do it. For example, the legislature clearly makes the state lands under the Beaufort Sea a state park. The legislature could clearly circumscribe the territorial reach of the Right-of-Way Leasing Act so that it doesn't reach submerged lands and the legislature could follow its legitimate policy articulating not only applicable policy considerations that must be evaluated and applied by the executive to implement this particular act. Those would be much easier to defend. It's possible to put an interpretive clause on section (b) that would in effect interpret it as essentially a elucidation on the territorial scope of the Right-of-Way Leasing Act. I think the problem with that particular interpretation, though, is that it ignores the specificity with which the bill identifies the offending project. For example, the commissioner can still issue a right-of-way lease for a gas pipeline that would follow the ANWR coast to Kaktovik. The pipeline goes on to Canada and then south at the commissioner's discretion has been eliminated. Conditions are [indisc.] saying separation of powers concerns that the specificity with which that particular project is identified raises, at least potentially, concerns under the United State Commerce Clause and under the U.S. and State people's protection clauses. He didn't have enough time to analyze whether those concerns are significant, but on the face of the bill they could be significant. CHAIRMAN TORGERSON said those same concerns were also in the NorthStar agreement in which Kachemak Bay Reserve was made off limits to oil and gas drilling, and that passed muster of the Supreme Court. He advised Mr. Griffin to check it out if he had some free time, but he thought it would be a waste. SENATOR TAYLOR moved to pass SB 164 from committee with individual recommendations. There were no objections and it was so ordered.