03/30/2006 08:00 AM House COMMUNITY & REGIONAL AFFAIRS
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| SB171 | |
| Adjourn |
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| += | SB 171 | TELECONFERENCED | |
ALASKA STATE LEGISLATURE
HOUSE COMMUNITY AND REGIONAL AFFAIRS STANDING COMMITTEE
March 30, 2006
8:06 a.m.
MEMBERS PRESENT
Representative Kurt Olson, Co-Chair
Representative Bill Thomas, Co-Chair
Representative Pete Kott
Representative Gabrielle LeDoux
Representative Mark Neuman
Representative Sharon Cissna
Representative Woodie Salmon
MEMBERS ABSENT
All members present
OTHER LEGISLATORS PRESENT
Representative Reggie Joule
Senator Donny Olson
COMMITTEE CALENDAR
CS FOR SENATE BILL NO. 171(FIN)(efd fld)
"An Act amending the National Petroleum Reserve - Alaska special
revenue fund; and establishing the Special Legislative Oil and
Gas NPR-A Development Impact Review Committee and defining its
powers and duties."
- HEARD AND HELD
PREVIOUS COMMITTEE ACTION
BILL: SB 171
SHORT TITLE: NPR-A COMMUNITY GRANT PROGRAM
SPONSOR(s): SENATOR(s) WILKEN
04/12/05 (S) READ THE FIRST TIME - REFERRALS
04/12/05 (S) CRA, FIN
04/20/05 (S) CRA AT 1:30 PM BELTZ 211
04/20/05 (S) Heard & Held
04/20/05 (S) MINUTE(CRA)
04/22/05 (S) CRA AT 1:30 PM BELTZ 211
04/22/05 (S) Moved SB 171 Out of Committee
04/22/05 (S) MINUTE(CRA)
04/25/05 (S) CRA RPT 3DP
04/25/05 (S) DP: STEVENS G, WAGONER, STEDMAN
04/26/05 (S) FIN AT 9:00 AM SENATE FINANCE 532
04/26/05 (S) Heard & Held
04/26/05 (S) MINUTE(FIN)
01/26/06 (S) FIN AT 9:00 AM SENATE FINANCE 532
01/26/06 (S) Heard & Held
01/26/06 (S) MINUTE(FIN)
02/01/06 (S) FIN RPT CS FORTHCOMING 4DP 2DNP
02/01/06 (S) DP: WILKEN, GREEN, BUNDE, DYSON
02/01/06 (S) DNP: HOFFMAN, OLSON
02/01/06 (S) FIN AT 9:00 AM SENATE FINANCE 532
02/01/06 (S) Moved CSSB 171(FIN) Out of Committee
02/01/06 (S) MINUTE(FIN)
02/03/06 (S) FIN CS RECEIVED TECH
TITLE CHANGE
02/16/06 (S) ENGROSSED
03/01/06 (S) TRANSMITTED TO (H)
03/01/06 (S) VERSION: CSSB 171(FIN)(EFD FLD)
03/01/06 (H) READ THE FIRST TIME - REFERRALS
03/01/06 (H) CRA, FIN
03/28/06 (H) CRA AT 8:00 AM CAPITOL 124
03/28/06 (H) Heard & Held
03/28/06 (H) MINUTE(CRA)
03/30/06 (H) CRA AT 8:00 AM CAPITOL 124
WITNESS REGISTER
AL CLOUGH, Deputy Commissioner
Office of the Commissioner
Department of Commerce, Community, & Economic Development
Juneau, Alaska
POSITION STATEMENT: Provided the committee with responses to
questions asked at the prior hearing on SB 171.
JO GROVE, Grants Manager
Fairbanks Office
Office of Community Advocacy
Department of Commerce, Community, & Economic Development
Fairbanks, Alaska
POSITION STATEMENT: During hearing of SB 171, answered
questions.
EDWARD ITTA, Mayor
North Slope Borough
Barrow, Alaska
POSITION STATEMENT: Expressed concerns with SB 171.
PATRICIA STITH
North Slope Borough Grants Division
North Slope Borough
Barrow, Alaska
POSITION STATEMENT: During hearing of SB 171, answered
questions.
DORA NUKAPIGAK
Nuiqsut, Alaska
POSITION STATEMENT: During hearing of SB 171, expressed
concerns with regard to NPR-A development.
NATHANIEL OLEMAUN, JR., Mayor
City of Barrow
Barrow, Alaska
POSITION STATEMENT: Testified in opposition to SB 171.
JOHN HOPSON, JR., President/CEO
Olgoonik Corporation
Wainwright, Alaska
POSITION STATEMENT: Testified in opposition to SB 171.
RAYMOND NEAKOK, JR., Vice Mayor
City of Nuiqsut
Nuiqsut, Alaska
POSITION STATEMENT: During hearing of SB 171, related the
impacts of all the NPR-A hearings on the ability to hunt and
fish.
ROBERT SUYDAM, Wildlife Biologist
North Slope Borough Department of Wildlife Management
North Slope Borough
Barrow, Alaska
POSITION STATEMENT: During hearing of SB 171, expressed the
need to accumulate more data with regard to impacts to the area.
DAVID SMITH, City Administrator
City of Nuiqsut
Nuiqsut, Alaska
POSITION STATEMENT: During hearing of SB 171, discussed the
impacts to the administration of the City of Nuiqsut.
SENATOR GARY WILKEN
Alaska State Legislature
Juneau, Alaska
POSITION STATEMENT: Spoke as the sponsor of SB 171.
ACTION NARRATIVE
CO-CHAIR KURT OLSON called the House Community and Regional
Affairs Standing Committee meeting to order at 8:06:01 AM.
Representatives Olson, Thomas, Kott, LeDoux, Neuman, and Cissna
were present at the call to order. Representative Salmon
arrived as the meeting was in progress. Also in attendance were
Representative Joule and Senator Olson.
SB 171-NPR-A COMMUNITY GRANT PROGRAM
8:06:29 AM
CO-CHAIR OLSON announced that the only order of business would
be CS FOR SENATE BILL NO. 171(FIN)(efd fld), "An Act amending
the National Petroleum Reserve - Alaska special revenue fund;
and establishing the Special Legislative Oil and Gas NPR-A
Development Impact Review Committee and defining its powers and
duties."
8:06:50 AM
AL CLOUGH, Deputy Commissioner, Office of the Commissioner,
Department of Commerce, Community, & Economic Development
(DCCED), pointed out that the committee packet should include a
document that responds to the questions asked at the prior
hearing of SB 171. He highlighted that the document provides a
table that outlines the Tongass National Forest receipts to the
state between fiscal years (FY) 01 and 06. The document also
specifies the amount of general funds (GF) that were provided to
the North Slope Borough communities between 2000-2006. Mr.
Clough turned to the question as to why funds from the Tongass
National Forest receipts weren't placed in the permanent fund.
To that, he explained that the federal law that distributes the
Tongass National Forest receipts is fairly specific in regard to
the distribution of those funds. He then cautioned the
committee when reviewing the data set for capital projects for
the North Slope Borough communities and indicated the need to
review it in its totality. Department staff are working to
provide a more detailed spreadsheet, which it hopes to provide
to members by the end of the week. He highlighted that there
are a number of funding sources other than NPR-A monies that go
to the North Slope communities. The data provided to the
committee today, he explained, attempts to capture the non NPR-A
monies. However, some of the funds include monies from various
other programs, such as the safe communities and temporary
physical relief monies. The data provided to the committee at
this point relates the total state dollars without including the
pass through federal dollars.
8:10:11 AM
MR. CLOUGH opined that the NPR-A program has been a difficult
program for DCCED to administer over the years. He further
opined that DCCED staff has attempted to perform their job
consistent with the law and regulations and make the program
work. In fact, the department has made internal changes in
order to have a better program that provides better support to
the communities. He informed the committee that department
staff become frustrated with regard to the definition of
"impact." To that end, the department welcomes legislative
input/guidance with regard to what constitutes "impact,"
although the department believes that the administration of this
program should remain an executive branch function within DCCED
rather than be moved to the legislative branch through the
proposed legislative committee. He suggested that perhaps
legislative guidance with regard to participation of those
departments in the review process would be beneficial.
8:13:52 AM
REPRESENTATIVE LEDOUX asked if DCCED administers the grants for
the Tongass National Forest receipts.
MR. CLOUGH replied no, and explained that those are pass through
formula-based funds to the communities. He likened those to
state revenue sharing and safe community funding. In further
response to Representative LeDoux, Mr. Clough confirmed that
it's not based on individual grants.
8:14:32 AM
CO-CHAIR THOMAS recalled that last year there was a handling fee
charged for the DCCED process, which was basically to cut a
check. Therefore, he asked if the department charges any
handling fees for the Tongass National Forest or NPR-A receipts.
MR. CLOUGH replied no for NPR-A receipts, and offered to check
on that in regard to the Tongass National Forest receipts.
CO-CHAIR THOMAS recalled the Exxon Valdez oil spill and the
impact it had on the entire fishing industry. He questioned how
one can define "impact."
8:17:08 AM
REPRESENTATIVE NEUMAN recalled the situation in which an
operating grant for a cultural center was approved in 2002,
although the center was never built.
8:18:03 AM
JO GROVE, Grants Manager, Fairbanks Office, Office of Community
Advocacy, Department of Commerce, Community, & Economic
Development (DCCED), related her understanding that a grant was
awarded to build a cultural center that was never built for
various reasons. That same year a grant was awarded for
operation of a new facility. However, she highlighted that no
funds were expended for that cultural center. In fact, those
funds were allocated elsewhere to help maintain and operate an
existing part of city offices in the same community.
REPRESENTATIVE NEUMAN recalled his conversation with folks in
the area of the proposed cultural center who believe those funds
were distributed to hook up natural gas to residents in another
area. He then turned to the changes in the administration and
inquired as to how those impact the oversight of the program.
MS. GROVE clarified that she was not responsible for the
administration of the NPR-A program when the cultural center
request was approved, although the administration of the NPR-A
program has come to be her responsibility. She then informed
the committee that she has worked with the department in
administering grant programs for almost 30 years. Ms. Grove
highlighted that the department has many systems in place to
ensure accountability and has made many significant improvements
over the past few years in identifying accountability issues and
working with the staff of the communities that receive these
projects. She further highlighted that department staff
regularly visit these communities and review the facilities that
are being operated with or maintained by these funds. Ms. Grove
pointed out that these projects are cost reimbursable and thus
communities must submit all financial records for review prior
to any payment. Although the aforementioned doesn't ensure 100
percent accountability, it certainly helps, she said.
8:22:13 AM
REPRESENTATIVE CISSNA asked if the funding for the cultural
center was actually ever used for something different.
MS. GROVE answered that to her knowledge those funds were
reprogrammed to benefit the community in order to support
existing city offices, a portion of which is a cultural center.
8:23:13 AM
REPRESENTATIVE LEDOUX asked if legislative oversight as proposed
in SB 171 has ever occurred.
MS. GROVE replied not to her knowledge.
8:23:56 AM
CO-CHAIR OLSON inquired as to the changes the department has
made in the last couple of years that would address the
sponsor's concerns.
MS. GROVE answered that there are very detailed grant agreements
outlining all of the responsibilities of the grantees, including
insurance, accounting records, and reporting requirements. In
fact, the department is in the progress of improving the
progress reporting in order to obtain more detail to address
some of the concerns that have been raised. Furthermore, the
department has made it a point to visit some of the communities
more frequently, although travel expenses are a challenge. She
informed the committee that at least once a year the department
conducts workshops on the program to which the North Slope
communities are invited. In further response to Co-Chair Olson,
Ms. Grove related that those meetings are generally conducted in
Barrow.
MR. CLOUGH relayed that one of the first changes was to host the
aforementioned meetings within the region impacted rather than
Anchorage.
8:26:38 AM
EDWARD ITTA, Mayor, North Slope Borough, paraphrased from the
following written testimony [original punctuation provided]:
Now that you've had a chance to hear the sponsor and
the Administration talk about SB 171's proposed
changes to the NPR-A Impact Aid Grant Program, I
appreciate this opportunity for people from the NPR-A
communities to tell you what it's like in the places
that are directly affected by industry activity.
As you know, the NPR-A grant program was born 25 years
ago after these petroleum reserve lands were
transferred from the Navy to the Department of
Interior with the intent of pursuing commercial
development. Senator Stevens was aware that activity
in NPR-A had already caused a lot of impacts in the
local communities, and he wanted them to receive a
healthy share of the non-federal revenues from
development. It wasn't Senator Stevens' desire to
wrap these villages up in complex arguments about what
constitutes a direct impact or an indirect impact.
That is a recent invention by this bill's sponsor.
Senator Stevens' intention - as it was expressed in
the federal law that created the program - was pretty
simple. He recognized that community impacts had
occurred in the past and would occur in the future.
He knew that these lands were the most important
subsistence territory for the majority of North Slope
residents. And he wanted the impacted communities to
receive benefits at a level that corresponds to
development.
The obvious and simple way to do that - as it was
established in the federal law - is to let impact aid
rise and fall with revenues. The revenue levels would
give a general indication of current and future
activity, and a general indication of impacts. The
impact aid program would give communities a way to
respond and to prepare for the increasing level of
impacts that were likely to occur.
And that is exactly what is happening. From 1987-
1995, there was some revenue generated from existing
leases, then it went quiet for a few years before the
big sales in 1999, 2002 and 2004 took place.
Suddenly, more than 2.8 million acres are leased, and
with the price of oil up so high, the industry is
really eager. There will also be a lease sale later
this year that offers the area north of Teshekpuk Lake
for the first time.
If you want to talk about impacts to the communities,
Teshekpuk Lake is a good place to start. That area is
a tremendous magnet for waterfowl of all kinds, as a
nesting and molting area. Birds come from thousands
of miles away in the spring. The Teshekpuk caribou
herd is also based there, migrating in and out through
a narrow neck of land between the eastern edge of the
lake and the ocean.
In terms of subsistence, the Teshekpuk area is the
focal point of the whole region and all four of our
NPR-A communities harvest from these wildlife
populations while they are in the Teshekpuk region or
during their migratory travels. If you want to make
people nervous on the North Slope, just tell them that
the industry is gearing up to move into the Teshekpuk
area, especially the most sensitive area north of the
lake, where the greatest concentrations of wildlife
are found.
Well, that is exactly what we were told by BLM [Bureau
of Land Management] when they released their Record of
Decision on Northeast NPR-A last month.
I bring this up because it is a good illustration of
the way that impacts can take effect. When you are a
subsistence hunter, you don't need an oil rig next to
your campsite before there's an impact. You don't
need a rig or a road or a seismic crew. For some of
the most serious impacts, all you need is a threat.
The area around Teshekpuk Lake - especially on the
north side of it - is a subsistence breadbasket. When
I talk to people in the villages and Barrow, the idea
that those lands are about to be leased isn't just a
piece of worrisome news. It hits them in the stomach.
It is a threat to their culture, because it is a
threat to activities at the core of their culture. I
think you understand that this is not just about
hunting. It's about preserving the activities that
make our culture possible. For the Native people up
north, the new threat around Teshekpuk Lake is one
more threat to the continuation of their culture.
So people in all of the NPR-A communities are
experiencing a new impact - before the ground has even
been leased. That is the nature of impacts in a
cross-cultural situation. They are not always easy to
understand or even identify, because they are created
in the context of one culture and received in the
context of another culture. The more you try to tie
specific actions to specific effects, the more you
will miss some of the most profound impacts. These
are the ones that come from a feeling deep inside our
people that their traditional hunting grounds are
gradually being taken away for another use, a use that
will disrupt the wildlife we depend on. Disrupting
the wildlife disrupts the people. And while it takes
time to figure out how much the wildlife are affected,
it doesn't take any time for people to feel worried
and threatened and stressed.
8:34:09 AM
MAYOR ITTA continued:
That's why the villages apply for youth programs and
recreation facilities. They are trying to create
alternative activities for kids in a culture that is
under stress. They apply for school counselors and
anti-drug programs, because they're trying to head off
some of the only source of stress on our kids and
communities. But it is one source, and with BLM's
decision to open up the Teshekpuk lands that have
always been protected, it is a lot bigger source of
stress than it used to be. Villages trying to create
alternative programs in a community that is stressed
and head off when culture feels it's under siege.
NPR-A is clearly not the only source of stress on our
kids and communities. But it is one source, and with
BLM's decision to open up the Teshekpuk lands that
have always been protected, it is a lot bigger source
of stress than it used to be.
I think this kind of widespread social impact that is
hard to get your arms around - and hard to quantify -
was anticipated by the federal law. It is the kind of
impact that stays under the radar, but it is real and
very disturbing. It's the undercurrent that affects
everyone, while the more obvious impacts affect one
village more than another. Nuiqsut is in the eye of
the storm now, but it was a quiet village ten years
ago. Wainwright is still a pretty quiet village, but
they feel this undercurrent, this fundamental shift in
land use priorities. They go to the BLM meetings and
see maps of the 2.8 million acres that have been
leased for exploration in the hunting grounds.
Development starts on the drawing board, not on the
drill rig, and so do impacts.
The people of Wainwright and Atqasuk and Barrow and
Nuiqsut see what's coming across the Colville River.
What's coming is a seismic shock to their subsistence
view of the world. They've heard that there might be
ten billion barrels under there. For someone who
depends on a very different use of that land, it
creates a real impact, and that impact is directly
tied to development. And like any social or cultural
impact, it's very hard to show a direct cause-and-
effect link.
I believe that is why the federal law leaves a lot of
latitude in its approach to impact aid. Sure, there
have to be guidelines and a demonstration of impact.
Maybe we haven't always done the best possible job of
communicating these impacts. But we are making
progress on that. The DCED staff congratulated our
grants people in this last round of applications; they
said our impact justifications were much stronger than
in the past.
It's very hard to prove a direct link between a
seismic crew marching across the tundra and a change
in the behavior of animals or humans in the area. We
can't do it, and the Legislature can't do it. And yet
that is the kind of hard-wired relationship between
activities and impacts that the sponsor of this bill
wants to require. If that's what he wants, then his
argument is not with us, and it is not with the
program as it operates now. His argument is with the
federal law that provides this money in the first
place. His argument is with Senator Stevens, who saw
the need for impact assistance at the local level and
created the program.
8:38:40 AM
MAYOR ITTA continued:
So I believe that some of the most profound impacts
are these very subtle changes in the minds and hearts
of our people as they see the industry march to the
west across the breadbasket of their traditional
lands. There are plenty of smaller, everyday impacts
too. They happen so often that we don't even think
about them. They might be incidents where we are
called on to help the industry. We respond without
thinking about it, because that's what you do when
someone is in trouble in the Arctic. Our Search and
Rescue department has flown 200 miles out to sea to
Medivac someone from a seismic ship. We fly Medivac
to remote industry campsites to pick up sick or
injured workers. It's happened several times in the
past few months. In fact, just last week our
emergency response team saved the life of an oil
worker who had both legs trapped in an augur at a
remote drilling site. He didn't come out of it so
good, but he's still alive, and it's because we are
the first responder on the Slope. Not the state or
the feds or the industry. In fact, some of the
lifesaving equipment that was used in this rescue was
paid for by an NPR-A grant. You won't hear about
grants like that when you're listening to the bill's
sponsor. That's because they are part of the success
of the NPR-A grant program.
One of the most dramatic images of an NPR-A impact
that you'll ever see is in one of the packets you have
on your desk. It's the booklet of photos called
"North Slope Borough Impacts from Oil and Gas
Development." There should be a flagged page, and if
you look at that page and the one after it, you'll see
a photo taken in NPR-A last fall. It shows a massive
amount of equipment and moveable facilities in a
staging area at Cape Simpson. Next to that city of
equipment is what looks like a tiny shack. And that's
what it is - it's a subsistence cabin that marks a
hunting area used by a Barrow family for generations.
Hundreds of cabins like this dot the tundra in NPR-A.
Many are on Native allotments that belong to families
from every NPR-A community. So the next time somebody
tries to tell you how far away some of these
communities are from Alpine, remember this picture.
It's quite a way from Alpine too, but it's very close
to where lots or our families go every summer to spend
time on the tundra and hunt and fish and camp.
From the sponsor's presentation on SB 171, you aren't
getting a true picture of what's happening in NPR-A.
You're not hearing what the real impacts are, and
you're not learning about the vast majority of
successful grants that have made this program a
success. You're being led to believe that hundreds of
thousands of dollars have been sent to communities,
where they are pocketed without living up to the grant
conditions. I didn't hear the sponsor mention one
very important thing about all NPR-A grants. And that
is that these grants are not funded up front. They
are reimbursable, so it's not State dollars at risk if
there is poor performance. It's local dollars. If
the communities can't show the Department legitimate
expenses, they don't get the grant money. That sounds
like pretty good accountability to me.
8:43:13 AM
MAYOR ITTA continued:
So what is this bill really about? It's about fixing
the program ... fixing the program so that very little
aid ends up going to the communities. The real intent
of this bill is to make a political football out of
the impact aid program. It's a two-step process.
First, you take decision-making away from the
administrative branch - where decision-making for
every other state grant program exists. You move the
grant reviewing, scoring and awarding process away
from the professionals who do this work every day and
into the political realm of the Legislature.
Second, you ratchet down hard on this slippery concept
of impacts. What you end up with is a really tough
task for a revolving group of people who are
appropriately focused on politics and finances, and
have plenty of ideas for other ways to use that money.
It's a setup for decisions based on politics, not on
the subtleties of impacts or federal intent.
The bill creates a timetable for dealing with these
grant applications that adds to the problem. This
timetable forces you to review and score and award a
bunch of grants in the midst of the legislative
session. Does the Legislature really want to be
dealing with village grant applications during the
session when you've got things like PPT [petroleum
production tax] on your plate? And do you really
think this will yield better, more thoughtful
decisions? I think your best bet is to work with the
department and with us to make the program stronger,
not to gut it.
I'm sure there are ways to improve the program. Some
of them are already being put in place. But the
approach outlined in Senate Bill 171 is overkill. All
we're asking of the Legislature is to preserve a fair,
non-political process, and you don't get that by
taking the grant professionals out of the picture, the
same kind of professionals that you trust with every
other state grant program. It just doesn't make
sense.
It is important to note that SB 171 does not provide
any new definitions or guidelines for judging impacts.
It only changes who is reviewing the grant
applications. I think you can see how this would add
to our concerns that this bill doesn't make anything
more fair or more open. If the Legislature wants to
set up a special subcommittee to review these impact
aid grants, it doesn't take a legislative change. A
subcommittee was formed in Senate Finance last year.
If legislators are just worried that these communities
might be getting too much money, the situation may
resolve itself without any legislative action. The
federal energy bill passed last year gives the
Secretary of the Interior the authority to reduce or
eliminate any and all bonus or lease payments on
development in NPR-A. That would deprive the State as
well as the local communities, so maybe what we should
be doing here is working together to protect revenues.
We have plenty of reasons to work together on all
kinds of resource development issues. The North Slope
Borough has been a major supporter of onshore oil and
gas for years. We have sent some of the most
effective foot soldiers to work the halls of Congress
on opening ANWR [Arctic National Wildlife Refuge]. At
times, we have cooperated with industry wishes on the
North Slope, even when our heart told us not to. If
you look at the record, you'll see that we have tried
to be strong partners for responsible development.
What do we get in return? In recent years, it seems
like we've been faced with a flurry of bills like this
- bills that are nothing more than a thinly-veiled
attempt to punish us for living on the North Slope,
and for receiving benefits at the same time as we
absorb all the impacts from oil and gas activity ...
activity that sends billions of dollars of wealth to
the rest of the state.
We believe in the partnership, but sometimes it feels
less like a partnership and more like a target range,
and we're the target. I have met some of you on this
committee, and I don't think that is your attitude.
But it is the attitude behind this legislation, and I
hope you won't buy into the attitude or the bill. It
would be a loss for all of us as we try to create a
better future for Alaska.
8:50:05 AM
MAYOR ITTA continued:
A number of people from the NPR-A communities are here
today, and they have a lot of experience with some of
the things I've mentioned. I want you to know that
they are not here on our dime. They paid their own
way so they could tell you how important the program
is to their communities. The mayor of Atqasuk was on
the way down here when she had a death in the family
and had to turn around. But her written testimony
should be in your file.
I want to thank you again, Mister Chairman, for
allowing us to have this time with the committee
today. It means a lot to us, and we really appreciate
your interest in getting some local input on the bill.
Quyanaqpak.
8:52:05 AM
REPRESENTATIVE KOTT opined that Mayor Itta just provided one of
the best presentations he has heard in his 14 years in the
legislature. Representative Kott recalled Mayor Itta explaining
that the work is performed prior to the grant application
process and the grant money being received. He inquired as to
how many grant applications are rejected.
MAYOR ITTA said that he couldn't answer, but deferred to staff.
8:53:36 AM
PATRICIA STITH, North Slope Borough Grants Division, North Slope
Borough, informed the committee that only a few of the grant
applications submitted are funded because it depends upon the
amount of funding available.
8:54:04 AM
REPRESENTATIVE SALMON opined that what happens with NPR-A and
the impact it causes elicits a similar feeling to that the
Gwich'in people have with regard to ANWR. He stressed that
[those impacted by NPR-A and ANWR] utilize the same food chain.
However, the Gwich'in people don't receive any impact aid.
MAYOR ITTA agreed that the two are parallel situations.
8:56:16 AM
CO-CHAIR OLSON recalled U.S. Senator Ted Stevens' presentation
before the legislature during which he spent much time
addressing the need to maintain the NPR-A.
8:57:00 AM
DORA NUKAPIGAK informed the committee that she is a resident of
Nuiqsut. She related that she is the mother of three boys who
have illustrated great interest in being hunters like their
mother and father. Hunting brings food to the table as well as
to the table of others who depend on others to hunt for them.
With industry in her backyard, she expressed fear with regard to
her son's future ability to provide for his family and share
with others. With Alpine development, satellite construction,
and the nearest oil rig being 4.5 miles from Nuiqsut, Ms.
Nukapigak said that she sees impacts in every day life.
However, these impacts began some 80 years ago with seismic
[testing] for NPR-A, which is evidenced by the abandoned [oil]
drums. Still, the government hasn't cleaned up these old well
sites.
MS. NUKAPIGAK then related that her mother has shown her the
places where she used to hunt in the region and where there has
been a change in or lack of game as industry has moved west.
She expressed concern that she too will have to tell her son
where she once hunted and fished. She then related a story of
an elderly woman who visited her allotment after 30 years and
found it was fenced with [oil industry] infrastructure [located
on it]. With the oil industry moving west, the land loss will
not stop and people will continue having to find new places to
hunt.
9:02:57 AM
MS. NUKAPIGAK reminded the committee that in 1998 assurances
related to NPR-A were given. However, when those were
eliminated, she lost trust in the government and provided a
different perspective with regard to what development will do.
There is so much activity that it's overwhelming to the people
in the area, she opined. Furthermore, there are social impacts
that arise as well. She related that the local leaders as well
as the general population of the area are feeling the effects of
this development because everyone is attending the meetings. In
fact, there are meetings every other day in Nuiqsut. She opined
that meetings have taken the place of hunting in Nuiqsut. She
related the following quote: "Oil does not have to live with
us, but that we as Inupiats have to live with oil."
9:05:49 AM
REPRESENTATIVE CISSNA thanked the bill sponsor for allowing the
committee to hear what is going on now and she also thanked the
witnesses for sharing.
MS. NUKAPIGAK encouraged the committee to come to Nuiqsut to see
the reality of the situation.
9:07:32 AM
NATHANIEL OLEMAUN, JR., Mayor, City of Barrow, began by
informing the committee that he was the mayor at the time when
the impact aid fund was started by U.S. Senator Stevens. He
opined that the NPR-A impact aid grant program has been a useful
tool to keep the city afloat. He explained that the City of
Barrow had to restructure its finances in order to utilize the
grants. He recalled difficulties with grant projects in the
past, which are now being addressed. The City of Barrow began
feeling impacts starting back in 1939. He related that in the
1940s four of the closest hunting grounds were destroyed during
seismic testing, which resulted in the location of the hunting
grounds shifting to the Teshekpuk Lake area that remains a
plentiful hunting area. However, now those areas are being
impacted as well.
9:12:38 AM
MAYOR OLEMAUN recalled the 10 years during which he worked at
Prudhoe Bay and the impact he saw to the North Slope from the
very beginning. He recalled the city in the 1970s when it
needed funds for essential services and the time he spent
working for the city for free. He related that [the City of
Barrow] has constructed recreation centers; retractable boat
ramps; boardwalks; Boys & Girls Club; et cetera. The
aforementioned wasn't available when he was a boy because the
outside was his playground. The aforementioned facilities were
made possible with the NPR-A impact aid fund. He recalled
fighting this fight over 30 years ago and indicated that he
didn't believe then that he would still be fighting that same
fight now. Mayor Olemaun concluded by stating his opposition to
SB 171.
9:19:44 AM
JOHN HOPSON, JR., President/CEO, Olgoonik Corporation,
paraphrased from the following written testimony [original
punctuation provided]:
I'm the President and CEO of Olgoonik Corporation, the
village corporation of Wainwright, which is 80 air
miles southwest of Barrow. I'm a hunter, fisherman,
member of the Wainwright Whaling Captains Association,
a former North Slope Borough Assemblyman and
Wainwright city mayor and councilman. I'm active in
local organizations, such as search and rescue and the
volunteer fire department.
Wainwright is a second-class city with powers of
recreation, boats and harbors, and cemetery sites.
Other local government services are provided by the
North Slope Borough.
I speak in opposition to Senate Bill 171, because it
is designed to make us less eligible for NPR-A impact
aid grants at a time when oil development is spreading
across the North Slope faster than ever and
challenging our subsistence way of life.
It is hard to separate the effects of NPR-A activities
from other oil development, including offshore. It is
also hard to separate the effects of current NPR-A
activities from those of the past or the ones that we
see coming our way in the near future. When we think
about oil and gas development, we don't separate one
kind from another. They are all part of the same
thing - a big change in the way we live and a
challenge to our traditional subsistence lifestyle.
There have been generations of seismic activity in the
places where we hunt and fish. These hunting grounds
extend far to the south and east, as well as west of
the village. The elders tell us how the movements of
some animals have been changed by seismic activity
over the years. Sometimes when the migrations are
disrupted, they do not return to their previous path
after the noise stops, so the animals are harder for
us to get to.
We get caribou from the Teshekpuk herd and we hunt for
birds that over winter in the eastern part of NPR-A.
These animals don't come around so much like they used
to, and we have to travel farther and farther to find
them. That means it is more difficult and more
expensive for us, in terms of travel and time away
from jobs or families. There is a very real cost to
us.
9:22:26 AM
MR. HOPSON continued:
When the North Slope Borough does their census, they
ask about subsistence activities, and they found that
more than 80 percent of the people in Wainwright get
at least half of their food from subsistence. So it
is not something we do in our spare time for fun. We
grew up with subsistence, and it is part of who we
are. There's not much in our local store anyway, but
we hunt and fish as a big part of our livelihood, and
we depend on wildlife for our meals.
People in Wainwright also don't have many jobs for
income, so we really need access to fishing and
hunting and whaling. The borough's official
unemployment rate for our community is 35 percent, but
from what we can tell as residents, the real
unemployment rate is more like 60 percent or higher,
depending on the time of year. And that rate is
rising, since the borough has had to cut back on jobs
and services in the last five or six years. We may
have more jobs than a lot of villages around Alaska,
but almost 20 percent of our families live below the
poverty line in terms of cash income, and they really
feel it when it gets more expensive to go out after
the caribou and other animals.
That's why NPR-A grant projects like our boat launch
are so important to us. Access to many of our best
hunting and fishing areas is by boat, and we really
need a decent boat launch to get our boats in the
water. It is not a recreational boat launch, but a
health and safety issue and a matter of survival for
us to harvest wildlife from the ocean and the inland
areas.
I understand that politics has a lot to do with this
legislation, and I can't give you much advice on that.
But I hope you won't be fooled into believing that
people in our villages are rich and the streets are
paved with gold. The streets are paved with ice most
of the year, and we live pretty simple lives.
9:24:52 AM
MR. HOPSON continued:
Our life has already been changed by oil and gas
development. Some of the changes are good - like
better schools and pretty good basic services in our
communities. Some of the changes have really hurt our
culture and put our kids and our language and our
traditions at risk. We don't completely understand
how industry activities and village impacts all work
together. Neither do you, and I hope you won't
pretend that you can sit here and tell us what impacts
are in our village. It gets pretty complicated when
you put two totally different cultures together.
We're just trying to hold on to our culture for
ourselves and our kids. I hope you won't make it
harder by taking away a source of revenue that has
made a big difference for our community.
9:25:39 AM
RAYMOND NEAKOK, JR., Vice Mayor, City of Nuiqsut, paraphrased
from the following written testimony:
Hello my name is Raymond Neakok Jr. son of Raymond
Neakok Sr. and Marie Kunaknanan Neakok. My
grandfather's birthplace is near the Alpine
development at a place called Nigliq at the mouth of
the Nechelik Channel. His name is Arthur Taqtu
Neakok. And my grandmother's birthplace is between
Wainwright and Barrow. Her name is Hester Tahklin
Neakok. My grandfather on my mother's side birthplace
is approximately 4 miles from the mouth of the
Anaktuvuk River. His name is Samuel Hugo originally,
but was changed to Samuel Kunaknana by the census
takers for whatever reasons unknown to me. And my
grandmother was born at Cross Island the current home
base for Whalers in Nuiqsut.
9:28:03 AM
MR. NEAKOK continued:
Currently the residents of Nuiqsut are expected to
attend 20 to 25 meetings a month nearly all at the
Local, State, and Federal level. Many of the
attendees are elders who have testified time and time
again for the past 30 years or so. I for instance had
a choice where I should be this past weekend. Should
I attend the SB 171 hearing or go out and hunt for
food for my family and to possibly trade for other
foods that are not available in the Nuiqsut area.
Which is clearly an IMPACT related to NPR-A
development at its present phase. I thank you for
your time at this very hour.
9:30:53 AM
CO-CHAIR THOMAS thanked Mr. Neakok for speaking as a Native by
introducing his family lineage.
MR. NEAKOK encouraged the committee to visit Nuiqsut.
9:32:04 AM
ROBERT SUYDAM, Wildlife Biologist, North Slope Borough
Department of Wildlife Management, North Slope Borough, informed
the committee that for the past 16 years Barrow has been his
home and office during which time he has completed a Master's
degree through the University of Alaska - Fairbanks. He noted
that this year he will complete a PhD through the University of
Washington. In the years he has worked and lived in Barrow, Mr.
Suydam related that he has spent a great deal of time in the
NPR-A hunting, fishing, studying wildlife, and observing oil and
gas activities.
MR. SUYDAM said that on the surface, SB 171 is about impacts and
particularly about mitigating impacts. However, there are many
data gaps in the NPR-A due to the fact that data gathering isn't
a priority for BLM. Furthermore, there aren't many biologists
who live and work in the NPR-A or the North Slope. For example,
the Alaska Department of Fish & Game (ADF&G) only has one
biologist that lives and works in the North Slope Borough. Mr.
Suydam emphasized that collecting base line information is
incredibly important, especially in the Arctic. The Arctic is
variable and thus there is the need for an extended data set in
order to understand how the system works. Furthermore, climate
change is an issue for the Arctic. He explained that
scientists/resource managers are attempting to sort out the
impacts related to oil and gas industry and climate change. The
goal is to ensure that observations of impact are attributable
to the correct culprit, which requires data. Because the
federal and state agencies aren't collecting such data, the
North Slope Borough has applied for impact funds in order to
fill the data gaps. He related that the borough is reviewing
the movements of caribou from the Teshekpuk Lake herd;
monitoring the distribution, abundance, and reproductive success
of various water fowl species in NPR-A; determining the
movements and habitat use of important fish species; and
collecting data on contaminants. Still, many data gaps exist.
Again, Mr. Suydam said that one can't adequately predict the
effects of climate change without data and there is no
understanding of the cumulative effects from the various
activities in the area.
9:38:01 AM
MR. SUYDAM acknowledged that the oil and gas activity benefits
those on the North Slope, but noted that there are also negative
impacts. He related his belief that the point of today's
hearing is to discuss the best way to mitigate impacts. He
recalled that the sponsor has said that SB 171 would make the
process of evaluating proposals more objective. However, Mr.
Suydam opined that if SB 171 passes, the decisions regarding
funding mitigation proposals will become less objective. He
further opined that with the passage of SB 171, the opportunity
to collect base line information may be compromised. Therefore,
Mr. Suydam encouraged the committee to strengthen a system that
already works and isn't broken.
9:39:04 AM
REPRESENTATIVE CISSNA asked if there is any review of toxicity
in subsistence foods and the potential sources of the toxins.
MR. SUYDAM answered that a fair amount of data has been
collected on the contaminants in subsistence use species. Many
of those contaminants have been heavy metals or organic
contaminants. However, there is very little data regarding
hydrocarbon contaminants and the components of oil that may
enter the food chain. One of the impact funds that the borough
has received attempts to [collect that data] with regard to the
contaminants in fish. The aforementioned [data] would offer
base line data that would allow understanding whether there has
been contamination from oil activity.
9:40:35 AM
REPRESENTATIVE NEUMAN recalled studies that say there is more
wildlife around Prudhoe Bay than prior to the development in the
area. He related his understanding that private industry
provides biologists who work in the area. He then asked whether
Mr. Suydam works with those biologists and whether Mr. Suydam
believes there is more wildlife in the area.
MR. SUYDAM agreed that the caribou herds, particularly the
Central Arctic herd, have increased. It seems that oil and gas
activity hasn't had a major impact on the Central Arctic caribou
herd. However, he highlighted that the impacts on animals may
not [directly relate] to the number of the animals. He
explained that it may be difficult for hunters to take caribou
because they are deflected. Furthermore, there is no knowledge
as to the cumulative impact of the oil and gas industry on
animals and thus he reiterated the need to have good base line
data in order to predict and mitigate impacts.
9:43:25 AM
DAVID SMITH, City Administrator, City of Nuiqsut, related that
city government is inundated with correspondence and
documentation regarding what is occurring within the area. In
fact, the city receives 60 or more documents a month that need
review and comment. Additionally, there are many meetings, most
of which occur in August and January. Currently, the city is
interfacing with ConocoPhillips Alaska, Inc. representatives on
a weekly basis. Mr. Smith informed the committee that there are
50-100 transient workers at a work camp from December to April.
City officials have been told that the work camp is in the
process of doubling and thus the city is expecting 150 outside
transient oil workers next winter as the NPR-A activities become
dominant. The city government has four full-time employees,
four to six part-time employees, five to six residents that are
employed at Alpine or Kuparuk, and ten to fifteen individuals
who work seasonally for about sixty days in order to build and
maintain the ice roads. Mr. Smith related that as Nuiqsut
residents find employment in Alpine or Kuparuk, which is only 8-
20 miles away from Nuiqsut, those residents move to Fairbanks.
Therefore, Mr. Smith suggested that Nuiqsut's population is
either stabilized or decreasing.
9:46:22 AM
MR. SMITH informed the committee that the City of Nuiqsut is in
the process of obtaining a gas line from Alpine. He related
that $10 million of the funds to do so came from NPR-A [impact
aid fund] and $10 million came from the North Slope Borough.
The fee for the gas will be $125 month.
9:46:59 AM
REPRESENTATIVE CISSNA asked if Mr. Smith has any documentation
regarding the data that must be kept and the meetings that must
be attended.
MR. SMITH answered that currently, the [City of Nuiqsut] is
accumulating historical data regarding the cumulative impacts,
which would include the number of meetings. He said that the
data is available and could be provided upon request as could
the report the [city] council.
9:48:35 AM
SENATOR GARY WILKEN, Alaska State Legislature, sponsor, thanked
those who testified today to make the legislation better.
However, he said that he took great exception with Mayor Itta's
comment that SB 171 is punitive because this legislation is
about following federal law and funding the needs of the entire
state. With regard to Mr. Clough's testimony regarding
alternative revenue sources, he noted that "4356" properties
have provided $1.2 billion to the North Slope Borough. The
aforementioned is the ad valorem tax that is placed on oil and
gas properties. He informed the committee that just this year
the aforementioned tax generated $189 million. Those
communities that have a tax on oil and gas properties can
receive an equal amount per the mill levy from the general fund
money created by the ad valorem tax. Last year the North Slope
Borough had a $189 million, the Fairbanks North Star Borough had
$4.3 million, Valdez had $13 million, and Kenai had $7 million.
What was left was the $46 million appropriated during the budget
process. Therefore, Senator Wilken characterized the $190
million average amount the North Slope Borough received as a
significant revenue source.
9:52:06 AM
SENATOR WILKEN stated his disagreement with the notion that the
program isn't broken. He related that for two years he has had
no sense of what the committee was thinking due to stonewalling
and destruction of records. With regard to the upcoming
Teshekpuk Lake lease sale, Senator Wilken highlighted that the
wants and needs of the North Slope Borough and the environmental
community haven't fallen on deaf ears as there will be 389,000
acres that will be leased, of which the leasing companies cannot
develop more than 1 percent of that area. With regard to the
"The march across the NPR-A," he noted that the seismic work
that began in the 1950s has been halted for years. Current
seismic work reaches out 30 miles beyond the NPR-A border and is
done by noninvasive acoustic machinery only during the winter,
and thus no footprint is left behind. He then related
information regarding how the Teshekpuk Lake caribou herd has
grown, even through seismic work.
9:54:52 AM
SENATOR WILKEN, in response to Representative Neuman, expressed
the hope that U.S. Senator Stevens would want the state to
follow federal law, which is what SB 171 does. In further
response, Senator Wilken confirmed that he has discussed SB 171
with U.S. Senator Stevens. He mentioned that he understands
U.S. Senator Stevens' concerns and U.S. Senator Stevens
understands his concerns.
9:56:18 AM
CO-CHAIR THOMAS related his understanding that under SB 171 the
money [from the oil and gas tax] goes to the permanent fund.
However, people don't want that money to be touched. He
inquired as to whether the sponsor would consider other ideas.
SENATOR WILKEN pointed out that the constitution specifies that
the money the state receives from mineral resources must be
deposited into the permanent fund. With regard to how to get
the money out of the permanent fund, he related his belief that
the permanent fund earnings can be accessed with a majority vote
of the legislature.
9:57:35 AM
REPRESENTATIVE CISSNA commented that it's remarkable that the
entire state enjoys so much wealth from the petroleum industry.
However, she expressed concern regarding whether this
legislation will set precedent in the state because different
groups in the state have realized some substantial revenue
sources due to resource development in the area. She expressed
the desire to share the wealth equally in the state.
SENATOR WILKEN, referring to whether SB 171 sets precedent,
replied no. He then reminded the committee that this is the
only program that is placed before the permanent fund and thus
necessitates accountability and public disclosure.
10:00:26 AM
CO-CHAIR OLSON closed public testimony.
10:01:22 AM
CO-CHAIR OLSON related that he and Co-Chair Thomas believe the
sponsor has raised some good points, but the past problems fall
at the department level. Therefore, he suggested that all
involved sit together to work toward a solution.
[SB 171 was held over.]
10:02:10 AM
ADJOURNMENT
There being no further business before the committee, the House
Community and Regional Affairs Standing Committee meeting was
adjourned at 10:02 a.m.
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