Legislature(2013 - 2014)HOUSE FINANCE 519
03/26/2013 09:00 AM House FINANCE
| Audio | Topic |
|---|---|
| Start | |
| SB27 | |
| HB129 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| + | SB 27 | TELECONFERENCED | |
| + | HB 129 | TELECONFERENCED | |
| + | TELECONFERENCED |
HOUSE FINANCE COMMITTEE
March 26, 2013
8:59 a.m.
8:59:53 AM
CALL TO ORDER
Co-Chair Stoltze called the House Finance Committee meeting
to order at 8:59 a.m.
MEMBERS PRESENT
Representative Alan Austerman, Co-Chair
Representative Bill Stoltze, Co-Chair
Representative Mark Neuman, Vice-Chair
Representative Mia Costello
Representative Bryce Edgmon
Representative Les Gara
Representative Lindsey Holmes
Representative Scott Kawasaki, Alternate
Representative Cathy Munoz
Representative Steve Thompson
Representative Tammie Wilson
MEMBERS ABSENT
Representative David Guttenberg
ALSO PRESENT
Daniel Sullivan, Commissioner, Department of Natural
Resources; Ed Fogels, Deputy Commissioner, Department of
Natural Resources; Larry Hartig, Commissioner, Department
of Environmental Conservation; Wendy Woolf, Petroleum Land
Manager, Division of Oil/Gas, Department of Natural
Resources; Joe Balash, Deputy Commissioner, Department of
Natural Resources.
SUMMARY
HB 129 OIL & GAS EXPLORATION/DEVELOPMENT AREAS
HB 129 was HEARD and HELD in committee for
further consideration.
SB 27 REGULATION OF DREDGE AND FILL ACTIVITIES
SB 27 was HEARD and HELD in committee for further
consideration.
SENATE BILL NO. 27
"An Act establishing authority for the state to
evaluate and seek primacy for administering the
regulatory program for dredge and fill activities
allowed to individual states under federal law and
relating to the authority; and providing for an
effective date."
9:00:09 AM
DANIEL SULLIVAN, COMMISSIONER, DEPARTMENT OF NATURAL
RESOURCES, explained that SB 27 and HB 129 were presented
by the Department of Transportation and Public Facilities
(DOT/PF). He noted the strong bipartisan support for the
bill. He provided a PowerPoint presentation, "Statewide
Permitting Reform" (copy on file).
Commissioner Sullivan discussed slide 2: "Importance of
Permitting Reform for Alaska's Competitiveness."
Permitting reform has bipartisan, national, and local
recognition and support
-Permitting reform is a bipartisan effort as
policymakers realize the economic benefits of
allowing large-scale development projects to
proceed in a responsible, timely manner
-States as politically diverse as California,
Massachusetts, Indiana, and Kansas are fully
engaged in modernizing their permitting processes
-The Federal government also recognizes the
issues and has undertaken initiatives to reduce
costs, simplify the system, and eliminate
redundancy and inconsistency
-Last year (February 2012), The Economist ran a
cover story called "Overregulated America" in
which it concluded that ''America needs a smarter
approach to regulation" that will "mitigate a
real danger: that regulation may crush the life
out of America's economy"
-In Newsweek June 2011), President Bill Clinton
lamented that it can take three years or more to
permit major economic development projects. One
of his top recommendations to put Americans back
to work \-vas to speed up the regulatory approval
process and grant state waivers on environmental
rules to hasten start times on construction
projects
Commissioner Sullivan looked at slide 3: "Importance of
Permitting Reform for Alaska's Competitiveness."
Permitting reform is a national issue affecting
U.S. competitiveness
-Potential investors sometimes express reluctance
to pursue projects in the U.S. and Alaska because
of the ever-present risk of permitting delays and
litigation
-In 2012, the investment firm Behre Dolbear
Group, 'which undertakes an annual global survey
of mineral sector investment, ranked the United
States last (tied with Papua New Guinea) out of
25 countries in the category of "permitting
delays"
"Permitting delays are the most significant
risk to mining projects in the United
States"
States are negatively impacted by federal
rules that they are bound to enforce
resulting in a 7-to 10-year waiting period
before mine development can begin
Australia is one of the countries with the
fewest permitting delays
-Contrast Alcan Highway construction
9:04:21 AM
Commissioner Sullivan highlighted slide 4: "Importance of
Permitting Reform for Alaska's Competitiveness."
Jobs and the Environment are Undermined by Permitting
Delays and Overregulation
-While an overly burdensome regulatory system can
discourage investments and job creation, it can
also undermine, not enhance, environmental
protection
-When companies forgo investing in places like
Alaska and the U.S. places with very high
environmental standards-because of regulatory
delays, it can result.in passing energy and
mineral investment to nations with substandard
environmental regulations and little capacity or
desire to protect the environment
Last year the Associated Press estimated
that 5 to 20 million tons of oil leaked a
year in Russia. At even the lower end, that
would be the equivalent of a Deepwater
Horizon blowout about every two months
Russia experienced approximately 18,000 oil
pipeline ruptures in 2010 the figure in the
U.S. for the same year was 341
-The global environment would be much better off
if hydrocarbons and other natural resources were
produced in countries with the highest
environmental standards rather than some of the
lowest
Commissioner Sullivan highlighted slide 8: "Statewide
Permitting Reform." He stated that the assistance of the
committee was imperative to reform and he stated that the
budget was reduced by one third.
9:07:49 AM
Representative Gara asked for a synopsis of permitting
"streamline bills." Commissioner Butcher replied that HB
360 passed in the previous legislature.
ED FOGELS, DEPUTY COMMISSIONER, DEPARTMENT OF NATURAL
RESOURCES, stated that interstate mining compact commission
bill passed in the previous session.
Representative Gara noted problems with the Army Corps of
Engineers in the past. He recalled a slide from a previous
presentation that stated that the decisions from the Army
Corps of Engineers had been historically timely. He
wondered if there would be a similar slide in the
presentation. Commissioner Sullivan noted that Pt. Thompson
and CD 5 were examples of the need for primacy. He added
that the department wished to avoid the problem of federal
EPA and Fish and Wildlife permitting delays.
Representative Gara stressed that there were possible
deficits that would reach beyond a billion dollars. He felt
that the primacy bill would ask the state to spend $2
million per year. He asked if there would be a slide
related to the timeliness of the decisions of the Army
Corps of Engineers. Commissioner Sullivan replied that
fully evaluating the cost to benefit aspect of primacy. He
stated that the Corps budget was recently reduced, so he
could not speak to the timeliness of their decisions.
Mr. Fogels added that the time limits were not the whole
issue. Stipulation and mitigation requirements played a
large role in the permitting process.
9:14:50 AM
LARRY HARTIG, COMMISSIONER, DEPARTMENT OF ENVIRONMENTAL
CONSERVATION, discussed the primacy aspect of the fiscal
note. He noted the bridge and build program in Section 404
permit from the Corp of Engineers. He noted that with
primacy, the state could be issuing the permits more
quickly. The 404 program included wetlands and waters of
the United States, with 65 percent of the nation's wetlands
are located in Alaska. He stated that a wetlands permit was
required for every project. He discussed the Corps of
Engineers and the delays of the 404 program, but stressed
the importance of the program. He stated that the wetlands
provided the improvement to water quality that clean the
waters, and noted that many states were looking at primacy.
He stated that the Waste Water Discharging Permitting
Process was regulated by Department of Environmental
Conservation (DEC) for the last five years. He mentioned
that Oregon and Alaska were poised to pursue primacy.
Mr. Hartig noted the large issue on the national level
regarding primacy. He stated that the bill would allow the
resources to be accessed sooner. He could not promise that
primacy was good for the state, but bill authorized the
state to pursue primacy. If the bill passed, the department
would continue to review the option. He stated that the
application for primacy with the EPA would require another
visit to the legislature for the money. He anticipated that
the process could last a few years.
9:21:47 AM
Mr. Hartig mentioned that he asked the Corps of Engineers
with employees if the state would be well positioned to
achieve primacy. He pointed out that the three year study
period.
Mr. Hartig stated that the permitting was a three year
process, so 5-8 years for permuting effort.
Representative Kawasaki asked about the jurisdiction for
Pebble Mine.
Mr. Hartig offered examples regarding the navigable waters.
He stated that a negotiation to the memorandum of
agreement. He remarked that the memorandum outlined the
jurisdiction and how they would be determined. He noted
that the pros and cons and the benefits were weighed in the
jurisdiction.
Commissioner Sullivan noted that the amount of jurisdiction
that the federal government was authorized through the
state might not be worth pursuing.
9:27:37 AM
Representative Wilson asked about the placer miners. Mr.
Hartig anticipated that the interior placer miner permits.
Representative Wilson asked if the bill would help the
miners through the 7 year process. Commissioner Hartig
noted that the 404 permitting and its geographical
boundaries had programmatic general permits. He noted that
the activity had low impact individually or collectively.
He stated that the Clean Water Act and the authority by DEC
permitting for placer miner would not be obstructed by
geographical location.
9:30:02 AM
Commissioner Hartig stated that that the Pebble Mine
legislation was not the impetus for the legislation. He
pointed out the ability to veto permits, and stressed that
EPA still holds the trump card.
Representative Munoz asked if the EPA would have veto
authority over the permits that were issued under a state
program. Commissioner Hartig stated that two states had
primacy, and one dozen other states were seeking it. He
remarked that the EPA would have veto power, but only in
very rare occasions.
Mr. Fogels pointed out that there were a number of programs
that the federal government oversaw in the state.
Commissioner Sullivan noted that the state would be
required to meet the federal standards by law.
9:35:40 AM
Representative Costello asked when the Clean Water Act was
passed. Commissioner Fogels replied 1972.
Representative Costello thought that the states pursuing
primacy and the timing interesting. Commissioner Hartig
replied that Alaska reviewed the decision to review the
permitting process. He stated that the process lasted six
years, as was the primacy of the program. He did not know
why there might be more effort now, but it might be the
general recognition that development was hampered by the
permitting process. He pointed out that Alaska had so many
wetlands that it was worth looking at. He added that most
states expressed concern.
Commissioner Sullivan added that the agencies came in at
the last minute killed the project.
Representative Costello stated that the bill would allow
analysis of the cost benefits of the decision. She asked if
state primacy would allow for more local knowledge in the
decision making process. Commissioner Butcher indicated
that he would provide that information.
9:42:50 AM
Vice-Chair Neuman asked about resource development projects
held up by 404 permit hold up. Mr. Fogels stated that Pt.
Thompson was the largest example of a delay, because it
stalled 1000 Alaskan jobs. He stressed that primacy would
ease that delay.
Commissioner Hartig mentioned smaller projects, but noted
that the authorization difficulties. He stressed that there
were delay issues with the Corps of Engineers and the
permitting process.
Mr. Fogels mentioned that the stipulations on the permits
make the legislation extremely important.
Vice-Chair Neuman discussed federal oversight for small
miners. He understood that the federal government and the
permitting process, but felt that smaller mining operations
with too much federal intrusion. Mr. Fogels stated that a
wetlands permit was required for nearly every project in
the state. He believed that state control of the permitting
process would benefit the development of every chapter. He
added that different states might have different views
about the state's activities, but noted that the state had
64 percent of the country's wetlands. Most wetlands in
Alaska were undisturbed.
9:49:08 AM
Vice-Chair Neuman asked about the oversight of the federal
government later on. He hoped for the future chance for the
federal government to take a step back. Commissioner Hartig
replied that the 404 application would remain the same,
including all regulations. The mitigation resources were
available and Alaska might make different decisions.
Representative Gara requested that the decision be made
with facts. He wished for information about the Army Corps
of Engineers, and the 84 percent of the applications were
decided in 60 days. He asked for the approval of $10
million in the next 5 years. He requested an analysis of
the Army Corp. Commissioner Hartig pointed out that
applications for 402 general permits were processed more
quickly, but he would need to see the slide that
Representative Gara keeps referring to. He promised to
return with more facts. His experience with permitting was
that the 404 was a large project when mitigations were
considered, but stated that the process might be appealed.
The average cost of a permit application was $270 thousand.
9:55:21 AM
Representative Gara discussed CD 5. He wondered if the
state takes over primacy, would the Clean Water Act Rules
be observed. He discussed mitigation options and the
statutory authorities as applied. He stated that decisions
would be different and the state would and could take
control. Mr. Fogels responded that the bill would be
implementing the state's own regulations challenges and
appeals in Alaska.
SB 27 was HEARD and HELD in committee for further
consideration.
HOUSE BILL NO. 129
"An Act relating to approval for oil and gas or gas
only exploration and development in a geographical
area; and providing for an effective date."
Commissioner Sullivan provided a PowerPoint presentation:
"HB 129: Oil and Gas Exploration and Development Approval
by Geographical Area."
Commissioner Sullivan continued to discuss a development
plan. He noted that it was important to remember that the
public interest phase would occur after // findings related
to oil and gas leasing. He noted that there was an
extensive vetting phase. There was much opportunity for
meaningful public input. He stressed that certainty was
important to the public process. He pointed to DNR statutes
and relayed that there was a good argument that the
department currently had the authority; however, it needed
to be clarified. The bill would avoid an internal debate on
the issue; the department did not want to invite
litigation.
10:03:30 AM
Co-Chair Austerman noted that the bill would be heard and
held at approximately 10:25 a.m.
WENDY WOOLF, PETROLEUM LAND MANAGER, DIVISION OF OIL/GAS,
DEPARTMENT OF NATURAL RESOURCES, looked to slide 2 titled
"Area wide Oil and Gas Lease Sales." She discussed lease
sale areas. She moved to slide 3 and explained that the
bill would clarify a statutory requirement related to
leasing phases. Subsequent to the initial leasing phase,
there would be a definition related to how oil and gas
development would occur.
Ms. Woolf explained slide 4: "Oil and Gas Lease Sale
Process." She discussed what HB 129 did, how it benefitted
the public, and how it benefitted the industry.
-It clarifies the Department of Natural Resources can
authorize oil and gas exploration and development
activities within a geographical area.
-It preserves public notice and review at the
beginning of an exploration or development phase.
-It ensures certainty when an approval has been
granted for exploration or development activities.
-It allows the public to comprehensively evaluate oil
and gas activities within a geographical area.
-It provides an opportunity for input at the beginning
of an exploration or development phase.
-It safeguards environmental concerns through special
stipulations and conditions.
-It allows a project to be planned within approved
parameters and conditions.
-It provides certainty that plans of operations
meeting those defined criteria can proceed.
-It ensures predictable project approvals for
subsequent exploration or development activity.
Ms. Woolf discussed slide 5: "Oil and Gas Lease Sale
Process."
Proposed Area wide Oil and Gas Lease Sale
-Public Notice and Opportunity to Comment
-Evaluate Statutory Criteria
-Develop Mitigation Measures
Final Finding of the Director to Lease Oil and Gas
Exploration Phase Public Notice and Opportunity to
Comment
Development Phase Public Notice and Opportunity to
Comment
Transportation (Pipelines) Public Notice and
Opportunity to Comment
10:09:32 AM
Ms. Woolf discussed slide 6: "Life of an Oil and Gas
Lease."
Year 0
-Final Finding of the Director - Area wide Oil
and Gas Lease Sale
-Lease Issued (10-Year Term)
Year 3
-Lease Plan of Operations - Seismic Program
(multiple leases)
-Public Notice and Comment Period
Year 5
-Lease Plan of Operations - Exploration Well
-Public Notice and Comment Period
Year 6
-Lease Plan of Operations - Exploration Well
-Public Notice and Comment Period
Year 7
-Lease Plan of Development - Conceptual -
Development Plan
Year 8
-Lease Plan of Operations - Initial Development -
Plans
-Public Notice and Comment Period
-Lease Plan of Operations - Modified Development
Plans
-Public Notice and Comment Period
-Pipeline Application (AS 38.05.850 or AS 38.35)
-Public Notice and Comment Period
Year 10
-Production
-Lease Plan of Operations - Additional
Development Plans
=Public Notice and Comment Period
Ms. Woolf discussed slide 7: Example of Geographical Areas
for Exploration Activities." The activities in the core of
the North Slope would define the exploration activities.
She separated out the shale from the conventional area.
Ms. Woolf discussed slide8: "Example Geographical Areas for
Development Activities." She spoke about the development
activities formed by the geography. She remarked that the
areas reflected looked at the core of the legislative
activities. She stated that the public notice and
opportunity for comment were important aspects of the
legislation.
10:15:57 AM
Ms. Woolf detailed slide 9:"Life of an Oil and Gas Lease
under HB 129."
Year 0
-Final Finding of the Director - Area wide Oil
and Gas Lease Angela Salerno, Executive Director,
National Association of Social Workers Alaska
Chapter Lease Issued (10 - Year Term)
Lessee develops exploration plans
Year 3
-Lease Plan of Operations - Seismic Program
(multiple leases)
Year 5
-Lease Plan of Operations - Exploration Well
Year 6
-Lease Plan of Operations - Exploration Well
Discovery - Lessee formulates development plan
Year 7
-Lease Plan of Development - Conceptual
Development Plan
Year 8
-Lease Plan of Operations - Initial Development
Plans
-Public Notice and Comment Period
-Lease Plan of Operations - Modified Development
Plans
-Public Notice and Comment Period
-Pipeline Application (AS 38.05.850 or AS 38.35)
-Public Notice and Comment Period
Year 10
-Production
-Lease Plan of Operations - Additional
Development Plans
Ms. Woolf discussed slide 10: "Results."
HB 129 provides for a new comprehensive review before
exploration or development.
HB 129 preserves public participation in the process.
HB 129 allows stipulations to be approved before a
company develops site specific plans for exploration
or development activities.
10:20:52 AM
JOE BALASH, DEPUTY COMMISSIONER, DEPARTMENT OF NATURAL
RESOURCES, discussed the new fiscal note.
Co-Chair Austerman wondered if the financing would be a
deposit. Mr. Balash stated that the bill would make
permitting much more streamlined. He remarked that there
would be more activity from additional lessees, so as the
workload becomes greater, the department needed to be much
more efficient.
Commissioner Sullivan referred to the shale oil development
which turned around North Dakota and Texas.
Co-Chair Austerman requested a better definition of a
geographical area to encompass shale oil development.
Vice-Chair Neuman remarked upstream cost of expediting the
permitting process. He felt that a fiscal note of $134
thousand would lead to a net gain for the state.
HB 129 was HEARD and HELD in committee for further
consideration.
ADJOURNMENT
10:25:10 AM
The meeting was adjourned at 10:26 a.m.