Legislature(2013 - 2014)HOUSE FINANCE 519

04/01/2013 09:00 AM FINANCE

Download Mp3. <- Right click and save file as

Audio Topic
09:06:00 AM Start
09:08:14 AM HB129
10:27:06 AM Adjourn
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
Heard & Held
-- Public Testimony --
Heard & Held
-- Public Testimony --
+ Bills Previously Heard/Scheduled TELECONFERENCED
Bill Postponed To 4/1/13 @ 1:30 Meeting
                  HOUSE FINANCE COMMITTEE                                                                                       
                       April 1, 2013                                                                                            
                         9:06 a.m.                                                                                              
9:06:00 AM                                                                                                                    
CALL TO ORDER                                                                                                                 
Co-Chair Stoltze called the  House Finance Committee meeting                                                                    
to order at 9:06 a.m.                                                                                                           
MEMBERS PRESENT                                                                                                               
Representative Alan Austerman, Co-Chair                                                                                         
Representative Bill Stoltze, Co-Chair                                                                                           
Representative Mark Neuman, Vice-Chair                                                                                          
Representative Mia Costello                                                                                                     
Representative Les Gara                                                                                                         
Representative Lindsey Holmes                                                                                                   
Representative Scott Kawasaki, Alternate                                                                                        
Representative Cathy Munoz                                                                                                      
Representative Steve Thompson                                                                                                   
Representative Tammie Wilson                                                                                                    
MEMBERS ABSENT                                                                                                                
Representative Bryce Edgmon                                                                                                     
Representative David Guttenberg                                                                                                 
ALSO PRESENT                                                                                                                  
Lisa  Weissler,  Self,  Juneau;  James  Sullivan,  Southeast                                                                    
Alaska  Conservation Council,  Juneau; Ruth  Hamilton Heese,                                                                    
Senior  Assistant Attorney  General, Environmental  Section,                                                                    
Department   of  Law;   Ed   Fogels,  Deputy   Commissioner,                                                                    
Department   of  Natural   Resources;   Lynn  Kent,   Deputy                                                                    
Commissioner, Department of Environmental Conservation.                                                                         
PRESENT VIA TELECONFERENCE                                                                                                    
Nikos Pastos,  Center for Water Advocacy,  Anchorage; Martha                                                                    
Itta, Native  Village of  Nuiqsut; Samuel  Kunaknana, Native                                                                    
Village  of Nuiqsut;  Rosemary  Ahtuangaruak, Self,  Barrow;                                                                    
Paul  Metz, Self,  Fairbanks;  Kristin Carpenter,  Executive                                                                    
Director, Copper River Watershed Project.                                                                                       
HB 4      IN-STATE GASLINE DEVELOPMENT CORP                                                                                     
          HB 4 was SCHEDULED but not HEARD.                                                                                     
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                                                                     
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."                                                                                                           
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."                                                                                
9:08:14 AM                                                                                                                    
Co-Chair Stoltze OPENED  public testimony. [Public testimony                                                                    
was opened concurrently for both SB 27 and HB 129.]                                                                             
LISA  WEISSLER,  SELF,  JUNEAU, testified  on  HB  129.  She                                                                    
reported that she was an  attorney with particular expertise                                                                    
in  natural   resource  law.  She  believed   the  bill  was                                                                    
problematic.   She  referenced   an  Alaska   Supreme  Court                                                                    
decision from  the prior  week related to  oil and  gas that                                                                    
she  thought would  affect the  legislation. She  elaborated                                                                    
that  the  decision  affected   the  Department  of  Natural                                                                    
Resources (DNR)  oil and gas project  reviews. She explained                                                                    
that  currently a  comprehensive best  interest finding  was                                                                    
required at the  lease disposal phase of  a project. Statute                                                                    
mandated  that the  lease disposal  finding  had to  include                                                                    
"consideration  of  the  reasonably  foreseeable  cumulative                                                                    
effects  of  exploration,  development, and  production  and                                                                    
transportation of  oil and  gas" for  the later  phases. The                                                                    
findings must  include the effects  on subsistence  fish and                                                                    
wildlife  populations and  historic and  cultural resources.                                                                    
She continued  that according to prior  Alaska Supreme Court                                                                    
decisions,  "a cumulative  impact analysis  did not  require                                                                    
speculation about  unknown and unpredictable  future events"                                                                    
but  was a  whole project  analysis done  in the  context of                                                                    
existing development.  The best  interest finding  phase was                                                                    
limited to the information known  at the time. Recently, the                                                                    
court ruled  that the  state was  "constitutionally required                                                                    
to consider  cumulative impacts throughout  all phases  of a                                                                    
project."  She   quoted  from  court  documents:   "DNR  was                                                                    
required  to continue  to analyze  and consider  all factors                                                                    
and  material relevant  to what  is in  the public  interest                                                                    
after the lease sale  phase including the cumulative impacts                                                                    
of  the project  and to  provide the  public the  timely and                                                                    
meaningful notice  of its  cumulative impacts  assessment in                                                                    
order to ensure the  constitutional principle of maximum use                                                                    
consistent with the public interest is given effect."                                                                           
She  related  how the  court  ruling  would affect  HB  129.                                                                    
Provisions  in   HB  129  authorized  blanket   approval  of                                                                    
exploration and  development in geographic areas  before the                                                                    
identification of  specific projects. The approvals  were in                                                                    
the same situation as the  best interest findings; they were                                                                    
going to proceed without knowing  the potential impacts of a                                                                    
project. The  department intended to halt  public notice for                                                                    
the comprehensive plans of operation  for projects. Yet, the                                                                    
court required timely notice of  the cumulative impacts of a                                                                    
project  for  the  public.  She  stated  that  the  decision                                                                    
"created a  hole in the  law." Currently plans  of operation                                                                    
were  comprehensive but  do  not  include cumulative  impact                                                                    
assessment.  She indicated  that DNR  needed to  implement a                                                                    
procedure for  cumulative impact analysis and  public notice                                                                    
"when exploration  and development projects  were proposed."                                                                    
She  cited Article  8, Section  2 of  the Constitution  that                                                                    
stated  the   legislature  was  tasked  with   the  duty  to                                                                    
determine   the    procedures   necessary   to    meet   the                                                                    
constitutional requirements  to "develop  Alaska's resources                                                                    
for  the maximum  benefit of  the  people." She  recommended                                                                    
that the  committee table the  bill and  develop legislation                                                                    
that met the courts mandates.                                                                                                   
Representative  Gara  asked  where   the  provision  in  the                                                                    
legislation  was  that  deprived  public  comment  over  the                                                                    
cumulative impact  statement. Ms. Weissler replied  that the                                                                    
plan to  eliminate public  notice was  not contained  in the                                                                    
bill. The legislation did not  address the cumulative impact                                                                    
phase of  development. She heard  of DNR's plan  through DNR                                                                    
testimony. She  stated that  the department's  intention was                                                                    
to  do a  general  analysis of  exploration and  development                                                                    
before detailing specific activities.  Plans of operation on                                                                    
specific projects  would subsequently be  issued. Currently,                                                                    
DNR did  provide public  notice for  plans of  operation. It                                                                    
was  DNR's   intent  to   discontinue  public   notice.  She                                                                    
concluded that currently  there was not a  method to analyze                                                                    
cumulative impacts on projects as a whole.                                                                                      
Representative  Gara wondered  where  the  bill stated  that                                                                    
public notice  was limited. Ms.  Weissler restated  that the                                                                    
exclusion was  not contained  in the  bill. She  stated that                                                                    
currently  public notice  was not  statutorily required  but                                                                    
that  DNR  provided  public  notice.  In  essence,  DNR  was                                                                    
changing  its  practice  which did  not  require  a  statute                                                                    
change.  She summarized  that DNR  wanted authorization  for                                                                    
broad based  approvals in order  to eliminate  site specific                                                                    
project reviews.  She opined that  the bill  was potentially                                                                    
benign if  DNR completed general approvals  and retained the                                                                    
practice  of public  notice afterwards.  She reiterated  her                                                                    
suggestion  to  table  the  bill and  deal  with  the  court                                                                    
decision mandate.                                                                                                               
9:18:28 AM                                                                                                                    
JAMES  SULLIVAN,   SOUTHEAST  ALASKA   CONSERVATION  COUNCIL                                                                    
(SEACC),  JUNEAU,   spoke  in   opposition  to  SB   27.  He                                                                    
communicated   that  the   council  found   the  bill   very                                                                    
problematic. He  urged the committee  to examine  the issues                                                                    
and better determine  what 404 Primacy would  get the state;                                                                    
he believed  there was  not a  clear picture.  He identified                                                                    
that  navigable waters,  coastline in  Alaska, and  adjacent                                                                    
wetlands to the coastline were  not included in 404 Primacy.                                                                    
The state  was comprised of  33 thousand miles  of coastline                                                                    
and  adjacent waters.  He questioned  why  Alaska needed  to                                                                    
assume 404 Primacy.  He felt that the few  reasons stated by                                                                    
the  administration were  not compelling.  The CD5  delay at                                                                    
the  Colville River  would always  remain under  the federal                                                                    
Rivers  and  Harbors  Act. Primacy  would  not  affect  such                                                                    
delays. He  noted that the  Point Thompson  permitting delay                                                                    
was another stated reason for  primacy. He argued that there                                                                    
were  no   delays  over  404  permitting.   He  stated  that                                                                    
litigation  which began  under the  Murkowski Administration                                                                    
in  2006 caused  the  delay. The  issues  were resolved  and                                                                    
permitting  immediately restarted  in  March  2012. He  felt                                                                    
that Point  Thompson permitting exemplified  how efficiently                                                                    
the Army  Corps of  Engineers handled permitting.  The corps                                                                    
signed off on  the permitting in October 2012  and the state                                                                    
completed additional  permitting the following  month. Exxon                                                                    
Mobil began  its Pt.  Thompson project  on time  in January,                                                                    
2013.  He was  concerned that  the state  would embark  on a                                                                    
project with unknown costs.                                                                                                     
Mr. Sullivan  related that the  Army Corps of  Engineers had                                                                    
54  employees  in  the  Alaska district  with  a  budget  of                                                                    
approximately  $7.9 million.  The  federal government  would                                                                    
not  authorize  primacy unless  the  state  proved it  could                                                                    
perform as well as the corps.  In light of the corps budget,                                                                    
primacy  was  a  huge  bureaucratic   "ramp  up"  and  would                                                                    
significantly  increase   state  spending  by   millions  of                                                                    
dollars. He  relayed that  404 primacy  would take  eight to                                                                    
ten years  to implement  but necessitated  hiring additional                                                                    
employees  immediately. He  opined  that the  administration                                                                    
failed  to define  any problems  that occurred  that primacy                                                                    
could  resolve  which made  primacy  an  imperative for  the                                                                    
state.  He  concluded   that  the  Environmental  Protection                                                                    
Agency  (EPA)  retained  ultimate   veto  authority  if  404                                                                    
Primacy was authorized.                                                                                                         
Representative  Munoz stated  that the  bill provided  for a                                                                    
study period  of two  years. She discerned  that one  of the                                                                    
results of  assuming primacy was  that the state  would gain                                                                    
the ability  to litigate  appeals of  permits. She  asked if                                                                    
SEACC  had  an  opinion  or   was  aware  of  state  primacy                                                                    
litigation  or  litigation  with  the  federal  courts.  Mr.                                                                    
Sullivan replied  that the council  was aware of  the issue.                                                                    
He pointed  out that  throughout the  process if  any issues                                                                    
arose, the  Fish and Wildlife  service would go  through the                                                                    
EPA. The federal agencies can  bypass the state. He believed                                                                    
that the bill represented a huge cost for little reward.                                                                        
9:29:03 AM                                                                                                                    
JAMES   SULLIVAN,  STAFF,   SOUTHEAST  ALASKA   CONSERVATION                                                                    
COUNCIL, testified in  opposition to HB 129.  He stated that                                                                    
the bill created confusion for  the public, who would not be                                                                    
able to predict  what effects a project might  have in their                                                                    
region of  a geographic area.  The council believed  that it                                                                    
was  particularly troublesome  in  multi-use  areas such  as                                                                    
Cook Inlet.  The legislation placed  an undue burden  on the                                                                    
public. He  believed that the  bill was antithetical  to the                                                                    
permitting  reform effort;  HB 129  created problems  rather                                                                    
than efficiencies.                                                                                                              
NIKOS  PASTOS, CENTER  FOR  WATER  ADVOCACY, ANCHORAGE  (via                                                                    
teleconference),  spoke in  opposition to  SB 27.  He stated                                                                    
that  the  bill was  nebulous  and  he was  concerned  about                                                                    
potential  impacts  on  migratory  birds  and  the  wetlands                                                                    
ecosystem.  He   thought  that  SB   27  was   an  expensive                                                                    
undertaking  and the  costs were  not properly  measured. He                                                                    
furthered that  federal agencies with oversight  of wetlands                                                                    
permitting were  obligated to consult with  tribes. He noted                                                                    
concern that  the bill  was curtailing  public participation                                                                    
and notification.                                                                                                               
Mr. Pastos  spoke in opposition  to HB 129. He  relayed that                                                                    
proposing   a   ten   year   best   interest   finding   was                                                                    
"unworkable."  Many changes  occurred in  a ten  year period                                                                    
that   effected  economic   development  as   well  as   the                                                                    
environment.  The center  believed HB  129 curtailed  public                                                                    
review and  skirted public  participation or  involvement in                                                                    
oil  and gas  exploration issues  and development  activity.                                                                    
The  bill was  vague and  could affect  the subsistence  and                                                                    
commercial  economies of  rural  communities.  He urged  the                                                                    
committee to oppose the legislation.                                                                                            
MARTHA  ITTA,   TRIBAL  ADMINISTRATOR,  NATIVE   VILLAGE  OF                                                                    
NUIQSUT  (via teleconference),  spoke in  opposition SB  27.                                                                    
She  voiced  that the  bill  would  change the  process  for                                                                    
development.  The  legislation   would  have  major  impacts                                                                    
across the  state and especially on  native communities. She                                                                    
pointed out that the community  was located on the Coleville                                                                    
Delta  and was  surrounded by  wetlands as  well as  oil and                                                                    
gas.  Any  building on wetlands required  permits. She spoke                                                                    
to the  importance of  permitting in the  area when  the oil                                                                    
industry   wanted   to  build   infrastructure.   Permitting                                                                    
provided  protection  for  native lands.  Public  input  was                                                                    
equally   important.   She   stated  that   projects   would                                                                    
significantly impact the  village's surroundings. Currently,                                                                    
federal  law required  that  federal  agencies consult  with                                                                    
tribal  government during  the wetlands  permitting process.                                                                    
No  similar  state law  existed  in  Alaska. She  urged  the                                                                    
committee to vote against SB 27.                                                                                                
Ms. Itta  addressed HB 129.  She spoke in opposition  to the                                                                    
legislation. She  stated that the bill  would greatly impact                                                                    
her village. The  legislation curtailed public participation                                                                    
and  local  input  on natural  resource  decisions.  Natural                                                                    
resource   decisions  should   benefit  all   Alaskans.  Her                                                                    
community was  greatly impacted by oil  and gas development.                                                                    
She  offered that  a "blowout"  had occurred  in Nuiqsut  in                                                                    
February 2012  in a well  operated by Repsol.  The community                                                                    
did  not receive  any help.  The  state did  not assist  the                                                                    
community. The  blowout released benzene at  harmful levels.                                                                    
She reported  that high  levels of  benzene were  related to                                                                    
leukemia.  Two children  in the  village were  stricken with                                                                    
leukemia since  the accident. She  stressed that a  ten year                                                                    
blanket  approval over  natural resources  was inappropriate                                                                    
and unsafe. She  stated that "one best  interest finding for                                                                    
the North  Slope's 5 million  acres cannot cover  the varied                                                                    
landscape  of the  region."   She continued  that the  Artic                                                                    
environment  was  rapidly  changing.  A  ten  year  approval                                                                    
period  was too  long and  unpredictable. She  mentioned the                                                                    
possibility  of  unconventional  drilling  methods  such  as                                                                    
shale oil fracturing. Public input  could not predict future                                                                    
technologies  ten  years  in advance.  Development  deserved                                                                    
"robust"  public review.  She furthered  that currently  DNR                                                                    
allowed for  public notice on  leasing and later  phases for                                                                    
exploration  and   development.  The  bill   removed  public                                                                    
involvement  in the  later phases  and did  not work  in the                                                                    
best interest  of Alaskans. She  advised that  the committee                                                                    
vote against the bill.                                                                                                          
9:42:49 AM                                                                                                                    
SAMUEL   KUNAKNANA,   NATIVE   VILLAGE   OF   NUIQSUT   (via                                                                    
teleconference),  spoke in  opposition to  SB 27.  He stated                                                                    
that the bill would take away  the village's right to have a                                                                    
voice on oil development in the area.                                                                                           
Co-Chair  Stoltze  asked  whether  he was  opposed  to  both                                                                    
bills. Mr. Kunaknana replied in the affirmative.                                                                                
ROSEMARY  AHTUANGARUAK, SELF,  BARROW (via  teleconference),                                                                    
was opposed  to HB 129.  She stated that the  bill abrogated                                                                    
the  public's  ability  to participate  in  the  process  of                                                                    
natural    resource   development.    She   believed    that                                                                    
participation  was crucial  to voice  concerns over  natural                                                                    
resource issues that could  adversely affect the traditional                                                                    
way of life. [The phone connection was lost.]                                                                                   
PAUL METZ,  SELF, FAIRBANKS  (via teleconference),  spoke in                                                                    
support  of  SB  27  with   one  important  reservation.  He                                                                    
discussed the  legal definition of wetlands.  He quoted from                                                                    
that Army Corps of Engineers  1987 permafrost manual "if the                                                                    
active  layer of  permafrost was  less  than 50  centimeters                                                                    
than  by   definition  the  soils  are   not  wetlands."  He                                                                    
contended  that large  areas of  Alaska  were underlined  by                                                                    
permafrost consisting of active  layers under 50 centimeters                                                                    
and should not  be classified as wetlands.  He reported that                                                                    
the  Army  Corps  of Engineers  classified  areas  of  shelf                                                                    
permafrost  as wetlands.  He wondered  whether the  state of                                                                    
Alaska  was attempting  to assume  404 Primacy  as a  way to                                                                    
waive its  right to challenge  the corps  classifications of                                                                    
wetlands.  He  thought  that the  state  should  not  assume                                                                    
primacy if  it compromised the state's  ability to challenge                                                                    
the corps'  wetland classifications in court.  Otherwise, he                                                                    
was in favor of the legislation.                                                                                                
KRISTIN   CARPENTER,   EXECUTIVE  DIRECTOR,   COPPER   RIVER                                                                    
WATERSHED PROJECT (via  teleconference), urged the committee                                                                    
to vote no on SB 27. She  spoke in opposition to HB 129. The                                                                    
group was  concerned about  the impact  on wetlands  and the                                                                    
state's   finances.   She    noted   her   experience   with                                                                    
construction  projects. The  group encouraged  consideration                                                                    
of fish habitat and  promoted sustainable development in the                                                                    
Copper  River drainage.  She commented  that the  region had                                                                    
multiple  fishing   economies.  She  agreed   with  previous                                                                    
testimony that  404 Primacy was a  "huge fiscal undertaking"                                                                    
and  added   to  the  state's  financial   obligations.  She                                                                    
furthered that the bill could  have a "huge impact" on rural                                                                    
Alaska. She  questioned DEC's ability  to carry out  the 404                                                                    
permitting  process.  She  related that  wetlands  on  small                                                                    
streams  were critical  fish habitat  for sustaining  salmon                                                                    
populations.  Salmon  fisheries  were  the  state's  largest                                                                    
renewable resource.  The legislation's impact  on sustaining                                                                    
salmon fisheries would  be felt in future  years. She wanted                                                                    
the  state  to  protect   family  and  small  rural  fishing                                                                    
businesses.  She   recommended  bringing   back  coordinated                                                                    
permitting that existed under  the former coastal management                                                                    
program if  the governor believed  that there was  a problem                                                                    
with permitting.                                                                                                                
Co-Chair  Stoltze  asked whether  she  was  opposed to  both                                                                    
bills. Ms. Carpenter replied in the affirmative.                                                                                
9:53:36 AM                                                                                                                    
Representative   Gara  asked   whether  Ms.   Carpenter  had                                                                    
experience  with   the  Army  Corps  of   Engineers  current                                                                    
permitting   process.  He   wondered   whether  the   corps'                                                                    
decisions  were   timely.  Ms.  Carpenter  replied   in  the                                                                    
affirmative. She mentioned  culvert replacement projects and                                                                    
stated that "the  corps had always been good  to work with."                                                                    
She  added that  she had  been  in situations  in which  the                                                                    
corps was in opposition to her groups desires.                                                                                  
Representative Gara  asked whether the corps  made decisions                                                                    
in  a   timely  manner.  He  wondered   whether  the  corps'                                                                    
engineers lived  in Alaska or Washington  D.C. Ms. Carpenter                                                                    
replied that everyone  she dealt with at the  corps lived in                                                                    
Co-Chair Stoltze  CLOSED public  testimony on  SB 27  and HB                                                                    
Representative  Wilson  referred  to public  testimony  that                                                                    
related  to  the  definition   of  wetlands.  She  requested                                                                    
RUTH  HAMILTON  HEESE,  SENIOR ASSISTANT  ATTORNEY  GENERAL,                                                                    
ENVIRONMENTAL  SECTION,  DEPARTMENT  OF LAW,  addressed  the                                                                    
definition  of  wetlands.   She  listed  the  jurisdictional                                                                    
exceptions  to   404  Primacy:  Navigable   waters,  tidally                                                                    
influenced waters,  and wetlands  adjacent to  navigable and                                                                    
tidally  influenced waters.  The exceptions  were prescribed                                                                    
by  the federal  Commerce Clause  that regulated  foreign or                                                                    
interstate  commerce.  The  state would  gain  control  over                                                                    
water and  wetlands within  their boundaries.  She mentioned                                                                    
"EPA guidance documents" referencing  state control over the                                                                    
majority of  waters and wetlands  outside of  the exceptions                                                                    
within its borders with the assumption of 404 Primacy.                                                                          
Co-Chair Stoltze clarified that  the question related to the                                                                    
"evolving" definition of wetlands.                                                                                              
Representative Wilson wondered whether  the state would lose                                                                    
the ability to challenge  the definition of wetlands related                                                                    
to  permafrost if  primacy was  acquired. Ms.  Heese replied                                                                    
that  the definition  of wetlands  was  not solidified.  She                                                                    
reported that  the Supreme Court had  "visited" the question                                                                    
and also  whether the federal  agencies had  properly guided                                                                    
federal jurisdictional wetlands policy.  She stated that the                                                                    
issue  would  be  examined   when  evaluating  primacy.  The                                                                    
Department of Law  (DOL) wanted the distinction  made so not                                                                    
all    permafrost    lands   were    considered    federally                                                                    
jurisdictional  wetlands.  Representative Wilson  wanted  to                                                                    
ensure  that  other  rights   were  not  relinquished  under                                                                    
primacy. Ms. Heese agreed.                                                                                                      
10:01:35 AM                                                                                                                   
Co-Chair Stoltze asked whether  the wetlands issues were due                                                                    
to political or environmental changes.                                                                                          
ED  FOGELS,  DEPUTY   COMMISSIONER,  DEPARTMENT  OF  NATURAL                                                                    
RESOURCES (DNR),  answered that  the intent outlined  in the                                                                    
Clean Water Act  was in favor of the  state assuming control                                                                    
over most  of the wetlands.  The state shared  that opinion.                                                                    
He  commented that  the wetlands  issue  would dominate  the                                                                    
evaluation    process.    He   thought    that    "political                                                                    
considerations   from  changing   administrations"  dictated                                                                    
federal  policy  over wetlands  which  was  an argument  for                                                                    
gaining regulatory authority based in the state.                                                                                
Representative  Gara understood  that if  the Supreme  Court                                                                    
ruled  in  favor  of states  and  interpreted  the  Commerce                                                                    
Clause to  allow the  state to define  and regulate  its own                                                                    
wetlands away  from navigable waters or  ruled in opposition                                                                    
taking  over primacy  would not  affect the  ability of  the                                                                    
state to  manage its wetlands.  Primacy would not  matter in                                                                    
regards   to  that   issue.  Ms.   Heese  answered   in  the                                                                    
affirmative.  She replied  that the  federal government  had                                                                    
the  "prerogative"  to  determine how  the  state  regulated                                                                    
Representative  Gara  restated  his  question.  He  wondered                                                                    
whether  gaining  primacy  rescinded  the  states  right  to                                                                    
define its wetlands  if the Supreme Court ruled  in favor of                                                                    
the states.  Ms. Heese replied in the negative.                                                                                 
Representative Gara cited examples  given in prior testimony                                                                    
as an argument  for state assumed 404 Primacy.  He noted the                                                                    
CD5 decision.  He stated that  CD5 was located  in navigable                                                                    
waters  and  was  exempt  from  404  Primacy.  Pt.  Thompson                                                                    
permitting delays were cited as  another example. He relayed                                                                    
that the delays  were due to litigation and  also related to                                                                    
navigable  waters  so  were  separate   from  the  issue  of                                                                    
Co-Chair Stoltze  remarked that  the testimony was  from Mr.                                                                    
Sullivan with SEACC.                                                                                                            
Mr. Fogels answered that the  state came close to losing two                                                                    
years  in delays  with the  Pt. Thompson  EIS (environmental                                                                    
impact statement) permitting process.                                                                                           
Representative  Gara understood  that  the  EIS process  had                                                                    
taken a  long time. He  asked whether the EIS  process would                                                                    
continue  under  primacy.  Mr.  Fogels  responded  that  the                                                                    
question  would   be  addressed   during  the   404  Primacy                                                                    
evaluation  process.  If a  project  was  under the  state's                                                                    
wetlands  jurisdiction the  process should  progress without                                                                    
federal  involvement.  Without  a "federal  hook"  the  Army                                                                    
Corps of Engineers  likely would not be involved  in an EIS.                                                                    
Most of  the large projects  were likely to have  a "federal                                                                    
hook." The  department guessed that  "a good portion  of the                                                                    
Pt. Thompson project  may have been delegated  to the state"                                                                    
under primacy.                                                                                                                  
10:08:28 AM                                                                                                                   
Representative  Kawasaki   asked  whether  the   entire  Pt.                                                                    
Thompson project would have needed  an EIS. He wondered what                                                                    
projects  would  be  under the  state's  jurisdiction  under                                                                    
primacy. Mr.  Fogels could  not provide  a clear  answer. He                                                                    
stated  that the  purpose of  SB 27  was to  seek definitive                                                                    
answers. The point  was to work with  the federal government                                                                    
to   determine   what   wetlands  the   state   would   gain                                                                    
jurisdiction  over.  He  informed the  committee  that  soon                                                                    
after  implementation  of  the   Clean  Water  Act  the  EPA                                                                    
(Environmental  Protection Agency)  "clearly" indicated  its                                                                    
expectation  that  states  would receive  primacy  over  the                                                                    
majority of  its wetlands. He  surmised that there  was some                                                                    
portion  of wetlands  in the  Pt. Thompson  region that  the                                                                    
state  would likely  gain jurisdiction  over. He  reiterated                                                                    
his uncertainty  about EIS requirements in  the Pt. Thompson                                                                    
region  under  state  assumed primacy.  However;  under  404                                                                    
Primacy  the state  was  required to  carry  out the  404-B1                                                                    
process which  mandated an  environmental analysis  in order                                                                    
to choose the environmentally safest alternative.                                                                               
Representative Kawasaki  wondered whether  a state  had ever                                                                    
negotiated a primacy  agreement as a first  step. Mr. Fogels                                                                    
answered that the evaluation stage  was necessary to provide                                                                    
more  clarity  on  what  wetlands  the  state  would  assume                                                                    
jurisdiction over. Evaluation  included discussions with the                                                                    
EPA  and   Army  Corps  of  Engineers.   He  disclosed  that                                                                    
discussions were currently in progress.                                                                                         
Representative  Kawasaki surmised  that  the department  was                                                                    
already  going  through  the  process  of  negotiations.  He                                                                    
wondered  why  the bill  was  necessary  at this  time.  Mr.                                                                    
Fogels replied  that discussions were very  preliminary. The                                                                    
discussions were  fact findings  centered on setting  up the                                                                    
evaluation process. The EPA indicated  that the SB 27 fiscal                                                                    
note  was sufficient  to move  forward  with the  evaluation                                                                    
Representative Kawasaki asked  whether the legislation would                                                                    
address the permafrost issue.                                                                                                   
LYNN KENT, DEPUTY  COMMISSIONER, DEPARTMENT OF ENVIRONMENTAL                                                                    
CONSERVATION, communicated  that the bill allowed  the state                                                                    
to examine  the "potential"  to assume 404  Primacy. Besides                                                                    
the  exceptions, primacy  related  to waters  of the  United                                                                    
States,  which   were  defined  by  the   Clean  Water  Act,                                                                    
implementing  regulations  and   through  court  cases.  She                                                                    
maintained that "there  was nothing in the  bill" that would                                                                    
limit  the   state's  ability   to  challenge   the  federal                                                                    
definition of "waters  of the U.S." She  added that wetlands                                                                    
were considered waters of the U.S.                                                                                              
Co-Chair Stoltze  asked the department  to follow up  with a                                                                    
more  detailed  definition  of  permafrost  in  relation  to                                                                    
10:15:44 AM                                                                                                                   
Representative  Kawasaki asked  whether  "a  useful tool  in                                                                    
programmatic permitting"  existed for  placer mining  in the                                                                    
Fairbanks area and  why it wasn't used  more "actively." Mr.                                                                    
Fogels  responded   that  within   the  guidelines   of  the                                                                    
programmatic general permit DNR  currently had the authority                                                                    
to  "take over"  permitting  certain  classes of  activities                                                                    
that have  lower levels of  impact. Placer mining  might fit                                                                    
into  that  category.  Programmatic general  programing  was                                                                    
another  tool besides  primacy for  the state  to gain  more                                                                    
control over  wetlands permitting.  The state  was examining                                                                    
what other "tools" were available  besides primacy to garner                                                                    
control over wetlands permitting.  He guessed that the state                                                                    
would  adopt some  of the  other tools  if primacy  wasn't a                                                                    
viable option.                                                                                                                  
Co-Chair Austerman  referred to Mr. Fogel's  testimony about                                                                    
the  federal government  having a  "hook" on  a project.  In                                                                    
relation  to the  Pt. Thompson  project permitting  he asked                                                                    
about the  environmental analysis  under primacy  as opposed                                                                    
to an  EIS. He asked  for clarification. Mr.  Fogels replied                                                                    
that he did  not want to imply that an  EIS for Pt. Thompson                                                                    
would  not have  been necessary  under primacy.  He restated                                                                    
that  some of  the project  likely would  have fallen  under                                                                    
federal  jurisdiction   for  Pt.  Thompson  making   an  EIS                                                                    
necessary. He  expounded that the  hope for 404  Primacy was                                                                    
the  department would  be a  cooperating agency;  therefore,                                                                    
placed in a  stronger position related to  EIS oversight. He                                                                    
stated  that the  EIS issue  required thorough  examination.                                                                    
Primacy  required the  state  to  analyze the  environmental                                                                    
impacts of a project.                                                                                                           
Representative Gara  had received  a document from  the Army                                                                    
Corps of  Engineers that provided permitting  statistics. He                                                                    
relayed that over  80 percent of the  corps' general permits                                                                    
were  decided  in 60  days  and  less  than one  percent  of                                                                    
permits  were denied.  He wondered  whether the  information                                                                    
was accurate and if primacy was worth the financial costs.                                                                      
Mr. Fogels  responded that seeking  primacy was  not related                                                                    
to a  backlog, it was  about the quality of  permitting, the                                                                    
stipulations  placed  on  the   permits,  and  the  kind  of                                                                    
litigation  required.   The  administration   believed  that                                                                    
primacy   provided  greater   state   control  over   permit                                                                    
stipulations and litigation.                                                                                                    
Ms. Kent  added that the  information came from a  pie chart                                                                    
provided by the corps.  She detailed that the administration                                                                    
viewed  the   corps  information  differently.   The  corps'                                                                    
statistics were  counted from the  date the  application was                                                                    
completed.  The  permit  process to  completion  could  take                                                                    
months  to  years. She  explained  that  84 percent  of  the                                                                    
general permits  fell into a  category of small in  scope or                                                                    
minor  dredge  and  fill   activities.  The  activities  had                                                                    
limited  cumulative impact  and  could be  covered under  an                                                                    
existing  general permit.  The permits  were issued  in less                                                                    
than 60 days.  She pointed out that 109  general permits for                                                                    
small projects took  more than 60 days to  issue. She stated                                                                    
that 67  percent of  the permits had  been issued  under 128                                                                    
days. The department  was concerned about the  33 percent of                                                                    
projects that  took longer  to issue  and wondered  how much                                                                    
more  time  was  necessary.   She  reiterated  that  seeking                                                                    
primacy  was  not   just  about  a  backlog   or  length  of                                                                    
permitting.  The goal  was to  ensure that  the state  had a                                                                    
role in the  permitting and decision making  process and was                                                                    
setting   the  priorities.   Timely   issuance  of   permits                                                                    
represented real jobs to Alaskans.                                                                                              
10:23:55 AM                                                                                                                   
Representative  Munoz  relayed  that  the  Kennsington  mine                                                                    
received a 404  permit, which was challenged by  the EPA and                                                                    
litigated by the US Supreme  Court. She wondered whether the                                                                    
result  might  have been  different  if  the state  had  404                                                                    
Primacy.  Mr. Fogels  stated  that he  could  not provide  a                                                                    
clear  answer.  He opined  that  under  primacy the  project                                                                    
would  have  fallen under  state  jurisdiction.  One of  the                                                                    
benefits  of  primacy  would mean  that  administrative  and                                                                    
judicial challenges  would remain in the  state. He remarked                                                                    
that seeking primacy  was not meant to  disparage the corps.                                                                    
An Alaskan process would benefit Alaskans.                                                                                      
Co-Chair Stoltze commented that  the role of the legislature                                                                    
was to engage in  political and policy discussions regarding                                                                    
the   states   working   relationship   with   the   federal                                                                    
HB  129  was  HEARD  and   HELD  in  committee  for  further                                                                    
SB  27  was   HEARD  and  HELD  in   committee  for  further                                                                    
HOUSE BILL NO. 4                                                                                                              
     "An  Act relating  to  the  Alaska Gasline  Development                                                                    
     Corporation;  making  the  Alaska  Gasline  Development                                                                    
     Corporation,  a   subsidiary  of  the   Alaska  Housing                                                                    
     Finance Corporation, an  independent public corporation                                                                    
     of  the state;  establishing  and relating  to the  in-                                                                    
     state  natural   gas  pipeline  fund;   making  certain                                                                    
     information  provided  to  or  by  the  Alaska  Gasline                                                                    
     Development  Corporation exempt  from  inspection as  a                                                                    
     public record;  relating to the Joint  In-State Gasline                                                                    
     Development  Team;  relating   to  the  Alaska  Housing                                                                    
     Finance Corporation;  relating to judicial review  of a                                                                    
     right-of-way lease or an action  or decision related to                                                                    
     the  development  or  construction  of an  oil  or  gas                                                                    
     pipeline  on state  land; relating  to the  lease of  a                                                                    
     right-of-way   for   a  gas   pipeline   transportation                                                                    
     corridor,  including  a  corridor  for  a  natural  gas                                                                    
     pipeline that  is a contract  carrier; relating  to the                                                                    
     cost   of  natural   resources,  permits,   and  leases                                                                    
     provided    to   the    Alaska   Gasline    Development                                                                    
     Corporation;  relating  to  procurement by  the  Alaska                                                                    
     Gasline  Development   Corporation;  relating   to  the                                                                    
     review  by  the  Regulatory  Commission  of  Alaska  of                                                                    
     natural gas  transportation contracts; relating  to the                                                                    
     regulation by  the Regulatory  Commission of  Alaska of                                                                    
     an in-state  natural gas pipeline project  developed by                                                                    
     the  Alaska Gasline  Development Corporation;  relating                                                                    
     to  the  regulation  by the  Regulatory  Commission  of                                                                    
     Alaska  of  an  in-state   natural  gas  pipeline  that                                                                    
     provides transportation by  contract carriage; relating                                                                    
     to  the  Alaska   Natural  Gas  Development  Authority;                                                                    
     relating to the procurement  of certain services by the                                                                    
     Alaska  Natural  Gas Development  Authority;  exempting                                                                    
     property of  a project developed by  the Alaska Gasline                                                                    
     Development Corporation from  property taxes before the                                                                    
     commencement  of commercial  operations; and  providing                                                                    
     for an effective date."                                                                                                    
HB 4 was SCHEDULED but not HEARD.                                                                                               
10:27:06 AM                                                                                                                   
The meeting was adjourned at 10:27 a.m.                                                                                         

Document Name Date/Time Subjects
HB 129 DNR Response 3-29-13.pdf HFIN 4/1/2013 9:00:00 AM
HB 129
HB 4 ABC-Rep Hawker Letter.pdf HFIN 4/1/2013 9:00:00 AM
HB 4
SB 27 Corp of Engineers Handout Gara.pdf HFIN 4/1/2013 9:00:00 AM
SB 27
SB 27 Cheeshna Tribal Council Letter.pdf HFIN 4/1/2013 9:00:00 AM
HB 129
SB 27
SB 27 Support.DOC HFIN 4/1/2013 9:00:00 AM
SB 27
HSEFIN SB27 Support ltr.doc HFIN 4/1/2013 9:00:00 AM
SB 27
AGC SB 27 Support Letter.pdf HFIN 4/1/2013 9:00:00 AM
SB 27
SB 27 (H) FIN Response .pdf HFIN 4/1/2013 9:00:00 AM
SB 27