Legislature(1993 - 1994)

02/16/1994 05:00 PM O&G

Audio Topic
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
              HOUSE SPECIAL COMMITTEE ON OIL & GAS                             
                        February 16, 1994                                      
                            5:00 p.m.                                          
  MEMBERS PRESENT                                                              
  Representative Joe Green, Chairman                                           
  Representative Pete Kott (arrived at 5:10 p.m.)                              
  Representative Gary Davis                                                    
  Representative Jerry Sanders                                                 
  Representative Joe Sitton                                                    
  Representative Jerry Mackie                                                  
  MEMBERS ABSENT                                                               
  Representative Harley Olberg                                                 
  OTHER LEGISLATORS PRESENT                                                    
  Representative Mike Navarre                                                  
  Representative Bill Williams                                                 
  Senator Suzanne Little                                                       
  Senator Judy Salo                                                            
  COMMITTEE CALENDAR                                                           
  *HB 426:  "An Act establishing the Chickaloon Flats Critical                 
            Habitat Area."                                                     
            PASSED OUT OF COMMITTEE WITH INDIVIDUAL                            
  *HB 474:  "An Act modifying administrative procedures and                    
            decisions by state agencies that relate to uses                    
            and dispositions of state land, property, and                      
            resources, and to the interests within them, and                   
            that relate to land, property and resources, and                   
            to the interests within them, that are subject to                  
            the coastal management program; and providing for                  
            an effective date."                                                
            HEARD AND HELD OVER                                                
  PREVIOUS ACTION                                                              
  BILL:  HB 426                                                                
  SPONSOR(S): REPRESENTATIVE(S) BUNDE                                          
  JRN-DATE     JRN-PG               ACTION                                     
  02/02/94      2219    (H)   READ THE FIRST TIME/REFERRAL(S)                  
  02/02/94      2219    (H)   O&G, RES, FIN                                    
  02/16/94              (H)   O&G AT 05:00 PM CAPITOL 124                      
  BILL:  HB 474                                                                
  SPONSOR(S): RESOURCES                                                        
  JRN-DATE     JRN-PG               ACTION                                     
  02/14/94      2375    (H)   READ THE FIRST TIME/REFERRAL(S)                  
  02/14/94      2375    (H)   O&G, RESOURCES, JUDICIARY                        
  02/16/94              (H)   O&G AT 05:00 PM CAPITOL 124                      
  WITNESS REGISTER                                                             
  REPRESENTATIVE CON BUNDE                                                     
  Alaska State Legislature                                                     
  Capitol Building                                                             
  Juneau, Alaska  99801                                                        
  Phone: (907) 465-4843                                                        
  POSITION STATEMENT: Sponsor of HB 426                                        
  FRANK RUE, Director                                                          
  Division of Habitat & Restoration                                            
  Department of Fish & Game                                                    
  1255 W. 8th Street                                                           
  Juneau, Alaska  99802                                                        
  Phone: (907) 465-4105                                                        
  POSITION STATEMENT: In Support of HB 426                                     
  JOHN HENDRICKSON, President                                                  
  Alaska Waterfowl Association                                                 
  3105A Lakeshore Drive, Suite 102                                             
  Anchorage, Alaska  99517                                                     
  Phone: (907) 243-3235                                                        
  POSITION STATEMENT: In Support of HB 426                                     
  JAMES EASON, Director                                                        
  Division of Oil & Gas                                                        
  Department of Natural Resources                                              
  3601 C Street, Suite 1380                                                    
  Anchorage, Alaska  99510-0734                                                
  Phone: (907) 762-2547                                                        
  POSITION STATEMENT: In Support of HB 474                                     
  TOM LOHMAN                                                                   
  North Slope Borough                                                          
  Box 69                                                                       
  Barrow, Alaska  99723                                                        
  Phone: (907) 852-0350                                                        
  POSITION STATEMENT: In Opposition to HB 474                                  
  NORMA CALVERT                                                                
  Marathon Oil                                                                 
  P.O. Box 196168                                                              
  Anchorage, Alaska  99519                                                     
  Phone:(907) 564-6474                                                         
  POSITION STATEMENT: In Support of HB 474                                     
  DOUG ROBBINS                                                                 
  Marathon Oil                                                                 
  P.O. Box 196168                                                              
  Anchorage, Alaska  99519                                                     
  Phone: (907) 564-6474                                                        
  POSITION STATEMENT: In Support of HB 474                                     
  MAUREEN McCREA                                                               
  6906 Big Mountain Drive                                                      
  Anchorage, Alaska  99516                                                     
  Phone: (907) 345-2453                                                        
  POSITION STATEMENT: In Opposition to HB 474                                  
  LOREN FLAGG, Executive Director                                              
  Kenai Peninsula Fisherman's Association                                      
  34824 K Beach Road                                                           
  Soldotna, Alaska  99669                                                      
  Phone: (907) 262-2492                                                        
  POSITION STATEMENT: In Opposition to HB 474                                  
  SUSAN FLENSBURG                                                              
  P.O. Box 394                                                                 
  Dillingham, Alaska  99576                                                    
  Phone: (907) 842-2666                                                        
  POSITION STATEMENT: In Opposition to HB 474                                  
  NANCY WAINWRIGHT                                                             
  13030 Back Road                                                              
  Anchorage, Alaska  99515                                                     
  Phone: (907) 345-5595                                                        
  POSITION STATEMENT: In Opposition to HB 474                                  
  NINA FAUST                                                                   
  Kachemak Bay Conservation Society                                            
  P.O. Box 846                                                                 
  Homer, Alaska  99603                                                         
  Phone: None Given                                                            
  POSITION STATEMENT: In Opposition to HB 474                                  
  EDGAR BAILEY                                                                 
  P.O. Box 2994                                                                
  Homer, Alaska  99603                                                         
  Phone: None                                                                  
  POSITION STATEMENT: In Opposition to HB 474                                  
  RIKKI OTT                                                                    
  United Fishermen of Alaska                                                   
  211 Fourth Street #112                                                       
  Juneau, Alaska  99802                                                        
  Phone: (907) 586-2820                                                        
  POSITION STATEMENT: In Opposition to HB 474                                  
  JOEL KAWAHARA                                                                
  United Fishermen of Alaska                                                   
  211 Fourth Street #112                                                       
  Juneau, Alaska  99802                                                        
  Phone: (907) 586-2820                                                        
  POSITION STATEMENT: In Opposition to HB 474                                  
  STAN STEPHENS                                                                
  Prince William Sound Regional Citizens Advisory Council                      
  Valdez, Alaska  99686                                                        
  Phone: (907) 835-4731                                                        
  POSITION STATEMENT: In Opposition to HB 474                                  
  CHIP TREINEN                                                                 
  Area K Seiners Association                                                   
  P.O. Box 2399                                                                
  Kodiak, Alaska  99615                                                        
  Phone: (907) 486-4686                                                        
  POSITION STATEMENT: In Opposition to HB 474                                  
  KARL KIRCHER                                                                 
  Kenai Peninsula Fishermens Association                                       
  Kasilof, Alaska  99610                                                       
  Phone: None Given                                                            
  POSITION STATEMENT: In Opposition to HB 474                                  
  JOHN BOCCI                                                                   
  Cordova District Fisheries United                                            
  P.O. Box 1312                                                                
  Cordova, Alaska  99574                                                       
  Phone: (907) 424-5182                                                        
  POSITION STATEMENT: In Opposition to HB 474                                  
  CHUCK DEGMAN                                                                 
  Bering Straits Coastal Resource Service Area                                 
  Unalakleet, Alaska  99684                                                    
  Phone: None Given                                                            
  POSITION STATEMENT: In Opposition to HB 474                                  
  TAPE 94-7, SIDE A                                                            
  Number 002                                                                   
  CHAIRMAN GREEN called the meeting to order at 5:07 p.m.                      
  HB 426 - CHICKALOON FLATS CRITICAL HABITAT AREA                              
  Number 008                                                                   
  REPRESENTATIVE CON BUNDE stated that Chickaloon Flats is an                  
  area on the northeast side of the Kenai Peninsula, on                        
  Turnagain Arm, facing the Alaska Coastal Refuge.  He said                    
  Potter Flats is just immediately across the inlet.  He said                  
  the area has a local nesting population of ducks and geese                   
  and it is an important resting and feeding area, as well as                  
  a migration point in the fall.  He stated the area serves                    
  ducks, geese, and shore birds, and the area has up to 25,000                 
  birds in a day, particularly in the fall migration.  He                      
  stated the birds use the area as a staging area when Portage                 
  Pass is closed due to bad weather.  He said Chickaloon is                    
  the primary place in the Turnagain Arm for birds to have a                   
  place to rest and feed.  He stated that Alaska has some                      
  other critical habitat areas and bird sanctuaries, the                       
  Mendenhall State Game Refuge, Anchorage Coastal Refuge,                      
  Trading Bay State Game Refuge, Palmer Hay Flats, and Susitna                 
  Flats.  He said these areas range from 300,000 acres to                      
  14,000 acres.  He stated the Chickaloon Flats area would be                  
  approximately 22,000 acres, which is a small addition to the                 
  system.  He said the purpose of HB 426 is to assure adequate                 
  habitat for waterfowl, rather than to create a stumbling                     
  block to future development of our resources.  He said there                 
  are currently no valid oil or gas leases in the purposed                     
  critical habitat area and it would not be disrupting any                     
  current plans for development.  He asked the committee to                    
  support HB 426.                                                              
  Number 049                                                                   
  REPRESENTATIVE GARY DAVIS moved that the committee adopt the                 
  committee substitute for HB 426.  There were no objections.                  
  Number 054                                                                   
  REPRESENTATIVE JERRY MACKIE asked if oil development,                        
  potential timber development, hunting, fishing and other                     
  kinds of development would still be allowed.                                 
  REPRESENTATIVE BUNDE stated it would be allowed if it does                   
  not disrupt the critical habitat.  He said that hunting,                     
  fishing, hiking, birding would not be a problem.                             
  REPRESENTATIVE MACKIE asked what HB 426 does if one can have                 
  oil production and other development.  He asked if there was                 
  a planned residential development for the area.  He said                     
  usually a critical habitat area is exactly that - it locks                   
  the area up from development to protect a certain species of                 
  game or birds.  He stated he did not understand what HB 426                  
  Number 071                                                                   
  REPRESENTATIVE BUNDE stated his intention was that                           
  development could not take place if it would be disruptive                   
  and displace the resting birds.  He said if development is                   
  mutually compatible, there would be no reason that it could                  
  not take place.                                                              
  Number 077                                                                   
  REPRESENTATIVE MACKIE stated the example Representative                      
  Bunde used was that if it was a condominium building it                      
  probably would not be compatible with the ducks, but if it                   
  was an oil drilling rig, it would be compatible.  He asked                   
  for the differences between the two scenarios and how they                   
  might affect ducks.                                                          
  Number 080                                                                   
  REPRESENTATIVE BUNDE said he could see that one could have                   
  potential development that would have minimal, if any,                       
  impact and you could have potential development that would                   
  have maximum impact as far as destroying actual resting                      
  Number 089                                                                   
  REPRESENTATIVE MACKIE said he believed the State does have                   
  regulations currently in place that do not allow for a paved                 
  highway to go through the marsh.  He said they were called                   
  wetlands and critical habitat area regulations.  He said the                 
  State has regulations protecting these type of areas.                        
  Number 098                                                                   
  CHAIRMAN GREEN stated for the record that Representative                     
  Mike Navarre joined the committee at the table.                              
  Number 100                                                                   
  DEPARTMENT OF FISH AND GAME (ADF&G), stated there are three                  
  types of state land.  He said there are park lands, which                    
  are withdrawn from the public domain and are the most                        
  restrictive state land designations the legislature can                      
  create.  He stated there are refuges, critical habitat areas                 
  or sanctuaries, which are a less restrictive designation by                  
  the legislature because the Department of Natural Resources                  
  (DNR) retains authority, but the legislature has said that                   
  ADF&G must approve development on the area and give it                       
  permit.  He said that other activities can go on in the                      
  area, it has not been withdrawn from public domain, but the                  
  legislature has put a higher standard for fish and wildlife                  
  by having ADF&G authorize activities in the area.  He said                   
  he third type of land is general state lands which ADF&G                     
  does not authorize or permit.  He said that ADF&G advises                    
  DNR about an area in a general state land situation.  He                     
  said in the case of surface entry for oil and gas activity                   
  in Chickaloon Flats, it is a fairly small area and so ADF&G                  
  might limit the activity to the winter.  He said ADF&G might                 
  recommend the avoidance of seismic work at the height of the                 
  bird migration.  He said ADF&G supports HB 426 and they                      
  support the committee substitute language that DNR wanted                    
  because it wanted to make sure oil and gas was allowed as an                 
  option and that is fine with ADF&G.  He said that ADF&G                      
  thinks HB 426 is a good idea because the Chickaloon Flats is                 
  a very important area for waterfowl migrating through the                    
  Number 140                                                                   
  (via Anchorage), stated he is also State Chairman of                         
  Waterfowl, USA.  He said the Alaska Waterfowl Association,                   
  along with ADF&G and many other groups, has been working for                 
  about 20 years to create a refuge and critical habitat                       
  system on Cook Inlet that was compatible with multiple use                   
  activities and getting along with the oil and gas industry,                  
  which the Alaska Waterfowl Association regards as very                       
  important.  He said that Chickaloon Flats is very important                  
  for migrating birds.  He stated that when the weather is bad                 
  to the south of Prince William Sound, birds pile up in                       
  Southcentral Alaska and they have to have a place to go and                  
  one of the places is Chickaloon Flats.  He said all sorts of                 
  species of ducks and geese use Chickaloon Flats in the fall                  
  and there are some local nesting populations of green winged                 
  teal and pintail mallards.  He said in the spring,                           
  Chickaloon Flats is also used by geese, shore birds, and                     
  ducks.  He said the Alaska Waterfowl Association regards HB
  426 as a very good bill.  He said the key of HB 426 is that                  
  it gives ADF&G some oversight so that mistakes are not made                  
  in the future.  He urged the committee to support HB 426.                    
  Number 177                                                                   
  REPRESENTATIVE MACKIE asked Representative Bunde in which                    
  district Chickaloon Flats is located.                                        
  Number 178                                                                   
  REPRESENTATIVE BUNDE stated that Chickaloon Flats is located                 
  in Representative Navarre's district.                                        
  Number 179                                                                   
  REPRESENTATIVE MACKIE asked Representative Navarre how he                    
  felt about HB 426.                                                           
  REPRESENTATIVE NAVARRE stated that he was looking at the                     
  bill for the first time so he was still formulating his                      
  opinion.  He said in general, he thought he supported it,                    
  with a reservation for oil and gas leasing.                                  
  Number 184                                                                   
  REPRESENTATIVE MACKIE made a motion to move HB 426 out of                    
  committee by unanimous consent, individual recommendations                   
  and zero fiscal note.                                                        
  REPRESENTATIVE DAVIS stated that he noticed on the map an                    
  island called Bird Island.  He asked if the island was                       
  privately owned and if it is within the proposed critical                    
  habitat area and how might it affect the ownership and                       
  ownership activity.                                                          
  Number 192                                                                   
  REPRESENTATIVE BUNDE stated that to his knowledge, Bird                      
  Island is privately owned and the critical habitat                           
  designation would have no affect on the owners.  He said                     
  they have access via the pipeline road.                                      
  Number 198                                                                   
  CHAIRMAN GREEN asked if there were any objections to                         
  Representative Mackie's motion.  There were none.                            
  HB 474 - ADMINISTRATIVE ACTION RELATING TO LAND                              
  Number 243                                                                   
  JIM EASON, DIRECTOR, DIVISION OF OIL & GAS,  ALASKA                          
  DEPARTMENT OF NATURAL RESOURCES (DNR), stated the Hickel                     
  Administration is fully supportive and committed to working                  
  with the legislature to assure passage of HB 474.  He said                   
  HB 474 does affect disposals of interests in resources other                 
  than oil and gas, however oil and gas is the primary                         
  catalyst for HB 474.  He stated the problem the state has                    
  with oil and gas leasing is one that affects mining and                      
  other disposals where best interest findings under Title 38                  
  and coastal zone management consistency determinations under                 
  Title 46 have to be written and issued.  He said HB 474 is                   
  designed to do several things.  The first is to clarify the                  
  legislature's intent that best interest findings and coastal                 
  zone consistency determinations under Title 38 and Title 46                  
  will be formulated and issued under certain procedures, and                  
  depending upon certain information, can be in a staged                       
  fashion if there is a series of developments or projects                     
  that are intended to occur.  He stated the legislation would                 
  make explicit that the director of the Division of Oil and                   
  Gas, through a delegation from the DNR commissioner would                    
  have the authority to establish the scope of the                             
  administrative review for a disposal and of the written                      
  finding in support of that disposal.  He said the scope                      
  would be set or established and would address the issues of                  
  concern that the director is asked to look at under the                      
  statutes.  He said most importantly, it would be the                         
  legislature's intent that DNR consider things that are not                   
  speculative, that are reasonably foreseeable, and that are                   
  direct effects.  He said the reason for the language is very                 
  important because the problem that brings the Division of                    
  Oil and Gas to the committee is one that extends through                     
  several adverse court decisions on Coastal Zone Management                   
  consistency determinations and best interest findings.  He                   
  stated the courts have essentially substituted their                         
  judgment for that of the legislature and the Administration                  
  in deciding how much is enough and how much to consider in a                 
  finding for a consistency determination.  He said the scope                  
  of HB 474 would be also intended to include applicable law                   
  and facts pertaining to the land, resources, or property                     
  that the director of Oil and Gas finds material to the                       
  determination.  He said it is important that the Division of                 
  Oil and Gas would not be held responsible for things that                    
  the division simply does not know or cannot know.  He said                   
  it was also important that the public have an opportunity to                 
  make known during the division's review process those things                 
  that the division does not know.  He said that finally, the                  
  scope also can be limited to issues that are found by the                    
  director to be relevant.  He stated a very important feature                 
  of HB 474 is that it addresses the question  of whether or                   
  not the division could review and issue best interest                        
  findings and consistency determinations as a discreet phase                  
  of multi-phase project.  He said that currently the courts                   
  will not allow that and the courts want the division to be                   
  able to predict with some certainty what the future events                   
  are that will follow a lease sale.  He stated the courts                     
  claim that the division must be able to do that in order to                  
  confirm that the division's mitigation measures and the                      
  lease sale terms do in fact make the sale consistent with                    
  the Coastal Zone Management Act and with the best interest                   
  standards under Title 38.  He said the Division simply                       
  cannot do that and it believes there is enough common sense                  
  within the committee to understand that the division is                      
  telling the truth.  He said he did not believe that anyone                   
  could predict the outcome of Lease Sale 78, if it had been                   
  held, or if it is ever held.  He stated the division has a                   
  process in place now, and will continue to have a process in                 
  place, that assures that subsequent activities, requests to                  
  drill wells, requests to conduct geophysical surveys, and                    
  other activities also undergo Coastal Zone Management Review                 
  by all of the agencies and the public so there is an                         
  opportunity to further condition any lease that is issued as                 
  a result of a lease sale.  He stated the division currently                  
  goes through this process, as it has in the past, and                        
  recently the courts have been ruling that it can no longer                   
  carry out this process.  He said the courts have ruled that                  
  the division must know in advance in order to certify                        
  consistency before it issues the lease.  He stated HB 474                    
  would acknowledge the legislature's intent that the Division                 
  be allowed to issue best interest findings based upon the                    
  scope that was described previously and to issue them in                     
  discreet phases, but only if the division can condition                      
  subsequent activities so it is certain that it can look at                   
  them and make certain that the activities are consistent                     
  with the Coastal Zone Management Act in future permit                        
  applications.  He said the division thinks that it is a                      
  common sense solution to an extraordinarily complex problem                  
  and one that is growing more complex as time goes on.  He                    
  said the committee would hear many comments and themes on HB
  474.  He said the division passed out a series of four small                 
  discussion papers and he encouraged the committee to read                    
  them.  He said the Alaska Supreme Court rejected DNR's                       
  arguments that it cannot understand the events that are                      
  going to follow from a mining/offshore prospecting permit                    
  with any specificity.  He said the division thinks the                       
  record is clear, particularly in light of the Lease Sale 78                  
  injunction, there is a pattern and that pattern will not go                  
  away.  He said he could tell the committee based on his                      
  personal experience, that absent legislative intervention                    
  and redirection of legislative intent, every lease sale that                 
  the division will propose to hold, will be subject to the                    
  same vulnerability if it is in the coastal zone and if it                    
  has a best interest finding, which all of them must.  He                     
  said that this point was very important to realize.  He said                 
  the system truly is in a bad situation and it needs help.                    
  He stated the division cannot fix the situation and the                      
  courts are unwilling to help the division fix it with any                    
  specificity.  He stated the time had come for the division                   
  to work with the legislature to ensure that the problem is                   
  fixed.  He said the committee would hear that DNR is trying                  
  to avoid doing a good job.  He said the trend of best                        
  interest findings since the statute in Title 38 was adopted                  
  has gone from a 10-15 page finding to a multi-hundred page                   
  finding.  He said the record in Lease Sale 78 is between                     
  15,000-20,000 pages of documents.  He said the process                       
  occurred over four years leading to the sale.  He said the                   
  record has grown exponentially and yet DNR is told that it                   
  is not doing enough, it could do more, and it has not                        
  considered the right issue under the right circumstances.                    
  He said under those circumstances, he did not know what to                   
  do and if the committee reviews the record with him, it will                 
  come to the same conclusion.  He said the courts are telling                 
  the division that the E.I.S. process and the N.E.P.A.                        
  process the federal government uses is a better way.  He                     
  said that was a judgment for the committee to make as                        
  policymakers.  He said the committee would also hear that                    
  the lease sales simply have to be conditioned in more detail                 
  than the Division is doing now because it cannot                             
  subsequently condition those leases so as to prevent entry                   
  in the event it determines that entry is necessary.  He said                 
  that was not true and as a matter of law, the Division                       
  retains in its lease and has the authority to prevent access                 
  to the lease in its entirety.  He said that fortunately, the                 
  division does not often have to use it, but the record                       
  speaks for itself.  He said that timing is very important.                   
  He said the division is issuing its final best interest                      
  finding for Lease Sale 79 at Yakataga on May 12, 1994.  He                   
  said if anyone chooses to litigate it, and the Alaska                        
  Supreme Court has not acted before then to reverse Judge                     
  Cranston's decision in Lease Sale 78, it is highly likely                    
  that anyone who wants to challenge that sale will get the                    
  same result, since Judge Cranston's decision will be the                     
  standing decision at the time of injunction.  He said his                    
  final comment was to urge the committee to look at HB 474                    
  very carefully and to understand that it is a very serious                   
  problem, but it is a problem that Mr. Eason believes can be                  
  fixed without diminishing public participation.                              
  Number 444                                                                   
  REPRESENTATIVE JOE SITTON said it seemed to be the year of                   
  determining what legislative intent is.  He said he would                    
  like to hear Mr. Eason's speculation on why the state has                    
  had such a string of adverse court decisions.  He said there                 
  is a body of opinion that thinks it is because of the poor                   
  work of the division.  He said that was not necessarily his                  
  view, but people think the division does sloppy work and the                 
  state ends up in court, as a result.                                         
  MR. EASON said the instruction that was issued by Judge                      
  Cranston was the first in the state's history.  He said he                   
  could not speculate better than anyone else, but he had                      
  speculated before the Lease Sale 78 injunction that it would                 
  be issued because he believed it was inevitable that a                       
  Superior Court judge was ultimately going to be influenced                   
  by the Supreme Court's decisions.  He said the division had                  
  a record of all litigation that it was involved in.  He said                 
  in every case the division was found to be in compliance                     
  with the best interest findings and the consistency                          
  determinations in Superior Court, but each ruling was                        
  reversed unanimously by the Alaska Supreme Court.                            
  REPRESENTATIVE SITTON asked what happened in between the                     
  rulings of the courts.                                                       
  Number 470                                                                   
  MR. EASON stated that Representative Sitton would have to                    
  ask the Supreme Court that question.  He said his                            
  speculation was that Superior Court judges read Supreme                      
  Court justices' opinions.  He said if the Superior Court                     
  kept sending opinions up that said something has been done                   
  right and it kept being told that it was being done wrong,                   
  ultimately the Superior Court judge would say that it is                     
  wrong first and let the Supreme Court sort it out.                           
  Number 477                                                                   
  CHAIRMAN GREEN stated that he wanted to recognize                            
  Representative Bill Williams, Senator Judy Salo and Senator                  
  Suzanne Little.                                                              
  Number 485                                                                   
  REPRESENTATIVE SITTON said that for four years he served as                  
  a director in state government and he would have been                        
  pleased to be given the powers as a director that Mr. Eason                  
  is asking for in HB 474.  He asked if Mr. Eason thought he                   
  needed such broad powers to determine the scope of things                    
  and he thought it made Mr. Eason unusual among the hundreds                  
  of state directors.                                                          
  MR. EASON stated the powers are not for the Director of Oil                  
  & Gas, they are for the DNR commissioner's delegation.                       
  Number 496                                                                   
  REPRESENTATIVE SITTON said that effectively the powers would                 
  be for Mr. Eason, since he is the Director of Oil and Gas                    
  Number 498                                                                   
  MR. EASON said, in fact the legislature has made that                        
  delegation in theory, and it is a matter of if the                           
  legislature wants that delegation to be made by the                          
  Administration or the courts.  He said that someone                          
  ultimately has to have that delegation.                                      
  Number 504                                                                   
  REPRESENTATIVE SITTON asked if the legislature wanted to                     
  delegate the powers at all.  He said the legislature would                   
  be giving DNR some very broad powers under HB 474.  He said                  
  there is element of trust and the legislature is building a                  
  tool for the future and the legislature did not know with                    
  whom it would be dealing.                                                    
  MR. EASON stated he agreed with Representative Sitton that                   
  the delegation of powers is a decision of the legislature.                   
  He said it is a power the legislature has given to DNR and                   
  it is a power that it can withdraw.                                          
  Number 516                                                                   
  REPRESENTATIVE SITTON said he was not suggesting withdrawing                 
  any power from DNR, but he was suggesting that the                           
  legislature should be very careful and deal very carefully                   
  with HB 474.  He stated he intends to read things very                       
  carefully because he is totally unsatisfied with the quality                 
  of work of the Alaska State Legislature that keeps the state                 
  in court all of the time.  He said it was the legislature's                  
  own work that he was questioning also.                                       
  Number 527                                                                   
  REPRESENTATIVE MACKIE asked Chairman Green whether or not it                 
  was good public policy to allow for a mid-level bureaucrat,                  
  such as Mr. Eason, to have that kind of discretion over                      
  people's lives.  He said good relationships can happen when                  
  one has Coastal Zone Management and other types of                           
  safeguards in place that require all parties involved to                     
  meet their level of responsibility.  He said the possibility                 
  of delegating total discretion to one mid-level government                   
  official was why the hearing room was full and why there                     
  were people on teleconference.  He said he thought that it                   
  gave people much concern.  He asked Mr. Eason if he felt                     
  comfortable accepting that responsibility and recommending                   
  that the Director of the Oil & Gas Division be given that                    
  Number 550                                                                   
  MR.EASON stated the final decision making, the actual                        
  issuance of the finding and the consistency determination                    
  for a lease sale, has to rest with someone, but in fact the                  
  decision making is not that person's alone.  He said the Oil                 
  & Gas Division does issue the consistency determinations but                 
  it has to have the concurrence of ADF&G, Department of                       
  Environmental Conservation (DEC), and the Division of                        
  Governmental Coordination (DGC).  He said the Division of                    
  Oil & Gas does not issue the determination and make the                      
  final decision on its own.  He said if the other agencies do                 
  not concur with the consistency terms, the division's                        
  consistency determination cannot be issued.                                  
  Number 566                                                                   
  CHAIRMAN GREEN asked if it wasn't actually the DNR                           
  commissioner who delegates.                                                  
  Number 570                                                                   
  MR. EASON stated that was correct.  He said it is the DNR                    
  commissioner's decision.  He stated that an appeal of a                      
  decision in a best interest finding goes to the DNR                          
  commissioner and ultimately it is the commissioner's                         
  decision.  He said the findings are actually issued with a                   
  disclaimer that they are made with the advance knowledge and                 
  concurrence of the DNR commissioner.  He said final                          
  authority does not lie with the Director of the Division of                  
  Oil & Gas.                                                                   
  Number 581                                                                   
  REPRESENTATIVE NAVARRE stated he has watched Mr. Eason                       
  through several administrations and he thought that Mr.                      
  Eason has done a good job as Director of Oil & Gas.  He said                 
  he would not necessarily be concerned about Mr. Eason, but                   
  he had some concerns about the power that the legislature                    
  would be vesting in the Director of Oil & Gas through the                    
  DNR commissioner.   He said he thought that it could lead to                 
  some potential problems in either seeking a statutory change                 
  at some point in the future in order to undo it, or perhaps                  
  in court.  With regard to the ability to prevent or                          
  condition future provisions of the lease sale through                        
  permitting and other things of that nature, he asked if it                   
  was true that it only could be done to a certain degree.  He                 
  asked Mr. Eason what would happen if the state sold a lease.                 
  He asked if there would be a right to entry or to develop                    
  the lease.                                                                   
  Number 601                                                                   
  MR. EASON stated there is no right to enter.  He said DNR                    
  has the right to condemn under the lease.  He said the                       
  language is essentially a reasonable opportunity to develop,                 
  but it is clear the division has the authority if it                         
  determines that for environmental reasons it is no longer in                 
  the state's interest to do that.                                             
  Number 609                                                                   
  REPRESENTATIVE NAVARRE asked what happens then.                              
  Number 610                                                                   
  MR. EASON stated the division has to repurchase the lease.                   
  He said there are standards set out in the lease on how that                 
  is done.  He said it is a step that the division would                       
  probably be very concerned about before it would take it.                    
  Number 621                                                                   
  CHAIRMAN GREEN reminded Representative Navarre about the                     
  Kachemak Bay buy-back in the late 1970s.                                     
  Number 623                                                                   
  REPRESENTATIVE NAVARRE stated that he did remember the                       
  buy-back and that is why he thought Lease 78 probably should                 
  not have been on the table in the first place, given the                     
  history of that portion of the lower Cook Inlet.  He asked                   
  if the term "nonspeculative" was defined anywhere in                         
  Number 635                                                                   
  MR. EASON stated he did not believe "nonspeculative" was                     
  defined in Alaskan statute.  He said the term, however, was                  
  defined and when the courts do not have a defined term in                    
  statute they refer to the dictionary.  He said there is an                   
  important linkage between the terms and they are there to                    
  establish a theme.  He said the theme is only conveyed by                    
  the sequence of the terms, given the litigation and the                      
  findings the state has had in the litigation.  He said  he                   
  hoped the legislature would want the courts to understand                    
  that it seriously means that it does not want speculation,                   
  multiple scenarios, or hypothecated scenarios to drive the                   
  mitigation measures and the decisions of whether to lease                    
  because the state simply cannot do that.  He said the state                  
  did not know what the outcome would be and the only way to                   
  talk about things in a way people can really judge the                       
  adequacy of mitigation and the ability to control                            
  development, is to talk about the facts, the things that are                 
  made known, and the things that can be reasonably expected                   
  based on the record.  He said this theme, coupled with a                     
  provision that assures that one can condition future                         
  activities by permit, is simply the only practical way to                    
  approach the problem if the state wants to avoid a                           
  continuing process of arguing about things that nobody would                 
  know for sure if they would ever occur.                                      
  Number 674                                                                   
  REPRESENTATIVE NAVARRE asked how HB 474 would change the                     
  public input, particularly at the municipal government                       
  level, on both the Coastal Zone Management Act and Title 38                  
  best interest findings.                                                      
  Number 686                                                                   
  MR. EASON stated that HB 474 would have no affect on the                     
  current process of public input.                                             
  Number 706                                                                   
  REPRESENTATIVE NAVARRE referred to page two, line 19.  He                    
  said in the final analysis, the Director of Oil & Gas is                     
  allowed to determine what is in the best interest of the                     
  Number 724                                                                   
  MR. EASON said the state's findings are written                              
  rationalizations of what the state thinks the important                      
  issues are, why the state thinks they are important, and why                 
  the state does not think others are relevant or important.                   
  TAPE 94-7, SIDE B                                                            
  Number 001                                                                   
  MR. EASON said the Division of Oil & Gas often finds                         
  comments which, in Mr. Eason's judgment, are not relevant to                 
  the determination of whether the lease sale is in the best                   
  interest.  He said he makes that determination when he looks                 
  at the standards in AS 38.05.035(g), which specify a series                  
  of issues and a context in which the state considers them.                   
  He said the state will receive many comments which are                       
  clearly irrelevant, unrelated, or the state simply does not                  
  know what the person intended the state to do with them.  He                 
  said that the division will rationalize the comments and                     
  address them in writing and explain why the state thinks                     
  they are or are not relevant.  He said he believed there                     
  will always be relevant and irrelevant issues raised in the                  
  consideration of something as major as a lease sale.                         
  Number 013                                                                   
  SENATOR SUZANNE LITTLE said under HB 474 the findings that                   
  the director will write will be narrowed to dealing with                     
  "...reasonably foreseeable, nonspeculative, direct effects."                 
  She asked Mr. Eason what the reports will deal with.                         
  Number 018                                                                   
  MR. EASON stated under HB 474, there will be no substantive                  
  change in the quality of the work, or in the scope of the                    
  work, other than the scope will focus on things that the                     
  state hopes a court will ultimately determine are reasonably                 
  foreseeable, nonspeculative and direct.  He said the                         
  legislation is designed to avoid arguments about whether or                  
  not the state should consider the Gates of the Arctic and                    
  then if the state should consider the Gates of the Arctic,                   
  should the state consider the effects of a North Slope sale                  
  on Anchorage and whether the state should consider the                       
  effects on the West Coast oil market and those sorts of                      
  arguments.  He said the dilemma is that the state is                         
  responsible for conducting a four to five year program, a                    
  very detailed process, where the state is totally open,                      
  everything is done publicly.  He said the state issues the                   
  final decision and it receives a one paragraph allegation of                 
  what it has not done.  He stated the courts receive the                      
  allegation and find that the state has not done it.  He said                 
  the division is asking the legislature to help the state                     
  bring some balance back to the process.                                      
  Number 035                                                                   
  SENATOR LITTLE stated she understood Mr. Eason's                             
  frustration.  She said she was trying to think of one thing                  
  that would be reasonably foreseeable, nonspeculative, and a                  
  direct effect of a lease sale and she could not think of                     
  anything.  She wondered if Mr. Eason might be able to give                   
  her an example.  She stated she believes that a finding                      
  would be a written title across the page and nothing on the                  
  rest of it.                                                                  
  MR. EASON said based on his personal experience, he is                       
  convinced that neither the Supreme Court nor the Superior                    
  Court would allow that to happen.                                            
  Number 042                                                                   
  SENATOR LITTLE asked Mr. Eason if public input will be                       
  narrowed down to the scope of the director's determination.                  
  MR. EASON stated it would not.  He said public input would                   
  be exactly what it is presently, perhaps greater.  He said                   
  there will be a burden on the part of the Division of Oil &                  
  Gas to make a written rationalization of the relevance of                    
  all the standards that are set out and to address the issues                 
  raised.  He said the division will address all of the                        
  comments received, as it has to under the statutes.  He said                 
  the division will have to rationalize the standards, but the                 
  standards that are set are certainly not designed to limit                   
  public opportunities, they are designed for the eventuality                  
  that if the state finds itself in court again, the court                     
  will be forced to be constrained in looking at the written                   
  document to be sure of whether the state has properly                        
  rationalized and accepted or rejected information that is                    
  suggested to be speculative.                                                 
  Number 060                                                                   
  SENATOR LITTLE stated that HB 474 addresses all actions that                 
  require best interest findings, not only for oil and gas,                    
  but for other issues as well.  She asked what types of                       
  actions fall under the best interest finding.                                
  Number 065                                                                   
  MR. EASON stated the actions could be agricultural                           
  disposals, timber disposals, certain types of mining                         
  disposals, or oil and gas leasing.  He indicated this was                    
  not an exhaustive list.                                                      
  Number 070                                                                   
  SENATOR LITTLE asked if a recreational lease, such as the                    
  one occurring for Hatcher Pass, would be involved.                           
  Number 072                                                                   
  MR. EASON indicated that recreational leases would be                        
  involved.  He said the intent, regardless of the disposal,                   
  is to apply the same standard so that decision making on a                   
  disposal decision rests on facts and not speculation.  He                    
  said that it was the state's belief that all disposals of                    
  resources should have that standard, otherwise the courts                    
  are the only arbiters of what disposals happen.                              
  Number 080                                                                   
  TOM LOHMAN (via Barrow) stated that he works for the North                   
  Slope Borough on coastal management issues.  He said it was                  
  clear to a lot of people who work in coastal management                      
  around the state, including some in state agencies, that HB
  474 is not the way to solve whatever problems exist.  He                     
  said DNR feels that it is being asked to consider too many                   
  potentially far removed impacts of state lease sales.  He                    
  stated the DNR does not like its lease sales held up in                      
  litigation for months or years.  He said if those are                        
  legitimate concerns, he does not think the language in HB
  474, or the kind of frustration that it would create within                  
  the public, is going to either reduce litigation or give the                 
  public a better feeling about the whole process.  He said                    
  there are a lot of people who have been participating in                     
  working groups for the past couple of years trying other                     
  ways to improve the process to give people a better feeling                  
  about the process.  He said a lot of the lawsuits that the                   
  state has seen have been over the process and the public's                   
  frustration with it, rather than the substance of DNR's                      
  review.  He said it is absurd that in light of what is                       
  essentially a partnership between the state and the local                    
  coastal districts with improved programs, the committee did                  
  not have the legislation sent down directly to the coastal                   
  districts or to members of the Coastal Policy Council,                       
  either before it was introduced or soon thereafter, so it                    
  could be reviewed in time to participate fully and                           
  meaningfully in the committee hearings.  He urged the                        
  committee to not move HB 474 in order to allow other efforts                 
  to improve the Coastal Management Program, as well as                        
  Alaskan citizens' feelings about the consistency review                      
  process.  He said it might not be a complete solution, but                   
  there are a lot of people involved in Coastal Management on                  
  a daily basis.  He stated those people have put a lot of                     
  work into efforts to improve the process and those people                    
  think they will solve a good portion of the problem.  He                     
  said he thought the committee would do very well to hear                     
  from different agencies such as DGC or the Department of                     
  Law, both of which have been working on the issue for a very                 
  long time in open forums where everybody speaks their peace,                 
  industry included.  He said he hoped that the committee                      
  would let DNR go back to the table to try to work within the                 
  same working group setting that he has been working in, and                  
  try to improve the procedures to allow that openness early                   
  on in the process and avoid the eleventh hour conflicts over                 
  state lease sales.                                                           
  Number 129                                                                   
  NORMA CALVERT, MARATHON OIL (via Anchorage), said Marathon                   
  Oil supports the principles and intent of HB 474.  She said                  
  Marathon believes that HB 474 provides an appropriate                        
  mechanism for all citizens to express legitimate concerns in                 
  a public review process and Marathon supports the defined                    
  authority of the DNR commissioner and the language to limit                  
  the scope of best interest findings to an analysis of                        
  reasonably foreseeable, nonspeculative, direct effects of                    
  leasing.  She said continued delay or cancellations of lease                 
  sales will result in fewer companies investing time and                      
  energy to identify potential production areas.  She said the                 
  decline of state revenues will be accelerated and reduced                    
  investment will increase unemployment.  She said Marathon                    
  Oil does not believe the state of Alaska or its citizens can                 
  afford to curtail sound, responsible development of its most                 
  significant resource.  She said Marathon Oil supports sound,                 
  responsible development of Alaska's natural resources and it                 
  believes that HB 474 provides definition and certainty in                    
  the leasing process that will allow such development.                        
  Number 158                                                                   
  DOUG ROBBINS, MARATHON OIL (via Anchorage), said Marathon                    
  regards itself as a partner with the state in producing the                  
  resources and providing for the welfare of Alaskans.  He                     
  said Marathon has a need for regular, predictable lease                      
  offerings to plan investigations and investments.  He asked                  
  the legislature to provide a clear direction to the agencies                 
  and to the courts to allow a smooth lease sale process.                      
  Number 186                                                                   
  MAUREEN McCREA (via Anchorage) stated  her opposition to HB
  474 is based on several concerns.  She said it seemed to be                  
  a hasty response to recent court decisions.  She stated HB
  474 seems to imperil the state's position in reviewing                       
  topical federal activities.  She said the state has actively                 
  pursued its ability to review federal activities for                         
  consistency with its Coastal Management Plan, including                      
  Outer Continental Shelf lease sales and timber sales.  She                   
  said in the mid-80's, in response to some concern expressed                  
  by the MMS, she conducted some research to determine if                      
  MMS's perception that federal oil and gas sales were held to                 
  a higher standard of consistency review than state or                        
  private activities were held.  She said she was able to                      
  conclude from that research that it was not necessarily an                   
  accurate perception.  She said that there seemed to be a                     
  fairly even treatment of comparable activities.  She said HB
  474 would imperil that conclusion unless the state also                      
  plans to limit its review of federal activities to only                      
  those actions that would occur beyond three miles of the                     
  state shoreline and only for those activities that the state                 
  knew would happen.  She said in 1990, the federal government                 
  passed amendments to the Coastal Zone Management Act, which                  
  exemplified the need to consider potential cumulative and                    
  secondary impact of activity.  She said the very elements                    
  that the state is considering removing, jeopardizes the                      
  state's participation from that federal program and would                    
  possibly make moot the state's ability to look at federal                    
  activity for consistency.  She stated she wanted to remind                   
  the committee that MMS also has the ability to rescind                       
  leases due to environmental concerns, such as the Bristol                    
  Bay buy-back.  She said she wanted to emphasize that                         
  cooperation has worked.                                                      
  Number 255                                                                   
  FISHERMAN'S ASSOCIATION (via Kenai), said he was concerned                   
  that HB 474 is being fast tracked through the legislature.                   
  He said it was only within the last hour that he received a                  
  copy of the legislation and was informed there was a                         
  hearing.  He demanded a fair opportunity to review the bill                  
  and to make more detailed comments.  He said the fast                        
  tracking of HB 474 runs parallel to the problems encountered                 
  with Lease Sale 78, where the final comment deadline was                     
  scheduled during the summer when fishermen are busy and                      
  unable to spend their time to participate in the comment                     
  process.  He said once he reviewed HB 474 it was obvious                     
  that it represented some major changes in the coastal                        
  management program.  He said it appeared to him that the                     
  Administration is trying to cover up DNR's incompetence in                   
  handling Lease Sale 78.  He said the DNR has tried to                        
  subvert the requirements under the Coastal Zone Management                   
  Act.  He urged the legislature to take a closer look at the                  
  operations within DNR and those responsible for conducting                   
  those operations.  He referenced page two, lines seven                       
  through nine of HB 474.  He said he had a serious problem                    
  with limiting the scope of the review to only                                
  nonspeculative, direct effects of the uses proposed.  He                     
  stated in any finding of what is in the best interest of the                 
  state potential impacts must be considered.  He said HB 474                  
  would lead to more problems in the courts, not less.  He                     
  said he also has a serious problem with page four, lines 15                  
  and 16.  He said it was absurd to limit the scope of the                     
  administrative review to only fish and wildlife species and                  
  their habitats within a lease sale area.  He said in Cook                    
  Inlet, the tides and currents are such that the impacts of                   
  an oil spill within a lease area are almost immediately                      
  thrust to areas adjacent to the lease area.  He asked how                    
  the state could not consider cumulative impacts in its                       
  administrative review.  He urged the committee not to move                   
  HB 474.  He said there is no problem with the laws and                       
  regulations and that no state lease sales have occurred                      
  without court delays.                                                        
  Number 308                                                                   
  REPRESENTATIVE NAVARRE said he knew that Chairman Green was                  
  interested in HB 474.  He addressed fast tracking and said                   
  it occurs when legislation is moved through a committee and                  
  through the legislature without due deliberative process and                 
  public input.  He said he thought the committee was trying                   
  to recognize there are people who think there are problems                   
  with the lease sale process in the state and he knew the                     
  Administration has been concerned about the process and                      
  there was a hearing in January 1994 with respect to Lease                    
  Sale 78.  He said he thought the committee was attempting to                 
  address the problems and fix them, but this legislation                      
  should be worked on because he was not sure the legislation                  
  was taking the right approach.  He addressed the concerns                    
  about fast tracking and said it was more of a concern about                  
  the overall issue and he did not think there was any attempt                 
  to fast track HB 474.  He said there are other rules and                     
  regulations that prevent the legislature from fast tracking                  
  Number 345                                                                   
  SUSAN FLENSBURG, BRISTOL BAY SHARER (inaudible) via                          
  Dillingham, said she had major concerns with HB 474 from a                   
  coastal management standpoint, as well as a public process                   
  standpoint.  She said HB 474 was introduced to fix problems                  
  that were characterized by DNR with the state's oil and gas                  
  leasing process under Title 38.  She stated she was not                      
  unsympathetic with DNR's concerns and she even supported a                   
  few of the provisions in the legislation.  She said HB 474                   
  gives DNR incredibly broad, almost unchecked authority to                    
  decide the scope of review and the basis on which a best                     
  interest finding would be made under Title 38.  She stated                   
  HB 474 takes away the ability of the public, resource                        
  agencies and coastal districts to raise and address issues                   
  of concern regarding a proposed project.  She said a                         
  particular concern was some of the terminology in HB 474                     
  that relates to the scope of review under Title 38 and the                   
  sections on consistency determinations under the ACMP.  She                  
  said that terms are not defined and it is not clear what is                  
  meant.  She said if the terms are not defined, it will pave                  
  a way for a lawsuit and put the courts in a position of                      
  clarifying what the terms mean.  She said she agreed with                    
  Mr. Eason that it would help to put target delineation on                    
  what project is to be reviewed and when.  She said she                       
  thought that one of the things that needs to be done with HB
  474 is to include a definition for the terms "direct effect"                 
  and "nonspeculative."  She said it would be a safe bet to                    
  say that the section on consistency determination also does                  
  not meet federal guidelines for the coastal management                       
  program.  She said she wanted to raise the question of                       
  whether HB 474 is a back door attempt to dismantle the                       
  Coastal Management Program.  She stated if that was not the                  
  case then she wanted to reiterate a previously made                          
  suggestion that a cooperative effort should be undertaken to                 
  address the problems that exist.  She said she hoped HB 474                  
  would not be moved too quickly and public concerns would be                  
  considered by the committee.                                                 
  Number 404                                                                   
  NANCY WAINWRIGHT, ATTORNEY (via Anchorage), said the Coastal                 
  Zone Management Program was a bargain between the state and                  
  the federal government.  She said the state was to develop a                 
  program to manage the coastal zone and it created the Alaska                 
  Coastal Management Program (ACMP).  She stated the ACMP had                  
  to meet the minimum federal standards in the broad language                  
  in the federal Coastal Zone Management Act.  She said the                    
  federal government offered funding and a legally binding                     
  obligation of the federal agencies to adhere to the state's                  
  coastal policies through federal consistency.  She stated HB
  474 proposes to change this policy.  She said the                            
  legislation will delegate authority to someone outside of                    
  the ACMP.  She said HB 474 raises a host of legal issues.                    
  She said HB 474 will restrict the scope of review for oil                    
  and gas lease sales and the federal government has also                      
  confronted this issue.  She stated the original language of                  
  the federal law said that each federal activity that                         
  directly affects the coastal zone must be consistent.  The                   
  U.S. Supreme Court interpreted the language to mean that a                   
  lease sale has no direct effect and therefore they do not                    
  need to be considered in looking at coastal zone management.                 
  She said in 1990, when Congress was reviewing the Coastal                    
  Zone Management Reauthorization Act, their intent was made                   
  clear that the effects that are looked at should be broad.                   
  She stated that Congress took the direct effect language out                 
  of federal law and said the effects which are to be                          
  considered are those which may be reasonably anticipated,                    
  including cumulative and secondary effects.  She said they                   
  intended the term "effect" to be construed broadly,                          
  including direct effects, which are caused by the activity,                  
  and indirect effects, which may be caused by the activity.                   
  She said the federal government has stated it wants a broad                  
  interpretation for coastal zone management purposes.  She                    
  stated there are problems that need to be solved.  She said                  
  the first was DNR's court ordered direction that it must                     
  broaden the scope of the impact it is looking at.  She                       
  stated that secondly, the legislature needs to look at how                   
  DNR has failed in terms of the ACMP to work the system in                    
  advance and to get people to the table early so lawsuits are                 
  not brought to the courts.  She said the solution may be                     
  allowing the DGC to have the funding and the expertise to                    
  conduct the coastal zone consistency review and leave the                    
  best interest findings to DNR.  She said  DNR could then                     
  devote its attention and its funds to analyzing the impact                   
  of the court and the ACMP.                                                   
  Number 509                                                                   
  said she is opposed to HB 474 and hopes the committee will                   
  not pass it out.                                                             
  Number 531                                                                   
  EDGAR BAILEY, BIOLOGIST (via Homer), said he has reviewed a                  
  lot of the leases in the past and one of the obvious reasons                 
  there is an effort to push HB 474 through the legislature is                 
  because of the poor work that went into the planning of the                  
  leases.  He said Lease Sale 78 is a good example.  He stated                 
  that 56,000 parcels of land were included, yet there was not                 
  adequate notice to private landowners involved who had                       
  subsurface leases within Lease Sale 78.  He stated the state                 
  should have listened to the advisory group that had been                     
  formed in the Kenai/Soldotna/Homer area.  Mr. Bailey said                    
  the advisory group stated they did not recommend any lease                   
  tracts along the coast because of conflicts in the Nikiski,                  
  Ninilchik and Anchor Point areas.  He said that same stance                  
  was recommended by various other groups as well, yet the                     
  state ignored them.  He said the state's rejection of the                    
  groups' recommendations had a lot to do with the filing of                   
  the lawsuit.  He said he thought it was clear that DNR was                   
  not doing a sound job as far as looking at all of the                        
  ramifications and consistency with the Coastal Zone                          
  Management Plan.  He said HB 474 is not needed.  He said DNR                 
  is not doing an adequate job and that is what is inviting                    
  all of the legal action.                                                     
  Number 602                                                                   
  RIKKI OTT, UNITED FISHERMEN OF ALASKA, she said she opposes                  
  HB 474.  She said HB 474 attempts to ignore consideration of                 
  problems at the initial stage of projects.  She stated the                   
  Alaska Coastal Management Program is not the problem.  She                   
  said in April 1993, the Alaska Supreme Court ruled that DNR                  
  failed to adequately consider salient issues in making its                   
  best interest finding to allow Lease Sale 50 to proceed.                     
  She said in December 1993, the Alaska Supreme Court ruled                    
  that DNR again failed to adequately consider identical                       
  issues in making its best interest finding to allow Lease                    
  Sale 55.  She said the Supreme Court specifically pointed                    
  out in its ruling that DNR appears to have copied, without                   
  altercation, the previously rejected Lease Sale 50 finding                   
  and tried to apply the same flawed finding to Lease Sale 55.                 
  She said in January 1994, the State Superior Court ruled                     
  preliminarily that DNR failed to adequately consider salient                 
  issues in making its best interest finding to allow Lease                    
  Sale 78 to proceed.  She said with Lease sale 78, DNR                        
  ignored commercial fishing interests in Cook Inlet.  She                     
  said legislative fixes are not going to substitute for                       
  professionalism.  She said HB 474 will increase the risk                     
  that projects that are not in the best interests of the                      
  state will go forward.  She said the Alaska Supreme Court                    
  noted that "...a finding that development that is                            
  economically feasible is not the same as a finding that the                  
  sale is in the state's best interest.  DNR must consider the                 
  social, cultural, and environmental impacts on the state                     
  from oil production."  She said the Alaska Supreme Court                     
  warned that "...the more segmented an assessment of                          
  environmental hazards, the greater the risk that prior                       
  permits will compel DNR to approve later environmentally                     
  unsound permits."  She stated HB 474 allows DNR to conduct                   
  multi-phase administrative reviews and permitting without                    
  requiring all of the relevant information at the initial                     
  stage of the proposed project.  She said this was counter to                 
  the best interests of the state because DNR will find it                     
  difficult to slow down or stop momentum once projects are                    
  initiated and developers have property interests.  She said                  
  that halting projects once they are started is not a viable                  
  public option.  She said that to be fair to the state,                       
  developers, and the public, it is imperative that all                        
  environmental and social risks are brought to the table at                   
  the initial stage of the project.  She said she objects to                   
  the terms "nonspeculative" and "direct" and she wanted to                    
  remind the committee that the EXXON VALDEZ and GLACIER BAY                   
  were both speculative up until they ran aground.  She said                   
  the public expects DNR to anticipate events and to work out                  
  resolutions in advance of any permits being issued.  She                     
  said the Alaska Supreme Court found that "...DNR is required                 
  by law to take a hard look at the salient problems involved                  
  with a lease sale and it must engage in reasoned decision                    
  making."  She said the Supreme Court further ruled that DNR                  
  "...must consider the probable, cumulative impact of all                     
  anticipated activities which will be part of the project."                   
  She said these are not unreasonable requests, yet DNR is                     
  appealing to the legislature to remove these requirements.                   
  She said the problem lies with DNR's ability to meet the                     
  requirements of the Coastal Management Program, not with the                 
  program itself.  She stated the public, industry, and the                    
  state deserve to discuss and resolve issues up front to                      
  ensure projects proceed responsibly and with minimal impact                  
  on other resource users and the environment.                                 
  TAPE 94-8, SIDE A                                                            
  Number 001                                                                   
  JOEL KAWAHARA, UNITED FISHERMAN OF ALASKA, stated he is not                  
  anti-development, however he feels strongly that development                 
  should be safe in terms of economic benefit to the state and                 
  in terms of protection to the environment.  He said he                       
  opposes HB 474 because he does not feel it provides for that                 
  safety.  He said the term "nonspeculative direct effect " is                 
  the issue in safety.  He said allowing developments that may                 
  not avoid future problems is irresponsible and puts at risk                  
  both the industry involved and the other users of the                        
  coastal zone.                                                                
  Number 033                                                                   
  ADVISORY COUNCIL (PWSRCAC), stated the PWSRCAC represents                    
  many people who have a keen interest in ensuring the maximum                 
  amount of public input into agencies' decisions within                       
  PWSRCAC's jurisdiction.  He said PWSRCAC has been an active                  
  participant in the working groups which work to resolve                      
  problems regarding the ACMP and oil spill contingency plan                   
  reviews.  He said the RCAC is named in the ACMP regulations                  
  as a reviewer for oil spill contingency plans.  He said RCAC                 
  has a great deal of respect for the process of letting                       
  industry, local government, agencies, and the public work                    
  together to resolve complex issues.  He said RCAC is                         
  concerned that HB 474 may narrow the scope of the project                    
  review process to such an extent as to possibly lose some                    
  valuable public input in the process.  He stated some of the                 
  aspects of HB 474 with which RCAC is concerned is the                        
  uncertain language of Section Three regarding "reasonably                    
  foreseeable, nonspeculative, direct effects."   He said the                  
  language narrows the breadth of analysis and may result in a                 
  review which is not as thorough as that which is found in                    
  the current ACMP language which requires analysis of direct                  
  and significant effects.  He referred to the section of HB
  474 dealing with the phasing of projects.  He indicated that                 
  it would have an uncertain impact on the current phasing                     
  language under ACMP regulations in federal law.  He said the                 
  language should be further defined and clarified before                      
  adoption, in order to make certain that it is consistent                     
  with other aspects of the ACMP.  He urged that before HB 474                 
  is finalized, the legal and definitional questions are                       
  answered and that local governments, industry, public                        
  citizens and agencies have an adequate opportunity to review                 
  the information presented.                                                   
  Number 067                                                                   
  CHIP TREINEN, AREA K SEINERS ASSOCIATION, urged the                          
  committee to slow HB 474 down so some considerations could                   
  be looked at a little more closely.  He stated he was                        
  concerned that HB 474 would not allow the public to give                     
  adequate testimony and input in determining the effects of                   
  oil and gas projects.                                                        
  Number 087                                                                   
  he was opposed to HB 474.  He referenced the terms                           
  "reasonably," "foreseeable," "nonspeculative," and "direct                   
  effects."  He said if the state follows Mr. Eason's                          
  reasonings and comments regarding the words "speculative" it                 
  would conclude that it is highly speculative that a lease                    
  sale will lead to oil and gas exploration.                                   
  JOHN BOCCI, CORDOVA DISTRICT FISHERIES UNITED, said the                      
  apparent fast track of HB 474 is very disturbing to him.  He                 
  said not only does it undermine due public process, but it                   
  leaves the ability to make significant coastal zone                          
  management decisions in the hands of mid-level bureaucratic                  
  management.  He said he did not think that state government                  
  was designed to be utilized in that manner.  He said to give                 
  such power to department managers can only be a disaster                     
  waiting to happen.  He said the public needs the ability to                  
  examine all sides of development to ensure that it is in the                 
  best interest of the state as a whole, not just the most                     
  persuasive special interest.                                                 
  Number 144                                                                   
  REPRESENTATIVE KOTT stated he has heard many comments about                  
  HB 474 being fast tracked.  He said he hoped that the public                 
  does not have that perception.  He said HB 474 has three                     
  committee referrals and that at best, it will be three to                    
  four weeks before it goes to the final committee of                          
  referral, House Judiciary.                                                   
  Number 157                                                                   
  REPRESENTATIVE MACKIE stated HB 474 was introduced on                        
  February 14, 1994, and it did not comply with the Five Day                   
  Rule.  He said the Oil & Gas Committee was conducting an                     
  illegal meeting.  He suggested the committee start with                      
  those points in their effort to determine why the public was                 
  concerned about fast tracking.                                               
  Number 167                                                                   
  MR. EASON stated that Ms. Wainwright suggested the DNR                       
  consistency determination system was broken and could be                     
  fixed.  He said he thought that it was important for the                     
  members of the committee to understand that DNR issues a                     
  consistency determination for a lease sale only after the                    
  DGC, DEC, ADF&G and other agencies certify that they also                    
  believe the finding and the consistency determination fully                  
  comply with the terms of the Coastal Zone Management Act.                    
  He said he thought that it was a mischaracterization to say                  
  that the problem is as simple as DNR's consistency                           
  determination.  He said in the case of Lease Sale 78, the                    
  courts overturned the consistency determination that all                     
  parties agreed was proper and in compliance with the law.                    
  He said there is a very broad promotion of the benefit of                    
  public use and public development of Alaska's resources for                  
  the benefit of all Alaskans.  He stated the legislature is                   
  the ultimate policymaker with regard to how DNR goes about                   
  implementing what the legislature wants it to do in                          
  furtherance of the general guidelines.  He said the ultimate                 
  resource decision is the decision to withdraw areas from                     
  leasing.  He said the legislature has generally withheld                     
  that delegation to itself.  He said the system of having a                   
  five year oil and gas leasing schedule is intended to get                    
  sales before the legislature early, so it can make decisions                 
  in the broad public sense if it believes there is an area                    
  that is so sensitive that it should not be leased.  He said                  
  DNR implements that program, if the legislature so chooses.                  
  He said DNR has the dilemma of trying to balance the                         
  resource use and making sure that all of the agencies and                    
  the public have an opportunity to comment.  He said DNR does                 
  not think the legislature intends for DNR to make the                        
  decision that one use should have priority and the                           
  opportunity to explore, under carefully controlled                           
  conditions, is not provided.  He said DNR does not think it                  
  is a good multiple use of the resource.  He stated he agreed                 
  with Mr. Kawahara that there are instances when safety                       
  analyses should be undertaken.  He said he believed those                    
  analyses should come when a project is proposed so that one                  
  has something real to analyze.                                               
  Number 239                                                                   
  REPRESENTATIVE MACKIE referred to his earlier comment about                  
  mid-level bureaucrats.  He said he had no reason to doubt                    
  that Mr. Eason was a very honorable person, but he was                       
  questioning from a public policy standpoint whether or not                   
  it was good to give such powerful authority to a director of                 
  a division.                                                                  
  Number 251                                                                   
  said what is important is the community impact.  He said his                 
  community depends on fish and wildlife and it is highly                      
  dependent on it.  He said it is very important for local                     
  people to have a say and for the public process to be open                   
  to regular citizens who are not used to bureaucratic                         
  terminology where the English language is very vague and has                 
  several meanings.  He said HB 474 eliminates all public                      
  participation by skirting around real issues so regular                      
  people cannot tell public employees their real concerns.  He                 
  said he wanted the committee to consider the impact of HB
  474 on local communities.                                                    
  Number 342                                                                   
  REPRESENTATIVE DAVIS stated there has been a lot of concern                  
  over the word "nonspeculative."  He asked what Mr. Eason's                   
  interpretation was of that word.                                             
  Number 351                                                                   
  MR. EASON said to his understanding, the word speculative                    
  means things that are not known with certainty, but are                      
  suspected or imagined.  He said the intent to provide an                     
  opportunity for making a written discrimination between                      
  events which people may suggest should be considered and                     
  those that are unrelated.  He said DNR is not proposing that                 
  people not talk to it about impacts they feel are real, as                   
  well as those they feel are speculative.  He said ultimately                 
  the decision has to be made in writing as to whether a                       
  proposal is in the state's best interest and the decision                    
  would be made by rationalizing and discussing each of the                    
  things that are brought up.  He said the burden would be on                  
  DNR to make a determination that a comment is speculative or                 
  Number 387                                                                   
  REPRESENTATIVE DAVIS stated it was his impression that Mr.                   
  Eason's understanding of the court decisions have required                   
  DNR to make speculative judgments.                                           
  MR. EASON stated that was correct.                                           
  REPRESENTATIVE DAVIS referenced page four, subparagraph (c).                 
  He stated he could foresee problems with that section.  He                   
  asked for a rationale for the language and how DNR expects                   
  to eliminate the concerns heard by the committee.                            
  Number 406                                                                   
  MR. EASON stated the intent is to define the universe so the                 
  court, DNR and potential litigants all have a common                         
  understanding of the area that would be under consideration,                 
  as well as the issues in that area that are under                            
  consideration.  He said DNR believes that without the                        
  language, the state will see more challenges like the one                    
  that addresses DNR's consideration or non-consideration of                   
  events in the Gates of the Arctic.  He said based on the                     
  recent string of court decisions, he thought the court was                   
  open to those types of challenges and there is no way to                     
  defend against them.                                                         
  Number 436                                                                   
  REPRESENTATIVE DAVIS referenced places in HB 474 that                        
  mention reasonably foreseeable, nonspeculative, direct                       
  effects of a project.   He asked if any of that wording is                   
  currently in statute.                                                        
  MR. EASON referenced AS 30.805 (g), on page four of HB 474.                  
  He said that if one notes in 1(f) the words are                              
  "...reasonably foreseeable, cumulative effects."  He said                    
  someone had said earlier that DNR should consider cumulative                 
  effects.  He said DNR currently considers reasonably                         
  foreseeable cumulative effects in their findings.  He said                   
  the problem has been with reasonably foreseeable speculative                 
  Number 457                                                                   
  REPRESENTATIVE MACKIE stated he had the same concern as                      
  Representative Davis.  He said in his capacity as a                          
  commercial fisherman, he knew that fish moved.  He said  it                  
  is not right to not address the concerns of those people who                 
  rely upon other natural resources.  He said his constituents                 
  would be very upset about tampering with their ability to                    
  voice their concerns.                                                        
  Number 502                                                                   
  MR. EASON said the point is one of clarification.  He said                   
  the statute as it reads now is for considerations within a                   
  lease sale area.  He said there is another description of                    
  things to be considered adjacent to the sale area.  He said                  
  there are different standards in the statutes as they exist                  
  today under section (g).                                                     
  Number 513                                                                   
  CHAIRMAN GREEN stated he would entertain a motion to move HB
  474 out of committee and on to House Resources with a memo                   
  to the members recommending they look at the transcript of                   
  the hearing and possibly undertake some type of review of HB
  Number 563                                                                   
  REPRESENTATIVE DAVIS requested that any memo sent to House                   
  Resources should be signed by all committee members and                      
  members should indicate specific concerns.                                   
  CHAIRMAN GREEN indicated that was a good idea and possibly                   
  the committee should go one step further and request that                    
  any member of the oil and gas committee who would like to                    
  participate in the review of HB 474 be allowed to do so.                     
  Number 580                                                                   
  REPRESENTATIVE MACKIE stated he objected to moving HB 474                    
  under any circumstances.  He said since the House Resources                  
  Committee sponsored the bill, he was not comfortable with                    
  the fact that it is going to House Resources next.  He said                  
  regardless of the situation, bills are held in committee all                 
  of the time, because members would like to see additional                    
  work done on the legislation.  He stated he wanted to do                     
  more work on HB 474.  He said HB 474 was put on the calendar                 
  pending introduction, but the bill was not introduced until                  
  February 14, 1994.  He said the reason there is a Five Day                   
  Rule is so the public has the ability to monitor things that                 
  are becoming part of the record.  He said a bill that was                    
  read on the House floor two days previous does not give the                  
  public ample opportunity to look at the legislation or                       
  testify.  He said he was not saying that he was opposed to                   
  HB 474, but that it was important to protect the process.                    
  Number 643                                                                   
  REPRESENTATIVE SITTON said he also opposed moving HB 474 out                 
  of committee because it needed work.                                         
  Number 654                                                                   
  REPRESENTATIVE DAVIS said he also opposed moving HB 474 out                  
  of committee.                                                                
  Number 668                                                                   
  REPRESENTATIVE PETE KOTT said he did not want to belabor the                 
  bill in the Oil and Gas Committee and we would like to see                   
  it moved to House Resources.                                                 
  Number 691                                                                   
  REPRESENTATIVE KOTT made a motion to move HB 474 to House                    
  Resources, with individual recommendations.                                  
  Number 692                                                                   
  REPRESENTATIVE MACKIE objected to the motion.                                
  Number 694                                                                   
  ROLL CALL VOTE:                                                              
  YEAH: Green, Kott, Sanders                                                   
  NAY : G. Davis, Sitton, Mackie                                               
  Number 701                                                                   
  CHAIRMAN GREEN noted that the motion failed.                                 
  REPRESENTATIVE MACKIE offered his assistance to work with                    
  the committee so everyone feels comfortable with HB 474.                     
  Number 729                                                                   
  CHAIRMAN GREEN adjourned the meeting at 7:22 p.m.                            

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