Legislature(2009 - 2010)SENATE FINANCE 532

03/30/2010 09:00 AM FINANCE


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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+= HCR 2 IN-STATE GAS PIPELINE TELECONFERENCED
Moved SCS CSHCR 2(FIN) Out of Committee
+= SB 237 SCHOOL CONSTRUCTION DEBT REIMBURSEMENT TELECONFERENCED
Heard & Held
+ SB 4 COASTAL MANAGEMENT PROGRAM TELECONFERENCED
Heard & Held
+ Bills Previously Heard/Scheduled TELECONFERENCED
                 SENATE FINANCE COMMITTEE                                                                                       
                      March 30, 2010                                                                                            
                         9:17 a.m.                                                                                              
                                                                                                                                
                                                                                                                                
9:17:14 AM                                                                                                                    
                                                                                                                                
CALL TO ORDER                                                                                                                 
                                                                                                                                
Co-Chair  Stedman   called  the  Senate   Finance  Committee                                                                    
meeting to order at 9:17 a.m.                                                                                                   
                                                                                                                                
MEMBERS PRESENT                                                                                                               
                                                                                                                                
Senator Lyman Hoffman, Co-Chair                                                                                                 
Senator Bert Stedman, Co-Chair                                                                                                  
Senator Charlie Huggins, Vice-Chair                                                                                             
Senator Johnny Ellis                                                                                                            
Senator Dennis Egan                                                                                                             
Senator Donny Olson                                                                                                             
Senator Joe Thomas                                                                                                              
                                                                                                                                
MEMBERS ABSENT                                                                                                                
                                                                                                                                
None                                                                                                                            
                                                                                                                                
ALSO PRESENT                                                                                                                  
                                                                                                                                
Representative Jay  Ramras; Senator Kevin Meyer;  Carl Rose,                                                                    
Executive  Director,  Association  of Alaska  School  Board;                                                                    
Carol  Comeau,  Superintendent, Anchorage  School  District;                                                                    
Mary Francis,  Executive Director, Alaska Council  of School                                                                    
Administrators; Tim Benintendi,  Staff, Senator Olson; Randy                                                                    
Bates, Director,  Division of Coastal and  Ocean Management,                                                                    
Department   of   Natural   Resources;   Marilyn   Crockett,                                                                    
Executive  Director, Alaska  Oil and  Gas Association;  Pete                                                                    
Slaiby,  Vice   President,  Shell  Alaska;   Wayne  Stevens,                                                                    
President,  Alaska   State  Chamber;  Paul   Laird,  General                                                                    
Manager,   Alaska   Support    Industry   Alliance;   Kathie                                                                    
Wasserman,  Executive  Director,  AML.  Mayor  Edward  Itta,                                                                    
North Slope Borough;                                                                                                            
                                                                                                                                
PRESENT VIA TELECONFERENCE                                                                                                    
                                                                                                                                
Marlene  Campbell, City  and Borough  of Sitka;  Maureen Mr.                                                                    
Campbell  Crea, Self,  Anchorage;  Tom  Lohman, North  Slope                                                                    
Borough; Steve Borell, Alaska Miners Association.                                                                               
                                                                                                                                
SUMMARY                                                                                                                       
                                                                                                                                
HCR  2    IN-STATE GAS PIPELINE                                                                                                 
                                                                                                                                
          HCR 2 was REPORTED out of Committee with a "do                                                                        
          pass" recommendation and with a new zero fiscal                                                                       
          note from the Senate Finance Committee.                                                                               
                                                                                                                                
SB   4    COASTAL MANAGEMENT PROGRAM                                                                                            
                                                                                                                                
          SB 4 was HEARD and HELD in Committee for further                                                                      
          consideration.                                                                                                        
                                                                                                                                
SB 237    SCHOOL CONSTRUCTION DEBT REIMBURSEMENT                                                                                
                                                                                                                                
          SB 237 was HEARD and HELD in Committee for                                                                            
          further consideration.                                                                                                
                                                                                                                                
HOUSE CONCURRENT RESOLUTION NO. 2                                                                                             
                                                                                                                                
     Requesting the governor to  provide energy security for                                                                    
     all Alaskans  by pursuing development of  a natural gas                                                                    
     bullet pipeline from the North  Slope to the Cook Inlet                                                                    
     region;  and requesting  the governor  to identify  and                                                                    
     negotiate  with   one  or   more  persons   capable  of                                                                    
     producing natural  gas from the  Gubik area,  and other                                                                    
     areas on  the North  Slope if necessary,  in sufficient                                                                    
     quantities to support a bullet pipeline project.                                                                           
                                                                                                                                
Senator Huggins  MOVED to ADOPT work  draft 26-LSO264\M. Co-                                                                    
Chair Stedman OBJECTED.                                                                                                         
                                                                                                                                
REPRESENTATIVE  JAY  RAMRAS  disclosed  that  this  was  the                                                                    
second  hearing  of the  resolution  by  the Senate  Finance                                                                    
Committee. He commented on the issue's maturation.                                                                              
                                                                                                                                
Co-Chair Stedman  asked about  the changes  made in  the CS.                                                                    
Representative Ramras  explained the  changes in the  CS. He                                                                    
commented on  Line 14 and discussion  regarding jeopardizing                                                                    
the supply to consumers relying  on production from the Cook                                                                    
Inlet  region.  He highlighted  Page  3,  Lines 19-22  which                                                                    
reflects  the  Senate  Resource Co-chairs  studying  gas  to                                                                    
liquids programs. He  informed that Fischer-Tropsch projects                                                                    
were large for the Alaskan  marketplace. He claimed that the                                                                    
technology is now advanced and appropriate.                                                                                     
                                                                                                                                
9:21:57 AM                                                                                                                    
                                                                                                                                
Co-Chair  Stedman asserted  that  Representative Ramras  was                                                                    
detailing the CS.                                                                                                               
                                                                                                                                
Representative  Ramras explained  the  CS through  sectional                                                                    
analysis.  He noted  that Alaska  now has  a standalone  gas                                                                    
Pipeline  project  advanced by  the  plan  created by  Harry                                                                    
Noah.  He  discussed Line  14,  which  mirrors some  of  the                                                                    
aspirations in HB 369. He  commented on Line 17 through Line                                                                    
20  concerning  a  precipitous  decline  in  the  taps  line                                                                    
necessitating alternative revenue sources  for the export of                                                                    
lesser  priced energy  for those  Alaskans living  along the                                                                    
Yukon  River. Line  21 and  22 recognize  two imminent  open                                                                    
seasons. He  highlighted Lines 23 through  26 that recognize                                                                    
a  heavily conditioned  open season  for  the pipeline.  The                                                                    
open  season  would provide  the  most  efficient method  of                                                                    
delivery for the  least expensive gas to  Alaskans, which is                                                                    
impossible if  the project is  so heavily conditioned  to be                                                                    
delayed for  an indeterminable amount of  time. He continued                                                                    
with  Line  27  through  29  which  reinforces  the  concern                                                                    
regarding moving  forward into the construction  phase for a                                                                    
large diameter  gas pipeline. He  discussed Page 5,  Lines 5                                                                    
through  10  which  addressed necessary  permits,  right  of                                                                    
ways, and  specifications. He mentioned Lines  11 through 17                                                                    
and the  two facilities  discussed including  the importance                                                                    
of maintaining  the existing export  license for  the Conoco                                                                    
Phillips Marathon Liquefied Natural  Gas (LNG) facility. The                                                                    
export permit  is the  only one  of its  kind in  the United                                                                    
States and  serves as an  industrial anchor for  the purpose                                                                    
of  establishing  an  instate  gas  pipeline.  He  expressed                                                                    
concern for  a project  without an  industrial anchor  as it                                                                    
becomes simply a concept and no longer a project.                                                                               
                                                                                                                                
9:28:49 AM                                                                                                                    
                                                                                                                                
Representative Ramras discussed Lines  18 thorough 21, which                                                                    
reinforce   the  need   for  the   administration  and   the                                                                    
Department of Natural Resources  (DNR) to pursue the renewal                                                                    
of the license issued by  the Department of Energy (DOE). He                                                                    
mentioned the  instate gas caucus which  enjoys a membership                                                                    
of 17  members in the  state legislature. He  recognized the                                                                    
continued  negotiations with  the commercial  working group.                                                                    
He  stressed the  need  for a  robust  discussion amongst  a                                                                    
commercial working group of buyers  and sellers to encourage                                                                    
the governor and  the stand alone pipeline  team to continue                                                                    
those discussions.  He stressed the  importance of a  gas to                                                                    
liquids program.                                                                                                                
                                                                                                                                
9:31:34 AM                                                                                                                    
                                                                                                                                
Co-Chair  Stedman  removed  his  objection.  Version  M  was                                                                    
adopted.                                                                                                                        
                                                                                                                                
Co-Chair  Stedman  asked  for   an  explanation  of  HCR  2.                                                                    
Representative  Ramras responded  that  global market  place                                                                    
dynamics have changed. Version M  is recognition of the fact                                                                    
that the dynamics of shale  gas and of equatorial tide water                                                                    
projects  have  changed in  the  last  year. He  thought  it                                                                    
better to  take advantage of Japanese  Crude Cocktail, which                                                                    
is  a  barrel of  energy  equivalent  price computation.  He                                                                    
stressed mindfulness  about the necessity of  acting quickly                                                                    
to  export  natural  gas.  He   felt  a  responsibility  for                                                                    
determining means  of delivering  energy to  all communities                                                                    
including the Railbelt.  He stated that an  economy built on                                                                    
inexpensive   and   abundant   energy  is   exemplified   by                                                                    
Anchorage.  He noted  the initiatives  to move  in-state gas                                                                    
forward.                                                                                                                        
                                                                                                                                
9:37:12 AM                                                                                                                    
                                                                                                                                
Senator Ellis  asked about the  interplay between  hydro and                                                                    
natural  gas.  He  commented  on  the  interest  in  instate                                                                    
natural gas.  He asked  about the  tradeoff between  the two                                                                    
options.                                                                                                                        
                                                                                                                                
Representative Ramras  responded that Alaska is  referred to                                                                    
as a state in civil war.  He noted that one project competes                                                                    
against  another. One  project, the  Susitna, is  large. The                                                                    
interior  comprises the  largest  coldest  community in  the                                                                    
circumpolar globe  still tethered  to diesel. He  noted that                                                                    
the transportation  tariff makes electric heat  unlikely. He                                                                    
opined that HCR 2 speaks  to the commercial working group in                                                                    
addressing the component  of demand. He spoke  to the likely                                                                    
hood of a transportation tariff  if the proposed pipeline is                                                                    
only  partially  full. He  stated  that  he  did not  see  a                                                                    
contest  between  large  scale  hydro and  instate  gas.  He                                                                    
calculated  that   the  contest  was  the   gathering  of  a                                                                    
commercial  working group  to match  buyers and  sellers and                                                                    
create   enough   demand   to   allow   for   a   reasonable                                                                    
transportation tariff. The state's  future is in hydro power                                                                    
and the  benefit of  hydrocarbons and  gas molecules  is the                                                                    
bridge fuel for the next 50 to 100 years.                                                                                       
                                                                                                                                
9:41:10 AM                                                                                                                    
                                                                                                                                
Senator  Huggins commented  that the  inside support  in the                                                                    
governor's office  is helpful. He observed  that the process                                                                    
expressed  by Representative  Ramras  was  sound. He  agreed                                                                    
with   the  various   alternatives.  He   opined  that   the                                                                    
psychology of  Alaska selling  gas was  important especially                                                                    
in-state  gas. He  underlined that  the issue  was not  only                                                                    
about the  Railbelt, but the logistical  distribution system                                                                    
that allows  transport of  gas products  to remote  areas is                                                                    
important.  He  asked  about  key  elements  concerning  the                                                                    
package  and  the timeline  to  allow  the project  to  move                                                                    
forward.  He stressed  that the  final decision  or solution                                                                    
must be economically viable.                                                                                                    
                                                                                                                                
9:43:34 AM                                                                                                                    
                                                                                                                                
Representative  Ramras   stressed  the  importance   of  the                                                                    
project's sanction  date. He believed  that the  state could                                                                    
see a  sanction date in  a year  or two. He  elaborated that                                                                    
Alaskans are  interested in  the short  term plan.  He noted                                                                    
that HCR  2 recognizes  that if the  state does  not proceed                                                                    
with the  project it  must consider  the importation  of gas                                                                    
into  the  South  Central region.  He  cautioned  that  Cook                                                                    
Inlet's  gas supply  is depleted  and expanding  communities                                                                    
and businesses will  have to employ diesel as  a fuel source                                                                    
for the next  10 or 20 years. He advocated  for a discussion                                                                    
between buyers and sellers in  the commercial working group.                                                                    
He advised  that the governor's office,  administration, and                                                                    
the Department of Natural Resources  engage in the extension                                                                    
of  the export  license  for the  Marathon Conoco  Liquefied                                                                    
Natural  Gas (LNG)  facility. He  encouraged the  members of                                                                    
both legislative bodies to seek alignment.                                                                                      
                                                                                                                                
9:50:00 AM                                                                                                                    
                                                                                                                                
Senator   Thomas    appreciated   the   resolution    as   a                                                                    
comprehensive  solution.   He  expressed  support   for  the                                                                    
instate  gasline. He  guessed that  if Alaska  were to  lose                                                                    
their  export license  it  would be  their  last leading  to                                                                    
dependence on gas importation.                                                                                                  
                                                                                                                                
9:51:18 AM                                                                                                                    
                                                                                                                                
Co-Chair Stedman asked  about Page 2, Line 22 of  the CS. He                                                                    
wondered about  the date  of 2016  for transport  of natural                                                                    
gas  along the  pipeline. He  inquired about  the optimistic                                                                    
timeline   and   wondered  if   it   was   a  print   error.                                                                    
Representative  Ramras opined  that Alaska  would not  see a                                                                    
large diameter gas  pipeline until after the  year 2016. The                                                                    
focus of the resolution is an in-state gas pipeline.                                                                            
                                                                                                                                
9:52:30 AM                                                                                                                    
                                                                                                                                
Co-Chair  Stedman mentioned  one zero  fiscal note  from the                                                                    
Senate Finance Committee.                                                                                                       
                                                                                                                                
Co-Chair Hoffman  MOVED to  report SCSCSHCR  2 (FIN)  out of                                                                    
Committee   with   individual    recommendations   and   the                                                                    
accompanying fiscal  note. There being NO  OBJECTION, it was                                                                    
so ordered.                                                                                                                     
                                                                                                                                
HCR  2  was REPORTED  out  of  Committee  with a  "do  pass"                                                                    
recommendation  and with  a new  zero fiscal  note from  the                                                                    
Senate Finance Committee.                                                                                                       
                                                                                                                                
9:55:42 AM                                                                                                                    
                                                                                                                                
SENATE BILL NO. 237                                                                                                           
                                                                                                                                
     "An Act extending the deadline for authorizing school                                                                      
     construction debt reimbursed by the state."                                                                                
                                                                                                                                
9:55:51 AM                                                                                                                    
                                                                                                                                
Co-Chair Stedman explained  the intent to bring  SB 237 back                                                                    
to  the committee  for  the second  time  and reopen  public                                                                    
testimony by invitation only.                                                                                                   
                                                                                                                                
SENATOR  KEVIN  MEYER  stated  that  he  had  no  additional                                                                    
comments and supported the amendment by Co-Chair Hoffman.                                                                       
                                                                                                                                
Co-Chair Stedman  reported that the request  for a breakdown                                                                    
by the  department of school construction  funding for urban                                                                    
and Regional  Education Attendance Area (REAA)  schools over                                                                    
the last twenty  years was provided as  requested during the                                                                    
bill's  last hearing.  He asked  Senator Meyer  for a  brief                                                                    
synopsis of the bill.                                                                                                           
                                                                                                                                
Senator Meyer explained the  legislation. He elaborated that                                                                    
SB 237  extends the debt reimbursement  program. The program                                                                    
is typically renewed  for two year periods  and is currently                                                                    
nearing sunset. The  program is very important  to the urban                                                                    
schools.                                                                                                                        
                                                                                                                                
Co-Chair Stedman  mentioned one fiscal note  from Department                                                                    
of Education  and Early Development (DEED)  showing the cost                                                                    
of debt  reimbursement beginning  in FY13 at  $3,700,000. He                                                                    
observed an additional fiscal note  just delivered from DEED                                                                    
reflecting changes in the CS,  but he preferred to review it                                                                    
prior to passing it out to committee members.                                                                                   
                                                                                                                                
Co-Chair Hoffman noted  that a ruling by  the third judicial                                                                    
district  stated  that  the  system   in  the  current  debt                                                                    
reimbursement system  was unconstitutional  due to  the lack                                                                    
of  focus  on  rural  Alaska.   He  explained  that  he  was                                                                    
searching for a  funding mechanism for both  urban and rural                                                                    
Alaska.                                                                                                                         
                                                                                                                                
9:59:57 AM                                                                                                                    
                                                                                                                                
CARL ROSE, EXECUTIVE DIRECTOR,  ASSOCIATION OF ALASKA SCHOOL                                                                    
BOARDS, testified  unanimous support  of the  legislation by                                                                    
the  Association of  Alaska School  Boards. He  recalled the                                                                    
General  Obligation  (GO) bond  that  cleaned  up the  major                                                                    
maintenance list eight  years ago which lacked  a formula to                                                                    
treat the grant  and bonding programs with  equity. He noted                                                                    
the large  imbalance regarding the  needs of both  urban and                                                                    
rural  Alaska.  The  bill  provides  a  great  beginning  in                                                                    
providing a formula for both the grant and bonded debt.                                                                         
                                                                                                                                
CAROL  COMEAU,  SUPERINTENDENT, ANCHORAGE  SCHOOL  DISTRICT,                                                                    
testified  in support  of the  legislation. She  believed it                                                                    
fair to have rural Alaska  receive funding as she recognized                                                                    
their needs for  new construction as well as  the backlog of                                                                    
deferred  maintenance.  She  applauded  the  Senate  Finance                                                                    
Committee for bringing this forward.                                                                                            
                                                                                                                                
10:03:46 AM                                                                                                                   
                                                                                                                                
Co-Chair  Hoffman  noted the  dialog  of  a sunset  for  the                                                                    
legislation. He  stated that  he was  not interested  in the                                                                    
sunset.                                                                                                                         
                                                                                                                                
Ms. Comeau  declared strong support  for the  elimination of                                                                    
any  sunset date  for both  the debt  reimbursement and  the                                                                    
proposal for the rural funding.                                                                                                 
                                                                                                                                
10:04:37 AM                                                                                                                   
                                                                                                                                
MARY FRANCIS,  EXECUTIVE DIRECTOR, ALASKA COUNCIL  OF SCHOOL                                                                    
ADMINISTRATORS testified in support  of the legislation. She                                                                    
noted that  the bill allows  a process to address  the needs                                                                    
of schools for  those unable to bond  locally. She suggested                                                                    
an audit for school buildings  statewide to allow for better                                                                    
understanding  of the  maintenance  and school  construction                                                                    
needs.                                                                                                                          
                                                                                                                                
10:06:10 AM                                                                                                                   
                                                                                                                                
Co-Chair Hoffman appreciated the testimony on the                                                                               
contentious issue.                                                                                                              
                                                                                                                                
SB 237 was HEARD and HELD in Committee for further                                                                              
consideration.                                                                                                                  
                                                                                                                                
SENATE BILL NO. 4                                                                                                             
                                                                                                                                
     "An Act relating to the Alaska coastal management                                                                          
     program; and establishing the Alaska Coastal Policy                                                                        
     Board."                                                                                                                    
                                                                                                                                
10:07:00 AM                                                                                                                   
                                                                                                                                
Senator Olson delivered the sponsor statement.                                                                                  
                                                                                                                                
     In 2003, HB 191 instituted significant changes to the                                                                      
     Alaska Coastal Management Program (ACMP).  It unduly                                                                       
    impacted local participation in development reviews                                                                         
     and approvals affecting both state and federal actions                                                                     
     in the coastal zone.   Prior to 2003, the program was                                                                      
     not felt to be significantly problematic.  Currently,                                                                      
     there are 28 management districts either approved, or                                                                      
     under review for approval.  For a list of current                                                                          
     districts, see the Alaska Coastal Management Program                                                                       
     website at                                                                                                                 
     (http://alaskacoast.state.ak.us/district/html/progress                                                                   
     final.htm).  To identify a community within a                                                                            
     particular coastal district, see                                                                                           
     http://alaskacoast.state.ak.us/explore/communityindex.                                                                   
     pdf .                                                                                                                    
                                                                                                                                
     The authority for a Consistency Review Process, used                                                                       
     to implement the ACMP, is found at 11 AAC 110.  This                                                                       
    process reviews proposed development activities for                                                                         
    conformity with state laws and regulations, federal                                                                         
     laws and regulations, and district enforceable                                                                             
     policies, such as exist now.  Under this bill,                                                                             
     districts would be authorized to generate enforceable                                                                      
     policies as they see fit.  Two other regulations play                                                                      
     prominent roles, 11 AAC 112 deals with statewide                                                                           
     standards, and 11 AAC 114 deals with the district plan                                                                     
     approval process.  The governing statutes are AS 46.39                                                                     
     and AS 46.40.                                                                                                              
                                                                                                                                
     With the changes from 2003, regulations adopted by the                                                                     
     Department of Natural Resources severely limited the                                                                       
     ability of coastal districts to establish enforceable,                                                                     
     locally-generated policies regarding the eventual                                                                          
     effects of development on coastal resources and uses.                                                                      
     So dramatic were the changes that the federal Office                                                                       
    of Oceans and Coastal Resource Management formally                                                                          
     reviewed state actions for compliance, and took two                                                                        
     years to determine acceptance.                                                                                             
                                                                                                                                
    Since the 2003 changes, Alaska's coastal districts                                                                          
    have dealt with controversy and delay by DNR where                                                                          
     achieving suitable district management plans are                                                                           
     concerned.  Formerly, disputes over approval of                                                                            
    district plans were resolved by the Coastal Policy                                                                          
     Council.   This bill would restore that option to a                                                                        
     new Coastal Policy Board.  Disbanding the Council                                                                          
     under HB 191 concentrated all decision-making power                                                                        
     within DNR.                                                                                                                
                                                                                                                                
     CSSB 4 (CRA) would establish the Alaska Coastal Policy                                                                     
     Board within the Department of Natural Resources, and                                                                      
     restore an authoritative role for local residents, one                                                                     
     that was working acceptably prior to 2003.  The new                                                                        
     board would be much trimmer than the pre-2003 panel of                                                                     
     seventeen members.  Nine members would compose the new                                                                     
     board, including five public members appointed by the                                                                      
     governor.  One of the five would be at-large from any                                                                      
     of the coastal districts, and the others would be                                                                          
     appointed from four defined regions:  Northwest                                                                            
     Alaska, Southwest Alaska, Upper Cook Inlet, and                                                                            
     Southeast Alaska.  Filling out the board membership                                                                        
     would be the commissioners of DEC, F&G, DNR, and CCED.                                                                     
     DNR would continue to provide day-to-day management                                                                        
     and support.                                                                                                               
                                                                                                                                
     With the governor appointing five public members and                                                                       
     with four commissioners having seats by definition,                                                                        
     the contention that substantial influences would shift                                                                     
    away from DNR is arguable.  Disbanding the Council                                                                          
    under HB 191 concentrated all decision-making power                                                                         
    with the Commissioner of the Department of Natural                                                                          
     Resources, and has since shown the changes to be                                                                           
     excessive and less productive.                                                                                             
                                                                                                                                
     CSSB 4 (CRA) would also reinstate authority for                                                                            
    locally-generated enforceable policies, streamline                                                                          
     project reviews, provide Board approval of agency-                                                                         
     generated regulations, provide for district management                                                                     
     plan approvals, allow for receiving grants and other                                                                       
     monies, and empower the Board with other                                                                                   
     administrative authorities.                                                                                                
                                                                                                                                
     The primary thrust of CSSB 4 (CRA) is to return a                                                                          
     measure of authority to local district residents,                                                                          
     through their district organizations, by sharing power                                                                     
     over the Alaska Coastal Management Program                                                                                 
                                                                                                                               
10:09:59 AM                                                                                                                   
                                                                                                                                
TIM  BENINTENDI, STAFF,  SENATOR OLSON  explained that  SB 4                                                                    
amends  the  Alaska  Coastal Management  Program  (ACMP)  by                                                                    
providing  a   fair  and  reasonable  approach   to  coastal                                                                    
development,  which would  encourage participation  of local                                                                    
coastal  districts, state  agencies and  project applicants.                                                                    
The legislation  would establish  the Alaska  Coastal Policy                                                                    
Board, remove  the Department of  Environmental Conservation                                                                    
(DEC) carve-out,  and allow  coastal districts  to establish                                                                    
meaningful and enforceable policies.  He continued that SB 4                                                                    
streamlines the board size from a  17 to a 9 member board. A                                                                    
new board  would represent coastal  districts and  all state                                                                    
resource  agencies.  The  new   board  would  operate  on  a                                                                    
consensus basis for nearly all  decisions. All members would                                                                    
be appointed by  the governor and DNR  would provide support                                                                    
services  to the  board.  The  administration has  cautioned                                                                    
against changes that would make  the program more cumbersome                                                                    
and costly  for project developers.  He explained that  SB 4                                                                    
does  not  restore the  ability  for  citizen law  suits  or                                                                    
petitions.                                                                                                                      
                                                                                                                                
Mr.  Benintendi continued  that  local enforceable  policies                                                                    
cannot  override state  or federal  regulations or  statutes                                                                    
and  must  be  clear   and  concise.  Subsistence  usage  is                                                                    
identified   as  a   value  and   is   already  in   coastal                                                                    
regulations.                                                                                                                    
                                                                                                                                
10:15:11 AM                                                                                                                   
                                                                                                                                
Co-Chair  Stedman  asked  about  Page 13,  Line  9  and  the                                                                    
activities within  the coastal  zone inland.  Mr. Benintendi                                                                    
answered that the  provision for review of a  project in the                                                                    
inland area  if deemed to  impact the coastal zone  would be                                                                    
subject to  review by  the panel. He  explained that  a mine                                                                    
up-land even a dozen miles  from the coastal area is subject                                                                    
to review under the coastal policy board.                                                                                       
                                                                                                                                
Co-Chair Stedman asked if timber  harvests were included. He                                                                    
referred to  Page 18  and the US  code 1453.  Mr. Benintendi                                                                    
offered to present answers at a later date.                                                                                     
                                                                                                                                
Senator  Huggins  directed  attention  to a  letter  in  the                                                                    
committee   packet    referring   to   off    shore   permit                                                                    
stipulations. Mr.  Benintendi offered  to address  the issue                                                                    
at a  later date.  Senator Olson noted  that the  letter was                                                                    
addressed to him and he  understood that all communities are                                                                    
subject to federal law.                                                                                                         
                                                                                                                                
10:18:12 AM                                                                                                                   
                                                                                                                                
Co-Chair Stedman asked for further  discussion on the board.                                                                    
He  was interested  in  necessary  qualifications for  board                                                                    
appointments and public  positions. Senator Olson understood                                                                    
that the  board appointees must  be residents of one  of the                                                                    
28 coastal districts.                                                                                                           
                                                                                                                                
Co-Chair Stedman referred to Page  3, Line 5 and the board's                                                                    
quorum with the board delegating  one or more of the members                                                                    
the power  to hold hearings.  He asked about the  term "hold                                                                    
hearings."                                                                                                                      
                                                                                                                                
10:20:57 AM                                                                                                                   
                                                                                                                                
Mr.  Benintendi   suggested  that   the  reference   was  to                                                                    
subcommittee hearings.                                                                                                          
                                                                                                                                
Co-Chair Stedman  noted two fiscal  notes, one from  DNR for                                                                    
$165 thousand in  general funds to cover the  cost of travel                                                                    
and  supplies  for  the  coastal policy  board  as  well  as                                                                    
contractual funds  for DNR and draft  regulation and another                                                                    
from  DEC  for $118,700  for  interagency  receipts for  one                                                                    
additional  person  needed  to  serve  as  the  department's                                                                    
coastal management coordinator.                                                                                                 
                                                                                                                                
Senator Huggins referenced  Page 3, Line 24.  He asked about                                                                    
the adoption of regulations to be approved by the board.                                                                        
                                                                                                                                
Mr.  Benintendi  thought  that the  department  would  draft                                                                    
regulations and  the board would  have the option  to review                                                                    
them.  Senator  Olson  clarified  the  board  has  the  same                                                                    
authority as they did prior to 2003.                                                                                            
                                                                                                                                
10:23:15 AM                                                                                                                   
                                                                                                                                
MARLENE   CAMPBELL,  CITY   AND   BOROUGH   OF  SITKA   (via                                                                    
teleconference),   testified  in   support   of   SB  4   to                                                                    
effectively   enable   Alaska's   coastal   communities   to                                                                    
participate in the Alaska Coastal Management Program.                                                                           
                                                                                                                                
Senator  Olson  requested  an outline  of  the  relationship                                                                    
between Sitka and  DNR since 2003. Ms.  Campbell recalled an                                                                    
arduous  multiyear  process  with  the  city  attempting  to                                                                    
revise  their  coastal  program  which  was  gutted  by  the                                                                    
proposed  changes.  She noted  that  a  program was  finally                                                                    
approved  in  April  2007,  which  resulted  in  a  lack  of                                                                    
opportunity to comment on the coastal plan.                                                                                     
                                                                                                                                
10:28:25 AM                                                                                                                   
                                                                                                                                
MAUREEN   MR.   CAMPBELL    CREA,   SELF,   ANCHORAGE   (via                                                                    
teleconference)  testified in  support  of the  legislation.                                                                    
She  commented  that  SB  4  addresses  several  significant                                                                    
problems in  the current  Alaska Coastal  Management Program                                                                    
(ACMP). She  believed that  an effective  coastal management                                                                    
program  facilitates development  while protecting  valuable                                                                    
uses and resources  of the coastal zone through  an open and                                                                    
public process.                                                                                                                 
                                                                                                                                
10:32:59 AM                                                                                                                   
                                                                                                                                
TOM  LOHMAN,  NORTH   SLOPE  BOROUGH  (via  teleconference),                                                                    
testified  in support  of the  legislation.  He agreed  that                                                                    
areas inland  of the coastal  zone could be impacted  by the                                                                    
legislation. The board issue allows  for public members with                                                                    
knowledge of the program. He  spoke to the fear of restoring                                                                    
some limited  meaningful role for  local communities  in the                                                                    
program. He opined that all  districts had greater abilities                                                                    
to  adopt  local  policies  before   2003.  He  argued  that                                                                    
districts  could adopt  policies  that  would conflict  with                                                                    
state  or federal  law  and Section  14  prevents them  from                                                                    
doing so.                                                                                                                       
                                                                                                                                
10:37:01 AM                                                                                                                   
                                                                                                                                
STEVE    BORELL,    ALASKA     MINERS    ASSOCIATION    (via                                                                    
teleconference)  testified   in  opposition  to  SB   4.  He                                                                    
disagreed  with  the method  of  establishment  of the  ACPM                                                                    
board. He  stated that  the board's  power does  not include                                                                    
the numerous  checks and  balances that  are imposed  on the                                                                    
DNR and  would eliminate the requirement  for district plans                                                                    
to  meet statewide  standards. He  claimed that  SB 4  would                                                                    
allow the coastal  policy board to define  the boundaries of                                                                    
coastal districts as far inland  as they wished, which would                                                                    
give the  coastal districts authority  over any  activity in                                                                    
the state.                                                                                                                      
                                                                                                                                
10:40:00 AM                                                                                                                   
                                                                                                                                
MAYOR  EDWARD  ITTA,  NORTH   SLOPE  BOROUGH,  testified  in                                                                    
support of SB 4. He  believed that the legislation strikes a                                                                    
reasonable balance.  He asserted that  the program is  not a                                                                    
permitting  program, but  instead  one  of coordination.  He                                                                    
stated that  the program  does not  create new  obstacles to                                                                    
slow down  development projects,  but instead  establishes a                                                                    
process for resolving  conflicts between project applicants,                                                                    
agencies and local districts.                                                                                                   
                                                                                                                                
10:42:44 AM                                                                                                                   
                                                                                                                                
RANDY  BATES,  DIRECTOR,  DIVISION   OF  COASTAL  AND  OCEAN                                                                    
MANAGEMENT, DEPARTMENT OF  NATURAL RESOURCES, testified that                                                                    
the  department has  concerns about  the  CS for  SB 4.  The                                                                    
initial concern is the creation  of a new oversight body for                                                                    
the  coastal  policy  board  and vests  the  body  with  the                                                                    
ability to approve enforceable  policies that would override                                                                    
agency  authority,  effectively  rendering  the  legislative                                                                    
establishment of  laws relative  to resource  management and                                                                    
protection  moot. The  second concern  is that  the bill  is                                                                    
specific to the  issues of a group of  ACMP participants but                                                                    
is not  a bill  of balance. He  opined that  the legislation                                                                    
changes the  structure of the  ACMP from one of  local input                                                                    
to  one  of  local  control.  The  legislation  would  allow                                                                    
enforceable policies to be  more restrictive, stringent, and                                                                    
more prescriptive  than existing  state and federal  laws by                                                                    
allowing   modification  of   standards  and   authority  of                                                                    
resource  agencies. He  stressed recognition  that the  ACMP                                                                    
will be  subject to  a program  audit by  Legislative Budget                                                                    
and  Audit Committee  this  year  as a  result  of a  sunset                                                                    
provision within the statute.                                                                                                   
                                                                                                                                
10:46:00 AM                                                                                                                   
                                                                                                                                
Co-Chair  Hoffman requested  that  the  department submit  a                                                                    
reasonable address to the expressed concerns.                                                                                   
                                                                                                                                
MARILYN  CROCKETT, EXECUTIVE  DIRECTOR, ALASKA  OIL AND  GAS                                                                    
ASSOCIATION declared  strong concerns with  the legislation.                                                                    
She  opined   that  the  legislation   provides  conflicting                                                                    
requirements,   consistent    disagreement   between   local                                                                    
districts   and   state   agencies  about   the   particular                                                                    
requirements of a coastal management program.                                                                                   
                                                                                                                                
PETE  SLAIBY, VICE  PRESIDENT,  SHELL  ALASKA, testified  in                                                                    
opposition to  the legislation. He  valued the needs  of the                                                                    
stakeholders  in the  communities involved.  He stated  that                                                                    
Shell  Alaska made  250 visits  into communities  to explain                                                                    
their intentions.  He stated  that the  existing legislation                                                                    
at the state  and federal levels covers  the concerns voiced                                                                    
by  stakeholders. He  provided an  example regarding  public                                                                    
comment received by Shell Alaska  regarding air permits. The                                                                    
concern with the bill is the series of regulations.                                                                             
                                                                                                                                
10:52:28 AM                                                                                                                   
                                                                                                                                
WAYNE  STEVENS, PRESIDENT,  ALASKA STATE  CHAMBER, testified                                                                    
in   opposition  to   the   legislation.   He  shared   that                                                                    
significant questions have  been insufficiently addressed in                                                                    
the  legislative debate.  He opined  that SB  4 attempts  to                                                                    
solve a  problem that may  not exist  and has not  been well                                                                    
defined.  Without  compelling   evidence  that  the  current                                                                    
program  does   not  adequately  protect   Alaska's  coastal                                                                    
resources  or allow  for  substantial public  participation,                                                                    
the state chamber questions the  wisdom of adding complexity                                                                    
to the permitting process.                                                                                                      
                                                                                                                                
10:54:36 AM                                                                                                                   
                                                                                                                                
PAUL  LAIRD,   GENERAL  MANAGER,  ALASKA   SUPPORT  INDUSTRY                                                                    
ALLIANCE,  testified in  opposition to  the legislation.  He                                                                    
examined that Alaska's  oil and gas industry  lost 1500 jobs                                                                    
in  the last  year  due  to a  hostile  tax environment  and                                                                    
global  economic  conditions.  He  opined that  SB  4  would                                                                    
further delay investment and destroy  jobs and businesses in                                                                    
Alaska's resource industries.                                                                                                   
                                                                                                                                
10:56:18 AM                                                                                                                   
                                                                                                                                
KATHIE  WASSERMAN,  EXECUTIVE   DIRECTOR,  ALASKA  MUNICIPAL                                                                    
LEAGUE (AML)  testified in support  of the  legislation. She                                                                    
explained that  the support of SB  4 by AML is  in an effort                                                                    
to restore their ability to regain a meaningful seat at the                                                                     
table.                                                                                                                          
                                                                                                                                
Senator Olson concluded that the bill's impetus was lack of                                                                     
movement or compromise on behalf of the opposition to                                                                           
rectify the situation.                                                                                                          
                                                                                                                                
SB 4 was HEARD and HELD in Committee for further                                                                                
consideration.                                                                                                                  
                                                                                                                                
ADJOURNMENT                                                                                                                   
                                                                                                                                
The meeting was adjourned at 10:57 AM.                                                                                          

Document Name Date/Time Subjects
Sponsor Stmt HCR 2.pdf SFIN 3/30/2010 9:00:00 AM
HCR 2
SB 237 Sponsor Statement.docx SFIN 3/30/2010 9:00:00 AM
SB 237
SB 237 Sectional SFIN.pdf SFIN 3/30/2010 9:00:00 AM
SB 237
SB 237 Kasayulie Ruling.pdf SFIN 3/30/2010 9:00:00 AM
SB 237
SB 237 DEED Capital Projects.pdf SFIN 3/30/2010 9:00:00 AM
SB 237
sb237 Sectional Analysis[1].pdf SFIN 3/30/2010 9:00:00 AM
SB 237
sb237 Program Funding_Historical and Projected[1].pdf SFIN 3/30/2010 9:00:00 AM
SB 237
SB4 Index Map[1].pdf SFIN 3/30/2010 9:00:00 AM
SB 4
SB4 Sectional Analysis[2].doc SFIN 3/30/2010 9:00:00 AM
SB 4
SB 4 Bill Packet[1].pdf SFIN 3/30/2010 9:00:00 AM
SB 4
2009 SB 4 CRA opposition RDC.PDF SFIN 3/30/2010 9:00:00 AM
SB 4
2009 SB 4 CRA opposition RDC.PDF SFIN 3/30/2010 9:00:00 AM
SB 4
HCR 2 SCS FIN 032910 Version M.pdf SFIN 3/30/2010 9:00:00 AM
HCR 2
SB 4 ACMP SFIN 03 30 10.pdf SFIN 3/30/2010 9:00:00 AM
SB 4
SB004CS(CRA)-DEC-CO-3-29-10.pdf SFIN 3/30/2010 9:00:00 AM
SB 4
SB 237 Maintenance Reimbursement 2010.pdf.pdf SFIN 3/30/2010 9:00:00 AM
SB 237
SB 4 AOGA letter 03 30 10.pdf SFIN 3/30/2010 9:00:00 AM
SB 4
2009 CSSB 4 CRA sponsor statement.doc SFIN 3/30/2010 9:00:00 AM
SB 4
2009 CSSB 4 CRA sectional analysis.doc SFIN 3/30/2010 9:00:00 AM
SB 4
SB 4 Shell Testimony SFIN 033010.pdf SFIN 3/30/2010 9:00:00 AM
SB 4
SB 4 AK Miners Assoc. SFIN 032910.pdf SFIN 3/30/2010 9:00:00 AM
SB 4
SB 237 ACSA Position Statement.pdf SFIN 3/30/2010 9:00:00 AM
SB 237
SB 4 Mayor Itta SFIN 033010.pdf SFIN 3/30/2010 9:00:00 AM
SB 4