02/08/2014 09:00 AM Senate RESOURCES
| Audio | Topic |
|---|---|
| Start | |
| SB146 | |
| SB109 | |
| SJR15 | |
| SJR16 | |
| Adjourn |
+ teleconferenced
= bill was previously heard/scheduled
| *+ | SB 146 | TELECONFERENCED | |
| *+ | SB 109 | TELECONFERENCED | |
| *+ | SJR 15 | TELECONFERENCED | |
| *+ | SJR 16 | TELECONFERENCED | |
ALASKA STATE LEGISLATURE
SENATE RESOURCES STANDING COMMITTEE
February 8, 2014
8:59 a.m.
MEMBERS PRESENT
Senator Cathy Giessel, Chair
Senator Fred Dyson, Vice Chair
Senator Peter Micciche
Senator Click Bishop
Senator Anna Fairclough
MEMBERS ABSENT
Senator Lesil McGuire
Senator Hollis French
COMMITTEE CALENDAR
SENATE BILL NO. 146
"An Act approving and ratifying the sale of royalty oil by the
State of Alaska to Tesoro Corporation and Tesoro Refining and
Marketing Company LLC; and providing for an effective date."
- MOVED SB 146 OUT OF COMMITTEE
SENATE BILL NO. 109
"An Act extending the termination date of the Citizens' Advisory
Commission on Federal Management Areas in Alaska; and providing
for an effective date."
- MOVED SB 109 OUT OF COMMITTEE
SENATE JOINT RESOLUTION NO. 15
Opposing any international designation of Alaska land or water
as an international park, world heritage site, biosphere
reserve, Ramsar site, or other classification of land or water
that affects the use of land or water by the state or an Alaska
Native corporation without approval by the United States
Congress and the Alaska State Legislature; requesting the United
States Department of State and the United States Department of
the Interior to cease all further action related to an
international designation for land and water in the state until
the action is approved by the United States Congress and the
Alaska State Legislature; requesting that the United States
Congress pass legislation requiring Congressional approval of
any international designation that affects the use of land or
water by the state or the United States; requesting that the
governor be involved in the process and development of any joint
action plan; requesting that the state, including the
departments responsible for the management of fish and wildlife
and other natural resources, be an integral part of any
discussion, agreement, understanding, or other process that
affects the use or development of fish and wildlife and other
natural resources in the state; and urging the governor and the
attorney general to reserve all legal remedies for a taking of
the natural resources of the state by an international
designation of land and water in the state.
- MOVED SJR 15 OUT OF COMMITTEE
SENATE JOINT RESOLUTION NO. 16
Urging the federal government to stop providing funding, through
federal agencies, to nongovernmental organizations that oppose
the development of Alaska's resources.
- MOVED CSSJR 16(RES) OUT OF COMMITTEE
PREVIOUS COMMITTEE ACTION
BILL: SB 146
SHORT TITLE: APPROVE TESORO ROYALTY OIL SALE
SPONSOR(s): RULES BY REQUEST OF THE GOVERNOR
01/29/14 (S) READ THE FIRST TIME - REFERRALS
01/29/14 (S) RES, FIN
02/08/14 (S) RES AT 9:00 AM BUTROVICH 205
BILL: SB 109
SHORT TITLE: ADVISORY COMMISSION ON FEDERAL MGT AREAS
SPONSOR(s): COGHILL
01/22/14 (S) PREFILE RELEASED 1/10/14
01/22/14 (S) READ THE FIRST TIME - REFERRALS
01/22/14 (S) RES, FIN
02/08/14 (S) RES AT 9:00 AM BUTROVICH 205
BILL: SJR 16
SHORT TITLE: OPPOSE FEDERAL AID TO CERTAIN NONPROFITS
SPONSOR(s): GIESSEL
01/29/14 (S) READ THE FIRST TIME - REFERRALS
01/29/14 (S) RES
02/08/14 (S) RES AT 9:00 AM BUTROVICH 205
BILL: SJR 15
SHORT TITLE: OPPOSE INTERNATIONAL DESIGNATING OF LAND
SPONSOR(s): GIESSEL
01/22/14 (S) READ THE FIRST TIME - REFERRALS
01/22/14 (S) RES
02/08/14 (S) RES AT 9:00 AM BUTROVICH 205
WITNESS REGISTER
JOE BALASH, Commissioner-designee
Department of Natural Resources (DNR)
Juneau, Alaska
POSITION STATEMENT: Explained provisions in SB 146.
MATT GILL, Senior Manager
External Affairs
Tesoro Corporation
Operations in Alaska and the Pacific Northwest
Anchorage, Alaska
POSITION STATEMENT: Supported SB 146.
JAMES TANGARO, Vice President and Manager
Tesoro's Kenai Refinery
Tesoro Corporation
Kenai, Alaska
POSITION STATEMENT: Answered questions on SB 146.
SENATOR JOHN COGHILL
Alaska State Legislature
Juneau, Alaska
POSITION STATEMENT: Sponsor of SB 109.
CHAD HUTCHISON
Staff to Senator Coghill
Alaska State Legislature
Juneau, Alaska
POSITION STATEMENT: Commented on SB 109 for the sponsor.
STAN LEAPHART, Executive Director
Citizen's Advisory Commission on Federal Areas (CACFA)
Fairbanks, Alaska
POSITION STATEMENT: Supported SB 109, SJR 15, and SJR 16.
RON SOMERVILLE, CACFA member
Juneau, Alaska
POSITION STATEMENT: Supported SB 109.
CHAIR GIESSEL
Alaska State Legislature
Juneau, Alaska
POSITION STATEMENT: Sponsor of SJR 15 and SJR 16.
JANE CONWAY
Staff to Senator Giessel
Alaska State Legislature
Juneau, Alaska
POSITION STATEMENT: Presented SJR 15 and SJR 16 for the sponsor.
STEVE BORELL, representing himself
Anchorage, Alaska
POSITION STATEMENT: Supported SJR 15.
MARLEANNA HALL, Project Coordinator
Resource Development Council (RDC)
Anchorage, Alaska
POSITION STATEMENT: Supported SJR 15.
MIKE COONS, representing himself
Palmer, Alaska
POSITION STATEMENT: Supported SJR 15.
MIKE COONS, representing himself
Palmer, Alaska
POSITION STATEMENT: Supported SJR 16.
MARLEANNA HALL, Project Coordinator
Resource Development Council (RDC)
Anchorage, Alaska
POSITION STATEMENT: Supported SJR 16.
LISA WEISSLER, representing herself
Juneau, Alaska
POSITION STATEMENT: She did not support SJR 16.
ACTION NARRATIVE
8:59:43 AM
CHAIR CATHY GIESSEL called the Senate Resources Standing
Committee meeting to order at 8:59 a.m. Present at the call to
order were Senators Micciche, Dyson, Bishop, Fairclough, and
Chair Giessel.
SB 146-APPROVE TESORO ROYALTY OIL SALE
9:01:08 AM
CHAIR GIESSEL announced SB 146 to be up for discussion.
JOE BALASH, Commissioner-designee, Department of Natural
Resources (DNR), said SB 146 intends to seek the legislature's
approval of a royalty sale with Tesoro that is lasting more than
one year. He explained that in 2013, the DNR entered into a
royalty sale contract with Tesoro that was for less than one
year and now they want to extend the terms beyond one year and
that requires legislative approval.
As owner of the oil and gas on state land, the state gets a
royalty interest in the production of the hydro carbon and has a
choice of taking it in kind (RIK) or in value (RIV). Statutes
direct the department to take royalty in kind unless the state's
interest is better served to take it in value, but the state is
then restricted on how to go about disposing of or selling that
royalty to achieve value.
COMMISSIONER BALASH said the state tends to stay in value for
the most part, benefiting from the lessee's expertise in being
able to manage the disposition and custody transfers. When
taking in kind they do it at the unit or lease boundary, and in
the case of oil, typically, that custody is immediately
transferred to the buyer of oil right there.
9:04:13 AM
The sale process is governed by a few interwoven statutes, the
first one being AS 38.05; and AS 38.05.182 directs the
department to take it in kind if they are able to determine it
is in the state's best interest to sell to folks in state for
refining purposes, hopefully, and to accomplish that through a
competitive process (with some exceptions).
Keeping that in mind, in 2012, he sent out an informal letter to
a variety of parties when it became apparent that Flint Hills,
in particular, was interested in additional volume for sale.
Those letters went out to producers, refiners, both in state and
out of state and generally went out through media and trade
publications. They received expressions of interest from Tesoro
and Flint Hills, and instead of continuing down the competitive
auction process, they negotiated non-competitive contracts with
each party to serve their respective needs or interests.
9:05:42 AM
SENATOR FAIRCLOUGH asked if other places would have competed.
COMMISSIONER BALASH answered their effort to test the waters
with this expression of interest and solicitation was intended
to see whether or not an auction process or competitive bid
system would generate enough interest to generate additional
revenue over and above what he would receive in an RIV context,
and based on the responses they received, they determined that a
large number of parties would not be interested in bidding for
royalty sales.
9:07:11 AM
SENATOR FAIRCLOUGH asked if the department had ever done a full-
blown RFP or search for a competitive bid.
COMMISSIONER BALASH answered yes, and showing a graph of RIK
sales history explained that the department did some nominations
and auctions back in the early 80s when it had a lot more
royalty and was in the throes of litigation over its value.
SENATOR FAIRCLOUGH noted that it looked like that stopped in
2004.
COMMISSIONER BALASH said specific terms in this contract were
taken from a contract that originally was for less than one
year, and those deliveries had begun earlier in the month. The
current contract doesn't directly reference the RIV versus RIK
calculations, rather it relies on a pricing formula that
averages together an ANS spot price and reported prices with a
$1.95 deduction and a tariff allowance (intended to capture not
only the cost of moving the hydrocarbon oil from the Valdez
marine terminal to the refinery, but also to reflect the
difference in the location depending on which destination it's
going to) for a marine differential. It also has adjustments for
the pipeline tariff, the quality bank, and a line loss factor.
Ultimately that kicks out a price that Tesoro will pay the state
for the value of its royalty.
9:09:05 AM
SENATOR DYSON asked him to explain "quality price adjustment."
COMMISSIONER BALASH relied that the quality bank adjustment is a
mechanism intended to keep all parties whole when various
qualities of crude are co-mingled in the pipeline. He explained
that the North Slope has fields that produce different grades of
petroleum and when it all comes into the TransAlaska Pipeline
System (TAPS) it mixes up and at the other end you get a barrel
of crude that is different than what was put in.
In the case of some Interior refineries, because they are
pulling TAPS quality crude off and recovering some of the higher
value products and returning the residual, they actually have to
pay into the quality bank. That is not a big factor for Tesoro,
because they don't put anything into the pipe, but for reporting
purposes they have to make sure the quality bank differential is
getting tracked from top to bottom.
COMMISSIONER BALASH said the quantity for this particular
contract is dependent upon the nomination made by the buyer with
a certain amount of notice so that the department can nominate
in turn through its lease prerogatives the taking of the volume.
It ranges from 5,000-15,000 barrels/day and may be adjusted so
long as that is done through the commissioner's office. The
contract can be terminated by the refinery or if they fail to
nominate for three consecutive months it terminates
automatically. He said there is an allowance for refinery
turnaround, so in the event they do need to do major maintenance
or an upgrade it doesn't count against them in that three-month
period. And similar to the Flint Hills contract, reserves are
included in the event of some sort of default so that the state
is not stuck as a distressed seller of crude that it has taken
in kind.
9:13:04 AM
When the commissioner makes a decision to sell the state's
royalty, he said that AS 38.05.183(e) guides the process and it
interconnects with the Royalty Board's contract evaluation
process, especially when it is one that goes for more than one
year.
COMMISSIONER BALASH said generally speaking they are guided by
the principal of ensuring that the state is going to receive at
least the same value it would have had the royalty been taken in
value. Because this contract is going beyond the one year term,
the state's Royalty Board met and reviewed it and the findings.
It then considers a list of eight things that try to take into
account the various opportunities that in-state refining, in
particular, or any other in-state use might have on the broader
community, so that more than just the cash value can be
considered. Their economists work very closely with applicants
from this year and prior years, relying on Department of Labor
and Workforce Development (DOLWD) statistics to understand the
jobs impact and try to get a handle on impacts in the market
pricing for the products that come out. Some of that is
difficult because of the unregulated nature of refined products
like diesel, gasoline, and home heating fuel. It's not like
natural gas that has a fairly transparent system to track value
from a producing field to a consumer.
9:15:32 AM
SENATOR FAIRCLOUGH asked in consideration of the projects'
additional costs and responsibilities, which could be imposed on
the state and affect political subdivisions by the developments
related to this transaction, how Tesoro is gaining access to the
crude and if they are responsible for the transportation costs.
COMMISSIONER BALASH replied that when the state makes these
sales, they do so at the lease boundary; in this case that means
Tesoro is responsible for gaining and managing the capacity in
whatever lines are needed to the oil from the field all the way
down to the end of TAPS. An allowance for those costs is
provided in the pricing formula.
The state position in negotiations with this buyer, as well as
others, is to not take custody risk or the obligation to secure
capacity in any of the lines. He explained that if the sales
point would be at the Valdez Marine Terminal (VMT), then there
would be a much higher burden on the division's staff to take on
the task of obtaining and managing capacity in those lines to
get from the field all the way to the VMT.
SENATOR FAIRCLOUGH asked if the point the state chooses to sell
from would affect the tariff.
9:17:47 AM
COMMISSIONER BALASH replied if the point of sale were moved
further south, it wouldn't necessarily affect the tariffs but it
would have to be included in the price formula a different way.
CHAIR GIESSEL asked if Tesoro gets the oil in Valdez and puts it
in one of their vessels and transports it to Nikiski where it
gets refined, and the oil that they can't process because of
their refinery configuration is then put on another ship and
gets sent down to the Lower 48, does that mean they have a zero
liability in the quality bank allowance.
COMMISSIONER BALASH replied in their case, that was correct, but
the quality bank differential varies over time depending on what
is going in at the top, what is going on midstream in the
Interior, and what is going on with the quality bank in the
North Pole. It probably has more of an impact on the competition
between refineries in the state, he thought, but then said
someone from Tesoro could answer that specifically.
9:19:44 AM
He said slide 10 showed the history of the state's royalty sales
program. Historically, there have not been a tremendous number
of sales to industries or buyers other than the state's Interior
refineries. Some sales have happened to Tesoro in the past and
hopefully, they will become a long term customer. He said that
Tesoro is also in the process of running the regulatory process
to construct a pipeline from the west side of Cook Inlet to
their location on the east side in Nikiski, and they hope to see
some good developments on the west side that helps keep them
supplied with Alaskan crude as opposed to imports.
SENATOR MICCICHE asked if the RIK contract price on page 5 was
similar to all of the other prior purchases beginning soon after
construction of the pipeline.
COMMISSIONER BALASH replied that the methods the state uses to
value its oil have evolved over time since the startup of TAPS.
He explained that in the course of the litigation during the
1980s the state sought to sell much more of its royalty, in
part, because we weren't certain we were getting the full value
from the lessees. As the settlements around those valuation
disputes occurred, beginning in the early 90s, the state felt
less of a need to sell its royalty in order to get full value
for it. And as time moved on, there were also changes in the way
the TAPS tariffs were calculated and the marine differentials
were accounted for.
He explained that TAPS tariffs were governed by a settlement
until the early mid-2000s when FERC was asked to adjudicate them
and then there was a fully adjudicated tax tariff value. So, in
some ways things have gotten to be much more transparent for the
state and for potential buyers.
9:23:50 AM
COMMISSIONER BALASH explained there is about a 20 cent
difference in the price per barrel for the volumes it is selling
to Tesoro. Part of the difference has to do with the
considerations that were included in that other contract. In
that case, they agreed to do certain things that the state
determined were valuable to the local population and market, the
big deal being price parity for gasoline that the Interior gets
relative to sales in the Anchorage market. But in this case, the
state is not receiving the benefit of any special commitments
from Tesoro and so the price is a little higher than the one
with Flint Hills last year.
CHAIR GIESSEL said Flint Hills had recently announced their
closure and that means that the royalty oil sold to them will
now become available and asked if that would affect this
agreement.
COMMISSIONER BALASH answered that as someone who grew up in
North Pole he was shocked at the Tuesday announcement and didn't
think the last shoe had dropped. He said that Flint Hills
initially had approached the state about a second ten-year
contract and looking at projections for declining production on
the North Slope, he wasn't certain of having sufficient royalty
volumes. But if Flint Hills shuts down and another buyer doesn't
reopen the refinery, the state will have a larger volume of
royalty available to sell. A combination of the Flint Hills and
Tesoro volumes in the next couple of years gets to be a pretty
high percentage of the state's royalty overall. In fact, both
contracts contain pro-ration clauses in the event the state is
short.
9:27:42 AM
COMMISSIONER BALASH said in some ways those issues become less
of a concern in the Tesoro case if Flint Hills is not taking
royalty. He said they will talk to the Royalty Board about
disposition of royalty volumes. Their first interest is to see
whether or not there is an opportunity to supply an Interior
refinery so that the one remaining with Petro Star continues to
operate.
9:28:12 AM
SENATOR FAIRCLOUGH asked if the loss of Flint Hills is going to
affect the ability to reheat the crude that is moving through
the pipe.
COMMISSIONER BALASH answered that he asked that question of
Alyeska immediately through the State Pipeline Coordinator's
Office and Admiral Barrett assured him that they will have the
ability to get heat into the system but it will cost more and
that Flint Hills received some value for the heat they were
putting back into the line.
COMMISSIONER BALASH said maintaining the stability of the
Nikiski facility and supporting jobs in the Kenai should have a
positive effect on the state overall. The Nikiski facility began
operations in 1969 and it is the most sophisticated refinery in
Alaska making ultralow sulphur diesel including a significant
piece of the overall market for jet fuel and a large role in
gasoline production, heating oil to a lesser extent. They make a
variety of products and employ 200 Alaskans in high paying
positions; they have a variety of retail outlets and filling
stations. Petro Star's facility in Valdez either does or will
manufacture low sulfur road diesel.
9:31:36 AM
SENATOR MICCICHE asked why the fiscal note is not negative.
COMMISSIONER BALASH answered that the fiscal note reflects a
zero cost to the agency for this contract. The revenue line is
indeterminate because they think this will ultimately return
more value to the state than staying RIV. Assuming maximum
volumes, it's about a 20 cent/barrel benefit to the treasury or
$1 million per year.
9:32:44 AM
SENATOR DYSON asked why the state doesn't give a discount to
refineries that are producing fuel for instate use, because
Alaskans have to pay more at the pump than people in the Lower
48.
COMMISSIONER BALASH replied that the refining and motor fuels
industries are unregulated and have very little transparency and
it would be hard to rely on the fact that a discount would flow
through to the benefit of the purchasing public. Because the
price realized at the fuel pump is a function of competition,
supply and demand, and a variety of factors, if the state would
consider selling its royalty oil to instate refineries at a
discounted price, the first question he would be asked is "Why?"
because a $5 difference in the state's royalty value would add
up to tens if not hundreds of millions of dollars depending on
the volumes sold in less revenue to the treasury. If one can
demonstrate that it is being passed on to the consumer
ultimately, that calculation could be evaluated and answered,
but some of the buyers of crude oil in the state have zero
appetite to provide transparent accounting for a price break
flowing through to the consumer.
SENATOR DYSON added that they would also be giving a benefit to
only a portion of the state's citizen to the detriment of others
and impacting deposits to the Permanent Fund.
COMMISSIONER BALASH said he was correct on both points.
9:36:29 AM
CHAIR GIESSEL noted that the Royalty Oil and Gas Development
Advisory Board is comprised of citizens that are volunteering
their services to the state of Alaska and are often invisible
and asked who they are.
COMMISSIONER BALASH said the Chair is Bob Roses (intending to
resign); Steven Menard, Chuck Wiegers, Dana Pruhs, and Steve
Selvaggio are public members; the cabinet members include
himself at the DNR, the commissioner of the DOR whose designee
is Bruce Tangeman, and the commissioner of the Department of
Commerce, Community and Economic Development (DCCED) Susan
Bell's designee (vacant).
He said when the board reviewed the Flint Hills contract last
year they expressed a desire to meet more frequently than just
to review a contract, so they had many meetings educating them
on royalty management history, including disputes that lead to
practices they use today. The board's history suggests that it
can hire its own staff to be a check against the Division of Oil
and Gas and the department generally, although it's been over 20
years since they had staff.
CHAIR GIESSEL thanked them for volunteering their services to
the state.
9:39:14 AM
MATT GILL Senior Manager, External Affairs, Tesoro Corporation
Operations in Alaska and the Pacific Northwest, Anchorage,
Alaska, supported SB 146. He said Tesoro Corporation is an
independent refiner and marketer of petroleum products. They
started refining in Alaska in 1969; the Kenai refinery has
capacity to produce up to 72,000 barrels per day and is
primarily focused on jet diesel production followed by gasoline
and gasoline blend stocks, heating oil, heavy fuel oils,
propane, and asphalt. They operate a 68-mile common carrier
products pipeline that transports jet fuel, gasoline, and diesel
to the Port of Anchorage and the Anchorage International
Airport. The wholesale delivery of their products occurs through
their terminals at Kenai, Anchorage, the Nikiski dock, and the
Port of Anchorage.
In addition to being the largest tax payer in the Kenai
Peninsula Borough, Mr. Gill said the refinery provides about 210
family wage jobs along with about 30 full time contractors who
are working in and around the refinery year round. They are able
to employ another 200-plus employees around the state at their
31 company-owned Tesoro-To-Go retail outlets, as well as the
operators that work at their terminals at the Port of Anchorage
and Nikiski.
He said Tesoro is a major supporter of the Cook Inlet Regional
Citizens Advisory Council (CIRCAC) and the largest member of the
Cook Inlet Spill Prevention and Response Team (CISPRE). They
actively support a wide range of local events and programs from
employee contributions and fund raising efforts for the United
Way to local youth sports programs. Each year they sponsor all
the 5th and 6th grade classes on the Kenai Peninsula to conduct
a mission at the Kenai Challenger Learning Center and they are
now the signature sponsor of the Caring for the Kenai Program.
MR. GILL said he supported SB 146 and said it is a result of
constructive dialogue and productive negotiations between the
Department of Natural Resources (DNR) and the Tesoro Corporation
as described in the presentation. Their original negotiations
resulted in a one-year contract beginning this month and ending
in January 2015. The original contract received best interest
findings, was approved unanimously by the State Royalty Board,
and was signed by both parties in October 2013. On further
analysis of their future needs, they sought this amendment to
the contract to add one more year using identical terms that
would deliver royalty oil until January 2016. A new final best
interest finding was produced by DNR, and the State's Royalty
Board again voted unanimously for approval.
MR. GILL said the state understands their issues and they
arrived at a mutually beneficial agreement that is a win/win for
both parties. The state will continue to receive a price for its
RIK oil that exceeds the price it would have received if it
elected to keep its royalty oil in value and this contract will
provide Tesoro with a stable supply of ANS crude while also
giving them the volumetric flexibility to help accommodate
seasonal fluctuations in demand for refined products. The
availability, flexibility, and stability this contract offers
will have a positive impact on Tesoro's ability to maintain its
ongoing operations at the Kenai refinery.
9:44:06 AM
JAMES TANGARO* Vice President, Tesoro Corporation* Manager,
Tesoro Refinery* Kenai, Alaska* said he was available to answer
questions on SB 146.
SENATOR BISHOP asked how much asphalt the refinery can produce
and what that would do to Department of Transportation and
Public Facilities (DOTPF) pricing on building lane miles in the
state and if Tesoro would be able to meet the demand.
MR. TANGARO said they usually make asphalt as needed and had not
maxed capacity and they will do everything they can to make sure
the supply is there.
SENATOR FAIRCLOUGH asked if they have sufficient resources to
pick up Flint Hill's shortfall in jet fuel supply at the
Anchorage International Airport.
MR. GILL answered yes; between their Kenai refinery and their
West Coast operations they would be able to supply the jet fuel
needs for the state.
CHAIR GIESSEL asked him where his supply of crude comes from.
MR. GILL replied that it comes from TAPS and everything that is
being produced in Cook Inlet, and they were excited about the
uptick in production there. On occasion foreign crudes from the
spot market have been brought in.
MR. TANGARO said ANS and Cook Inlet make up 90 percent on an
annual basis of what they run in the refinery but they shop on a
world market looking for opportunities.
SENATOR MICCICHE commended Tesoro for keeping unit costs as low
as possible and if some of that is supplemented with foreign
product that is just the way the business works. The reality is
that too many jobs and too many community benefits depend on
their success and he hoped to see some expansion considerations
in the future.
9:48:18 AM
MR. GILL added that they take possession of the ANS crude at the
top of the TAPS and buy a quality 10; if it goes through the
Flint Hills refinery they process it and put back in a lesser
product, which means that the product coming out of the pipeline
at Valdez is a lesser quality than what they bought, and that is
where the quality bank adjustment comes in to make sure they are
getting the value for what they bought at the top of the pipe.
Answering another question he said that Petro Star produces
ultra-low sulphur diesel at their Valdez refinery.
CHAIR GIESSEL opened public comment; hearing none, she closed
it.
SENATOR FAIRCLOUGH moved to report SB 146, version A, from
committee to the next committee of referral with attached fiscal
note and individual recommendations. There were no objections
and it was so ordered.
9:50:16 AM
At ease from 9:50 to 9:51 a.m.
SB 109-ADVISORY COMMISSION ON FEDERAL MGT AREAS
9:51:40 AM
CHAIR GIESSEL announced SB 109 to be up for consideration.
SENATOR JOHN COGHILL, Alaska State Legislature, sponsor of SB
109, said this measure is an extension of the sunset date for
the Citizen's Advisory Commission on Federal Areas (CACFA). He
said the federal government owns 60 percent of Alaska's lands
going from productive land to wilderness and preserves; Alaska
shares the remaining 40 percent with Alaska Native Corporations.
He explained that the focus of federal lands generally goes from
conservation to preservation and the land in Alaska goes from
the need for production to the need for conservation, which
travel in different directions. So, there must be a way for
Alaskans to speak up on how they want to work with the federal
government in both areas. The Statehood Compact, the Alaska
Native Claims Settlement Act (ANCSA), and the Alaska National
Interest Lands Conservation Act (ANILCA) provide the rules to
play by.
SENATOR COGHILL said there is always a need for ongoing
education and Alaska has to speak up for itself. Another issue
is that the personnel turnover in the federal management areas
that are generally conservation units to wilderness areas is
very high and the Bureau of Land Management (BLM) is often
operated from Seattle and is often overruled in D.C., which is
why Alaska often resorts to the courts. Citizens who have to
navigate through the complex set of rules and regulations and
their modifications need to be alert and this citizen's advisory
commission is one way to bring these issues into the light and
provide an avenue to our delegation in Congress. When ANILCA was
first instituted it had a high level commission made up of both
federal and state officials who could make policy calls, but
that went away. This is one way to get input from people at the
community who just navigate on a river.
He said the federal government can take people to court and they
have unlimited access to legal instruments that quite often the
citizen who is just trying to guide on a river doesn't have. He
said the Senate Majority felt so strongly that they hired
someone to help them work with the Citizen's Advisory Commission
and Congress on things like the Izembek Road.
CHAIR GIESSEL thanked him for his work adding that he is a great
asset on CACFA.
9:59:45 AM
CHAD HUTCHISON, staff to Senator Coghill, sponsor of SB 109,
said CACFA does very important work holding hearings regarding
land management, resource development, and access issues, and it
makes recommendations for public policy to the State of Alaska;
he said members should have received its annual report.
CACFA's intent is to protect the state's interests relating to
resource development and land management. It provides the Alaska
Land Update that allows them to focus on particular resource
development issues related to the Pebble Mine, Izembek, the
proposed Beringia National Park, and the Wrangell St. Elias
National Park. It is an entity that allows them to articulate
issues to the general public and allows them to make comments as
necessary. Most folks have little understanding as to what the
federal government is continually doing around the State of
Alaska and that is why CACFA is so important.
10:02:44 AM
CHAIR GIESSEL said she appreciated the annual report as she
would be bringing up topics in committee about some of them.
10:03:18 AM
STAN LEAPHART, Executive Director, Citizen's Advisory Commission
on Federal Areas (CACFA), supported SB 109. He said the
commission has a lot of work to do in the next few years and
that Senator Bettye Fahrenkamp from Fairbanks was the initial
sponsor of the commission in 1981, shortly after passage of
ANILCA. Now 30 years later we are still fighting to make sure
it's implemented in the way Congress intended and that the
federal agencies live up to the promises and compromises that
are in that bill.
He said review of some major management plans was coming into
focus and that the BLM is undertaking two: the Central Yukon
Plan and the Bering Sea Western Interior Plan. The Tongass
National Forest is considering revising its management plan with
issues ranging from the roadless rule to transitioning from old
growth harvested timber to second growth harvested timber and a
lot of other wildlife and fisheries management issues. The
Chugach National Forest is also revising its management plan and
has issues related to access and public use.
MR. LEAPHART said he had been asked to be a member of a
subcommittee put together by the BLM to look at their new placer
mining policy. It's of considerable concern to the mining
industry, in particular the small miners. The policy will
probably impose some pretty significant and regulatory burdens
on them. The subcommittee is a good approach, because it will
involve people from the industry, state and federal agency
people, other regulatory people, the Alaska Miners Association
and people from the Forty-mile mining district.
He said they have had similar experience working with the BLM's
subcommittee through the Resource Advisory Council on a trapping
cabin policy, which turned out quite well and that included
people from the trapping community.
10:07:15 AM
MR. LEAPHART said the annual report didn't clarify that the
recommendations in the main report are not all the
recommendations they heard at the August 2013 Summit. Those are
listed in the summary that is attached to the annual report and
weren't all necessarily endorsed by the commission.
He said the next step is for a group of commissioners to meet
next week in Anchorage to refine the list of recommendations and
develop strategies on how to implement them. Those will be
forwarded to the legislature, the governor's office and the
delegation.
CHAIR GIESSEL said the Anchorage summit was amazing; it was
highly attended and had great input. She said the commission is
made up largely of public citizens who remain mostly invisible
and asked him to identify them.
MR. LEAPHART said they are a 12-member commission with two
legislative members: Senator Coghill and Representative Keller,
who is currently the chairman; Rod Arno (also the executive
director of the Alaska Outdoor Council), Teresa Hanson from
Fairbanks (her family operates a small placer mine), Kathleen
Liska from Anchorage (she has great interest in federal land
issues), Susan Smith (an in-holder in Wrangell St. Elias
National Park living a subsistence lifestyle with her husband),
Mike Meekin from Palmer (an air taxi operator), Ron Somerville
from Juneau (retired ADF&G biologist and an early warrior in the
ANILCA battles), Mark Fish from Big Lake (maker of Black Powder
Rifles), Charley Lean from Nome (has worked in many places in
Alaska), Warren Olsen from Anchorage (active in fish and game
issues for his whole career), and Frank Woods from Dillingham
(commercial fisherman and sits on several boards related to
subsistence and trail use). He said it is a very active group
and they almost always have a full slate of members in
attendance at their meetings.
CHAIR GIESSEL thanked them for their volunteer labor on behalf
of the state; she then opened public testimony.
10:13:34 AM
RON SOMERVILLE, CACFA member, Juneau, Alaska, said he was a
commercial fisherman with his father in Craig and got a Master's
degree in wildlife management from the University of Montana and
came back to work for Alaska Department of Fish and Game (ADF&G)
for 24 years. A lot of his career was spent on these types of
issues, as well as tagging bears. He had lived 74 years in
Alaska and watched as the entitlements Alaska was supposed to
get at statehood have been compromised in Washington.
Because of his travels around the state for ADF&G Mr. Somerville
said he was interested in what was happening to the small
communities that get inundated with bureaucratic paperwork.
Plans are constantly being redone and things are snuck into them
that violate a lot of agreements that were made in ANILCA and
the Statehood Act. Things happening in the Interior could affect
Southeastern and groups can hardly keep up with forest planning
efforts in Glacier Bay National Park and some of the other
conflicts that occur. This has a significant detrimental impact
on land issues in Alaska and CACFA fills that role.
MR. SOMERVILLE said for example that for 40 years the
Territorial Sportsmen built cabins on Admiralty Island, provided
boats and chopped wood, and maintained the cabins, not only for
people to enjoy but because they were important for providing
shelter and safety to people in the wilderness.
He was in the committee room when ANILCA was passed and the
Forest Service promised that Admiralty Island would be a
wilderness area, but they wouldn't treat it like the Bob
Marshall Wilderness Area in Montana. Thirteen exceptions were
made to wilderness management in Alaska and yet the Forest
Service today is trying to make Admiralty Island exactly like
the Bob Marshall Wilderness Area. They no longer allow the
Territorial Sportsmen to use chains saws in order to cut wood
for the cabins or to use power equipment in the spring to
maintain and improve them.
He agreed to serve on the Commission because its work is so
important in helping people to fully understand what the
overreach of the federal government is like. "You would not
believe it!"
MR. SOMERVILLE related that Alaska has about 22,000 rivers and
about 1 million lakes that could qualify under any definition of
navigability, yet the navigability issue has been resolved on
less than 25 rivers. The state has to prove in court the river
was navigable at the time of statehood and the federal
government is forcing adjudication of every river in the state.
The unfortunate part is that at statehood Alaska received title
to 60 million acres of submerged and tidelands and at this rate,
we will lose that entitlement, because everybody who used them
for that purpose is dead. It will have a phenomenal negative
impact on this state.
He said that one of major reasons we got statehood was to manage
our fish and wildlife and now it's a mess. Something needs to be
done to improve the fish and wildlife management problems. If we
don't take care of them the federal government will preempt us.
CHAIR GIESSEL thanked him for his service.
10:22:11 AM
SENATOR MICCICHE thanked him for service and for remaining
active.
SENATOR BISHOP echoed those sentiments and added that he would
like to break bread with him before leaving Juneau.
MR. SOMERVILLE said it would be a pleasure.
10:23:01 AM
CHAIR GIESSEL finding no further questions or comments and
closed public testimony.
SENATOR DYSON moved to report SB 109, version A, from committee
to the next committee of referral with attached fiscal notes and
individual recommendations. There were no objections and it was
so ordered.
10:23:50 AM
At ease from 10:23 to 10:32 a.m.
SJR 15-OPPOSE INTERNATIONAL DESIGNATING OF LAND
10:32:46 AM
CHAIR GIESSEL announced SJR 15 to be up for consideration and as
the sponsor, related that it is a resolution related to an
international transboundary area in the Bering Straits region.
She said that Beringia is a designated area that recognizes the
cultural connections between areas in Russia and areas on the
west coast of Alaska around Nome and Kotzebue. The intent that
has been going forward for the past approximately 25 or 30 years
is to declare this area an international park, the definition of
which would designate a protected area in two countries that
would result in sharing information, joint studies, and
promoting joint activities.
Other designations are related to international parks: Ramsar
sites in the Izembek National Wildlife Refuge, biosphere
reserves in Denali National Park, and World Heritage Sites in
Glacier Bay and Wrangell St. Elias National Parks. Around these
areas often the National Park Service and federal government
wish to designate buffer zones, an ongoing effort in Denali
National Park.
CHAIR GIESSEL said the concern about designating Beringia as an
international park is how it will affect resource development
and subsistence use on in the area. One of the recommendations
coming from the Citizen's Advisory Commission on Federal Areas
(CACFA) is to avoid spending scarce federal funds and resources
on special non designated areas such as Beringia International
Park.
10:34:09 AM
JANE CONWAY, staff to Senator Giessel, explained that SJR 15
urges the federal government to cease pursuing the creation of
the Beringia International Park. This idea has been floating
around since the 80s where it has languished, gained momentum
and then languished again. It gained momentum recently and a
Memorandum of Understanding (MOU) came about in October 28,
2013.
She said the MOU doesn't actually create the park; however it
symbolically links national parks in Alaska and Russia with a
focus on environmental protection. While it sounds harmless
enough, those phrases can take on entirely different meanings
when used in a campaign opposing building of resource
development projects. They are leery of any formal agreement
regarding these related areas in the Bering Strait region that
could affect Alaskan's ability to develop its resources in that
economically challenged region (which encompasses the Red Dog
Mine).
MS. CONWAY said the resolution is a violation of Section 101 of
ANILCA and the MOU between the U.S. Department of State and
Russia is proceeding with zero input from the state government.
These international designations come through United Nations
Educational Scientific and Cultural Organizations (UNESCO). The
Ramsar site in the Izembek Lagoon National Wildlife Refuge was
cited as one of the reasons Secretary Jewell made the decision
she did to deny the Izembek Road.
10:37:13 AM
MS. CONWAY said besides Glacier Bay and Wrangell St. Elias
National Park and Preserve seven others are on the tentative
list to be considered as World Heritage Sites in Alaska. While
Alaska does not have an official designation of a buffer zone
now, one has been discussed around Denali National Park having
to do with restricting wolf hunting and trapping since 2000.
These international designations have affected multiple projects
around the world: the New World Mine in Montana, the uranium
mine in Australia, the Aginskoya Mine in Russia and the list
goes on.
SENATOR MICCICHE asked if the list of Alaskan sites was in their
packets.
MS. CONWAY read them: Glacier Bay in 1992, Wrangell St. Elias in
1979, Aleutian Islands Unit of Alaska Maritime National Wildlife
Refuge, Arctic National Wildlife Refuge, Cape Krusenstern
Archaeological District, Denali National Park, Gates of the
Arctic National Park, and Katmai National Park.
10:39:52 AM
CHAIR GIESSEL opened public testimony.
STEVE BORELL, representing himself, Anchorage, Alaska, supported
SJR 15. He related that he first learned about something called
Beringia and the concept of an international park between parts
of western Alaska and the Russian side in the early 90s. Then he
heard later that it was actually supposed to go from the
Mackenzie River all the way over to the Kolyma River, in the
Magadan Region. When he was preparing for testimony at the
federal overreach CACFA summit he learned that it actually goes
from the Mackenzie River as far as the Elena River, another
1,000 kilometers further west in Russia; he also learned that it
goes from 70 N latitude (above Barrow) down to the southern tip
of Kamchatka, which he guess was about the latitude of Juneau:
nearly all of Alaska is included in what they have defined as
Beringia. He had not recently checked to see if it had been
drawn further.
He said when in the early 1990s an Alaskan geologist Joe
Dressler was working in the Russian Far East first learned about
Beringia International Park, he went on a radio call-in program
in Magadan; several callers complained that the U.S. and
Canadian companies would come over and just take the metals and
leave a big mess and nothing to benefit the Russian people. At
that time just a few U.S. and Canadian companies were exploring
there and none of them had an operating mine. Joe finally asked
one of the callers who told him that and the answer he received
was that the National Park Service and the Audubon Society had
visited many of the villages and were saying that they needed
this national park to protect their land.
Part of the purpose of the shared Beringia Program is to
reconnect the peoples and that is a great goal, however, they
are using reconnection of the peoples as a way to build
financial support to save the National Park Service from paying
for their traveling back and forth.
He learned that three things are being proposed for Western
Alaska: 1. the International Park, 2. a World Heritage Site, and
3. a Marine Biosphere Reserve. The International Park is just
step one of the plan and if one had been in place when the Red
Dog was being proposed, the Rainbow Warrior and every other kind
of environmental group would have been attacking and trying to
stop it.
10:44:53 AM
MARLEANNA HALL, Project Coordinator, Resource Development
Council (RDC), said it is their policy to advocate for access to
and across lands in Alaska for resource and community
development and they supported SJR 15. The MOU for the creation
of Beringia International Park will create another level of
bureaucracy limiting access to areas in Alaska. This bill is
timely, because the MOU has not been signed by the president
yet.
Past federal government promises assured access to allow
resource development in this area and others not set aside
through the ANILCA Act which withdrew 106 million acres of
federal lands in Alaska into conservation system units. Today
Alaska accounts for 70 percent of all national park lands in the
U.S. as well as 54 percent in the federally designated
wilderness.
10:47:01 AM
STAN LEAPHART, Executive Director, Citizen's Advisory Commission
on Federal Areas (CACFA), said a letter in their packets
supported SJR 15. A similar designation is the Ramsar
designation for the Izembek National Wildlife Refuge. No one
would dispute the importance of that area and no one wants to
jeopardize it. But everyone is aware of the need for a road
between King Cove and Cold Bay for medical evacuation purposes,
which is the subject of a proposed land exchange in the
legislature. The King Cove Native Corporation made a number of
acres available for it and the purpose was to allow the
construction of the road, but during the analysis of it
conducted by U.S. Fish and Wildlife Service they decided to not
approve the land exchange or the road. One of the reasons cited
in both the Environmental Impact Statement (EIS) and Secretary
of Interior's decision was the designation of Izembek as a
Wetlands of International Importance under the Ramsar
convention. While it is not supposed to be binding, it had a
major effect on that decision.
He thought that similar decisions had been made in designating
Glacier Bay a World Heritage Site and Biosphere Reserve that
affected the ultimate elimination of commercial fishing there in
the 1990s. These types of designations heighten the profile of
any activity around them and concerns have been expressed about
the future of the state's ability to manage its own resources on
its land as well as those of the Native corporations.
10:50:17 AM
MIKE COONS, representing himself, Palmer, Alaska, supported SJR
15. He said he had sent a PDF with suggested additions to it as
follows: On page 4, line 2, add a further resolve that:
The Alaska State Legislature request that the U.S.
Department of the State or the U.S. Department of the
Interior nevertheless pursues or proposes the
designation of land or water as an international park,
world heritage site or biosphere reserve, Ramsar site
or classification of land or water than affects the
proper use of the land or water by the state of Alaska
or Alaska Native Corporation, the Congress of the
United States vote against this violation of U.S. and
state sovereignty....
Second, he suggested on page 4, line 7, to delete "and" between
"process and development" and to add "after the development,
oversight, and disapproval" and on line 10 delete "if not
primary". He said this language strengthens an already strong
resolution and he didn't think that Russia would enforce this it
anyhow.
CHAIR GIESSEL, finding no further comments on SJR 15, closed
public testimony. She added that the Ambler Mining district
could potentially be affected by the international park
designation. Since the MOU was constructed as late as October
2013, there seems to be more active movement forward on this
designation. Letter from Representative Don Young and Senator
Lisa Murkowski supported it.
SENATOR FAIRCLOUGH asked the committee if it would entertain
sending a letter to National Conference of State Legislatures
(NCSL), specifically the Labor and Economic Development
Committee that she is vice chair of, asking the U.S. Trade
representative to communicate with states, because they are
feeling left out of these agreements as they negotiate state law
and allow foreign entities better leverage inside of their
business environment without the states' concurrence.
SENATOR MICCICHE thanked her for bringing the issue forward.
ANILCA clearly says we will not add additional acreage to our
state to remove it from potential development and that has not
been followed through. He thought the federal government was
struggling to maintain the park land they already have and they
should be asked why they should keep adding to it.
10:56:27 AM
SENATOR FAIRCLOUGH clarified that we want good international
relationships and this is not a reflection of anything that
Russia or its delegation may have done. The criticism, if there
is one, lies directly at the foot of the U.S. side of this
conversation.
10:57:17 AM
SENATOR DYSON stated that he has three wilderness properties
south of Denali National Park along with scores of other folks
and the federal government might remove property rights for what
could be considered inholdings and extend federal wildlife
management into those areas. However, he didn't think that would
bias him on this issue.
10:58:19 AM
At ease from 10:58:19 to 10:58:55 a.m.
10:58:55 AM
CHAIR GIESSEL said she appreciated Mr. Coons' comments and
suggested amendments, but adopting them at this time it would
slow down the process. She thought the important parts had
already been captured in the resolution.
SENATOR MICCICHE said because many oppose increasing federal
control over our lands in Alaska doesn't mean we aren't
fascinated by the cultural aspects of Beringia and the other
lands. Most of our genetic code can be traced to people as they
walked across the land bridge many thousands of years ago. What
it means is when portions of these lands are developed for
projects that employ potentially thousands of Alaskans, the
impact is on a few acres, a tiny dot, among millions of acres.
That is an important point to remember when they want to lock up
millions of acres and things like ANWR.
11:00:30 AM
CHAIR GIESSEL drew attention to the map in their packets noting
that we already have a Bering Land Bridge National Preserve and
Cape Krusenstern National Monument and Russia has several parks
designated, as well, where cultural preservation and heritage
are addressed. The concern is the increasing take of our lands
which contain resources which help these communities support
themselves. The villages of Norvik, Kiana, Ambler, and Kobuk are
close to resources where energy will be developed along with the
mineral resources there. Extending these international
transboundary areas jeopardizes the economic potential and thus
the sustainability of these communities and the cultures they
represent.
11:01:58 AM
SENATOR DYSON moved to report SJR 15, version 28-LS1192\U, from
committee to the next committee of referral with attached zero
fiscal note and individual recommendations. There were no
objections and it was so ordered.
11:02:23 AM
At ease from 11:02 to 11:03 a.m.
SJR 16-OPPOSE FEDERAL AID TO CERTAIN NONPROFITS
11:03:46 AM
CHAIR GIESSEL, announced SJR 16 to be up for consideration. She
said this issue was brought to her attention by constituents who
noted the U.S. Fish and Wildlife Service (USFWS) as a major
donor to environmentally based nonprofits that are working
against resource development in our state. The purpose of the
resolution is to highlight this and ask the federal government
to stop using tax funds to work against Alaskans.
JANE CONWAY, staff to Senator Giessel, sponsor of SJR 16,
explained it asks that environmental nonprofit organizations not
receive federal funds to use in campaigns against resource
development in Alaska. This is an abuse of federal funds and
runs afoul of the Alaska Statehood Act and the Alaska
Constitution.
At statehood, she said, Congress recognized that Alaska's small
population would not be able to pay for government services with
taxes alone and promised the state 90 percent of revenues earned
from resource development on Alaska federal lands, although that
percentage has been reduced to around 40 percent.
MS. CONWAY said the U.S. Department of Justice, Environment and
Natural Resource Division, has the responsibility for the
conduct and oversight of litigation conducted directly and
indirectly on behalf of the USFWS. In 1982, an MOU was signed by
USFWS and the Alaska Department of Fish and Game (ADF&G), which
allows the department to have primary responsibility to manage
fish and wildlife in the State of Alaska. Despite the promises
in the Statehood Compact the USFWS awards a variety of natural
resource assistance grants and contracts to nongovernmental
organizations, some of which aggressively oppose the express
promise to Alaskans at statehood and oppose the intent behind
Section 101(D) of ANILCA known as "the no more clause."
Thus Congress believes that the need for future legislation
designating new conservation system units, new national
conservation areas, or new national recreation areas has been
obviated.
11:07:19 AM
She listed some of the organizations receiving federal money to
oppose development of the state's resources:
1. $10-50,000 to the Alaska Conservation Foundation in 2010 and
2011
2. Advocacy groups such as the Chuitna Citizen's Coalition whose
sole purpose is opposing proposed Chuitna coal mine.
3. Bristol Bay Protection Campaign and Cook Inlet Keeper, groups
opposed to the Pebble Mine project.
MS. CONWAY said the Alaska Conservation Foundation had provided
numerous grants to the Trustees for Alaska that provides
advocacy and legal representation to groups that oppose a
variety of resource development projects around the state
including filing lawsuits against the State of Alaska and the
Department of Natural Resources (DNR).
The Trustees' website says that Alaska is poised to make an
outsized and self-destructive contribution to global warming in
the form of massive coal developments. It also says that
Alaska's environment has intrinsic value that defies measurement
in economic terms.
She said the Alaska Conservation Foundation funded 111 grants in
2012; 50 percent of them were grants for oppositional campaigns.
It has awarded over $3 million annually to over 200 Alaskan
nongovernmental organizations and other entities that advocate
against resource development. It has solicited support for their
efforts to "Keep Alaska's Coal in the Ground," and has made a
total of $1,000,371 in numerous grants to organizations opposing
responsible development of coal related projects throughout the
state.
11:10:27 AM
MS. CONWAY said she also noticed the website says the Alaska
Center for the Environment, the Alaska Conservation Alliance,
and the Alaska Youth for Environmental Action are merging, and
one of their mission statements is to have a direct lobbying
impact in Juneau.
This resolution shines a light on these types of activities. It
suggests that perhaps the Office of Management and Budget pay
closer attention to the activities of its agency's grant program
considering that Alaska is a resource state.
The Alaska Mental Health Trust Lands Program receives
substantial benefits from Fort Knox and it stands to receive
royalties and payments from the Chuitna Coal and the Wishbone
Hill mines; that money is used solely to provide services to the
mentally ill, disabled, those with brain trauma, substance
abuse, dementia and more.
11:11:43 AM
SENATOR DYSON asked on page 5, line 15, if there is anything in
federal law or regulations that talks about public funds being
used for litigation in these situations.
MS. CONWAY didn't know specifically, but the U.S. Department of
Justice's website says a substantial portion of the division's
work includes litigation under a plethora of statutes related to
the management of public lands such as the nation's most
significant subtropical wetlands, the Everglades, and the
nation's largest rain forest, the Tongass, to individual range
lands or wildlife refuges. It specifically represents all land
management agencies in the U.S., and the USFWS is among the
listings.
SENATOR DYSON suggested inserting language urging the USFWS to
not finance any litigation.
11:15:18 AM
SENATOR DYSON moved conceptual Amendment 1 to insert the words
"environmentally responsible development" where appropriate.
There were no objections and it was so ordered.
SENATOR BISHOP said he made the distinction that there might be
some good use of these dollars in the conservation funding
efforts.
MS. CONWAY said the 2011/12 grants were listed in their packets
and not all of them looked like they all had that type of anti-
campaign activity.
SENATOR BISHOP said he keyed in on one of the Alaska Native Fund
awards because it was to the Yukon Fisheries Association to
study the Chum salmon and King salmon decline on the Yukon
River.
SENATOR DYSON said many citizens' groups do good work and he was
impressed with what the Matsu group is doing on analyzing
game/sport fish issues. A grand example is the Prince William
Sound Advisory Group that came out of the Exxon Valdez
settlement that has become a model for many similar groups.
11:19:54 AM
SENATOR MICCICHE said three groups are contributed to by the
Alaska Conservation Foundation and asked if she had been able to
track funding for litigation related activities by these groups
or had most of funding been related to data collection.
MS. CONWAY answered that much of the litigation dollars would go
to the Trustees of Alaska, which is the advocacy legal group,
but she couldn't link it to any project.
SENATOR MICCICHE said typically federal funding has a very
specific purpose and he hated to paint them all with a broad
brush. Some of it is used for pro-development projects and
sport/commercial fishing related processes, one being Cook Inlet
Keeper that monitors in-stream water flows and temperatures on
ADF&G professional sport fishing projects. The Kachemak
Conservation Society, Cook Inlet Keepers, the Center for Alaska
Coastal Studies were listed and he valued their opinion on
different things although he didn't agree with all of them. He
would have pulled the names below the Alaska Conservation
Commission out of the resolution, because they do have mixed
roles. They don't want to eliminate Alaskans' right to comment
on things, and he hoped the resolution would stay tied to
litigation-related dollars, because he agreed with the chair
that public funding should not go to litigation against Alaska
projects.
11:23:05 AM
CHAIR GIESSEL said the U.S. Constitution's First Amendment is
freedom of speech, but this resolution doesn't have anything to
do with that. This resolution brings out the fact that federal
money is being distributed through grants to these organizations
that turn around and use them to oppose development in Alaska.
These are transparent funds they can see, but a letter from Mr.
Leaphart would talk about the funding that is not seen and that
is the issue the resolution addresses.
11:24:23 AM
CHAIR GIESSEL opened public testimony.
11:24:30 AM
STAN LEAPHART, Executive Director, Citizens Advisory Commission
on Federal Areas (CACFA), Fairbanks, Alaska, supported SJR 16.
He offered that the USFWS supports the 220 friends groups
(volunteers around the country) that do bird banding, habitat
conservation, and things like that. A group in Alaska is called
Friends of the Alaska Wildlife Refuges; they do great work, but
his concern lies with a policy that was proposed several years
ago and hadn't been finalized that deals with how the agency
interacts with these volunteer groups.
He explained that federal agencies cannot use appropriated funds
to lobby Congress, state or local governments, but friends
groups are able to do that. The policy didn't provide enough
guidance for the agency on how they would interact with these
groups. They provide training, office space and allow use of
office equipment, they provide transport out to do the volunteer
work, but sometimes they have lobbied Congress in opposition to
the land exchange in Izembek and the road, testified at Mineral
Management Service hearings against possible oil and gas leases
offshore of Alaska, and lobbied against the proposed land
exchange in the Yukon Flats National Wildlife Refuge between
Doyon and the USFWS. It's unclear where the line is drawn for
the volunteer group and the responsibilities of the staff for
these agencies. It's not a direct grant, but it is still support
that probably comes very close to violating federal law, which
does not allow the use of appropriated funds for lobbying or
advocacy.
11:28:20 AM
MIKE COONS, representing himself, Palmer, Alaska, supported SJR
16. He wondered if USFWS could be sued for spending U.S. dollars
in violation of their charter. It sounds like they are picking
and choosing their attacks on conservative groups like the IRS
is doing. He agreed with Senator Dyson that environmental groups
generally use bad science and emotions where conservation groups
have a long history of using good science and facts and getting
the education out. Lastly, he asked if Congress acts on
resolutions or just ignore them.
11:30:03 AM
MARLEANNA HALL, Project Coordinator, Resource Development
Council (RDC), Anchorage, Alaska, supported SJR 16. Their
concern is that the federal government is discouraging
investment in Alaska by donating funding through federal
agencies to nongovernment organizations (NGOs) to opposed
development of Alaska's natural resources. The funding of these
groups contradicts RDC's mission to grow Alaska through
responsible resource development.
She said in recent years lawsuits by NGOs have caused delays and
other issues for projects in Alaska, often with little or no
added benefits to the environment. Many lawsuits have threatened
Alaskan jobs, businesses, and communities, for example
exploration and development on the Outer Continental Shelf
(OCS). Lawsuits can cost the state hundreds of thousands of
dollars and even when these projects are not ultimately stopped
the uncertainty of the litigation can effectively stop progress
on them.
Additionally, NGOs involved in litigation often collect large
attorney fees from the federal government in lawsuits that are
aimed at systematically stopping development in mining, oil,
timber, and other industries. She said Alaska's Constitution
says to develop our natural resources for the benefit of all
Alaskans and the state has the responsibility to achieve fiscal
certainty. That can't be done if the projects continue to be
halted by outside interests.
11:32:04 AM
LISA WEISSLER, representing herself, Juneau, Alaska, described
herself as an attorney with expertise in natural resource law.
She did not support SJR 16. She related that language on page 2,
line 4, says it's the policy of the state "to encourage
settlement of its lands and development of its resources by
making them available for maximum use consistent with the public
interest." In this case, "public interest" means what everyone
benefits from: the land, the air, the water, community social
structures, cultural values and its economic interests. And
language on page 2, line 22, talks about how the Department of
Natural Resources (DNR) and Department of Environmental
Conservation (DEC) have comprehensive and stringent regulations
to ensure the responsible development of the state's resource.
However, there is no statutory requirement for a coordination
function that will account for the public interest relative to
the agencies, and without that, sometimes public interest groups
have to step in.
MS. WEISSLER said it's hard for the public to participate in the
review process, because they have to go from agency to agency
and figure out what is happening and how to effectively comment
on it. NGOs also step in to deal with general public interest
issues that the state is not fully addressing right now.
MS. WEISSLER said it would be better to have comprehensive
legislation that would provide for the coordinated review of
projects as a whole in which the state's and the public's
interests are identified.
11:35:23 AM
SENATOR DYSON said he appreciated her testimony and that he had
seen similar problems with other state statutes and asked if she
knew of other states that had done this successfully.
MS. WEISSLER said Alaska's Coastal Zone Management Program had
done exactly what she had just described: it coordinated state
permitting and identified state and local interests, and it had
the added advantage of the federal government having to listen,
something we won't get back any time soon. "The Coastal Zone
Management Program was our public interest statutes." That is
why the reviews are so fragmented and the public interest is not
being fully accounted for.
CHAIR GIESSEL, finding no further questions or comments, thanked
Ms. Weissler and closed public testimony. She clarified that
they are referring to federal funds being used in the grant
programs to folks that are working in the opposite direction to
the benefit of Alaska. She stated that comments were made that
our permitting agencies lack coordination and the consideration
of the total impact of development, and she wanted to raise the
committee's awareness that Alaska had been including a health
impact assessment (HIA) in all project applications for 15 or 20
years and was the first state to do that. Alaska has lead the
way in permitting processes; we also lead the way in agency
coordination: Alaska Department of Fish and Game (ADF&G),
Department of Environmental Conservation (DEC), and the
Department of Natural Resources (DNR) get together weekly to
deliberate, express concerns, and get further data on large
project applications.
As the Resources Committee, she said, they need to know how
these applications are processed and that is not relevant to
this resolution, which only addresses the use of federal funds
against our resource development opportunities.
11:39:41 AM
SENATOR MICCICHE agreed with her on the litigation piece but
added that some of the contracts are unbiased and just collect
data. They are all about science and some of these folks are the
lowest bidding contractor to provide that data and the
resolution seemed to say that they shouldn't support those
contracts. He struggled with that and asked her to help him.
MS. CONWAY asked him to be more specific.
CHAIR GIESSEL said she thought he was looking at the Further
resolved clause on page 5, line 10-13 that says: the Alaska
State Legislature urge the U.S. Office of Management and Budget
to investigate those expenditures and perform a comprehensive
audit of all grants and contracts that may have been issued from
taxpayer funds through the U.S. Fish and Wildlife Service. It
doesn't prohibit grants or contracts; it requests an audit.
SENATOR MICCICHE said he was looking at "to hire unbiased
independent firms of credible scientists to collect data and
compile peer-reviewed scientific reports and documents;" on page
5, lines 3-5. He assumed the state's goal was not to go with the
lowest qualified bidder among firms doing data collection.
CHAIR GIESSEL said it doesn't do that.
11:42:37 AM
SENATOR DYSON moved to report SJR 16, version 28-LS1211\N, as
amended from committee with attached zero fiscal note and
individual recommendations. There were no objections and it was
so ordered; therefore CSSJR 16(RES) moved from the Senate
Resources Standing Committee.
11:43:26 AM
CHAIR GIESSEL adjourned the Senate Resources Standing Committee
meeting at 11:44 a.m.