Legislature(2003 - 2004)

03/28/2003 03:40 PM RES

Audio Topic
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
                    ALASKA STATE LEGISLATURE                                                                                  
              SENATE RESOURCES STANDING COMMITTEE                                                                             
                         March 28, 2003                                                                                         
                           3:40 p.m.                                                                                            
                                                                                                                                
MEMBERS PRESENT                                                                                                               
                                                                                                                                
Senator Scott Ogan, Chair                                                                                                       
Senator Thomas Wagoner, Vice Chair                                                                                              
Senator Fred Dyson                                                                                                              
Senator Ralph Seekins                                                                                                           
Senator Ben Stevens                                                                                                             
Senator Kim Elton                                                                                                               
                                                                                                                                
MEMBERS ABSENT                                                                                                                
                                                                                                                                
Senator Georgianna Lincoln                                                                                                      
                                                                                                                                
COMMITTEE CALENDAR                                                                                                            
                                                                                                                                
HOUSE BILL NO. 69                                                                                                               
"An Act relating to regulation of shallow natural gas leasing                                                                   
and closely related energy projects; and providing for an                                                                       
effective date."                                                                                                                
     MOVED SCS HB 69(RES) OUT OF COMMITTEE                                                                                      
                                                                                                                                
SENATE BILL NO. 97                                                                                                              
"An Act relating to public interest litigants and to attorney                                                                   
fees; and amending Rule 82, Alaska Rules of Civil Procedure."                                                                   
     ASSIGNED TO SUBCOMMITTEE                                                                                                   
                                                                                                                                
SENATE BILL NO. 122                                                                                                             
"An Act relating to an annual wildlife conservation pass and the                                                                
fee for that pass; relating to nonresident and nonresident alien                                                                
big game tag fees; and providing for an effective date."                                                                        
     SCHEDULED BUT NOT HEARD                                                                                                    
                                                                                                                                
PREVIOUS ACTION                                                                                                               
                                                                                                                                
HB 69 - See Resources minutes dated 2/24/03.                                                                                    
                                                                                                                                
SB 97 - No previous action to record.                                                                                           
                                                                                                                                
SB 122 - No previous action to record.                                                                                          
                                                                                                                                
WITNESS REGISTER                                                                                                              
                                                                                                                                
Mr. Robert Mintz                                                                                                                
Assistant Attorney General                                                                                                      
Department of Law                                                                                                               
PO Box 110300                                                                                                                   
Juneau, AK  99811-0300                                                                                                          
POSITION STATEMENT: Described changes made to Version C of HB 69                                                              
                                                                                                                                
Mr. Dan Seamount                                                                                                                
Alaska Oil and Gas Conservation Commission                                                                                      
333 W 7th Ave. #100                                                                                                             
Anchorage, AK  99501-3539                                                                                                       
POSITION STATEMENT:  Answered questions about Amendment 2 to HB
69                                                                                                                              
                                                                                                                                
Mr. Randy Ruedrich                                                                                                              
Alaska Oil and Gas Conservation Commission                                                                                      
333 W 7th Ave. #100                                                                                                             
Anchorage, AK  99501-3539                                                                                                       
POSITION STATEMENT: Answered questions about Amendment 2 to HB
69                                                                                                                              
                                                                                                                                
Mr. Matt Davidson                                                                                                               
Alaska Conservation Alliance                                                                                                    
419 6th St.                                                                                                                     
Juneau, AK                                                                                                                      
POSITION STATEMENT: Expressed concerns about SCS HB 69(RES)                                                                   
                                                                                                                                
Mr. Gary Carlson                                                                                                                
Forest Oil Corporation                                                                                                          
1600 Broadway, Suite 2200                                                                                                       
Denver, CO 80202                                                                                                                
POSITION STATEMENT:  Supports SB 97                                                                                           
                                                                                                                                
Mr. Neil MacKinnon                                                                                                              
Alaska Minerals Commission                                                                                                      
1114 Glacier Avenue                                                                                                             
Juneau, AK  99801                                                                                                               
POSITION STATEMENT: Supports SB 97                                                                                            
                                                                                                                                
Ms. Pam LaBolle                                                                                                                 
Alaska State Chamber of Commerce                                                                                                
217 Second Street                                                                                                               
Juneau, Alaska 99801                                                                                                            
POSITION STATEMENT:  Supports SB 97                                                                                           
                                                                                                                                
ACTION NARRATIVE                                                                                                              
                                                                                                                                
TAPE 03-18, SIDE A                                                                                                            
Number 0001                                                                                                                     
                                                                                                                                
CHAIR SCOTT  OGAN called the Senate  Resources Standing Committee                                                             
meeting to  order at  3:40 p.m. All  members were  present except                                                               
Senator Lincoln, who was excused.                                                                                               
                                                                                                                                
            HB 69-REGULATION OF SHALLOW NATURAL GAS                                                                         
                                                                                                                              
CHAIR  OGAN  told  members  that  he had  assigned  HB  69  to  a                                                               
subcommittee chaired by Senator Dyson.  He declared a conflict of                                                               
interest with  HB 69 and asked  to be excused from  taking action                                                               
on it.                                                                                                                          
                                                                                                                                
SENATOR BEN STEVENS objected.                                                                                                   
                                                                                                                                
CHAIR OGAN  then stated that  Vice Chair Tom Wagoner  would chair                                                               
the meeting.                                                                                                                    
                                                                                                                                
SENATOR ELTON asked Chair Ogan to describe his conflict.                                                                        
                                                                                                                                
CHAIR OGAN  said he works during  the interim for a  company that                                                               
will be directly affected by this legislation.                                                                                  
                                                                                                                                
VICE-CHAIR  WAGONER  told  members   that  a  proposed  committee                                                               
substitute, Version C, was before the committee.                                                                                
                                                                                                                                
SENATOR SEEKINS moved to adopt  Version C as the working document                                                               
of the committee.                                                                                                               
                                                                                                                                
VICE-CHAIR WAGONER noted without objection, the motion carried.                                                                 
                                                                                                                                
SENATOR DYSON moved  the adoption of Amendment 1,  which reads as                                                               
follows.                                                                                                                        
                                                                                                                                
                      A M E N D M E N T  1                                                                                  
                                                                                                                                
Page 3, line  26, after "laws" delete all  language through lines                                                               
31 and replace with:                                                                                                            
                                                                                                                                
     If  DNR   clearly  demonstrates  an   overriding  state                                                                    
     interest, waiver  of local planning  authority approval                                                                    
     and the  compliance requirement may  be granted  by the                                                                    
     commissioner.  The  commissioner shall  issue  specific                                                                    
     findings giving reasons for granting any waiver under                                                                      
     this section.                                                                                                              
                                                                                                                                
Page 4, line 2, after (o)  delete all language through line 6 and                                                               
replace with:                                                                                                                   
                                                                                                                                
     If  DNR   clearly  demonstrates  an   overriding  state                                                                    
     interest, waiver  of local planning  authority approval                                                                    
     and the  compliance requirement may  be granted  by the                                                                    
     commissioner.  The  commissioner shall  issue  specific                                                                    
     findings giving  reasons for granting any  waiver under                                                                    
     this section.                                                                                                              
                                                                                                                                
SENATOR  OGAN explained  that Amendment  1  articulates that  the                                                               
state has a  vested interest in that subsurface right  and if the                                                               
local regulations  are so onerous, the  commissioner can override                                                               
them. He said  he personally believes it is good  state policy to                                                               
protect  state subsurface  rights.  Currently,  in other  states,                                                               
cases  have  arisen  in  which   local  governments  have  passed                                                               
regulations  that  prevented   developers  from  accessing  state                                                               
subsurface property.                                                                                                            
                                                                                                                                
SENATOR  SEEKINS said  he supports  this language  because it  is                                                               
just  a restatement  of a  truism. The  state has  certain rights                                                               
under the Constitution; Amendment 1 reserves those rights.                                                                      
                                                                                                                                
SENATOR  ELTON asked  if  a precedent  for  this language  exists                                                               
anywhere else in statute.                                                                                                       
                                                                                                                                
SENATOR OGAN said  there is a precedent in the  section on public                                                               
projects.                                                                                                                       
                                                                                                                                
SENATOR  ELTON stated  the  original language  in  Version C  was                                                               
problematic for the Alaska Municipal  League (AML) and questioned                                                               
whether AML supports Amendment 1.                                                                                               
                                                                                                                                
SENATOR OGAN said it does and  that a representative from the AML                                                               
was available to testify.                                                                                                       
                                                                                                                                
VICE-CHAIR  WAGONER  asked  if any  of  the  public  participants                                                               
wanted to testify on Amendment 1. There was no response.                                                                        
                                                                                                                                
SENATOR BEN STEVENS asked if the sponsor endorses Amendment 1.                                                                  
                                                                                                                                
VICE-CHAIR  WAGONER  asked  that  the  record  reflect  that  the                                                               
sponsor nodded affirmatively in support of Amendment 1.                                                                         
                                                                                                                                
SENATOR OGAN informed members the citation for the waiver for                                                                   
public projects is AS 35.30.030.                                                                                                
                                                                                                                                
With no further objection to the adoption of Amendment 1, VICE-                                                                 
CHAIR WAGONER announced the motion carried.                                                                                     
                                                                                                                                
SENATOR  DYSON  moved  to  adopt Amendment  2,  proposed  by  the                                                               
Department of  Law. He told  members Department of Law  staff has                                                               
advised that the language in  Amendment 2 is more consistent with                                                               
existing statutory  language and  will help to  avoid litigation.                                                               
Amendment 2 reads as follows.                                                                                                   
                                                                                                                                
                      A M E N D M E N T  2                                                                                  
                                                                                                                                
OFFERED IN THE SENATE RESOURCES              BY SENATOR DYSON                                                                   
     COMMITTEE                                                                                                                  
                                                                                                                                
TO: SCS HB 69  (23-LS0428\C)                                                                                                    
                                                                                                                                
Page 1, line 7                                                                                                                  
     Delete "unconventional"                                                                                                    
     Insert "shallow"                                                                                                           
                                                                                                                                
Page 1, lines 7-8                                                                                                               
     Delete ", including coal bed methane,"                                                                                     
                                                                                                                                
Page 1, line 9                                                                                                                  
     Delete "unconventional"                                                                                                    
     Insert "shallow"                                                                                                           
                                                                                                                                
Page 1, line 12                                                                                                                 
     Delete "unconventional"                                                                                                    
     Insert "shallow"                                                                                                           
                                                                                                                                
Page 2, line 3:                                                                                                                 
     Delete "unconventional"                                                                                                    
     Insert "shallow"                                                                                                           
                                                                                                                                
Page 2, line 7, following "as"                                                                                                  
     Delete "unconventional"                                                                                                    
     Insert "shallow"                                                                                                           
                                                                                                                                
Page 2, line 15                                                                                                                 
     Delete "unconventional"                                                                                                    
     Insert "shallow"                                                                                                           
                                                                                                                                
Page 2, line 17                                                                                                                 
     Delete "unconventional"                                                                                                    
     Insert "shallow"                                                                                                           
                                                                                                                                
Page 2, line 21                                                                                                                 
     Delete "unconventional"                                                                                                    
     Insert "shallow"                                                                                                           
                                                                                                                                
Page 2, line 22                                                                                                                 
     Delete ", including coal bed methane"                                                                                      
                                                                                                                                
Page 2, line 25                                                                                                                 
     Delete "unconventional"                                                                                                    
     Insert "shallow"                                                                                                           
                                                                                                                                
     Delete ",including coal bed methane,"                                                                                      
                                                                                                                                
Page 2, line 26, following "and, if so,"                                                                                        
     Delete "establish the response"                                                                                            
     Insert "whether the volume of oil encountered will be of                                                                   
     such quantities that an oil discharge prevention and                                                                       
     contingency plan will be required."                                                                                        
                                                                                                                                
Page 2, lines 27-28                                                                                                             
     Delete all material.                                                                                                       
                                                                                                                                
Page 3, line 2                                                                                                                  
     Delete "unconventional"                                                                                                    
     Insert "shallow"                                                                                                           
                                                                                                                                
Page 3, line 25                                                                                                                 
     Delete "unconventional"                                                                                                    
     Insert "shallow"                                                                                                           
                                                                                                                                
Page 3, line 30                                                                                                                 
     Delete "unconventional"                                                                                                    
     Insert "shallow"                                                                                                           
                                                                                                                                
Page 3 lines 30-31                                                                                                              
     Delete ", including coal bed methane,"                                                                                     
                                                                                                                                
Page 4, line 1                                                                                                                  
     Delete "title"                                                                                                             
     Insert "chapter"                                                                                                           
                                                                                                                                
Page 4, line 1                                                                                                                  
     Insert a new bill section to read:                                                                                         
"*Sec.5 AS 31.05.170 is amended by adding a new paragraph to                                                                  
read:                                                                                                                           
          (15) "shallow natural gas" means coal bed methane,                                                                    
natural  gas  drilled   for  under  a  lease   authorized  by  AS                                                               
38.05.177,  or natural  gas  drilled  for in  a  well whose  true                                                               
vertical depth is 4,000 feet or less."                                                                                          
                                                                                                                                
Renumber the following bill sections accordingly.                                                                               
                                                                                                                                
Page 4, line 1:                                                                                                                 
     Delete "AS 38.05.177"                                                                                                      
     Insert "AS 38.05"                                                                                                          
                                                                                                                                
     Delete "subsection"                                                                                                        
     Insert "section"                                                                                                           
                                                                                                                                
Page 4, line 2                                                                                                                  
     Delete "(o)"                                                                                                               
     Insert "Sec. 38.05.178. Regulation of shallow natural gas;                                                                 
relationship of chapter to other laws."                                                                                         
                                                                                                                                
Page 4, line 13                                                                                                                 
     Delete "unconventional"                                                                                                    
     Insert "shallow"                                                                                                           
                                                                                                                                
Page 4, lines 13-14                                                                                                             
     Delete ", including coal bed methane,"                                                                                     
                                                                                                                                
Page 4, line 6                                                                                                                  
     Insert "For purposes of this section, 'shallow natural gas'                                                                
has the meaning given in AS 31.05.170"                                                                                          
                                                                                                                                
Page 4, line 13                                                                                                                 
     Delete "unconventional [SHALLOW]                                                                                           
     Insert "shallow"                                                                                                           
                                                                                                                                
Page 4, lines 13-14                                                                                                             
     Delete "including coal bed methane gas,"                                                                                   
                                                                                                                                
Page 4, line 15, following "determines"                                                                                         
     Insert "under AS 31.05.030(j) that"                                                                                        
                                                                                                                                
Page 4, line 16, following "(1)"                                                                                                
     Delete "under AS 31.05.030(j) that"                                                                                        
                                                                                                                                
Page 4, line 16, following "for"                                                                                                
     Delete "unconventional"                                                                                                    
     Insert "shallow"                                                                                                           
                                                                                                                                
Page 4, line 19, following "plan"                                                                                               
     Delete "with an appropriate response planning standard                                                                     
described in"                                                                                                                   
                                                                                                                                
Page 4, line 20                                                                                                                 
     Delete "AS 46.04.030(k)"                                                                                                   
                                                                                                                                
Page 4, following line 22                                                                                                       
     Insert a new bill section to read                                                                                          
"*Sec.8. AS  46.04.900 is  amended by adding  a new  paragraph to                                                             
read:                                                                                                                           
          (30) "shallow natural gas" has the meaning given in AS                                                                
31.05.170"                                                                                                                      
                                                                                                                                
Renumber the following bill sections accordingly.                                                                               
                                                                                                                                
Page 4, line 26                                                                                                                 
     Delete "unconventional"                                                                                                    
     Insert "shallow"                                                                                                           
                                                                                                                                
Page 4, line 26                                                                                                                 
     Delete "unconventional"                                                                                                    
     Insert "shallow"                                                                                                           
                                                                                                                                
Page 4, following line 30                                                                                                       
     Insert a new bill section to read:                                                                                         
"*Sec.10 AS  46.40.210 is  amended by adding  a new  paragraph to                                                               
read:                                                                                                                           
          (10) "shallow natural gas" has the meaning given in AS                                                                
31.05.170."                                                                                                                     
                                                                                                                                
Renumber the remaining bill section accordingly.                                                                                
                                                                                                                                
                                                                                                                                
SENATOR OGAN objected for the purpose of discussion.                                                                            
                                                                                                                                
VICE-CHAIR  WAGONER asked  Mr.  Mintz to  explain  the intent  of                                                               
Amendment 2 to the committee.                                                                                                   
                                                                                                                                
MR. ROBERT  MINTZ, Assistant Attorney General,  Department of Law                                                               
(DOL), explained to  members that Amendment 2 was  drafted by the                                                               
DOL  after consultation  with representatives  of the  Alaska Oil                                                               
and Gas  Conservation Commission  (AOGCC), Department  of Natural                                                               
Resources   (DNR),   and    the   Department   of   Environmental                                                               
Conservation (DEC). It is intended to do three things.                                                                          
                                                                                                                                
   · The term "unconventional natural gas" was changed to                                                                       
     "shallow natural gas" throughout  the legislation. The title                                                               
     of the bill uses the term  "shallow natural gas" so the term                                                               
     was made  consistent to avoid  a potential problem  with the                                                               
     title not  describing the  subject of  the bill.  The common                                                               
     understanding of  "unconventional natural gas"  includes gas                                                               
     at deep depths.                                                                                                            
   · It provides a statutory definition of "shallow natural                                                                     
     gas."  DOL felt that  inclusion was important because as the                                                               
     bill has  been developed, it  actually affects not  only the                                                               
     AOGCC statute,  but also DEC  and DNR. The  definition makes                                                               
     clear what  projects would and  would not be covered  by the                                                               
     bill.                                                                                                                      
                                                                                                                                
MR. MINTZ  told members  that an AOGCC  member would  explain the                                                               
definition to members.                                                                                                          
                                                                                                                                
MR.  DAN SEAMOUNT,  Alaska Oil  and Gas  Conservation Commission,                                                               
said  both the  AOGCC and  DNR discussed  ways to  define shallow                                                               
natural gas  and agreed on  this definition.  Any one or  more of                                                               
three  criteria  is  sufficient   to  meet  the  definition.  One                                                               
criterion  is coal  bed  methane. Because  there  is a  practical                                                               
depth limitation involved, coal can  be squeezed to a point where                                                               
gas cannot flow out of it  at that depth, probably at about 4,000                                                               
feet. The second criterion could be  covered by a DNR shallow gas                                                               
lease, under  AS 38.05.177.  The third  criterion is  natural gas                                                               
drilled for  in a well  with a true  vertical depth (TVD)  of not                                                               
more than 4,000 feet. Both the  AOGCC and DNR felt these criteria                                                               
would cover the types of  projects the committee intends to cover                                                               
under this legislation.                                                                                                         
                                                                                                                                
MR. MINTZ then told members the  third change in Amendment 2 will                                                               
correct an inconsistency  in the language between  what the AOGCC                                                               
is expected  to do under  Section 6 of  the bill (related  to oil                                                               
spill contingency plans)  and what the AOGCC is  authorized to do                                                               
under   Section  2   of  the   bill  (the   AOGCC's  powers   and                                                               
responsibilities). Using  the language from Section  6 in Section                                                               
2 will  avoid any  uncertainty about the  AOGCC's authority.   In                                                               
addition, a superfluous phrase was deleted.                                                                                     
                                                                                                                                
MR. MINTZ noted  a fourth change in Amendment 2  is technical and                                                               
relates to Section  5. As written, the  committee substitute adds                                                               
a new  subsection to  Section 177  of AS  38.05, the  shallow gas                                                               
leasing statute.  Because the  coverage of  Section 5  is broader                                                               
than shallow gas  leasing and the concept of  shallow natural gas                                                               
is broader than  what is provided for under  the leasing statute,                                                               
DOL thought placing Section 5  in the shallow gas leasing section                                                               
could cause  confusion. DOL instead  suggested it be placed  in a                                                               
new section by itself. Amendment 2 adds that new section.                                                                       
                                                                                                                                
SENATOR OGAN referred to page 2,  lines 22-25 of Amendment 2, and                                                               
asked if  the intent of  that language  is to prevent  AOGCC from                                                               
playing the role traditionally played by DEC.                                                                                   
                                                                                                                                
MR. MINTZ said  that is a policy call for  the committee to make.                                                               
He said Section  2 is only supposed to  provide express authority                                                               
for the AOGCC  to do what Section  6 asks it to  do. The language                                                               
on lines  22-25 would make  the language consistent  with Section                                                               
6.                                                                                                                              
                                                                                                                                
SENATOR OGAN asked if AS 31 is the AOGCC statute.                                                                               
                                                                                                                                
MR. MINTZ said that is correct.                                                                                                 
                                                                                                                                
SENATOR  OGAN asked,  "So  you  don't want  AOGCC  to  be in  the                                                               
business of  establishing a  response? That's more  what DEC  - I                                                               
mean  is that  why  we're  doing this  basically  -  the DEC  job                                                               
description?"                                                                                                                   
                                                                                                                                
MR. RANDY RUEDRICH, AOGCC, told  members that two sections of the                                                               
bill were  inconsistent. Section 6 contained  the requirements to                                                               
provide  information,   which  are  left  unchanged.   Section  2                                                               
required the  AOGCC to do  the task  described in Section  6. The                                                               
amendment attempts  to make  consistent what  the AOGCC  is being                                                               
asked to  do with  what it is  doing. He said  the AOGCC  will be                                                               
defining  the likely  flow  rates  to give  to  the  DEC for  the                                                               
establishment of a spill contingency plan.                                                                                      
                                                                                                                                
SENATOR OGAN asked  if the line number changes on  page 4 reflect                                                               
the adoption of the committee substitute.                                                                                       
                                                                                                                                
MR. MINTZ  said that  is correct. He  explained that  Amendment 2                                                               
was  originally drafted  to  apply to  Version  B. However,  when                                                               
Version  C was  introduced,  handwritten revisions  were made  to                                                               
apply  to Version  C.  He acknowledged  that  because of  limited                                                               
time, he cannot  assure that all of the  necessary revisions were                                                               
included. [Amendment  2 as typed  above contains  the handwritten                                                               
revisions provided by Mr. Mintz that apply to Version C.]                                                                       
                                                                                                                                
VICE-CHAIR WAGONER  announced that  with no further  questions or                                                               
objections, CSHB  69(RES) [Version C]  as amended was  before the                                                               
committee.                                                                                                                      
                                                                                                                                
SENATOR OGAN  moved that  the bill  drafter be  able to  make any                                                               
technical conforming  changes necessary to  incorporate Amendment                                                               
1 as he believed some clean-up changes may be required.                                                                         
                                                                                                                                
VICE-CHAIR WAGONER suggested  that the motion allow  the chair to                                                               
make sure  the changes are  technical in nature before  the draft                                                               
is considered finalized.                                                                                                        
                                                                                                                                
SENATOR  BEN  STEVENS  asked  Senator  Ogan  to  clarify  why  he                                                               
believes Amendment 1 will require a technical correction.                                                                       
                                                                                                                                
SENATOR OGAN said  he is concerned the heading  will not conform.                                                               
He added that  he is only asking the committee  to give the legal                                                               
drafter   the  ability   to  make   technical  corrections,   not                                                               
substantive  changes.  He  said   the  legal  drafter  made  that                                                               
suggestion because he did not draft Amendment 1.                                                                                
                                                                                                                                
SENATOR ELTON commented that if  any technical amendments need to                                                               
be made, he would also like a copy.                                                                                             
                                                                                                                                
SENATOR OGAN indicated  the legislation could also  be changed on                                                               
the Senate floor, if necessary.                                                                                                 
                                                                                                                                
There  being  no  further discussion  or  objections,  VICE-CHAIR                                                               
WAGONER  announced  the motion  carried  and  that the  committee                                                               
would take public testimony.                                                                                                    
                                                                                                                                
MR. MATT  DAVIDSON, representing the Alaska  Conservation Voters,                                                               
expressed concern that  the public has had very  little chance to                                                               
review  the changes  to HB  69  made in  the Senate.  He said  he                                                               
agrees that the  development of coal bed methane  and shallow gas                                                               
drilling has huge potential for  the development of energy across                                                               
the state, especially in rural  areas where energy costs are very                                                               
high. Unfortunately,  the bill does  not recognize  the potential                                                               
risks of this type of  development to groundwater, surface water,                                                               
community development and  public and private lands.  The bill is                                                               
lacking  in that  it does  not instruct  the agencies  to take  a                                                               
proper look at  these impacts. He asked that  the bill recognize,                                                               
in its  findings section,  the potential  impacts to  the waters,                                                               
neighborhoods  and  communities  of   the  state  from  coal  bed                                                               
methane.                                                                                                                        
                                                                                                                                
MR. DAVIDSON said  the bill erroneously implies  that the impacts                                                               
of coal  bed methane  developments are  less of  a threat  to the                                                               
resources  of the  state. He  agrees they  differ from  deep well                                                               
drilling,  but  the impacts  to  private  landowners and  surface                                                               
waters in  the Rocky Mountains  have been very big.  He described                                                               
the  process  of  coal   bed  methane  development,  particularly                                                               
reinjection, and problems associated  with salinity, seepage, and                                                               
groundwater levels  and contamination.  He repeated  the findings                                                               
section should reflect those risks  and that AOGCC should develop                                                               
regulations to address them.                                                                                                    
                                                                                                                                
MR. DAVIDSON  said he believes  it is inappropriate to  leave the                                                               
variance provision  in Sections 1 and  3 of the bill.  A variance                                                               
will not be necessary once  regulations are developed to properly                                                               
manage coal  bed methane  production. He  urged the  committee to                                                               
add the sunset provision to the variance language.                                                                              
                                                                                                                                
MR. DAVIDSON said  he also believes it is  inappropriate that the                                                               
public notice  of the variances  continues to be included  in the                                                               
legislation. There  has been  no compelling  testimony as  to why                                                               
the variances  are necessary. The  AOGCC is  currently processing                                                               
some of  the variances requested  by Evergreen Drilling.  He said                                                               
he continues to object to  the language limiting local government                                                               
planning in  Sections 4  and 5. Coal  bed methane  has tremendous                                                               
impacts  on private  land.  A local  government  should have  the                                                               
right to tell the producer and the  state that it does not want a                                                               
compressor station  built next to  a school. His final  point was                                                               
that  the  exemption  to  coastal   zone  consistency  review  is                                                               
inappropriate because  coal bed  methane produces  wastewater and                                                               
has  the potential  to  affect marine  and  other ecosystems  and                                                               
should not be exempted.                                                                                                         
                                                                                                                                
SENATOR  OGAN told  Mr.  Davidson that  the  subcommittee held  a                                                               
number of  meetings and publicly  noticed each one. He  then told                                                               
Mr. Davidson,  regarding ground and surface  water contamination,                                                               
the  plans  that  Evergreen  Resources  submitted  to  the  AOGCC                                                               
contain double  protection to ensure no  aquifer infiltration. He                                                               
said  water is  not actually  injected to  produce the  well. The                                                               
water  is drawn  down to  lower  the pressure  in the  reservoir,                                                               
which makes the methane to rise.  He said some of that water does                                                               
have low salinity  levels. That is reinjected below  the level of                                                               
production  into bedrock.  It is  virtually  impossible for  that                                                               
water to infiltrate  the aquifer. He also told  Mr. Davidson that                                                               
the boroughs  will be able to  say they do not  want a compressor                                                               
station  next to  a school  through land  use and  planning. This                                                               
bill  does   not  remove   that  ability;   it  does   allow  the                                                               
commissioner to  waive local  requests if  there is  a compelling                                                               
issue but he believes those  mitigating concerns can be addressed                                                               
in the permit.                                                                                                                  
                                                                                                                                
SENATOR  OGAN  said  he  believes Mr.  Davidson  must  have  been                                                               
referring to  a New York  Times article about methane  seepage in                                                             
the  Powder  River Basin.  He  said  the  methane seepage  was  a                                                               
natural seepage that had been  there forever. He pointed out that                                                               
methane is  non-toxic. He has  seen friends in the  Mat-Su Valley                                                               
turn on  their faucets, hold a  match and light a  fire. He noted                                                               
the coal  is very shallow  in some  places in the  Mat-Su Valley.                                                               
Those people are actually drawing  water out of coal. Their water                                                               
wells produce gas.                                                                                                              
                                                                                                                                
SENATOR ELTON  commented that it is  easy to talk about  a lot of                                                               
these  issues as  if the  public  has the  same understanding  of                                                               
them. Often what gets in the way  is a lack of knowledge. He said                                                               
the issue is that at one  end the bill constricts the possibility                                                               
of public  notice, at the  other end, communities are  being told                                                               
they have  no say.  That sets  up a  situation where  no rational                                                               
discussion  will take  place because  there will  be no  forum in                                                               
which to  do so.  He asked  whether situations  in the  past have                                                               
occurred that warrant the new sections in the bill.                                                                             
                                                                                                                                
SENATOR OGAN asked to respond to  a previous comment and said the                                                               
only  thing  this bill  does  is  to  change public  notices  for                                                               
technical  changes made  by the  AOGCC,  basically for  down-hole                                                               
operations. He said a technical  change might be requested when a                                                               
company  wants to  make minor  changes to  its plan  of operation                                                               
because  it   encountered  a  slightly  different   geology  than                                                               
expected. He said  the public still has plenty  of opportunity to                                                               
comment on  the leasing issue  itself and mitigating  measures on                                                               
the overall plan. He pointed out  to date, no one has requested a                                                               
public hearing on any of those technical changes.                                                                               
                                                                                                                                
SENATOR ELTON  asked if  any situation  has arisen  that requires                                                               
the kind of relief this bill seeks.                                                                                             
                                                                                                                                
SENATOR OGAN said, to the best  of his knowledge, there have been                                                               
no requests  on these technical  down-hole issues, and  that they                                                               
have  all been  public noticed  with the  AOGCC. He  told members                                                               
that  someone  who wants  to  delay  a  project could  request  a                                                               
hearing,  which requires  a 30-day  notice. That  could force  an                                                               
operation to  shut down over  a technical  change to a  plan that                                                               
the  AOGCC commissioners  are capable  of  deciding upon  without                                                               
harming  the  public.   He  said  he  believes   this  change  is                                                               
consistent  with   the  Governor's  attempt  to   streamline  the                                                               
regulatory process.                                                                                                             
                                                                                                                                
SENATOR  ELTON   maintained  that  one  can   always  envision  a                                                               
situation  in  which  public notice  and  public  hearings  could                                                               
create problems, even if they haven't in the past.                                                                              
                                                                                                                                
MR.  DAVIDSON  told  members  that  he  testified  at  the  first                                                               
subcommittee  hearing,   at  which   time  the   first  committee                                                               
substitute was  introduced. That  was the first  time he  saw the                                                               
municipal  language  and  called  the Mat-Su  Borough  to  inform                                                               
staff. Since  then, the  chair of the  subcommittee asked  him to                                                               
hold his  comments and bring  them before the full  committee. He                                                               
said  he  appreciates  Senator   Ogan's  knowledge  of  coal  bed                                                               
methane. He  noted that  the State of  Montana just  considered a                                                               
bill  to regulate  the discharge  of  water drawn  from coal  bed                                                               
methane. The farmers and ranchers  want it regulated because they                                                               
cannot use  that water on  their operations. He pointed  out that                                                               
neither the  state nor  the AOGCC  has a  lot of  experience with                                                               
coal  bed  methane production  or  drilling  so  he feels  it  is                                                               
appropriate to discuss potential issues in communities.                                                                         
                                                                                                                                
SENATOR OGAN said  he agrees that other states  have had problems                                                               
with water  discharges. However, in  some areas of  Colorado, the                                                               
water is so  pure it is drinking water quality.  Ranchers love it                                                               
because they  can get a  water supply  they did not  have before.                                                               
However, there  are problems with  salinity in other  areas. That                                                               
is  not  the  case  in   Alaska  because  that  water  cannot  be                                                               
discharged  on the  ground;  it must  be  reinjected below  4,000                                                               
feet.                                                                                                                           
                                                                                                                                
MR.  DAVIDSON  told members  his  goal  is that  the  legislation                                                               
recognize  that  impacts from  coal  bed  methane production  can                                                               
occur. He asked  the committee to consider the  comments from the                                                               
Mat-Su Borough  because placing limits  on Title  29 authorities'                                                               
ability to zone these production wells is important.                                                                            
                                                                                                                                
VICE-CHAIR  WAGONER  said  he  thought   the  committee  had  the                                                               
concurrence of the Mat-Su borough on the bill as amended.                                                                       
                                                                                                                                
TAPE 03-18, SIDE B                                                                                                              
                                                                                                                                
SENATOR OGAN invited  Mr. Davidson to contact  staff at Evergreen                                                               
Resources who would be glad to  give him a tour and explain their                                                               
operations. He said  he believes Mr. Davidson  would be impressed                                                               
with how conscientious Evergreen is about its operations.                                                                       
                                                                                                                                
MR. DAVIDSON  said he  is not  arguing Evergreen's  intentions or                                                               
that this legislation is a back  door way to do business, he just                                                               
believes the public deserves to recognize the potential impacts.                                                                
                                                                                                                                
VICE-CHAIR  WAGONER  announced  a  10-minute  at-ease.  When  the                                                               
committee  reconvened, he  said he  would entertain  a motion  to                                                               
move the legislation from committee.                                                                                            
                                                                                                                                
SENATOR SEEKINS  said he  would like to  express support  for the                                                               
rally going  on in front of  the Capitol Building to  support our                                                               
troops  and President  Bush.  He then  moved  SCSHB 69(RES)  with                                                               
individual recommendations.                                                                                                     
                                                                                                                                
SENATOR ELTON objected and asked what the original motion was.                                                                  
                                                                                                                                
VICE-CHAIR WAGONER said the original  motion was to adopt Version                                                               
C and then the committee adopted two amendments.                                                                                
                                                                                                                                
SENATOR  ELTON  asked  for  an  explanation  of  the  differences                                                               
between Versions B and C.                                                                                                       
                                                                                                                                
SENATOR  DYSON  explained that  when  the  subcommittee sent  its                                                               
proposal to  the legal drafters,  it had  a line drawn  through a                                                               
few words  but the drafter  did not exclude those  words. Senator                                                               
Dyson did  not notice  that the words  remained when  he reviewed                                                               
the  draft committee  substitute. He  said those  words kept  the                                                               
municipalities from  having any  say, which the  subcommittee did                                                               
not intend. Those words were removed  in Version C and, as far as                                                               
he knows, that  is the only difference between  the two versions.                                                               
He  said  he  takes  total   responsibility  for  the  error  and                                                               
apologized for the mistake.                                                                                                     
                                                                                                                                
SENATOR  ELTON  removed  his  objection  and  VICE-CHAIR  WAGONER                                                               
announced that without objection, the motion carried.                                                                           
                                                                                                                                
VICE-CHAIR WAGONER  called a brief at-ease  and, upon reconvening                                                               
the meeting, handed the gavel back to Chair Ogan.                                                                               
                                                                                                                                
           SB 97-ATTY FEES: PUBLIC INTEREST LITIGANTS                                                                       
                                                                                                                                
CHAIR  OGAN asked  a representative  from  the Administration  to                                                               
present the bill.                                                                                                               
                                                                                                                                
MR.   CRAIG  TILLERY,   Assistant  Attorney   General  with   the                                                               
Department of  Law (DOL),  gave the  following explanation  of SB
97.  This legislation  relates to  public interest  litigants and                                                               
more  generally to  attorney  fees, and  it  provides a  specific                                                               
amendment  to Civil  Rule 82.  A  public interest  litigant is  a                                                               
doctrine developed  by the Alaska  Supreme Court,  which provides                                                               
that if  someone is deemed a  public interest litigant in  a case                                                               
and wins  the case, the  person is awarded full  attorney's fees.                                                               
If the  person loses  the case, no  attorney's fees  are assessed                                                               
against him  or her. If the  person wins only a  small portion of                                                               
the  case,  except  in exceptional  circumstances,  there  is  no                                                               
apportionment  for  that  issue   so  full  attorney's  fees  are                                                               
awarded.  In  addition, under  the  catalyst  theory, even  if  a                                                               
person  does not  win a  small part  of the  case but  the agency                                                               
might later adopt  a change reflective of the  lawsuit, the award                                                               
of attorney's fees might be assessed.                                                                                           
                                                                                                                                
MR. TILLERY said the public  interest litigant provision is not a                                                               
court rule; it was developed by  the Alaska Supreme Court in case                                                               
law. It applies both to civil  actions and to appeals. He said SB
183  was introduced  and  passed  the Senate  but  not the  House                                                               
during the last  legislative session. It would  have amended Rule                                                               
82 to remove the public interest  litigant rule for anyone. SB 97                                                               
follows a  similar approach but  is limited to  certain decisions                                                               
made by  the Departments  of Environmental  Conservation, Natural                                                               
Resources  and  Fish  and  Game.   Those  decisions  are  coastal                                                               
consistency  determinations,  the   adoption  of  regulations  or                                                               
decisions for  which there is  an opportunity for  public comment                                                               
and  for   administrative  review  of  the   decision.  In  those                                                               
circumstances,  public interest  litigants would  be treated  the                                                               
same as  other litigants  under the  bill. In  each of  the above                                                               
named  situations, the  state already  paid for  extensive public                                                               
participation.                                                                                                                  
                                                                                                                                
MR.  TILLERY said  one suggestion  likely  to be  proposed as  an                                                               
amendment  is due  to a  glitch on  his part.  SB 97  should also                                                               
amend Appellate Rule 508, which  has the public interest litigant                                                               
exception attached  to it. He said  one more section of  SB 97 is                                                               
not  specific  to  public  interest   litigants.  Civil  Rule  82                                                               
contains a  fee variance in  which, under  certain circumstances,                                                               
one can get enhanced or lowered  fees. SB 97 contains a provision                                                               
that  says  in  those  situations,  if a  fee  is  varied  by  an                                                               
increased  award,  the enhanced  fees  may  only be  awarded  for                                                               
issues  on  which  the  party  prevailed  except  in  exceptional                                                               
circumstances. He  pointed out the exceptional  circumstances are                                                               
not defined  in the bill  but the  Supreme Court term  often uses                                                               
that term in its opinions to denote very rare circumstances.                                                                    
                                                                                                                                
MR. TILLERY said  the purpose of SB 97 is  several-fold. It is an                                                               
effort to balance the incentives  in litigation between those who                                                               
would  attack a  state  resource agency  decision  and those  who                                                               
would defend it. It would change  the law to force all litigants,                                                               
whether they be public interest litigants  or not, to engage in a                                                               
cost benefit  analysis that  regular litigants  must do  prior to                                                               
filing a  suit. In  looking at  the kinds of  costs that  DOL has                                                               
been  required to  bear over  the last  6 or  7 years,  in almost                                                               
every  instance the  entities that  litigated  against the  state                                                               
with public interest  litigant status are entities  that are well                                                               
financed  with a  number of  lawyers. Those  entities can  engage                                                               
very effectively  in this kind  of cost benefit  analysis without                                                               
any disadvantage.  Most public interest lawsuits  are against the                                                               
state and they are costly. DOL  has expended over $475,000 over a                                                               
7-year period.  That money  could be  better spent  elsewhere and                                                               
there is a  risk that it could become a  factor in state decision                                                               
making.                                                                                                                         
                                                                                                                                
MR. TILLERY  noted that  public interest  litigant fees  are also                                                               
available against private individuals. That  may or may not raise                                                               
the specter of  inhibiting the private party's  ability to resort                                                               
to the courts to defend a  lawsuit and to take a certain position                                                               
and follow it to  the end of the lawsuit.   Depending on the size                                                               
of  the entity,  it may  not be  a big  problem but,  for even  a                                                               
moderate sized  corporation, fees can easily  amount to $100,000.                                                               
He said  DOL expects this  bill to reduce  excessive, unjustified                                                               
claims.  The lack  of  apportionment of  awards  has resulted  in                                                               
lawsuits where DOL  has "the kitchen sink thrown at  us and a lot                                                               
of other  appliances." In  a recent case,  84 separate  points on                                                               
appeal were  taken to  Superior Court.  The number  of successful                                                               
points on  appeal was  zero. From that  decision, 98  points were                                                               
taken to  the Supreme Court on  appeal. The case became  moot and                                                               
the  only remaining  issue  was whether  the  litigant would  get                                                               
attorney's  fees. The  current system  provides  no incentive  to                                                               
make a  reasoned decision  as to which  counts should  be pursued                                                               
and  which  should not.  Attorney  time  to defend  against  non-                                                               
meritorious claims is costly to DOL.                                                                                            
                                                                                                                                
MR.  TILLERY  said  the  philosophy  of  this  approach  is  very                                                               
narrowly drawn.  From FY 95 to  FY 01, there were  32 fee orders.                                                               
Of  those,  only 10  would  have  fallen  under this  rule.  This                                                               
approach does  not discourage anyone  from bringing a  lawsuit or                                                               
restrict anyone's  ability to do  so; it only removes  a positive                                                               
incentive  to  bring  a  large  complex  lawsuit  and  makes  the                                                               
litigant  decide the  important issues  upfront. Generally,  they                                                               
all involve  situations where there was  already extensive public                                                               
involvement by the parties and  a number of opportunities both to                                                               
be heard and for public review.                                                                                                 
                                                                                                                                
MR. TILLERY  said under  SB 97,  the courts  remain free  to vary                                                               
awards  under the  civil and  appellate  rules for  a variety  of                                                               
reasons,  such  as the  complexity  of  the litigation.  However,                                                               
awards will  no longer be  varied because  the party is  a public                                                               
interest litigant.                                                                                                              
                                                                                                                                
CHAIR OGAN asked whether committee members had questions.                                                                       
                                                                                                                                
SENATOR ELTON said  his understanding of what  SB 97 accomplishes                                                               
is that  in discrete incidences  described, no attorney  fees for                                                               
public  interest litigants  will be  awarded unless  the litigant                                                               
has followed a  prescribed course of action  for participation at                                                               
the  administrative level.  He asked  if  a court  can make  that                                                               
decision right now based on the circumstances.                                                                                  
                                                                                                                                
MR. TILLERY said  SB 97 does not prevent the  award of attorney's                                                               
fees  like  other  cases  allow.   However,  if  public  interest                                                               
litigants lose, they pay attorney's fees like anyone else.                                                                      
                                                                                                                                
SENATOR ELTON said that can happen now.                                                                                         
                                                                                                                                
MR. TILLERY  said the Supreme Court  has made it very  clear once                                                               
the  court deems  a  person  a public  interest  litigant, it  is                                                               
required  to  award  full  fees  except  in  cases  of  vexatious                                                               
conduct, bad faith, and a few others.                                                                                           
                                                                                                                                
SENATOR ELTON asked if the  case of the 84 non-meritorious points                                                               
that grew to 98 on appeal would be considered vexatious.                                                                        
                                                                                                                                
MR.  TILLERY said  DOL would  consider  it a  vexatious case  but                                                               
DOL's  experience has  been  that courts  generally  do not  find                                                               
counts to  be vexatious because they  are devoid of merit.  To be                                                               
considered vexatious,  a case tends  to require active  bad faith                                                               
or  some  indication that  the  case  was  filed simply  for  the                                                               
purpose of harassment. DOL rarely gets  the court to rule with it                                                               
on that issue.                                                                                                                  
                                                                                                                                
SENATOR ELTON  asked if the court  would consider a case  that is                                                               
totally void of merit to be vexatious.                                                                                          
                                                                                                                                
MR. TILLERY  said DOL  has not  found that  the courts  refuse to                                                               
award attorney's  fees simply because  a count is  totally devoid                                                               
of merit.                                                                                                                       
                                                                                                                                
SENATOR WAGONER asked if the  $475,000 cost was the total expense                                                               
to the state.                                                                                                                   
                                                                                                                                
MR. TILLERY  said that $475,000  was expended on  public interest                                                               
litigants that would most likely  fit under this bill. The actual                                                               
cost for  all public  interest litigants  during that  period was                                                               
actually much  greater. He said at  least one of those  cases was                                                               
$1 million. The  $475,000 does not include the time  spent by DOL                                                               
attorneys  on cases  that  DOL believes  were  without merit  and                                                               
would have  been brought  much more  compactly if  SB 97  were in                                                               
effect.                                                                                                                         
                                                                                                                                
CHAIR OGAN  asked who  the typical litigants  are in  these cases                                                               
and who represents them.                                                                                                        
                                                                                                                                
MR. TILLERY  said a  solitary attorney brought  the case  with so                                                               
many counts that he mentioned. Most  of the cases were brought by                                                               
organizations such as the Trustees for Alaska.                                                                                  
                                                                                                                                
CHAIR OGAN said  it would probably be  unconstitutional to single                                                               
out an organization that repeatedly files these cases.                                                                          
                                                                                                                                
MR. TILLERY  said in DOL's  view, targeting  the bill in  the way                                                               
Chair Ogan  suggested would  be constitutionally  problematic. He                                                               
said that  SB 97  does not  go after an  individual or  party. It                                                               
focuses on  a type of  case where  these fees are  not available,                                                               
such  as consumer  protection  cases.  This prescription  against                                                               
public  interest litigants  would apply  equally to  the Trustees                                                               
for  Alaska and  to  the Pacific  Legal  Foundation, which  might                                                               
bring  a case  on behalf  of an  industry that  is attempting  to                                                               
develop a project.                                                                                                              
                                                                                                                                
SENATOR  BEN STEVENS  asked Mr.  Tillery if  any public  interest                                                               
litigant has  ever brought each  department to  trial separately,                                                               
and  how   many  times  a   public  interest  litigant   has  the                                                               
opportunity to take the state to trial.                                                                                         
                                                                                                                                
MR.  TILLERY replied  cases can  be  complex and  can be  brought                                                               
serially and often.                                                                                                             
                                                                                                                                
SENATOR BEN  STEVENS asked if  the same public  interest litigant                                                               
brings the suit each time.                                                                                                      
                                                                                                                                
MR. TILLERY said it could.                                                                                                      
                                                                                                                                
SENATOR BEN STEVENS asked if that has happened.                                                                                 
                                                                                                                                
MR. TILLERY  said he thought an  ongoing case was the  Forest Oil                                                               
case but  that is not  the only one.  He explained that  one suit                                                               
might be  filed during the  exploration phase and  another during                                                               
the planning phase.                                                                                                             
                                                                                                                                
SENATOR BEN  STEVENS asked  if there  is legal  justification for                                                               
taking a case to each individual  department or whether that is a                                                               
stall tactic.                                                                                                                   
                                                                                                                                
MR. TILLERY said he believes  the litigants are frequently forced                                                               
to file  cases in a serial  fashion because decisions tend  to be                                                               
phased over  a number of years.  One can't sue over  a production                                                               
decision that  was not made  two years ago while  the exploration                                                               
aspects were being addressed. Litigants  have a limited amount of                                                               
time to  sue once a  decision is  made, even though  the litigant                                                               
might prefer to wait and combine lawsuits.                                                                                      
                                                                                                                                
SENATOR  SEEKINS  asked  how   one  establishes  public  interest                                                               
litigant status.                                                                                                                
                                                                                                                                
MR. TILLERY said  the court uses a number of  factors to make the                                                               
determination.  Those factors  include  whether  the litigant  is                                                               
advocating  public policy  or whether  a large  number of  people                                                               
will be affected.  The court looks to see whether  there would be                                                               
enough  of  an  economic  interest   that  the  litigant  has  an                                                               
incentive to bring the case on his or her own.                                                                                  
                                                                                                                                
SENATOR SEEKINS asked if that status is difficult to establish.                                                                 
                                                                                                                                
MR.  TILLERY   said  public  interest  litigant   status  is  not                                                               
something that happens every day,  but the courts are comfortable                                                               
making that decision.                                                                                                           
                                                                                                                                
SENATOR  SEEKINS  asked  if  he  had a  personal  interest  in  a                                                               
situation  and  found  a  friend  who  did  not,  whether  it  is                                                               
conceivable he could  get his friend to become  a public interest                                                               
litigant while Senator Seekins helped fund the case.                                                                            
                                                                                                                                
MR. TILLERY  said first of all  the friend may not  have standing                                                               
to bring  the case. Second,  the court  tends to look  at whether                                                               
the case  is the type  in which a  person might have  an economic                                                               
interest.                                                                                                                       
                                                                                                                                
SENATOR SEEKINS  asked if there  are any  disclosure requirements                                                               
about who is paying for the case.                                                                                               
                                                                                                                                
MR. TILLERY said he did not  know, but the party in litigation is                                                               
a matter of public record, as well as the attorneys.                                                                            
                                                                                                                                
SENATOR  SEEKINS said  he  was  wondering if  he  could have  his                                                               
mother front the case while  he funded it without any requirement                                                               
for disclosure.                                                                                                                 
                                                                                                                                
MR.  TILLERY said  to his  recollection, Senator  Seekins' mother                                                               
could be  the litigant, and  DOL could inquire into  her finances                                                               
if  she asked  that  the fees  be  waived. He  said  it would  be                                                               
difficult  to find  out who  might be  financing her.  If Senator                                                               
Seekins' mother  had an economic  interest in the case,  it would                                                               
not be likely to be a public interest litigant case.                                                                            
                                                                                                                                
5:37 p.m.                                                                                                                     
                                                                                                                                
SENATOR  SEEKINS said  he asked  because the  only name  that has                                                               
been brought  up is  the Trustees  for Alaska.  That organization                                                               
may be funded by an  outside environmental extremist organization                                                               
just to  slow down progress  in the state.  He asked if  there is                                                               
any way to know who might be behind such a case.                                                                                
                                                                                                                                
MR. TILLEY  said he  believes the  Trustees makes  its activities                                                               
public record on its website.                                                                                                   
                                                                                                                                
CHAIR  OGAN commented  that perhaps  a  better disclosure  method                                                               
should  be considered.  He noted  with no  further questions,  he                                                               
would put this measure into  a subcommittee. He appointed Senator                                                               
Seekins as  chair of the  subcommittee, and Senators  Stevens and                                                               
Elton as  members. He encouraged participants  to contact Senator                                                               
Seekins'  office for  the schedule  of subcommittee  meetings. He                                                               
then took public testimony.                                                                                                     
                                                                                                                                
MR.  TOM  CRAFFORD, Alaska  Miners'  Association  (AMA), said  he                                                               
thought  Mr. Tillery  did  an excellent  job  of summarizing  the                                                               
benefits  of SB  97.  He said  the AMA  believes  this bill  will                                                               
create a level  playing field and reduce the  incentives to bring                                                               
lawsuits that  are aimed at delaying  development projects. Given                                                               
the seasonality  of much  of the  work in  Alaska, a  lawsuit can                                                               
delay a project  for a year and  the expense that can  cause to a                                                               
company can  far exceed the  attorneys' fees.  He  stated support                                                               
for SB 97.                                                                                                                      
                                                                                                                                
MR.   GARY  CARLSON,   Senior  Vice   President  of   Forest  Oil                                                               
Corporation, stated support  for SB 97. He told  members that the                                                               
Alaska  Supreme  Court  through judicial  decisions  created  the                                                               
public interest litigant doctrine.  It provides special treatment                                                               
for certain litigants  chosen by the Supreme Court  when it comes                                                               
to  awarding  attorneys' fees.  This  doctrine  has been  applied                                                               
against the state  and private parties who have been  sued by the                                                               
public  interest litigants.  It is  time for  the legislature  to                                                               
step  in and  assert its  authority  over this  area. The  public                                                               
interest  litigant  doctrine  represents  policy  making  by  the                                                               
Supreme Court on issues that  are the province of the legislature                                                               
to  decide. SB  97 levels  the  playing field  and prohibits  the                                                               
courts from  discriminating against litigants appearing  in state                                                               
courts.  It does  so without  amending existing  court rules,  in                                                               
particular Civil Rules 82.                                                                                                      
                                                                                                                                
MR. CARLSON asked  that the public interest  litigant doctrine be                                                               
abrogated   because  it   provides  a   perverse  incentive   for                                                               
environmentalists  and  other  interests opposed  to  development                                                               
activities in  Alaska to sue  the state and private  companies to                                                               
stop projects of  great benefit to Alaskans.  The public interest                                                               
doctrine  is tailor  made for  environmentalists and  other anti-                                                               
development litigants  who qualify  for public  interest litigant                                                               
status virtually as a matter  of law. These litigants face almost                                                               
no  risk in  bringing the  most  frivolous challenge  to a  state                                                               
approved  project. If  they  win  on any  issues,  no matter  how                                                               
trivial, they hit  the jackpot and receive  full attorneys' fees.                                                               
Such  decisions  are not  only  costly  to  the state,  but  they                                                               
operate  as  a  disincentive  for  responsible  companies  to  do                                                               
business  in  Alaska.  He  said  the  Redoubt  Shoal  development                                                               
project is a  good example. He described problems  Forest Oil has                                                               
encountered with litigation of that project.                                                                                    
                                                                                                                                
CHAIR OGAN  asked Mr.  Carlson what  the costs  of the  delays to                                                               
Forest Oil's project cost the company.                                                                                          
                                                                                                                                
MR.  CARLSON  said it  is  difficult  to characterize  the  exact                                                               
amount because  Forest Oil  tried to  make good  use of  its time                                                               
while the  Supreme Court  shut down  its operation.  However, the                                                               
cost was well in excess of $1 million.                                                                                          
                                                                                                                                
CHAIR  OGAN asked  how  long  Forest Oil  has  been operating  in                                                               
Alaska.                                                                                                                         
                                                                                                                                
MR.  CARLSON said  Forest  Oil started  operations  in Alaska  in                                                               
1997.                                                                                                                           
                                                                                                                                
CHAIR  OGAN asked  Mr.  Carlson if  he  believes Alaska's  public                                                               
interest  litigant policy  is a  disincentive  to attracting  new                                                               
investment to the state.                                                                                                        
                                                                                                                                
MR.  CARLSON  said   it  is.  It  destroys   value  and  provides                                                               
uncertainty. When a  company comes to Alaska,  complies with what                                                               
the state has asked  it to do, and is then  shut down for certain                                                               
periods of  time because  of these lawsuits,  it is  definitely a                                                               
disincentive.                                                                                                                   
                                                                                                                                
CHAIR OGAN thanked Mr. Carlson and took further testimony.                                                                      
                                                                                                                                
MR.   NEIL  MACKINNON,   Vice  Chair   of  the   Alaska  Minerals                                                               
Commission,  told members  that it  is no  coincidence that  this                                                               
legislation   is   the    Alaska   Mineral   Commission's   first                                                               
recommendation  in  its annual  report  this  year. He  said  the                                                               
members of  the commission felt  strongly that this is  a serious                                                               
problem companies are facing day in  and day out.  He pointed out                                                               
the second part of the  commission's recommendation is to require                                                               
disclosure of funding sources. He  told members that in 1999, the                                                               
Trustees  for  Alaska  were  awarded  $84,639  in  court  awarded                                                               
attorney's fees. He  said attorney's fees should also  be paid by                                                               
organizations that  file frivolous lawsuits. He  pointed out that                                                               
the  Trustees  for Alaska  spent  $464,000  providing free  legal                                                               
counsel  and advocacy  to protect  and  sustain Alaska's  natural                                                               
environment.  The  Trustee's  assets on  9/30/99  were  $138,959,                                                               
which  is substantially  more than  some of  the companies  it is                                                               
suing. He said companies want  financial equality before the law,                                                               
yet public interest litigants often  have more assets than any of                                                               
the mining  companies. He asked  that the subcommittee  look into                                                               
expanding the legislation to include financial disclosure.                                                                      
                                                                                                                                
CHAIR  OGAN  commented  that  a  few years  ago  members  of  the                                                               
Sakhalin Duma  visited Alaska.  He told  those members  about the                                                               
public interest  litigant doctrine; they were  completely baffled                                                               
by  it. He  then  asked Mr.  MacKinnon how  he  would respond  to                                                               
accusations that  without the public interest  litigant doctrine,                                                               
companies will pollute  the earth and poison  everyone with toxic                                                               
chemicals.                                                                                                                      
                                                                                                                                
MR. MACKINNON said  this bill is fairly limited as  it only deals                                                               
with state  issued permits, for  which massive hearings  are held                                                               
and  public  comment  is  taken.  He  said  these  cases  do  not                                                               
represent the kind  of case where the little guy  is fighting the                                                               
huge evil company.                                                                                                              
                                                                                                                                
CHAIR OGAN said  that groups like the Sierra Club  have raised so                                                               
much money  for the ANWR issue,  they could easily afford  to pay                                                               
for litigation.                                                                                                                 
                                                                                                                                
MR.  MACKINNON repeated  that a  person who  is fighting  an evil                                                               
company  will not  be hindered  in  any way  by this  legislation                                                               
because a  person who brings a  case with merit is  not precluded                                                               
from collecting attorney's fees.                                                                                                
                                                                                                                                
MS.  PAM  LABOLLE,  President  of the  Alaska  State  Chamber  of                                                               
Commerce, stated strong  support for SB 97. She  said that public                                                               
interest litigant  status is a  special one granted to  a certain                                                               
group  of Alaskans  over the  interests of  other Alaskans.  This                                                               
status  was not  created by  the elected  representatives through                                                               
the recognized  public process, the legislature,  but instead was                                                               
created by the  courts. Under this special  status, litigants are                                                               
provided  exemption  from  their  requirements of  Rule  82.  The                                                               
Alaska State  Chamber worked very hard  to get Rule 82  into law.                                                               
The  Chamber feels  the public  interest  litigant doctrine  came                                                               
into  being  through the  courts  in  1990  as  a result  of  the                                                               
Anchorage Daily News vs. the Anchorage School District case.                                                                    
                                                                                                                                
TAPE 03-19, SIDE A                                                                                                              
                                                                                                                                
MS. LABOLLE said  these groups are often  special interest groups                                                               
posing as trusts. Such challenges  typically allege as many as 15                                                               
to  20  specific  deficiencies   in  the  state's  administrative                                                               
finding and when the groups  challenging the resource development                                                               
decisions  prevail,  they generally  do  on  one or  two  issues.                                                               
However, they are awarded the full costs and attorney's fees.                                                                   
                                                                                                                                
MS.  LABOLLE   said  SB   97  will   return  fairness   to  civil                                                               
proceedings. Under  Rules 82,  the court is  allowed to  raise or                                                               
lower  the  amount  to  be awarded  based  upon  the  established                                                               
factors. The  rule should  be applied  equally to  all litigants.                                                               
She urged the committee to support and pass SB 97.                                                                              
                                                                                                                                
MS.  DEBORAH  GREENBERG,  Executive  Director  for  Trustees  for                                                               
Alaska,  told   members  she  submitted  written   testimony  for                                                               
members'  consideration.  The  Trustees asks  to  participate  in                                                               
Senator  Seekins'  subcommittee  and  to  be  notified  of  those                                                               
hearings.                                                                                                                       
                                                                                                                                
There being  no further testimony,  SENATOR SEEKINS asked  if the                                                               
subcommittee  will  be  working  on Version  A  and  whether  the                                                               
proposed amendment has been adopted.                                                                                            
                                                                                                                                
CHAIR OGAN said that is correct and  that he feels it is best for                                                               
the  subcommittee to  look  at the  proposed  amendment. With  no                                                               
further business  before the committee, he  adjourned the meeting                                                               
at 5:55 p.m.                                                                                                                    

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