Legislature(2003 - 2004)

04/23/2003 03:35 PM RES

Audio Topic
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
                    ALASKA STATE LEGISLATURE                                                                                  
              SENATE RESOURCES STANDING COMMITTEE                                                                             
                         April 23, 2003                                                                                         
                           3:35 p.m.                                                                                            
                                                                                                                                
MEMBERS PRESENT                                                                                                               
                                                                                                                                
Senator Scott Ogan, Chair                                                                                                       
Senator Thomas Wagoner, Vice Chair                                                                                              
Senator Fred Dyson                                                                                                              
Senator Ben Stevens                                                                                                             
Senator Kim Elton                                                                                                               
Senator Georgianna Lincoln                                                                                                      
Senator Ralph Seekins                                                                                                           
                                                                                                                                
MEMBERS ABSENT                                                                                                                
                                                                                                                                
All members present                                                                                                             
                                                                                                                                
COMMITTEE CALENDAR                                                                                                            
                                                                                                                                
SENATE BILL NO. 31                                                                                                              
"An Act relating to a  railroad utility corridor for extension of                                                               
the  Alaska Railroad  to Canada  and to  extension of  the Alaska                                                               
Railroad to connect with the North American railroad system."                                                                   
     MOVED CSSB 31(RES) OUT OF COMMITTEE                                                                                        
                                                                                                                                
SENATE BILL NO. 143                                                                                                             
"An Act relating to the  Alaska coastal management program and to                                                               
policies  and   procedures  for   consistency  reviews   and  the                                                               
rendering  of  consistency  determinations  under  that  program;                                                               
relating  to the  functions of  coastal  resource service  areas;                                                               
creating   an   Alaska   Coastal  Program   Evaluation   Council;                                                               
eliminating the Alaska Coastal  Policy Council; annulling certain                                                               
regulations relating  to the  Alaska coastal  management program;                                                               
relating  to  actions  based on  private  nuisance;  relating  to                                                               
zoning  within  a  third  class borough  covered  by  the  Alaska                                                               
coastal management program; and providing for effective dates."                                                                 
     HEARD AND HELD                                                                                                             
                                                                                                                                
PREVIOUS ACTION                                                                                                               
                                                                                                                                
SB 31 - See Transportation  minutes dated 2/11/03 and 3/27/03 and                                                               
Resources minutes dated 4/14/03.                                                                                                
                                                                                                                                
SB 143 - No previous action to record.                                                                                          
                                                                                                                                
WITNESS REGISTER                                                                                                              
                                                                                                                                
Mr. Richard Schmitz                                                                                                             
Staff to Senator Cowdery                                                                                                        
Alaska State Capitol                                                                                                            
Juneau, AK  99801-1182                                                                                                          
POSITION STATEMENT:  Testified for the sponsor of SB 31                                                                       
                                                                                                                                
Mr. Bob Loeffler                                                                                                                
Director, Division of Mining, Land and Water                                                                                    
Department of Natural Resources                                                                                                 
400 Willoughby Ave.                                                                                                             
Juneau, AK  99801-1724                                                                                                          
POSITION STATEMENT:  Explained the changes made in CSSB 31(RES)                                                               
                                                                                                                                
Ms. Phyllis Johnson                                                                                                             
Alaska Railroad Corporation (ARRC)                                                                                              
PO Box 107500                                                                                                                   
Anchorage, AK 99510-7500                                                                                                        
POSITION STATEMENT:  Answered questions about CSSB 31(RES)                                                                    
                                                                                                                                
Ms. Jeanette James                                                                                                              
Office of the Governor                                                                                                          
PO Box 110001                                                                                                                   
Juneau, AK  99811-0001                                                                                                          
POSITION STATEMENT:  Answered questions about CSSB 31(RES) and                                                                
suggested an amendment                                                                                                          
                                                                                                                                
Dr. Charles Jurasz                                                                                                              
Faro Sustainable Development                                                                                                    
Faro, Yukon Territory                                                                                                           
POSITION STATEMENT:  Supports CSSB 31(RES)                                                                                    
                                                                                                                                
Mr. Jack Phelps                                                                                                                 
Special Assistant                                                                                                               
Office of the Governor                                                                                                          
PO Box 110001                                                                                                                   
Juneau, AK  99811-0001                                                                                                          
POSITION STATEMENT:  Stated support for CSSB 31(RES)                                                                          
                                                                                                                                
Ms. Dana Olson                                                                                                                  
HC 30 Box 5438                                                                                                                  
Wasilla, AK                                                                                                                     
POSITION STATEMENT:  Stated opposition to SB 31                                                                               
                                                                                                                                
Ms. Marty Rutherford                                                                                                            
Office of the Commissioner                                                                                                      
Department of Natural Resources                                                                                                 
400 Willoughby Ave.                                                                                                             
Juneau, AK  99801-1724                                                                                                          
POSITION STATEMENT:  Presented the changes made to CSSB 143(RES)                                                              
                                                                                                                                
Mr. Ken Donakowski                                                                                                              
Conoco Phillips Alaska, Inc.                                                                                                    
P.O. Box 100360                                                                                                                 
Anchorage, Alaska 99510                                                                                                         
POSITION STATEMENT:  Stated support for CSSB 143(RES)                                                                         
                                                                                                                                
Mr. Larry Houle                                                                                                                 
Alaska Support Industry Alliance                                                                                                
4220 B St. #200                                                                                                                 
Anchorage, AK  99501                                                                                                            
POSITION STATEMENT:  Supports CSSB 143(RES)                                                                                   
                                                                                                                                
Mr. Bob Stinson                                                                                                                 
CONAM Construction                                                                                                              
1242 St. Gotthard Ave.                                                                                                          
Anchorage, AK  99508                                                                                                            
POSITION STATEMENT:  Supports CSSB 143(RES)                                                                                   
                                                                                                                                
Mr. Chuck Degnan                                                                                                                
No address provided                                                                                                             
POSITION STATEMENT:  Opposed to CSSB 143(RES)                                                                                 
                                                                                                                                
Mr. Dan Bevington                                                                                                               
Coastal District Coordinator                                                                                                    
Kenai Peninsula Borough                                                                                                         
144 N. Binkley                                                                                                                  
Soldotna, AK  99669-7599                                                                                                        
POSITION STATEMENT:  Supports CSSB 143(RES)                                                                                   
                                                                                                                                
Mr. Gary Carlson                                                                                                                
Forest Oil                                                                                                                      
310 K St. #70                                                                                                                   
Anchorage, AK 99501                                                                                                             
POSITION STATEMENT:  Supports CSSB 143(RES)                                                                                   
                                                                                                                                
Ms. Lisa VonBargen                                                                                                              
City of Valdez                                                                                                                  
PO Box 307                                                                                                                      
Valdez, AK                                                                                                                      
POSITION STATEMENT:  Supports CSSB 143(RES)                                                                                   
                                                                                                                                
Mr. Bob Shavelson                                                                                                               
Cook Inlet Keeper                                                                                                               
PO Box 3269                                                                                                                     
Homer, AK  99603                                                                                                                
POSITION STATEMENT:  Opposed to SB 143                                                                                        
                                                                                                                                
ACTION NARRATIVE                                                                                                              
                                                                                                                                
TAPE 03-31, SIDE A                                                                                                            
Number 0001                                                                                                                     
                                                                                                                                
CHAIR SCOTT  OGAN called the Senate  Resources Standing Committee                                                             
meeting to order  at 3:35 p.m. Senators  Wagoner, Stevens, Dyson,                                                               
Elton  and Chair  Ogan  were present.  Senator  Cowdery was  also                                                               
present. Chair  Ogan informed members  that he did not  intend to                                                               
move SB 143 out of committee  today as it will make a substantial                                                               
policy change that needs more than one hearing.                                                                                 
                                                                                                                                
         SB 31-RAILROAD UTILITY CORRIDOR TO & IN CANADA                                                                     
                                                                                                                                
CHAIR  OGAN announced  that SB  31 was  before the  committee and                                                               
that  a proposed  committee substitute  (CS), labeled  Version S,                                                               
had been prepared for the committee's consideration.                                                                            
                                                                                                                                
SENATOR WAGONER moved to adopt  Version S as the working document                                                               
before the committee.                                                                                                           
                                                                                                                                
CHAIR OGAN objected for the purpose of discussion.                                                                              
                                                                                                                                
[SENATOR LINCOLN arrived.]                                                                                                      
                                                                                                                                
The committee took a brief at-ease.                                                                                             
                                                                                                                                
SENATOR JOHN COWDERY, sponsor of  SB 31, informed members that SB
31  establishes a  transportation corridor  for the  extension of                                                               
the  Alaska  Railroad  to  the  Canadian  border.  He  hopes  the                                                               
railroad can  eventually connect  to the North  American railroad                                                               
system. He pointed out the bill  was amended after it came to his                                                               
attention that  the Department of  Natural Resources  (DNR) would                                                               
be the agency to grant the  rights-of-way to the railroad and for                                                               
construction  of the  gas pipeline.  If and  when a  gas pipeline                                                               
becomes a reality,  he wanted to limit the  railroad's ability to                                                               
charge  tariff fees  on the  corridor. The  amendments in  the CS                                                               
reflect his  intent. He  then asked Mr.  Schmitz to  describe the                                                               
other changes in the CS to committee members.                                                                                   
                                                                                                                                
MR. RICHARD SCHMITZ,  staff to Senator Cowdery,  told members the                                                               
changes made to  SB 31 since the last  Senate Resources Committee                                                               
hearing  will make  sure  this bill  retains  its vision  without                                                               
impacting any other vision, specifically  the gas pipeline. Staff                                                               
from  the  Alaska  Railroad  Corporation  (ARRC),  DNR,  and  the                                                               
Governor's  Office  met to  find  language  everyone could  agree                                                               
upon, which  resulted in  Version S. He  provided members  with a                                                               
comparison  chart of  Version  Q  and Version  S  [Version Q  was                                                               
previously considered by  the committee]. He said  the changes in                                                               
Version  S  are technical  in  nature  and  clarify some  of  the                                                               
ambiguous language. Those changes will  prevent the builders of a                                                               
gas line from having to get permits from both DNR and ARRC.                                                                     
                                                                                                                                
MR. BOB  LOEFFLER, Director of  the Division of Mining,  Land and                                                               
Water, DNR,  gave the following  description of the  changes made                                                               
in Version S.                                                                                                                   
                                                                                                                                
     1. A  reference was  added to  AS 38.35.020  to clarify                                                                    
     that the corridor can be used for a pipeline.                                                                              
                                                                                                                                
     2. The  words, "in  consultation with  other interested                                                                    
     parties"  were added  to Section  1(b)  to reflect  the                                                                    
     fact that  ARRC must coordinate with  potential gasline                                                                    
     developers to  ensure optimal  location for  a pipeline                                                                    
     as well.                                                                                                                   
                                                                                                                                
     3.  Language was  added to  Section 1(c)  to address  a                                                                    
     concern that  a railroad transportation  corridor might                                                                    
     not  be  consistent  with a  corridor  designed  for  a                                                                    
     gasline.  This language  requires  DNR  to approve  the                                                                    
     corridor  in a  way that  minimizes the  impact on  the                                                                    
     potential right-of-way for the gasline.                                                                                    
                                                                                                                                
     4. In Section 1(c)(1),  the words "and other provisions                                                                    
     of this act", were added, which is a technical change.                                                                     
                                                                                                                                
     5. In Section 1(d), the  words "and other provisions of                                                                    
     this  act" were  added to  clarify that  the identified                                                                    
     funding  source  is  the   trigger  for  conveyance  of                                                                    
     management authority.                                                                                                      
                                                                                                                                
     6.  Paragraph (d)(3)  was  added  which reserves  DNR's                                                                    
     authority  to   manage  the   gas  pipeline   from  the                                                                    
     conveyance    to   the    railroad.   Therefore,    the                                                                    
     identification  and  management  of  the  gas  pipeline                                                                    
     remains  with   DNR.  That  will  allow   the  pipeline                                                                    
     developers to deal with one agency only, DNR.                                                                              
                                                                                                                                
     7. The same  change to paragraph (d)(3)  is mirrored in                                                                    
     paragraph (e)(2).                                                                                                          
                                                                                                                                
     8.   Section 1(f)  was rewritten to  provide protection                                                                    
     for the railroad. It requires  DNR to consult with ARRC                                                                    
     right  away if  the  Joint Pipeline  Office approves  a                                                                    
     pipeline  first. It  also gives  DNR  the authority  to                                                                    
     change the  boundaries of  the corridor  to accommodate                                                                    
     the best interests of the state, if necessary.                                                                             
                                                                                                                                
SENATOR ELTON thanked Mr. Loeffler  for his quick response to the                                                               
Senator's question  about Section 1(f).  He said the  change made                                                               
to that subsection adequately addressed his concerns.                                                                           
                                                                                                                                
CHAIR  OGAN  noted  the  bill is  silent  regarding  tariffs  the                                                               
railroad might charge  the gas pipeline for use  of the right-of-                                                               
way and asked if that needs to be addressed.                                                                                    
                                                                                                                                
MR. LOEFFLER replied:                                                                                                           
                                                                                                                                
     Because the  changes reserve from  what is  conveyed to                                                                    
     the  railroad the  right to  authorize  a gas  pipeline                                                                    
     right-of-way,  then  the  railroad  does  not  play  in                                                                    
     tariffs  or other  gas  pipeline  decisions except,  of                                                                    
     course,  we will  have  to coordinate  with  them if  a                                                                    
     railroad existed there  - they would be  the experts in                                                                    
     railroad safety standards.                                                                                                 
                                                                                                                                
SENATOR COWDERY asked  if Version S contains a  provision to deal                                                               
with a  situation in which the  gas pipeline has a  need to cross                                                               
the railroad right-of-way.                                                                                                      
                                                                                                                                
MR. LOEFFLER said he believes it  does. The decision to cross the                                                               
railroad right-of-way would  be up to DNR but  the crossing would                                                               
have  to   comply  with  federal  and   other  applicable  safety                                                               
standards.                                                                                                                      
                                                                                                                                
SENATOR  COWDERY  said  it  is  reasonable  to  expect  that  any                                                               
crossing would  have to  maintain the  integrity of  the railroad                                                               
and  that  any fees  would  have  to  be  borne by  the  pipeline                                                               
developers. He stated,  "I just didn't want them to  say well, so                                                               
much  a cubic  foot of  gas or  any kind  of a  tariff bill  into                                                               
that."                                                                                                                          
                                                                                                                                
MR.  LOEFFLER said  it  is his  understanding  that the  railroad                                                               
would  not be  able to  add to  the tariff  or to  tariff on  the                                                               
portion of its  route through the railroad  corridor. Although it                                                               
is  not explicit  in the  bill that  the railroad  would have  to                                                               
establish  particular  safety  standards,  he  believes  that  is                                                               
implicit in the way government works.                                                                                           
                                                                                                                                
SENATOR COWDERY  said he  asked because he  wanted the  intent on                                                               
record. He thanked Mr. Loeffler.                                                                                                
                                                                                                                                
SENATOR  LINCOLN referred  to language  on page  4, line  29, and                                                               
asked:                                                                                                                          
                                                                                                                                
     If  a railroad  has  started their  process before  the                                                                    
     gasline corridor,  and the  department finds  they need                                                                    
     that portion, then  they have - then  what happens? The                                                                    
     department can  just automatically adjust  the location                                                                    
     of the transportation corridor?                                                                                            
                                                                                                                                
MR. LOEFFLER  said if  the railroad is  already built,  [ARRC] is                                                               
conveyed  the land.  ARRC  will  own the  land  so, like  private                                                               
landowners, anyone wishing  to cross that land will  have to deal                                                               
with  ARRC. However,  DNR will  not  convey all  rights. It  will                                                               
reserve  oil and  gas mineral  rights,  the right  to get  people                                                               
across,  and the  right  to  authorize a  gas  pipeline. He  said                                                               
because it's a  railroad, DNR will have to consult  with ARRC and                                                               
meet applicable safety standards.                                                                                               
                                                                                                                                
SENATOR  LINCOLN said  that  answers her  question  but does  not                                                               
alleviate her concern.                                                                                                          
                                                                                                                                
CHAIR OGAN asked  Ms. Johnson if she concurs  with Mr. Loeffler's                                                               
analysis of Version S.                                                                                                          
                                                                                                                                
MS. PHYLLIS  JOHNSON, general  counsel for  ARRC, said  she does.                                                               
She  stated that  after both  the railroad  and gas  pipeline are                                                               
built, DNR will retain the authority  to manage and deal with the                                                               
pipeline owners entirely. She said  she feels that is appropriate                                                               
because it would not  be fair for a company to  have to deal with                                                               
several agencies to  build one pipeline. She said  in an earlier,                                                               
more generic  version of  the bill, after  the final  transfer of                                                               
the 200-foot  corridor to  ARRC, DNR would  have charged  for the                                                               
lineal footage on  railroad right-of-way and paid  that amount to                                                               
ARRC on  any existing contracts,  including an  existing pipeline                                                               
contract. The pipeline owner will not  have to deal with ARRC but                                                               
ARRC would  have received a  small percentage; all  revenues will                                                               
be collected by DNR.                                                                                                            
                                                                                                                                
MS.  JEANETTE  JAMES,  former  Alaska  State  Representative  and                                                               
current railroad advisor to the  Governor, told members she has a                                                               
concern,  although it  is  not  a concern  of  DNR  or ARRC.  She                                                               
believes  any  revenues from  the  part  of  the gasline  in  the                                                               
railroad's right-of-way  should be prorated to  ARRC for exposure                                                               
of the  pipeline on ARRC  property. The gasline  developers agree                                                               
as long  as the  fees have  already been  established by  DNR and                                                               
ARRC does not charge more.  DNR was concerned about the mechanics                                                               
of collection but  she does not believe that  would be difficult.                                                               
She has  found no objection  to allowing the railroad  to receive                                                               
the revenue  for those uses  within its corridor. She  caution if                                                               
that is not done, there could be conflict later on.                                                                             
                                                                                                                                
SENATOR LINCOLN  asked if her  position as railroad advisor  is a                                                               
paid position.                                                                                                                  
                                                                                                                                
MS. JAMES said it is.                                                                                                           
                                                                                                                                
SENATOR LINCOLN said she shares  Ms. James' concern and asked her                                                               
to elaborate.                                                                                                                   
                                                                                                                                
MS. JAMES responded:                                                                                                            
                                                                                                                                
     We  have  to  just  kind  of guess  at  what  kinds  of                                                                    
     situations  there  could  be   on  the  ground  Senator                                                                    
     Lincoln. I'm just  using the evaluation of  - there was                                                                    
     a gasline identified previously  when they were talking                                                                    
     about it and they came  to my office as Majority Leader                                                                    
     and there was  one place where the  gasline crossed the                                                                    
     existing railroad  corridor that  is identified  on the                                                                    
     map.  That   railroad  corridor  is  probably   in  the                                                                    
     neighborhood of where a new  railroad corridor would be                                                                    
     - and maybe  not because that has yet  to be determined                                                                    
     and surveyed and  a feasibility study done  and lots of                                                                    
     things to identify that.                                                                                                   
                                                                                                                                
     It  seems to  me that  when both  the railroad  and the                                                                    
     gasline are going  to be going down  the Alaska Highway                                                                    
     area to some  place in Canada, that  certainly there is                                                                    
     a  possibility  that  they  might   be  in  very  close                                                                    
     proximity. There is  - if you have a piece  of land and                                                                    
     a  gasline is  going through  your land  - there  is an                                                                    
     exposure  there. And  so it  doesn't seem  reasonable -                                                                    
     and no matter  what the amount of  the compensation is,                                                                    
     that  there is  any  compensation being  paid for  that                                                                    
     gasline, that the exposure should  go to the landowner.                                                                    
     That's  my issue.  There may  be none,  except maybe  a                                                                    
     cross  here and  there. Or  there maybe  a lot  that is                                                                    
     lined  up  simply  because the  gasline  is  where  the                                                                    
     railroad  needs to  go because  of  the topography  and                                                                    
     geological  situations there.  But, generally,  I would                                                                    
     think  the gasline  would be  away  from there  because                                                                    
     they  can  go  over  hills and  valleys  and  different                                                                    
     things  that the  railroad can't.  We  don't know  what                                                                    
     those things are....                                                                                                       
                                                                                                                                
CHAIR  OGAN asked  Ms. James  if she  could suggest  any language                                                               
changes.                                                                                                                        
                                                                                                                                
MS. JAMES said she would provide some.                                                                                          
                                                                                                                                
MS. JOHNSON also offered to work on additional language.                                                                        
                                                                                                                                
SENATOR   ELTON  asked   Ms.   James,  when   she  talked   about                                                               
compensation  for   any  exposure,   if  she  was   referring  to                                                               
compensation for  risk, and  not, for  example, for  laying fiber                                                               
optic cable in the transportation corridor.                                                                                     
                                                                                                                                
MS. JAMES said  she is not suggesting the  railroad should charge                                                               
the  gasline  developers  for anything  other  than  the  charges                                                               
arranged by DNR.                                                                                                                
                                                                                                                                
SENATOR ELTON  said the flip  side of  that argument would  be to                                                               
identify  a  gas  pipeline right-of-way  and  have  the  pipeline                                                               
developers charge the railroad if it crosses that right-of-way.                                                                 
                                                                                                                                
MS.  JAMES said  they are  two entirely  different transportation                                                               
systems. SB 31 specifically gives  the land, fee simple title, to                                                               
ARRC for its  corridor. She assumes that will be  a 200-foot wide                                                               
corridor  within a  500-foot  transportation  corridor. She  said                                                               
historically railroads  have owned  the land they  run on.  It is                                                               
not typical for  gasline developers to own the land  a gasline is                                                               
built on.                                                                                                                       
                                                                                                                                
CHAIR OGAN  announced that Senator Seekins  joined the committee.                                                               
He then  reminded members that  a motion  to adopt Version  S was                                                               
before the committee so the  discussion should be centered on the                                                               
proposed committee substitute.                                                                                                  
                                                                                                                                
SENATOR LINCOLN  pointed out  that the corridor  in Version  S is                                                               
500-feet wide. She  said the impetus for this  legislation was to                                                               
connect the  Alaska Railroad  to the Canadian  border and  she is                                                               
bothered to  hear anyone  say the state  should pay  the railroad                                                               
for  any right-of-way.  She remarked,  "...I  have problems  with                                                               
this being this  - still this 500 foot, which  is maybe more into                                                               
the real  estate side of  it than it is  for the goal  of getting                                                               
the railroad tie extended into Canada."                                                                                         
                                                                                                                                
MS. JOHNSON  told members  the introductory  section of  the bill                                                               
does  say  500  feet.  However,  the portion  of  the  bill  that                                                               
addresses the construction of the  railroad [Section 1(e) on page                                                               
3] says DNR  will convey 100 feet either side  of centerline. The                                                               
intent is to reserve a  multi-purpose 500 foot corridor but, once                                                               
the railroad  is built,  ARRC will  get its  usual 200  feet. The                                                               
other 300 feet will remain in DNR's jurisdiction.                                                                               
                                                                                                                                
CHAIR OGAN  asked if ARRC  would mediate any  conflicts regarding                                                               
placement of the railroad and the pipeline.                                                                                     
                                                                                                                                
MS.  JOHNSON  said that  Version  S  requires that  the  railroad                                                               
consult with  other parties  early on when  it is  deciding where                                                               
the track should go. DNR would be the arbiter among all parties.                                                                
                                                                                                                                
CHAIR OGAN  removed his objection  to adopt Version  S, therefore                                                               
the motion carried. He then took public testimony.                                                                              
                                                                                                                                
DR.  CHARLES JURASZ  said  he  was testifying  on  behalf of  the                                                               
Canada  West  Foundation  and  as   the  Vice  President  of  the                                                               
[Indisc.]  Sustainable Development  Corporation, whose major task                                                               
is to establish  a trans-Yukon railway. He said  he would discuss                                                               
the level of interest that exists  in the Yukon and the amount of                                                               
interest and  engagement on the  national and  territorial levels                                                               
in Canada.                                                                                                                      
                                                                                                                                
DR. JURASZ  said Datapath Systems of  Whitehorse recently carried                                                               
out a survey  to determine awareness of a  trans-Yukon railway or                                                               
a rail link. He provided the following results from that survey:                                                                
                                                                                                                                
  · 68 percent of those people polled in Whitehorse were aware                                                                  
   · 66 percent of rural Yukoners were aware                                                                                    
   · 90 percent of those who were aware support a rail link                                                                     
   · the lowest level of support was 84 percent, the highest was                                                                
     98 percent                                                                                                                 
                                                                                                                                
DR. JURASZ told members the  Yukon Territory went from a position                                                               
of having a population with barely  any interest in "being on the                                                               
map" to  one of people  who carefully  watch the method  by which                                                               
being put on the map  proceeds. Alaska's method is very important                                                               
to Yukoners, who  see the potential success of a  rail link being                                                               
based on coordinating  with a pipeline to  reduce building costs.                                                               
As  recently as  10 days  ago, the  Minister of  Foreign Affairs,                                                               
Bill  Graham,  who is  responsible  for  deciding on  whether  to                                                               
proceed  with  a  bilateral   agreement,  visited  Whitehorse  to                                                               
discuss the  commission. At the  end of those  evenings, Premiere                                                               
Fenty  and Foreign  Minister Graham  addressed the  candidacy for                                                               
commission members.  He believes the  level support in  Canada is                                                               
high although it might not be enthusiastically presented.                                                                       
                                                                                                                                
SENATOR  LINCOLN  asked  for the  breakdown  of  support  between                                                               
Whitehorse and the rural areas.                                                                                                 
                                                                                                                                
DR. JURASZ  repeated the  support in  Whitehorse was  68 percent;                                                               
the support in the rural communities was 66 percent.                                                                            
                                                                                                                                
SENATOR LINCOLN asked how many households were polled.                                                                          
                                                                                                                                
DR. JURASZ  did not have that  number but said the  pollster said                                                               
it  was one  of  the  "fuller" polls,  meaning  more people  were                                                               
interviewed. He offered  to send the survey  details to committee                                                               
members.                                                                                                                        
                                                                                                                                
SENATOR ELTON  pointed out that Dr.  Jurasz was a teacher  in the                                                               
Juneau School District and was  largely responsible for fostering                                                               
student interest in the biological sciences.                                                                                    
                                                                                                                                
SENATOR WAGONER asked if the rail  link on the Yukon side will be                                                               
built with government or private corporation funds.                                                                             
                                                                                                                                
DR. JURASZ said those options  are being addressed right now. The                                                               
route  for  both  the  rail   and  the  pipeline  has  been  well                                                               
established on the  Alaska side. The map on the  Yukon side shows                                                               
the interest  of rail in the  Yukon and that route  is consistent                                                               
with the  pipeline route Alaska  is interested in, but  there are                                                               
additional  considerations.  The  focus  on the  Alaska  side  is                                                               
"rails to  resources." To do that  on the Yukon side  will entail                                                               
corridors  that do  not coincide  with any  route that  Alaska is                                                               
currently addressing for the pipeline. He explained:                                                                            
                                                                                                                                
     When you  ask at what level  are we looking to  or what                                                                    
     are the different sources  for funding, etcetera, there                                                                    
     is  no question  that  private  ownership becomes  very                                                                    
     significant to us, i.e. that  much of the rail interest                                                                    
     lies   within  the   private  sector.   We  have   some                                                                    
     advantages   on   the    Canadian   side.   There   are                                                                    
     organizations that literally  sponsor us, ensuring both                                                                    
     public  and  private  partnership.   So  we  have,  for                                                                    
     example,  a Canadian  Council  for  Private and  Public                                                                    
      Partnerships, which pursues only 'mega' projects and                                                                      
     the railroad across the Yukon would be such a project.                                                                     
                                                                                                                                
DR.   JURASZ  told   members  that   Foreign  Minister   Graham's                                                               
involvement   signifies   that   the  Department   of   Transport                                                               
recognizes this  as a project  with international potential.   He                                                               
thanked members for their time.                                                                                                 
                                                                                                                                
MR.  JACK PHELPS,  special assistant  for  natural resources  and                                                               
transportation   to   Governor   Murkowski,  told   members   the                                                               
Governor's commitment to a rail  link between Alaska and the rest                                                               
of the  country through  Canada is  longstanding and  well known.                                                               
When  he  was   a  United  States  Senator,   he  formulated  the                                                               
legislation  that created  the bilateral  commission. He  is very                                                               
interested  in seeing  the transportation  corridor designed  for                                                               
other   purposes:  pipelines,   fiber  optic   cable  and   other                                                               
appropriate uses. Obviously, this  legislation is the first step.                                                               
He stated Version  S is the direct result  of discussions between                                                               
Senator  Cowdery  and  DNR.   The  Administration  supports  this                                                               
legislation,  however it  believes other  issues may  need to  be                                                               
addressed.                                                                                                                      
                                                                                                                                
CHAIR OGAN asked if the  Administration wants the bill moved from                                                               
committee today.                                                                                                                
                                                                                                                                
MR. PHELPS said he would support that.                                                                                          
                                                                                                                                
SENATOR LINCOLN asked Mr. Phelps  if the potential amendment that                                                               
Ms. James  discussed is one of  the other issues that  need to be                                                               
addressed.                                                                                                                      
                                                                                                                                
MR. PHELPS replied:                                                                                                             
                                                                                                                                
     That is  certainly one that  can be discussed.  At this                                                                    
     point I'm  not prepared  to discuss  the details  of it                                                                    
     except to  say that  there are complexities  related to                                                                    
     it, but  I think the  short answer to your  question is                                                                    
     yes.                                                                                                                       
                                                                                                                                
CHAIR OGAN took public testimony.                                                                                               
                                                                                                                                
MS. DANA  OLSON, testifying from  the Mat-Su  via teleconference,                                                               
told members one of her major  concerns with SB 31 is notice. She                                                               
has a  property interest  in which  she has  a reservation  for a                                                               
federal railroad on a federal  patent. She contacted ARRC and was                                                               
assured that  she would receive a  response at the end  of March,                                                               
but she has not received anything.  She was surprised to find out                                                               
SB 31  was introduced as  it required coordination  among various                                                               
agencies. She  stated the  Alaska Railroad  Transfer Act  of 1982                                                               
said  railroad  ownership  would   revert  back  to  the  federal                                                               
government after  18 years of  non-continuous use.  The effective                                                               
date of  the 18-year deadline  was January 5, 2003.  The transfer                                                               
act required that  multiple efforts be made to  provide notice to                                                               
those who would be affected.                                                                                                    
                                                                                                                                
TAPE 03-31, SIDE B                                                                                                              
                                                                                                                                
MS. OLSON  continued. She  said this bill  does not  address that                                                               
issue so  she does not  know whether  she has been  affected. She                                                               
told  members that  SB 31  violates the  federally aided  highway                                                               
act. She  said she met with  DNR staff about a  proposed pipeline                                                               
across the Inlet. It would cross within her right-of-way.                                                                       
                                                                                                                                
CHAIR  OGAN  noted  that  the  pipeline  corridor  would  connect                                                               
Fairbanks and Canada and not cross her land in the Mat-Su.                                                                      
                                                                                                                                
MS. OLSON  said the pipeline  spurs might affect  her indirectly.                                                               
She said the  Alaska Railroad Transfer Act requires  notice to be                                                               
published. She said she was  denied a meeting with the Governor's                                                               
aides  to discuss  that  matter. She  said  that the  legislature                                                               
cannot legislate  until it knows  who will be affected.  She said                                                               
she would  be asking ARRC  to immediately respond to  her request                                                               
and she asked  that SB 31 be stayed until  appropriate notice has                                                               
been given to people who will be affected.                                                                                      
                                                                                                                                
CHAIR OGAN said that appropriate notice  has been given on SB 31.                                                               
This legislation  deals with  a railroad  extension to  Canada to                                                               
connect  to the  North American  railroad system  so it  does not                                                               
affect the Mat-Su  area. With no further  participants, he closed                                                               
public testimony.                                                                                                               
                                                                                                                                
SENATOR  WAGONER  moved CSSB  31(RES),  labeled  Version S,  with                                                               
individual  recommendations and  its attached  fiscal notes  from                                                               
committee.                                                                                                                      
                                                                                                                                
SENATOR ELTON  objected and expressed concern  that a substantive                                                               
amendment is  being prepared that  addresses compensation  to the                                                               
railroad. He said  this is the appropriate committee  to review a                                                               
change of  that magnitude. He  said his  concern is that  if this                                                               
bill   leaves  this   committee,  members   will  not   have  the                                                               
opportunity  to  review the  issue  of  whether the  railroad  or                                                               
gasline has primacy.                                                                                                            
                                                                                                                                
CHAIR OGAN  pointed out  this legislation has  a referral  to the                                                               
Senate Finance  Committee. He stated,  "you can get  another bite                                                               
of the apple up there and a bite of the apple on the floor."                                                                    
                                                                                                                                
SENATOR ELTON  said he believes it  asks a lot of  Senate Finance                                                               
Committee members  to get involved  in an issue that  goes beyond                                                               
the fiscal impact.  The primacy question is  a substantive policy                                                               
issue.                                                                                                                          
                                                                                                                                
CHAIR  OGAN said  he understands  the Senator's  concerns but  he                                                               
does not believe there is  consensus in the Governor's Office. He                                                               
said he would  commit to tracking that question and,  if there is                                                               
a serious problem, he will make sure it gets addressed.                                                                         
                                                                                                                                
SENATOR LINCOLN  also expressed concern  about SB 31  leaving the                                                               
committee.  She  appreciates  the Chair's  thoroughness  but  she                                                               
shares Senator Elton's  concerns. She does not believe  it is the                                                               
Finance Committee's  obligation to deal with  resource issues and                                                               
amending a bill on  the floor is not that easy.   Since Ms. James                                                               
is the  railroad advisor to the  Governor, one can assume  she is                                                               
working  with  the  Governor  on a  proposed  amendment  that  is                                                               
resource  related.  She  believes  this committee  has  not  done                                                               
everything it can to finalize this legislation.                                                                                 
                                                                                                                                
CHAIR OGAN  said he understands  those concerns, but  Ms. Johnson                                                               
told members  that the railroad's  right-of-way will be  100 feet                                                               
on each  side of the centerline  and that DNR will  arbitrate any                                                               
conflicts. That arrangement set his concerns aside.                                                                             
                                                                                                                                
SENATOR DYSON  said he wants  to take action on  this legislation                                                               
because  it presents  a  marvelous  opportunity. Stimulating  the                                                               
economy  and providing  jobs is  a  very high  priority for  both                                                               
governments. He believes Dr. Jurasz  is correct in that there has                                                               
been a change  in the Canadian federal  government's attitude and                                                               
an  opportunity  is  available   for  both  governments  to  come                                                               
together. He  said there is  an immense amount of  mineral wealth                                                               
north of  the Alaska Highway  that both  sides of the  border are                                                               
very  eager to  have commercialized.  Lack of  market access  has                                                               
prevented commercialization.  He believes  the issue of  what the                                                               
railroad will charge for use  of its right-of-way can be resolved                                                               
as this process  moves forward. He encouraged members  to keep SB
31 moving.                                                                                                                      
                                                                                                                                
SENATOR  ELTON maintained  his  objection but  stated  he has  no                                                               
problem with this  bill as written. He agrees  with Senator Dyson                                                               
about  the  importance  of  economic  development.  However,  the                                                               
question that remains in his mind  is that if a proposal to allow                                                               
ARRC to do a charge off  against the gas pipeline comes forth, he                                                               
will choose  primacy for the  pipeline. He said the  committee is                                                               
assuming that  nothing will get in  the way of the  gas pipeline.                                                               
He hopes that's the case.                                                                                                       
                                                                                                                                
CHAIR  OGAN said  there  is some  ambiguity  from the  Governor's                                                               
Office that  needs to be  worked out.  He said he  shares Senator                                                               
Elton's concerns and he believes  it is the committee's intent to                                                               
give primacy  to the pipeline. He  said if this issue  was raised                                                               
two weeks ago, he would be  willing to hold the bill in committee                                                               
but the  clock is ticking.  He will  discuss the matter  with the                                                               
Administration  but he  does  not  object to  moving  it out.  He                                                               
called for a roll call vote.                                                                                                    
                                                                                                                                
SENATORS  STEVENS, DYSON,  SEEKINS,  WAGONER, and  OGAN voted  in                                                               
favor, and SENATORS  LINCOLN AND ELTON voted  against moving CSSB
31(RES) from committee, therefore the motion carried.                                                                           
                                                                                                                                
The committee took a brief at-ease.                                                                                             
                                                                                                                                
               SB 143-COASTAL MANAGEMENT PROGRAMS                                                                           
                                                                                                                                
CHAIR OGAN  announced that he did  not intend to move  SB 143 out                                                               
of  committee today  and he  apologized  in advance  in case  the                                                               
committee is  unable to hear from  everyone who has signed  up to                                                               
testify. He said the committee  would first hear a brief overview                                                               
of what the legislation does  and then put the proposed committee                                                               
substitute (CS) on the table.                                                                                                   
                                                                                                                                
SENATOR ELTON  moved to  adopt the  proposed CS  (labeled 03-0069                                                               
bil3.doc), and  said that two  committee members have  a schedule                                                               
conflict  and will  need to  leave  at 5:00  p.m. He  said he  is                                                               
assuming that Department of Natural  Resources (DNR) and Division                                                               
of  Governmental Coordination  (DGC) staff  will be  available to                                                               
answer questions at the next meeting.                                                                                           
                                                                                                                                
CHAIR  OGAN said  that  paid  staff can  come  back  and that  he                                                               
planned to  give priority today  to citizens who are  taking time                                                               
off of work to testify.                                                                                                         
                                                                                                                                
SENATOR  DYSON said  he believes  it is  unfortunate to  schedule                                                               
meetings  while  standing  committees   are  scheduled  to  meet,                                                               
especially  when  substantive  bills   are  being  discussed.  He                                                               
encouraged  members  to  not   schedule  another  meeting  during                                                               
standing committee  hearings out  of respect  for those  who have                                                               
made an effort to testify.                                                                                                      
                                                                                                                                
CHAIR OGAN announced  he would give first priority  to people who                                                               
have flown to Juneau to testify.                                                                                                
                                                                                                                                
MS.  MARTY RUTHERFORD  told members  she represents  DNR and  the                                                               
Administration and would  speak to the proposed CS.  She said she                                                               
recently left DNR after working  for that department for 11 years                                                               
and is  now under  contract with  the department.  She introduced                                                               
Mr. Breck  Tostevin with the  Department of Law, Mr.  Pat Galvin,                                                               
the past director of DGC, and  Mr. Randy Bates who is employed as                                                               
the newly  appointed Coastal Zone Management  program coordinator                                                               
in DNR. These  people comprise the team that reworked  SB 143 and                                                               
made  very  substantive  changes  to  the  bill  in  response  to                                                               
comments  received  by  the Administration  while  its  companion                                                               
bill,  HB  191, was  under  review  in  the House.  She  informed                                                               
members  that  a  brief,  one-page   synopsis  of  the  committee                                                               
substitute,  a  transition timeline,  a  comparison  chart and  a                                                               
sectional analysis  were distributed to  them. She then  said she                                                               
would provide an overview of the primary elements of the CS.                                                                    
                                                                                                                                
CHAIR OGAN announced that no  objection was heard to the adoption                                                               
of the  work draft, therefore  the motion carried. He  then noted                                                               
that Senate President Therriault had joined the committee.                                                                      
                                                                                                                                
MS. RUTHERFORD made the following comments.                                                                                     
                                                                                                                                
     The  Coastal  Zone  Management   Program  is  an  older                                                                    
     program  that   has  not  appropriately   responded  to                                                                    
     Alaska's  maturing  statutory  and  regulatory  regime.                                                                    
     Therefore, the program is  often redundant, using local                                                                    
     enforceable policies  that are  often a  reiteration of                                                                    
     existing  regulatory  agencies' permit  standards.  The                                                                    
     program is  also unpredictable.  It is overly  broad in                                                                    
     scope, takes  a long time,  and delays the  issuance of                                                                    
     permits  and  start  up   of  projects.  The  statewide                                                                    
     standards and local enforceable  policies are vague and                                                                    
     are extremely subject to multiple interpretations.                                                                         
                                                                                                                                
CHAIR  OGAN announced  that  Representative  Kerttula joined  the                                                               
committee.                                                                                                                      
                                                                                                                                
MS. RUTHERFORD continued.                                                                                                       
                                                                                                                                
     While the  program has  problems, the  sweeping changes                                                                    
     embedded in the original SB  143 eliminated many of the                                                                    
     primary reasons that Alaska  first embraced the Coastal                                                                    
     Zone  Management  program,  including state  and  local                                                                    
     control over  projects requiring  federal authorization                                                                    
     and  state  and  local   influence  on  direct  federal                                                                    
     activities.                                                                                                                
                                                                                                                                
     During discussions  of the original  bill on  the House                                                                    
     side,  the Administration  took  some  of the  comments                                                                    
     made by citizens  and districts to heart.  As a result,                                                                    
     the   committee  substitute   returns   to  the   basic                                                                    
     structure  of  the  existing  Coastal  Zone  Management                                                                    
     program. It retains the  existing four coastal resource                                                                    
     service  areas,  all  of  which   are  located  in  the                                                                    
     unorganized  borough in  Western  Alaska. In  addition,                                                                    
     all existing coastal districts  continue and retain the                                                                    
     same  authorities  and  responsibilities as  under  the                                                                    
     current   program.  This   committee  substitute   also                                                                    
     retains  local  enforceable  policies and  all  of  the                                                                    
     statewide  standards  of  the  program,  including  the                                                                    
     habitat   standard   and  the   subsistence   standard.                                                                    
     Furthermore,  it ensures  that all  federal activities,                                                                    
     activities requiring  a federal permit, or  an activity                                                                    
     requiring  a  state  permit  will  have  a  consistency                                                                    
     review.  District  enforceable   policies  will  remain                                                                    
     applicable  to  all  projects that  are  subject  to  a                                                                    
     consistency  review,  not  just the  Outer  Continental                                                                    
     Shelf (OCS)  projects and federal activities  that were                                                                    
     envisioned  in  the  original  SB  143.  The  committee                                                                    
     substitute  assures  the  districts will  retain  their                                                                    
     seat at the table as project decisions are made.                                                                           
                                                                                                                                
     The  committee substitute,  however, makes  significant                                                                    
     changes  to the  program in  an attempt  to retain  the                                                                    
     important  elements while  addressing the  problems. It                                                                    
     will:                                                                                                                      
                                                                                                                                
   · eliminate the Coastal Policy Council and transfer its                                                                      
     duties to the DNR commissioner                                                                                             
   · place a sunset provision on the current statewide standards                                                                
     and  coastal district  plans and  mandate their  replacement                                                               
     standards  be   clear,  concise,  and  not   susceptible  to                                                               
     subjective interpretations and  not duplicative of otherwise                                                               
     existing requirements                                                                                                      
   · clarify that local enforceable policies may not address a                                                                  
     matter that is regulated or authorized by state or federal                                                                 
     law unless the policy specifically relates to a matter of                                                                  
     local concern  - a test will  be embedded in the  statute to                                                               
     assist in making that determination                                                                                        
   · provide important clarification to the consistency review                                                                  
     process in  order to ensure  more predictable  timelines and                                                               
     standards, including the scope of  a project that is subject                                                               
     to review and  when a project can proceed in  phases, and it                                                               
     encourages the use of general permits                                                                                      
   · clarify that the Department of Environmental Conservation's                                                                
     (DEC)  permits   and  authorizations  will   constitute  the                                                               
     consistency  determination for  activities regulated  by DEC                                                               
     air, land and water quality standards                                                                                      
   · insulate the Coastal Management Plan consistency review                                                                    
     from  delays  associated  with  those  complex  permits  and                                                               
     authorizations                                                                                                             
                                                                                                                                
MS.  RUTHERFORD told  members the  program is  very complex.  She                                                               
offered to have  Mr. Tostevin describe the  sectional elements of                                                               
the bill but noted in the  interest of time, that information has                                                               
been provided in written form.                                                                                                  
                                                                                                                                
CHAIR  OGAN said  he  would plan  to hear  from  Mr. Tostevin  on                                                               
Friday.                                                                                                                         
                                                                                                                                
SENATOR LINCOLN requested a copy of Ms. Rutherford's testimony.                                                                 
                                                                                                                                
CHAIR OGAN took public testimony.                                                                                               
                                                                                                                                
MR.  KEN DONAKOWSKI,  the Alaska  permitting  manager for  Conoco                                                               
Phillips,  told  members  that Conoco  Phillips  is  the  state's                                                               
largest  producer  of  oil,   leaseholder,  and  most  aggressive                                                               
explorer. As such, permit streamlining  is imperative to maintain                                                               
Conoco  Phillips' enviable  position in  Alaska and  to encourage                                                               
other oil and  gas firms to elevate their  respective standing in                                                               
these three areas. Conoco  Phillips unequivocally supports AOGA's                                                               
position   on   the   committee  substitute.   He   offered   two                                                               
observations. This committee substitute  preserves a role for the                                                               
coastal  districts   and  formally  introduces  the   concept  of                                                               
enforceable  policies into  the statutory  language. Second,  the                                                               
regulatory framework  for environmental  protection in  Alaska is                                                               
preserved  by this  committee substitute  and,  in essence,  that                                                               
framework remains whole and intact.                                                                                             
                                                                                                                                
SENATOR  ELTON noted  Mr. Donakowski  said this  legislation will                                                               
empower  coastal   districts  by   introducing  the   concept  of                                                               
enforceable  policies and  asked  him to  elaborate because  many                                                               
people from the coastal district side are confused about that.                                                                  
                                                                                                                                
MR.  DONAKOWSKI  said  enforceable policies  are  policies  that,                                                               
according to the criteria laid out  in the statute, are issues of                                                               
importance  to   local  concerns   that  do  not   duplicate  the                                                               
regulatory framework.                                                                                                           
                                                                                                                                
CHAIR   OGAN  thanked   Mr.  Donakowski   for  Conoco   Phillips'                                                               
aggressive  posture  in  exploration   and  development  and  for                                                               
introducing cutting edge technology.                                                                                            
                                                                                                                                
MR. LARRY HOULE,  general manager of the  Alaska Support Industry                                                               
Alliance,  told  members  the  Coastal  Zone  Management  Program                                                               
includes  the  consistency  review process,  which  requires  all                                                               
projects  located in  the coastal  zone to  obtain a  consistency                                                               
determination  before state  or  federal permits  can be  issued.                                                               
Nearly all oil and gas  activities undergo the consistency review                                                               
process. Its  purpose is to  ensure that projects  are consistent                                                               
with   state  and   local  enforceable   policies.  Funding   for                                                               
exploration   and   development   in  Alaska   faces   increasing                                                               
competition  on a  worldwide scale.  Many competing  projects are                                                               
closer to markets and are  less capital intensive. Operators need                                                               
reliable  predictions,  permitting schedules,  and  requirements.                                                               
Delays in the  permit timelines are significant  factors that can                                                               
adversely  affect  the economic  feasibility  of  a project.  The                                                               
contracting community  in Alaska is  concerned about the  lack of                                                               
schedule  and  scope  certainty   and  the  unpredictability  and                                                               
subjective nature  of the overall  review process  that currently                                                               
exists. He  said the Alliance endorses  the committee substitute;                                                               
it believes  it will  streamline the  review process  and improve                                                               
predictability.                                                                                                                 
                                                                                                                                
MR. BOB  STINSON, President of Con-Am  Construction of Anchorage,                                                               
stated support for the committee  substitute or any other form of                                                               
the  bill  that will  change  the  current process.  The  current                                                               
Coastal Zone  Management Program's rules and  process are unclear                                                               
and  need to  be fixed  so that  an applicant  with a  beneficial                                                               
project knows what  to expect when submitting  an application. He                                                               
sat on the  Governor's DNR transition team and  listened to large                                                               
corporations  and local  companies express  frustration over  the                                                               
current   review  process.   The   transition  team   recommended                                                               
streamlining that process.                                                                                                      
                                                                                                                                
He  then  described  an experience  his  company  encountered  as                                                               
follows. Anchorage  Fueling and Service Company,  a consortium of                                                               
22 major  airlines, hired his  company to replace a  small, aging                                                               
pipeline routed  through residential  streets in  Anchorage. That                                                               
pipeline  delivered most  of  the  jet fuel  to  the Ted  Stevens                                                               
International Airport. His company was  hired to design and build                                                               
a  larger  pipeline  to  reliably  meet  increasing  demand.  His                                                               
company submitted its  permit application to the  state, the U.S.                                                               
Corps  of  Engineers and  the  Municipality  of Anchorage  (MOA),                                                               
after  preliminary  discussion  with  each  entity  revealed  the                                                               
soundness of the  project and, in particular, the  routing of the                                                               
pipeline. The  project quickly became a  target for environmental                                                               
concerns  since  the  routing   took  the  new  pipeline  through                                                               
portions of the Anchorage coastal  mud flats. Throughout the next                                                               
1  1/2  years,  his  company spent  an  additional  $1.5  million                                                               
securing  the  permit,   due  to  delays  in   the  Coastal  Zone                                                               
Management process. The project  was originally estimated to cost                                                               
$6 million.                                                                                                                     
                                                                                                                                
MR. STINSON said in fact, there  was no process. DGC did not know                                                               
how to  handle the application  and how to coordinate  with other                                                               
agencies and the  public. He ended up hiring  many consultants to                                                               
invent a process  for permit review and coordination.  DGC had no                                                               
clear timetable  or time limitations  for permit  review. Phasing                                                               
of the  project was  not allowed.  All agency  permits had  to be                                                               
completed  before a  consistency determination  could be  issued.                                                               
There was no scope of review  to which anyone could work with. He                                                               
said this project  was not a resource extraction  project; it was                                                               
an infrastructure  improvement project  for the airport.  He said                                                               
had the  State of Alaska owned  the old pipeline, a  permit would                                                               
have been issued  in an expeditious way, allowing  the airport to                                                               
meet its growing  demand for fuel. The  airlines that experienced                                                               
this permitting nightmare could not  understand why the state was                                                               
not  supportive  of  this beneficial  project  and  talked  about                                                               
taking their  business elsewhere.  He encouraged members  to move                                                               
the bill from committee.                                                                                                        
                                                                                                                                
MR. CHUCK  DEGNAN, testifying from  Unalakleet, told  members the                                                               
Bering Straits  Coastal Resource Service Area  was very concerned                                                               
about the original bill that  eliminated coastal resource service                                                               
areas. Its other  concern is the sunset provision  for making new                                                               
plans. The rural areas have clean  air, water and land because of                                                               
very  little  development.  However, the  development  that  does                                                               
occur takes  a long time because  it is planned so  that projects                                                               
flow. Very few have been delayed.                                                                                               
                                                                                                                                
MR.  DAN BEVINGTON,  Coastal District  Coordinator for  the Kenai                                                               
Peninsula Borough,  said he  recognizes that  writing legislation                                                               
to  streamline  permitting is  a  challenging  task, and  thanked                                                               
members and  the Governor  for attempting it.  He said  the Kenai                                                               
Peninsula  Borough has  supported  its own,  similar program  for                                                               
more than two  decades. During that time, the  Borough has passed                                                               
over 34  ordinances and 7  resolutions that directly  support the                                                               
coastal resource management program.                                                                                            
                                                                                                                                
MR.   BEVINGTON  said   the   legislation   asserts  that   local                                                               
governments  should exert  their own  coastal management  control                                                               
through planning and zoning powers. That  seems to add a level of                                                               
complexity  when the  Borough does  not need  to assert  any more                                                               
permitting powers  through its participation in  the program. The                                                               
Borough  appreciates  the fact  that  the  current working  draft                                                               
addresses that and allows the  Borough that opportunity. However,                                                               
the Kenai Peninsula  Borough remains concerned about  the loss of                                                               
similar  policies under  the  provision that  DEC  will have  the                                                               
exclusive determination  of consistency of the  program under its                                                               
authorities. It is also concerned  about the summary discharge of                                                               
the Alaska  Coastal Policy Council  without developing  a similar                                                               
representative  body  within  DNR.  The issue  of  promoting  and                                                               
balancing   economic   development   with   long-term   community                                                               
interests  demands  the  meaningful  involvement  of  communities                                                               
across the state.                                                                                                               
                                                                                                                                
MR.  GARY CARLSON,  Senior Vice  President  of Forest  Oil and  a                                                               
member of AOGA, stated support  for AOGA's position but added the                                                               
following  comments. The  ACMP process  has  become a  regulatory                                                               
maze that is  costly to the state and to  industry. The program's                                                               
ambiguities  and uncertainties  have provided  a breeding  ground                                                               
for  obstructionists  and  special interest  litigants  to  delay                                                               
responsible   development.  The   bill   will  make   substantial                                                               
improvements   to   the   process  by   establishing   deadlines,                                                               
eliminating duplication of state  and federal law, establishing a                                                               
bright line as  to when the ACMP applies,  and eliminating delays                                                               
in  consistency   determinations.  It  also  requires   the  ACMP                                                               
standards  to be  clear,  precise and  not  subject to  multiple,                                                               
subjective  interpretations. This  should improve  the efficiency                                                               
of the permitting  process and reduce litigation  exposure of the                                                               
state and the industry. He stated support for the legislation.                                                                  
                                                                                                                                
MS. LISA  LOMBARGEN informed members  the City of Valdez  and the                                                               
coastal  district  is  very  pleased  with  the  Administration's                                                               
efforts to listen  to the concerns of the  coastal district about                                                               
participation  and  to  provide  a level  playing  field  as  the                                                               
permits are being reviewed for consistency.                                                                                     
                                                                                                                                
MR.  BOB SHAVELSON,  Executive Director  of  Cook Inlet  Keepers,                                                               
told  members he  was  speaking  on behalf  of  over 500  members                                                               
throughout  Southcentral Alaska.  He made  the following  points.                                                               
Regarding Ms.  Rutherford's comment  that districts  would retain                                                               
their same authorities, Section 14  will clearly eliminate a vast                                                               
extent  of  local  district authorities.  It  will  be  virtually                                                               
impossible for  local districts to  have policies that  will meet                                                               
the  convoluted  and  legalistic   language  in  Section  14.  He                                                               
suggested  to  the  House Resources  Committee  that  it  request                                                               
examples of what acceptable local  enforceable policies will look                                                               
like.  He  also suggested the ability to review  a mark-up of the                                                               
Kenai Peninsula  Borough coastal management  enforceable policies                                                               
and which ones would be  retained under this legislation. He does                                                               
not believe many  of those policies, if any,  will remain intact.                                                               
Although SB  143 has a zero  fiscal note, it has  taken the State                                                               
of Alaska over 15 years to  approve all of the coastal management                                                               
programs. SB 143  will create a considerable  financial burden on                                                               
local  districts. It  is an  unfunded mandate  that will  require                                                               
these districts  to rewrite the  plans they spent many  years and                                                               
dollars to develop.                                                                                                             
                                                                                                                                
Regarding the  timeline, MR. SHAVELSON  said it does  not include                                                               
time  for the  environmental impact  statement process  under the                                                               
National Environmental  Policy Act.  This is an  extensive policy                                                               
change,  along  with  the  elimination   of  the  Coastal  Policy                                                               
Council.  This   will  require   an  extensive,   time  consuming                                                               
environmental  impact  statement  for the  entire  state  coastal                                                               
program.  He  said  SB  143 will  add  complexity  and  confusion                                                               
because  as  local  district authorities  are  removed,  it  will                                                               
encourage the  adoption of local ordinances.  Therefore, one-stop                                                               
permitting will no  longer be available so industry  will have to                                                               
get state permits and local approvals.                                                                                          
                                                                                                                                
TAPE 03-32, SIDE A                                                                                                              
                                                                                                                                
SENATOR   BEN  STEVENS   asked  Mr.   Shavelson  to   repeat  the                                                               
terminology  he  used  to describe  the  Kenai  Borough's  policy                                                               
requirements that the state would not adopt under this program.                                                                 
                                                                                                                                
MR. SHAVELSON said he was referring  to Section 14 of the pending                                                               
legislation, which includes some  very restrictive and legalistic                                                               
jargon that will  make it difficult for local  districts to adopt                                                               
local enforceable policies.                                                                                                     
                                                                                                                                
VICE-CHAIR WAGONER asked  Mr. Shavelson if Cook  Inlet Keeper has                                                               
500 members  or whether they  are members of  other organizations                                                               
that Cook Inlet Keeper represents.                                                                                              
                                                                                                                                
MR. SHAVELSON said they are members of Cook Inlet Keeper.                                                                       
                                                                                                                                
MS. DANA OLSON,  testifying from the Mat-Su  Valley, told members                                                               
that HB 257 relies on issues of right-of-way.                                                                                   
                                                                                                                                
VICE-CHAIR WAGONER interrupted  to ask Ms. Olson  to restrict her                                                               
testimony to the bill before the committee.                                                                                     
                                                                                                                                
MS. OLSON clarified that she  is speaking about the rights-of-way                                                               
in the coastal  area. She told members she is  concerned when the                                                               
land use  plans do not  have the rights-of-way included,  and the                                                               
legislature is passing other bills  that affect the coastal zone,                                                               
because she does not have the  means to have adequate notice. She                                                               
noted that  an enforceable policy  is defined by the  federal act                                                               
and  it  does not  include  zoning  and  planning. It  says  that                                                               
judicial  decisions   are  enforceable   policies,  as   well  as                                                               
constitutional  provisions. Therefore,  zoning not  based on  the                                                               
constitutional  or judicial  standards would  not be  enforceable                                                               
policies  of the  local district.  She said  the Clean  Water Act                                                               
does not limit the scope of  which local concern is on non-source                                                               
point  pollution. She  noted the  1990 amendment  to the  Coastal                                                               
Zone Management  Act said the act  had to consider the  zone as a                                                               
whole. Considering only local  enforceable policies would violate                                                               
that.                                                                                                                           
                                                                                                                                
VICE-CHAIR  WAGONER announced  that  he would  hold  the bill  in                                                               
committee and  it would be heard  again on Friday, at  which time                                                               
the committee would take public  testimony. He then adjourned the                                                               
meeting.                                                                                                                        

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