Legislature(2003 - 2004)
04/23/2003 03:35 PM Senate RES
| Audio | Topic |
|---|
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ 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.
| Document Name | Date/Time | Subjects |
|---|