Legislature(1993 - 1994)
02/22/1994 12:00 PM Senate RES
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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
SENATE RESOURCES COMMITTEE
February 22, 1994
12:00 P.M.
MEMBERS PRESENT
Senator Mike Miller, Chairman
Senator Loren Leman, Vice Chairman
Senator Steve Frank
Senator Drue Pearce
Senator Dave Donley
Senator Fred Zharoff
MEMBERS ABSENT
Senator Al Adams
OTHER LEGISLATORS PRESENT
Senator Suzanne Little
Senator Jay Kerttula
Representative Joe Green
COMMITTEE CALENDAR
SENATE BILL NO. 215
"An Act relating to and redesignating the oil and hazardous
substance release response fund and to its use in the event of a
disaster emergency; repealing the authority in law by which marine
highway vessels may be designed and constructed to aid in oil and
hazardous substance spill cleanup in state marine water using money
in the oil and hazardous substance release response fund; amending
requirements relating to the revision of state and regional master
prevention and contingency plans; altering requirements applicable
to liens for recovery of state expenditures related to oil or
hazardous substances; amending the authority to contract to provide
personnel to respond to a release or threatened release of oil or
a hazardous substance and to contract to conduct spill related
research; reassigning responsibility for the oil and hazardous
substance response corps and for the emergency response depots to
the Department of Environmental Conservation, and for the operation
of the state emergency response commission and its attendant
responsibilities for the local emergency planning commissions to
the Department of Military and Veterans' Affairs; and modifying
definitions of terms relating to the preceding provisions;
terminating the nickel-per-barrel oil conservation surcharge;
levying and collecting two new oil surcharges; and providing for
the suspension and reimposition of one of the new surcharges; and
providing for an effective date."
SENATE BILL NO. 308
"An Act modifying administrative procedures and decisions by state
agencies that relate to uses and dispositions of state land,
property, and resources, and to the interests within them, and that
relate to land, property, and resources, and to the interests
within them, that are subject to the coastal management program;
and providing for an effective date."
HB 232 (BOW HUNTING STAMP & BOW HUNTING SAFETY) WAS SCHEDULED, BUT
NOT HEARD THIS DATE.
PREVIOUS ACTION
SB 215 - See Resources minutes dated 11/19/93, 1/19/94,
2/7/94, and 2/16/94. See Labor & Commerce minutes
for 2/22/94.
SB 308 - See Resources minutes dated 2/14/94.
HB 232 - No previous action to record.
WITNESS REGISTER
Representative Mike Navarre
Capitol Building
Juneau, Ak. 99801-1182
POSITION STATEMENT: Opposed SB 215.
Marla Berg, Legislative Aide
c/o Senator Al Adams
Capitol Building
Juneau, Ak. 99801-1182
POSITION STATEMENT: Commented on an amendment to SB 215.
Robert Poe, Director
Division of Information and Administrative Services
410 Willoughby Ave., Suite 105
Juneau, Ak. 99801-1795
POSITION STATEMENT: Opposed SB 215.
Mike Conway, Director
Division of Spill Prevention and Response
Department of Environmental Conservation
410 Willoughby Ave., Suite 105
Juneau, Ak. 99801-1795
POSITION STATEMENT: Opposed SB 215.
Jim Eason, Director
Division of Oil and Gas
Department of Natural Resources
P.O. Box 107034
Anchorage, Ak. 99510-7005
POSITION STATEMENT: Supported SB 308.
Charlie Johnson
P.O. Box 948
Nome, Ak. 99762
POSITION STATEMENT: Opposed SB 308.
Steve Porter
P.O. Box 100360
Anchorage, Ak. 99510
POSITION STATEMENT: Supported SB 308.
Walt Furnace
Alaska Support Industry Alliance
4220 B St.
Anchorage, Ak. 99503
POSITION STATEMENT: Supported SB 308.
Loren Flagg, Executive Director
Kenai Peninsula Fishermen's Association
34824 K Beach Rd.
Soldotna, Ak. 99669
POSITION STATEMENT: Opposed SB 308.
Theo Matthews, Administrative Assistant
United Cook Inlet Drift Association
P.O. Box 69
Kasilof, Ak. 99610
POSITION STATEMENT: Opposed SB 308.
Irv Carlisle
P.O. Box 2349
Soldotna, Ak. 99669
POSITION STATEMENT: Opposed SB 308.
Tom Lohman
North Slope Borough
P.O. Box 69
Barrow, Ak. 99723
POSITION STATEMENT: Opposed SB 308.
Kristin Stahl-Johnson
Kodiak Conservation Network
P.O. Box 2661
Kodiak, Ak. 99615
POSITION STATEMENT: Opposed SB 308.
Linda Freed
Kodiak Island Borough
710 Mill Bay
Kodiak, Ak. 99615
POSITION STATEMENT: Commented on SB 308.
Mike Chihuly
P.O. box 39294
Ninilchik, Ak 99639
POSITION STATEMENT: Opposed SB 308.
Stan Stephens
P.O. Box 1297
Valdez, Ak. 99686
POSITION STATEMENT: Commented on SB 308.
Nancy Lethcoe
Alaska Wilderness and Recreational Citizens Association
P.O. Box 1313
Valdez, Ak. 99686
POSITION STATEMENT: Commented on SB 308.
John Oscar
Soldotna, Ak. 99669
POSITION STATEMENT: Opposed SB 308.
Richard Tyler
Homer, Ak. 99603
POSITION STATEMENT: Opposed SB 308.
Mike O'Maera
P.O. Box 1125
Homer, Ak. 99603
POSITION STATEMENT: Opposed SB 308.
Riki Ott
United Fishermen of Alaska
P.O. Box 1430
cordova, Ak. 99574
POSITION STATEMENT: Opposed SB 308.
James Mykland
P.O. Box 1241
Cordova, Ak. 99574
POSITION STATEMENT: Opposed SB 308.
John Bocci
P.O. Box 939
Cordova, Ak. 99574
POSITION STATEMENT: Opposed SB 308.
Jon Isaacs
308 G Street
Anchorage, Ak. 99501
POSITION STATEMENT: Wanted more time to consider SB 308.
Fran Bennis
Alaska Conservation Counsel
P.O. Box 101145
Anchorage, Ak. 99510
POSITION STATEMENT: Opposed SB 308.
Joe McGill
Bristol Bay L. A.
P.O. box 322
Dillingham, Ak. 99576
POSITION STATEMENT: Opposed SB 308.
Alice Ruby
P.O. Box 121
Dillingham, Ak. 99576
POSITION STATEMENT: Wanted more time to evaluate SB 308.
Chuck Degnan
Unalakleet, Ak.
POSITION STATEMENT: Opposed SB 308.
Eric Smith
731 East 8th
Anchorage, Ak 99501
POSITION STATEMENT: Opposed SB 308.
Nancy Wainwright, Attorney
Anchorage, Ak.
POSITION STATEMENT: Commented on SB 308.
Sue Flensburg
P.O. Box 349
Dillingham, Ak. 99576
POSITION STATEMENT: Commented on SB 308.
Barbara Fullmer
1031 W. 4th, Suite 200
Anchorage, Ak. 99501-1994
POSITION STATEMENT: Commented on SB 308.
ACTION NARRATIVE
TAPE 94-11, SIDE A
Number 001
CHAIRMAN MILLER called the Senate Resources Committee meeting to
order at 12:00 p.m. and announced SB 215 (OIL/HAZARDOUS SUBS.
RELEASE RESPONSE FUND) to be up for consideration. He explained
there was a proposed CS, dated 2/15/Resources/U version. They
briefly discussed the changes from the "O" version.
Number 97
SENATOR LEMAN moved to adopt the U version. There were no
objections and it was so ordered.
REPRESENTATIVE MIKE NAVARRE spoke in opposition to SB 215 and gave
the history of the 470 Fund. He said he was co-sponsor of the
original bill. He said because of lack of detailed records many
times it was hard to determine who was responsible for oil spills.
It will be impossible to find the responsible party for a number of
contaminated sites and the burden of cleaning will fall on the
state. The estimate was significant. He was looking for a way to
provide for eventual cleanup and protection from ground water. At
the time, there was a lot of concern about who was going to be
ultimately liable for an independent contractor who had accepted
hazardous waste for disposal.
He explained the 470 Fund was passed before Exxon Valdez spill and
it wasn't funded adequately before then. His primary concern was
what if there was another big spill. Had the nickel been split at
the time, it would have been adequate, but the legislature
substantially changed what can be appropriated out of that fund
with respect to prevention, monitoring, contingency plans, etc.
Some of the things that might save money haven't been enacted. For
instance, if there was one contingency plan, instead of having
numerous ones.
The legislature recognized there would be an on/off provision. He
thought the accounting was flawed. He also noted they did not know
all the expenses involved in an adequate prevention program.
He concluded that there is a legitimate concern that this has been
made an additional nickel per barrel tax to the industry. On the
other hand, the fund is appropriated by the legislature. The focus
of the debate should not be how to limit spending specifically, but
what is needed to provide the programs that we want to monitor and
have proper oversite for oil and hazardous substance. He thought,
given the philosophy of the current administration regarding ANWR,
it would be good for Alaska to have proper oversite.
He also noted that at the time they established the catastrophic
fund, the $50 million was a goal; although they realized it
wouldn't be adequate for a catastrophic spill.
Number 298
SENATOR ZHAROFF proposed the following amendments for Senator Adams
who was not able to attend. He noted they were based on the "O"
version of the bill.
SENATOR ZHAROFF moved amendment #1. SENATOR MILLER objected for
purposes of discussion. This removes "the big stick" meaning if
the legislature doesn't appropriate funds the surcharge would be
suspended, SENATOR ZHAROFF explained.
SENATOR DONLEY asked if the subcommittee got a legal opinion on the
constitutionality of such a "dedication of funds" provision?
SENATOR MILLER responded that Mr. Chenoweth, who drafted the
legislation, did not raise that as an issue. He would get an
opinion on it, however.
SENATOR ZHAROFF moved the amendment and asked for unanimous
consent. SENATOR MILLER maintained his objection. SENATOR ZHAROFF
just moved the amendment then. Senators Zharoff and Donely voted
yes; Senators Leman and Miller voted no and the amendment failed to
pass.
Number 376
SENATOR ZHAROFF moved amendment #2 which would allow the fund to be
tapped to provide a safe drinking water source should the existing
source be polluted. He said this issue has come up and sometimes
it is cheaper and faster to drill a new well than to clean up the
existing source.
MARLA BERG, Aide to Senator Adams, said since the 470 Fund can't be
used for capital projects, and if a community didn't have enough
money to drill a new water source themselves, they would go through
village safe water to get funding and clean up the existing water
source which would cost a lot of money. It would be a lot cheaper
to just drill a new well if they could have access to the 470 Fund.
SENATOR MILLER said he supported the amendment, but it was just a
little too broad. Senators Donley and Zharoff voted yes; Senators
Leman and Miller voted no and the amendment failed.
Number 420
SENATOR ZHAROFF moved amendment #3 which puts hazardous substances
back into the catastrophic fund. Senators Donley, Zharoff, and
Leman voted yes; Senator Miller voted no and the amendment passed.
Number 431
SENATOR ZHAROFF moved amendment #4 which deletes the accrued
interest from being part of the contingency and abatement account.
Senator Miller said he would get an opinion on the dedicated funds
issue. Senator Zharoff voted yes; Senators Donley, Leman, and
Miller voted no and the amendment failed.
Number 480
SENATOR ZHAROFF moved amendment #5. SENATOR MILLER objected.
Senators Donley and Zharoff voted yes; Senators Leman and Miller
voted no and the amendment failed.
Number 493
SENATOR DONLEY said he also had some amendments at Senator Adams'
request. He moved amendment #9 which deletes section 9 from the
bill. SENATOR MILLER objected for discussion purposes.
ROBERT POE, Department of Environmental Conservation, said they
supported the original language stating that a responsible party
would have to actually contain or clean up and not just take
containment "action." Deleting section 9 would accomplish that.
SENATOR LEMAN commented he thought the language in section 9 meant
that action would have to be taken to mitigate a spill which would
be substantial.
SENATOR DONLEY said the Department of Environmental Conservation
supports the status quo, but he asked to hear why someone wanted to
change it.
SENATOR MILLER removed his objection and the amendment passed.
Number 590
SENATOR DONLEY said the next amendment requested by Senator Adams
was to delete sections 26 and 28 which was requested by the DEC.
MR. POE said these two items define when a release is imminent.
This part of the law is acted upon a couple of times a week.
TAPE 93-11, SIDE B
Number 590
MR. POE said the further refinements of the definition of imminent
release could call into question a lot of suits after the fact.
SENATOR MILLER said he thought the new language gave them more
flexibility. SENATOR LEMAN agreed. MR. POE reiterated that for
DNR, generally worded guidance has been best.
SENATOR FRANK asked for specific examples of this situation.
MIKE CONWAY, Director, Division of Spill Prevention and Response,
said they deal with many times with the potential for a spill, for
example a fishing vessel on the rocks whose tank has not been
punctured, but given the weather you take action to pump off the
tanks. And then the weather changes and it never happens. The new
language would allow more "Monday morning quarterbacking" which
would imply bad judgement was used.
SENATOR LEMAN said he would consider the example he cited as an
imminent release.
SENATOR DONLEY asked if they had engaged in any litigation over the
existing statute? MR. CONWAY answered that he hadn't while he
worked for the state, but as Federal On-Scene Coordinator with the
Coast Guard whenever they took action to mobilize gear and then go
back to the responsible party, yes, they had that problem.
REPRESENTATIVE GREEN asked if that was before or after the Exxon
Valdez? MR. CONWAY said it was before. REPRESENTATIVE GREEN said
he didn't think that after the Exxon Valdez it would be a problem
to err on the side of prevention.
SENATOR ZHAROFF asked for another example. MR. CONWAY couldn't
think of one at the moment.
SENATOR PEARCE said she thought the new language gave them
increased flexibility by expanding the definition to reasonably
expect there could be a problem instead of saying it's going to
happen.
MR. CONWAY said with the discussion on the intent of this issue as
a matter of record, the language would be acceptable.
SENATOR DONLEY withdrew amendment #7.
Number 418
SENATOR LEMAN moved amendment #8 and asked for unanimous consent.
SENATOR MILLER objected for purposes of discussion.
SENATOR LEMAN explained this is the inflation proofing provision
for the catastrophic oil release response account in which the $50
million will be placed.
Senators Donley, Zharoff, Frank, Pearce, and Leman voted yes;
Senator Miller voted no and the amendment passed from Committee.
Number 395
SENATOR ZHAROFF moved to adopt amendment #9. SENATOR MILLER
objected for purposes of discussion. SENATOR ZHAROFF explained a
report from the Commissioner is to be submitted in the first 120
hours, then the Governor does not need to do anything to let the
efforts continue. However, by administrative order he could
suspend use of the fund. Now the Governor has to respond with an
executive order allowing the work to continue.
Senators Donley and Zharoff voted yes; Senators Frank, Pearce,
Leman, and Miller voted no and the amendment failed.
SENATOR ZHAROFF moved amendment #10 which lets some of the funds be
used for the part of the construction of the ferries that have
spill equipment.
Senators Donley and Zharoff voted yes; Senators Frank, Pearce,
Leman, and Miller voted no and the amendment failed.
SENATOR ZHAROFF moved amendment #11 which puts hazardous materials
back in and restores the mechanism by which municipal grants can be
made from the fund. He said he is not certain what they did to
rural communities and the funding they need to be able to respond
to a spill. SENATOR MILLER said this issue did need clarification.
However, the drafter couldn't be here today. SENATOR ZHAROFF asked
to have this amendment forwarded. SENATOR MILLER agreed.
Number 272
SENATOR DONLEY pointed out that SB 215 is essentially a very large
spending bill, because it removes a source of revenue from the
state. He is very concerned about how it is going to be rolled
into an overall spending plan that hasn't been developed, yet.
According to testimony, the tax is approximately 1% of the profit
for the industry and all kinds of Alaskans are going to have to
take very significant reductions in state assistance to them.
He stated that there are conflicting opinions about the uses of the
fund and a lot of people have testified that it is being used
exactly they way they intended it to be used.
Number 200
SENATOR LEMAN moved to discharge CSSB 215 U version, as amended,
with individual recommendations and accompanying fiscal notes.
Senators Donley and Zharoff voted no; Senators Frank, Pearce,
Leman, and Miller voted yes and CSSB 215 passed from Committee.
SENATOR MILLER announced SB 308 (ADMIN ACTION RE
LAND/RESOURCES/PROPERTY) to be up for consideration.
JIM EASON, Director, Division of Oil and Gas, said several concerns
had been expressed about whether the state has the legal authority
to condition, once they issue an oil and gas lease, future
activities including and up to a prohibition on surface entry. An
opinion from the Department of Law says they do have that
authority, because it is pivotal to their proposal for phased
consideration in consistency determinations and best interest
findings of lease sales. He said this CS would accommodate the
concerns raised by public testimony.
This CS also makes clear the scope of the phases. The term non-
speculative was replaced with "reasonably foreseeable, significant,
direct affects" which is the federal standard. "The law" was
replaced with the applicable statutes and regulations so it is
clear they will be in conformance with those laws and regulations
which apply to the best interest finding and the coastal zone
consistency determination.
MR. EASON said that section 2 had been redrafted to clarify the
intent not to require the public or an agency meet all three of the
standards.
Number 69
SENATOR LEMAN moved to adopt the CS to SB 308 Resources, J version
with the handwritten changes that are noted. There were no
objections and it was so ordered.
TAPE 94-12, SIDE A
Number 001
CHARLIE JOHNSON, Nome, said this legislation was a reaction to the
court's decision on lease sale 78. He said it's not needed; it's
bad legislation.
STEVEN PORTER, Anchorage, supported full analysis of all issues
associated with a best interest finding process for each sale which
current statutes and regulations do. The DNR scope of review
should be defined during the administrative review process and not
by the court. This bill is directed at providing certainty for
DNR. They appreciate DNR's efforts to accommodate the public's
concerns.
WALT FURNACE, the Alaska Support Industry Alliance, said he was
concerned with the court injunction on lease sale 78. They support
this legislation which attempts to clarify the authority of the
Commissioner in contracting for lease of land under the State of
Alaska Oil and Gas Lease Sale Program.
LOREN FLAGG, Executive Director, Kenai Peninsula Fishermen's
Association, testified that SB 308 is bad legislation. It looks
like the administration is trying to coverup for DNR's incompetence
in handling lease sale 78. He said most sales have occurred
without court delays. When DNR fails to address overriding public
concerns in sensitive areas, they are successfully challenged.
THEO MATTHEWS, United Cook Inlet Drifters Association, opposed SB
308. He said it basically turns public interest findings into
industry interest findings. It represents a radical change in
public policy that affects all land disposals. He thought it
should have a judiciary reference. SB 308 is fiscally
irresponsible, he said.
SENATOR LEMAN noted that the Chairman for the Judiciary Committee,
as well as two members were present and participating in the
meeting.
Number 205
IRV CARLISLE, Soldotna, opposed SB 308 for most of the reasons
already stated. It gives the power to limit the concerns to be
addressed on an issue that affects so many Alaskans.
TOM LOHMAN, North Slope Borough, agreed with all the comments made
before him in opposition to SB 308.
KIRSTIN STAHL-JOHNSON, Kodiak, said they are adamantly opposed to
SB 308. She said it tries to limit legitimate public concerns.
The burden of proof should lie with the industry.
SENATOR MILLER said they would recess for a session on the floor
and would reconvene at 5:00 p.m.
Number 255
SENATOR MILLER called the meeting back to order at 5:00 p.m.
LINDA FREED, Acting Mayor of Kodiak, said there is improvement over
the original bill, especially deleting non-speculative. However,
she said they have not had adequate time to review the amendments
to the bill. They would like additional time to address their
concerns with the discrete phasing language. They support a
process that brings together government and industry special
interest groups to identify appropriate language to use in the best
interest of the state and all its residents.
Number 289
MIKE CHIHULY, Ninilchik, said he is a recreationist. He hunts,
fishes, digs clams, and he has a charter service. He adamantly
opposed SB 308. He said our present laws were designed to allow
meaningful public participation in protecting resources from
detriment by oil and gas activities. SB 308 will give DNR a
license for oil development anywhere, at any time, at any cost.
STAN STEPHENS, Valdez RCAC, said they respect the process that
allows for public input. He said they are concerned that SB 308
limits the public review process and hoped they would have more
time to review it.
SENATOR DONLEY noted that most of the people testifying say they
want more time to review the bill and asked what the intention of
the Committee was.
SENATOR MILLER answered that it had been a week since the bill was
introduced and it was his intent to deal with the legislation this
week.
Number 377
NANCY LETHCOE, President, Alaska Wilderness, Recreational, and
Tourism Association, encouraged them to slow down and look closely
at the legislation to see what it does to the whole state and not
just certain aspects of it. She said they needed more time to
analyze the bill. She urged them to separate legislative problems
from management problems.
JOHN OSCAR testified that SB 308 was haphazard irresponsibility.
It gives full authority to the Commissioner of DNR to destroy land
from hundreds of miles away. This bill provides no opportunity for
rural people to say something about development if it's going to be
severely affecting their economy. This bill provides no meaningful
permitting process.
RICHARD TYLER, Homer, said the court stopping lease sale 78 was the
law working as it should. He thought they were trying to fix
something that wasn't broken.
MIKE O'MAERA, Homer, said SB 308 was a waste of time and would
create even more law suits. He said it might be more productive to
modify administrative procedures. He did not think it would help
establish a predictable and consistent program for the oil
industry. Administrative procedures should be revised, so that
divisions like the Divisions of Oil and Gas and Forestry, no longer
evaluate their own project proposals. Best interest findings
should go to a balanced disinterested evaluation authority.
RIKI OTT, United Fishermen of Alaska, testified in opposition to SB
308. It allows DNR to ignore resource use conflicts,
transportation issues, and environmental issues during the initial
administrative review - prior to disposal of lands. It is not so
much a matter of which issues are addressed as when they are
addressed. A multi-phased process will force the state during
later stages into a position of either proceeding with an unsound
project or expensive buy backs of the sale or lease, including
interest and any expenditures made by the lessee.
This bill favors development, MS. OTT said. Although "non-
speculative" has been removed, the intent has not changed.
"Direct" is still in it and there are many rules against using it
because it limits itself to paper transactions. DNR should
anticipate risks, such as oil spills, and work out resolutions
before any leases are issued.
MS. OTT continued saying that this bill limits local control over
local development and increases federal control over federal lands.
It concentrates the power to determine land disposals in the hands
of mid-level bureaucrats. She said this bill would increase law
suits because of public frustration and lack of clarity. The
Coastal Zone Management is not the problem. The public needs to
discuss and resolve issues up front to make sure its projects are
allowed to proceed, that they are done responsibly, and with
minimal impact on other resource users and the environment.
JAMES MYKLAND, Cordova, said he realized development was necessary
to insure the financial survival of our state, but he wants
environmentally safe development. This legislation will allow DNR
to ignore resource use conflicts and environmental issues during
the initial administrative review prior to disposal of these lands.
He strongly supported delaying SB 308 until all citizens from
around the state have a chance to respond to it if they want to.
JOHN BOCCI, Cordova, opposed SB 308 for all the reasons already
mentioned today.
TAPE 94-12, SIDE B
He doubted that the oil industry could handle a catastrophe.
JON ISAACS said he is a planning consultant and has worked with
communities and the oil, mining, and timber industries. He said
there has been the need to change the Coastal Zone Management
program over the past year regarding oil spills, contingency plans,
and coastal zone planning. He has helped to develop solutions
everyone could live with.
He appreciated the problems DNR has with the court decision on
lease sale 78 with best interest findings and coastal consistency.
There has not been adequate time to evaluate the implications of
the bill or the amendments.
SB 308 as it stands is not a solution for a number of reasons.
Procedural problems with best interest findings resulting from
shortage of staff could have been avoided with assistance from
Division of Governmental Coordination and other agencies. It gives
broad discretion to Division Directors with implications that are
not wholly related to oil and gas decisions. It reduces the local
government coastal district role in decision making.
In conclusion, he urged the Committee to not take hasty action on
SB 308 and allow proper consideration of the proposed amendments
and other appropriate alternatives to this problem.
FRAN BENNIS opposed SB 308. She said the Coastal Zone Management
Program is important to those on the coast and they strongly oppose
legislation that undermines the substance of the Act by reducing
public involvement by limiting the effects of the scope of
evaluating in the review process. They support the ecosystem
management concept. Potential effects on lands adjacent to lease
sales must be considered in the review process.
JOE MCGILL, Dillingham, opposed any change in administrative
procedures. People in Dillingham depend on the fishing industry,
he stated.
ALICE RUBY, Chairman, Bristol Bay --- Association, said they want
to continue working with the state in developing policies and
support legislation. They realize there needs to be certainty in
the leasing process and other decisions in Title 38. They have not
had time to review the bill and there are very intense opinions on
both sides. As a result they do not oppose or support the bill.
SENATOR ZHAROFF asked why the court said the state can't continue
with lease sale 78. SENATOR MILLER explained that the court said
that the state in using their best findings used reasoning they
shouldn't have. MR. EASON explained that the Superior Court issued
an injunction against lease sale 78, because the judge determined
that the plaintiffs would likely prevail on a claim when the case
is finally adjudicated by the court on an issue of whether or not
the Division of Oil and Gas would be in compliance with the Coastal
Zone Management Program consistency determination by presuming you
can condition future permitting activities to assure that they are
consistent.
SENATOR ZHAROFF asked how the state knows what to do. MR. EASON
explained that this bill does not propose to do away with the
public process. It's being mischaracterized to say that it would.
It defines the ability of the director, under a delegation from the
Commissioner, to define the scope and, most importantly, to define
the ability to make a decision to proceed with a lease sale on a
phased basis. SB 308 would allow the process of issuing a lease
(the paper transaction) to take place with less than total
certainty of what may happen in the future, but with a guarantee
that the lease is conditioned so that whatever activity is proposed
in the future, there will be ACMP review, review by the public, and
review by the agencies.
He said it is wrong that this is a dramatic departure in policy.
To illustrate this he read the Code of Federal Regulations:
930.37(c): "In cases where the Federal agency has sufficient
information to determine the consistency of a proposed development
project from planning to completion, only one consistency
determination will be required. However, in cases where major
federal decisions related to a proposed development project will be
made in phases, based upon developing information with each
subsequent phase subject to federal agency discussion to implement
alternative decisions based upon such information, for example
planning, citing, and design decisions, a consistency determination
will be required for each major decision. In cases of phased
decision making, federal agencies shall insure that the development
project continues to be consistent to the maximum extent
practicable with the state's management program."
He summarized that they are simply asking the state legislature to
put into law what is already in federal statutes and regulations.
He said if you can make a good enough decision to condition all the
things you want to happen in the future, you only do one
consistency determination. He thought that truly would be cutting
the public out of the process.
SENATOR ZHAROFF commented that he didn't think it was good to model
the state's policy after federal policy, because they have kind of
a dictatorial type of approach. Because there were a lot of
complications with the Bristol Bay oil lease sale, he said it was
important to be cautious and move slowly.
MR. EASON said there is no retroactive provision in the
legislation. He pointed out that this is not intended to affect
the process where people review permits for development. There is
no intent to restrict or exclude from consideration the public or
their participation in that consideration.
He explained the problem DNR finds itself in with the court
decision is a history that extends from 1959, in the case of Cook
Inlet where there have been 26 oil and gas lease sales in the sale
78 area. The court bought an allegation of a conflict and yet
there is no record of it. There is a record of claims that there
will be conflicts, but that is balanced against 26 lease sales
where there has been compatible development, fishing, and
recreational use.
He said there is a lot of discussion about the discomfort of
delegating the responsibility of making a decision of this
importance to the Commissioner. It is inevitable that someone will
make that decision for Alaska where it's the Commissioner or the
courts. Based on the process, he didn't think they really wanted
the courts making resource disposal decisions. It's a very time
consuming and contradictory process.
Number 363
CHUCK DEGNAN, Unalakleet, opposed SB 308, because it narrowly
defines project impact areas or phases of projects. This bill
would effectively neutralize public citizens' and coastal
districts' input into the state decision making process. It also
puts the decision making on the director level rather than the
commissioner level.
SENATOR LITTLE pointed out that SB 308 could very narrowly limit
the scope of a consistency determination. It could therefore,
limit input from the public.
MR. EASON explained that the responsibility would be upon the
department to address in writing any comment or concern raised by
the public, as it is today. But it is correct that relevant
comments and concerns to the disposal would be the focus of the
scope. It is quite likely, and based upon past experience, that
they will receive comments that are neither related or relevant, or
in some cases, can't be understood, to apply to the issue they are
considering. Those cases would be identified and discussed and if
they aren't truly relevant, it will be explained why in writing.
The legislature would have the continuing ability as an oversite
body to make sure that process is not abused. At the same time,
the courts would have some guidance from the legislature about the
process it intends to have in place and the level of inquiry it
expected of a decision maker to proceed with a lease sale.
SENATOR DONLEY said a lot of people have said they need more time
to deal with this issue and he asked if they were from extremist
groups. MR. EASON answered no, he thought it an issue that needed
to be addressed quickly. He explained that this legislation has
been characterized as an immediate reaction to a one time, special
problem. It is, in fact, a reaction to a series of litigation
results that began in 1987 that have clearly established a pattern
of the court in picking up the jurisdiction and authority to make
leasing policy. That is a seven year process and we are facing a
situation where literally every sale that is scheduled for which
there is a finding and a consistency determination under the
current law will be, if it's challenged, enjoined, in his opinion.
MR. EASON said there has been a great deal of testimony, a lot of
it has been misdirected and inaccurate. He is trying to clarify
the inaccuracies.
ERIC SMITH, Anchorage, said this legislation is DNR trying to get
the legislature to tell DNR they don't have to consider the impacts
of mining or oil and gas development at the lease sale stage or at
the exploration stage. He said the government never turns anyone
down if they find something. He said the federal government looks
at all stages, not just the lease stage.
NANCY WAINWRIGHT, Anchorage attorney, said the working groups with
Coastal Zone Management have been a very positive development. She
said Mr. Eason has not indicated a willingness to meet with many of
these groups who have been working together for perhaps 15 years.
She said that impacts have to be looked at broadly. She thought
this bill should be allowed to go through the process that has
worked well in the past.
SUE FLENSBURG, Dillingham, made two observations. She said there
definitely needs to be certainty for all concerned with respect to
the decision making process. She thought the amendments are a step
in the right direction, but they need additional work. She
appreciated Senator Donley's remarks about slowing the bill down,
because the public has a genuine interest in it and needs the time
to comprehend what the amendments mean.
Number 75
MR. EASON responded to a number of points by saying that this is
not just a recent phenomenon, but it is real and it creates a
conflict between facts and speculation which is why they had a
standard of "non-speculative" - originally. They are finding that
the mere allegation of a conflict is accepted by the courts,
although there are 26 lease sales that suggest the contrary. He
said the bill has an immediate effective date and is not
retroactive. It is not set up to bypass the public process. It is
set up to get guidance from the legislature for both them and the
judiciary on what they expect so everyone knows the rules and can
proceed with the orderly development of Alaska's resources. DNR is
not asking to avoid the hard questions.
One of the most important comments was made by Mr. Isaacs who said
that he hadn't participated in any or almost no projects which
weren't susceptible to being worked out. Here we are dealing with
a process the courts have now adopted where we don't get the
opportunity to try to work on projects - where things are really
proposed, under real time situations, under real locations, with
real analysis of the things that may be conflicts. The courts are
stopping them short at the paper transaction. Nothing happens at
a lease sale but the transfer of a right which is further
conditioned to assure that there is a consistency determination
review and agency and public review of anything that is proposed.
He said under AS 38.05.180(c) they already consider cumulative
impacts. That is required and it still would be required. This
does not represent a radical change in policy. It's the policy
followed by federal agencies. It is the policy they think is
important for the Alaska Court to recognize.
He said the only time the state has had to buy back a lease is when
the legislature made a decision that it did not want leasing in
Kachemak Bay. It was very appropriate. The legislature has also
chosen to withhold from leasing all the submerged and tidelands in
Bristol Bay. In no other instance has there been the need to buy
back a state lease. It is important to note there has been
numerous occasions when state lessees did not get to do exactly
what they wanted to do on their lease. It's not a question of
whether they can or cannot condition that use. Using the example
of Lisburne and Niakuk, he said the state conditioned those two
developments extensively.
TAPE 94-13, SIDE A
Number 001
SENATOR LITTLE asked if any developers had not been allowed to do
anything on their lease. MR. EASON answered not that he was aware
of.
SENATOR ZHAROFF asked what affect passage of this legislation would
have on lease sale 78. MR. EASON said it was due to go to trial in
September and that process has to go through the court system
unless the Supreme Court overturns the injunction which the state
has appealed. If this legislation passed, the court would be aware
of it, but he didn't know if it would have an impact on their
decision making.
SENATOR LEMAN said he thought the effective date would probably be
90 days after the Governor would sign the bill and asked how he
thought it would affect the current process for an August lease
sale. MR. EASON said they had issued the preliminary finding and
consistency determination last week or the week before. It is out
for public comment now. Based on public comment they will revise
both of those decisions as necessary. Those findings will go out
on May 14. Technically anyone has a right to object from that
point until the sale in late August or early September.
Number 131
SENATOR ZHAROFF said the way he understood this bill the public
process was going to change to the extent that now the concerns of
the public and Coastal Zone Management people start from the bottom
and work up. The passage of this bill reverses the process so all
of the public interests are considered. Only the interests
identified by the Department come back down for public review.
MR. EASON said that was not correct. The intent is not to narrow
the scope of what people can say. It's to make clear they will
take all comments from the public regardless of where or whom they
are. The decision making in support of the written finding will
address those comments and will also have the burden of showing
which of those comments are relevant to the sale proposed and to
the phase of the disposal. It's with the understanding that those
subsequent events that might happen will go through the same public
review.
MR. EASON said he has struggled to try and make the process more
understandable to people. He apologized for any failure in that,
but gave an example with drivers licensing. Using the reasoning
behind the court's injunction, if he were issuing a drivers license
he is being asked to determine where everyone he's giving a license
is going to drive for the rest of their life; what kind of car they
are going to drive in; whether or not they might hit someone; and
whether or not they might drive under the influence of alcohol. If
he were the drivers license director, he couldn't do that. Yet he
is being asked to do that for something that is more important to
the state's long term health. He can't do that, but he assures
them, if they allow him to issue the lease, he will make sure the
lease has the conditions in it that will make them come back to the
public and the agencies with a specific proposal.
With this legislation he is telling them there is a serious
problem. If the problem is unaddressed, there will be no more
leasing. That is not necessarily good under the fiscal
circumstances the state finds itself in.
He explained they do not give a lease unless the people are
qualified and there are already laws saying what the qualifications
have to be. They can't do a thing until they post a bond. That's
not the end of it. They still must get contingency plan approvals
from DEC; they must get Title 16 approvals by ADF&G; they must
undergo consistency determination; if they are lucky enough to find
something and it's offshore or in wetlands, they must do a federal
Environmental Impact Study, etc. The system of permitting and
processing is huge and extensive and consumes years.
SENATOR ZHAROFF noted that sometimes the sales have taken place
within a core section of fishing grounds - as in Shelikof Straits.
At the time the industry was able to work with them to modify plans
and came up with something agreeable. Passing this bill throws all
that aside.
MR. EASON said this bill doesn't do that. The process he described
at Shelikof Straits is exactly the process they had at sale 78.
Several provisions in the lease put them on notice that a whole
range of alternatives existed for restricting activities including
timing restrictions, restricting their access to certain surface
locations, or requiring the use of directional drilling.
SENATOR ZHAROFF said he can't see where the process has been
broken. He felt they were going too far too fast. He said he was
concerned with sale 79 which is in Cape Yakataga in his district.
MR. EASON said if that sale is allowed to happen, it does not
provide the lessee an opportunity to go anywhere at any time he
wants. Any proposal to do anything will go through public review
as well as state agency reviews. If this bill passes, there will
be one difference. The courts would understand that whoever makes
the decisions cannot foresee into the future after a lease sale and
can not tell in advance if there will be 1 well or 30 wells or
3,000 wells.
Number 330
SENATOR ZHAROFF asked if this bill takes away any tool an
individual or user group might have in the future? MR. EASON
explained that it's ultimately the policy decision the legislature
has to make whether they want a decision making process that is
based upon someone's vague discomfort or a feeling that something
might be wrong. If that's the standard, they can adopt that and
DNR can do their best working with it. He advised that is not a
very good standard for making decisions.
SENATOR ZHAROFF said he didn't think the courts would allow
frivolous concerns for an injunction.
MR. EASON responded the bill is not limiting public comment. As a
matter of law they could not prevail in a litigation without some
certainty within the process that defines the standards that both
have to live by. And some person has to ultimately make the
decision.
SENATOR LITTLE said the decision should be made within the Coastal
Zone Management Process. MR. EASON said that is a matter for the
legislature. Currently that decision is relegated to the
Commissioner.
SENATOR DONLEY said he would feel better and might be convinced if
there was more time to understand the issues and asked for the bill
to be held for one more week.
Number 371
SENATOR DONLEY moved to table SB 308 for one week or to the
Chairman's discretion after one week to comply with what people are
asking for. SENATOR MILLER objected to the motion. Senators
Zharoff and Donley voted yes; Senators Leman, Pearce, and Miller
voted no and the motion failed.
SENATOR PEARCE asked if he could do a side by side schematic for
the process they go through and the timing as it stands now and as
it would be under SB 308.
MR. EASON said there is a simple answer. There will be no change
in the process. There was some discussion of the schedule with
BARBARA FULLMER, Department of Law in Anchorage.
SENATOR PEARCE said she understood people saying they wouldn't have
an opportunity to have input and she heard him saying the public
would have input, but he is trying to bring the scope back from an
entire universe of trying to guess what might happen somewhere
maybe to something they can say with some amount of reliability may
or may not take place. She asked how long a lease sale was valid.
MR. EASON said most of the leases are for 10 years. That's the
primary term. If production is discovered, there are lives that
are much longer than 10 years. Some go back into the early sixties
and may be producing still in 30 years.
SENATOR PEARCE noted that drilling techniques and production
techniques are changing so quickly, she didn't know how anyone
could know with any certainty what the possible ramifications of
leasing might be in a few years time. MR. EASON said he
appreciated her comments on this issue - that systems are designed
to accommodate people's concerns. It comes at a cost to industry,
but it is something that can and is done.
Number 494
SENATOR DONLEY moved amendment #1. SENATOR LITTLE explained it
would confirm what DNR has been stating about not being compelled
to go ahead with a project if they later determined the project was
not in the best interests of the state. It also says that
liabilities and benefits will be considered at that particular
phase without greater weight necessarily being given to the long
term benefits.
SENATOR PEARCE noted that they have already proved they have the
right to not go ahead, although she didn't understand the second
part.
Senators Donley and Zharoff voted yes; Senators Frank, Pearce,
Leman, and Miller voted no and the amendment failed to pass.
Number 567
SENATOR DONLEY moved amendment #2. SENATOR LITTLE explained this
amendment would enable the state to revoke a permit without having
to buy back the lease.
SENATOR MILLER asked what the guidelines would be for cancelling a
lease. SENATOR LITTLE said that would be up to the Department.
MR. EASON explained there is a process for buying back leases. He
also didn't think amendment #2 would hold up under court review.
Senators Donley and Zharoff voted yes; Senators Frank, Leman,
Pearce, and Miller voted no and the amendment failed to pass.
SENATOR DONELY moved amendment #3. SENATOR LITTLE explained it
deletes language exempting permits or other authorization revokable
by the Commissioner from a written best interest finding
requirement.
TAPE 94-13, SIDE B
Number 595
MR. EASON asked if this would require a written finding before a
permit or authorization. SENATOR LITTLE answered yes. MR. EASON
said they have a staff that does nothing but written findings and
requiring it for every authorization they do could simply not be
done. It would also significantly increase the budget. SENATOR
LITTLE explained the intent was to confirm the public's
participation in the process.
Senators Donley, Zharoff, Frank, Pearce, Leman, and Miller voted no
and the amendment failed to pass.
SENATOR ZHAROFF asked if the first two amendments could accompany
the bill to the next committee. SENATOR MILLER agreed to do that.
SENATOR LEMAN asked what would be the impact of the first part of
the first amendment that was offered. MR. EASON said he thought it
was unnecessary. They decided to work on the language and send it
along with the bill.
SENATOR ZHAROFF moved that a new section 5 be added reading this
bill would sunset in 5 years. SENATOR MILLER objected for purposes
of discussion. MR. EASON said it was a legislative prerogative.
Senators Donley, Zharoff, and Leman voted yes; Senators Frank,
Pearce, and Miller voted no and the amendment failed to pass.
Number 468
SENATOR FRANK moved to pass CSSB 308 (Resources) from Committee
with individual recommendations and asked for unanimous consent.
SENATOR DONLEY objected.
Senators Pearce, Leman, Frank, and Miller voted yes; Senator Donley
and Zharoff voted no and CSSB 308 (Resources) passed from
Committee.
SENATOR MILLER adjourned the meeting at 5:35 p.m.
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