Legislature(2003 - 2004)

05/03/2003 09:10 AM FIN

Audio Topic
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
HOUSE BILL NO. 191                                                                                                            
     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.                                                                                                       
Vice-Chair  Meyer MOVED  to  ADOPT work  draft  #23-GH1069\H,                                                                   
Kurtz,  5/01/03,  as  the  version of  the  bill  before  the                                                                   
Representative  Croft  OBJECTED.   He  asked  the  difference                                                                   
between the two versions.                                                                                                       
MARTY    RUTHERFORD,    (TESTIFIED    VIA    TELECONFERENCE),                                                                   
CONSULTANT,  DEPARTMENT  OF  NATURAL   RESOURCES,  ANCHORAGE,                                                                   
explained that  there are two  differences between  the House                                                                   
Resources   committee  substitute   and  the  House   Finance                                                                   
committee substitute.   One is  a technical change  involving                                                                   
two  parts,  Page  15,  Section  22,  Subsection  "O".    The                                                                   
language  clarifies   that  the   new  90-day  deadline   for                                                                   
completing a  review does not  apply to the review  involving                                                                   
the Department's  disposal of State land or  resources.  That                                                                   
process is detailed  in statute and would require  a finding.                                                                   
The finding combined  with other elements of  the consistency                                                                   
review  cannot be accomplished  within  90-days.  The  second                                                                   
part of the amendment provides  clarification that the 90-day                                                                   
time frame  would be  suspended, not  terminated under  three                                                                   
     ·    When an applicant does not adequately respond                                                                         
          within fourteen days in writing after receiving a                                                                     
          request for additional information from the agency                                                                    
          that is adopting the consistency review.                                                                              
     ·    When a project applicant requests a delay.                                                                            
     ·    When a consistency review undergoes an elevation,                                                                     
          which is an appeal.                                                                                                   
The  second  difference  between   the  two  versions  is  an                                                                   
amendment to  satisfy one concern  of the coastal  districts.                                                                   
It would require  when the district requests,  the Department                                                                   
would consult  with them  to help  identify which  amendments                                                                   
necessary for plans  and local policies in order  to meet the                                                                   
established guidelines.   That language is found  on Page 23,                                                                   
Section 47, Lines 28-30.                                                                                                        
Representative Croft WITHDREW his OBJECTION,                                                                                    
Ms. Rutherford  added that a team  had been reworking  HB 191                                                                   
attempting to make substantive  changes to the original bill.                                                                   
Those changes  are included  in the  House Finance  Committee                                                                   
She reported that the coastal  management program is an older                                                                   
program that has  not adequately responded to  the changes in                                                                   
the Alaska  statutory and regulatory  regime.  The  result is                                                                   
that existing programs are often  redundant.  It is a program                                                                   
that  uses  local  enforcement  policies  that  are  often  a                                                                   
reiteration of the regulatory  agencies permitting standards.                                                                   
Furthermore,  the  program's consistency  review  process  as                                                                   
currently  structured is  unpredictable and  overly broad  in                                                                   
scope and takes too much time.                                                                                                  
Ms.  Rutherford continued,  the statewide  standards and  the                                                                   
local enforcement  policies  are often  vague and subject  to                                                                   
multiple interpretations.   She  noted that the  program does                                                                   
have problems, however, the sweeping  changes proposed in the                                                                   
original  HB  191  does eliminate  many  of  the  fundamental                                                                   
reasons that  Alaska embraced the coastal  management program                                                                   
in the first place.                                                                                                             
During  the   initial  committee  hearings   and  discussions                                                                   
regarding  HB  191,  the Administration  took  to  heart  the                                                                   
comments  made by the  districts, listening  to the  citizens                                                                   
statewide.  The committee substitute  introduced in the House                                                                   
Resources Committee  returned to  the basic structure  of the                                                                   
existing  coastal  management  program.    Furthermore,  that                                                                   
committee substitute insures that  all federal activities and                                                                   
activities required  at federal and State permits  would have                                                                   
a consistency review.                                                                                                           
The committee  substitute insures  that the districts  retain                                                                   
their seats at  the table, which is important  when the State                                                                   
resource agencies  are considering resource projects.   While                                                                   
some of the  elements are retained, the  committee substitute                                                                   
would  make  significant   changes  to  the   program.    The                                                                   
attempted  balance is  retention  of the  important  elements                                                                   
directing the problem.                                                                                                          
The    House   Finance    Committee    substitute    includes                                                                   
recommendations  for   elimination  of  the   Coastal  Policy                                                                   
Council, transferring  the duties to the Commissioner  of the                                                                   
Department of  Natural Resources (DNR).   It also  provides a                                                                   
sunset provision  on the current  statewide standards  and on                                                                   
the coastal district  plans.  Additionally, it  mandates that                                                                   
replacement  standards and  local policy  be rewritten  to be                                                                   
clear and concise.   It would  clarify that local enforcement                                                                   
policies  may  not address  a  matter  that is  regulated  or                                                                   
authorized by State or federal  law unless the policy relates                                                                   
specifically to a  matter of local concern.   The legislation                                                                   
provides important  clarification  on the consistency  review                                                                   
process in order to provide better standards and timelines.                                                                     
Ms. Rutherford concluded, the  committee substitute clarifies                                                                   
that  the  Department  of  Environmental  Conservation  (DEC)                                                                   
permits and  authorizations would constitute  the consistency                                                                   
determinations for activities  regulated by that Department's                                                                   
air and water  quality standards.  The change  would insulate                                                                   
the  coastal  management  consistency   review  process  from                                                                   
delays associated  with some  of Department of  Environmental                                                                   
Conservation's  more  complex   permits  and  authorizations.                                                                   
That change would streamline the process.                                                                                       
Ms. Rutherford  spoke  to the  fiscal note.   She noted  that                                                                   
there  would  be  some immediate  savings  from  the  coastal                                                                   
management  program  budget  based on  Executive  Order  106,                                                                   
which   transfers   the   functions  of   the   Division   of                                                                   
Governmental  Coordination  to   the  Department  of  Natural                                                                   
Resources.  Those savings are  realized in the FY04 operating                                                                   
budget  as a  reduction  of $342  thousand  dollars in  State                                                                   
general  fund  match.   The  reduction  would result  in  the                                                                   
elimination  of five full  time positions  and one  temporary                                                                   
position.    She added  that  there  would be  a  significant                                                                   
effort  over  the next  three  years  for the  Department  of                                                                   
Natural  Resources  to  clarify   and  update  the  statewide                                                                   
standards and  for the districts  to clarify their  plans and                                                                   
Co-Chair   Harris  asked   how   this  would   affect   local                                                                   
communities  controlling  their   "destiny"  with  regard  to                                                                   
environmental quality and land use.                                                                                             
Ms. Rutherford  replied  that there is  a distinction  there.                                                                   
The legislation  would remove the local districts  ability to                                                                   
develop specific enforceable policy.   Under the legislation,                                                                   
the  communities  would not  be  able  to implement  a  local                                                                   
enforcement policy  to exceed the water quality  standard for                                                                   
the Department  of Environmental  Conservation.   Because the                                                                   
Department  of  Environmental   Conservation  air  and  water                                                                   
quality  standards  do  not address  some  things,  in  those                                                                   
areas, the local  communities would be able  to develop their                                                                   
own local  policy  regarding the  citings.   When a Title  29                                                                   
municipality  has  a  local  ordinance  permitting  functions                                                                   
linked  to  air  and  water  quality,   the  bill  would  not                                                                   
eliminate  their ability  to  do that  under  their Title  29                                                                   
authority.  It simply eliminates  their ability to embed that                                                                   
in a local enforcement policy.                                                                                                  
Ms. Rutherford addressed  land use.  She noted  that the bill                                                                   
indicates  that   a  municipality  cannot  restate   a  State                                                                   
standard or regulation,  but rather, determine  an area where                                                                   
a gap exists.                                                                                                                   
Representative  Croft referenced  Sections #11  and #14.   He                                                                   
asked why  that language does  not exclude any  discussion on                                                                   
air, land and/or water protection.   Ms. Rutherford requested                                                                   
that  Mr. Galvin respond to that question.                                                                                      
PAT  GALVIN,   (TESTIFIED  VIA  TELECONFERENCE),   PETROLEUM,                                                                   
DIVISION  OF OIL AND  GAS, DEPARTMENT  OF NATURAL  RESOURCES,                                                                   
ANCHORAGE, explained  that the language in Section  11 refers                                                                   
to  the standards  of the  program.   The Coastal  Management                                                                   
Program  (CMP)  has  always  looked   to  the  Department  of                                                                   
Environmental  Conservation   statutes  and   regulations  as                                                                   
establishing the  air, land and  water quality  standards for                                                                   
the  program  and  for  the most  part,  the  districts  have                                                                   
referred  to those standards.   The  bill is  a product  of a                                                                   
problem  that  has  existed  within  the  Coastal  Management                                                                   
Program  based  upon  the  embedding  of  the  Department  of                                                                   
Environmental   Conservation  standards   into  the   Coastal                                                                   
Management  consistency  requirements.   For  the  permitting                                                                   
process, a  project could  not be  found consistent  until it                                                                   
was found by the Department of  Environmental Conservation to                                                                   
meet all  their requirements,  resulting in no  permits being                                                                   
issued  because  the State  cannot  issue permits  until  the                                                                   
Department finds the projects  consistent.  The intent of the                                                                   
legislation is to  separate those two so that  the Department                                                                   
of Environmental Conservation  permitting process can proceed                                                                   
at  its own  pace and  the consistency  determination can  be                                                                   
issued  without waiting  for the Department  to complete  the                                                                   
Mr. Galvin  explained that  the question  became how  to keep                                                                   
the standards in place, retaining  a reasonable process.  One                                                                   
area was to determine  if the districts would be  able to add                                                                   
additional criteria  to what the Department  of Environmental                                                                   
Conservation regulates.   HB 191 indicates that  they cannot.                                                                   
What the Department  of Environmental Conservation  regulates                                                                   
are the State standards, which  will apply throughout Alaska.                                                                   
The  districts   would   not  be  able   to  add   additional                                                                   
requirements to those specific purposes.                                                                                        
Representative Croft  asked if part  of the concern  was that                                                                   
the  districts  would  adopt   the  same  statutes,  however,                                                                   
interpreting  them  differently  from the  Department.    Mr.                                                                   
Galvin replied  that the problem  was not that  the districts                                                                   
had  been   interpreting  the  Department   of  Environmental                                                                   
Conservation (DEC)  standards differently.  The  problem with                                                                   
the standards has  been their role in the program.     HB 191                                                                   
clarifies that  if the State is  to allow the DEC  permits to                                                                   
stand for  a consistency determination  and if  the districts                                                                   
are allowed  to add  another requirement,  it would  create a                                                                   
need for two consistency determinations  and two local review                                                                   
processes during that timeline.   The decision was clear that                                                                   
the Department's  permit needs to  stand on its own  and with                                                                   
its  own  standards  and  that  the  districts  cannot  allow                                                                   
additional requirements to those standards.                                                                                     
Representative Croft referenced  the sectional analysis, Page                                                                   
2, regarding  coastal districts  having enforceable  policies                                                                   
for activities  in a  project that are  not addressed  by the                                                                   
Department  of  Environmental  Conservation  standards.    He                                                                   
inquired where that authority would be defined.                                                                                 
Mr. Galvin pointed  out that in one of the  earlier sections,                                                                   
the language was  changed and made to specific  references to                                                                   
air, land  and water  quality.  The  language was  changed to                                                                   
make specific  reference  to statutory  provisions so  not to                                                                   
presume that  air, land and  water quality are  the exclusive                                                                   
product of that  Department.  The idea is that  only whatever                                                                   
DEC  embeds into  statutory provisions  would then  establish                                                                   
where DEC is  regulating.  That would preclude  the districts                                                                   
from going into those areas.                                                                                                    
Representative Croft thought that  constitutional enforcement                                                                   
policies  for "those  purposes" are  too broad.   A grant  of                                                                   
exclusive enforcement policy jurisdiction  is clear; however,                                                                   
the exception is  not yet clear.  He asked  how that language                                                                   
would interact with  Section 14 and that State  law could not                                                                   
adequately address a plan.                                                                                                      
Mr. Galvin  responded  that the  intent of  Section 14  is to                                                                   
allow  the  districts  to adopt  local  enforcement  policies                                                                   
where  the matter  is not  adequately addressed  by State  or                                                                   
federal law.   Section  11 is  specifically designed  so that                                                                   
only the  references to those  statutes that DEC  is actually                                                                   
regulating.    If  there  is  an  area  that  the  Department                                                                   
regulates,  then the locals  would be  able to address  them.                                                                   
Regarding the  language "exclusive enforcement  policies", if                                                                   
DEC is regulating an activity  then that would be presumed to                                                                   
be adequately addressed.                                                                                                        
REPRESENTATIVE  BETH  KERTTULA  referenced  Section  11,  the                                                                   
federal  activities   and  voiced   concern  regarding   that                                                                   
activity.  She asked what would  be left if the Department of                                                                   
Environmental  Conservation  standards  had  been  precluded.                                                                   
Mr.  Galvin referenced  b(2) in  conjunction  with Section  C                                                                   
below  it.   Sub  Section  ©  recognizes  that in  the  outer                                                                   
continental  shelf,   the  review   would  be  done   by  the                                                                   
Department  of Natural  Resources (DNR).   Since  DEC is  not                                                                   
issuing  a  permit,  then  they would  be  looking  at  their                                                                   
standards  making a finding  to determine  if it meets  their                                                                   
requirements.  In  sub Section ©, DNR would  review all other                                                                   
enforceable   policies  and   would   then  incorporate   the                                                                   
Department  of Environmental  Conservation  finding into  the                                                                   
consistency review.                                                                                                             
Representative   Kerttula pointed  out that  it would  be DNR                                                                   
applying  the  DEC  standards  and  issuing  the  consistency                                                                   
determination based upon that.   Mr. Galvin responded that in                                                                   
regard to  the areas that  DEC regulates, the  district would                                                                   
not  have enforceable  policies dealing  with the  activities                                                                   
that DEC was regulating under  Sections 11 & 14.  Under those                                                                   
sections,  there could  be district policies  that relate  to                                                                   
those issues.                                                                                                                   
Ms. Rutherford  interrupted, noting  that there was  material                                                                   
regarding  the  local  enforcement  policies  that  meet  the                                                                   
requirements of the committee substitute in Section #14.                                                                        
In  reference   to  an  example   provided  by   Mr.  Galvin,                                                                   
Representative  Kerttula  commented  that language  would  be                                                                   
"splitting  fine   hairs"  about   what  the  Department   of                                                                   
Environmental  Conservation standards  are under Section  #11                                                                   
and that it would be a "terrible" area for litigation.                                                                          
Representative Kerttula asked  when the policy changes and if                                                                   
DEC has the  exclusive enforceable policy, what  would happen                                                                   
to federal activity  in local districts.  Mr.  Galvin did not                                                                   
know  the  policies referenced  by  Representative  Kerttula;                                                                   
however,  based  upon the  description  of the  policies,  he                                                                   
thought that  they would be  allowed under the  provisions of                                                                   
the committee  substitute and  that DEC  would be looking  at                                                                   
the technical evaluation of the review.                                                                                         
Representative Kerttula asked  what would happen if the local                                                                   
municipality  had  been  precluded   and  the  Department  of                                                                   
Environmental  Conservation had  a set  standard.  She  asked                                                                   
how  would  the local  municipality  receive  a break.    Mr.                                                                   
Galvin did not  understand the presumption that  the district                                                                   
would  not have  any enforceable  policy  on the  issue.   He                                                                   
responded that  if it did not,  then DEC permitting  would be                                                                   
the determination  of the efficiency and then  the permitting                                                                   
process  would  make  that  determination.    Ms.  Rutherford                                                                   
pointed  out that  few districts  have decided  to expand  or                                                                   
make more aggressive standards  that are currently imposed by                                                                   
the Department's activities subject  to regulation.  The only                                                                   
circumstance  found  was when  a  couple districts  chose  to                                                                   
require that a  containment area for stored fuel  would be at                                                                   
110%  capacity instead  of the  DEC  established standard  of                                                                   
105%.   Including those regulations  in a consistency  review                                                                   
has greatly delayed the issuance of permits.                                                                                    
Representative  Stoltze  voiced  concern  that  the  handouts                                                                   
distributed had not been adequately  identified.  He stressed                                                                   
that  documents should  indicate  from where  they are  being                                                                   
distributed.    He  knew  that   there  would  be  litigation                                                                   
resulting  from this legislation  and  that the handouts  had                                                                   
not  properly  been  labeled.     Ms.  Rutherford  noted  the                                                                   
Administration  had  provided   a  one-page  synopsis,  which                                                                   
identified  only   the  key   components  of  the   committee                                                                   
substitute, a time  line of transition to the  new program, a                                                                   
chart that compares the committee  substitute and a sectional                                                                   
TAPE HFC 03 - 74, Side B                                                                                                      
Co-Chair Harris asked where the  handouts had come from.  Ms.                                                                   
Rutherford  responded  that  the Department  team,  whom  she                                                                   
identified earlier, had created them.                                                                                           
Representative Joule  asked about the litigation  expected to                                                                   
result  from  the  proposed  legislation.     Ms.  Rutherford                                                                   
replied that the  Coastal Management Program  has been rifled                                                                   
with litigation  for the  past 15 years.   The intent  of the                                                                   
legislation  is  to bring  some  clarity into  the  statewide                                                                   
standards  and local enforcement  policies  so that they  are                                                                   
not  subject to  the confusion  that currently  exists.   She                                                                   
hoped that it would reduce the  current amount of litigation.                                                                   
Representative Joule  pointed out that the  legislation would                                                                   
do-away  with  the  State  Policy  Counsel  and  moves  those                                                                   
responsibilities  to  the  Department  of  Natural  Resources                                                                   
Commissioner's  Office.  He  recognized that  the issue  is a                                                                   
big concern and  should have the citizen's  participation and                                                                   
review.    He mentioned  all  the  other boards  that  review                                                                   
standards.   Representative Joule  reiterated that this  is a                                                                   
very important  area and  should be  adequately reviewed  and                                                                   
Representative  Joule spoke  to the  fiscal note.   He  asked                                                                   
when district  level policy  councils  become null and  void,                                                                   
would the  State continue  to help  with financial  resources                                                                   
for the transition.  He noted  that the fiscal note only goes                                                                   
through FY09 and that there would  be a 10-year reevaluation.                                                                   
He asked if  the district councils would receive  the State's                                                                   
financial support.                                                                                                              
BILL  JEFFRESS, DIRECTOR,  OFFICE OF  PROJECT MANAGEMENT  AND                                                                   
PERMITTING,  DEPARTMENT OF  NATURAL RESOURCES,  spoke to  the                                                                   
fiscal note.   He  noted that the  intent of the  legislation                                                                   
was  to keep  the program  continuing all  its functions  and                                                                   
redirecting   the  focus   to  better   assist  the   coastal                                                                   
Representative Joule  asked about the reauthorization  during                                                                   
the ten-year  time frame.   Mr.  Jeffress responded  that the                                                                   
program continues as long as the  federal money keeps coming.                                                                   
It is anticipated that the focus  will shift from what it was                                                                   
in  the past  to  bringing the  districts  in  line with  the                                                                   
purpose of  the committee  substitute and  to help  guide the                                                                   
different  coastal communities.    He did  not  know how  the                                                                   
federal government  would continue  their financial  support.                                                                   
He thought that the coastal district  would need to provide a                                                                   
higher match to continue the same level of service.                                                                             
Representative  Kerttula  inquired  how  the  cuts  had  been                                                                   
determined, how  many positions had  been lost and  if salary                                                                   
changes were made.   Mr. Jeffress responded that  5 full time                                                                   
positions were lost.   By moving the program  from the Office                                                                   
of  the  Governor,  it  changed  from  exempt  to  classified                                                                   
service  status.   With the  reclassification, salaries  were                                                                   
adjusted  to the  same function  equivalent within  DNR.   He                                                                   
added that  there had been an  additional set back  from cuts                                                                   
to the State general fund money  against the grant.  Once the                                                                   
positions  are  reclassified   and  the  exact  salaries  are                                                                   
determined, the amount of the match will be more clear.                                                                         
JUDY   BRADY,  (TESTIFIED   VIA  TELECONFERENCE),   EXECUTIVE                                                                   
DIRECTOR,  ALASKA  OIL  AND  GAS  ADVISORY  COUNCIL  (AOGAC),                                                                   
ANCHORAGE, testified in support  of the committee substitute.                                                                   
She  urged that  members closely  examine  information.   She                                                                   
asked if it  was possible to develop a reliable  timeline for                                                                   
the existing  permitting process.   Ms. Brady  suggested that                                                                   
Alaska Coastal Management Program  (ACMP) was the single most                                                                   
confusing  piece of  legislation  and that  various  problems                                                                   
exist within that program.  She  maintained that the proposed                                                                   
legislation  only  addresses  some  of  the  problems.    She                                                                   
pointed  out  concerns  with the  permitting  process.    She                                                                   
maintained that  the self-implementing approach  was valid in                                                                   
the State  because the lands  and environmental laws  are the                                                                   
most comprehensive  in the country and are  designed to fully                                                                   
protect all the air, water, fish and bird resources.                                                                            
Ms. Brady stated that the committee  substitute was the first                                                                   
time that the Legislature referred  to enforceable policy and                                                                   
granting  significant authority  for  the coastal  districts.                                                                   
She discussed reasons for AOGAC's  support of the legislation                                                                   
     ·    Improvements in processing time;                                                                                      
     ·    Eliminating duplication  of State and federal laws;                                                                   
     ·    Establishing clear guidelines  of when ACM applies;                                                                   
     ·    Recognizing   that   DEC   water   standards   were                                                                   
          inherently different and sufficiently protective;                                                                     
     ·    Requiring enforcement policies be clear and not                                                                       
          open to interpretation, and                                                                                           
     ·    Streamlining procedures.                                                                                              
She concluded  that Alaskans take pride in  our comprehensive                                                                   
environmental regulations  and that we should  take care that                                                                   
State, local and federal laws are consistent and clear.                                                                         
LARRY HOULE, (TESTIFIED VIA TELECONFERENCE),  GENERAL MANGER,                                                                   
ALASKA  SUPPORT   INDUSTRY  ALLIANCE,  ANCHORAGE,   spoke  in                                                                   
support  of the  proposed legislation.    The Alaska  Coastal                                                                   
Management  Program (ACMP) includes  the Coastal  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   exploration,   development,   expansion   and   routine                                                                   
operations and maintenance activates  undergo the Consistency                                                                   
Review  Process.    The purpose  of  the  Consistency  Review                                                                   
Process is  to assure that  projects within the  coastal zone                                                                   
are  consistent  with  State  of  Alaska  and  local  coastal                                                                   
district enforceable policies.  HB 191 would enforce that.                                                                      
Mr.   Houle  stated   that   funding  for   exploration   and                                                                   
development in  Alaska faces increasing competition  and that                                                                   
most competing  projects are closer to markets,  require less                                                                   
capital intensive  and do  not have  the challenges  faced in                                                                   
arctic  development.   For  companies   to  make   investment                                                                   
decisions, operators need reliable  predictions of permitting                                                                   
schedules and requirements  and that, delays and  the lack of                                                                   
permit  certainty,   are  significant   factors,  which   can                                                                   
adversely affect the economic viability of a project.                                                                           
Mr.  Houle noted  that given  the significant  transportation                                                                   
costs  and huge  arctic  development costs,  Alaska  projects                                                                   
start out  with a huge economic  disadvantage.   Because ACMP                                                                   
is  integral  to  the  permitting  system  for  oil  and  gas                                                                   
operations in  the coastal zone,  the program is  critical to                                                                   
the  efficiency  of  oil  and   gas  operations.    From  the                                                                   
perspective  of  the  contracting   community,  today's  ACMP                                                                   
program is the  single most significant deterrent  to new oil                                                                   
and gas development  in the State.  The current  program puts                                                                   
the future of oil and gas development in Alaska at risk.                                                                        
Mr.  Houle  concluded  that  on behalf  of  the  420  company                                                                   
members  that  make  up  the  Alliance,  they  encourage  the                                                                   
Finance Committee to approve HB 191.                                                                                            
FAYE  SULLIVAN, (TESTIFIED  VIA  TELECONFERENCE),  REGULATORY                                                                   
AFFAIRS  COORDINATOR,  UNOCAL  ALASKA,  ANCHORAGE,  spoke  in                                                                   
support  of   the  committee   substitute.    She   discussed                                                                   
frustrations  with the  existing permitting  process and  the                                                                   
work of the Coastal Management  Program.  Ms. Sullivan stated                                                                   
that it is very important that  the bill pass this session in                                                                   
order to revitalize the economy  in Alaska.  She acknowledged                                                                   
that the legislation does not answer all problems.                                                                              
CHUCK DEGNAN,  (TESTIFIED VIA TELECONFERENCE),  BOARD MEMBER,                                                                   
BERING  STRAITS COASTAL  RESOURCE  SERVICE AREA,  UNALAKLEET,                                                                   
stated that the Bering Straits  Coastal Resource Service Area                                                                   
Board  opposes HB  191.  That  area is  composed of  nineteen                                                                   
communities  from Shishmaref  on the  north, Stebbins  on the                                                                   
south, Gambell on the west, and  Unalakleet on eastern Norton                                                                   
Sound.  All of the communities  are heavily dependent on fish                                                                   
and other wildlife.  All of the  communities are located near                                                                   
or on the seashore  or on a riverbank.  For  healthy fish and                                                                   
wildlife,  clean  air,  water,  and healthy  lands  are  very                                                                   
important to  all the citizens.   The Bering  Straits Coastal                                                                   
Management   Program  assists   local,  State,  and   federal                                                                   
officials  plan  projects  that  will be  beneficial  to  all                                                                   
citizens, including the applicant for a permit.                                                                                 
HB 191  would terminate the  Coastal Resource  Service Areas.                                                                   
HB 191 would  transfer the Alaska Coastal  Management Program                                                                   
to the Department of Natural Resources,  which would make the                                                                   
Alaska Coastal  Policy Council subservient to  the Department                                                                   
of Natural Resources.  The current  Alaska Coastal Management                                                                   
Program  is a valuable  planning tool  for permit  reviewers,                                                                   
applicants, and our  citizens.  Mr. Degnan stressed  that all                                                                   
of these  communities use  vast areas of  land and  waters to                                                                   
hunt and fish.  The communities oppose HB 191.                                                                                  
JOHN   OSCAR,   (TESTIFIED   VIA   TELECONFERENCE),   COASTAL                                                                   
MANAGEMENT PROGRAM,  BERING SEA,  testified in opposition  to                                                                   
the bill.  He maintained that  there is no duplication in the                                                                   
current process  and that  each area has  varying needs.   He                                                                   
stressed that  Anchorage's needs  should not determine  other                                                                   
areas  process.    Mr.  Oscar  discussed  his  experience  in                                                                   
creating road construction policies  for coastal areas, which                                                                   
did not experience  delays.  He pointed out  that traditional                                                                   
governments  had   not  been  present  under   Title  29  and                                                                   
questioned Alaska's  constitutionality under this  bill.  The                                                                   
federal government  requires equal  treatment in  the coastal                                                                   
communities.   If coastal areas  are not considered  in these                                                                   
decisions,  then tribal  governments will  also be  excluded.                                                                   
He  pointed   out  that   extensive  areas   are  not   being                                                                   
represented in this process.                                                                                                    
Mr. Oscar  noted that  it took  five years  to write  a plan,                                                                   
which  now is being  rewritten  in one year.   He  maintained                                                                   
that  the  bill   includes  only  a  voice   for  the  larger                                                                   
communities,  noting   that  there  is  no   language  taking                                                                   
subsistence  or   habitat  protection  into  account.     The                                                                   
villages support  development, however,  he pointed  out that                                                                   
his village  depends upon  natural resources  of the  coastal                                                                   
area.   He emphasized  that there needs  to be more  thorough                                                                   
planning and involvement from the coastal districts.                                                                            
BOB  SHAVELSON,  (TESTIFIED  VIA  TELECONFERENCE),  EXECUTIVE                                                                   
DIRECTOR,  COOK INLET  KEEPER NON  PROFIT ORGANIZATION,  COOK                                                                   
INLET, testified  in opposition to the  committee substitute.                                                                   
He commented  that the  sweeping language  of the bill  would                                                                   
undermine the  ability of the  local communities.   State law                                                                   
will consume  local planning  and there will  be no  room for                                                                   
the local  areas to  shape local  decisions.   The bill  will                                                                   
"handcuff"  the local  communities  decision-making  process.                                                                   
That  will result  in  bigger government  at  the expense  of                                                                   
local communities.                                                                                                              
Mr.  Shavelson pointed  out  that there  have  been no  facts                                                                   
indicating the sweeping  effect that the bill will  have.  He                                                                   
inquired what an  unreasonable delay would be.   According to                                                                   
statistics, there has not been  one review that has gone over                                                                   
the  timetable.   Currently, there  is  a reasonable  balance                                                                   
between  the permanent  function,  local  protection and  the                                                                   
State  meeting  its  obligation  under  the  constitution  to                                                                   
promote a  balanced use  of resources.   He commented  on the                                                                   
holdup  of the  fuel pipeline  in  Anchorage, which  resulted                                                                   
from  the  Army  Corps  of  Engineers,  not  the  CMP.    Mr.                                                                   
Shavelson stressed that there  are no examples of where local                                                                   
district plans unreasonably  held up projects and  that it is                                                                   
local communities and authorities  that will have their power                                                                   
stripped resulting from the legislation.                                                                                        
Mr.  Shavelson  addressed  the fiscal  impacts  and  unfunded                                                                   
mandates.   He  believed that  the legislation  will place  a                                                                   
million  dollar  burden  on the  local  communities.    Those                                                                   
communities are  currently struggling with their  budgets for                                                                   
essential school needs, roads  and other services.  Now, they                                                                   
are being  asked to rewrite the  plans that they  placed time                                                                   
and effort into  and then submit those plans for  review.  He                                                                   
projected  that every  district  would be  faced with  severe                                                                   
economic problems  while accomplishing that.    Additionally,                                                                   
fiscal  impact concerns  will  be the  costs  to oversee  the                                                                   
complete rewrite of  rules and public hearings.   That is not                                                                   
reflected  in  the note.    The  bill creates  a  significant                                                                   
change  to  the  program and  will  require  a  comprehensive                                                                   
environmental statement,  which needs  to be approved.   That                                                                   
work is  highly time  consuming, complex  endeavor and  is an                                                                   
unaccounted cost.                                                                                                               
Mr. Shavelson asked when the program  change would occur.  He                                                                   
emphasized  that  unapproved  programs  do  not  get  federal                                                                   
funding until they are approved.   He urged members to take a                                                                   
prudent approach to the complexity of this issue.                                                                               
TAPE HFC 03 - 75, Side A                                                                                                      
NANCY WAINWRIGHT,  (TESTIFIED VIA TELECONFERENCE),  ATTORNEY,                                                                   
ANCHORAGE,  commented on  the  local process  that the  Coast                                                                   
Policy  Council went  through  in creating  their  individual                                                                   
plans.   Every  plan had  to go  through  the Coastal  Policy                                                                   
Council, which had six State and  nine local representatives.                                                                   
Each plan had unanimous support of the council.                                                                                 
Ms. Wainwright  noted  that ACMP was  created under  Governor                                                                   
Hammond  and  was the  way  to  get around  the  bureaucratic                                                                   
approach imposing  the will of the federal  government on the                                                                   
State or  the State government on  the locals.  HB  191 would                                                                   
return the State  to the "top-down" approach  and would leave                                                                   
the ultimate  decisions to either  the Department  of Natural                                                                   
Resources or the Department of  Environmental Conservation as                                                                   
the policy makers.   Not the local areas.   She surmised that                                                                   
local interests could be negated.                                                                                               
Ms.  Wainwright acknowledged  that the  Committee should  not                                                                   
minimize the  concerns of AOGA  regarding problem  solving in                                                                   
delayed  permitting.    She  stated  it  would  not  be  best                                                                   
resolved  by imposing  a local government  with an  unfounded                                                                   
mandate.    The   concerns  with  AOGA  could   be  met  with                                                                   
regulations  that set  a specific  time  frame for  projects.                                                                   
She   understood   that   the    Division   of   Governmental                                                                   
Coordination  (DGC)  went  through  a  three-year  regulatory                                                                   
revision process  trying to meet  some of the  AOGA concerns.                                                                   
Those regulations came through in January, 2003.                                                                                
Ms. Wainwright concluded that  the costs in having a top down                                                                   
from  the Department  of Natural  Resources  & Department  of                                                                   
Environmental  Conservation government  would be  tremendous.                                                                   
Imposing a mandate  on the locals to revise  their plans will                                                                   
be very expensive  and the locals will be asked  to bear more                                                                   
of the  cost burden.  On  that basis, the Legislature  should                                                                   
allow locals to review their budget  and see if they have the                                                                   
funds to reach the mandate.                                                                                                     
Representative  Joule   spoke  against  closing   the  public                                                                   
testimony on  the bill.   He  noted that some people  will be                                                                   
greatly  impacted  by this  legislation  and  that they  were                                                                   
planning  on  being  in  Juneau this  Monday  morning  for  a                                                                   
RECESS:             10:55 A.M.                                                                                                
RECONVENE:          11:55 A.M.                                                                                                
Representative Croft  stated that he  was not ready  to offer                                                                   
his  amendments  at  this  time   and  emphasized  that  this                                                                   
legislation is "troubling".                                                                                                     
Co-Chair Harris acknowledged concern  dealing with the States                                                                   
local management  plan  and the local's  ability to  override                                                                   
the State  agencies.   He noted  that those  issues could  be                                                                   
addressed on the House floor.                                                                                                   
Representative Foster MOVED to  report CS HB 191 (FIN) out of                                                                   
Committee  with  individual  recommendations   and  with  the                                                                   
accompanying fiscal notes.                                                                                                      
Representative  Joule OBJECTED.    He requested  to hold  the                                                                   
bill  until  Monday  when  the  Coastal  Policy  meeting  was                                                                   
scheduled.   He  pointed out  that the  areas represented  by                                                                   
that   group   will   be  substantially   impacted   by   the                                                                   
legislation.   He knew that  the bill  would be going  to the                                                                   
Senate side and hoped that there would be testimony there.                                                                      
Representative Joule  acknowledged the need for  resource and                                                                   
economic  development in  Alaska; however,  the current  bill                                                                   
proposes policy  for the  coastal communities, which  carries                                                                   
much uncertainty.  He pointed  out that there are cost issues                                                                   
and  evaluation  rewrites  while the  fiscal  notes  indicate                                                                   
Representative  Joule  reminded  members that  testimony  had                                                                   
been given  indicating that the  legislation could  slow down                                                                   
the  delivering  of  fuel  to  the  Anchorage  airport.    He                                                                   
emphasized that had not been from  the involvement of CMP but                                                                   
rather,  the Army  Corps of  Engineers.   The Coastal  Policy                                                                   
Council is a  vital concern for coastal areas  throughout the                                                                   
State.   He objected  to moving the  bill from Committee  and                                                                   
doubted that the Senate would be allowing public process.                                                                       
Representative  Croft  objected to  moving  the  bill on  the                                                                   
grounds of policy  and procedures.  He emphasized  that there                                                                   
are substantive  and legal issues  with the bill.   He stated                                                                   
that he was  not capable of dealing with the  complexities of                                                                   
outcome  of passage  of this the  bill.   Delays were  caused                                                                   
because  "the original  version  was horrible".   There  have                                                                   
been a  number of hearings  on the bill,  and the  bill keeps                                                                   
moving.   He reiterated that  the House Finance  Committee is                                                                   
not doing  proper procedure by  sending it out  of Committee.                                                                   
No  one  knows  the  dimensions  of  this  complicated  bill.                                                                   
Regarding   policy  level,   back   up   received  from   the                                                                   
Administration indicates that:                                                                                                  
     "Coastal resource districts could have enforceable                                                                         
     policies that are not addressed by the Department of                                                                       
     Environmental Conservation standards."                                                                                     
He advised that the bill states  that it is the Department of                                                                   
Environmental  Conservation policies  that are the  exclusive                                                                   
enforcement  policies  for those  purposes.   "Purposes"  are                                                                   
broadly defined in the legislation.   The Legislature has not                                                                   
done  a good  job  of articulating  where  the Department  of                                                                   
Environmental Conservation  statutes and regulations  preempt                                                                   
and where they do not.  Representative  Croft reiterated that                                                                   
there is no indication in statute where the authority lays.                                                                     
A roll call vote was taken on the motion.                                                                                       
IN FAVOR:      Meyer, Stoltze, Whitaker, Foster, Hawker,                                                                        
OPPOSED:       Moses, Croft, Joule                                                                                              
Co-Chair  Williams  and  Representative   Chenault  were  not                                                                   
present for the vote.                                                                                                           
The MOTION PASSED (6-3).                                                                                                        
CS HB  191 (FIN)  was reported  out of  Committee with  a "no                                                                   
recommendation"  and  with  a  zero fiscal  note  #1  by  the                                                                   
Department  of Fish  and Game,  zero  fiscal note  #2 by  the                                                                   
Department of Environmental Conservation  and a new zero note                                                                   
by the Department of Natural Resources.                                                                                         

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