Legislature(1993 - 1994)

02/28/1994 05:00 PM O&G

Audio Topic
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
txt
  HB 474 - ADMINISTRATIVE ACTION RELATING TO LAND                              
                                                                               
  CHAIRMAN GREEN called the meeting to order at 5:05 p.m.                      
                                                                               
  Number 021                                                                   
                                                                               
  CHAIRMAN GREEN asked if there was a motion to adopt the                      
  committee substitute for HB 474.                                             
                                                                               
  Number 022                                                                   
                                                                               
  REPRESENTATIVE JERRY SANDERS made the motion to adopt CSHB
  474.  There were no objections.                                              
                                                                               
  Number 037                                                                   
                                                                               
  JIM EASON, DIRECTOR, DIVISION OF OIL & GAS, DEPARTMENT OF                    
  NATURAL RESOURCES (DNR), stated the changes suggested in                     
  CSHB 474 are intended to be responsive to comments received                  
  in the first hearing of HB 474 in the House Oil & Gas                        
  Committee, as well as hearings before the Senate Resources                   
  Committee on SB 308.  He said a great deal of comment was                    
  directed toward the standard of "reasonably foreseeable,                     
  nonspeculative, direct effect."  He said the Division of Oil                 
  & Gas, in response to the comments, went to a more familiar                  
  standard in dealing with "significant direct effects."  He                   
  said the "reasonably foreseeable" standard was kept in the                   
  committee substitute.  He said the intent was to send a                      
  message to the courts that the legislature intends that DNR                  
  not be held to a standard of having to speculate events that                 
  might follow from a lease sale.  He said that DNR would like                 
  to require that the obligation to make sure that DNR is                      
  aware of specific potential problems is on a person, group,                  
  or a potential litigant.  He referenced the section of HB
  474 dealing with AS 38.05.035(g).  He said it was intended                   
  to clear up confusion about whether or not DNR intended to                   
  limit the scope of its analysis and findings, which is                       
  already required under AS.38.05.035(g) in the section set                    
  out under "(b)."  He stated there are factors which are                      
  listed under current statute as "(a)" through "(k)."  He                     
  stated DNR always intended that it would be bound by the                     
  obligation to look at those factors and to know them at the                  
  time of the lease sale.  He said DNR believes it is                          
  expanding the public scope to require that it consider other                 
  factors that may not be included in the list currently under                 
  statute, so long as those factors are material to the                        
  decision affecting the lease sale.  He stated DNR hopes that                 
  the clarification will help to eliminate some of the concern                 
  that was expressed about the intent of the provision.  He                    
  referenced section 46.04.094, and pointed out there had been                 
  a title change.  He said it is intended to give legislative                  
  support to the concept that during the leasing stage, when                   
  DNR is looking at the facts, the law, the comments, and the                  
  record, it can make a consistency determination based upon                   
  the factors without a perfect knowledge of the future.  He                   
  said this would be possible as long as DNR has conditioned                   
  the lease sale to make certain that it has the opportunity                   
  to revisit each additional permitting point and to condition                 
  proposed projects to ensure they are consistent with the                     
  Alaska Coastal Management Program.                                           
                                                                               
  Number 095                                                                   
                                                                               
  CHAIRMAN GREEN stated for the record that Representative                     
  Mike Navarre was at the committee table.                                     
                                                                               
  Number 098                                                                   
                                                                               
  REPRESENTATIVE GARY DAVIS referenced page four, section two                  
  of CSHB 474.  He expressed his concern about the word "or"                   
  on page four, line 15.  He said it appeared that by using                    
  the word "or," DNR is intending to follow procedures in                      
  "(a)" or "(b)" instead of "(a)" and "(b)."                                   
                                                                               
  Number 108                                                                   
                                                                               
  MR. EASON stated DNR believed that the use of "and" would                    
  require a higher standard of the public.  He said the public                 
  would have to fit within the requirement of having made                      
  known to DNR their concerns under "(a)" as well as having to                 
  do with issues under "(b)."  He stated DNR believes the use                  
  of "or" is actually favorable to public participation                        
  because under the provision, DNR will be bound to consider                   
  whatever the public says, determine its materialism, and                     
  address it in writing, even though under current statute it                  
  is not a requirement under the listed factors that DNR has                   
  to consider.                                                                 
                                                                               
  Number 128                                                                   
                                                                               
  FRANK RYMAN, YAKUTAT BOROUGH ASSEMBLY (via Yakutat), stated                  
  he is opposed to HB 474.  He said Alaskans and the oil                       
  industry should work as partners and minimize the economic                   
  problems being faced by dwindling resources.  He said HB 474                 
  flies in the face of such philosophies.  He said it                          
  represents a panic approach to Alaska's economic problems,                   
  where commissioners and directors at DNR will begin acting                   
  as philosopher-kings, unilaterally cutting the scope of                      
  administrative review and the degree to which Alaskan's                      
  will be able to participate.  He said current statutory                      
  language defining administrative best interest findings and                  
  the requirements for a written statement was promulgated                     
  under direct court review of Moore v. State.  He said the                    
  law as it currently exists was drafted to be in compliance                   
  with specific constitutional language requiring safeguards                   
  to the public interest and disposing of public property.  He                 
  said changing any portion of that language, particularly to                  
  the degree of HB 474, would lead to future court action.  He                 
  said such court action will end in a Alaska Supreme Court                    
  review.  He said such a review will delay any economic                       
  development for months, or even years and cost the people of                 
  Alaska dollars that should be directed elsewhere.  He said                   
  by passing HB 474, the legislature will provide the                          
  mechanism whereby the wishes of the people of Alaska will be                 
  ignored.                                                                     
                                                                               
  Number 226                                                                   
                                                                               
  JON ISAACS (via Anchorage), stated he felt there was no                      
  process better than coastal management for bringing everyone                 
  to the table to resolve concerns that result in the best                     
  possible development, including the best interest findings.                  
  He said coastal management gives local government a                          
  guarantee that the state and federal governments will treat                  
  them as equals and take their position seriously.  He stated                 
  in the past 12 months, when there has been a need to make                    
  changes in the coastal management program, coastal                           
  districts, agencies, representatives of the oil industry,                    
  and environmental groups have worked together to develop                     
  consensus solutions.  He said coastal districts recognize                    
  the importance of oil and gas sales and other state                          
  resources to state and local economies.  He said coastal                     
  districts agree that the Superior Court decision on Lease                    
  Sale 78 has created a problem in the Division of Oil & Gas                   
  with regard to best interest findings.  He said the primary                  
  issues relate to determining a reasonable scope of analysis                  
  for a best interest finding, what level of analysis is                       
  applied to disposable interest and subsequent phases of                      
  development and how it should multi-phased projects be                       
  addressed under the coastal consistency determination.  He                   
  said coastal districts appreciate the attempt of recent                      
  amendments, but HB 474, even with proposed amendments is not                 
  yet an acceptable solution.  He said HB 474 gives broad                      
  discretion to Oil and Gas Division directors and reduces the                 
  coastal district role of decision making.  He said HB 474                    
  sets a more lenient standard for best interest findings                      
  compared to similar federal approval.  He stated HB 474                      
  defers full project review to later phases of a project                      
  under the recommended changes to AS 46.04.094.  He requested                 
  the committee delay action on HB 474 in order to develop                     
  amendments that can best meet the interest of all parties.                   
                                                                               
  Number 265                                                                   
                                                                               
  BECKY GAY, EXECUTIVE DIRECTOR, RESOURCE DEVELOPMENT COUNCIL                  
  (via Anchorage), said RDC believes that HB 474 is a step in                  
  the right direction.  She said RDC has great concerns over                   
  the continuing onslaught of judicial response with regard to                 
  the problematic state oil and gas lease situation.  She said                 
  the courts had recently injected a great deal of uncertainty                 
  into the future of oil and gas leasing by introducing the                    
  notion that production of oil and gas resources are somehow                  
  not in the best interest of the state.  She said the                         
  legislature needs to send a clear signal to the judicial                     
  branch that it, along with the administrative branch,                        
  considers continued oil and gas leasing to be in the best                    
  interest of the state.  She said HB 474 will tighten the                     
  shortcomings with the present leasing program.  She said she                 
  applauds the legislative attempt to clarify the future of                    
  oil and gas leasing to increase the efficiency of the                        
  leasing program.                                                             
                                                                               
  Number 319                                                                   
                                                                               
  STEVEN PORTER, ARCO ALASKA (via Anchorage), said currently                   
  AS 38.05.035(g) requires the director to make a written best                 
  interest finding prior to disposal of state lands.  He said                  
  the statutes do not expound the scope of the finding except                  
  for oil and gas lease sales, but the legislature has                         
  determined the scope of the review should include at least                   
  those areas listed under AS 38.05.035(g).  He said he saw HB
  474 as an opportunity for the legislature to define to the                   
  director, to the public and to the court the scope of the                    
  review for the disposal of state land.  He said because of                   
  the continuing controversy surrounding the scope of review,                  
  it has become apparent the legislature needs to act in this                  
  area to provide some much needed direction.  He said in                      
  addition to those areas specifically identified by the                       
  legislature, the scope of the review should include those                    
  areas identified by the director.  He said all public                        
  comment should be included in the scope of the review.  He                   
  said the director must seriously consider all public comment                 
  and respond in writing to the relevance to the disposal of                   
  state land.  He said HB 474 is DNR's attempt to reduce to                    
  writing, the scope of the review as we have expressed it                     
  here today.  He said there are members of the public that                    
  agree with the concept he expressed, but do not agree with                   
  the way DNR expresses the concepts in writing.  He                           
  recommended those opposed to HB 474 explain their reasoning                  
  for their concerns and identify the specific language that                   
  gives rise to that concern so those concerns can be more                     
  effectively addressed by DNR and the legislature.  He                        
  recommended the passage of HB 474.                                           
                                                                               
  Number 369                                                                   
                                                                               
  MIKE O'MEARA (via Homer), stated HB 474 should be done away                  
  with.  He said HB 474 is a way of reducing the public                        
  process and avoiding oversight by the court.  He stated the                  
  legislature should try to draft a bill that accomplishes                     
  some real improvements.  He said a frame work needs to be                    
  set up whereby extractive industry meets with other interest                 
  groups to work out differences before the agency involved                    
  proposes the disposal.  He said legislation should mandate                   
  that concerns expressed from all interests be reflected in                   
  the proposal put forth.  He said all proposals should be                     
  developed and judged in light of their potential combined                    
  and cumulative effects.  He said all proposals should                        
  reflect the potential impact to areas adjacent to the                        
  disposal.  He said the legislature should encourage                          
  participation by coastal districts in all phases of proposed                 
  disposals early on.  He said the present best interest                       
  finding process itself needs to be replaced with an                          
  evaluation of proposed disposals by unbiased authority.  He                  
  said improve all public participation mechanisms.  He said                   
  it involved early, better, more frequent notification of                     
  important deadlines and dates, 90 day review period for all                  
  major documents, mandatory scheduling of both preliminary                    
  informational meetings and public testimony hearings in                      
  areas to be effected or adjacent areas.  He urged the                        
  committee to let the bill die.                                               
  Number 452                                                                   
                                                                               
  LARRY SMITH, KACHEMAK RESOURCE INSTITUTE (via Homer), said                   
  he has worked for 10 years to set up a coastal district with                 
  the Kenai Peninsula.  He said while the Kenai Peninsula                      
  Borough did not do a perfect job with the review of Lease                    
  Sale 78, local government went far beyond the Division of                    
  Oil & Gas.  He said offshore development in some places is                   
  incompatible with economic activities such as fishing and                    
  tourism.  He said HB 474 fixes problems that he had not                      
  heard existed for the Division of Land, the Division of                      
  Forestry, the Division of Water, or any other arm of DNR.                    
  He said he was not convinced the Division of Oil & Gas has a                 
  problem that can be solved by legislation.                                   
                                                                               
  BEN MILLSTEIN (via Homer), stated he wanted to go on record                  
  as agreeing with most of Mr. Smith's testimony and all of                    
  Mr. O'Meara's testimony.  He said there are a lot of people                  
  that rely on state and federal land and when people bring up                 
  concerns about various lease sales or applications it is                     
  their right to be noted.  He stated HB 474 will take less,                   
  not more, public consideration into account.                                 
                                                                               
  Number 550                                                                   
                                                                               
  JIM EVENSON, UNITED FISHERMEN OF ALASKA (via Soldotna),                      
  stated HB 474 is bad legislation.  He said HB 474 would not                  
  have existed if Lease Sale 78 had gone through.  He said the                 
  idea of DNR recommending that oil activity occur in that                     
  area is unthinkable.  He said HB 474 is not needed.                          
                                                                               
  Number 604                                                                   
                                                                               
  DREW SPARLIN (via Soldotna), stated he recognized the value                  
  of oil and the Lease Sale 78 could have gone on if DNR would                 
  have been willing to negotiate and withdraw the portions                     
  that were in conflict.  He said he is not against lease                      
  sales.  He urged the committee to hold HB 474 to the point                   
  that it has studied it and recognized the fact that it is                    
  bad legislation.  He said it solves none of the problems for                 
  which it was intended and it will complicate the opportunity                 
  for successful lease sales in the future.                                    
                                                                               
  Number 649                                                                   
                                                                               
  LOREN FLAGG, KENAI PENINSULA FISHERMENS' ASSOCIATION (via                    
  Soldotna), stated there is no problem with the laws and                      
  regulations, however there is a major problem with the way                   
  DNR conducts their reviews.  He said DNR's final finding on                  
  Lease Sale 78 was deficient in several areas and that is why                 
  it is in trouble with the court.  He said DNR failed to                      
  adequately address the commercial and recreational fisheries                 
  that exist within the lease sale area and the potential                      
  impacts to the fisheries.  He said the final finding in                      
  Lease Sale 78 was totally inaccurate.  He asked the                          
  committee to hold the bill until the three absent committee                  
  members were present at the hearing.                                         
                                                                               
  TAPE 94-9, SIDE B                                                            
  Number 001                                                                   
                                                                               
  JAMES MYKLAND (via Cordova), stated HB 474 would allow DNR                   
  to ignore resource use conflict during the initial review,                   
  prior to the disposal of land.  He said HB 474 would give                    
  the director of Oil & Gas the authority to decide which                      
  facts, materials and issues are relevant to the public                       
  interest.  He said that authority is currently vested in the                 
  local communities and removing it from the communities will                  
  reduce their ability to manage and plan for the future.  He                  
  said HB 474 will limit best interest findings to the                         
  consideration of the impacts on fish and wildlife only                       
  within the lease sale.  He stated air and water emissions or                 
  oil and hazardous substance spills could affect fish and                     
  wildlife, as well as their habitats, outside the lease area                  
  but within the coastal zone.  He asked why DNR could not                     
  competently prepare a best interest finding.  He said the                    
  public must be provided with all of the relevant concerns                    
  before a project begins to ensure that the state proceeds                    
  responsibly, with minimal impact on local communities and                    
  other resources in the environment.                                          
                                                                               
  Number 034                                                                   
                                                                               
  RIKI OTT, UNITED FISHERMEN OF ALASKA (UFA) (via Cordova),                    
  said UFA opposed HB 474.  She said HB 474 was fiscally                       
  irresponsible and would favor development regardless of the                  
  cost to competing resource users.  She said multi-phasing                    
  introduces a new element of financial risk because it                        
  increases the likelihood of erroneous land disposal.  She                    
  said UFA does not believe the financial risk should be                       
  carried by the state or the public.  She emphasized that UFA                 
  strongly believes the state should be required to conduct a                  
  thorough best interest finding prior to a land disposal.                     
  She stated that multi-phased development was not in the                      
  state's best interest.  She said because HB 474                              
  institutionalized multi-phased development, it did not                       
  protect the public interest.  She said Mr. Eason had                         
  misrepresented the impact of HB 474 to the public.  She said                 
  HB 474 would take away full public input at the beginning of                 
  the lease sale or land disposal process.  She said at the                    
  lease sale state, DNR functions as a public agency and it                    
  controls the conflict resolution process with minimal bias,                  
  because it does not have a vested interest in the product at                 
  that point.  She stated after the land is disposed, the                      
  state and the lessee work closely together.  She said there                  
  are contractual obligations and financial investments to                     
  which the public is not privy.  She said during the later                    
  public comment period the public is fighting an uphill                       
  battle against both the lessee and the state, which at that                  
  point is a vested partner.  She said public input at later                   
  project stages does not carry the same weight as at the                      
  initial review stage.  She said Mr. Eason had misrepresented                 
  the ramifications of HB 474 to the state and to the public                   
  and that it was a serious breach of public trust.  She said                  
  HB 474 would be a radical shift in public policy.  She said                  
  it was important to realize that HB 474 would slow, rather                   
  than speed, development because it would increase the number                 
  of lawsuits over issues such as constitutionality,                           
  conforming with the Coastal Zone Management Act, just                        
  compensation to l, and potential state liability for buy                     
  backs.                                                                       
                                                                               
  Number 089                                                                   
                                                                               
  MARILYN CROCKETT, ALASKA OIL & GAS ASSOCIATION (AOGA) (via                   
  Anchorage), stated AOGA supports a full analysis of all                      
  issues and concerns for the best interest finding process                    
  for each lease sale.  She said AOGA believes that current                    
  statutes and regulations were designed for the full                          
  analysis.  She said AOGA is concerned by the uncertainty                     
  created by the recent court rulings.  She said DNR's scope                   
  of review should be defined during the administrative review                 
  process, not by the courts.  She said the only question is                   
  how to define that scope of review.  She said AOGA believes                  
  the scope of review for best interest findings for oil and                   
  gas lease sales should cover the following points.  The                      
  director of Oil & Gas should determine those issues which                    
  should be addressed during the review.  All public comment                   
  should be considered in determining what the scope of the                    
  review should be.  The legislature has determined that those                 
  items listed in AS 38.05.035(g) should be part of the scope                  
  of review.  She said if the director of Oil & Gas, the                       
  public, and the legislature do not consider an issue to be                   
  of sufficient concern, then the courts should not be allowed                 
  to rule that the issue must be covered in the best interest                  
  findings.  She said AOGA believes the intent of HB 474 is                    
  directed at providing certainty in the scope of the review.                  
                                                                               
  Number 113                                                                   
                                                                               
  PAUL MAYS, ALASKA WILDERNESS RECREATION & TOURISM                            
  ASSOCIATION, (AWRTA) (via Valdez), said AWRTA believed that                  
  HB 474 would increase unemployment and litigation costs by                   
  giving priority to Alaska's expansive timber, mining, oil,                   
  and gas industry.  He said the priority was at the expense                   
  of the tourism industry, which is also based on Alaska's                     
  natural resources.   He asked the committee not to support                   
  HB 474.                                                                      
                                                                               
  Number 171                                                                   
                                                                               
  KARL KIRCHER (via Soldotna), stated he did not see any                       
  difference between HB 474 and CSHB 474.  He said many                        
  coastal communities in Alaska depend on good cooperation                     
  between fisheries and oil development in order for both                      
  industries to prosper.  He said HB 474 would destroy                         
  fishermens' belief that they have a viable input when new                    
  oil and gas leases are offered and subsequent development                    
  moves into coastal areas.  He said as he understood HB 474,                  
  it was not reasonably foreseeable that a lease sale would                    
  end in oil and gas development.  He felt that before oil and                 
  gas lease sales are issued, the problems that might develop                  
  or the concerns that both parties have with the final                        
  dispositions should be put on the table.  He felt that HB
  474 would destroy any good faith cooperation that Alaskans                   
  presently strive for in multiple use coastal zone areas.  He                 
  requested the committee to hold HB 474 until the three                       
  absent committee members were present.                                       
                                                                               
  Number 204                                                                   
                                                                               
  JOSEPH JOLLY, UNITED COOK INLET DRIFT ASSOCIATION (via                       
  Soldotna), stated HB 474 was a blatant attempt to circumvent                 
  safeguards that are put in place by responsible                              
  representatives elected by the people of the state of                        
  Alaska.  He said HB 474 makes a mockery of the Costal Zone                   
  Management Plans that are put in place by the local                          
  populations.                                                                 
                                                                               
  THEO MATTHEWS, UNITED COOK INLET DRIFT ASSOCIATION (UCIDA),                  
  stated UCIDA opposes HB 474.  He said he was encouraged by                   
  the comments from AOGA.  He said the State should not have                   
  to speculate out to the ends of the earth, but that point                    
  was not the driving force of HB 474.  He referenced page                     
  two, lines 24 through 27 of CSHB 474.  He said HB 474 will                   
  not permit DNR to consider the most nonspeculative of issues                 
  down the road.  He referenced Section three of CSHB 474.  He                 
  referenced Lease Sale 78 and said the people in Cook Inlet                   
  made it very clear that a stationary production platform in                  
  certain waters in Cook Inlet were totally incompatible with                  
  the existing use due to physical and safety conflicts.  He                   
  said the public and every possible forum let DNR know that                   
  there were conflicts.                                                        
                                                                               
  Number 331                                                                   
                                                                               
  LOISANN REEDER, SUSITNA VALLEY ASSOCIATION (via Anchorage),                  
  referenced Sections one and three of CSHB 474.  She stated                   
  her concerns were how the sections related to timber sales.                  
  She said the scope of the best interest determinations for                   
  timber sales is already mandated in AS 38.05.112.  She said                  
  since AS 38.05.112 provides a more explicit direction for                    
  timber sales, it would likely take precedent over the                        
  suggested amendments to AS 38.05.035(g) contained in HB 474.                 
  She said having conflicting guidelines in two separate                       
  sections of Title 38 could only result in undue confusion                    
  and other legal challenges.  She encouraged the committee to                 
  exempt timber sales from Sections one and three of CSHB 474.                 
                                                                               
  Number 359                                                                   
                                                                               
  JEFF PARKER, ALASKA SPORTSFISHING ASSOCIATION (ASA) (via                     
  Anchorage), stated ASA was opposed to HB 474.  He said ASA                   
  interests were primarily focused on the best interest                        
  determinations made under AS 38.05.035(e) with respect to                    
  oil and gas, as well as land disposals and timber sales.  He                 
  said ASA views HB 474 as unnecessarily narrow in the scope                   
  of review.  He said HB 474 does not specify criteria, but                    
  instead allows wide open discretion to the director of Oil &                 
  Gas through the language that limits the scope of review to                  
  the facts and issues the director finds material.  He said                   
  HB 474 eliminates the cumulative impact inquiry that is                      
  necessary in multi-phased land dispositions.  He said HB 474                 
  arose out of a series of lawsuits involving oil and gas                      
  lease sales.  He said in all of the cases, the courts found                  
  DNR out of compliance with the existing statute.  He                         
  believed DNR violated the statute three times and was now                    
  approaching the legislature for a statutory waiver of what                   
  the legislature previously directed as a necessary                           
  requirement.                                                                 
                                                                               
  Number 416                                                                   
                                                                               
  CLIFF EAMES, ALASKA CENTER FOR THE ENVIRONMENT (ACE) (via                    
  Anchorage), stated ACE opposed HB 474.  He emphasized that                   
  ACE was concerned not only with oil and gas leases sales,                    
  but also with timber sales and land disposals.  He said ACE                  
  did not believe the scope of the administrative review                       
  should be narrowed.  He said ACE did not think it was                        
  unreasonable for a decision maker to be asked to look at the                 
  specific facts that are presented by a specific proposal and                 
  to use reasonable standards to determine what factors need                   
  to be analyzed.  He said indirect and direct effects should                  
  be analyzed.  He said it was not uncommon for indirect                       
  effects to be of greater concern to the public than direct                   
  effects.  He said phase analysis was a bad idea.  He said                    
  once permission to enter into one phase of development is                    
  granted, and a substantial investment of time and money is                   
  invested, there is no going back.                                            
                                                                               
  Number 503                                                                   
                                                                               
  MR. EASON said it was a drastic and dramatic mistake to view                 
  HB 474 as an overreaction to Lease Sale 78.  He said HB 474                  
  is a measured reaction to a series of decisions that began                   
  in 1987 and continued with two Alaska Supreme Court                          
  decisions on Lease Sale 50 and Lease Sale 55, and finally                    
  with the stay on Lease Sale 78.  He said Lease Sale 78 was                   
  an instance in which the court turned its back on more than                  
  30 years of compatible development in the fishing corridor                   
  with no conflicts.  He said the court subsequently decided                   
  there would be a conflict and then it used that conflict as                  
  a basis for determining the sale should not proceed.  He                     
  said the words of the litigants would provide the committee                  
  with the best indication of the dilemma that Mr. Eason has                   
  found himself in when trying to address the concerns people                  
  have about leasing under current statutes.  He referenced                    
  Lease Sale 57 and Trustees for Alaska's lawsuit against the                  
  state.  He stated the litigants said "...DNR failed to                       
  adequately analyze the impacts of the sale on riparian                       
  resources, failed to analyze the impacts of the sale on                      
  archaeological resources, and failed to analyze the impacts                  
  of the sale on the Gates of the Arctic National Park and                     
  Preserve."  He said concurrently Trustees for Alaska filed                   
  litigation regarding Lease Sale 75a.  He said Trustees'                      
  claim was that "...DNR failed to adequately analyze the                      
  impacts of the sale on wetland habitat and riparian areas,                   
  failed to adequately analyze the impacts of the sale on                      
  archaeological resources, and violated the Alaska Historical                 
  Preservation Act with respect to the documented historical                   
  and archaeological sites within the area."  He said Trustees                 
  then "...reserved the right with the court to amend the                      
  Statement of Points on Appeal after the completion of a                      
  review of the administrative record."  Mr. Eason stated both                 
  of the lawsuits were filed after Trustees for Alaska did not                 
  participate in the administrative appeal.  He said there                     
  were no comments submitted to DNR from Trustees for Alaska                   
  during either the preliminary or the final best interest                     
  finding.  He said after the period for those findings                        
  closed, DNR was faced with the litigation.  He said he did                   
  not know how anyone could respond to such a situation.  He                   
  said the court has clearly illustrated that it will accept a                 
  lawsuit regardless of how vague it is.  He said the Alaska                   
  Supreme Court has confirmed time and again that it will act                  
  to overturn the Superior Court, who has found in DNR's                       
  favor, in every instance.  He said in DNR's best judgment,                   
  there is a problem which has led to a situation where there                  
  will be no more lease sales in Alaska until there is greater                 
  guidance and clarification of the standards that the                         
  legislature wants DNR to meet.  He said DNR cannot meet open                 
  ended, totally speculative standards.                                        
                                                                               
  Number 672                                                                   
                                                                               
  CHAIRMAN GREEN stated there were a few comments expressing                   
  concern that by changing the existing statutes, the state                    
  may be violating some legislative requirements.  He asked if                 
  there was anything in HB 474 that would cause less of a                      
  review of the impacts or violate any of the legislative                      
  requirements.                                                                
                                                                               
  Number 686                                                                   
                                                                               
  KYLE PARKER, ASSISTANT ATTORNEY GENERAL, stated the state                    
  did not view HB 474 as limiting the review that will be                      
  conducted.  He said the state believed that HB 474 would                     
  broaden the review.  He said AS 38.05.035(g) specifically                    
  lists the issues which must be considered in a best interest                 
  finding.  He said there is no provision for the director of                  
  Oil & Gas or the DNR commissioner to broaden the review that                 
  will be conducted.  He said HB 474 will allow the DNR                        
  commissioner to consider the comments put forward by the                     
  public during the public review of the project.  He said the                 
  DNR commissioner can consider the comments and determine                     
  whether any of them are material to his decision.  He stated                 
  the DNR commissioner can then broaden his review to include                  
  those issues which may be raised during public comment.                      
                                                                               
  Number 710                                                                   
                                                                               
  REPRESENTATIVE DAVIS said AS 38.05.035(g) does add                           
  opportunity to respond to public comment.                                    
                                                                               
  TAPE 94-10, SIDE A                                                           
  Number 002                                                                   
                                                                               
  REPRESENTATIVE DAVIS said he was concerned by the provision                  
  in HB 474 that states the public must review or make comment                 
  on specific issues only if they pertain solely to a discreet                 
  issue or the lease phase of a multi-phased project.                          
                                                                               
  Number 009                                                                   
                                                                               
  MR. EASON said the state views the standard of "may," as                     
  being one that allows the director of Oil & Gas to limit,                    
  but does not prohibit the director from not limiting.  He                    
  said the alternative would be to use terms such as "shall"                   
  or "must" and those terms would clearly restrict and make                    
  impossible the consideration of things such as indirect                      
  effects.  He said there is no prohibition that indirect                      
  effects cannot be thought of, cannot be discussed, cannot be                 
  actualized.  He said there is correspondingly, no mandate                    
  that they must be thought about, discussed, or actualized.                   
  He said the range of potential indirect effects is simply                    
  unpredictable.  He said if people want to discuss indirect                   
  effects, or their view of what might be indirect effects,                    
  there is nothing that would require the director of Oil &                    
  Gas not consider those or determine they are material to a                   
  decision under the amendments.                                               
                                                                               
  Number 022                                                                   
                                                                               
  REPRESENTATIVE DAVIS confirmed that one can only address the                 
  concerns that pertain solely to the discreet phase of a                      
  project.  He asked for clarification or interpretation as to                 
  how the process does not limit public comment.                               
                                                                               
  Number 031                                                                   
                                                                               
  MR. EASON referred to the Lease Sale 78 decision.  He said                   
  the courts wanted the state to provide some certainty as to                  
  the outcome of future events in order to proceed beyond the                  
  leasing stage.  He said the only practical way for that                      
  system to work is that the state identify during the                         
  administrative process, either through its own knowledge or                  
  through knowledge made available by the public and other                     
  agencies, all of the issues and concerns that people have                    
  about things that might happen in the future from leasing.                   
  He said if there are provisions to further condition an                      
  actual permit that may follow from the lease, the record                     
  should reflect the issues that will be of concern.  He                       
  stated in the absence of specific information as to where                    
  something may occur, one can really only make provision for                  
  some certainty that nothing will be allowed to occur until                   
  the conflicts are identified and all the public comments                     
  that need to be addressed to that potential development are                  
  reviewed and the process is allowed to work its way through.                 
                                                                               
  Number 057                                                                   
                                                                               
  BARBARA FULLMER, ASSISTANT ATTORNEY GENERAL (via Anchorage),                 
  stated the concept of phasing is already recognized within                   
  the Alaska Coastal Zone Management Plan (ACMP) regulations.                  
  She referenced 6 AAC 50.190, number 14, which defines                        
  projects under the ACMP.  She said the definition of                         
  projects includes land or water activity developed or                        
  authorized in discreet phases.  She stated each phase                        
  requires agency decisions regarding permits and each phase                   
  is considered a project and therefore would be considered                    
  individually.                                                                
                                                                               
  Number 073                                                                   
                                                                               
  MR. EASON referenced Lease Sale 50.  He said the courts                      
  determined the state had not properly considered the                         
  geophysical hazards in the Camden Bay area.  He explained                    
  the state had addressed the only known map of the                            
  geophysical hazards that are in the offshore Camden Bay                      
  area.  He said there was one map in the public record that                   
  was produced by the U.S. Geological Survey (USGS).  He said                  
  the state was aware that the area was seismically unstable                   
  and the state had reason to believe there were other                         
  geophysical hazards that would be of concern to the state                    
  when a permit was requested.  He said the state took the                     
  approach that before a permit could be issued, a                             
  site-specific survey would be done to determine the very                     
  localized and specific sea floor conditions.  He said the                    
  state believed this was a common sense approach.  He said it                 
  was argued by the litigants that the state had to do                         
  geophysical surveys to determine the location of all                         
  potential hazards before the state could offer a lease.  He                  
  said the cost for site-specific surveys is in the hundreds                   
  of millions of dollars.  He said because of the great cost,                  
  it only makes sense to conduct the surveys when one knows                    
  that one wants to go somewhere very specific and wants to                    
  find out whether it can or cannot be done.  He said the                      
  state simply cannot operate under those conditions.                          
                                                                               
  Number 118                                                                   
                                                                               
  REPRESENTATIVE DAVIS referenced page two, line 27 of CSHB
  474.  He stated he thought concerns should be addressed at                   
  the leasing stage, not the permitting stage.                                 
                                                                               
  MR. EASON stated at the leasing stage, there is not enough                   
  information to do a specific tract by tract analysis to                      
  determine what local conditions exist.  He said the Alaska                   
  Department of Fish & Game cannot provide that kind of                        
  detailed information on fisheries and game resources at that                 
  point.  He said once an area has been leased, and the state                  
  is made aware that someone wants to drill it, that triggers                  
  a very detailed analysis and separate consistency                            
  determinations under state law that involve state agencies.                  
  He said in the case of offshore sales, federal agencies are                  
  involved as well.  He said those kinds of concerns are                       
  brought to the table at that point and they have to be                       
  addressed in order to make the project consistent.  He said                  
  that meant gathering the fact-specific information and                       
  tailoring the project to be sure the state avoids problems.                  
                                                                               
  Number 148                                                                   
                                                                               
  REPRESENTATIVE DAVIS confirmed that concerns would not be                    
  addressed during the lease phase.                                            
                                                                               
  Number 149                                                                   
                                                                               
  MR. EASON indicated that was correct.                                        
                                                                               
  Number 150                                                                   
                                                                               
  REPRESENTATIVE DAVIS said if there is a tract of land and a                  
  river traverses it, it is obvious there will be known                        
  impacts should a lessee agree to lease that tract.  He                       
  confirmed that Mr. Eason was indicating the state did not                    
  need to put the findings under the lease phase.                              
                                                                               
  Number 156                                                                   
                                                                               
  MR. EASON responded in the negative.  He said impacts of                     
  that nature are identified at the lease sale stage.  He said                 
  currently the finding for every sale includes a list of                      
  mitigating measures and terms that will apply to any of the                  
  leases.  He stated there are a number of measures and terms                  
  that are identified at the leasing stage in the finding, but                 
  it is the ones that are not so clear, that are not                           
  indisputable, that are simply unknown in a lot of cases that                 
  the state cannot identify at that stage.                                     
                                                                               
  Number  168                                                                  
                                                                               
  REPRESENTATIVE DAVIS stated he thought that everyone agreed                  
  with Mr. Eason's point.  He said the public does not expect                  
  the state to respond to unforeseen or unreasonable                           
  conditions.  He stated there are obvious concerns.  He said                  
  the public feels they will be left out and Mr. Eason says                    
  that public input  will be increased.  He asked if there was                 
  some point of reference in HB 474 that would assure him the                  
  bill is on the right track with respect to public input.                     
                                                                               
  Number 185                                                                   
                                                                               
  MS. FULLMER (via Anchorage) clarified that Representative                    
  Davis was discussing the identification of foreseeable                       
  issues.                                                                      
                                                                               
  Number 189                                                                   
                                                                               
  REPRESENTATIVE DAVIS stated he was not sure.  He said he was                 
  referring to what the public said.  He indicated that he                     
  wanted to refer to the section of HB 474 that would assure                   
  him the public is not being left out of the process.                         
                                                                               
  Number 194                                                                   
                                                                               
  MS. FULLMER (via Anchorage) said she was wondering why the                   
  public felt left out.  She said initially she understood the                 
  concerns were that people thought the scope would be                         
  determined before any public comment was received.  She said                 
  that is not the intent of HB 474.  She said the written                      
  findings come after the public comment period.  She referred                 
  to the comments regarding mitigation measures and referred                   
  to page two, lines 30 and 31.  She said until she had some                   
  specific cite as to why people think they are being limited                  
  in their comments she could not answer that.  She said the                   
  public comment period has not been changed.                                  
                                                                               
  Number 214                                                                   
                                                                               
  REPRESENTATIVE DAVIS said he was also hoping to get some                     
  specifics from the testimony as to exactly what parts of the                 
  bill they found objectionable.                                               
                                                                               
  Number 218                                                                   
                                                                               
  CHAIRMAN GREEN asked for the wish of the committee.                          
                                                                               
  Number 232                                                                   
                                                                               
  REPRESENTATIVE SANDERS made a motion to move CSHB 474 with                   
  individual recommendations and a zero fiscal note.                           
                                                                               
  Number 242                                                                   
                                                                               
  REPRESENTATIVE KOTT objected to the motion for the purpose                   
  of clarifying whether or not the legislature has addressed                   
  the proposed amendment by Representative Olberg.                             
                                                                               
  Number 251                                                                   
                                                                               
  CHAIRMAN GREEN said he had received Representative Olberg's                  
  amendments and it was indicated to him they may have legal                   
  problems.  He asked for an attorney's opinion.                               
                                                                               
  Number 257                                                                   
                                                                               
  MR. EASON stated he was not sure if Ms. Fullmer and Ms.                      
  Lundquist had seen Representative Olberg's amendments.  He                   
  noted the amendments were not in amendment form, they were                   
  addressed as conceptual amendments.  He indicated that he                    
  was not sure if the state could truly give the committee an                  
  opinion without some specific amendment language.                            
                                                                               
  Number 270                                                                   
                                                                               
  REPRESENTATIVE DAVIS stated he recognized that                               
  Representative Olberg's amendments were not in proper                        
  amendment.  He confirmed that Representative Olberg would                    
  have the opportunity to submit amendments at a later date in                 
  another committee.                                                           
                                                                               
  Number 292                                                                   
                                                                               
  REPRESENTATIVE KOTT stated he was bringing the amendments to                 
  the committee's attention out of respect to Representative                   
  Olberg.  He withdrew his objection to the motion.                            
                                                                               
  Number 303                                                                   
                                                                               
  REPRESENTATIVE KOTT stated he thought the Chairman had made                  
  a good point that the committee has had a significant amount                 
  of difficulty in getting a quorum at committee time.  He                     
  said to hold HB 474 in the Oil & Gas Committee would perhaps                 
  not do it justice.  He said if HB 474 needs additional                       
  tampering, the Oil & Gas Committee should let the standing                   
  committees do it.                                                            
                                                                               
  Number 312                                                                   
                                                                               
  CHAIRMAN GREEN stated HB 474 was moved to the House                          
  Resources Committee with individual recommendations.  He                     
  adjourned the meeting at 6:57 p.m.                                           
                                                                               

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