Legislature(2003 - 2004)

04/23/2003 03:35 PM RES

Audio Topic
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
               SB 143-COASTAL MANAGEMENT PROGRAMS                                                                           
CHAIR OGAN  announced that he did  not intend to move  SB 143 out                                                               
of  committee today  and he  apologized  in advance  in case  the                                                               
committee is  unable to hear from  everyone who has signed  up to                                                               
testify. He said the committee  would first hear a brief overview                                                               
of what the legislation does  and then put the proposed committee                                                               
substitute (CS) on the table.                                                                                                   
SENATOR ELTON  moved to  adopt the  proposed CS  (labeled 03-0069                                                               
bil3.doc), and  said that two  committee members have  a schedule                                                               
conflict  and will  need to  leave  at 5:00  p.m. He  said he  is                                                               
assuming that Department of Natural  Resources (DNR) and Division                                                               
of  Governmental Coordination  (DGC) staff  will be  available to                                                               
answer questions at the next meeting.                                                                                           
CHAIR  OGAN said  that  paid  staff can  come  back  and that  he                                                               
planned to  give priority today  to citizens who are  taking time                                                               
off of work to testify.                                                                                                         
SENATOR  DYSON said  he believes  it is  unfortunate to  schedule                                                               
meetings  while  standing  committees   are  scheduled  to  meet,                                                               
especially  when  substantive  bills   are  being  discussed.  He                                                               
encouraged  members  to  not   schedule  another  meeting  during                                                               
standing committee  hearings out  of respect  for those  who have                                                               
made an effort to testify.                                                                                                      
CHAIR OGAN announced  he would give first priority  to people who                                                               
have flown to Juneau to testify.                                                                                                
MS.  MARTY RUTHERFORD  told members  she represents  DNR and  the                                                               
Administration and would  speak to the proposed CS.  She said she                                                               
recently left DNR after working  for that department for 11 years                                                               
and is  now under  contract with  the department.  She introduced                                                               
Mr. Breck  Tostevin with the  Department of Law, Mr.  Pat Galvin,                                                               
the past director of DGC, and  Mr. Randy Bates who is employed as                                                               
the newly  appointed Coastal Zone Management  program coordinator                                                               
in DNR. These  people comprise the team that reworked  SB 143 and                                                               
made  very  substantive  changes  to  the  bill  in  response  to                                                               
comments  received  by  the Administration  while  its  companion                                                               
bill,  HB  191, was  under  review  in  the House.  She  informed                                                               
members  that  a  brief,  one-page   synopsis  of  the  committee                                                               
substitute,  a  transition timeline,  a  comparison  chart and  a                                                               
sectional analysis  were distributed to  them. She then  said she                                                               
would provide an overview of the primary elements of the CS.                                                                    
CHAIR OGAN announced that no  objection was heard to the adoption                                                               
of the  work draft, therefore  the motion carried. He  then noted                                                               
that Senate President Therriault had joined the committee.                                                                      
MS. RUTHERFORD made the following comments.                                                                                     
     The  Coastal  Zone  Management   Program  is  an  older                                                                    
     program  that   has  not  appropriately   responded  to                                                                    
     Alaska's  maturing  statutory  and  regulatory  regime.                                                                    
     Therefore, the program is  often redundant, using local                                                                    
     enforceable policies  that are  often a  reiteration of                                                                    
     existing  regulatory  agencies' permit  standards.  The                                                                    
     program is  also unpredictable.  It is overly  broad in                                                                    
     scope, takes  a long time,  and delays the  issuance of                                                                    
     permits  and  start  up   of  projects.  The  statewide                                                                    
     standards and local enforceable  policies are vague and                                                                    
     are extremely subject to multiple interpretations.                                                                         
CHAIR  OGAN announced  that  Representative  Kerttula joined  the                                                               
MS. RUTHERFORD continued.                                                                                                       
     While the  program has  problems, the  sweeping changes                                                                    
     embedded in the original SB  143 eliminated many of the                                                                    
     primary reasons that Alaska  first embraced the Coastal                                                                    
     Zone  Management  program,  including state  and  local                                                                    
     control over  projects requiring  federal authorization                                                                    
     and  state  and  local   influence  on  direct  federal                                                                    
     During discussions  of the original  bill on  the House                                                                    
     side,  the Administration  took  some  of the  comments                                                                    
     made by citizens  and districts to heart.  As a result,                                                                    
     the   committee  substitute   returns   to  the   basic                                                                    
     structure  of  the  existing  Coastal  Zone  Management                                                                    
     program. It retains the  existing four coastal resource                                                                    
     service  areas,  all  of  which   are  located  in  the                                                                    
     unorganized  borough in  Western  Alaska. In  addition,                                                                    
     all existing coastal districts  continue and retain the                                                                    
     same  authorities  and  responsibilities as  under  the                                                                    
     current   program.  This   committee  substitute   also                                                                    
     retains  local  enforceable  policies and  all  of  the                                                                    
     statewide  standards  of  the  program,  including  the                                                                    
     habitat   standard   and  the   subsistence   standard.                                                                    
     Furthermore,  it ensures  that all  federal activities,                                                                    
     activities requiring  a federal permit, or  an activity                                                                    
     requiring  a  state  permit  will  have  a  consistency                                                                    
     review.  District  enforceable   policies  will  remain                                                                    
     applicable  to  all  projects that  are  subject  to  a                                                                    
     consistency  review,  not  just the  Outer  Continental                                                                    
     Shelf (OCS)  projects and federal activities  that were                                                                    
     envisioned  in  the  original  SB  143.  The  committee                                                                    
     substitute  assures  the  districts will  retain  their                                                                    
     seat at the table as project decisions are made.                                                                           
     The  committee substitute,  however, makes  significant                                                                    
     changes  to the  program in  an attempt  to retain  the                                                                    
     important  elements while  addressing the  problems. It                                                                    
   · eliminate the Coastal Policy Council and transfer its                                                                      
     duties to the DNR commissioner                                                                                             
   · place a sunset provision on the current statewide standards                                                                
     and  coastal district  plans and  mandate their  replacement                                                               
     standards  be   clear,  concise,  and  not   susceptible  to                                                               
     subjective interpretations and  not duplicative of otherwise                                                               
     existing requirements                                                                                                      
   · clarify that local enforceable policies may not address a                                                                  
     matter that is regulated or authorized by state or federal                                                                 
     law unless the policy specifically relates to a matter of                                                                  
     local concern  - a test will  be embedded in the  statute to                                                               
     assist in making that determination                                                                                        
   · provide important clarification to the consistency review                                                                  
     process in  order to ensure  more predictable  timelines and                                                               
     standards, including the scope of  a project that is subject                                                               
     to review and  when a project can proceed in  phases, and it                                                               
     encourages the use of general permits                                                                                      
   · clarify that the Department of Environmental Conservation's                                                                
     (DEC)  permits   and  authorizations  will   constitute  the                                                               
     consistency  determination for  activities regulated  by DEC                                                               
     air, land and water quality standards                                                                                      
   · insulate the Coastal Management Plan consistency review                                                                    
     from  delays  associated  with  those  complex  permits  and                                                               
MS.  RUTHERFORD told  members the  program is  very complex.  She                                                               
offered to have  Mr. Tostevin describe the  sectional elements of                                                               
the bill but noted in the  interest of time, that information has                                                               
been provided in written form.                                                                                                  
CHAIR  OGAN said  he  would plan  to hear  from  Mr. Tostevin  on                                                               
SENATOR LINCOLN requested a copy of Ms. Rutherford's testimony.                                                                 
CHAIR OGAN took public testimony.                                                                                               
MR.  KEN DONAKOWSKI,  the Alaska  permitting  manager for  Conoco                                                               
Phillips,  told  members  that Conoco  Phillips  is  the  state's                                                               
largest  producer  of  oil,   leaseholder,  and  most  aggressive                                                               
explorer. As such, permit streamlining  is imperative to maintain                                                               
Conoco  Phillips' enviable  position in  Alaska and  to encourage                                                               
other oil and  gas firms to elevate their  respective standing in                                                               
these three areas. Conoco  Phillips unequivocally supports AOGA's                                                               
position   on   the   committee  substitute.   He   offered   two                                                               
observations. This committee substitute  preserves a role for the                                                               
coastal  districts   and  formally  introduces  the   concept  of                                                               
enforceable  policies into  the statutory  language. Second,  the                                                               
regulatory framework  for environmental  protection in  Alaska is                                                               
preserved  by this  committee substitute  and,  in essence,  that                                                               
framework remains whole and intact.                                                                                             
SENATOR  ELTON noted  Mr. Donakowski  said this  legislation will                                                               
empower  coastal   districts  by   introducing  the   concept  of                                                               
enforceable  policies and  asked  him to  elaborate because  many                                                               
people from the coastal district side are confused about that.                                                                  
MR.  DONAKOWSKI  said  enforceable policies  are  policies  that,                                                               
according to the criteria laid out  in the statute, are issues of                                                               
importance  to   local  concerns   that  do  not   duplicate  the                                                               
regulatory framework.                                                                                                           
CHAIR   OGAN  thanked   Mr.  Donakowski   for  Conoco   Phillips'                                                               
aggressive  posture  in  exploration   and  development  and  for                                                               
introducing cutting edge technology.                                                                                            
MR. LARRY HOULE,  general manager of the  Alaska Support Industry                                                               
Alliance,  told  members  the  Coastal  Zone  Management  Program                                                               
includes  the  consistency  review process,  which  requires  all                                                               
projects  located in  the coastal  zone to  obtain a  consistency                                                               
determination  before state  or  federal permits  can be  issued.                                                               
Nearly all oil and gas  activities undergo the consistency review                                                               
process. Its  purpose is to  ensure that projects  are consistent                                                               
with   state  and   local  enforceable   policies.  Funding   for                                                               
exploration   and   development   in  Alaska   faces   increasing                                                               
competition  on a  worldwide scale.  Many competing  projects are                                                               
closer to markets and are  less capital intensive. Operators need                                                               
reliable  predictions,  permitting schedules,  and  requirements.                                                               
Delays in the  permit timelines are significant  factors that can                                                               
adversely  affect  the economic  feasibility  of  a project.  The                                                               
contracting community  in Alaska is  concerned about the  lack of                                                               
schedule  and  scope  certainty   and  the  unpredictability  and                                                               
subjective nature  of the overall  review process  that currently                                                               
exists. He  said the Alliance endorses  the committee substitute;                                                               
it believes  it will  streamline the  review process  and improve                                                               
MR. BOB  STINSON, President of Con-Am  Construction of Anchorage,                                                               
stated support for the committee  substitute or any other form of                                                               
the  bill  that will  change  the  current process.  The  current                                                               
Coastal Zone  Management Program's rules and  process are unclear                                                               
and  need to  be fixed  so that  an applicant  with a  beneficial                                                               
project knows what  to expect when submitting  an application. He                                                               
sat on the  Governor's DNR transition team and  listened to large                                                               
corporations  and local  companies express  frustration over  the                                                               
current   review  process.   The   transition  team   recommended                                                               
streamlining that process.                                                                                                      
He  then  described  an experience  his  company  encountered  as                                                               
follows. Anchorage  Fueling and Service Company,  a consortium of                                                               
22 major  airlines, hired his  company to replace a  small, aging                                                               
pipeline routed  through residential  streets in  Anchorage. That                                                               
pipeline  delivered most  of  the  jet fuel  to  the Ted  Stevens                                                               
International Airport. His company was  hired to design and build                                                               
a  larger  pipeline  to  reliably  meet  increasing  demand.  His                                                               
company submitted its  permit application to the  state, the U.S.                                                               
Corps  of  Engineers and  the  Municipality  of Anchorage  (MOA),                                                               
after  preliminary  discussion  with  each  entity  revealed  the                                                               
soundness of the  project and, in particular, the  routing of the                                                               
pipeline. The  project quickly became a  target for environmental                                                               
concerns  since  the  routing   took  the  new  pipeline  through                                                               
portions of the Anchorage coastal  mud flats. Throughout the next                                                               
1  1/2  years,  his  company spent  an  additional  $1.5  million                                                               
securing  the  permit,   due  to  delays  in   the  Coastal  Zone                                                               
Management process. The project  was originally estimated to cost                                                               
$6 million.                                                                                                                     
MR. STINSON said in fact, there  was no process. DGC did not know                                                               
how to  handle the application  and how to coordinate  with other                                                               
agencies and the  public. He ended up hiring  many consultants to                                                               
invent a process  for permit review and coordination.  DGC had no                                                               
clear timetable  or time limitations  for permit  review. Phasing                                                               
of the  project was  not allowed.  All agency  permits had  to be                                                               
completed  before a  consistency determination  could be  issued.                                                               
There was no scope of review  to which anyone could work with. He                                                               
said this project  was not a resource extraction  project; it was                                                               
an infrastructure  improvement project  for the airport.  He said                                                               
had the  State of Alaska owned  the old pipeline, a  permit would                                                               
have been issued  in an expeditious way, allowing  the airport to                                                               
meet its growing  demand for fuel. The  airlines that experienced                                                               
this permitting nightmare could not  understand why the state was                                                               
not  supportive  of  this beneficial  project  and  talked  about                                                               
taking their  business elsewhere.  He encouraged members  to move                                                               
the bill from committee.                                                                                                        
MR. CHUCK  DEGNAN, testifying from  Unalakleet, told  members the                                                               
Bering Straits  Coastal Resource Service Area  was very concerned                                                               
about the original bill that  eliminated coastal resource service                                                               
areas. Its other  concern is the sunset provision  for making new                                                               
plans. The rural areas have clean  air, water and land because of                                                               
very  little  development.  However, the  development  that  does                                                               
occur takes  a long time because  it is planned so  that projects                                                               
flow. Very few have been delayed.                                                                                               
MR.  DAN BEVINGTON,  Coastal District  Coordinator for  the Kenai                                                               
Peninsula Borough,  said he  recognizes that  writing legislation                                                               
to  streamline  permitting is  a  challenging  task, and  thanked                                                               
members and  the Governor  for attempting it.  He said  the Kenai                                                               
Peninsula  Borough has  supported  its own,  similar program  for                                                               
more than two  decades. During that time, the  Borough has passed                                                               
over 34  ordinances and 7  resolutions that directly  support the                                                               
coastal resource management program.                                                                                            
MR.   BEVINGTON  said   the   legislation   asserts  that   local                                                               
governments  should exert  their own  coastal management  control                                                               
through planning and zoning powers. That  seems to add a level of                                                               
complexity  when the  Borough does  not need  to assert  any more                                                               
permitting powers  through its participation in  the program. The                                                               
Borough  appreciates  the fact  that  the  current working  draft                                                               
addresses that and allows the  Borough that opportunity. However,                                                               
the Kenai Peninsula  Borough remains concerned about  the loss of                                                               
similar  policies under  the  provision that  DEC  will have  the                                                               
exclusive determination  of consistency of the  program under its                                                               
authorities. It is also concerned  about the summary discharge of                                                               
the Alaska  Coastal Policy Council  without developing  a similar                                                               
representative  body  within  DNR.  The issue  of  promoting  and                                                               
balancing   economic   development   with   long-term   community                                                               
interests  demands  the  meaningful  involvement  of  communities                                                               
across the state.                                                                                                               
MR.  GARY CARLSON,  Senior Vice  President  of Forest  Oil and  a                                                               
member of AOGA, stated support  for AOGA's position but added the                                                               
following  comments. The  ACMP process  has  become a  regulatory                                                               
maze that is  costly to the state and to  industry. The program's                                                               
ambiguities  and uncertainties  have provided  a breeding  ground                                                               
for  obstructionists  and  special interest  litigants  to  delay                                                               
responsible   development.  The   bill   will  make   substantial                                                               
improvements   to   the   process  by   establishing   deadlines,                                                               
eliminating duplication of state  and federal law, establishing a                                                               
bright line as  to when the ACMP applies,  and eliminating delays                                                               
in  consistency   determinations.  It  also  requires   the  ACMP                                                               
standards  to be  clear,  precise and  not  subject to  multiple,                                                               
subjective  interpretations. This  should improve  the efficiency                                                               
of the permitting  process and reduce litigation  exposure of the                                                               
state and the industry. He stated support for the legislation.                                                                  
MS. LISA  LOMBARGEN informed members  the City of Valdez  and the                                                               
coastal  district  is  very  pleased  with  the  Administration's                                                               
efforts to listen  to the concerns of the  coastal district about                                                               
participation  and  to  provide  a level  playing  field  as  the                                                               
permits are being reviewed for consistency.                                                                                     
MR.  BOB SHAVELSON,  Executive Director  of  Cook Inlet  Keepers,                                                               
told  members he  was  speaking  on behalf  of  over 500  members                                                               
throughout  Southcentral Alaska.  He made  the following  points.                                                               
Regarding Ms.  Rutherford's comment  that districts  would retain                                                               
their same authorities, Section 14  will clearly eliminate a vast                                                               
extent  of  local  district authorities.  It  will  be  virtually                                                               
impossible for  local districts to  have policies that  will meet                                                               
the  convoluted  and  legalistic   language  in  Section  14.  He                                                               
suggested  to  the  House Resources  Committee  that  it  request                                                               
examples of what acceptable local  enforceable policies will look                                                               
like.  He  also suggested the ability to review  a mark-up of the                                                               
Kenai Peninsula  Borough coastal management  enforceable policies                                                               
and which ones would be  retained under this legislation. He does                                                               
not believe many  of those policies, if any,  will remain intact.                                                               
Although SB  143 has a zero  fiscal note, it has  taken the State                                                               
of Alaska over 15 years to  approve all of the coastal management                                                               
programs. SB 143  will create a considerable  financial burden on                                                               
local  districts. It  is an  unfunded mandate  that will  require                                                               
these districts  to rewrite the  plans they spent many  years and                                                               
dollars to develop.                                                                                                             
Regarding the  timeline, MR. SHAVELSON  said it does  not include                                                               
time  for the  environmental impact  statement process  under the                                                               
National Environmental  Policy Act.  This is an  extensive policy                                                               
change,  along  with  the  elimination   of  the  Coastal  Policy                                                               
Council.  This   will  require   an  extensive,   time  consuming                                                               
environmental  impact  statement  for the  entire  state  coastal                                                               
program.  He  said  SB  143 will  add  complexity  and  confusion                                                               
because  as  local  district authorities  are  removed,  it  will                                                               
encourage the  adoption of local ordinances.  Therefore, one-stop                                                               
permitting will no  longer be available so industry  will have to                                                               
get state permits and local approvals.                                                                                          
TAPE 03-32, SIDE A                                                                                                              
SENATOR   BEN  STEVENS   asked  Mr.   Shavelson  to   repeat  the                                                               
terminology  he  used  to describe  the  Kenai  Borough's  policy                                                               
requirements that the state would not adopt under this program.                                                                 
MR. SHAVELSON said he was referring  to Section 14 of the pending                                                               
legislation, which includes some  very restrictive and legalistic                                                               
jargon that will  make it difficult for local  districts to adopt                                                               
local enforceable policies.                                                                                                     
VICE-CHAIR WAGONER asked  Mr. Shavelson if Cook  Inlet Keeper has                                                               
500 members  or whether they  are members of  other organizations                                                               
that Cook Inlet Keeper represents.                                                                                              
MR. SHAVELSON said they are members of Cook Inlet Keeper.                                                                       
MS. DANA OLSON,  testifying from the Mat-Su  Valley, told members                                                               
that HB 257 relies on issues of right-of-way.                                                                                   
VICE-CHAIR WAGONER interrupted  to ask Ms. Olson  to restrict her                                                               
testimony to the bill before the committee.                                                                                     
MS. OLSON clarified that she  is speaking about the rights-of-way                                                               
in the coastal  area. She told members she is  concerned when the                                                               
land use  plans do not  have the rights-of-way included,  and the                                                               
legislature is passing other bills  that affect the coastal zone,                                                               
because she does not have the  means to have adequate notice. She                                                               
noted that  an enforceable policy  is defined by the  federal act                                                               
and  it  does not  include  zoning  and  planning. It  says  that                                                               
judicial  decisions   are  enforceable   policies,  as   well  as                                                               
constitutional  provisions. Therefore,  zoning not  based on  the                                                               
constitutional  or judicial  standards would  not be  enforceable                                                               
policies  of the  local district.  She said  the Clean  Water Act                                                               
does not limit the scope of  which local concern is on non-source                                                               
point  pollution. She  noted the  1990 amendment  to the  Coastal                                                               
Zone Management  Act said the act  had to consider the  zone as a                                                               
whole. Considering only local  enforceable policies would violate                                                               
VICE-CHAIR  WAGONER announced  that  he would  hold  the bill  in                                                               
committee and  it would be heard  again on Friday, at  which time                                                               
the committee would take public  testimony. He then adjourned the                                                               

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