Legislature(1993 - 1994)
02/28/1994 05:00 PM House O&G
| Audio | Topic |
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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
HOUSE SPECIAL COMMITTEE ON OIL & GAS
February 28, 1994
5:00 p.m.
MEMBERS PRESENT
Representative Joe Green, Chairman
Representative Pete Kott
Representative Gary Davis
Representative Jerry Sanders
MEMBERS ABSENT
Representative Harley Olberg
Representative Joe Sitton
Representative Jerry Mackie
OTHER LEGISLATORS PRESENT
Representative Mike Navarre
COMMITTEE CALENDAR
HB 474: "An Act modifying administrative procedures and
decisions by state agencies that relate to uses
and dispositions of state land, property, and
resources, and to the interests within them, and
that relate to land, property and resources, and
to the interests within them, that are subject to
the coastal management program; and providing for
an effective date."
PASSED CSHB 474 OUT OF COMMITTEE
*HB 276: "An Act amending the purposes for which money in
the oil and hazardous substance release response
fund may be expended."
NOT HEARD
(*First Public Hearing)
PREVIOUS ACTION
BILL: HB 474
SHORT TITLE: ADMINISTRATIVE ACTION RELATING TO LAND
SPONSOR(S): RESOURCES
JRN-DATE JRN-PG ACTION
02/14/94 2375 (H) READ THE FIRST TIME/REFERRAL(S)
02/14/94 2375 (H) O&G, RESOURCES, JUDICIARY
02/16/94 (H) O&G AT 05:00 PM CAPITOL 124
02/28/94 (H) O&G AT 05:00 PM CAPITOL 124
BILL: HB 276
SHORT TITLE: OIL SPILL RESPONSE FUND: FISHER LOSSES
SPONSOR(S): REPRESENTATIVE(S) LARSON BY REQUEST,Carney
JRN-DATE JRN-PG ACTION
04/07/93 1070 (H) READ THE FIRST TIME/REFERRAL(S)
04/07/93 1070 (H) OIL & GAS, STATE AFFAIRS,
RESOURCES, FIN
02/28/94 (H) O&G AT 05:00 PM CAPITOL 124
WITNESS REGISTER
JAMES EASON, Director
Division of Oil & Gas
Department of Natural Resources
3601 C Street, Suite 1380
Anchorage, Alaska 99510-0734
Phone: (907) 762-2547
POSITION STATEMENT: In Support of HB 474
FRANK RYMAN III, Assembly Member
City & Borough of Yakutat
P.O. Box 160
Yakutat, AK 99689
Phone: (907) 784-3323
POSITION STATEMENT: In Opposition to HB 474
JON ISAACS
2418 Forest Park Drive
Anchorage, Alaska 99517
Phone: (907) 274-9719
POSITION STATEMENT: In Opposition to HB 474
BECKY GAY
Resource Development Council
121 West Fireweed Lane, Suite E
Anchorage, Alaska 99503
Phone: (907) 276-0700
POSITION STATEMENT: In Support of HB 474
STEVEN PORTER
ARCO Alaska
P.O. Box 100360
Anchorage, Alaska 99510
Phone: (907) 265-6269
POSITION STATEMENT: In Support of HB 474
MIKE O'MEARA
P.O. Box 1125
Homer, Alaska 99603
Phone: (907) 235-7767
POSITION STATEMENT: In Opposition to HB 474
LARRY SMITH
1520 Lakeshore Drive
Homer, Alaska 99603
Phone: (907) 235-3855
POSITION STATEMENT: In Opposition to HB 474
BEN MILLSTEIN
P.O. Box 531
Homer, Alaska 99603
Phone: None given
POSITION STATEMENT: In Opposition to HB 474
JIM EVENSON
P.O. Box 324
Kenai, Alaska 99611
Phone: (907) 776-8060
POSITION STATEMENT: In Opposition to HB 474
DREW SPARLIN
37010 Cannery Road
Kenai, Alaska 99611
Phone: (907) 283-4095
POSITION STATEMENT: In Opposition to HB 474
LOREN FLAGG
34824 K-Beach Road
Soldotna, Alaska 99669
Phone: (907) 262-2492
POSITION STATEMENT: In Opposition to HB 474
JAMES MYKLAND
P.O. Box 1241
Cordova, Alaska 99574
Phone: (907) 424-5141
POSITION STATEMENT: In Opposition to HB 474
RIKI OTT
P.O. Box 1430
Cordova, Alaska 99574
Phone: (907) 424-3915
POSITION STATEMENT: In Opposition to HB 474
MARILYN CROCKETT
Alaska Oil & Gas Association
121 West Fireweed Lane
Anchorage, Alaska 99503
Phone: (907) 272-1481
POSITION STATEMENT: In Support of HB 474
PAUL MAYS
Alaska Wilderness Recreation & Tourism Association
P.O. Box 1353
Valdez, Alaska 99686
Phone: (907) 835-4300
POSITION STATEMENT: In Opposition to HB 474
KARL KIRCHER
34824 K-Beach Road
Soldotna, Alaska 99669
Phone: (907) 262-2492
POSITION STATEMENT: In Opposition to HB 474
JOSEPH JOLLY
HC 2 Box 753
Soldotna, Alaska 99669
Phone: (907) 283-9505
POSITION STATEMENT: In Opposition to HB 474
THEO MATTHEWS
P.O. Box 389
Kenai, Alaska 99611
Phone: (907) 283-9540
POSITION STATEMENT: In Opposition to HB 474
LOISANN REEDER
960 Slalom Drive
Anchorage, Alaska 99516
Phone: (907) 346-1943
POSITION STATEMENT: In Opposition to HB 474
JEFF PARKER
1207 Hyder
Anchorage, Alaska 99501
Phone: (907) 274-5418
POSITION STATEMENT: In Opposition to HB 474
CLIFF EAMES
519 West 8th Avenue #201
Anchorage, Alaska 99501
Phone: (907) 274-3621
POSITION STATEMENT: In Opposition to HB 474
KYLE PARKER, Assistant Attorney General
Civil Division
1031 West Fourth Avenue, Suite 200
Anchorage, Alaska 99501-1994
Phone: (907) 269-5100
POSITION STATEMENT: In Support of HB 474
BARBARA FULLMER, Assistant Attorney General
Civil Division
1031 West Fourth Avenue, Suite 200
Anchorage, Alaska 99501-1994
Phone: (907) 269-5100
POSITION STATEMENT: In Support of HB 474
TAPE 94-9, SIDE A
Number 002
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.
BILLS NOT HEARD
HB 276: "An Act amending the purposes for which money in
the oil and hazardous substance release response fund may be
expended."
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