Legislature(2001 - 2002)
03/28/2001 03:35 PM Senate RES
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* first hearing in first committee of referral
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ALASKA STATE LEGISLATURE
SENATE RESOURCES COMMITTEE
March 28, 2001
3:35 p.m.
MEMBERS PRESENT
Senator John Torgerson, Chair
Senator Drue Pearce, Vice Chair
Senator Rick Halford
Senator Pete Kelly
Senator Robin Taylor
Senator Kim Elton
Senator Georgianna Lincoln
MEMBERS ABSENT
All Members Present
COMMITTEE CALENDAR
SENATE BILL NO. 156
"An Act amending the Alaska Land Act to clarify the requirement of
a single written Best Interest Finding required for the sale,
lease, or other disposal of state land or resources or an interest
in them, and relating to certain disposals involving multiphased
development; and providing for an effective date."
MOVED CSSB 156(RES) OUT OF COMMITTEE
SENATE BILL NO. 158
"An Act directing the commissioner of revenue to prepare a report
to the legislature relating to the state's participation in owning
or financing a gas pipeline project; and providing for an effective
date."
MOVED CSSB 158(RES) OUT OF COMMITTEE
SENATE BILL NO. 164
"An Act prohibiting leases under the Right-of-Way Leasing Act on
state land in or adjacent to the Beaufort Sea; and providing for an
effective date."
MOVED SB 164 OUT OF COMMITTEE
PREVIOUS COMMITTEE ACTION
SB 156 - No previous action to record.
SB 158 - No previous action to record.
SB 164 - No previous action to record.
WITNESS REGISTER
Ms. Judy Brady, Executive Director
Alaska Oil and Gas Alliance
121 W Fireweed #207
Anchorage AK 99508
POSITION STATEMENT: Supported SB 156.
Ms. Marty Rutherford, Deputy Commissioner
Department of Natural Resources
550 West 7th Ave. Ste 1400
Anchorage AK 99501
POSITION STATEMENT: Supported SB 156.
Mr. Mark Meyers, Director
Division of Oil and Gas
Department of Natural Resources
550 West 7th Ave.
Anchorage AK 99501
POSITION STATEMENT: Commented on SB 156.
Ms. Mary Lundquist, Assistant Attorney General
Department of Law
100 Cushman St., Suite 400
Fairbanks, AK 99701
POSITION STATEMENT: Commented on SB 156.
Mr. Ken Boyd (former Director, Division of Oil and Gas)
No address provided
POSITION STATEMENT: Commented on SB 156.
Mr. Jim Eason
No address provided
Anchorage AK
POSITION STATEMENT: Commented on SB 156.
Mr. Patrick Coughlin
Consultant to the Senate Resources Committee
Senator Torgerson
State Capitol Bldg.
Juneau AK 99811
POSITION STATEMENT: Commented on SB 156.
Mr. Darwin Peterson
Staff to Senator Torgerson
State Capitol Bldg.
Juneau AK 99811
POSITION STATEMENT: Commented on SB 158.
Mr. Wilson Condon
Commissioner
Department of Revenue
PO Box 110400
Juneau, AK 99811-0400
POSITION STATEMENT: Commented on SB 158.
Mr. Michael Hurley
North American Natural Gas Pipeline Group
P.O. Box 100360
Anchorage AK 99510
POSITION STATEMENT: Opposed SB 164.
Mr. Bill Britt
Pipeline Coordinator
Department of Natural Resources
411 W 4th Ave., 2nd Floor
Anchorage AK 99501
POSITION STATEMENT: Supported SB 164
Mr. Jack Griffin, Assistant Attorney General
Department of Law
1031 W 4th Ave., Suite 200
Anchorage AK 99501
POSITION STATEMENT: Commented on SB 164.
ACTION NARRATIVE
TAPE 01-24, SIDE A
Number 001
SB 156-BEST INTEREST FINDING UNDER AK LAND ACT
CHAIRMAN JOHN TORGERSON called the Senate Resources Committee
meeting to order at 3:35 p.m. and announced SB 156 to be up for
consideration.
SENATOR PEARCE said that SB 156 amends the Alaska Land Act to
clarify the requirement that the Department of Natural Resources
prepare a single, written Best Interest Finding for multi-phased
development projects. In 1994, the Legislature passed SB 308 to
amend the Alaska Land Act in response to several unfavorable Alaska
Supreme Court decisions that threatened the state's leasing
program. She explained:
We have a "catch-22" situation with offshore leases on
the North Slope where the court tried to require a Best
Interest Finding to discuss or lay out what the impacts
would be on onshore animals as a result of the offshore
sale. This is when they instituted phasing, because there
was really no way to guess what those might be, because
they didn't know if and where the development might be.
The legislation explicitly allowed project phasing and
precisely defined the scope of the Best Interest Finding
determination. Since its passage, recent court decisions
have continued to threaten the program and the courts
have said that the Department is obliged, at each phase
of development, to issue a best interests
finding…relating to that phase before the proposed
development may proceed.
Under SB 308, the original legislation, the Legislature
intended that a Best Interest Finding would be prepared
for the first phase, the disposal and subsequent phases
would be subject to the Department's approval and to
separate reviews by extensive permitting processes that
include public input and scrutiny of other agencies. The
Legislature did not intend the approval to be defined as
a Best Interest Finding determination as the courts have
misinterpreted. The Legislature intended the Department
to exercise their discretion to impose conditions in the
Best Interest Finding determination, issued for the
disposal, which would minimize future impacts.
Preparation of a Best Interest Finding determination for
every phase would be a very costly and time-consuming
process.
SB 156 elaborates the legislative findings for phasing
under the Alaska Land Act and amends AS 38.05.035 so it
becomes clear that DNR is required to issue a single
written Best Interest Finding for the disposal of state
land. It also ensures the public the opportunity to
comment at the exploration, production and transportation
phases of a project. By clarifying the Legislature's
original intent, SB 156 will overturn the courts'
erroneous interpretation. It provides clear guidance to
the courts regarding the e legislature's policy and will
result in the avoidance of protracted litigation and
associated delays or disruptions of the state's leasing
program and development of already leased acreage.
SENATOR PEARCE explained that the concern is if a Best Interest
Finding is required at every phase, the cost and time delay for
both the state and the industry would be enormous. They want to
make sure that doesn't happen.
SENATOR KELLY asked if a public meeting was part of the Best
Interest Finding.
SENATOR PEARCE said it is a very long and involved process. The
permitting processes in later phases also have opportunities for
public comment.
MS. JUDY BRADY, Executive Director, Alaska Oil and Gas Alliance,
supported SB 156. It makes it clear what the Department of Natural
Resources' obligation is to prepare one Best Interest Finding for
disposal of oil and gas lease lands. The only problem they see with
the bill is on page 5, lines 21 - 25, the public notice section.
They don't understand what that section is trying to accomplish and
that would be important.
MS. MARTY RUTHERFORD, Deputy Commissioner, Department of Natural
Resources, said:
As Senator Pearce noted, in a Supreme Court decision in
Kachemak Bay Conservation vs. Department of Natural
Resources 2000, the court spoke to the necessity for DNR
to take a continuing hard look at future development on
lease sale lands and to issue a Best Interest Finding on
each phase of a project before the proposed development
may proceed. DNR believes this interpretation was not the
intent of the legislature and this bill clarifies that
conclusion by specifying that additional Best Interest
Findings are not required in subsequent phases of a
project. Therefore, the administration supports this
bill. However, we would propose one amendment. On page 5,
line 21, add, "If the disposal is an oil and gas
disposal." We recommend this amendment, because the
primary focus of this legislation is on the oil and gas
activities. We believe that a public notice requirement
should be focused upon oil and gas and not upon other
disposal activities that do not currently require public
notice.
Number 800
CHAIRMAN TORGERSON noted that an amendment would be offered that
would take care of the public notice concern.
SENATOR ELTON asked where they get the most public involvement and
does it come mostly through the permit processes or through the
Best Interest Findings.
MS. RUTHERFORD answered that it depends on whether it's an oil and
gas activity or some other type of disposal.
SENATOR ELTON asked to start with oil and gas.
MR. MARK MEYERS, Director, Division of Oil and Gas, said he thought
they had a good public input throughout the whole process, but
there is great opportunity during the Best Interest Finding. He
said there is public input prior to development, also.
SENATOR ELTON asked how close this bill comes to the constitutional
provision that requires public notice and other safeguards in the
public interest in the disposal of state assets.
MS. RUTHERFORD answered that she believed it was within the
constitution and she believed that this amendment would continue
what has been the status quo for the Department of Natural
Resources' public processes.
SENATOR ELTON asked if she had gotten an analysis from the
Department of Law.
MS. RUTHERFORD said the Attorney General told the Director that the
constitution requires public notice prior to a disposal of an
interest in state lands and this provision actually deals with
public notice of later permitting activities.
SENATOR ELTON noted language on page 4, lines 9 - 11, "The Best
Interest Finding shall be based upon known information or
information that is made available to the director." He asked what
happens if there is known information that the developer has, but
doesn't give to the director.
MS. RUTHERFORD answered that the director is only required to
consider known information or information that is made available to
him through the public process. It does not require the director to
seek out additional information.
SENATOR ELTON asked what happens in a situation in which
information isn't transmitted to the director that could affect the
Best Interest Finding, specifically if the developer doesn't give
pertinent information to the director. "Does that void the Best
Interest Finding process?"
MS. MARY LUNDQUIST, Assistant Attorney General, answered:
A failure of industry to provide information to the
director could not void a disposal or void a Best
Interest Finding. The requirement is placed on DNR to
consider known information or information that is made
available to the director. The Alaska Supreme Court has
recognized that there is no requirement placed on DNR to
actively go out and solicit information. A Best Interest
Finding would not be overturned based on not actively
going out and seeking information. However, DNR's method
of operation is currently to widely publicize the lease
sales or other disposals and to consider all information
that is made available to them.
Number 1200
MR. KEN BOYD said he was one of the former directors of the
Division of Oil and Gas. He explained that a Best Interest Finding
is really for the disposal of state land and at that phase of the
process they are just issuing a lease. There is a huge process that
follows the issuance of that lease; the lease itself is a paper
transaction. This was clearly recognized by the legislature in SB
308. The director has to consider only those things that he knows
at that time. MR. BOYD continued:
To me, this is an extraordinarily important piece of
legislation. I believe the courts have misconstrued the
meaning of the legislature by saying that we have to do a
Best Interest Finding in every phase. Truly, the first
phase, when you're just issuing a lease, you are just
doing a paper transaction. At subsequent phases, I think
it's important to realize that the state is, through all
its many agencies and all its many powers, gathering a
lot more information. All the agencies, not just DNR,
have the opportunity to have any questions they need to
have answered, especially at subsequent phases.
MR. JIM EASON, another former Director for the Division of Oil and
Gas, said he was speaking on behalf of himself today. He wanted to
shed some historical perspective on any questions the committee
might ask. He was director during the time when many of the
lawsuits were spawned that led to SB 308. He was also working with
Senator Pearce and others in the legislature in 1994 to try and
correct that problem. He said further:
I am embarrassed to say that we obviously didn't do it
well enough for the Supreme Court, but hopefully, this
time it will work. It was the intent of the legislature
originally to have a Best Interest Finding for the
disposal of state interests and that is how the statutes
read before we became involved in 1994 and that's how
they read today. But the Court, including the Supreme
Court, apparently has made the judgment in a couple of
cases that in their reading of the amendments that
occurred in 1994, (the ones that are before you now),
that there is an implication that the subsequent process
after the disposal would include a detailed Best Interest
Finding at each phase. In other words, at exploration and
at development, if you're lucky enough to find something.
Based upon my experience, we were trying not to require
additional Best Interest Findings and I believe it was
the legislature's intent that that not be required.
Under the amendments that are proposed in SB 156, I
believe that you will correct that problem and make it
clear that one single Best Interest Finding is required.
And I believe that Senator Pearce has pointed out, and I
agree, that a number of things will be accomplished if
you do that. You will avoid some extraordinarily time-
consuming and very expensive and costly processes that
the state would be required to undertake if it were to be
required to do Best Interest Findings at each phase. You
would have additional delay and uncertainty in the
development of resources and, important to each of you, I
believe, delay in the receipt of state revenues to
support the programs that are important to all Alaskans.
I encourage you to take up SB 156 and pass it. I think it
will be to the state's benefit.
SENATOR ELTON said he appreciated Mr. Eason's and Mr. Boyd's
participation, because they are nonaffiliated experts. He asked if
the words: "This act is intended to make clear that public notice
and the opportunity to comment shall be provided at each phase of
the project." on page 4, line 12 was already covered under existing
regulations that govern permits or is this going to require new
regulations on the part of the Department.
MR. EASON replied that he believed all the operations that occur on
oil and gas leases are in the coastal zone. He elaborated:
First of all in the preliminary phase and the Best
Interest Finding phase, there certainly is detailed and
prescribed public notice and process for response. As a
matter of fact, the Best Interest Finding requires not
only public notice and meeting, but the preparation of a
preliminary finding and then public notice of that and
its availability and the opportunity for people to
comment and suggest changes, which then produces a final
Best Interest Finding for each disposal. Since the
disposals are occurring in the coastal zone, any
activity, including geophysical prospecting, drilling of
wells or building of facilities and structures if you
find something, all go through a review for coastal zone
consistency which involves a detailed public process.
I think that, at least in my reading, the sponsors are
trying to make clear on page 5, lines 21 - 25, through
some amendment language they are proposing, that if
there's any question, it's reaffirmed here that public
notice will take place on those subsequent phases in
either of two situations. Either, if you're proceeding to
the next phase, the Department will require notice under
regulations, which it will adopt, if it is not covered by
noticing provisions of the Alaska Coastal Management
Program. My perception, at least, is that this is
intended to make clear that there will be notice and if
it is not provided for now, it will be provided for under
this amendment.
SENATOR ELTON asked if he just gave the long answer of, "No, you
don't think that new regulations will be required?"
MR. EASON responded, "I believe today, noticing is occurring on all
leases in every instance and it hasn't required new regulations."
SENATOR PEARCE noted a zero fiscal note from the Department of
Natural Resources and that she had two amendments.
SENATOR PEARCE offered a technical correction to amendment #1 on
page 5, line 18 to delete "a" and insert "to". She then moved
amendment #1. There was objection for an explanation of the
amendment.
SENATOR PEARCE explained:
This answers and the second and third piece, I hope will
help alleviate Ms. Brady's and AOGA's concern. When we
passed SB 308, it was our intent that the phases - We do
a disposal or lease sale; then you've got an exploration
phase; you've got a development phase; you have a
transportation phase whether you're building a pipeline
or some way to get the product to market. So those are
the phases. I understand Judy's concern that the language
on page 5 might be now interpreted by laws meaning every
little thing that might be done might be a new phase. But
that's certainly not the legislature's intent and I think
this amendment helps clarify that. That was our intent in
SB 308. The other pieces of this amendment frankly speak
to drafting errors and small changes we needed to make.
SENATOR LINCOLN asked the committee to consider the meaning of the
proposed language if "or" was deleted on page 5, line 23.
MR. PATRICK COUGHLIN, Consultant to the Senate Resources Committee,
said he wanted to comment on Senator Elton's question regarding
whether regulations would have to be adopted. He explained:
Today everything that we're leasing has been in the
coastal zone and therefore, new phases are publicly
noticed pursuant to those regulations. However, we are
now issuing leases outside of the coastal zone and we
have a lease sale coming up in May for the Foothills.
Some of that acreage is outside the coastal zone. So, the
purpose of this was to insure that for leases that might
fall out of the coastal zone and, therefore, wouldn't be
subject to public notice under the coastal zone
provisions, there would be public notice for such
activities and those would be the regulations the
Department would have to adopt.
The reason for changing "or" to "unless" [Senator
Lincoln's question] was because it's really meant to be
either or, not both. When some people read the "or" they
were confused and the suggestion was you either give it
by the regulations adopted by the agency unless it was
begin given under the coastal zone management program.
SENATOR PEARCE moved to amend the amendment on page 5, line 23, to
delete "or, if" and insert "unless".
SENATOR ELTON noted that the answer also indicated that new
regulations are going to be necessary if this falls outside the
coastal zone. "So, the short answer has changed a little bit."
CHAIRMAN TORGERSON said that amendment #1 had been noted and asked
if there was any further discussion. There were no objections and
amendment #1 was adopted.
SENATOR PEARCE said she understands AOGA's concern that there not
be a new definition of what every little piece is that might
require a public notice. She agrees with Mr. Eason that any leasing
and further phases are happening now without public notice. She
explained further:
However, and I hope I get a little latitude here, I never
would have imagined that the Railroad could have managed
to build a terminal at the Anchorage Airport that had no
EIS, no environmental assessment, no public notice
requirements, because it fell through all of the cracks
in all of the programs…There was never public notice
before the project was actually happening and so, there
are situations out there where we find we don't have the
blanket that we think we have. I understand the interest
of the folks in Cook Inlet of making sure, and all of the
state, that they have public notice as these phases are
moving forward so they have an opportunity to testify and
provide comments. I would like to have that prescribed in
law as this does as opposed to have systems such as the
stake holders process that the governor followed on a
previous Cook Inlet lease sale that I think didn't
accomplish much and, on the other hand, was completely
outside of the law. So, I'm happy to see we are calling
for specific opportunities for that to happen.
SENATOR PEARCE offered amendment #2 that was requested by the
Department on page 5, line 21 which points out that this new
section is for those disposals that are oil and gas disposals.
SENATOR LINCOLN apologized to Senator Pearce with a technical
amendment deleting "if".
MS. RUTHERFORD said she was comfortable with that change.
CHAIRMAN TORGERSON announced there were no further objections and
the amendment was adopted.
SENATOR HALFORD asked if there was any limitation on how long a
Best Interest Finding lasts.
MS. LUNDQUIST answered that there is a provision in 035(e) that
deals with oil and gas lease sales releasing under 180.
MR. MEYERS replied Best Interest Findings last for 10 years.
MS. LUNDQUIST added, "Unless substantive new information becomes
available. Then they would have to do an amendment prior…"
SENATOR HALFORD said at some point you go back and review the Best
Interest Finding on the original gas line or the application for a
refining plant and, "it's sold to somebody else and it goes on
forever." I just wanted to make sure there was a limitation on it.
SENATOR ELTON noted that Senator Pearce said this would save a lot
of time and energy in the Department for doing this and the fiscal
note doesn't reflect any savings and he was assuming it would be
potential savings, because they are not now doing what the courts
suggested they ought to be doing.
MS. RUTHERFORD replied that was a correct interpretation.
SENATOR PEARCE moved to pass CSSB 156 (RES) with the fiscal note
with individual recommendations. There were no objections and it
was so ordered.
SB 158-REPORT:STATE PARTICIPATE IN NAT GAS PIPE.
CHAIRMAN TORGERSON announced SB 158 to be up for consideration.
MR. DARWIN PETERSON, Staff to Senator Torgerson, explained that
commercialization of North Slope natural gas has been one of the
legislature's top priorities this session. The potential benefits
of commercialization include short and long-term employment,
additional state and municipal revenues, opportunities for new
industries and cheap clean energy for the state. This bill would
direct the Commissioner of the Department of Revenue to retain a
financial expert to examine whether the state should participate in
either ownership or financing of a natural gas pipeline. The expert
would examine any benefit or detriment to a project caused by the
state's participation. In the past the state has retained financial
experts to advise it on the possibility of the state participating
in such a project. Those reports need to be updated. The bill would
insure that the legislature participates in the preparation of the
report by:
· 1. requiring that the chairs of the Senate and House Resources
Committees periodically meet with the expert to review data
and information about the report, and
· 2. requiring that the Commissioner provide progress reports to
the chairs every 60 days.
The bill would require the Commissioner to prepare a confidential
report with recommendations addressing the state's options by
January 31, 2002 and submit it to the legislature and the governor.
SENATOR ELTON asked why they used January 31, 2002, when they are
anticipating a report from the producers at the end of this year.
CHAIRMAN TORGERSON responded that he came up with that date but
said, "Maybe we want it quicker."
COMMISSIONER WILSON CONDON, Department of Revenue, said "I will
take the responsibilities outlined in this bill, if it becomes law
and if funds are appropriated that will allow us to enter into a
contract with a suitable party to do the work. I have no
recommendations in terms of changes to the assignment as reflected
in the bill."
CHAIRMAN TORGERSON asked him what he thought of the January 31,
2002 date.
COMMISSIONER CONDON replied that was his sister's birthday and it
will remind him to send her a card.
SENATOR LINCOLN wanted to know, "If that were not your sister's
birthday, would that date be good?"
COMMISSIONER CONDON replied, "Yes, it would."
SENATOR ELTON asked if it could be earlier.
COMMISSIONER CONDON replied that he, "didn't want to promise
anything any earlier."
SENATOR LINCOLN said on page 2, line 29 it says that the
"Commissioner of Revenue shall contract with a qualified or
suitable firm or person qualified…..to complete this job", but the
fiscal note says the Commissioner would contract with and
investment banking firm for the expertise. She asked if that was
the individual they were referring to.
CHAIRMAN TORGERSON replied that it was his intent to give the
Commissioner as much latitude as possible and he had talked all
along about a banking firm that had a lot of information and
expertise in this field. But it could be a person.
SENATOR TAYLOR moved amendment #1.
CHAIRMAN TORGERSON explained that the amendment inserts another
section that says, "The state should participate in a gas pipeline
project by establishing a private corporation, which would be
composed of Alaska residents who wish to become shareholders, that
would own a portion of the project or assist in the construction
and operation of the project." He explained that it was brought to
him by another member who wanted the opportunity to have shares
available so that individual Alaskans might be able to buy them.
TAPE 24, SIDE B
CHAIRMAN TORGERSON said he didn't think that would have much impact
on investment firms or anyone else looking at it.
CHIARMAN TORGERSON noted there were no objections to amendment #1
and it was adopted.
SENATOR TAYLOR moved to pass CSSB 158(RES) from committee. There
were no objections and it was so ordered.
SB 164-NO GAS PIPELINE OVER BEAUFORT SEA
CHAIRMAN TORGERSON announced SB 164 to be up for consideration. He
explained that SB 164 makes legislative findings saying, "We want
the North Slope gas for the highest utilization to be made for in-
state usage to the maximum - jobs and opportunities that are within
the state for value-added opportunities and adding significant
long-term property base for the state and the bill concludes with
making a legislative Best Interest Finding that prohibit the
Commissioner from issuing a lease for the right-of-way over the top
until a line is built south."
MR. MICHAEL HURLEY, North American Natural Gas Pipeline Group, said
the three companies in the group are BP, ExxonMobil, and Phillips
and they are, "working diligently to develop an economically viable
project to commercialize North Slope natural gas by pipeline
through Canada to the Lower 48 markets."
FERC, before it issues a Certificate of Public Convenience and
Necessity, requires them to analyze alternative pipeline route
options as part of the application process. This project has the
potential to be the largest energy project in North America and
will require capital investments in the billions of dollars. He
said their energies are used for a thorough evaluation of
alternatives and an understanding of their relative strengths,
weaknesses, risks and rewards. Their efforts are, "focused on
creating and understanding opportunities, not prematurely
discarding them. This legislation would do the later."
MR. HURLEY said that limiting options would discourage other
investors in Alaska projects. Any Alaskan projects, "must be able
to deliver products to the market at a competitive cost in order to
succeed. There are many other competing sources of supply and
buyers will go elsewhere if a project fails in that regard. While
our work may show that a southern route does offer the best
combination of benefits and economic viability to Alaskans, it must
be realized that efforts to prohibit the consideration of other
development options, such as a northern route, may impede an Alaska
natural gas project from moving forward."
MR. HURLEY said they were listening to the views of the Alaskan
legislature and Alaskan citizens and were evaluating the
alternatives on the basis of seven criteria:
· Overall project economics
· Alaskan access to gas
· Jobs for Alaskans
· Revenue to the State
· Safety
· Environmental protection
· Project timing
We do not feel that we have enough information, yet, to
make a route decision. That is the reason for our
aggressive work program this year. The effect this
legislation will have on FERC and other agency permit
applications is as yet unknown.
SENATOR TAYLOR asked how this legislation would preclude them from
analyzing all the routes.
MR. HURLEY answered that they don't think that; they don't know
what FERC will require of them as a result of its passage.
CHAIRMAN TORGERSON said he, "Found it difficult to believe FERC is
going to make you look at options when the President of the United
States and Congress has picked one. FERC doesn't have a dog in this
fight." He thought not wanting the southern route was an
intercompany policy.
MR. HURLEY replied that they are approaching this as a green field
application that would require an alternative analysis as part of
the backup of the application.
CHAIRMAN TORGERSON asked if they were ignoring the authorized
route.
MR. HURLEY replied that the lack of clarity about how the old laws
applied and whether they still apply has caused them to push
forward as if it were a green field application.
SENATOR LINCOLN said that she was a bit offended by his testimony
today. "To me it suggests that we have not been diligent in our
analysis of the different routes and what's in the best interests
of the state." She didn't think there had ever been any question
about the dedication of Alaskans' access to gas and jobs, revenues
to the state, safety and environmental protection. As far as
timing, "We would like to see that done as quickly as possible…"
SENATOR LINCOLN continued: "This Chair, I've given him great kudos
for really taking the Resources Committee through all of the
routes, to hearing the public testimony, hearing from the
producers, to hearing from the different groups that have an
interest in this."
MR. HURLEY apologized and said it wasn't intended to offend.
MR. BILL BRITT, Alaska State Pipeline Coordinator, strongly
supported SB 164. The over-the-top route is not in the state's best
interests for the reasons sighted nor do they believe it would be
cheaper or faster due to a variety of design and permitting
considerations.
However, a brief legal review has revealed some possible legal and
constitutional issues, especially related to separation of powers.
He said they needed more time to examine the issue. They are
concerned about the precedent of this very prescriptive statute.
They agree with the policy, but feel that they would be led to the
same result without the prohibition in section (b), page 3.
CHAIRMAN TORGERSON asked what the separation of powers issue he was
concerned with.
Number 1800
MR. JACK GRIFFIN, Supervisor of the Oil and Gas Division in the
Department of Law, said their legal review has been cursory, but on
the face of the bill there is a separation of powers concern.
While the legislature clearly has the constitutional
authority to establish land use policy in the first
instance, as a rule it establishes that policy on laws of
general applicability and leaves the implementation of
that policy to the executive branch. That's the approach
the legislature has chosen and is reflected in the
current Right-of-Way Leasing Act.
SB 164, on the other hand, starts off with the general
and very legitimate policy consideration articulated by
the legislature, but then in subparagraph (b), directs
the commissioner to exercise the discretion in the event
the commissioner sees application for a particular
project in a particular area. The problem here is not
really what the bill would do, but how it would do it.
For example, the legislature clearly makes the state
lands under the Beaufort Sea a state park. The
legislature could clearly circumscribe the territorial
reach of the Right-of-Way Leasing Act so that it doesn't
reach submerged lands and the legislature could follow
its legitimate policy articulating not only applicable
policy considerations that must be evaluated and applied
by the executive to implement this particular act. Those
would be much easier to defend.
It's possible to put an interpretive clause on section
(b) that would in effect interpret it as essentially a
elucidation on the territorial scope of the Right-of-Way
Leasing Act. I think the problem with that particular
interpretation, though, is that it ignores the
specificity with which the bill identifies the offending
project. For example, the commissioner can still issue a
right-of-way lease for a gas pipeline that would follow
the ANWR coast to Kaktovik. The pipeline goes on to
Canada and then south at the commissioner's discretion
has been eliminated. Conditions are [indisc.] saying
separation of powers concerns that the specificity with
which that particular project is identified raises, at
least potentially, concerns under the United State
Commerce Clause and under the U.S. and State people's
protection clauses.
He didn't have enough time to analyze whether those concerns are
significant, but on the face of the bill they could be significant.
CHAIRMAN TORGERSON said those same concerns were also in the
NorthStar agreement in which Kachemak Bay Reserve was made off
limits to oil and gas drilling, and that passed muster of the
Supreme Court. He advised Mr. Griffin to check it out if he had
some free time, but he thought it would be a waste.
SENATOR TAYLOR moved to pass SB 164 from committee with individual
recommendations. There were no objections and it was so ordered.
CHAIRMAN TORGERSON adjourned the meeting at 4:45 pm.
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