HCR 11 - NORTHSTAR AGREEMENT LITIGATION Number 0010 CHAIRMAN GREEN announced the first item on the agenda was HCR 11, Urging the Attorney General of the State of Alaska to use every appropriate resource and due diligence to defend the state's interests in the civil action filed against the state challenging the 1996 revisions of the Northstar unit leases, and respectfully requesting the Superior Court of the State of Alaska to give expeditious consideration to the matter. Number 0028 REPRESENTATIVE GAIL PHILLIPS, sponsor of HCR 11, said on February 13, 1997, British Petroleum announced they would immediately stop production work on their Northstar oil field development project. The company indicated the reason for the work stoppage was their concern about a lawsuit challenging revisions to the Northstar lease terms ratified by the Alaska legislature and signed into law by the Governor last year. She said HCR 11 asks the attorney general of the state of Alaska to use every appropriate resource and due diligence to defend the state's interest in this case. It also respectfully requests the superior court to expedite consideration of appending legislation so that work on the project can resume as quickly as possible. REPRESENTATIVE PHILLIPS said, in 1996, the legislature authorized the commissioner of natural resources to revise the Northstar unit oil and gas leases. At the time there was a strong commitment to Alaska hire, Alaska build and Alaska buy in the development of the field. Following the revised lease agreement, construction of modules for the Northstar project began in Anchorage. Several Alaskan construction and oil service companies made preparations for the increased work load. People were hired and plans were put into place. The lawsuit has directly resulted in many Alaskans losing their jobs. In the interest of all Alaskans, this case must be resolved quickly. The resolution simply asks the court to act as expeditiously as possible on the hearing, in order to put Alaskan families back to work. REPRESENTATIVE PHILLIPS said there is a work draft before the committee. She said committee changes were incorporated in the work draft, but she had one other suggestion. Referring to page 2, line 16, of the work draft, she recommended that line 16 be amended from "would ask" to "has asked" in light of the newspaper article which said that the Governor had asked the judge to toss out the lawsuit on Northstar. She said HCR 11 will go hand in glove with the Governor's request. Both the legislature and the Governor would ask the courts, while fully recognizing the separation of powers, to act as expeditiously as possible in this matter. Number 0267 DALE BONDURANT testified next via teleconference from Kenai. He said that this state will non-competitively give away the Northstar royalty provision is another bump in the present legislative giveaway program of Alaska's own resources for the real purpose of increasing industry profit at the expense of the public's long term benefits. Even after industry enters into and are successful in the open and competitive bidding process, they come back and demand self-interest changes in their contractual commitments. He said industry is saying they can't have any more restrictive regulations, but are readily demanding lower than their contractual commitments, including their refusal to voluntarily pay their royalty debts. MR. BONDURANT said this resolution and the voluntary changes of the industry's bidding contract liability is just another example of the numerous pending bills intended to lower responsibility of environmental protection, resource conservation and the public trust rights as owner of Alaska's common property resource. The 1997 legislature's attitude flies in the face of the first statement on HCR 11, "Whereas a majority of Alaskans support safe and responsible oil development in the state". He ended there and challenge the sponsor to add the following statement, "as proof of this responsibility we offer the examination of the intent of the following pending regulations which include HB 28, HB 29, HB 4, HB 23, HB 57, HB 58, HB 31, HB 60, HB 68, HB 109, HB 128." MR. BONDURANT said industry's continued demand for more favorable financial climate shows their self-interest attitude by extending its lobby of a reduction in state budget funding for education and sports. This includes a reduction of commitment for extracurricular activities such as sports, music, crafts and social activities as well as cutting health care for the young and elderly. Number 0543 JERRY McCUTCHEON testified next via teleconference from Anchorage. He asked why BP (Alaska) Inc. started the Northstar modules knowing that they were going to be sued. He said Badami is going to go on- line before Northstar, the crews from Badami will transfer to Northstar. He questioned why Northstar modules were started before work began on the Badami modules, especially when the modules are the same. He asked why the Badami modules are going to be built in Calgary and why BP was in such a hurry to get the Northstar modules started. He further questioned why BP didn't bother to check with the Department of Transportation and Public Facilities (DOT/PF) as to the adequacy of the three bridges to get the modules across of which there will be four by the end of summer. Given all those questions, it is rather obvious that BP started the Northstar modules for the simple purpose of cancelling them. Number 0710 REPRESENTATIVE CON BUNDE made a motion that the committee adopt the committee substitute O-LS0615\B, dated February 26, 1997, as the committee's working document. Hearing no objections, CSHCR 11(JUD) was before the committee. Number 0756 REPRESENTATIVE BRIAN PORTER made a motion to adopt Amendment 1, located on page 2, line 16, deleting the words "would ask" and replacing them with "has asked" to CSHCR 11(JUD). Hearing no objection Amendment 1 was adopted. Number 0794 REPRESENTATIVE BUNDE made a motion to move CSHCR 11(JUD) from committee with individual recommendations as amended. Hearing no objection CSHCR 11(JUD) was moved from the House Judiciary Standing Committee.