SENATE BILL NO. 142 "An Act designating the Department of Natural Resources as lead agency for resource development projects; making conforming amendments; and providing for an effective date." CS FOR SENATE BILL NO. 142(RES) "An Act designating the Department of Natural Resources as lead agency for resource development projects; making conforming amendments; and providing for an effective date." This was the first hearing for this bill in the Senate Finance Committee. Co-chair Wilken informed that the Senate Rules Committee at the request of the Governor sponsors this legislation. He stated that the intent of this legislation is to identify the Department of Natural Resources as the lead agency for resource development projects and to establish an Office of Project Management and Permitting within the Department. He noted that "this office would lead and coordinate all matters relating to the State's review and authorization" of these projects. Senator Bunde moved to adopt the original bill, SB 142, Version 23- GS1070\A rather than the Senate Resources committee substitute. Co-Chair Wilken asked that Members refrain from offering any motions at this time. He specified that the Senate Resources committee substitute is before the Committee. Without objection, Senator Bunde WITHDREW the motion. Co-Chair Wilken clarified that CS SB 142(RES) is before the Committee for discussion. TOM IRWIN, Commissioner, Department of Natural Resources, introduced Kurt Fredriksson, Deputy Commissioner, Department of Environmental Conservation, Mary Siroky and Janet Burleson Baxter, Legislative Liaisons for the Departments of Environmental Conservation and Natural Resources, respectfully, and noted that Richard LeFebvre, Deputy Commissioner, Department of Natural Resources, and Cameron Leonard, Natural Resources Section, Department of Law, were available via teleconference. Commissioner Irwin voiced support of Governor Frank Murkowski's efforts to develop and utilize the State's resources. He continued that this bill would facilitate and expedite the use of State resources by providing the Commissioner of the Department of Natural Resources with statutory authority to lead and coordinate all matters relating to the State's review and authorization of resource development projects. He stated that in order to accomplish this goal, the Department must have clear and explicit authority. He noted that while the Department is currently the lead agency for mining activities, this bill would provide "the explicit authority" required for other resource development activities. Commissioner Irwin continued that the establishment of the Office of Project Management and Permitting would allow the Department to efficiently review and authorize large projects and oversee the Alaska Coastal Zone Management Program. He stated that where possible, the permitting process would entail a project team approach. He stressed that the intent of this legislation is to coordinate and integrate projects and that this change would not alter the decision-making authority from other entities such as the Department of Environmental Conservation. He attested that the goal of this legislation "is to get people together." Commissioner Irwin continued that small, less complex projects that require few permits could benefit from the establishment of a lead agency coordination for review. He stated that these projects might or might not require the establishment of a project team. Commissioner Irwin specified that resource development projects that utilize the lead coordinating agency and project review team approach would have a three-phase process that would include evaluation of the project to determine whether the lead agency review project team approach would adequately address the review and permitting needs of the project; would result in the establishment of the project team, development of an integrated review schedule, and the dissemination of information requirements and completion of necessary agreements amongst the agencies and applicants; and lastly the actual project review and authorization process including public participation that adheres to the requirements specific to that project. Additionally, he noted that the bill would assist the Department's efforts to streamline project review and authorization by facilitating the state's ability to pull together agencies to address project specific concerns and to facilitate and expedite the review and authorization process; and to develop a more cohesive working relationship among representatives of the agencies. He stated that this is where the teamwork and communication develops. Thirdly, he stated that through better communication, more efficient permitting and consolidated public process, where possible, would assist in integrating the State and federal agency process requirements. Commissioner Irwin informed that the laws for resource development have expanded and that more agencies with permitting authority are involved in the process. He asserted that, "resource development should not be held up by the sheer complexities of government." He stated that this bill is intended to assist in alleviating that problem. Commissioner Irwin voiced that the provision relating to a repeal of this statute that is included in the Senate Resources committee substitute is a "sound concept" which is being expanded to other State projects. He informed that rather than this being a new concept, the Department currently utilizes the provision in its large mining project permitting. He further announced that the concern regarding the unintended consequences of the termination date clause, or "what follows down the road" is a key element in this discussion. He stated that by specifying that the lead agency authority being granted to the Department of Natural Resources would be repealed or sunset on July 1, 2007 would send the wrong message to developers and investors because he stressed that entities, which invest millions of dollars in a project, over as much as a twenty-year period, would interpret "the message as that the State will only stick with them for four years. This is not the intent we want to give out there. The perception is bad enough already." He avowed that the State is addressing this issue to verify that Alaska "in this for the long haul… we're going to make a program that works and that people are going to want to keep going." He stated that this lead agency legislation is one of many pieces of legislation that the Administration is furthering to accomplish efficient permitting. Senator Taylor voiced concern that other than establishing some timelines and a lead agency that would conduct hearings, the only thing accomplished by this legislation over the current process established by the Office of Governmental Coordination is the establishment of some firm timelines that would require entities to state positions on projects "within a given period." Sec. 46.35.071 (e) Each state agency having jurisdiction to approve or deny an application for a permit shall have the power vested in it by law to make such determinations. Nothing in AS 46.35.031 - 46.35.071 lessens or reduces these powers, and AS 46.35.031 - 46.35.071 modify only the procedures to be followed in the carrying out of the powers. Senator Taylor questioned why Section 46.35.071(e) provides each agency with the independent authority to approve or deny a permit as he attested that "if the Department of Natural Resources is truly going to be the lead agency, then all other agencies in State government should be advisory." He stated were this the case, the Department of Natural Resources could make a decision and the process could move forward. However, he asserted that "if every agency is allowed to have the veto power that we have seen exercised other the last several years, then I'm not sure that we're really accomplishing much other than electing the cheerleader for the committee and setting the timeframe for how long it would take them to kill the project for you." Commissioner Irwin responded that, while he understands Senator Taylor's concern, the large project team approach "does work." He stated that having a designated lead agency provides "the authority to get individual agencies to the table and that's what's critical." He stated efficiency is created by establishing communication at the onset of a project as opposed to affected agencies becoming involved as the project progresses and thereby causing project delays. He stated that, in addition to involving all agencies at the beginning of a project, the permittee is made aware of the flow of communication and project requirements and timelines. He stated that upon completion of the project team meeting, the Department of Natural Resources, as the lead authority, would establish timelines and the schedule of events and responsibilities. He reiterated that the process would work. Co-Chair Wilken questioned why the adoption of the sunset language amendment enlarged the original two-page bill to a fourteen-page bill as reflected in CS SB 142(RES), Version 23-GS1070\D. CAMERSON LEONARD, Assistant Attorney General, Natural Resources Section, Civil Division, Department of Law, testified via teleconference from Anchorage to confirm that the bill was expanded "purely" because of the sunset provision adopted by the Senate Resources Committee. He informed the Committee that the Murkowski Administration requests that the original version of the bill, which does not contain the sunset provision, be adopted. Co-Chair Wilken asked whether the Department of Natural Resources is unable to support the sunset clause because "it sends the wrong message to developers." Commissioner Irwin responded that the four-year sunset clause does send the wrong message to developers and that, instead, the State should send a message to developers conveying that the State is committed "to making this work." He expressed that the Legislature could conduct an annual review of the process and require the Department to be accountable for moving the process forward. Co-Chair Wilken surmised that a future administration might possess a different approach to the purpose of this legislation, and that the approach might "be an automatic retreat from this type of development in the State." Commissioner Irwin noted that the "power of an Administration can speed up or close down any process." He stated that the omission of the sunset clause would assist this Administration's efforts; but he voiced that, "it doesn't cure the problem of what future administrations might do." Amendment #1: This conceptual amendment transfers $36,200 from the Department of Environmental Conservation personal services budget to provide funding for Department of Natural Resources expenses that would be generated by this bill. Senator Olson offered a motion to adopt Amendment #1. He stated that this bill appears to reduce the demand on services provided by the Department of Environmental Conservation while increasing the demand for services in the Department of Natural Resources. Co-chair Wilken objected. He asked which of the two accompanying fiscal notes would be affected. Senator Olson identified the affected fiscal note as the Department of Environmental Conservation fiscal note #1. A roll call was taken on the motion. IN FAVOR: Senator Hoffman and Senator Olson OPPOSED: Senator Bunde, Senator B. Stevens, Senator Taylor, Co- chair Green, and Co-chair Wilken The motion FAILED (2-5) Amendment #1 FAILED to be adopted. Senator Bunde moved to adopt the original bill, SB 142, Version 23- GS1070\A as the working document. [Note: Co-chair Wilken identified this motion as Amendment #2 during discussion on the bill.] There being no objection, SB 142 was ADOPTED as the working document. Co-chair Wilken asked for confirmation that the Administration supports this action. Commissioner Irwin concurred. AT EASE 9:22 AM / 9:24 AM Senator Taylor moved to report the original bill from Committee with individual recommendations and accompanying fiscal notes. There being no objection, SB 142 was REPORTED from Committee with zero fiscal note #1 from the Department of Environmental Conservation and zero fiscal note #2 from the Department of Natural Resources. AT EASE 9:26 AM / 9:27 AM