CSSSHB 86(JUD)am -INJUNCTIONS AGAINST PERMITTED PROJECTS  CHAIR SEEKINS reminded members they were contemplating Amendment 1 during the last discussion on CSSSHB 86(JUD)am. SENATOR THERRIAULT moved to withdraw Amendment 1 and replace it with corrected language. CHAIR SEEKINS announced that without objection, Amendment 1 was withdrawn. SENATOR THERRIAULT moved to adopt Amendment 2. He explained to members that he received a memo from legislative counsel who expressed a few areas of concern. Amendment 2 contains modifications that will address those concerns. The first concern was about the separation of power between the legislative and executive branches. To address that, language on page 3, lines 9 and 10 has been removed. The second change is to line 13 [page 3] where language was inserted to clarify that an individual's right to challenge the activity will not be cut off. He pointed out the counsel's concern was whether the courts would always grant an individual citizen's constitutional rights, despite what the Legislature did in statute. SENATOR OGAN expressed confusion and asked if the bracketed language on line 11 would remain in the legislation with additional language added to it. He noted when language is bracketed in a bill that usually signifies it is to be deleted. CHAIR SEEKINS asked members if they had any objection to rewriting Amendment 2 by removing the bracket at the beginning of line 11 and the bracket after the word "review" on line 13, and adding the phrase, "unless it is a claim based on the United States Constitution or the Constitution of the State of Alaska" for the purpose of clarity. SENATOR OGAN agreed those changes will eliminate further confusion. [No members objected.] REPRESENTATIVE FATE asked if Section 3 had been deleted. CHAIR SEEKINS said it was not. SENATOR THERRIAULT noted that he provided information to address Senator French's concerns. SENATOR FRENCH referred to a document entitled, Oil and Gas Projects in Cook Inlet, and noted it lists six projects. He asked where the Osprey project by Forest Oil company falls in that list. SENATOR THERRIAULT indicated it would fall in the Redoubt unit. SENATOR FRENCH asked if that is the only unit that has been involved in 10 years of litigation. CHAIR SEEKINS said he would not say the Redoubt unit is the only one with a problematic process, but, "...it is the one ... we have used as an example of the problem that exists." MR. KYLE PARKER, general counsel, Forest Oil Company, told members the project that Forest Oil spoke of yesterday that has undergone 10 years of litigation dates back to the lease sale in 1978. He clarified that during that 10 year time period, additional litigation over Cook Inlet lease sales has occurred, but that litigation was not reflected in the chronology presented to the committee. Other litigation regarding listing the beluga whale as an endangered species also transpired. He said some people would suggest that all of that litigation has been geared toward stopping oil and gas development in Cook Inlet. SENATOR FRENCH said he was trying to set up a clear distinction between this project and other projects in the Cook Inlet area. He said an example of a project that is going forward without too much difficulty is Conoco Phillips' Cosmopolitan exploration drilling in the southern part of the [Kenai] Peninsula. MR. PARKER said an important distinction between the Cosmopolitan and Redoubt projects is that the Cosmopolitan project is being drilled from shore. The Redoubt project brought the first new exploration and development platform into the Cook Inlet since the early 1980s. If the state is going to see additional oil and gas development in Cook Inlet, additional exploration and development platforms will have to be brought into the Inlet. The offshore platforms appear to be the focus of the litigation by the environmental groups. SENATOR FRENCH maintained that is the beauty of waiting for better technology and said the horizontal drilling that will be used on the Cosmopolitan well is astounding. He noted Conoco Phillips would be drilling several miles into the Inlet from on shore. CHAIR SEEKINS pointed out the permits that have been issued for the Cosmopolitan project and the Redoubt project would be grandfathered in under this legislation. He believes it is incorrect to say this legislation is specific to any project because it is not specific to Cook Inlet. SENATOR FRENCH said he would feel far more comfortable dealing with a clean copy of Amendment 2. He noted the legislation will make a big change to the way Cook Inlet permits will be addressed: it will freeze the permits in place and give them legislative blessing. He said he would like to hear from everyone who will be affected by this legislation, such as fishermen. He said he shares the concern of other legislators about passing legislation in the closing weeks of the session. SENATOR THERRIAULT apologized for presenting an amendment that had markings on it, but said it is clear. With regard to the previous action [on SJR 19], the Senate was asked to take action on a constitutional amendment that was introduced a few weeks ago. He noted there is a big difference between a constitutional amendment and a statute. CHAIR SEEKINS said he has great faith in Senator French's ability to understand Amendment 2. SENATOR ELLIS indicated the adoption of this amendment and passage of this legislation would end one court case. He said he is unclear about which other court cases will cease as a result of this legislation. CHAIR SEEKINS said he has no idea and that he has not considered that in this matter. He considers CSSSHB 86(JUD) am to be good legislation. MR. JOE BALASH, staff to Senator Therriault, said the language in Section 1 of Amendment 2 deals with all authorizations and permits up until the effective date of the law. He explained: And as we move through whatever period of time there will be between today and passage of the bill and then, finally, being signed into law, it will then be another 90 days before the new law is effective, which would be new bill section 3 on page 2. So, in that intervening time, there will be multiple permits and authorizations issued, which will be subject to the possibility of litigation throughout the summer and so if we did not have sort of this forward looking ability to say that there will not be an opportunity beyond these sets of circumstances, we could wind up with a very awkward situation with kind of a weird window in the middle that doesn't accomplish what we're setting out to do here. And so the potential is there for additional projects to be litigated and so we want to protect those additional projects, which are the ones cited on this first page here on the various exploration units and development units. SENATOR THERRIAULT said he wants to make sure everyone understands that getting a permit will still require applicants to undergo a lengthy process and a project must adhere to the requirements of the permit. He added: We have given specific standing to the applicant in case they're turned down - they can appeal. The affected coastal resource district, which is the entity that creates and shapes the local enforceable policies - that's where areas of extra sensitivity in a community - we allow the community to direct extra attention, extra protection for those areas, that's the coastal district. And individual Alaskans - we've clarified to make sure that everybody understands their right to due process - constitutional right - is not in anyway abridged by this. I just want to make sure that everybody understands we're not changing the permit process. We're just saying when you get to the end of the permit process, you're allowed to go forward with your project. SENATOR OGAN said when he first read this bill, he discussed with legislative counsel his concern that due process be provided. He said his concern was addressed. Amendment 2 will limit who has standing. The affected coastal resource district will be the place for due process for people who have problems. If people feel their due process rights are compromised on a constitutional basis by this legislation, they have standing to challenge that. He said although this legislation deals with one project involved in litigation, it also deals with all projects on a broad regional basis. MR. SCOTT NORDSTRAND, Deputy Attorney General for the Civil Division of the Department of Law, told members he provided the committee with a letter describing the department's concerns. He said the committee should be aware the ongoing litigation has a cost to the state as well as to Forest Oil Company. The state has incurred about $300,000 in legal fees, either internally or paid to the Trustees of Alaska. SENATOR FRENCH referred to Section 3 of Amendment 2, on page 2, and asked if that is specific to the Cook Inlet area or whether it will be applicable to any coastal program. MR. NORDSTRAND said the Department of Law has not undertaken a formal review of Amendment 2 but he sees nothing in it to suggest it is specific to Cook Inlet. SENATOR FRENCH asked if the amendment makes a statewide change to the Coastal Zone Management Plan. SENATOR THERRIAULT explained the coastal zone management system still operates the way it was set up: permit review, consistency determination, and the ability to elevate decisions by permit writers. However, [the amendment] will provide that when an applicant comes out with a permit in hand, the applicant can move forward and will not be subject to litigation unless the litigation is a constitutional matter, or the applicant or coastal resource district has specific standing. SENATOR FRENCH asked if it would apply statewide. SENATOR THERRIAULT affirmed that it would. 11:42 a.m.  SENATOR OGAN said he believes the intent of Amendment 2 is to provide a linear process for people investing in Alaska. He said he learned during his first year as a legislator that companies do not mind having to jump through hoops during the application process, but they need to know that when they've jumped through "hoop Z," they do not have to go back to "hoop A." He said that costs time and money and this state has driven away business because it does not have a linear process. CHAIR SEEKINS said he believes the public process is protected with this legislation. He said once the public process is completed and a permit has been issued, the cost of litigation is not in the best interest of the State of Alaska in terms of income, revenue, jobs, or local tax revenue. This legislation will provide a point of finality in the permit process. SENATOR FRENCH said he is aware the Legislature recently adopted a fairly comprehensive change to the Coastal Zone Management Plan; HB 191 is en route to the Governor for his signature. His understanding is that law has its own subsection (i). He said it is possible the legislature is sending two bills to the Governor with identical language and he questioned the result. MR. BALASH replied: Unlikely as it may seem, the Governor has the ability to veto HB 191, in which case we would need - the very next section in statute - or subsection would be (i). So, I think if you looked at 46.40.096 in HB 191, the very first piece of that section of statute that's been added is subsection (i). They both start with a new (i). But in our revisor's powers, over in [Legislative Legal and Research Services], they take a look at all of the legislation passed and enacted through the course of a session and the revisor is given specific statutory authority to place the sections and subsections where they belong in relation to one another. And so, I'm not sure what the final subsection was in 191. I think it went out to (q) or (r) so this would then be the next letter in the alphabet. SENATOR THERRIAULT agreed that the legislative system anticipates the need to mesh multiple laws together. He noted that the Senate had a fairly good debate on HB 191. Its big impact will be that the local enforceable policies will have to meet some standards so that contractors are not confronted with vague statements that do not describe what activity is entailed. CHAIR SEEKINS noted that objection to the adoption of Amendment 2 was maintained. After a roll call vote was taken, he announced that the motion carried with Senators Ogan, Therriault and Seekins in favor, and Senators French and Ellis opposed. SENATOR THERRIAULT moved SCS CSSSHB 86(JUD) from committee with individual recommendations and its attached fiscal notes. SENATOR FRENCH objected. He said he is still concerned with language on the first page of Amendment 2, lines 7 and 8, which basically says the legislature is putting its blessing on all oil and gas projects that had, as of the effective date of this act, a final authorization permit or other form of approval. He expressed discomfort with the "other form of approval" phrase, as it is vague and indeterminate. He moved to strike "other form of approval" from lines 7 and 8 on page 1 of Amendment 2. CHAIR SEEKINS noted that a motion was already on the floor. SENATOR ELLIS asked if the sponsor of the motion would be willing to withdraw his amendment to allow Senator French's motion to be addressed. SENATOR THERRIAULT agreed to do so and withdrew his motion. SENATOR FRENCH made a motion to amend Amendment 2 of SCS CSSSHB 86(JUD) by striking the words, "or other form of approval" from lines 7 and 8. He noted the punctuation would have to be cleaned up and the word "or" would have to be inserted between "authorization" and "permit." SENATOR THERRIAULT objected and asked that Mr. Parker or the former director of the Division of Oil and Gas provide an example. He pointed out that the Legislature controls the statutes that grant the approvals and permits. MR. JIM EASON, former director for the Division of Oil and Gas, Department of Natural Resources, and currently representing Forest Oil Company, told members that other authorizations do exist, one being best interest findings, another being letters of non-objection for activities considered to be minimal, such as collecting rock samples with a rock hammer. SENATOR THERRIAULT maintained his objection to amending SCS CSSSHB 86(JUD). CHAIR SEEKINS called for a roll call vote. The motion to amend Amendment 2 failed with Senators Ellis and French voting yes and Senators Ogan, Therriault and Seekins voting no. SENATOR THERRIAULT moved to pass SCS CSSSHB 86(JUD) from committee with individual recommendations. SENATOR ELLIS objected. CHAIR SEEKINS called for a roll call vote and announced the motion carried with Senators Ogan, Therriault, and Seekins in favor, and Senators French and Ellis opposed. SCS CSSSHB 86(JUD) moved from committee.