HB 215-PIPELINE PROJECT: JUDICIAL REVIEW/ROW  2:17:15 PM CHAIR FRENCH announced the consideration of HB 215. He noted that the committee received a brief overview of the bill at the previous hearing and that the Senate committee substitute (CS), version X, was before the committee. He recognized that Speaker Chenault and Representative Hawker were present. 2:17:53 PM REPRESENTATIVE MIKE CHENAULT, sponsor of HB 215, said his staff would refresh the committee on the provisions in the bill. 2:18:28 PM TOM WRIGHT, staff to Representative Mike Chenault, reviewed the bill speaking to the following sponsor statement: [Original punctuation provided.] The objective of House Bill 215 is to prohibit the filing of lawsuits that have the potential to delay construction of in-state gaslines. The provisions under House Bill 215 modify current statute and the provisions only apply to state land rights-of-way. Claims may be filed only by an applicant, a competing applicant or a person who has a direct financial interest affected by the lease of a right-of-way. The requests for judicial review must be filed within 60 days of the publication of notice for a right-of-way lease application. Judicial review may only be granted for claims challenging the validity of the statute or challenging a denial of rights under the state constitution. Any claim will be barred unless it is filed within the 60 day time frame. [That means from the effective date of this bill since most of the right-of-way leases on state land have been granted or are in the process of being granted.] The Department of Environmental Conservation, under the Clean Water and Clean Air Acts, is exempted from the provisions pertaining to judicial review. All claims are to be filed in Alaska Superior Court which will have exclusive jurisdiction to determine the proceeding. The court will not have the jurisdiction to grant any injunctive relief with the exception of an issuance of a final judgment. This legislation is modeled after the Trans-Alaska Pipeline legislation, 43 USC, Chapter 34, that was adopted by Congress in 1973 (43 USC, Chapter 43, Sec. 1652 (d).) Similar legislation to House Bill 215 was passed by the Alaska State Legislature in 1973, Senate Bill 3, related to the TAPS line. The bill also allows the Alaska Gasline Development Authority (AGDC) to move from a common carrier requirement to a contract carrier option. This change is necessary to pursue a successful open season and project financing for an in-state gasline. CHAIR FRENCH recognized that Ken Vassar with AGDC, Ann Brown with the Department of Natural Resources (DNR), Daryl Kleppin, Tina Grovier, Joe Dubler, and Dan Fauske were available to testify and/or answer questions. CHAIR FRENCH referred to the October 5, 2011 memorandum from legislative counsel, Donald Bullock Jr., and asked for an explanation of "direct financial interest." MR. WRIGHT deferred the question to an attorney. 2:22:33 PM KEN VASSAR, General Counsel, Alaska Gasline Development Corporation (AGDC), said that someone with a "direct financial interest" would primarily be a competing applicant. CHAIR FRENCH asked if AGDC would be the applicant. MR VASSAR explained that Alaska Housing Finance Corporation (AHFC) previously leased the right-of-way and part of this legislative effort was to transfer the lease to AGDC. CHAIR FRENCH asked how much of the right-of-way AHFC had under lease. MR VASSAR said all of the right-of-way was currently under lease to AHFC. CHAIR FRENCH asked if it was a continuous right-of-way from the North Slope to Anchorage. MR VASSAR said that AHFC had all of the rights-of-way that DNR had authority to lease, but that other owners along the route were not part of the AHFC lease. CHAIR FRENCH asked if anyone had a map that showed which parts of the right-of-way were under lease to AHFC. 2:24:52 PM MR. WRIGHT said he wasn't aware of a map, but his understanding was that AHFC had over 300 miles of right-of-way and that an application had been submitted to the federal government for federal rights-of-way. He noted that Mr. Dubler might have additional information. CHAIR FRENCH asked how much of the pipeline route was federal right-of-way and how much was state right-of-way. 2:25:35 PM JOE DUBLER, Vice President and Chief Financial Officer, Alaska Gasline Development Corporation (AGDC), said there are 437 miles of state right-of-way, and once AGDC obtains the federal right- of-way the combination will represent over 90 percent of the rights-of-way. He suggested that Dave Haugen, the AGDC project manager, might know the exact number of miles of federal right- of-way. CHAIR FRENCH asked Mr. Haugen how many miles of the proposed pipeline was federal right-of-way. 2:26:06 PM DAVE HAUGEN, Project Manager, Alaska Gasline Development Corporation (AGDC), said he would follow up with the exact number, but it was over 200 miles. CHAIR FRENCH asked if the proposed Act would affect the federal rights-of-way in any way. MR. WRIGHT confirmed that the answer was no. CHAIR FRENCH asked if the pipeline would have to cross land that was neither state nor federal. MR. DUBLER said yes; AGDC would have to negotiate rights-of-way to cross a variety of lands including Native allotments, private lands, and mental health trust lands. CHAIR FRENCH asked if AHFC or AGDC currently held any rights-of- way on private land. MR. DUBLER answered no. CHAIR FRENCH asked where most of the private lands were located. MR. DUBLER said the bulk is in the Anchorage, Big Lake area but some is near Fairbanks and Cantwell. He offered to follow up with a map to show the different rights-of-way. 2:28:06 PM CHAIR FRENCH asked if HB 215 gives AGDC the right to negotiate those rights-of-way and try to collect them in one corridor. MR. DUBLER said no; the bill applies only to state rights-of- way. CHAIR FRENCH asked what would happen in the event of a recalcitrant private landowner along the proposed pipeline route. MR. DUBLER responded that AGDC is asking for the right of eminent domain, so the property would be condemned and taken for purposes of the gas pipeline. He confirmed that the landowner would receive fair market value for the condemned property. 2:29:06 PM MR. WRIGHT highlighted that there was already statutory authority for gas pipelines to invoke the right of eminent domain. CHAIR FRENCH commented that it is a utilitarian government authority for the greater good. He asked which landowners would be most affected by the proposed pipeline. MR. DUBLER said it would be private landowners in the Big Lake and Willow areas and AGDC expected to begin negotiations soon with these landowners to obtain rights-of-way. CHAIR FRENCH asked if, once AGDC connected to the distribution network in Big Lake, there would be sufficient capacity to move up to 500 million mcf of gas without constructing more pipelines. MR. DUBLER said that was correct; the plan was to enter the Enstar pipeline system at Beluga, so the pipeline won't enter the Municipality of Anchorage. 2:31:31 PM CHAIR FRENCH asked Ms. Grovier who might have a direct financial interest. 2:31:43 PM TINA GROVIER, Attorney, Birch Horton Bittner and Cherot, said the language came from existing statute, and it might be an adjacent landowner or a non-applicant who wants their comments on a proceeding to rise to the level of direct financial interest in order to have standing." CHAIR FRENCH asked if a competitor might bring a challenge because they, too, want to build a pipeline. MS. GROVIER agreed that was one possibility. CHAIR FRENCH posed a hypothetical situation of a competitor whose land the proposed pipeline would cross. MS. GROVIER qualified that it would be an adjacent landowner. CHAIR FRENCH asked if an Anchorage consumer could challenge the pipeline. MS. GROVIER clarified that the bill reflects the same framework as existing statute, with slight reordering. CHAIR FRENCH recalled the same debate with AGIA; the Legislature made sure that any challenges would be brought sooner rather than later so that a project wouldn't get derailed in the later stages by a lawsuit. He asked if AGIA adopted a 60-day or 90-day timeline MS. GROVIER said she couldn't speak to AGIA, but AS 38.35.200 has a 60-day timeline for someone to raise a challenge. CHAIR FRENCH reviewed Sec. 5 starting on page 6 and agreed with Ms. Grovier that it was all new language. MR. VASSAR said that under the current statutory language AGDC wouldn't have the background to know whether somebody was intended to be included, and if it came to a court challenge it would be difficult to identify who would be able to carry the burden of demonstrating a direct financial interest. It might be, but wouldn't have to be, a person who wants to lease the land for some other type of project and the AGDC project in some way gets in the way of their ability to lease the land. CHAIR FRENCH asked if the 60-day timeframe on page 6, lines [23 and 25] refer to a challenge to the constitutionality of this provision. MR. WRIGHT said yes. MS. GROVIER agreed and added that that idea came from the Trans- Alaska Pipeline Authorization Act (TAPPA) legislation as opposed to the direct financial interest language in AS 38.35.200(a). CHAIR FRENCH highlighted that Sec. 38.35.200 had been law since 1973. 2:38:52 PM SENATOR WIELECHOWSKI offered his understanding that someone could challenge the constitutionality of a statute at any time. He asked if he was incorrect. CHAIR FRENCH recalled that it was done in AGIA. 2:39:34 PM MR. WRIGHT read the judicial review from AGIA as follows: A person may not bring a judicial action challenging the constitutionality of this chapter or the constitutionality of a license issued under this chapter unless the action is commenced in a court of the state of competent jurisdiction within 90 days after the date that a license is issued. SENATOR WIELECHOWSKI asked if there was case law on that. MR. WRIGHT said that John Hutchins from DOL tried and was unable to find any challenges to TAPS either during or after that period. SENATOR COGHILL asked for an explanation of the language in Section 5 on page 5, lines 23-25. MR. DUBLER explained that the action refers to the signing of the lease with the state. All the references are to the state lease of the right-of-way between AGDC and DNR. MR. WRIGHT said Mr. Hutchins was prepared to expound on the answer he gave about challenges. 2:41:38 PM JOHN HUTCHINS, Assistant Attorney General, Civil Division, Department of Law (DOL), said the 60-day language came from the Trans-Alaska Pipeline Authorization Act, but the original model was probably from the Emergency Price Control Act of 1942. In Yakus v. United States, the U.S. Supreme Court upheld the 60-day limit to challenge the constitutionality of the Act or an action by the Office of Price Administration (OPA). He said he wasn't aware of an Alaska case. SENATOR WIELECHOWSKI asked what the fact scenario was. MR. HUTCHINS summarized that it was a wartime challenge of the constitutionality of the federal OPA price regulation statutes that said that a case could only be brought within 60 days of an action. The U.S. Supreme Court reviewed the case and upheld that provision of the statute. CHAIR FRENCH referred to the April 15, 2011 memorandum from Legislative Counsel, Donald Bullock Jr. that discussed how Moore v. State might apply to HB 215. He read the following from page 5: The limitations on bringing a claim under AS 38.35.200(c) are set by law; the equitable remedy of laches is not applicable. CHAIR FRENCH explained that the Moore case concerned oil and gas leases in Kachemak Bay. A provision in that lease barred someone from bringing a challenge after a certain length of time. On page 5 of the memo, Mr. Bullock said the court indicated disfavor of limitations and found that the plaintiffs were "not guilty of inexcusable delay" and that sufficient prejudice was established on the record. MR. HUTCHINS responded that laches is common-law doctrine and it was his belief that Moore was distinguishing between common law in statute and the statute of limitations. This is about a statutory limitation on bringing an action, and the question is whether the Legislature has the power to impose a time limit to bring an action. He opined that Yakus and the cases that affirm the Yakus holding were more relevant than Moore was. CHAIR FRENCH asked Mr. Hutchins to forward the Yakus citation to his office. 2:45:43 PM SENATOR PASKVAN asked what type of constitutional challenges the bill seeks to limit, and questioned how the Legislature could validate that it considered specific limitations if they weren't presented. MR. HUTCHINS replied the most obvious constitutional challenge would be an action by the commissioner to deprive someone of a property interest without due process. SENATOR PASKVAN assumed that this was about due process regarding the potential loss of an economic interest as opposed to a non-economic interest. MR. HUTCHINS agreed that it primarily deals with things that could be measured by an economic loss. SENATOR PASKVAN reiterated that the specific issues related to economic due process ought to be on the record. MR. DUBLER highlighted that DNR already issued the lease and AGDC followed all the statutory due process requirements in applying for the permit. CHAIR FRENCH clarified that he was saying that AHFC already had the right-of-way and that HB 215 would pass it to AGDC. MR. DUBLER agreed. MR. HUTCHINS added that [AS 38.35.200(c)] would affect more than the existing right-of-way decision. It would also affect permitting decisions that relate to the right-of-way so there is potential for a constitutional challenge relating to a permitting decision that's not yet been made. 2:49:31 PM SENATOR COGHILL asked what a final judgment would be reviewed Section 5, page 6, lines 28-30: Notwithstanding AS 22.10.020(c), except in conjunction with a final judgment on a claim filed under this subsection, the superior court may not grant injunctive relief, MR. HUTCHINS posed a hypothetical example of someone who had a permit to use part of the land in the right-of-way corridor. The construction activity and pipeline impaired the ability of that person to exercise his rights under his land use permit. He believed that the commissioner did not account for his use of the land or adequately notice him of the pipeline such that he could comment so he brought a constitutional challenge. If the court were to decide in his favor, he could get an injunction that would reverse whatever the commissioner had done that affected his interests. 2:51:17 PM SENATOR PASKVAN asked if the court would be unlikely to grant injunctive relief if the total remedy was money. MR. HUTCHINS said yes and that was one reason that provisions that bar temporary injunctive relief were upheld in the past. However, there could be circumstances under which a damages remedy could be held to be inadequate. He cited a hypothetical example of a stream crossing that required construction that could not be remediated entirely with money. An injunction might be barred in such a case. SENATOR COGHILL summarized his understanding of the circumstances under which the court would not grant injunctive relief. MR. HUTCHINS responded that the point is to prevent legal delays from delaying the project. 2:53:23 PM SENATOR WIELECHOWSKI asked if the exact route of the pipeline was established. MR. DUBLER explained that AGDC applied for several alternative routes in the draft EIS process, but the preferred route minimizes the length of the pipeline and the impact on the environment. The final EIS, due this summer, will come with a record of decision and the federal right-of-way. SENATOR WIELECHOWSKI asked if someone who wants to file a constitutional challenge within 60 days of the effective date of this Act potentially would not know the route. MR. DUBLER clarified that this only applies to the state portion; DNR already issued that lease and the route is established. SENATOR PASKVAN asked how state law compared to federal law for things such as stream protection. MR. DUBLER deferred the question to Tina Grovier. MS. GROVIER stated that the provision in Section 5 models the Trans-Alaska Pipeline Authorization Act (TAPAA) and her understanding was that there would not be any comparable federal statute that would apply to federal land. CHAIR FRENCH asked if the federal government treats challenges to federal rights-of-way the same way that AS 38.35.200 does for TAPS. MS. GROVIER said no, and clarified that while the federal government has treated challenges to its rights-of way in this manner in the past - under TAPPA for example, she did not believe that there was an example that would apply to the AGDC pipeline. SENATOR PASKVAN restated that he was trying to understand the current system for someone to challenge a federal right-of-way because of a stream crossing, for example. 2:58:33 PM MS. GROVIER offered to follow up. CHAIR FRENCH commented that the state will treat its rights-of- way in one legal method and it was fair to ask what legal method the federal government will use for its rights-of-way. 2:58:57 PM SENATOR COGHILL asked if the U.S. Army Corps of Engineers (USACE) and the Bureau of Land Management (BLM) would explain both federal and state rights-of-way to the public in meetings going forward. MR. DUBLER responded that the USACE focused on federal rights- of-way through the draft EIS process, and AGDC already held public meetings along the proposed route from Barrow to Wasilla. SENATOR PASKVAN mentioned a conflict last summer on an Interior waterway, and asked if federal right-of-way laws might preempt state laws if a federal waterway passed through land in the state right-of-way. MR. HUTCHINS explained that the Clean Water Act uses the phrase "Waters of the United States," and there was some ambiguity as to what that means. Clearly, it includes navigable waters and adjacent wetlands, but a waterway in the Interior probably is not "Waters of the United States" unless it is adjacent to a river that is a navigable waterway, he said. SENATOR PASKVAN asked Mr. Hutchins to submit a written explanation so he could better understand where federal law may and may not apply. MR. HUTCHINS agreed. CHAIR FRENCH asked if the provision in subsection (d) on page 7, lines 9-13, was necessary because the state was taking primacy on permits. MR. HUTCHINS deferred the question to Ruth Heese who was responsible for the provision. 3:02:32 PM RUTH HAMILTON HEESE, Assistant Attorney General, Civil Division, Department of Law (DOL), representing the Department of Environmental Conservation (DEC), explained that subsection (d) applies to three clean water and clean air programs that the U.S. Environmental Protection Agency had approved DEC to administer. She said that to add clarity, DOL suggested the sponsor make the following changes to the language in AS 38.35.200(d): Page 7, line 9, following "decision" Insert "or authorization" Page 7, line 10-11, following "under" Insert "a program approved or delegated" and Delete "authority delegated to the Department of Environmental Conservation" 3:05:17 PM CHAIR FRENCH summarized that appeals of DEC permitting decisions that relate to the Clean Water Act do not fall under the restrictions in AS 38.35.200(c). MS. HEESE clarified that it applies to both the Clean Water Act and the Clean Air Act. CHAIR FRENCH observed that land was being restricted. MR. WRIGHT explained that removing the second reference to DEC [page 7, line 11] keeps the EPA from taking control from the state of programs under the Clean Air Act. He said the state has the ability to administer programs under the Clean Water Act under the language that Ms. Heese described, and the sponsor would be happy to make the suggested changes. CHAIR FRENCH thanked the participants and held HB 215 in committee.