HOUSE JUDICIARY STANDING COMMITTEE April 27, 1994 2:00 p.m. MEMBERS PRESENT Representative Brian Porter, Chairman Representative Jeannette James, Vice-Chair Representative Gail Phillips Representative Pete Kott Representative Joe Green Representative Cliff Davidson Representative Jim Nordlund MEMBERS ABSENT None OTHER LEGISLATORS PRESENT Senator Suzanne Little COMMITTEE CALENDAR SB 308: "An Act modifying administrative procedures and decisions by state agencies that relate to uses and dispositions of state land, property, and resources, Bill Status: Hearing to be continued until April 28, 2 p.m.and to the interests within them; and modifying administrative procedures and decisions by state agencies that relate to uses and activities involving land, property, and resources, and to the interests within them, that are subject to the coastal management program when the use or activity is to be authorized or developed in phases; and providing for an effective date." PASSED OUT OF COMMITTEE WITH LETTER OF INTENT WITNESS REGISTER MARY ANN LUNDQUIST, Assistant Attorney General Civil Division Department of Law 1031 W. 4th, Suite 200 Anchorage, AK 99501-1994 Telephone: 269-5254 POSITION STATEMENT: Introduced SB 308 JAMES EASON, Director Division of Oil and Gas Department of Natural Resources PO Box 107034 Anchorage, AK 99510-0734 Telephone: 762-2547 POSITION STATEMENT: Testified in support of SB 308 PETER VAN TUYN Trustees for Alaska A Non-Profit, Public Interest, Environmental Law Firm 725 Christensen Drive, Suite 4 Anchorage, AK 99501 Telephone: 276-4244 POSITION STATEMENT: Testified in opposition to SB 308 NANCY WAINWRIGHT Address Unavailable POSITION STATEMENT: Presented testimony on SB 308 from Jon Isaacs, Consultant, Jon Isaacs and Associates THEO MATHEWS United Cook Inlet Drift Association P.O. Box 389 Kenai, AK 99611-0389 Telephone: 283-3600 POSITION STATEMENT: Testified in opposition to SB 308 WALT FURNACE Alaska Support Industry Alliance 4220 B St., Suite 200 Anchorage, AK 99521 Telephone: 337-5811 h. 563-2226 w. POSITION STATEMENT: Testified in support of SB 308 LINDA FREED Community Development Director Kodiak Island Borough Assembly 710 Mill Bay Road Kodiak, AK 99615-6340 POSITION STATEMENT: Testified in regard to SB 308 PAUL FUHS, Commissioner Alaska Department of Commerce and Economic Development PO Box 110800 Juneau, AK 99811-0800 Telephone: 465-2500 POSITION STATEMENT: Testified in support of SB 308 BRAD PENN Alaska Oil and Gas Association 121 W. Fireweed, Suite 207 Anchorage, AK 99503 Telephone: 272-1481 POSITION STATEMENT: Testified in support of SB 308 SENATOR SUZANNE LITTLE Alaska State Legislature State Capitol, Room 7 Juneau, AK 99801-1182 Telephone: 465-2828 POSITION STATEMENT: Testified in regard to SB 308 JOHN OSCAR, President Native Village of Tununak Tununak IRA Council Department of Natural Resources PO Box 107 Tununak, AK 99681 Telephone: 652-6527 POSITION STATEMENT: Testified in opposition to SB 308 ELIZABETH KERTTULA, Assistant Attorney General Civil Division Department of Law PO Box 110300 Juneau, AK 99811-0300 Phone: 465-3600 POSITION STATEMENT: Testified regarding SB 308 PREVIOUS ACTION BILL: SB 308 SHORT TITLE: ADMIN ACTION RE LAND/RESOURCES/PROPERTY SPONSOR(S): RESOURCES JRN-DATE JRN-PG ACTION 02/14/94 2828 (S) READ THE FIRST TIME/REFERRAL(S) 02/14/94 2828 (S) RES, FIN 02/14/94 (S) RES AT 3:30 PM BUTROVICH RM 205 02/22/94 (S) RES AT 12:00 PM BUTRVICH RM 205 02/22/94 (S) MINUTE(RES) 02/22/94 (S) RES AT 3:00 PM BUTROVICH RM 205 02/23/94 2937 (S) RES RPT CS 3DP 1NR 1DNP NEW TITLE 02/23/94 2937 (S) ZERO FN TO SB & CS PUBLISHED 02/23/94 2937 (S) (DNR, F&G, GOV, DEC) 02/24/94 (S) FIN AT 09:00 AM SENATE FIN 518 02/24/94 (S) MINUTE(FIN) 02/28/94 (S) FIN AT 09:00 AM SENATE FIN 518 02/28/94 (S) MINUTE(FIN) 03/02/94 (S) FIN AT 08:00 AM SENATE FIN 518 03/22/94 (S) FIN AT 09:00 AM SENATE FIN 518 03/22/94 (S) FIN AT 10:00 AM SENATE FIN 518 03/24/94 (S) FIN AT 1:00 PM BUTROVICH RM 205 03/25/94 (S) FIN AT 8:00 AM BUTROVICH RM 205 04/08/94 (S) FIN AT 08:30 AM SENATE FIN 518 04/11/94 (S) FIN AT 09:00 AM SENATE FIN 518 04/12/94 3582 (S) FIN RPT CS 4DP 1NR 1DNP NEW TITLE 04/12/94 3582 (S) FN TO CS PUBLISHED (DNR) 04/12/94 3582 (S) PREVIOUS ZERO FNS APPLY (GOV, DEC, F&G) 04/13/94 (S) RLS AT 04:10 PM FAHRENKAMP ROOM 203 04/14/94 3666 (S) RULES RPT 2CAL 2NR 4/14/94 04/14/94 3668 (S) READ THE SECOND TIME 04/14/94 3668 (S) FIN CS ADOPTED UNAN CONSENT 04/14/94 3669 (S) ADVANCE TO 3RD RDG FAILED Y8 N8 E1 A3 04/14/94 3669 (S) THIRD READING 4/15 CALENDAR 04/15/94 3722 (S) READ THE THIRD TIME CSSB 308(FIN) 04/15/94 3722 (S) MOTION TO RETURN TO 2ND FOR AM 1 04/15/94 3722 (S) RETURN TO 2ND FOR AM 1 WITHDRAWN 04/15/94 3722 (S) MOTION TO RETURN TO 2ND FOR AM 2 04/15/94 3723 (S) RETURN TO 2ND FOR AM 2 FLD Y10 N9 E1 04/15/94 3723 (S) RETURN TO SECOND FOR AM 3 UNAN CONSENT 04/15/94 3724 (S) AM NO 3 MOVED BY LITTLE 04/15/94 3724 (S) AM NO 3 FAILED Y8 N11 04/15/94 3724 (S) AUTOMATICALLY IN THIRD READING 04/15/94 3725 (S) FLD TO ADOPT LETTER OF INTENT Y7 N12 E1 04/15/94 3726 (S) PASSED Y13 N6 E1 04/15/94 3726 (S) EFFECTIVE DATE PASSED Y15 N4 E1 04/15/94 3726 (S) Little NOTICE OF RECONSIDERATION 04/18/94 3759 (S) RECON TAKEN UP/IN THIRD READING 04/18/94 3759 (S) HELD ON RECON TO 4/21 OR LATER CALENDAR 04/21/94 3850 (S) ZERO FN TO FIN CS PUBLISHED (DNR) 04/21/94 3849 (S) RETURN TO SECOND FOR AM 4 UNAN CONSENT 04/21/94 3850 (S) AM NO 4 MOVED BY PEARCE 04/21/94 3853 (S) AM NO 4 ADOPTED UNAN CONSENT 04/21/94 3853 (S) AUTOMATICALLY IN THIRD READING 04/21/94 3853 (S) MOTION TO ADOPT LITTLE LETTER OF INTENT 04/21/94 3853 (S) AM TO LETTER OF INTENT ADPTD Y11 N8 E1 04/21/94 3854 (S) ADPTD NO 2 LETTER OF INTENT Y15 N4 E1 04/21/94 3855 (S) PASSED ON RECONSIDERATION Y12 N7 E1 04/21/94 3855 (S) EFFECTIVE DATE PASSED Y16 N3 E1 04/21/94 3859 (S) TRANSMITTED TO (H) 04/25/94 3703 (H) READ THE FIRST TIME/REFERRAL(S) 04/25/94 3704 (H) JUDICIARY 04/27/94 (H) JUD AT 02:00 PM CAPITOL 120 ACTION NARRATIVE TAPE 94-63, SIDE A Number 000 The House Judiciary Standing Committee was called to order at 3:45 p.m. on April 27, 1994. A quorum was present. CHAIRMAN BRIAN PORTER stated that SB 308 would be the only bill heard in the day's meeting. He said there would be someone from the Department of Law present to walk the committee through the bill. SB 308 - ADMIN ACTION RE LAND/RESOURCES/PROPERTY Number 031 MARY ANN LUNDQUIST, Assistant Attorney General, Department of Law, gave a background history of the origins of the legislation. She said she sees two reasons for the legislation. Currently there is no guidance in the best interest finding statute with regard to what must be in the best interest finding, other than that it has to state the basis on which the director's determination is based; that a disposal is in the best interest of the state. This bill at least gives some sideboards to the best interest finding. MS. LUNDQUIST said further, there has been a long line of Alaska Supreme Court cases that have consistently overturned Superior Court decisions with regard to best interest findings and coastal consistency determinations. One of those cases is Camden Bay 1, which is sale 50. And in there, the focus was on transportation issues. Department of Natural Resources (DNR) did not discuss transportation if ANWAR remained unavailable for onshore support facilities, even though at the time the best interest finding was made, it was uncertain as to where, when, and if a development would ever be made, and what technology would be available for transportation of oil to the onshore facilities. Camden Bay 2 was the sale 50 after remand, and it was an overturning on the coastal consistency determination, because of a failure on DNR's part to identify known geophysical hazards. This is in spite of the fact that the federal passage with regard to geophysical hazards was less comprehensive than the passage that DNR had put in their best interest finding, and they had cited to the only known survey with regard to geophysical hazards. Demarkation Point, sale 55, had the transportation issue come up again. It is the same transportation issue that had been in Camden Bay 1 and the Porcupine caribou herd. The court ruled that DNR should have looked at the Porcupine caribou herd, which is an onshore herd, even though it was an offshore development. Goodnews Bay, with regard to offshore prospecting permits, the court redefined the scope of DNR's best interest finding and said that they were required to issue a best interest finding for offshore prospecting permits, and at that time they had to examine the possible future effects of any mining that might occur if workable deposits were ever discovered. The administrative procedures in the legislation arise primarily from sales 57 and 75a. They were cases brought by Trustees for Alaska, in which Trustees for Alaska had participated little, if any, in the administrative process. Those cases were settled after motion to dismiss for lack of standing was filed by the state. The final impetus was sale 78 in the Lower Cook Inlet, an oil and gas lease sale, and it was the first time in Alaska state history that an oil and gas lease sale was stayed. The basis of the stay was that DNR had not adequately discussed the habitat standard under the ACMP, the Alaska Coastal Management Program. DNR had, in fact, discussed the habitat standard and referred to the discussion in its conclusive consistency determination, and the Superior Court itself had raised the argument, not the appellant, and therefore the preliminary best interest finding where the analysis was, was not before the Superior Court. And the Alaska Supreme Court declined a petition for review in sale 78. MS. LUNDQUIST then gave an overview of the sections of the bill, skipping over the ones she felt were minor, housekeeping points. Under Section one, there is a statement of legislative intent, with regard to best interest findings, and ACMP conclusive consistency determinations covered under the bill. Under current law, the best interest finding has to be made before a disposal lease sale of land, resources, or property is made. Currently, it is in the director's discretion. The director is responsible, with the consent of the commissioner, to make the best interest finding, but other than to have the basis upon which the best interest finding is made, stated in the best interest finding, there are no requirements. Section two is intended to set up some sideboards so the director is required to discuss the known information, and information it finds as material. Section two, under (c), page 4, line 9, is recognition that phased determinations, phased projects are appropriate under certain circumstances, and (c) provides that when certain protections are met, phasing is allowed. Page five, 5(A) and 5(B) is an expansion of the public notice requirements from the current 21 days to 180 days and 90 days before the sale; it is the time limit when public comment can be given. That is an expansion for oil and gas lease sales. The 21 days currently in the statute with regard to all best interest finding is retained. Section three is the "G" list that is often cited to. It ensures that for an oil and gas lease sale, the Section G list will still be addressed as well as items known to the director, and material, and are therefore within the scope of review determined under Section one of the bill. Section 4, under (h), page 8, line 29 is a statement that the director is not required to speculate about future effects which he or she can only guess, about which there is no current information. Section (i) sets out the administrative appeal procedure. The test for a person who may bring an administrative appeal or written request for reconsideration was a test adopted by the Supreme Court, with regard to appeals under the APA, and even under one of the most current cases on best interest findings in the Alaska Supreme Court, `Trustees For Alaska', the court has stated that in order to bring an appeal to the Superior Court, the appellant must have participated in the administrative proceedings either by submitting written comment, or by bringing in a written request for reconsideration. The appeal procedures ensure that administrative remedies will be exhausted, and the agency, the court itself, and the legislature have previously recognized, as having expertise to deal with these complex issues and matters of fundamental policy, and are given the opportunity to address and resolve the issues before a Superior Court appeal is brought. Section seven, page 11: Expansion of the type of notice that must be given for best interest findings. Section eight deals with consistency determinations under the ACMP, and it is a specific recognition that phasing is appropriate under certain circumstances, and when certain protections are met. On page 12, lines 19 - 27 is an adoption of the federal language with regard to phasing under the federal regulations, and it is intended that during a phase consistency review, the state agency will review the reasonably foreseeable significant effects of the use or activity for which the consistency determination is sought. This provision does not impact the ability of the agency to request from an applicant, additional information that is related to the reasonably foreseeable effects of the consistency determination. Ms. Lundquist said if there were specific questions with regard to any sections, she would be glad to answer them. Number 290 REPRESENTATIVE JOE GREEN: "Mr. Chairman, is it your intention to have the testifiers go through and then ask the questions?" CHAIRMAN PORTER replied that yes, that there were nine people to testify, and he suggested that questions be saved until individual testimony had been complete. REPRESENTATIVE CLIFF DAVIDSON discussed with Chairman Porter about whether or not that is the best way to facilitate the meeting. CHAIRMAN PORTER stated that he would like to get through the meeting and move the bill, if possible. REPRESENTATIVE DAVIDSON expressed the hope that at least one additional day could be spent on the bill. He noted that he had received a letter from constituents regarding work to be done on the legislation, particularly concerning the phasing aspect of the bill. Chairman Porter agreed that Representative Davidson might pose a question to Ms. Lundquist. Number 338 REPRESENTATIVE DAVIDSON asked Mary Lundquist a question regarding Section eight. He asked if she was saying this was basically the adoption of federal language. He asked if it results in the same kind of phasing pattern or consistency with the federal law. MS. LUNDQUIST said she thought the intent was for this provision to be consistent with the federal law, as it stands right now. REPRESENTATIVE DAVIDSON noted that Ms. Lundquist specifically mentioned `the intent.' He asked if it does, in fact, become consistent with federal law. Number 355 MS. LUNDQUIST said she felt this provision to be consistent with federal law. She said that the federal program, in the very least, requires that you look at the reasonably foreseeable significant effects, and she thought that would be accomplished by this bill. The phasing language itself, was adopted from the federal regulations, and it is not the intent to curtail or shorten the examination of the factors, facts, or issues during a coastal consistency determination. The intent, and the way the bill works is to ensure that when a consistency determination is phased, you have the most recent information; you actually have facts before you, before the consistency determination is made. Ms. Lundquist said she thought there are certain circumstances where phasing might be appropriate, and maybe there are circumstances where it will not meet the conditions for phasing, and it would not be appropriate to phase it. Number 373 REPRESENTATIVE DAVIDSON said he understood that in the phasing aspect of federal law, any time a new item or a new piece of information comes up in any phase, you can go back and forth within that phasing concept and deal with that specific. It was his understanding that that is not, in fact, how this phasing provision would work, if this were to become state law. Number 382 MS. LUNDQUIST said it was her understanding, under federal law, that a consistency determination, once it is made, is not re-evaluated on a consistent basis. If a fact comes up later on down the pike once the consistency determination is made, the consistency determination is made. Number 400 REPRESENTATIVE DAVIDSON asked if this applied to new information, as well. Number 405 MS. LUNDQUIST believed there may be confusion with regard to information that comes up in a later phase. When a project is phased, and there will be multiple consistency determinations; there will be a consistency determination made at each phase of the project. In phase one, you will not be examining the facts at phase three. At phase two, you will know more facts than you knew at phase one. So as time progresses, and you go through the phases, you will be examining the facts that are known and available to you; and the reasonably foreseeable significant effects. Number 410 REPRESENTATIVE JIM NORDLUND asked about the bill attempting to set up some guidance, some sideboards for making determinations. He asked if that is what she meant by phasing, if she considered these projects in discrete phases, to be the sideboards. MS. LUNDQUIST stated that when she referred to the sideboards, she was referring to "in the best interest finding" section, Section two, page 3, lines 17-21, specifically. The phasing is included in those sideboards, but the sideboards really are, that the director can only be responsible for known information and is not required to speculate, and the director makes the determination of whether something is material or not. REPRESENTATIVE NORDLUND said one of his concerns about this bill is, the method used for determining what is `material.' Who gets to decide? It says the director is given the authority to decide what is material, and yet there is no guidance in this legislation as to what is material - none at all, as far as he could tell. As he understood existing law, we do have some guidance with oil and gas leasing, in terms of those kinds of considerations the director has to make, but with the other kinds of leasing included under this bill, whether it be coal, or other kinds of mining, there are no similar kinds of what he would consider sideboards in terms of deciding what is being decided. MS. LUNDQUIST suggested that perhaps Director Eason might be able to address that comment specifically; and she had a couple of comments on it, also. The word "material" is currently used in statute with regard to what is referred to as the "G" list, which is on page seven, lines 21 and flooding down on page eight, through line 21, "Material to the following matter" and on page three, when a determination is made that something is "material," the items to be discussed are those known to the director, and items specifically brought up by the public, where the public comes and says, "This is an issue, and I think you should consider this." The director would make a determination whether or not he thought it was material. That determination would be in the best interest finding, and it would be a point for appeal to the Superior Court or after the appeal, and the administrative remedies were exhausted. CHAIRMAN PORTER said the fact that he did not consider it, if it was brought up, is an appealable point though. MS. LUNDQUIST confirmed that it is an appealable point. Number 465 REPRESENTATIVE JAMES asked if it were true that if anyone, including the public, brought up any considerations, they must be responded to in writing. Number 470 MS. LUNDQUIST confirmed that Representative James was correct. All written comments from the public have to be responded to. If a fact or issue brought up in a public comment is determined not to be material, that determination specifically, must be in the best interest finding itself. Number 480 REPRESENTATIVE KOTT asked for clarification of page 9, line 15. What constitutes an individual having standing, and how specific does one have to be in dealing with standing? What is "meaningful participation"? How specific does one have to be upon appeal? In other words, if you complained of possible pollution earlier, could you then have standing later on, in asserting that hydrocarbon pollution is the issue we are dealing with on appeal? Do you have to be very specific during the initial process in order to have standing later on? Number 498 MS. LUNDQUIST stated that the public would have to be sufficiently specific, that there would not be a broad gap between what their public comment was or whatever was in the request for reconsideration repeal, that there was some logical connection between the two, and that it was not a dream between the two. And meaningfully participated is defined as submitting written comments and presenting oral testimony, on page 9, lines 17-20. The test, of "meaningful participated" to be affected by the decision and factually agreed by it, was adopted from Alaska Supreme Court cases. Number 515 REPRESENTATIVE DAVIDSON remarked he knew we were dealing with both Title 46 and Title 38, and he wanted to understand if Ms. Lundquist's expertise is in both of these titles, or does she concentrate, in her task, in one specific area or the other? MS. LUNDQUIST responded by saying that she has primarily dealt in Title 38, but has also dealt quite extensively in Title 46. CHAIRMAN PORTER asked Ms. Lundquist to stay at the meeting in case other questions should arise. He then read the witness list and announced the first witness, Mr. Jim Eason. Number 539 JIM EASON, Director of the Alaska Division of Oil and Gas, Department of Natural Resources noted that for over two months they had been in the process leading towards the bill being heard. Judging from the comments submitted for the record, he believed the committee would be hearing a great deal of comment saying the process has moved fast, it has been inconclusive, and resolution has not been reached. He urged the committee to keep in mind that while the House has, after the first two hearings on oil and gas, not had much activity with this bill. On the Senate side there has been two very long hearings in Senate Resources, transferred to Senate Finance, and then delegation to a subcommittee which lead to about five weeks of intermittent work, some very long days with a group open to anyone who wanted to participate in the conference in the attempt to draft amendments that would reach compromise and be answerable to many of the issues and concerns that have been raised by the public. Mr. Eason observed that it is seldom you get everything you want on a bill; sometimes you do; sometimes there is unanimity, and it is always pleasant when you can do that. MR. EASON said he would be available for any questions on the process, and on the bill. "I believe, and I hope, that you will hear some testimony that is at least cautiously supportive of the effort we've made, because we did start under very adverse circumstances, with a decision that literally puts at risk every disposal that the state may undertake, to an injunction. We didn't choose the timing for that. We didn't expect it to happen, but it happened in the middle of the session, with a lot of controversial issues before you, and before us, and so we were thrown, literally, into the brier patch with a very controversial bill, with a very short time to try to create a solution that would be answerable to public concerns, but at the same time, provide the safeguards and sideboards that we need to assure that you make policy, and that the court does not." MR. EASON said he believed that ultimately, the predictability that will be brought to the process by the legislature defining its goal and its concerns in this legislation, will be productive for everyone. It will set the ground rules more clearly for the court, but also for the agency. It will also set the ground rules for those who want to litigate, as well as those from the public at large, so that they understand that they have an opportunity to participate fully. That also brings an obligation to participate fully or meaningfully in the process so that you define what your concerns are with enough specificity that the DNR can try to resolve them. He cautioned, "But it is important to acknowledge, and I will today, that we won't always do everything everyone wants us to do when we prepare a lease sale. We simply can't. Otherwise we wouldn't have lease sales, because the process simply is not one that pleases everyone in every case. But we have made, not only in our lease sale efforts, but, I believe, quite honestly, in this legislation, a good faith attempt to listen carefully to every concern and to move directly to correct things that we knew and believe were wrong, and to increase the public process, and public opportunities to participate in this legislation." MR. EASON noted there were four or five issues that some people who participated in this process wished on that day to see amended and accomplished. Mr. Eason wished the committee to understand that in the course of the process more than 40 amendments had been made, some of them very substantive; some of them very expansive of the ability to participate, and for the DNR's obligation to listen and respond in writing, and to have a better record for appeals, for all other purposes, and that effort had been made. But there remained four or five issues which he believed should not be resolved by further amendment, if possible, because this might put at risk the protections intended by this process. Ones that assure the legislature is not brought back into this kind of battle every year, and one that assures the courts are not invited to make new law concerning disposals. Mr. Eason expressed the belief that it was important that this legislation balance interest, that it provides for full public input, full agency response, and full legislative participation by setting the guidelines. That has been their attempt. He said that had been their attempt and he hope it would be seen as successful. Number 610 REPRESENTATIVE DAVIDSON: "As a former chairman, I know that I always cringe when I am told that the `other body' has done our work. We are a separate body. And frankly, I don't give a damn what they do on the other side. So it always grates me when we say, `Well, in the other body, they did this, they did that.' But as a matter of fact, we know that not everyone was given the full opportunity to participate in that other body. As far as the briar patch is concerned, Mr. Eason, you are quite a capable rabbit, I know that. "The other problem is that it seems that every time we go through the system and a party prevails, we are back the following legislative year trying to overturn the court decision. I have some misgiving as to why can't we get right one of these times. Maybe this is the time. But if I'm getting letters from my constituency back home, and I represent that great area of the state where 70 percent of our people live and make their livelihoods, of course, there's a great deal of interest when certain local traditions or power or abilities to respond to what the state is doing in that area, as far as disposal or developing resources -- There's going to be a certain amount of concern at that local level. And that's what I would like for us as a committee to respond to. What is it that our local constituency, that is, our local planning commissions, our coastal zone management people are doing to ensure that they are players in the process? And that's what I'd like to find out. "As regards all agencies, it's my understanding that the Department of Governmental Coordination, or the Division of Governmental Coordination, was in fact not a part of this process in the Senate. You can say yes or no to that Mr. Eason, but it seems to me when everybody's interest is involved here, we have to take the time that is necessary, whether that's one year, two years, or a dozen years, to ensure that we all have a say as to these important decisions on what happens in our local areas. Thank you very much for that digression that you allowed, Mr. Chairman." Number 660 REPRESENTATIVE NORDLUND said he has been looking at this bill and talking to a number of people, and frankly, he was trying to understand it. It is not the kind of bill you normally hear in the Judiciary Committee. Normally, this would go to the Resources Committee. Concerning the phasing proposal, he asked for a concrete example of the kind of project that would be phased, and what the phases would be. Number 665 MR. EASON explained that oil and gas leasing is a concrete example of a phasing disposal. For a number of years, we have proceeded with oil and gas leasing as a phased decision making process. We issue best interest findings, based upon the reasonable expectations that all the comments received from the public and from agencies, and concerns expressed, plus the review of the factors set out in the statutes, with an attempt to rationalize how those things may affect the area, or how they may be affected by a lease in the area under consideration. And there are certain things we can reasonably accept, but we do not know for certain will happen, but it is reasonable to assume there will be some exploration. And if there is exploration, it is reasonable to assume there are things you are absolutely going to require every time. For example, you will require consistency with DEC's solid waste and other disposal provisions. You will, if there are special critical habitat areas involved, the Department of Fish and Game will notify you in advance. It will be part of the finding of what will and what will not be allowed in those areas, within the sale. If there are critical habitats that for one reason or another Fish and Game insists not be exposed to surface entry, those things will be identified. A finding will be done and a consistency determination made based upon some expectation. But what will not be done, at that point, is speculate about where a discovery may ultimately occur, how large it is, and how you might get to it with a pipeline, or otherwise with marine transportation, because it is simply, we believe, a very poor use of resources to speculate on multiple alternative developments that are far removed in time, if ever they are going to occur. And my interpretation of your guidance in this bill will allow us and will show the court that it is appropriate, best interest finding-wise, for an oil and gas leasing sale, to do things we have done. MR. EASON stated this bill requires additional findings, and additional rationalization of materiality and non- materiality, and lots of public dialogue that currently is not required by statute. But ultimately, it recognizes the decision will be to lease with the safeguards we know are going to be necessary regardless of what happens, with a further understanding that things happening in the future will have to go through further permit reviews, so they can be conditioned as appropriate at that time, to make sure they are in conformance with the coastal zone management act, and that they continue to protect the state's interest. Number 700 REPRESENTATIVE NORDLUND asked if the phases then would be to first issue the lease and then, say it is to an oil company, and they come to you and they say, "We are interested in exploration." Then the next phase would be permit for the exploration, and the next phase would be a permit for production. He asked if that is the kind of thing Mr. Eason was talking about. Number 705 MR. EASON replied generally that would be the pattern, and it is really important to understand because there has been some confusion early on. One of the concerns was that DNR controls the process after leasing, and it is the fox and the hen house concern; once we have made a best interest find to lease, then we are just going to routinely approve these other phases. And, in fact, DNR's control to the extent it has any -- First of all, it has none, unilaterally, even at a lease sale, because the consistency determination that issued is agreed upon by the Division of Governmental Coordination, Fish and Game, DEC and DNR. All agencies have to agree with a consistency determination or it cannot be issued. It gets elevated and resolved at some higher level. But even though that control by DNR is limited, it is the last time there is any control at all of that process, because all the future events, drilling, the building of production facilities, the laying of pipelines, all of those possible things come under multiple permit scenarios, which require that the Division of Governmental Coordination to coordinate all that and render the consistency determinations. They take our opinion, but it is only one of many. Number 725 REPRESENTATIVE NORDLUND asked about the Camden Bay case. It seemed to him that it is reasonable that you would have to confront the transportation issue, at the very outset. It was a lease that was being developed offshore, and there was going to be a need to somehow transport materials and oil from offshore to onshore. So how does this bill help you with that? Number 730 MR. EASON said this bill would signal to the court that the level of analysis is what you reasonably can assume, or reasonably expect. That it does not extend to having to speculate that a discovery will be made 25 miles east of some point, and then try to determine all the alternatives you might have -- buried pipelines, suspended pipelines, offshore loading of tankers, offshore loading of ice- breaking tankers, all those things that may, farther than anybody can conceivably think, be possible at some point in the future; do not have to be argued, essentially, in the record as to which one is better. But the protection you have built into the law today, and would have continually under this bill, is that all those issues do not get disregarded, they get considered when there is enough information to know the discovery has happened and to make a factual analysis based on where it is, how large it is, and what all the alternatives are at that time under then existing law and technology. Number 740 REPRESENTATIVE NORDLUND referred to a line in the bill that says "reasonably foreseeable significant impacts." Under the language in this bill, does that mean you would be looking at impacts beyond just present impacts, but also future impacts that are reasonably foreseeable, they could be cumulative? Number 747 MR. EASON said Representative Nordlund was correct. That is required today under the "G" list, for oil and gas lease sales, and we would still do that. CHAIRMAN PORTER introduced Peter Van Tuyn, from Trustees for Alaska. Number 752 PETER VAN TUYN, Representing Trustees for Alaska, a nonprofit, public interest environmental law firm has been dealing with natural resources issues in Alaska for the last twenty years. "We have got several serious concerns with SB 308. Mostly, they stem from the fact that the bill significantly alters the best interest finding requirement and the requirement that activities in Alaska's coastal zone be consistent with social, cultural, and environmental safeguards. These alterations substantially limit meaningful public participation in government decision making. The alterations also steer the decision making process toward the result that the administration, the current administration supports, whether it be pro or anti- development. We do not feel this bill is anti-development, or pro-development, per se. The amount of discretion it gives to DNR, to state agencies can go either way. It depends on the whim or the policy decision made by that current administration. How does Senate Bill 308 do this? Under the proposed legislation, a state agency making a decision regarding a public land disposal, or an ACM consistency review has total discretion to limit the review of such actions to issues he or she considers material or to issues which he or she assert relate to a later phase of a particular proposal. SB 308 gives the state agency the authority to conduct a piecemeal review of such an action. Let's take an oil and gas lease sale as an example. SB 308, as we have heard, permits DNR to declare that a lease sale is broken up into many different phases. "Representative Nordlund mentioned exploration as one phase, production as another phase. DNR could simply declare that a lease sale as the first phase is merely a paper transaction. I pass you a lease, as an oil company; you pass me some money. That is the entire phase. Under this bill, issues raised by the public regarding later phases, whether it is the exploration or production phase, can simply be declared immaterial, or if it is a phased project, DNR can say that they are immaterial and disregard them. Because none of the costs of the later phases are factored into the equation. Again, the best interest equation is basically a cost benefit analysis - in loose terms, it is not purely economic; social, cultural, and environmental concerns are factored in as well, as are economic. In that equation, in that balance, phasing the situation allows any state agency, it allows the current administration, to take the costs of those later phases and zero them out. Just say, `This is merely phase one, this is a paper transaction of a lease sale.' In itself, it has no impact on the environment, unless you get a paper cut from the document. But yet, the benefits are huge. They are quite high. The benefits are royalties from production, and that best interest equation and the phasing in this bill does not require the state agencies to disregard the benefits down the road, it just allows them to disregard the costs. Moreover, and perhaps what is most disturbing about SB 308, is that it does limit the opportunity for meaningful public participation in the government decision making process, not only through DNR's authority to disregard concerns about later stages, but because it changes standing doctrine in Alaska, in a very significant way. "Who is affected by a lease sale? If a lease sale is a transfer of paper, I'm concerned about the impact of development operations, and possibly an oil spill on the beaches where I fish, the paper transaction itself, does not authorize that -- `That is a different phase, it is later down the road. We will look at it later.' How am I affected by that lease sale? I am not is the only answer I can come up with. In SB 308, you are only allowed to appeal the decision if you are affected by it. It is not defined in the bill, but if we look to federal law for a definition, a reasonable thing to do under the standards of the courts, then we get the conclusion that you have to have an injury in fact. And if my injury only comes from the oil washing up on my beach where I fish at the development stage, and that stage is not being considered at the lease sale stage, I have no standing to argue that later in discussion. I have no injury. "Additionally, we have heard here today, as well, that SB 308 intends that phasing be in line with the federal language. I believe that the language that I heard was that the phasing in this bill is not intended to curtail or shorten any evaluation that is being taken place. Under the federal phasing under the Coastal Zone Management Act, the phasing is used to allow ongoing review of a project, mostly long-term projects that can be broken down into various phases. Known information is not disregarded in that phase. But if we look to the statute in SB 308, and I'll specifically point the Chairman to Section 8 on page 13, at line one, this talks about the DNR's discretion to `limit the consistency review.' I think the difference between curtail, shorten and limit - I'm not sure what it is, but if I look to where the court is going to look, where the agency who is implementing this is going to look, I see the word `limit.' It comes up again on line 10: DNR shall when the consistency review...is `limited' under this section, conducted for the particular phase, and so forth. And that is not in line with the federal intent. Again, the federal intent is to broaden the view, so that you can get a comprehensive look at an ongoing project that is long-term in nature. "At best this bill raises many complicated issues. The issues impact, as I heard Representative Davidson say, 70-75 percent of the population in Alaska, because that is the number that lives in the coastal zone. True, there have been various meetings to work through this bill, and try and come to consensus on various issues, but for various reasons, no need to get into them, they have all failed and if we can take a look at what, in the past, has been the position of the administration in dealing with issues which affect the coastal zone, we need look no further back than the beginning of this session with SB 238. Coastal Policy Council, petitions for review, issues that deal with the coastal zone in Alaska. And those issues were again, I believe, brought to the floor as a result of the Camden Bay Demarkation Point appeal to the Coastal Policy Council, and there was some concern that that process needed some fixing. So what did the administration do? The administration went to the coastal districts and said, `Please, sit down at the table, let's work this out together. Let's come to some sort of consensus on the issues.' And they did so, and it breezed through here earlier this year. At the least, that's what needs to be done here. The coastal districts need to have a chance to sit down with all the interested parties, including the administration, and work through this. And if the problems are real and the solutions are there, they will come, along with the administration and any other interested party, back to this body in the next session. "Finally, I have two points. I abhor getting into the details of the litigation absent any questions, but just to give you an idea of the difference of opinion that has come about because of litigation over the years, I heard, again, the state discussing the Demarkation Point sales as one example, pointing out how unreasonable it was for the court to require that the DNR analyze the impact of the Demarkation Point sale on the Porcupine caribou herd, which, I think the language was, is onshore of the Arctic National Wildlife Refuge. Regardless of whether or not it's onshore, and that's certainly debatable, we do have clear evidence that the caribou are in the water. This is the coast of the National Wildlife Refuge. These caribou are standing in either the Camden Bay lease sale or the Demarkation Point lease sale. Their feet are wet. And under the terms of those lease sales an oil platform could be put - (text lost to tape turn over.) TAPE 94-63, SIDE B Number 000 MR. VAN TUYN: (text lost) " - come through the Alaska court system. The point is the court decided the way it did for a reason. We will deal with that. If there is a problem with that, focus on what the court said, not what should have been argued in front of them, or what they did wrong in the analysis. That is all I have to say, I appreciate your time. I will stay around for questions, if there are any." REPRESENTATIVE DAVIDSON said he has heard not only individual property owners are affected by the changes that would result if this were to pass, but even many businesses would be adversely affected. He asked Mr. Van Tuyn to expand on some of the areas where smaller businesses would have cause for concern with the changes brought about by this bill. MR. VAN TUYN: "I think that could happen in two ways. Number one is, in the bill, and this is probably a point that's been raised before, there is a provision that requires that economic - it's on page nine, it's in Section four of the bill - that talks about DNR's ability to say that the economic feasibility of ultimate development need not be considered to the extent it involves speculation. And I think that the term `economic feasibility' really needs to be defined, and it should be clarified, that that includes not only economic benefits, but detriments as well. This could, in other words, blindside a coastal community that, given a comprehensive analysis of economic feasibility up front, could maybe identify some of the problems that could arise. Well, oil could potentially have an impact on the fishing revenue of this particular area, so be prepared. That's an issue that's going to come up later on. Under this speculation standard, here, that you don't have to look at that economic feasibility, DNR can call it speculation, they'll get a lot of deference on that, and it could blindside that small business when down the road it gets dropped there, and they're out of business, and they're not allowed to go back in that area. That is one way it does it. "The second manner in which I believe that it affects all business...is that in an administration that has a slightly different policy stance on these things, the amount of discretion can also work to expand the scope of analysis. You can define what's material to the ends of the universe, so that every little nit-picky thing will be factored in, and something like the (indiscernible) situation in Point McKenzie near Anchorage, could get papered to death, and I think that's some of the concerns, certainly that I've heard, form the coastal district." Number 068 REPRESENTATIVE JAMES: "My question is regarding speculation. Many, many times when we have any kind of an economic activity, whether it be a lease sale, or whether it be a production further along on whatever stage you're in, and making up the decision as to what the effect of that application is going to be to the area, and so forth, there is a lot of speculation, and some of the speculation that I can anticipate is, you have to decide all the things that might just happen. And one of the things that I see that is in this bill, is to prevent, so that we don't get into the speculation where the speculation of something that might happen, will totally destroy the ability to even go forward, just because that might happen. And so phasing does make sense to me. The only thing that I'm concerned about is that in the second or third phase or whatever the phases are, that the decision to go or no-go, is still a decision: It's not a go, go, go, but it's a go or no-go. And I believe the protection is in there. But wouldn't you think that it would be smarter for all of us to just deal with what we know as opposed to what we speculate might happen? Because we could get in a totally different direction (than) what we'll ever get if we can just get to one step at a time." MR. VAN TUYN completely agreed with her that we can only analyze what we know about the impacts of an activity, so the only thing we need to do up front, and this is what the federal phasing discussion focuses around as well, is what we know about those impacts, but impacts are only half of the equation. The other half of the equation is the activity that is the actor here, that is going to have that impact. That is where we believe some speculation is warranted, and the speculation is simple. It is this, and this alone: That in an oil and gas lease sale, in a situation where the state is disposing of land for oil and gas development, it is perfectly reasonable to assume, to speculate, if you will, that oil and gas development will occur, and that in a mining situation, it is perfectly reasonable to assume, to speculate that mining will occur. You do not have to know exactly where. You have a broad area of fishing ground three miles wide and twelve miles long. And it is extensively fished with 400 drift net boats trailing 900 foot nets, and about 600 set nets from the shore extending out a mile and a half; and it is reasonable to assume if someone is going to buy an oil tract in that area for oil and gas development, that it may occur, and that is a speculation, I will grant you that, but what we do not speculate is what the impacts are going to be if it does occur. Those impacts are based on common knowledge, based on the experience of the captains working in this particular fishery, and that experience told us in the sale 78 situation the fishing activity would have to stop. And so it is a two sided coin. We have the impacts, which, no speculation, phasing in the federal government would say, no speculation on impacts, but when we get down to later phases at the exploration and development stage and our pool of knowledge is so much broader, and, again with no speculation, we take the known facts and we apply it to those activities and see what the impacts are. Speculation does occur though, on the activity, and I think that is reasonable given the purpose for which the disposal was provided in the first place. Number 155 REPRESENTATIVE GREEN asked Mr. Van Tuyn if he was aware of how many platforms are in Cook Inlet. Number 165 MR. VAN TUYN replied that he thought there were 21, or 19. REPRESENTATIVE GREEN said he thought there were more like 15 or 16, and asked Mr. Van Tuyn if he was familiar with how close they may be to shore. Number 187 MR. VAN TUYN said he was roughly familiar. REPRESENTATIVE GREEN asked if the platforms were within the set net areas. MR. VAN TUYN stated that he was not an expert on this, but as far as he knew, he did not believe that any of the existing platforms in Cook Inlet are in active set net areas. REPRESENTATIVE GREEN said because of environmental restriction, and in an economic sense, they are not there; because they can reach that from shore and that is a less expensive operation. And so, for that area of concern, along the fishing areas, set netting and so on, there will not be platforms at the shoreline, just as was indicated on the caribou, that there might be a platform right there; it would not happen there, because they would reach that from a shore site, simply because it is a lot less expensive. And finally, are you aware of the cooperation that has existed in the central caribou herd, and the field operations, where the number of caribou, since that operation has been in effect has increased six-fold? MR. VAN TUYN answered that the question of whether or not offshore tracts can be accessed from onshore directional drilling, is exactly the point. In the sale 78 litigation. If that is true, and, in fact, is what the oil companies would like to see, let's require it in the lease sale, let's make sure that those costs are factored into the oil company's decision on how much they want to bid for a particular area, and as the technology would demonstrate in most areas, albeit not all, the directional drilling techniques can get to three miles out, if they are on shore. Number 240 REPRESENTATIVE NORDLUND noted that it depends on the depth. Number 243 MR. VAN TUYN agreed that yes, some geological factors are involved, as well. But where it is possible, let us require it at the lease sale, so the oil companies know what the costs are up front. And the public, especially the fishing public knows that their livelihood is not going to be jeopardized, because they cannot move their operations. Those fish are coming through that particular area - Fish and Game, and it's expert opinions so that's the place for fishing. As far as your second question, dealing with the Central Arctic caribou herd, and the interaction of that herd with the industry; the type of information that an attorney will rely upon in bringing a lawsuit, is something that can stand up in court. Scientific text is relied upon to tell what the impacts are on caribou. Certainly your experience and the oil companies' experience in dealing with the Central Arctic herd is highly relevant to the impact on the Porcupine caribou herd. It certainly is. So let us examine it. That is all we ask. Let us examine it. Let us talk about it. Let us put it in the final finding. Let us not say that the oil and gas development is not going to have an impact, or whether it is relevant. Whether or not it has an effect is irrelevant. That was the Demarkation Point sale. As of one point of clarification, the Demarkation Point and Camden Bay lease sales were offshore of ANWR, so they could not have been accessed from land, which is one of the bigger issues there, because the refuge is off limits to oil development at this time. Number 245 REPRESENTATIVE NORDLUND asked Mr. Van Tuyn if he was the attorney on the Camden Bay case. MR. VAN TUYN said he was not, that he has been attorney of record only in some cleanup duties in the second Camden Bay case. Number 252 REPRESENTATIVE NORDLUND said that was a trustees lawsuit, and asked Mr. Van Tuyn if he was familiar with it at all, to which Mr. Van Tuyn replied that he was. Representative Nordlund continued, "The question I asked Mr. Eason about the issue of the transportation - I'm still trying to figure out what the best policy call on something like that is. I think he makes the point that, certainly, there probably is going to be some transportation but it's very difficult to know the siting of those particular - where, you know, wherever the discovery is made. And who knows what the impact is going to be, given that, and how the oil is going to get transported, and what not. I just wondered if you had a comment on that and could shed some light, perhaps, on what the courts - " MR. VAN TUYN said that similar to the Porcupine caribou herd in the Demarkation Point case, in the Camden Bay case the court said you have to look at the important factors, and those factors are not defined, at that time they were not defined, DNR came to you and asked you to help define what those important factors might be after that case. What is an important factor? Let us look at a particular area. Camden Bay is offshore of the Arctic National Wildlife Refuge, it is east of existing transportation facilities, and the technology that will need to be used to get oil from any development, again, not saying that development is going to be right here, but just saying it is reasonable to assume some development in this area will occur. Examine the methods you could use to bring this offshore oil on shore to transportation facilities when you cannot use the adjacent land mass. Tell us what your first cut is of the relative risks of each of those methods. So it is not a question of saying what site it is and how long it is going to be and so forth. It is a question, though of examining current scientific and technological engineering methods of transportation; examining their relative risks, and then making the call as to whether or not it is still in the best interest of the state to proceed with this. MR. VAN TUYN further stated, so again, you have to focus on what is an important factor, and that is going to be different wherever you are. In Cook Inlet, it turns out that the court felt that fishing was an important factor. Mr. Van Tuyn thought that was reasonable; would not be if it were in the north of ANWR. Number 289 REPRESENTATIVE NORDLUND stated that Mr. Van Tuyn said that under the provisions of this bill the department can look at the long term negative and positive aspects of a project, but not the negative; the costs. You can look at the benefits and not the cost, and he asked for a comment from either Mr. Eason, or the Department of Law. Number 294 CHAIRMAN PORTER welcomed the next person to present testimony. MR. JON ISAACS in Anchorage was scheduled but not present as he was due at a city council meeting. His testimony was presented by Ms. NANCY WAINWRIGHT from Anchorage. Number 305 NANCY WAINWRIGHT of the office of Jon Isaacs and Associates, Consultants, read JOHN ISAACS' testimony via teleconference from Anchorage. "Thank you for the opportunity to testify today; in my testimony, I am speaking for myself and not representing anyone else's opinions. "As a member of an informal coastal district working group, I have been participating in the review of Senate Bill 308 with representatives of the Department of Natural Resources and Mr. David Rogers, who has been representing your committee. Over the last two months, I have participated in several Senate Finance Committee meetings and work group discussions to develop a bill that addresses the concerns of the Department of Natural Resources without creating significant problems for the coastal districts and other municipalities. "I appreciate the efforts of Mr. Rogers and others and they have attempted to address many of the issues brought before them. On the afternoon of April 15, a small group of individuals worked on the significant outstanding issues identified by the informal coastal district working group. I should mention that this group does not represent or speak for all coastal districts, many of whom have other valid concerns regarding this legislation. In this meeting, we came to consensus on many of the major issues, with a few exceptions. The issues where there are still some differences regarding language or resolution include: (1) use of `may address only' vs. shall address reasonably foreseeable significant effects related to the use in Section 2 (A) of the bill. DNR's verbal intent is that, at a minimum, reasonably foreseeable significant effects related to the use will be addressed. The appropriate language needs to be used; (2) standing to request appeal or reconsideration of a best interest finding; I understand that DNR is looking into what language may be more appropriate; (3) in Section 8, page 13, line 22, the concept of material to the consistency determination has not been previously used or defined; I would prefer the term relevant be used in its place or that material be defined; (4) Finally, I understand that some municipalities are still concerned about the lack of guidance regarding other best interest findings besides oil and gas, mining, timber, and commercial recreation; while language in the bill requires addressing reasonably foreseeable significant effects related to the use, and the basis of phasing can be appealed, I strong suggest that DNR continue to consider other solutions. "While this bill is not perfect, many of the major concerns have been addressed. Resolution of the outstanding issues would improve this bill further. Thank you." CHAIRMAN PORTER invited Theo Mathews of the United Cook Inlet Drift Association to deliver his testimony via teleconference from Kenai. Number 385 (TAPE IS DAMAGED AND SOUND QUALITY IS POOR) THEO MATHEWS, Cook Inlet commercial salmon permit holder, spoke representing Cook Inlet commercial fishing organizations in general, and United Cook Inlet Drift Association in particular, where he serves as an administrative assistant. He was also representing United Fishermen of Alaska, a statewide organization comprised of 21 regional associations (indiscernible) from Ketchikan to the Bering Sea. "I should probably also note in my introduction that UCIDA was a plaintiff in the (indiscernible) lease sale 78 in the Cook Inlet, and we have major disagreements with the characterizations presented by the Department of Law in that process." Mr. Mathews said he had submitted some brief written comments to the committee and hoped the committee had received these and past testimony as well. CHAIRMAN PORTER responded that these had been received. Mr. Mathews noted that he hadn't been notified that he would be testifying until that morning. (Discussion amongst committee members concerning availability of written testimony.) MR. MATHEWS stated, "I also would like to stress that even though this has been a long and arduous process in the Senate, as Representative Davidson mentioned we are now in the House, and this is a major public policy issue, major issues that have not been resolved, in our opinion. We would hope that there would be time for some statewide public comment as the House deliberates this major issue. (Indiscernible) the UCIDA and UFA both oppose the version of 308 sent from the Senate, in the letter I sent to Chairman Porter last evening, I did note that our major concerns have not been resolved about this legislation. "The first major concern that has not been resolved is the ability of the Department of Natural Resources (DNR) director to phase best interest and consistency findings that allow the initial disposal of the state's resources; a disposal which grants the property rights (indiscernible) to be treated at the director's discretion as a paper transaction. This concept of a paper transaction at the initial disposal stage is irresponsible and perverts the public process. "The second major issue that was identified early on that has not been addressed by any version of this legislation, is the inclusion of non-oil and gas disposal under this legislation. "Finally, I should note that at the last minute in the Senate, without knowledge of any of the working members, in Section 4, was added to this bill which drastically limits the ability of the public to request reconsideration and file appeals. "I've been trying to think of some analogy to represent where we are in this situation and how it evolved. The best one I could come up with is the idea of buying a new car. If you go into the lot, and you get in, and your car won't start, and you find out the engine is kaput, you have a fundamental problem. If the dealer says, okay, I'll take it back, give it to my experts, they'll fix it in the shop. And then you come back and all you find is a new paint job, new tires, but the engine won't run. You still have a fundamental problem. Essentially, that is the situation that commercial fishermen find themselves in with respect to this bill. "I will try to speed up here and run through the two major issues that are occurring once again. The first concerns this issue of all case disposals being included, and not just oil and gas. This would include mining, timber and (indiscernible) water rights. We have repeatedly pointed out to DNR that these (indiscernible) of issues exist when dealing with oil and gas disposals; that's the "G" list that AG Lundquist mentioned. There are, however, no standards set for non-oil and gas disposals. In the working group jargon there are no sideboards for these disposals in this legislation. "Commercial fishing groups statewide have many different varying concerns. But in all areas of the state we have concerns for non-oil and gas disposal. There has been much public comment on this issue, and I feel there is absolutely no public understanding of how non-oil and gas disposal would (indiscernible) under this legislation. We think at a minimum these issues of non-oil and gas disposals should be eliminated from the legislation. "The second major concern we identified is the unprecedented discretion - and I stress the word discretion - granted DNR directors to establish the scope of administrative review and to limit the review at his discretion to discrete phases. This discretion, as has been previously noted, can cut both ways. Depending on the inclinations of any given administration, this legislation could be used either to impede development or to promote development. As presently worded, phasing permitted under this legislation would allow DNR, at its discretion, to treat the initial disposal as a paper transaction. This puts the public in jeopardy in four very important ways. "The first problem, it grants the property rights to the lessee. This property right has been recognized by the courts. And in fact I think we all concur with it. Once you have granted a property right, you get into the issue of takings. And we find that mining disposals, timber disposals (indiscernible) noted in lease sale 78 that essentially you have granted a property right and you cannot unreasonably restrict the use of that right without compensating the lessee. You (indiscernible) to say that therefore once it's issued the lease, the state is under tremendous pressure to let the lease go forward for the exploration and extraction. So the first thing you've done is, you've given a property right to a lessee. And, under the paper transaction scenario, no comments, no concerns of the public, even if (indiscernible) are relevant to the decision to grant that property right. "The second problem for the public with this legislation is that once the property right has been granted the public must follow individual tracts, individual sales, throughout each phase and make comments and try and make those comments relevant to that phase. It's a time-consuming nightmare. "The third issue...for the public is that when your concern finally does become relevant, the only option for the state if it decides that your concern is important enough that it's not in the state's best interest for the project to proceed, the state has to buy back the (background noise and conversation mar sound) that it gave in the first place. "And finally, the issue of standing, and what DNR must consider, in terms of speculation. DNR is free to speculate about the benefits of the lease, but it is not required under this legislation to look at the downsides. "Thank you for your time and this opportunity to comment." Number 525 CHAIRMAN PORTER welcomed Walt Furnace of The Alliance. Number 530 WALT FURNACE, General Manager of the Alaska Support Industry Alliance, testified in support of SB 308. The Alliance is a business organization comprised of 300 companies and individuals who provide support services to the resource development industries throughout Alaska. A lot of our emphasis is up on the North Slope and into Kenai. The Alliance has had an opportunity to participate and review SB 308, and we are in support of this legislation. It clarifies the authority of the Commissioner of the Department of Natural Resources, and contracting for lease of land under the State Oil and Gas Lease Program. The Alliance has maintained a very strong presence in support of this legislation and in the various lease sales held recently in Alaska to include those in Cook Inlet, 148, 149, 85, 85a, and lease sale 78, of which I believe a lot of this legislation is the result. We are concerned with the delays caused by the courts and their various injunctions, in particular, lease sales in the Kenai area, and we see Senate Bill 308 as a vehicle to address many of those concerns. MR. FURNACE continued, under the Constitution of the State of Alaska, the legislature is empowered to develop the resources of the state to the maximum benefit of the people of the state. And over the years, the legislature has passed various statutes, and regulations have been enacted to carry out that, and part of that is the State Oil and Gas Leasing Program. As a deliberative body, as a policy making body, your responsibility is to look at those resources and see how we can best develop those to that maximum extent. A great deal of credit goes to members in the other body, and particularly Mr. Eason, under the Division of Oil and Gas, for being quite sensitive to the various concerns brought to the table, concerning oil and gas leasing. They have done an admirable job of taking these various testimonies, merging those into this piece of legislation, with the hopes that they have reached out, they have provided the various avenues by reaching out, and putting those concerns in this bill. Thousands of hours, no doubt have gone into this effort. And for that, they should be commended. Those who have voiced concern with this legislation remind me of a time I went shoe shopping with my wife, and after several hours of trying on various shoes, in various sizes and various colors, and the store was about to close; she still had not made a decision. It prompted me to say, `Honey, you know, the store is closing. The time is late. You need to address this issue. Let's pick a pair of shoes. Let's go home.' Well this is a very important issue for you as policy makers to look at. The time is late, this store is closing within the next 14 days. I would press upon you the importance of this legislation. The Oil and Gas Leasing Program is very, very important to the future of the revenue stream of the state of Alaska. Without leases, there is no production, without production, there are no revenues, and without revenues, you, ladies and gentlemen, are going to have to scurry all over the place looking at the fishing industry, or whatever, as additional tax base. We have a golden cow in hand that produces 85 percent of that revenue right now, but it needs leases; it needs the ability to produce in order to do that. On behalf of The Alliance, we see SB 308 as a vehicle to provide that base and with that in mind, we would ask you to favorably look at this legislation, and we would encourage you to act very speedily towards the passage. Number 600 REPRESENTATIVE PHILLIPS asked Mr. Furnace's opinion, had this bill been in place for Lease Sale 78, on the affect it would have had on public testimony and public participation in that particular sale. Number 606 MR. FURNACE answered when you consider the findings in this bill, the phases of the bill that address specifically, public testimony, and how that is to be conducted; when you consider, also, that the courts have ruled that while the Department of Natural Resources, the Division of Oil and Gas have followed current statutory language to the `T', that that is not enough and so in the findings of this bill, in other sections of this bill, they have beefed up those public avenues into the process -- had those been in place at that time, I am of the opinion that Lease Sale 78 would be a reality right now, and the companies could be looking favorably toward those projects. Number 618 REPRESENTATIVE PHILLIPS said that was one of the biggest concerns expressed by the people in Kenai Peninsula on Lease Sale 78; that there were not the protections for the public comment period and the public discussion period, and this bill corrects those problems. Number 625 REPRESENTATIVE DAVIDSON said it was good to see Walt Furnace again. They served many years ago together, but in regards to some of Mr. Furnace's analogy, Representative Davidson added that, without more fish, there is a lot fewer Alaskan livelihoods, and he can appreciate the Golden Goose here, but when we go back always blaming the courts; the courts are not deliberately trying to shut down oil and gas leasing, and that is, in fact, one reason to keep hammering away in trying to understand this better. Article 8 of our Constitution, Section 2 under "General Authority", it reads, "The legislature shall provide for the utilization development in conservation of all natural resources belonging to the State, including land and waters, for the maximum benefit of the people." And therein lies the challenge to our judicial system. REPRESENTATIVE DAVIDSON said it is not an easy task to weigh and balance out these different difficult allocations of resources, and so while certainly, we all want to move forward with the development to the maximum extent possible, at the same time, we do have conservation concerns; we do have benefit distribution concerns, so when we rush to conclusion such as this bill is attempting to do, because of this letter I would like to pass out later, it did come to the committee, but at a later point I would like to emphasize that we have lots of local communities that have a lot of livelihoods that are dependent upon fishing. They have these concerns, so while, certainly we want to expedite development of our resources, and maximize benefit, we cannot just out of hand dismiss why the court has proceeded as it has, and attempt to blame that separate branch of government for not doing their job, because for the most part we have difficulty understanding what that other branch of government's job is. Number 660 MR. FURNACE responded, saying it is the opinion of the Alliance, that the court is single-handedly against oil and gas development. The court, like our Alaska Constitution, is sort of a living process and it is their responsibility to interpret the scene of the day, the thoughts of the day. Basically what the court has said to the state of Alaska is, "While you have done what the legislature has set out for you to do, it is not enough." And they have placed a road map for considering these types of things; additional means of public input, et cetera, et cetera. So Mr. Eason, with the assistance of the other body, has simply taken those ideas, taken the court documents, taken the public testimony, taken the first working group, and brought all these interests together under a piece of legislation, in order to address it. One other thought that you talked about is, fishing and oil development having coexisted quite well in Southcentral Alaska to include the Kodiak and the Kenai area. MR. FURNACE said there is no question as to where the largest amount of revenues generated by industry comes from. That indeed comes from oil and gas development. When you look at the per capita income of individuals, the greatest per capita income is paid by the oil and gas industry. If you look at the longevity of the various industries, while fishing has a seasonal content to it, oil and gas provide year-round stable employment. The Daily News some time ago, came out with an article that said that the state of Alaska pays somewhere in the neighborhood of $100,000,000 annually to the development of our fishing industry in the state of Alaska, of which the industry pays back in the form of taxes and other fees, or whatever, about $40,000,000. Its conclusion [was] that over a ten year period of time, that the state has subsidized fishing development to the tune of $600,000. Number 690 REPRESENTATIVE DAVIDSON said Mr. Furnace was talking about the Greg Medreff article that had since been dismissed. It is based on very bad numbers. Representative Davidson said he would be happy to provide Mr. Furnace with an update, not only from the Department of Fish and Game but other organizations, to refute those very remarks. Number 698 MR. FURNACE stated that the point was that, again when we look at the giant scheme of financing services in government of the state of Alaska, that is provided through oil and gas development, and he did not think you could find anyone who disputes the importance of fishing in Alaska, but the fact is, the Golden Goose is oil and gas development. This bill addresses that, and hopefully, with your strong support, we will maintain that. Number 705 REPRESENTATIVE GREEN said that for 30 years, there have been platforms in Cook Inlet, and for 30 years, we have been catching a lot of salmon. While our fish happen to be migratory, this is not uncommon, that where platforms exist, fishing is superb because the platforms act as an artificial reef and protect small fish, so the concerns expressed that fishing will go down the tubes because of possible oil development, is just not well founded. Number 715 LINDA FREED, Community Development Director for Kodiak Island Borough, testified via teleconference. She also offered her testimony as Acting Mayor of Kodiak Island Borough. The Kodiak Island Borough has only recently taken a formal position on SB 308. MS. FREED read a copy of a letter she wrote to Senator Drue Pearce dated April 15. MS. FREED said that she noted in that letter that the Kodiak Island Borough appreciated Senator Pearce's efforts on the Senate side to improve SB 308. They also appreciate the efforts of David Rogers, Jim Eason, and other legislative and administrative officials as we have worked to create acceptable language for this bill. Mr. Eason in a testimony has noted there have been substantial changes to this bill since it was introduced. The Kodiak Island Borough agrees with that position, and for the most part we agree that these changes have been very positive. Kodiak Island Borough originally objected to including the phasing and the concept of this bill. As it became evident to us that the Senate intended to include phasing language in this bill, we worked hard to make that language acceptable. Any concerns regarding the phasing issue, and Title 38 amendments contained in SB 308 are briefly identified in a letter to Senator Pearce. Ms. Freed expanded briefly on some of those points. Her letter to Senator Pearce was provided to the committee. (Background noise makes testimony difficult to hear.) MS. FREED stated: "It is important to note that the last time I was involved in a wide-ranging discussion of these issues, four attorneys along with a few others were also present, and, for the record, I am not an attorney.... While a handful of attorneys were present, they could not agree on the meaning and the implications of specific words and phrases contained in the bill. And if the intent in this legislation is to limit litigation or to reduce litigation in the scope of the state interests and (indiscernible), until this language is clear, I don't believe we will actually see that goal. This is a concern that we have particularly raised.... That if a group of seemingly very knowledgeable people who have spent a great deal of time working on this bill can't agree on what the phrase, for example, `may address only' means, how is the average citizen who is trying to comment on a state's proposal supposed to know what the phrase means? And more importantly, what will a court of law say about the interpretation of that phrase?" Ms. Freed discussed this issue further, offering an additional example concerning the meaning of `economic feasibility,' illustrating the confusion she perceived to be inherent in the language of the legislation. (Tape is damaged and further testimony at this point is difficult to hear.) Number 775 CHAIRMAN PORTER introduced Commissioner Paul Fuhs, Department of Commerce and Economic Development. Number 780 PAUL FUHS, Commissioner, Department of Commerce and Economic Development, who has also sat on the Coastal Policy Council for the last three years, a group that oversees coastal consistency determinations on a statewide basis, testified in support of SB 308. He has also worked extensively with all of the groups during the writing, drafting and redrafting of this legislation. COMMISSIONER FUHS stated, "I consider this one of the most important economic development bills before the legislature. The guts of this thing is a common sense way to look at phasing. When you look at projects, some of them do come in phases, and part of the problem that we've got is that -- You know, Representative Davidson raised the issue of the courts. If you talk to the courts, they're saying, `This language is so vague that this is the only way that we can rule. You're not giving us any clear directions on this. If we don't take into account every potential speculative use, then we've got to throw the lease out.' That's what's happening. And a lot of attention has been paid to oil and gas, but not so much to the other resources. And that's what I wanted to speak to a little bit. The (indiscernible) project was raised, and I think that that's a good example, because what's needed there, for a tideland lease is, you need a dock, and you need the area where this steel refinery is going to go in, and you really don't need anything else. Well, you could speculate that sometime down the road, well, maybe you'd build a railroad into there, or maybe some day coal would go across it, or maybe logs, or you've had other types of development. Well, when that time comes, then you apply for those permits. Now, this language is very clear in here.... You can phase the project only if the uses to be authorized are part of that discrete phase and that the department's approval is required before the next phase of the project may proceed. So you've got to come back for those permits, and there is full opportunity for the public to comment at that time. In fact, this is a very much expanded opportunity for the public to comment, and those issues came out of Lease Sale 78, and this language came primarily out of Senator Little's bill, who had to expand the notification period. And also, with some other people, comments in the Senate, the time for appeal...has been expanded in the bill, so I think the public's right is protected in this...." Commissioner Fuhs expanded on these points and provided examples from the oil and the seafood industries in support of his position. Addressing the question of an absence of standards for other resources, COMMISSIONER FUHS said we know enough about oil and gas that you can lay out those standards. We looked a little bit at this, and we know that those other resources have a broad range of potential uses, and there is no way you can come down and lay down every single standard for every other resource. It would just be impossible to do that. The other thing, as far as giving more discretion to the director, and any concerns that another administration would have that would be less pro development; that is not a very realistic concern, yet if they do not want to do it, if you had an anti-development governor or administration, they just would not put the leases out. They have ultimate control. It is a false argument to say that this bill could give a future administration more control over development. (end of tape.) TAPE 94-64, SIDE A Number 000 COMMISSIONER FUHS' testimony continued with a discussion of speculation about foreseeable or not foreseeable results. He reiterated that he believed the public would have sufficient participation and that he believed that this was a good bill; as far as improving it, you can always improve things, but this bill is a good balance of protection of the rights of the public to participate and for economic development for Alaska. If you went into the phasing issue, you would destroy the whole reason this bill is necessary. We have done our very best to work with fishing groups, making substantial changes at their request. Number 044 REPRESENTATIVE NORDLUND understood that the Coastal Policy Council did not endorse this bill, that they in fact had wished that they had been the entity to bring the bill forward and to work through all the problems. Representative Nordlund referred to a letter from coastal districts addressing perceived problems in the bill and noted that he felt the districts did not feel adequately consulted on the issues. Number 051 COMMISSIONER FUHS said that the issue was raised for quite a while in front of the Coastal Policy Council, and he did make a full report to them at the last meeting, and they did not say they did not endorse it, but they did not endorse it either. They just did not take a position on it. At that time the council was asked if there were any additional issues they wanted brought up. Some were raised and dealt with. There is not a piece of legislation anywhere that is going to please everybody. This bill provides a good balance. Number 100 BRAD PENN, Alaska Oil and Gas Association (AOGA) via teleconference in Anchorage, said AOGA supports a full analysis of all issues and concerns for the best interest finding process for each lease sale. The association feels that the current statutes were designed to do just that. However, AOGA is concerned by the uncertainty that has been created by recent rulings of the courts interpreting the current law. AOGA supports certainty in the process, so that DNR's scope of review can be defined during the administrative review process, and not by the courts. The only question is how to define the scope of review. MR. PENN said that AOGA believes that the scope of review for the best interest findings for oil and gas lease sales should cover three items: (1) The director should determine those issues to be addressed; (2) public comments should be considered in determining what the scope of the review should be; and (3) the legislature has determined that those items listed in AS 38.05.035(g) should be part of the scope of review. If the director, the public and the legislature do not consider an issue to be of sufficient concern, then the courts should not be allowed to decide if it should have been covered in the best interest finding or consistency determination. AOGA believes that the intent of this bill is directed at providing certainty in the scope of review. AOGA supports SB 308. Number 142 REPRESENTATIVE JAMES, addressing Mr. Eason, said she would like to confirm with him her interpretation of some experiences with the court in some of these lease sales. She requested an outline of the things which needed to be considered in determining best interest findings of the state. Representative James said she believes our courts make these findings because our laws are insufficient to define what exactly is meant by best findings in the interest of the state. Number 188 MR. EASON said that was precisely his view. Number 195 REPRESENTATIVE JAMES asked what is "material" in the phasing. If someone from the public, say during the first phase of this lease sale proposal, came up with a concern they thought was material and the department did not figure it was material, and then the department would be required to respond to that person in writing, because they had a concern, would it be possible, and if the department then determined that their concern was not material, at this phase, would that person then have the right to go to court and say they thought it was material and that they were responded to incorrectly? Number 198 MR. EASON said that was precisely the recourse they would have. They would first have to exhaust the administrative remedies by appealing the director's decision. If they did not like the result, then they would have to appeal to the commissioner, and failing happiness there, they would have to pursue that issue in court. Number 232 REPRESENTATIVE JAMES said that the public's opinions have not been aced out in this procedure. Number 250 MR. EASON responded by saying that from his perspective one of the most unfortunate parts of the debate about the bill and what the bill is intended to do is that (a perception existed that) the bill was intended to foreclose opportunities; he honestly believed that from the beginning the intent of the bill had been that it be better, and much more refined in the public interest, and that whatever comments are received, are addressed and he hoped the language of the bill reflected this. MR. EASON commented, the standards will be standards the court will apply and use in defense of an appellant's right, if they are misused by a director. But if it sits in statute, then all of those issues and concerns will be addressed, and they will be addressed in writing; and any decision that a fact or issue is not material will be explained as to why it is not material. MR. EASON said if it is material to a later phase or a later permitting decision, that will also be rationalized in the best interest finding decision. There is a more complete dialogue, rather than having the public say something, and then having a giant echo, and no response. This will require that those comments be addressed, and in my view, it contains a continuing dialogue which is important to, I hope, increase public confidence in the programs that this legislation will cover, but also to establish a more complete record for the courts, that have to review lawsuits that may arise under this bill. Number 266 REPRESENTATIVE JAMES expressed one more concern. She has had some experience in local planning authorities, where it is stated that in order to be able to appeal in court, you have to have been a participant at some earlier stage in this planning process. There was some concern, also, that someone asked, "How do you get standing to appeal in court?" If a person from the public had a concern and the concern was determined by the department to have not been material, and they could have this administrative appeal, and if it was not material, that still would not necessarily preclude them from being a party in a subsequent suit, because they had been a participant earlier on in the process. Would that be a correct assumption? Number 280 MR. EASON said that assumption would be correct if you were talking about an appeal later on that issue. They would be foreclosed from raising new issues they had not raised during the administrative process sometime. It is a balance. We are trying to provide more time and more opportunity earlier for the public to understand what we are trying to do, and what we think is the right way to do it. But we are also trying to strike the balance that by doing that, we pull them out, we pull their comments out, and we make them more concrete, so an agency can try to understand them and address them. So it is a two way street, but presuming that you have participated and you have made your concerns known, under this bill you would be fully eligible to take those concerns to the Superior Court, if the department is unable to resolve them as you think they should be resolved. REPRESENTATIVE JAMES stated, "It would appear to me that being given the ground rules in the beginning of this public process, knowing full well that in order to be a participant or to be able to be in appeal at some later time, that the citizens in the public process, are going to thoroughly examine any concern...that they may think that they might have, so that in fact they will then protect their position of being able to appeal at some later time - in which case, the results of that would be, then, that more things are brought up in the beginning than might be if they thought there was some other chance to not have to do that. Is that correct?" MR. EASON: "I agree with you completely." Number 283 REPRESENTATIVE DAVIDSON said Mr. Eason indicated they would be precluded from bringing up a new issue. But if in fact, the issue is new, because new information is brought up in a later phase, why would they be denied an opportunity to present that, even though at an earlier phase that information should have been, but was not known to be available. Number 290 MR. EASON said they would not be precluded from appealing, commenting on, participating in, or appealing a decision related to the permitting of a subsequent phase. This would in no way affect those rights. Number 296 REPRESENTATIVE DAVIDSON said he was talking about a part of the phase where a new piece of information came up. For example, let us say there was a very rich archeological site that came up at the very late stage, say, of production, say one or two phases past the time that we should have known that it was there. We are precluded then from going back to that other phase with this new archeological find? Say, of world class significance? And it's just too bad because we should have known back then, but did not? Number 313 MR. EASON commended Representative Davidson for his hypothetical, saying it is a very difficult one to answer. The difficulty with that hypothetical, though, is that there would be two questions the court would ask if confronted with this bill and that set of facts. The first one would be, "Did somebody really know about this archeological site? Were they the only people to know about it, and yet they were quiet, with the hopes that nobody else would mention it? And then, after the process had run, they would use that to stop the sale?" In those circumstances, the court is likely to appropriately say, "That is unfair." But if it is the opposite, and in fact, the administrative process has run, but there is something that happens of extraordinary significance, then, Mr. Eason asserted, "I believe personally, and I am not an attorney, but I believe, at least with my experience in losing many cases with the court, I think the court would probably be pretty receptive to taking that information before it, regardless of what you said or what I said." Number 330 REPRESENTATIVE DAVIDSON asked Mr. Eason why he is losing so many cases before the courts. Number 332 MR. EASON said he was glad to be asked that. The simple answer is that he is not sure on all of them, but something Representative Davidson said earlier did strike a chord that he thought important for everyone to understand. On a couple of these, it is truly a mystery. On others, it is arguably not a mystery. Some of the things that have been said by the courts point out a problem that is not a problem of my making and it is not a problem of your making. It is a problem that we really have to come to grips with though. In thinking in specific terms of the Goodnews Bay decision, that was a decision that went before the Coastal Policy Council. It was determined by all the agencies to be consistent with the Alaska Coastal Management Program. Its best interest finding was conducted under Title 38 provisions, as the Director of Mining understood them to exist. It really was a long protracted process that appeared to have extraordinary public support, including the Coastal Policy Council, but a local community obviously did not agree with that decision. The Superior Court confirmed the decision. The Supreme Court again ruled 5 - 0 that it was wrong, and that you had to consider all the possible impacts of mining that may happen in the region, not just offshore, but in the region of Goodnews Bay. And then, the court went on to say that it felt that it was appropriate that the state conduct investigations like the NEPA or EIS investigations of the federal government. The problem is that we cannot do the job that we think you want us to do. We are not funded to do that, because it is about $1,000,000,000 that the federal government has spent doing those analyses in Alaska; compared to whatever we have spent over all the years that his division has existed. The quality of the analysis is open to debate. Good, well- intentioned people can argue about the validity and the importance of the information derived from those studies. But the fact remains that in every case, they really do not reflect what actually happened after they were done; especially the ones dealing with OCS leasing. This leads to the question of what we would gain. Some folks have said we gain better insurance; there is no litigation. We looked at that. About 50 percent of the federal sales have been challenged, and a considerable number of them more than we have lost, have been successfully challenged under federal, NEPA, or NEI standards. So, the court is telling us, they want us to do that. We are telling you, that is what the court says, and that is what they are going to hold us to even though the law says something much less than that. The options are, we can do nothing further, and we may not be able to do anything further if you were to give us $1,000,000,000. It is open to question. Number 380 REPRESENTATIVE DAVIDSON said that brings us into federal law, and asked if that brings us into compliance with federal law -all sections of the bill? Number 384 MR. EASON said there is no attempt, here, to bring us into compliance with federal law under Title 38, the State's disposal statutes. The legislature has not said we should have a comparable process to federal law there, but, as we said earlier, with Mary Lundquist's testimony, we believe this brings us in compliance, we will be in compliance with federal law in dealing with the Title 46 issues, which is something required, since the state is a participant in that program. The federal government does not have a say, directly, over how we administer the best interest findings under Title 38, because the legislature has chosen not to require that. REPRESENTATIVE DAVIDSON said we see from Ms. Freed's testimony that locally impacted populations and areas are not satisfied with the haste with which we are moving forward on this bill. Secondly, they would lose their ability to respond, and protect their own interest, vis-a- vis the state coming down on them with these decisions. Wouldn't federal law then seek to provide protection for those local communities where state law refused to do so? Number 411 MR. EASON answered that there are, depending upon the circumstances, the project and various authorities, of federal and state, and local agencies, a number of safeguards that are designed to ensure that neither the state, nor the federal government can run over each other or run over the public. That is not the intent of government. Sometimes people feel that is the process of government, and unfortunately, that tension is always there. MR. EASON said in the case of a decision on permitting in the coastal zone for a development project, obviously, if it is in the coastal zone, it is going to require a Corps of Engineers permit and an Environmental Protection Agency permit, as well as a consistency determination. He believes that regardless of what amendments are made in respect to this bill, to current state law, the existing protections are not only there, but they are numerous, to assure that the local public and the state and the federal agencies all have a say in what happens. Number 435 REPRESENTATIVE DAVIDSON said he would like to hear a little bit more on the Goodnews Bay issue, because it helps put some things into perspective. He asked if Mr. Oscar, whom he understood to be a litigant in that case, could address the issue from his perspective as to where that litigation went as a result of lack of state law. Number 440 CHAIRMAN PORTER replied, "To show you that there are very, very few absolutes, I will accede to that request for that one additional person to testify, and I will also accede to a request that we've had from Senator Little to address us as relates to her involvement in this as was mentioned by a previous witness. And, after that is concluded, you win, we will continue until 2:00 tomorrow for the purpose of - no more testimony, but - considering your amendments, I will ask the agency people, if they can, to be here at 2:00 tomorrow to help us with the amendment proposals and hopefully at the conclusion of that, we can address the bill." Number 455 REPRESENTATIVE DAVIDSON: "Mr. Chairman, I don't win anything, but your able stewardship of the public process wins. Thank you." Number 460 REPRESENTATIVE NORDLUND asked if Chairman Porter would consider sending this bill to a subcommittee. That is not to delay the bill, but there are a series of amendments that could be better addressed in a subcommittee format where we can have people from the department here as well as folks on the other side of the issue, and maybe we can hammer through and come to an agreement on a lot of those amendments. We would not have to take up the committee's time; we could bring it back as soon as possible. Number 470 CHAIRMAN PORTER felt there was a degree of urgency because of the lateness in the session, and that, with the other committees being shut down, the time was available for the committee to review the bill, so that in the normal judiciary fashion the committee should be able to work on the amendments with whomever they needed to work. Number 476 REPRESENTATIVE NORDLUND requested that, with that mind, would it be okay while going through the amendments to have the people at the table, from pro and con, to help the committee understand. CHAIRMAN PORTER reserved the right to limit discussion if it seemed to be getting repetitive, but other than that, that would be fine. Number 484 SENATOR SUZANNE LITTLE noted that she had a concern, as it had been said that part of her bill was placed in this bill, and she acknowledged that to be true. She said that it was, however, only a small part of her bill, and basically, the portions of her bill that were placed in this bill were pretty much codifying existing policy and existing operations in the Department of Natural Resources, as far as noticing those. SENATOR LITTLE'S bill was not a response to the Ombudsman's report regarding Lease Sale 78. Many, many complaints from her district came to the Ombudsman regarding that lease sale, and that report was in response to those complaints. The Ombudsman's report said the public notice portion of current regulations just are not fair, and so Senator Little wrote a bill taking just a few of the Ombudsman's recommendations, and those few recommendations in her bill had been pared down to basically what is in existing policy today, with the exception that additional advertisement was being added to the public notice. Senator Little had included seven consecutive days of public notice publication in her bill, and this bill allows for one day notification separated by a week; in other words, one notification for two weeks. SENATOR LITTLE commented on the characterization in the Senate, that everyone who was interested in this bill was able to participate with the working group that was a part of drafting some recommended changes for the bill. Senator Little wanted to let the committee know that she was a very interested person in this bill and she was not invited to participate. Also, it had been characterized that fishing interests had participated to a great extent in some of the changes made in the bill, and to Senator Little's knowledge, that was not factual. She stated that it is misleading to say that including portions of her bill makes it okay for the public's ability to know and comment, since other parts of SB 308 are so negative in that respect. SENATOR LITTLE said she still had two remaining concerns with the bill which were a great debate on the Senate floor. The first concern was phasing. She was very concerned that it is not consistent with the Federal Coastal Management Program. The Federal Coastal Management Program basically says that if you know information, at any phase, you will consider it. This bill, Senator Little stated, says you will look through this knot-hole, looking at the specific discrete phase, and consider only information pertaining to that discrete phase and not the other available information. Senator Little was concerned by this and had requested an opinion about whether or not the legislation would be consistent with the federal program. SENATOR LITTLE's other remaining concern was that there was no list of issues that the department has to consider for non-oil and gas development. The "G" list that had been referred to, she said, has been a good list of things to be considered for oil and gas development, but a lot of coastal communities are concerned that such a similar list should be created for non-oil and gas development. SENATOR LITTLE concluded, "If our intent is to get the drill bit in the ground more quickly, I don't think the bill gets us there." She believed the bill would bring a lot more litigation, a lot more court time, a lot more expense, and might even put the state in the position of buying back leases in the second, third, fourth phase of the project. Senator Little reiterated that she had strong concerns about the bill, and trusted the remaining problems could be resolved. Number 567 REPRESENTATIVE PHILLIPS said she thought Senator Little had brought up a good point, and asked for a very specific statement from the Department of Law or DNR on "...whether or not our legislation must come into compliance with federal legislation; whether or not we are in contention, et cetera, et cetera." She wished for a specific statement on whether or not the legislation needed to be in compliance and whether or not there was a mandate to be in compliance. She requested that these questions be answered when the hearing was continued on the following day. Number 577 JOHN J. OSCAR, President, Native Village of Tununak, testified on behalf of the Native Village of Tununak. Mr. Oscar presented critical analysis and recommendations concerning SB 308. He noted that he had travelled a little over 1,088 miles to see to it that his village was properly represented. Mr. Oscar said he was also the co-chair for his coastal management district, for which he had been the coordinator. Mr. Oscar provided a written statement for committee members' review. MR. OSCAR began with a rebuttal of Mr. Eason's assertion that there was a lot of support for the bill "out there." Mr. Oscar said that was not true; 56 villages did not support the Goodnews Bay offshore prospecting permits as prepared. He said that AVCP (Alaska Village Council Presidents) has passed a resolution to oppose the bill and was an appellant in that case. Mr. Oscar said that villages had introduced habitat legislation three times, but did not succeed, he believed, because of the strength of the ability of the Department of Natural Resources to oppose any bill which caused it concern. MR. OSCAR noted that statehood had come into being without the input of his people. He believed that the same thing was occurring in this case. He stated, "We had presented to the Department of Natural Resources about our concerns of local knowledge, and the way it was prepared. We had presented to them charts. It was clearly shown to the Coastal Policy Council where the migration routes were of sperm whales, where the haul-outs were for the walrus, and sea lions; where the herring stay before they come up to my island, in the Goodnews Bay Area, where the king salmon stay just before they go up to the Yukon, and the Kuskokwim Rivers...and where the smelt were, where the (indiscernible) were, where the eel grass beds were, where the herring lay their eggs.... But those were denied because they said, `Speculative. Unscientifically based. Only of belief.' "Is that the condition that we are going to be put under with this process? The director's unlimited power to ignore science and long-developed experience and traditional knowledge as `speculative' and `immaterial' gives us some grave concerns." Mr. Oscar asserted that the Department of Natural Resources would dismiss such knowledge as speculative, unscientifically based and only a belief no matter how long observations had been made. "These terms," he said, "have been given the determining factor to control and manage our resources, giving the agencies ultimate say however unfit the decision may be." MR. OSCAR said this was why he was so concerned when MR. EASON pointed out that Goodnews Bay had a lot of support. Mr. Oscar observed that the courts had said that the Department of Natural Resources had done a poor job of doing its homework in the beginning; if they had not done a poor job of doing their homework, the matter would not have reached the courts. Mr. Oscar said, "In fact, all the tracts that were being proposed were not opposed by these people. They were opposed by these migration routes where the staging areas were; what would occur when the cumulative impacts occurred, from the very beginning. DNR refused to understand that and assess the situation." MR. OSCAR foresaw a situation, where, at the "director's discretion," should phasing be developed, the state would assess only one phase and "may address only reasonably foreseeable significant effects...," thus avoiding arguments addressing impacts by the first phase of development. He stated, "Depletion of fish and wildlife resources and their habitat from cumulative effects caused by the first phase give the director unfair judgment and discretion to reject any argument and determine new resource information immaterial and nonexistent. Moreover, it accelerates and binds the process to continue with development, despite imbalances, by rendering phasing." MR. OSCAR continued, "We're quite concerned, and question the validity of not requiring written findings before a project is approved. Does this mean once a project is approved the director may write (written findings) after the decision is made? It says here, on page six, line seven, that he is not required to write one before the approval." Mr. Oscar was concerned that an across-the-board approach could be taken concerning sales contracts, leases, permits, mineral claims or licenses and characterized it as inappropriate. MR. OSCAR cautioned, "The director can `limit the scope of an administrative review and finding...that pertain solely to the discrete phase of a project' by using only what is material only to his point of view and with broad authority." He said that the amended language under Section 2 would limit, if not eliminate, public participation. Again, Mr. Oscar, warned, "The director may only address what he sees fits his agenda." He noted that phasing by the federal government guarantees the method of assessing all costs and effects of a proposed project by incorporating public knowledge, known facts and findings provided to them at the beginning. "This bill causes us some grave concerns, because many times my people have been left behind, even in the revenues of the state." Mr. Oscar reiterated that his people were not consulted when statehood came into being. He challenged the constitutionality of the bill given the lack of public knowledge concerning the complex legislation. Mr. Oscar said that the people, the public, would be at a disadvantage, would have no voice, vs. the advantage the agencies and the agencies' lawyers and the agencies' researchers would hold. "We will be displaced, and it is very sad; the repeat of the state's ability to dominate our people is not fair. And we are trusting the state of Alaska to remind itself of its Constitution, that it should not forget all the people that are concerned about an issue. This process here is a radical change from present law under the administrative process. The original intent of the Coastal Management Program was to give the little guy a voice. This bill takes that away. As written, the bill restricts standing to appeal." Mr. Oscar went on to delineate the ways in which public participation was limited. MR. OSCAR challenged the time provided for in the bill as being inadequate for interested parties to assess the director's findings and provide information, especially in a rural setting, with only 20 days after the finding is issued. He provided recommendations to address this problem. In conclusion, MR. OSCAR characterized the legislation as a quick fix proposed by the DNR for the mistakes that it had created. He predicted that it would increase litigation. "We support well thought out, thoroughly planned development. Let us not repeat mistakes by the 18th century's lack of respect for the land, fish and wildlife resources, and the blindsighted approach to haphazard development. We do not wish to see the creation of a bulldozing bureaucratic monster for lack of equitable language. We recommend that a working group be developed to come to a more appropriate consensus on these bills...." Mr. Oscar noted that meetings had taken place between DNR and some coastal districts which were not given enough opportunity to settle differences. He recommended a working group to develop policy similar to the process used in developing SB 238. Finally, Mr. Oscar reiterated the hope of the people he was representing, many of whom could not afford the cost of coming in person to testify, that the state "...listen to the little voice..." so often dominated by the large agencies which are able to "...tailor language which favors their interests. What about the little guy? Please don't forget him. Thank you." CHAIRMAN PORTER expressed that by his observation, the Village of Tununak was well represented. Number 771 COMMISSIONER FUHS offered clarification on the seafood processing companies, and wanted to make it clear those were some individual companies he had talked to, and the ESPA, nor any other processors' organization has taken a position on this bill. Somebody had a question about what he was saying, so he wanted to clarify it. Number 776 CHAIRMAN PORTER recessed the meeting until 2 o'clock the following day and said he would request agency representatives to be present to answer questions on the 10- 15 amendments to be discussed. THE HOUSE JUDICIARY COMMITTEE RECESSED AT 6:10 p.m. TAPE 94-65 SIDE A Number 000 The House Judiciary Standing Committee was called back to order at 4:15 p.m. on April 28, 1994. A quorum was present. CHAIRMAN PORTER stated the Committee would continue to hear CS for SB 308(FIN)am. He announced the witnesses who would be available for questions. Number 062 REPRESENTATIVE DAVIDSON referred to a letter which had been passed out to the committee from the Department of Law which talks about the intent of the bill which is that the state still be in compliance. Representative Davidson asked, what is the process that must be waited on to ensure the maintenance of federal certification; and that we will not, during the interim, or other times, lose any federal grants or anything that would be affected by the bill before us. Number 084 MS.LUNDQUIST explained that any changes that were made to the coastal plan, the state plan would have to consent to OCRM, and they would have to approve of the amendments and support them for the plan to be federally certified. Number 092 REPRESENTATIVE DAVIDSON asked if that meant when we pass this law, we will not know until we receive word from the feds that they passed the federal muster. MS. LUNDQUIST told Representative Davidson that was correct. Generally, it would not be prudent to (indiscernible) legislation that is still in the formative process. OCRM would have to have a certain amount of time to act in order to determine whether they considered it consistent with the federal plan. If it was not considered to be consistent, there would be two results. One would be the state would not have the ability to oversee federal projects, and the other is that the state would be in danger of losing federal grants. Number 118 REPRESENTATIVE DAVIDSON said in view of a long list of people and organizations in local governmental agencies who still have concerns or outright opposition to this bill, he would like to move a conceptual amendment that would delete everything except the oil and gas applications, and thereby save ourselves a lot of grief and ensure that other parts of this bill, perhaps in a work group setting, we could work out with these other groups as other work groups have worked out in the past. Mr. Eason's shop is working hard to make sure we expedite lease sales, but at the same time, we could save ourselves a lot of wrong headed policy if we made this bill apply to oil and gas, and standards already exist in statute for such transactions. REPRESENTATIVE DAVIDSON moved the Conceptual Amendment. Number 156 REPRESENTATIVE PHILLIPS objected. Number 160 CHAIRMAN PORTER asked Representative Davidson to consider rescinding his motion for the moment. Chairman Porter requested this for a technical reason, saying, "We have amendments #1-23, and I don't want to renumber them all. Could you do that at the end, rather than at the beginning? And during that period of time, then, I have a letter here from the Department of Natural Resources that commits them to working on the regulations during the next year for the G-list type criterion for the other resources." Number 167 REPRESENTATIVE DAVIDSON stated he would certainly like to be cooperative, but with this letter of commitment, there is not a single name on it that we know will be here come next January. In the past, commitments from departments to perform in a way that we think they should because we have made policy decisions -- the amendment cannot be withdrawn just because of this letter of commitment. CHAIRMAN PORTER clarified his request, saying he was not asking Representative Davidson to withdraw his amendment permanently, but just until the end of the testimony, and then it could be brought up again. Number 190 REPRESENTATIVE DAVIDSON stated that his hope in this conceptual amendment was to save the committee from having to go through a lot of these different amendments. He then withdrew the amendment. Number 197 REPRESENTATIVE NORDLUND said he was going to speak to the fact that if the amendment had been offered, it might have alleviated the committee needing to go through a lot of the other amendments; it would make a lot of the amendments moot. We would have to have the bill redrafted, and take another look at it, because it would be so sweeping as to change the bill, but if you want to do it that way, that is fine; it just sort of makes more sense to do a bigger approach first, and then if we do not achieve that, then to go through the smaller amendments. REPRESENTATIVE DAVIDSON asked if this means the amendment was probably dead before we consider the advantages of such an amendment? CHAIRMAN PORTER said he had no idea, and that what he told Representative Davidson is exactly what he meant - that he did not want to try and renumber 23 amendments. REPRESENTATIVE DAVIDSON offered to do this himself. Number 318 REPRESENTATIVE NORDLUND said Representative Davidson and himself would be alternating offering the amendments, and they would not necessarily be in the order that we have them in the stack. CHAIRMAN PORTER said they could be referred to by the numbers in the corners. REPRESENTATIVE DAVIDSON offered Amendment #9. CHAIRMAN PORTER clarified that it referred to page four, lines 3-8. REPRESENTATIVE DAVIDSON explained Amendment #9. One of the problems with the bill is that it gives entirely too much discretion to one or two individuals, and in the words the "Director finds are material to..."; this makes it too easy for an individual to pass easy up or down judgment on that material, so by deleting that first part, it resolves that problem, having the effect of spreading the power out to more than just a director. The other one is on page four, lines 22-31. REPRESENTATIVE DAVIDSON asked, "Is there a pressing issue or project, Mr. Chairman, that you know about, that wants for us to rush this legislation through right now?" REPRESENTATIVE PHILLIPS interjected that the amendment was not before the committee. REPRESENTATIVE DAVIDSON said he thought they were passed out. CHAIRMAN PORTER asked Representative Davidson to move the amendment. REPRESENTATIVE DAVIDSON moved Amendment #9. Number 345 REPRESENTATIVE PHILLIPS objected. Number 351 REPRESENTATIVE DAVIDSON reiterated that if we want to give that kind of power to one or two people within the bureaucracy, over the many different groups of people at the level of local government, he does not believe our local constituents will find that to be good public policy. REPRESENTATIVE NORDLUND agreed that the bill gives too much discretion to the Director of the Division of Oil and Gas to determine what is material, what facts need to be determined in order to decide whether or not to go ahead with a lease sale or exploration or certain development. Representative Nordlund referred to existing sideboards in law regarding oil and gas sales and noted that the legislation does not provide for those kinds of considerations for the other kinds of land disposals. He requested the issue be addressed by Mr. Van Tuyn and Mr. Eason. CHAIRMAN PORTER agreed that Mr. Van Tuyn and Mr. Eason might be called upon to provide succinct reflections on the amendments but requested that the discussion not become a "meritorious, redundant debate." Number 357 REPRESENTATIVE JAMES asked if she could ask a brief question of Representative Davidson, since she had another meeting to attend. "You're saying that you find too much power in the director to indicate what is material in the determination. Who did you want to make that decision?" Number 365 REPRESENTATIVE DAVIDSON explained that more clarification and input was needed from the local experts, having more persuasion on that director. REPRESENTATIVE JAMES observed, "Somebody has to make that decision. I don't know who you're suggesting would do it." MR. VAN TUYN responded that to the extent that anyone needs to make that call, the discretion would still remain with DNR, and still remain solidly with DNR. Currently, the sideboards on that are the current statutes, which require that you look all the way to the end of the project. The standard of review of the thing is that all important factors be considered. That is the legal standard, and if a factor is an important factor, it must be considered by the director. `Important' is an objective standard. You take a look at the community around you. You take a look at the Porcupine caribou herd and see what uses it is used for. You determine if that is important. Then you see whether the director has applied it. What SB 308 does is allow the director to define what is important, so you're taking the objective standard away and inserting a subjective feeling of one, of the current, administration." Number 380 REPRESENTATIVE DAVIDSON referred to a conversation he had had earlier in the day with Mr. John Oscar of the Native Village of Tununak, who had appeared before the committee on the previous day. Representative Davidson expressed that investing this much authority in one or two individuals was premature when standards were just now being established in non-oil and gas areas. He stated, "I think that given the fact that the local people are the ones who have to live with the materials left to the discretion of one person without the knowledge heretofore; of course, we have a commitment, but what does that say? I think that it is important that we allow for a little more input from the local level, to ensure this to happen before that final discretion by the..." REPRESENTATIVE JAMES left for her other meeting, saying she would return in half an hour. Number 400 MR. VAN TUYN commented that in all cases except for oil and gas, there are no sideboards, and the intent of Amendment #9 is to take away that sole discretion of the director with respect to the best interest finding to be the only one who can determine what the appropriate sideboard is. Number 412 MR. EASON: "To the contrary. What the important factors are, are not objective. That is the problem. People's views of importance are very subjective, and every one of these cases is based upon different views of important or salient factors. The phrases that Peter used were very important, to all the important factors to the end of the project. That is precisely why we are here. Because the court has told us that they believe we must know what all those events are before we can properly condition them. Your choice with this amendment is a very simple one. You take the status quo and make it much worse. You assure that there will be no development of any sort in the state of Alaska, and it's a clear-cut, very simple amendment that would accomplish that." Number 425 REPRESENTATIVE DAVIDSON asked for clarification on Mr. Eason's last comment. Number 430 MR. EASON said the question is, to whom the discretion goes, and how much discretion there is; the legislature has already seen fit to delegate that extraordinary discretion to the commissioner, who has delegated it through a series of departmental delegations to directors. But obviously, it is not unfettered discretion. We view this bill as a good faith attempt to define more precisely, what that discretion is, and how the public interacts with it. But ultimately, as Representative James said, it is very important that we recognize somebody has to exercise the discretion. It is yours, under the Constitution, but you saw fit to delegate it to the commissioner. You can take it back, and conduct sales and disposals every year, or you could give it to one of the local districts, or you could spread it, presumably, if it is constitutionally permissible. We have a situation now, where the discretion you have delegated is not being recognized in any fashion, and I do not think it is an improvement to disperse that discretion, or make it appear to the courts they have been corrected, that they can substitute their judgment. But to make it even more complex, by suggesting that fishermen can also make those decisions, or someone else, somewhere else in the state can -- Someone, ultimately has to make the decisions, or they simply won't get done in any sort of predictable and public process. Number 455 REPRESENTATIVE DAVIDSON asked how the individual with the discretion would determine what is "material" without statutory standards that have discussed maximum benefits for all people, not just people who want to do a project. Number 460 MR. EASON said that would be the entire intent of the findings under the statute, that the rationalization of the thought process a director goes through, including his determinations of non-materiality, has to be defined in writing. It has to be a living document that the public will be able to read and understand, and have the ability to challenge on its merits. And the court is very comfortable with the term "material"; it will make a decision, if there is a challenge as to whether or not the discretion has been exercised properly in those determinations. Number 470 CHAIRMAN PORTER interjected, recognizing within the commitment in this letter there is no guarantee the commissioner will be there, and for that matter there is no guarantee we will be here. There are no guarantees in this world at all, but assuming Commissioner Noah, or yourself, or someone else recognizes this is a commitment and pursues this; the process of developing the sideboards for G-list considerations for the resources, is a public process. Is it not under the Administrative Procedures Act? MR. EASON responded that that was correct. CHAIRMAN PORTER: "And has a multitude of opportunity for public input and discussion?" MR. EASON concurred. CHAIRMAN PORTER asked if there were any other questions; there being none, a roll call vote was taken. ROLL CALL VOTE Representative Brian Porter N Representative Jeannette James - Representative Gail Phillips N Representative Pete Kott N Representative Joe Green N Representative Cliff Davidson Y Representative Jim Nordlund Y Amendment #9 failed 4 - 2. Number 500 REPRESENTATIVE NORDLUND offered and moved Amendment #1. There was objection. Number 515 REPRESENTATIVE NORDLUND explained Amendment #1 was in the finding section of the bill. It is Finding #5. It states that in delegating this discretion, what this would be to the department, is an intent of the legislature to limit public comment or public opportunity to meaningfully participate in administrative review. Hopefully, this is a matter of clarification, that whatever participation there is, it is not just participation for the sake of showing up in a room at a time when maybe the person is not able to consider a relevant issue, but the participation is meaningful. There are other sections in the bill relating to meaningful participation - in the appeal process, for instance, where a person is allowed to appeal a decision, that they had meaningfully participated in considerations of the issues previous to that, it's only fair that we also make sure that it's reflected as meaningful participation here in the finding section also. REPRESENTATIVE DAVIDSON said to ask for consistency of meaningful participation, or the kind of participation is not asking for too much in determining how we want the participation to be. Number 530 REPRESENTATIVE KOTT had a problem with using the word "meaningfully". It is a very slippery word, and offers potential for an appeal to take place. If this issue was ever brought before the court, the court would probably imply this word anyway. He did not feel it was a necessary word. Number 539 REPRESENTATIVE NORDLUND asked Representative Kott if he would be in favor of deleting the word "meaningfully" on page nine, line 15, just to make it consistent. This is the section that deals with appeal and the eligibility of the person who is appealing, whether or not they participated in the process. Let us say in the earlier time they participated in the process, they showed up in the hearing and signed the witness register, and walked out of the room, and did not even listen. I guess you could say they participated, but that is not meaningful participation. It is difficult to define the term, but since it is in the bill originally, it kind of begs the question, "What is meaningful participation?" Number 552 MS. LUNDQUIST addressed that question. She said "meaningfully participated" is defined in the bill itself, on page nine, lines 15-20. To "meaningfully participate" is to submit written comment during the period when written comment is being received, or present oral testimony at a public hearing, and this is a test that has been adopted from Alaska case law, with regard to standing, to appeal. Number 562 CHAIRMAN PORTER confirmed this is as opposed to interjecting a term that could be interpreted different ways in the findings. Number 566 MR. VAN TUYN commented that even with the language on page nine, defining what is meaningful, and so forth, there is really not a lot of opportunity here for meaningful participation in the process, and therefore, the thought of putting it in the legislative findings would merely reiterate that the legislature finds meaningful participation to be a goal that is worthy of the statute. Leaving it out here, and yet leaving it in the standing section, literally; and who can go forward with the bill, we are creating almost a double standard where the legislature is saying, it is not real important that we be the guardian of your meaningful participation, that we give you the process. You have to figure that out, you have to push your way through it, and then you can appeal. That is the intent behind it. Number 580 CHAIRMAN PORTER said he viewed construction of statutes as a way to clarify, not to muddle; so as to allow courts to make specific interpretations as opposed to speculative interpretations. "Meaningfully" is one of those terms, sans the definition on page nine for how it is used there, that is a litigation causer, not a litigation solver, so he would not support the amendment. There being no further discussion, a roll call vote was taken. ROLL CALL VOTE Representative Brian Porter N Representative Jeannette James - Representative Gail Phillips N Representative Pete Kott N Representative Joe Green N Representative Cliff Davidson Y Representative Jim Nordlund Y Amendment #1 failed 4 - 2. Number 600 REPRESENTATIVE DAVIDSON moved Amendment #10. REPRESENTATIVE PHILLIPS objected. REPRESENTATIVE DAVIDSON said this amendment would accomplish (indiscernible) of phasing. He addressed Mr. Eason, asking, "When you are determining the benefits - for simplification, let's say the monetary benefits - of a project, is that not a lot easier than trying to determine what costs that same development might accrue in terms of later competition for a resource area? How do you balance out the easy to assess monetary value benefits vs. the cost of degradation to the environment, or the taking of a resource from another person, say, oil vs. fish? How, as a man with this great discretion now, do you determine what the costs of a project are?" Number 620 MR. EASON responded, "I think that the premise underlying your question is wrong. In my mind, the determination of the benefits is no easier or no more precise than the determination of the cost. I think that in the case of the disposals that I am responsible for, they are both highly uncertain. As a point of evidence of that, we have had lease sales in which there were no leases bid upon, so there was nothing. There was some cost, there was the administrative cost, and there were, in the case of this particular sale, there was a litigation filed over it, which subsequently was dismissed, so those are costs which were hard to quantify or anticipate beforehand. There obviously were no benefits because I don't think the public was well served by the litigation, and in fact, the litigants had to pay money to dismiss the case. So, I believe that they are both equally uncertain, and that is really at the heart of one of the major dilemmas that we are trying to address with this legislation, because some litigants are asking that we treat the determination of a decision to dispose as if it were a tabulation of cost and credits and debits and, on top of that, supposedly understandable tablet, you extrapolate to the end of the project. My life would be so much simpler, and so would yours, if that were a fact. But it simply isn't. Every disposal is unique. In my case, I try to approach the decision making by looking at the record and reflecting the thought process in my response to the written and public record. But there are none that can be reduced to simple columns and rows." Number 644 REPRESENTATIVE NORDLUND asked Mr. Eason to comment on an assertion made in the previous day's testimony that under the provisions of the bill he would be able to look at the long-term benefits of a project, but would not be required to look at the long-term costs. Number 649 MR. EASON responded, "I have heard that several times, but I don't see anything in the bill that suggests that we would be able to look at the long-term benefits and not at the costs. If we know either, there is nothing that I see that would preclude you from considering them. If they are part of the record, and they are reasonably foreseeable, I think that whatever is in the record has to be rationalized. But if you don't know them, or can't know them, whether they be cost or benefits, there's simply no way to quantify them or to balance them." Number 656 MR. VAN TUYN said that that raised a point that perhaps this was an opportunity to clarify. As he understood it, under this bill, there is a phasing promotion that would allow DNR to break a project up into discrete segments to do a piecemeal review of each segment. Let us take the exploration phase of oil and gas. What are the benefits to be accrued from the state from exploration? They would come from development. There is no money that passes to the state, as in a lease sale. Literally, the paper transaction where a certain amount of money is passed over in trade for a piece of paper; that is a concrete benefit you can analyze in that piecemeal review. You do not look beyond that. That is what this bill allows. We can move to exploration where things get fuzzier because no money changes hands. What is the benefit to the state from exploration? The benefit of exploration is the potential for development. But that, under this bill, if a project is phased, is not fair game to be evaluated. If that is the case, your best interest determination on cost and benefits is going to be piecemeal all the way; and you cannot justify an exploration, because the benefits are zeroed out. Mr. Van Tuyn took that statement back and said the benefits accrue to an oil company that employs people to do the exploration. The costs of course are felt by the fishermen who are impacted by the exploration itself, if it were to occur within fishing season. Number 690 MR. EASON said it is critical that the committee have the opportunity to understand the fundamental dilemma that brings us here. We are hearing a great deal about it today in words that he hoped would encourage the committee to understand why this legislation is needed. We do not and will not break projects up under phasing of this bill. By their nature, some projects are those that you do not know enough about to make one conclusive consistency determination. That is not his fault, or something that is done. That is not something that he can change. Those kinds of projects will speak for themselves. It will be up to the public and the agencies and everyone else to judge whether or not they agree with that, and to place that within the public record and to debate it. But we will not, under this legislation, artificially break up, or treat things in a piecemeal fashion. They will be addressed, as federal law now allows under those circumstances, with common sense. We will recognize what they are, try to understand all we can about them, try to quantify all we can, and we will address them as best we can as human beings. "There are no benefits" is a serious mis-statement of the benefits of exploration. Some of us would agree that people who draw salary, who are employed, and are not on the welfare rolls for the state, are a benefit to the state. Those things do accrue from exploration, regardless of where the development comes. And they are considered as part of the findings, but we do not quantify them, because we do not know that there will be any jobs. There may be no leases, and we simply can't. Number 716 MR. VAN TUYN said perhaps there is a problem with the wording in the bill, because he agrees with everything Mr. Eason just said about not having an artificial review of this; but if you look at the language on page four at line 14, the operative word in the beginning of `C' is `limit'. Line 14 says, "The only uses to be authorized by the proposed disposal are part of that discrete phase." And that discrete phase is whether it is the exploration of lease transfer of paper or the development later on, to the extent we can bring this language in line with what Mr. Eason just said, a lot of the objections about the phasing aspect of the bill would go away. It is pretty clear from this language that the term "limit" and part of that discrete phase, it does not do what he just said. Number 725 REPRESENTATIVE NORDLUND commented on the concept of phasing. The problem with it is that if you are not looking at the long term possible costs, and you are trying to determine what is in the best interest of the state, and you issue a lease; when you get to the next phase, say the company is starting exploration, and the company has started to invest money, and basically ends up on the line for a great deal of money, and you finally become aware of the fact that they want to put a platform in a fishing area. At that point you decide it is not in the best interest of the state to go ahead with this project. The state is already on the line. The court refers to this as momentum that has been built up, and at that point, it may not be in the best interest of the state any more to get out of the deal because you potentially have to buy the lease back. If you had known that up front, you probably would not have issued the lease in the first place, because in the long term to consider all of the consequences from all the phases is in the best interest of the state. That is a fundamental problem with the whole concept of phasing. Number 750 MR. EASON addressed that subject. One of the prevalent things, since the bill was first introduced is the specter of having to buy back leases. Every lease we have issued since 1978, carries a provision dealing with eventuality. You may ultimately decide allowing a development is not in the state's interest, and the state may not allow it to happen. That is in the lease, and it sets out very explicit provisions for what happens to reimburse the lessee if that ever happens. We have never had to exercise that, even though we have had treating projects in discrete phases some extraordinarily controversial permit requests, which have been denied. Two are very high profile. Niakuk, which would be piece development, is either on production or will be shortly. That development was first attempted to be permitted six or seven years ago. It ran into tremendous difficulties with the state and federal agencies over the type of program they wanted, whether they wanted to use offshore facilities in an area that Department of Fish and Game, Corps of Engineers and others determined they should not. Even though they had leases which arguably gave them the right to do it, the permitting decision's where you cannot do it. Your alternatives are to develop it from shore where you cannot retrieve all the reserves, or do not develop it, and we will buy all the leases. They are developing the field. They are leaving oil in the ground. The state will lose, and they will lose, but the state agencies made the decision under the Coastal Zone Management Act. But the trade offs to preserve the offshore area were appropriate and we were a participant in that process. The same thing at Lisburne, at Prudhoe Bay. The offshore production that was needed to thoroughly produce those reserves in Prudhoe Bay was denied because of conflicts with surface occupancy. Prudhoe will leave millions of gallons of oil in the ground as a result of that. That area was not occupied by facilities, because the process worked. When you knew there was a conflict, the agencies worked together with the lessee to resolve them. But you have to know them, and you have to get there before you understand what you can do to approach them. Number 783 REPRESENTATIVE NORDLUND commented that was a situation under the current leasing system, not under the phase system. What would happen under the new proposal, if you did get into a situation where there might be recourse through the courts for the oil industry to come back and say, "Look. You led us down a primrose path, and we are not able to produce." Number 788 MR. EASON stated the provisions are, that the department, both in the finding and in the consistency determination for phasing, has to have the opportunity to further review the project, and has to retain the authority to further condition it, if necessary. In my view, this actually reinforces and makes clear -- Not only do you have the lease language, but you have the statutory language that puts the lessee on notice that he proceeds under those phased processes at his risk. Number 795 MR. VAN TUYN said it has been recognized by this discussion, this is really one of the central issues of SB 308; whether or not to allow phasing. It is a difference of opinion. All that is being asked here is to pull phasing out of this bill, and then get working groups together during the interim. It can work just the same way you have received a commitment from DNR to work in the interim to bring guidelines under the G-list for things other than oil and gas. You have received a good faith commitment from interested parties, be they coastal districts, boroughs, interest groups. The administration seems to be the only hold out in that equation. It is not an all or nothing amendment. There is opportunity for people to get together and reach consensus on this issue, and come back to you with a package. CHAIRMAN PORTER asked if there were further questions; there being none, a roll call vote was taken. ROLL CALL VOTE Representative Brian Porter N Representative Jeannette James - Representative Gail Phillips N Representative Pete Kott N Representative Joe Green N Representative Cliff Davidson Y Representative Jim Nordlund Y Amendment #10 failed 4 - 2. Number 821 REPRESENTATIVE DAVIDSON moved Amendment #20. REPRESENTATIVE PHILLIPS objected. REPRESENTATIVE DAVIDSON explained the amendment. He said this takes us back to phasing, Title 26. He referred to the last paragraph of a letter from several different boroughs, dated yesterday. It would delete this part of the bill and allow for different local groups to be part of the process to determine what they can do to protect their interest in the process. He read the last two sentences of that paragraph. "We request that the House Judiciary Committee give us the opportunity to resolve these remaining issues so that this legislation may be as broadly supported as our past efforts. Without a consensus, the result will be a bill which is divisive, and generates controversy in the communities of Alaska." Representative Davidson said he would like to avoid divisiveness and would like to allow these people time to get involved in the issue of phasing. Representative Davidson therefore urged his colleagues to vote for Amendment #20. Number 840 MR. EASON said the decision rendered by Judge Cranston in Sale 78 suggests, that he is concerned that you can find consistency unless you understand the future events, and then compare them with litigating measures you have selected for a sale. We believe that very short decision on that particular point will render any disposal subject to similar injunctions as long as that is the law, and as long as that is belief of the law. Others will look to that decision. The message is that without this opportunity to phase, and again, it is important to remember we have intentionally looked to the federal language to define the terms under which you phase, and to provide the protections that would assure you are going to have the opportunity to review subsequent phases, and to further condition them. Without that language, what you are looking at during the pendency of a review by a committee of any sort, is no development. Of course, we have several months before the legislature convenes again. That would be a pretty drastic thing to be facing. Number 857 MR. VAN TUYN said if we assume there is no argument on Mr. Eason's side, that without this bill, all development in Alaska will stop; take a look at what would happen. Let's take that assumption, and assume it is true: that without this bill, all development in Alaska will stop. And let's move forward from that platform and take a look at what would happen if the phasing section were pulled out, we've got all the development in Alaska stopped. We pull the phasing out, we go to a working group, we negotiate among the interested parties in the group, and we come back to you, the legislature, in January, and fly through a bill that addresses exactly the concerns DNR has, in consensus with the people in the coastal districts and the boroughs. How much development will actually be stopped? What proposed developments are coming up? Of course, things were started before this bill was passed, as Ms. Lundquist has pointed out - (Tape side ends abruptly.) TAPE 94-65, SIDE B Number 000 MR. VAN TUYN: "What other project is there that could be potentially impacted by this? If we assume somebody would go to court and be successful in getting an injunction, which has happened once in 80, 79, so far, lease sales. One time, it has happened. The odds are not so great that for the short amount of time the coastal districts and the boroughs are asking to do a thorough analysis of this, that the costs are that great. That is my only point. Number 006 REPRESENTATIVE GREEN said he had been reluctant to get involved, but believed there was a misconception about why phasing is necessary and why it would be supportive of Mr. Eason's statement that production would stop. Even if you had a blue ribbon committee to work this thing over, when it comes time to put up an area for lease sale, if past is prologue, the judge is still going to say, "Did you consider a certain amount of production, and a certain place that this exploratory well will be drilled?" Having worked in the industry, between the time an exploratory well is approved by the management of a company, and the time it is drilled, the location can change several times by miles. This has happened before. So, it would be impossible at phase one, or step one, for the department to take into consideration all the possible ramifications, and that is what the judge is asking. The only way it can be a meaningful and a true response is to go a step at a time, just like the company doing the work itself -- the one who is going to pay the bills. They get a prospect, do some subsurface geology, get approval to drill a well, change their mind, put it on the shelf, get it back out again. It is in a different place. All these things are subject to various people looking at them. So for the department to say, "We know this is the way it will be, and we will take these sorts of things into consideration," very likely will not be the thing that happens. In any of the lease sales in Alaska, it has not worked out the way it was predicted, either by the oil companies, or by the division. The reason for phasing is if we are going to deal in facts, we have to go a step at a time. If you walk down a dark hall, you do not know what is next -- you take a step and realize it is solid there, but you do not know the next step. When the product you are looking at is two miles deep, you cannot makes those kinds of assumptions and cover every possible aspect of it. MR. VAN TUYN said this process needs to be a workable one. Everyone has different ideas of what that means. Is there a down side to evaluating this over the interim? What projects, as a practical matter are we moving ahead on that this bill would apply to if it passes, that will stop? Sale 79 will not stop because this bill would apply to Sale 79, according to Ms. Lundquist, if the final best interest finding is not out by the time this bill comes out. What is the next oil and gas lease sale? It is after the interim is over. What is the next mining project? What is the next timber? Mr. Van Tuyn had not heard of any big project that is going forward that would be impacted by the lack of phasing at this point, and therefore, the only point is, there are a lot of people with expertise that need to be heard on this issue. The best forum for that is a working group where people can come to consensus. Not to have something pushed down into the coastal districts. CHAIRMAN PORTER asked if there were further questions on Amendment #20. There being none, a roll call vote was taken. ROLL CALL VOTE Representative Brian Porter N Representative Jeannette James - Representative Gail Phillips N Representative Pete Kott N Representative Joe Green N Representative Cliff Davidson Y Representative Jim Nordlund Y Amendment #20 failed 4 - 2. Number 095 REPRESENTATIVE NORDLUND moved Amendment #2. Number 110 REPRESENTATIVE PHILLIPS objected. Number 120 REPRESENTATIVE NORDLUND explained the amendment deals with the part of the bill that says the director need not speculate about future impacts. This amendment would delete language having to do with that. It is not necessary. The bill already states the director only address reasonably foreseeable significant effects, and if they are that in fact, I do not see the reason why there needs to be this language about speculation. Number 142 MR. EASON felt it very important that the bill reinforce for the court the intent of the legislature, which hopefully will indicate that speculation about future development activities is not a very productive process, particularly if you have made provision that any development activity proposed, from the simplest, which means from an application to drill an exploratory well, to the most complex: The development of a multi-million barrel oil field; will undergo multi-agency and public review on a very specific basis. Facts are known and the locations define the size of the potential conflicts with the surface resources and the surface resource users. If all those things are known, there is ample opportunity to make the best judgments, based on fact, about how to condition and to proceed with development. Speculation about that has lead and will lead, or the attempt to force speculation about those attempts, just makes fertile ground for additional litigation. We think it is very important that the legislative intent continue to reflect that. Number 175 REPRESENTATIVE NORDLUND understood Mr. Eason's point that the amendment does not deal with just the findings, it also deals with other sections of the bill. It says the director would not be required to speculate. Why is that necessary when you only have to look at reasonably foreseeable significant impacts? Number 182 MR. EASON replied this bill reflects the cumulative impacts, for want of a better word, of a number of lawsuits that, in our view, went far afield, and were joined far afield by the court on some pretty speculative things that have to be considered and rationalized at the point you make a decision to hold a lease sale. It is important that the legislature has some agreement about the extent you want the decision maker to speculate, because if you do not make a statement, the court will, because it will be invited to. Number 200 MR. VAN TUYN believed Representative James and himself had discussed the day before what type of speculation really is called for under the law as it currently exists. That needs to be made clear and emphasize again the only speculation the courts have required in the past for an oil and gas lease sale, for example, is the speculation that when the state leases public lands for one particular activity, oil and gas development, you assume, you speculate oil and gas development will occur. There has been no requirement that you say it is going to occur at a particular latitude and longitude. There is only the speculation such activity will occur. The impacts of such development involve no speculation, based on scientific, experiential and traditional facts, as Mr. Oscar stated yesterday, and it is based on common sense. And to the extent that Mr. Eason is saying that speculation goes to those impacts, I vociferously disagree that any court in the state of Alaska has ever required such speculation and I encourage you to read the opinions. Number 230 CHAIRMAN PORTER asked if the impact of 1,000 barrel a day oil well would be significantly different than 1,000,000 barrel a day oil well. MR. VAN TUYN said absolutely. The speculation is on oil development in a generic sense, not in a real specific sense. If oil development occurs, the speculation is it would be your average size oil spill. Number 240 CHAIRMAN PORTER stated that was his point. There is not an average size well. We have the biggest well in the world, and a couple of the smaller ones. Number 243 MR. VAN TUYN said there is a lot of history we rely upon to make that speculation. What is the alternative to making that speculation? The alternative is to literally put blinders on, to say, "Yes, we are leasing this land for oil and gas development; but no, we do not think it is going to occur." Number 247 MR. EASON brought forward a copy of a complaint regarding this issue. There were two lawsuits filed last year which were subsequently withdrawn. This is what we were confronted with at the end of a multi-year project, after the public process and the decision was rendered by writing to us. We had a lawsuit that, instead of specifically telling us what we had done wrong, or what we had not done enough of; this is the sole content of the lawsuit: DNR failed to adequately analyze the impacts of the sale on repairing resources, failed to analyze the impacts of the sale on archeological resources, and failed to analyze the impacts of the sale on the Gates of the Arctic National Park and Preserve. The next sale, Sale 75a, where we held a sale the year before, there were no comments, whatsoever. Private land, owned by the Arctic Slope Regional Corporation, the sub-surface jointly owned by the state and Arctic Slope, we had a few tracts that were not available for leasing when we did the first sale, because there was a contract dispute between the village of Nuiqsut and ASRC, that was subsequently resolved. ASRC asked us to hold another sale to make the remaining few acres, it was less than 2,000 acres on that sale, we were sued. The claim was DNR failed to adequately analyze the impacts of the sale on wetland habitat and repairing them at areas. We failed to analyze adequately the impacts of the sale on archeological resources, and we violated the Alaska Historical Preservation Act, with respect to documented historical and archeological sites within the area. No discussion of how we did that. Then the court was told the plaintiff in this case reserved the right to amend their statement of points, which was this: After completion of the review of the administrative record, if they wanted the opportunity to find if there was still something there, that they had not claimed was a problem. Under those circumstances, speculation, reinforced by refusal to acknowledge that we should not do that, will encourage those lawsuits again, and again, and again. No one can successfully defend against them if you do not have some sideboards. MR. VAN TUYN said he was the lead attorney in those cases. Trustees For Alaska was the law firm representing clients that brought those cases. If you think this particular bill in front of you is going to change the paragraph that Mr. Eason just read, which explains what are technically called the points on appeal, for bringing a case; you are going to need a two-thirds vote. That is appellate Rule 602 that allows that. This bill is not going to change that requirement, only a change to an appellate rule will. But the point is that Mr. Eason said the litigation brought these issues forth, not the points on appeal. Those are the points on appeal. The litigation itself, that opening brief that is filed by an appellant, in a case, if one chooses to appeal the decision, and not bring a complaint against it, and proceed through a normal trial; we have always tried to go the appeal route because it saves everyone's resources and is the more reasonable way to proceed. You file a notice of appeal, and your opening brief is what allows you to get very specific on your issues. It is a misconception to think this bill is going to change that particular paragraph. Number 325 MR. EASON agreed. He did not believe the bill would change the filing of lawsuits with this kind of language, but it will give the courts the ability, once those lawsuits are filed, to look at the administrative record and the legislative record, and your intent, and the legislation embodies by this, and hopefully deal with the litigation a little bit more precisely and quickly. CHAIRMAN PORTER asked if there were further discussion of Amendment #2. There being none, a roll call vote was taken. Representative James had returned to the meeting. ROLL CALL VOTE Representative Brian Porter N Representative Jeannette James N Representative Gail Phillips N Representative Pete Kott N Representative Joe Green N Representative Cliff Davidson Y Representative Jim Nordlund Y Amendment #2 failed 5 -2. Number 344 REPRESENTATIVE NORDLUND moved Amendment #8. REPRESENTATIVE PHILLIPS objected. REPRESENTATIVE NORDLUND explained the amendment; regarding the different phases, the considerations that the department would have to take, they would not necessarily be absolutely limited to those considerations for that particular phase, but they focus, the change in the word is from `limiting' to `focusing' on circumstances that they determine material to that particular phase. Number 368 MR. EASON explained this specific amendment was suggested during the discussions that were held with a working group, and there was a great deal of discussion about it. It was the decision that we do not want to proceed with that language, for a very specific reason. We believe that language would again encourage the sorts of speculation that we addressed just a moment ago, with the phasing language because, to us, it appears that when you say focus, that implies that you are focused, but there are other things that you must consider as well. That is reinforced in my mind by the word "include" on line 27 that the proposed amendment would accomplish, so it would leave the court open ground to say you have to focus your analysis when you establish the scope of review, and you have to include these specific things. Since it does not say `limit,' it suggests that there are other things you should have considered, and that is reinforced again by the inclusion language. I believe under those circumstances, it is again, fertile ground for someone to suggest the things that should have been included other than the ones you focused on, and you are back into the treadmill again. Number 395 REPRESENTATIVE NORDLUND said given other provisions of the bill, they would still have to be reasonably foreseeable significant effects. You would focus on the immediate ones; you would have to look at the ones in your peripheral vision, if they are glaring out there. It does not seem to undo what your intent is. Number 405 MR. EASON said the word `limit' raises concern in people's mind, but if you read the bill in its entirety, and particularly if you read this section, it is not very limiting when you are limiting the scope to all the laws and regulations that are applicable; all the facts pertaining to that land resource or property interest, that the director finds are material. Again, you have to make that finding in writing in response to everything that is on the G-list for oil and gas as well as any comments made in the public record to anything that you know or knowledge of which is made known to you during the process, and all the issues, under (3) in the next (indiscernible.) That, based on the statutes and regulations referred to in these other provisions are material for this particular phase. That is a very inclusive, global arena from which, facts specific, a director will have to make a decision about the scope, and the limiting is equivalent to defining. You are defining the scope. Limit is there for a specific reason, because the substitution of focus, as the amendment would propose, leaves open the question of just what else, other than the laws, the regulations, the facts, and everything everybody said, you should have considered. Number 430 MR. VAN TUYN said he looks at the amendment, he sees the word `limit' and hears the state say that federal phasing - and he has not been enlightened by the recent opinion passed out this afternoon from the Attorney General's Office at the request of Representative Phillips - but he had seen several variations of an analysis of whether this bill pushes federal phasing forward, and in his independent opinion as an attorney who has worked on some of these issues, the term `limit,' and limiting things to what is set out here, does not meet the intent of the federal requirement, and a lot of concerns would be appeased if the federal language was put in there. Number 449 MS. LUNDQUIST made the point that the amendment currently on the table is in regard to Title 38 and not with regard to the ACOP, and would not be (inaudible) by the federal government. MR. VAN TUYN said there had been a prior opinion by OCRM, which is the federal office that oversees coastal management, and a deep concern was expressed by that official in the federal government that changing the phasing for best interest findings would also affect the scope of the consistency review process, and that they should be discussed in tandem. Number 461 MS. LUNDQUIST said OCRM stated concern over the Title 38 Section. However, (paper shuffling - inaudible) which they were responding did not distinguish between Title 38 and Title 46, and confused the two. MR. VAN TUYN said that letter was in response to an inquiry by Mr. Eason. He quoted the section at the top of page three of the letter, saying, "The proposed changes to Title 38, however, are relevant to OCRM and coastal management in that they could affect the scope of the ACMP review for certain state activities." That was in response to Mr. Eason, and it was directly applicable to Title 38. REPRESENTATIVE PHILLIPS wanted to put on the record that those letters were initially sent from Lori Ott to the federal, and then the response from Jim to the federal, so just keeping the record clear as to how the letters went out. Number 490 MR. EASON said the date of the letter was a month and a half ago, and they were addressing a version which was the second version of what ultimately became version X, as it was amended and came from the Senate. A number of the specific amendments that were done in actuality, about doubling the length of that bill at that time, were done not only in response to public comment, but in response to that letter. One particular point that seemed to be embedded in that letter was concern about the potential limitation of the review to significant direct affects that we were contemplating at the time, and those changes were made explicitly in acknowledgement of concerns they had. Again, no one can say what the OCRM is going to say about this bill when and if it is ever passed. MR. VAN TUYN responded, "The only reason I brought up that letter was, not to say that it focused on one prior version of this bill - that was a generic statement from a federal official that recognized that changes to Title 38, scope of review, may impact the Coastal Management Program. And that was the only point of that letter. Number 500 CHAIRMAN PORTER asked if there were further discussion on Amendment #8. There being none, a roll call vote was taken. ROLL CALL VOTE Representative Brian Porter N Representative Jeannette James N Representative Gail Phillips N Representative Pete Kott Y Representative Joe Green N Representative Cliff Davidson Y Representative Jim Nordlund Y Amendment #8 failed, 4-3. REPRESENTATIVE NORDLUND moved Amendment #3. REPRESENTATIVE NORDLUND explained this amendment to be a change to the finding section of the bill, making sure that the phasing done under this legislation is consistent with that which is permitted under the Federal Coastal Zone Management Program. I hope the committee would consider making this relatively minor change. The Senate did adopt a letter of intent which reads, "It is the intent of the legislature that the sections of this legislation pertaining to AS 46.40 will be consistent with the Federal Coastal Zone Management Act." This merely states that in the findings. REPRESENTATIVE PHILLIPS quoted a letter received from the Attorney General's Office, "Participation in this federal program is not mandatory, and is a policy decision that has been made by the state." She was against the amendment because of that statement in the letter. MR. EASON urged committee members not to adopt this amendment. We discussed and actually helped draft the letter of intent that was initially adopted by the Senate, very explicitly to take the position other than this, for a reason that we felt was important. A lot of discussion has taken place during the review of this bill about the discretion invested in your bureaucrats, but after all, whether you like us or not we are your bureaucrats, and you can control us. The process works well for that control to happen. None of us, elected or otherwise have much control over many bureaucrats that are 4,000 miles away, and often do not have your interest and our interest at heart. We think we know what the Coastal Management Program says, and how it is interpreted today by those federal agencies. It is conceivable that we will have disputes about that. We think it is important, and we agreed that we should, as long as the legislature is intent upon participating, be bound by the Coastal Zone Management Act, but it is conceivable, and possibly even likely, one wants to speculate that there may be revisions as they are currently being done today, to those regulations, which the state may want to challenge. So we think it would be a mistake to bind, by legislative intent, or otherwise, to a pig in the poke, essentially. One that you may want to challenge, for whatever reason, regardless of your position, once you know the amendments, and understand what they may do. Number 563 REPRESENTATIVE PHILLIPS interjected her philosophy: The less we have to get involved with the federal government, the better. She opposed the amendment. Number 565 REPRESENTATIVE NORDLUND asked how the department planned on dealing with the Senate's letter of intent. Number 570 MR. EASON said they believed to be in compliance with the Federal Coastal Zone Management Act. They also believe the amendments are in compliance. If there is a dispute, there is a process for resolving discrepancies or differences of opinion about being in compliance. Number 578 MR. VAN TUYN said Representative Phillips' concern about keeping the federal government out of this, is exactly the type of concern they heard during the testimony the day before from coastal districts. True, the Coastal Zone Management Program is underneath the federal program, and it must remain consistent with it, to be considered valid under that program. If you lose the consistency, then the federal government takes over and you have a lot more federal involvement. The way it works now, the Alaska Coastal Management Program is literally another phrase for local control over development projects in the coastal zone. The coastal districts that we heard from yesterday are exactly the ones that are controlling the development. The people of Homer have a voice in federal projects now that go on in their area. If we lose consistency with the federal government, the people of Homer will be silenced." REPRESENTATIVE PHILLIPS interjected that the people of Homer would never be silenced. Never. MR. EASON said that, again, we are engaging in some speculation about whether or not we will lose certification. And again, that is speculation. But then we would have to speculate on speculation to determine whether or not we would be able to bring ourselves back into compliance, and then, failing that, whether or not there were actions that could be taken. Mr. Eason said he felt that was the difference in the way he and Mr. Van Tuyn viewed the legislation. We certainly do not know, though we have every reason to believe, based upon the Department of Law's review, that what we are proposing in these amendments is in fact consistent with the Coastal Zone Management Act. REPRESENTATIVE JAMES offered an analogy concerning speculation. "The words that I always hear are, `Is this legal or not? Well, the courts will decide.' Can we speculate as to what they are going to determine? No, we can't. We only can just make some guidelines and hope they understand what we're talking about. So I think that when you get into speculation as to what someone else is going to say, it is just that: speculation. We do the very best job we can to get it as specific as we can, but we cannot make any guarantee that we will have a decision down the line that is going to be the kind of decision we're looking for. Sometimes it just takes a risk." CHAIRMAN PORTER asked if there were further discussion of Amendment #3. There being none, a roll call vote was taken. ROLL CALL VOTE Representative Brian Porter N Representative Jeannette James N Representative Gail Phillips N Representative Pete Kott N Representative Joe Green N Representative Cliff Davidson Y Representative Jim Nordlund Y Amendment #3 failed, 5 - 2. REPRESENTATIVE NORDLUND offered Amendment #7 and moved that it be passed with unanimous consent. REPRESENTATIVE PHILLIPS objected. REPRESENTATIVE NORDLUND explained that this amendment would change page 3, line 24, where the scope of the findings made by the department may only address reasonably foreseeable significant effects. Why do we want to limit the option for the department to look at those effects that may be somewhat less than foreseeable, or maybe something less than significant? Number 645 MR. EASON said the language of the amendment, saying "shall include" begs the question of "what else?" is there as well. He stated, "We aren't trying to be unduly narrowing or unduly cutting off or limiting the public's participation or anyone's participation in the process, because we have other provisions other than this language. We have provisions in this bill dealing with expanded notice, provisions dealing with expanded responsibilities to write and rationalize in writing why we're dealing with things, and what we believe. As a matter of fact, in the case of oil and gas, we will be telling people up front, at a preliminary finding required under this bill, what we believe the scope to be, so that they have the opportunity to tell us if they believe we've unfairly limited, and to put that in the record, and we have to respond to it. But it's a quid pro quo. We believe that additional responsibility on our part in the long run will pay benefits to the state, because it will force a dialogue that is a better record for everybody. And we're very concerned about leaving an open end that begs the question of `what else do we have to consider?' because it's a long process that costs a lot of money to go through - two plus years, in the case of oil and gas lease sales - that process, to get to the final finding, only to find that somebody failed to consider something that may be really insignificant, but, because of the language of the bill, suggests that you should have considered." Number 675 MR. VAN TUYN pointed out that these three words have caused a lot of heartache for every letter he had seen in opposition to this bill, or putting suggestions toward this bill. That includes the letter from the Kodiak Borough, the North Slope Borough, Northwest Arctic Borough, Bering Straits, Bristol Bay and Coastal Resource Areas, et cetera. The point is, we cannot speculate about everything that comes up. This leaves the department some flexibility to take things into account down the road that they might not have seen at step one. Number 685 MR. EASON agreed that Mr. Van Tuyn was right in pointing out that this has been of concern to a lot of people but he is wrong in pointing out that this solution is the solution that has been proposed by most people. Most people, in our discussions, that have problems with the language "may address only," have suggested we use "shall address only". We consciously made the decision not to do that, because "shall address only" is, in fact, more limiting of the public process, and of a director's ability. By your giving a director a direction that he may address only, you are setting a limit. He has to address that, but you are not telling him he cannot address something else if he wants to, or if the public records suggest he shall. Number 703 MR. VAN TUYN suggested a letter of intent explaining "shall address only". MR. EASON said that he had placed this issue on the record at least three times during testimony and in addition five or six during subgroup meetings. REPRESENTATIVE PHILLIPS agreed with the letter of intent idea. Number 720 REPRESENTATIVE DAVIDSON concurred with Representative Phillips. Number 724 REPRESENTATIVE KOTT concurred as well. REPRESENTATIVE NORDLUND asked if the committee was willing to adopt a letter of intent? REPRESENTATIVE PHILLIPS said she would move a letter of intent to put it on the record for clarification. CHAIRMAN PORTER asked if that required moving the bill back. Number 730 REPRESENTATIVE PHILLIPS replied that it would not, because the Senate had a letter of intent, too. Number 738 There was discussion on whether or not you have to adopt the Senate's letter of intent. Number 745 ELIZABETH KERTTULA, Assistant Attorney General, Civil Division, Department of Law stated that you do have to adopt the Senate's letter of intent in order to move the bill. There was further discussion concerning letters of intent. Number 750 REPRESENTATIVE NORDLUND withdrew Amendment #7, in view of the fact that the committee would be adopting a letter of intent, and moved Amendment #14. Number 755 REPRESENTATIVE PHILLIPS objected. REPRESENTATIVE NORDLUND explained the amendment as substituting the word "known" for "material," those considerations that are material to a particular phase would be substituted with those circumstances that are known at the time. MR. EASON stated opposition to the amendment. It is quite likely that the class of known facts will almost always be a greater universe than material facts. He stated, "I would not want us to be in the position of arguing whether we had considered and thought about all the known facts even if they weren't material or in any other way relevant to a decision." Number 793 MR. VAN TUYN reiterated that to define "material" means something different to each person and the sole discretion for defining that word was being put in the hands of one state agency and one current administration. "It could end up being defined," Mr. Van Tuyn cautioned, "to preclude development, because what is material could be a much broader universe under a different administration than it perhaps it is under this one. And that's where the concerns come up with respect to a lot of people that we've heard from who have said this bill is as much anti-development as it is pro-development." CHAIRMAN PORTER asked if there were further development on Amendment #14. There being none, a roll call vote was taken. ROLL CALL VOTE Representative Brian Porter N Representative Jeannette James N Representative Gail Phillips N Representative Pete Kott - Representative Joe Green N Representative Cliff Davidson Y Representative Jim Nordlund Y Amendment #14 failed, 4 - 2. Number 814 REPRESENTATIVE DAVIDSON moved Amendment #15. REPRESENTATIVE PHILLIPS objected. REPRESENTATIVE DAVIDSON described the amendment to substitute the word "and" for "or." This ensures the written findings will be considered in both the preliminary and final findings of fact. Number 822 MR. VAN TUYN said the point is if meaningful public input is to be had by this bill, it is very important that members of the public, who are not experts in a particular area, but have deep concerns about that area, know what DNR has to know in time for them to comment. Know what Fish and Game knows in time for them to comment. They can factor it into their own concerns. Without requiring that those things go into the preliminary finding, they could be left out, and the public then doesn't have the opportunity to apply its own knowledge, its own experience, its own concerns, to those issues. It will come up for the first time in the written finding and nobody will have had a chance to comment on it...." Number 832 MR. EASON expressed belief that it is clear that whether you are doing a preliminary finding, or a final written finding, you will have to consider the issues on the list. This was the drafting of Mr. Chenoweth, the legislative drafter. He specifically asked what our intent was, and we said our intent is, that regardless of whether we are doing the preliminary finding, or the final finding, we will do the same scope, and we will define the scope. The word "or" is that if we're doing a preliminary finding, we will do this; if we're doing a final finding, we will do this. But we will only do it for oil and gas lease sales, because there is no statutory requirement for preliminary findings for other disposals. MR. VAN TUYN again suggested a letter of intent (that "or" means "and") in this particular case. Number 845 MS. LUNDQUIST noted that on line 13, "The Director shall consider and discuss in a preliminary or in a final written filing." You have to read the entire sentence. You cannot read the "preliminary or final" without reading "shall consider and discuss". It is clear from the language that "the Director shall consider and discuss in the preliminary or in the written findings" makes it a requirement both in the preliminary and in the final. CHAIRMAN PORTER agreed with Ms. Lundquist. Number 853 ROLL CALL VOTE Representative Brian Porter N Representative Jeannette James N Representative Gail Phillips N Representative Pete Kott - Representative Joe Green N Representative Cliff Davidson Y Representative Jim Nordlund Y Amendment #15 failed 4 - 2. TAPE NO. 94-66, SIDE A Number 000 REPRESENTATIVE NORDLUND offered Amendment #18 Number 005 Somehow this section of the tape did not record, but there was a short discussion on Amendment #18 between MR. EASON, MS. LUNDQUIST, MR. VAN TUYN, REPRESENTATIVE DAVIDSON, and REPRESENTATIVE PHILLIPS. The amendment proposes to delete all materials from page 9, line 21. ROLL CALL VOTE Representative Brian Porter N Representative Jeannette James N Representative Gail Phillips N Representative Pete Kott N Representative Joe Green N Representative Cliff Davidson Y Representative Jim Nordlund Y Amendment #18 failed 5 - 2. Number 150 CHAIRMAN PORTER: "Back on the record?" REPRESENTATIVE NORDLUND: "Thank you, Mr. Chairman. I would like to offer one additional amendment, and then Representative Davidson is going to offer his conceptual amendment. The amendment would be #22, and I would move that amendment." REPRESENTATIVE PHILLIPS objected. REPRESENTATIVE NORDLUND described the amendment to extend the period of comment time, regarding certain disposals of land. It is currently 21 days, and people feel it is much too short. In some rural cases, it takes longer for word to get around, and a 90 day period would seem more appropriate. Representative Nordlund referred to Mr. John Oscar's testimony of the previous day concerning this issue. MR. VAN TUYN supported REPRESENTATIVE NORDLUND's comments. Number 280 MR. EASON objected, because the provision would affect every disposal, other than oil and gas; many of which are inconsequential in nature, very routine disposals that are not of statewide interest. There is a distinction that is overlooked with this provision. The law right now provides notice will occur in no less than 21 days. In some cases, it may be completely legitimate to have a shortened, 21 day period between the notice and the disposal, because it is something that is inconsequential and non-controversial, but the system has worked quite well, and those instances where you need additional time, you have the right to exercise that discretion, and to provide time. As the law stands today, you cannot do any less than that regardless of what kind of a disposal it is. It is appropriate, and has worked quite well. Number 306 REPRESENTATIVE PHILLIPS noted as a person who was born and raised in Northwest Alaska, and has many, many friends around rural Alaska; communications in rural Alaska is tremendously sophisticated compared to what it was 20 years ago, or 30 years ago, or 40 years ago. Almost everywhere in Alaska there are telephones and telefaxes and teleprompters, and public radio, public television, and everything else. The idea that we are this obscure, uncommunicative state, is a scare tactic that has been thrown on us for a long time and it just simply is not true. Number 323 REPRESENTATIVE NORDLUND said he has never lived in rural Alaska, and does not know; but he does know what Mr. Oscar said, and takes it to heart. He said when folks go out to fish camp, a lot of times they do not have television or radio, and telephones. In a situation like that, a 21 day period might be too short. He believed this is one amendment they could adopt that would show some compromise, helping to alleviate some of the political concerns with this bill, but it is up to the committee to decide that. Number 335 REPRESENTATIVE DAVIDSON said a little bit more time is a little bit more consideration. We may live in a very modern telecommunicative world, but the facts speak for themselves. Alaskans go off into the great beyond, and sometimes do not get the messages as fast as we want. REPRESENTATIVE PHILLIPS said to keep in mind the language is "not less than 21." It does not say, "only 21". CHAIRMAN PORTER asked if there was further discussion concerning Amendment #22. There being none, a roll call vote was taken. Number 346 ROLL CALL VOTE Representative Brian Porter N Representative Jeannette James N Representative Gail Phillips N Representative Pete Kott N Representative Joe Green N Representative Cliff Davidson Y Representative Jim Nordlund Y Amendment #22 failed, 5 - 2. REPRESENTATIVE DAVIDSON moved the Conceptual Amendment to delete non-oil and gas issues from this bill. He reminded the committee that the reason for doing this is there are not statutory standards to give the protections necessary particularly to our local communities, who have spent an awful amount of time trying to stay up and out of the clutches of federal control as well as being overly imposed upon by state decisions as well. Out in those local communities we have seen, through correspondence, as well as testimony that there is an eager willingness to serve more groups to get a more consensus agreement on including these non-oil and gas areas into the bill. There is a strong desire to participate in such discussions and work groups. Finally, as the letter I quoted earlier indicated, there is a desire as well, to avoid divisiveness, and the loss of local control. With that Representative Davidson urged committee members to delete non-oil and gas issues from this bill, and we can move forward, looking to next session for a better bill. REPRESENTATIVE PHILLIPS objected. MR. VAN TUYN commented that we are not talking about forever. We have received commitments from all interested parties; boroughs, districts, and others, to get together and discuss this exact issue. DNR is willing to do so, and has provided a letter to that effect. He suggested doing it before the bill goes forth, so these standards can be used by everyone, when looking at their projects. Number 400 MR. EASON thought they should look at the bill as a whole. He said there are some very important provisions dealing with an analysis of the facts, the law, the facts pertaining to the land resources in the use and disposal you are considering; and the public provisions you are including here, all of which are designed as a package, to provide a good written record with good public participation regardless of what this disposal is. We have certainly had in mind other disposals as we work to try to make this a better bill than we have today, because there simply are no standards for any disposal that are not subject to judicial intervention, and judicial risk of re-interpretation. There are no sideboards, and we have intentionally come to you for some direction, including the legislative findings of this bill. So regardless of the disposal, the court will have some sense of the philosophical intent of the legislature, as well as the implications for what that means for a judge who will be interpreting a challenge to a disposal under that statute. REPRESENTATIVE DAVIDSON said in response that there are a tremendous number of local agencies, groups and people with a lot of expertise who have spent a lot of years working to ensure that the very kinds of things that are going to happen to them as a result of this bill, possibly, do not happen. We've seen, we've heard these people in testimony. I think that if we cannot at least give them the opportunity to be part of the public policy process that affects them so directly, then, we have to give them a much more detailed explanation than they've gotten this afternoon. Number 430 REPRESENTATIVE PHILLIPS said she really appreciated the letter from the Commissioner of the Department of Natural Resources today, saying they will be drafting regulations to address the concerns on other than oil and gas issues. She then made a formal request that the department take the interests of all the local communities, and go out, and have hearings in all the local areas, as they put together this list. I do not think that is an unreasonable request, and it would certainly bring all the players into consideration as the department works on this. Number 456 REPRESENTATIVE JAMES expressed concerns about the letter. It is a commitment, but does not have a time frame, or any specifics as to when it will happen, and what the specifics of it will be. She said she would like to have some kind of a time frame, under which these will be accomplished. She felt more comfortable putting it into statute than into regulation. She would like to see DNR commit to get a G- list for non-oil and gas issues that could be put into legislation next year, and that does take input from the communities. Representative James was willing to not limit the legislation before the committee to oil and gas if a stronger commitment could be secured from the Department of Natural Resources as to how they would address these issues. She asked Mr. Eason, although he was specifically representing the Division of Oil and Gas, if he could speak for the Department of Natural Resources as a whole. Number 480 MR. EASON thought he could speak for the Commissioner since they had discussed the letter before it was drafted. The purpose of not having a specific timeline was not to try and hide the ball, but to simply recognize that they were in the middle of a process where Mr. Eason has been tied to the halls of the legislature for several days; that many of the other directors are similarly situated; they are away from their offices, they are here, they are working on other pieces of legislation. Our intent is to convene as soon as the session is over, and we have a chance to sit down and discuss how we are going to proceed with trying to get public involvement. Mr. Eason had spoken with Assistant Attorney General Kerttula of the Division of Governmental Coordination. He said he felt it would be reasonable to try to use that division in some sort of telecast networking and facilitating of meetings. It would be his intent to undertake this relatively soon, i.e, within the next few weeks, but he could not control the process given the requirements of the Administrative Procedures Act and the time required to draft a document in conjunction with a large number of people, as well as a subsequent review by the Department of Law. Number 505 REPRESENTATIVE JAMES had a follow-up question. She asked Mr. Eason to respond to her concern about feeling more comfortable having this in statute than in regulation. Number 508 MR. EASON understood what she was saying and if that was the intent of the group, they could structure this process to not be one where they have the intent of drafting regulations, but with the intent to have working groups gather and give recommendations for lists and see if they can provide a list of that sort for your consideration. Number 515 REPRESENTATIVE JAMES stated her desire would be to set up communication with the interested parties to have the potential of either regulations or legislation; whichever seemed to best meet their needs. She also acknowledged the process would be complicated because it would concern all different kinds of sales. Representative James concluded, "What I would really like to have, my desire would be, that the input from the public would be either regulations or statute, whichever happened to seem to be the best method to do that - not just regs and then find out we need statutes, or not just statutes and then find out we need regs; and I don't know how you could bring those up together. But, for what it's worth, that would be my desire." REPRESENTATIVE GREEN said he had communicated that afternoon with a constituent active in the Coastal Zone review process, and that he had indicated to that person that if he is re-elected, and if these issues had not been adequately addressed, that he would pre-file legislation to that effect. REPRESENTATIVE DAVIDSON said desires are not always paid attention to by the bureaucracy. "We must be very cognizant and sensitive to those people at the local level who are going to be most impacted by what we're doing here today. That's why I offer this conceptual amendment, because I know the people out there are the ones with the expertise, certainly as much expertise as we have - well, what are we on, our fifth or sixth commissioner of Natural Resources? This is the kind of thing that bothers me, Mr. Chairman. It's out there at the local level where we get the continuity and judgment and the experience over the long haul, because these are the people whose interests are most directly affected by these decisions." Representative Davidson again urged his colleagues to vote for the Conceptual Amendment to remove non-oil and gas from the legislation, and said he would be offering another conceptual amendment as well if he might. CHAIRMAN PORTER commented that he did not intend to support the amendment. "I would say to those who were considering legislation in this area that we would probably be well- served by the process that DNR is committed to go through in the development of regulations. Quite frankly, because of where we are, and I don't anticipate moving in the next couple of years, it's easier and (there's) more opportunity for local input into these kinds of things through the regulatory process than there is through the development of law. Is there any other discussion on the conceptual amendment that we have been discussing?" There being none, a roll call vote was taken. Number 583 ROLL CALL VOTE Representative Brian Porter N Representative Jeannette James N Representative Gail Phillips N Representative Pete Kott N Representative Joe Green Y Representative Cliff Davidson Y Representative Jim Nordlund Y Conceptual Amendment #1 failed 4 - 3. REPRESENTATIVE DAVIDSON moved Conceptual Amendment #2 which establishes a working group from the various coastal communities to work on these issues we have been discussing...to ensure that in fact these local communities' concerns are included. Number 620 REPRESENTATIVE PHILLIPS objected to the amendment but, at the same time, requested clarification from the Department of Natural Resources that they would do this. She noted that establishing a legislative working group would entail a fiscal note, a resolution establishing the group, and other technicalities; but if they could get a commitment from the DNR on record that the DNR would do this, the concerns of the conceptual amendment would be taken care of. Number 625 MR. EASON said the Division of Governmental Coordination was the perfectly logical place to start, since that is the group that has communicated with, and brought together this group that has worked with us, and the amendments that have been done to date on the Senate side. He said it was certainly his intent to use the Division of Governmental Coordination to the maximum extent possible to help define how to ensure that all interested parties have an opportunity to participate. Number 636 CHAIRMAN PORTER said we have already established a letter of intent, and asked if it would be appropriate to include Mr. Eason's commitment in that letter of intent. REPRESENTATIVE DAVIDSON said he would be prefer moving forward with the amendment to establish the group. REPRESENTATIVE PHILLIPS said she did not believe they could amend this bill to establish a group unless it was broken down as far as the fiscal notes, et cetera. Yet, a motion could be made out of the committee to have it established, not necessarily tie it as an amendment to the bill. Number 649 REPRESENTATIVE DAVIDSON was not deterred from his intent to establish a working group. He was not concerned about fiscal notes, because he felt it very important that they have money to do this kind of thing. He hoped it would go to the Finance Committee because he felt it should have gone not only to the Finance Committee but also to the Resource Committees, as well. CHAIRMAN PORTER asked if there was further discussion on Conceptual Amendment #2. There being none, a roll call vote was taken. Number 655 ROLL CALL VOTE Representative Brian Porter N Representative Jeannette James N Representative Gail Phillips N Representative Pete Kott N Representative Joe Green N Representative Cliff Davidson Y Representative Jim Nordlund Y Conceptual Amendment #2 failed, 5 - 2. CHAIRMAN PORTER re-offered the opportunity to put the language into the letter of intent and asked that it be prepared by Representative Nordlund. REPRESENTATIVE PHILLIPS agreed that was a good idea and said she would be willing to put forward a motion on that. CHAIRMAN PORTER said he did not feel a motion was necessary. REPRESENTATIVE PHILLIPS asked if the committee needed to adopt the Senate letter of intent. CHAIRMAN PORTER said this could be done after the bill was passed. REPRESENTATIVE GREEN proposed to move out SB 308 with zero fiscal notes with the Senate letter of intent and the letter of intent from the committee, as described. There was objection to moving the bill. ROLL CALL VOTE Representative Brian Porter Y Representative Jeannette James Y Representative Gail Phillips Y Representative Pete Kott Y Representative Joe Green Y Representative Cliff Davidson N Representative Jim Nordlund N The bill was moved as described. The House Judiciary Standing Committee meeting adjourned at 6:45 p.m.