MEMORANDUM

TO: Pete Sprague, President

Members of the Kenai Peninsula Borough Assembly

FROM: Millie Martin, Assembly Member

DATE: November 6, 2003

SUBJECT: Resolution 2003-123, Requesting amendment of Alaska Statutes 31.05.125 and 38.05.177(o), which authorize the Department of Natural Resources Commissioner to waive compliance with local laws for shallow natural gas leases in limited cases, and requesting additional public notice requirements.

The State of Alaska recently issued a shallow natural gas lease in the southern Kenai Peninsula to provide for shallow coal bed methane development. While the development of natural resources in Alaska is important, it should be conducted with due regard for other affected property rights. The State Legislature recently enacted Senate Committee Substitute for House Bill 69, which relates to the regulation of shallow natural gas leasing and closely related energy projects. Sections 4 and 6 of this bill authorize the commissioner of the Department of Natural Resources ("DNR") to approve a waiver of local planning authority approval and requirements if the DNR clearly demonstrates an overriding state interest. The provisions do require the commissioner to issue specific findings giving reasons for granting such a waiver.

However, it is well recognized that local communities are best qualified to regulate surface uses of property within their jurisdiction. Such authority is specifically delegated to local governments in Title 29. Local planning ordinances and regulations are only adopted after public hearings, typically by both the planning commission and the municipal legislative body. Authorizing a single unelected official to waive all such requirements without any opportunity for public input or standards other than the demonstration of an "overriding state interest" fundamentally contradicts long standing principles of local control and protection of private property interests. While state law does require the mineral leaseholder to post a bond to pay damages sustained by reason of entering the surface to access minerals, this bond may not come close to addressing all damages ultimately sustained by the surface owner and the local community. This resolution would notify the state legislature that the borough assembly opposes this delegation of far reaching authority to an unelected state official and encourages either the repeal of these provisions or the adoption of clear standards and public hearing requirements before compliance with local laws may be waived.