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Senate Finance moves NPR-A grant bill Bill will create Legislative committee to review applications for community grant program, which has first call on federal dollars Kristen Nelson Petroleum News
Senate Finance voted 4 to 2 Feb. 1 to pass out Senate Bill 171 establishing a legislative committee to evaluate National Petroleum Reserve-Alaska community grant applications.
The bill was introduced last year by Sen. Gary Wilken, R-Fairbanks and had acrimonious hearings last spring in Senate Community and Regional Affairs before being passed on to Senate Finance, where it was heard and held in late April.
At issue are federal funds coming to the State of Alaska from NPR-A revenues. Under a 1980 federal law the state was directed to give priority in using the funds to subdivisions of the state most directly or severely impacted by work in NPR-A. A 1986 court decision said it was up to the Alaska Legislature to examine and evaluate claimed needs arising from oil and gas development impacts, evaluate them, rank them and meet them out of NPR-A revenues.
Wilken told Senate Finance Jan. 26 that because of the 1980 federal law, North Slope communities have dipped into NPR-A funds before they ever got to the Permanent Fund. Federal law has effectively taken money out of the Permanent Fund and the bill tries to fix that, he said.
The bill modifies the NPR-A mitigation grant program administered by the Department of Commerce, Community and Economic Development, which has been evaluating applications. In late January the proposal was that the department would continue to determine if requests will alleviate an impact of oil and gas development and rank the applications, which would then be submitted to the Legislature’s NPR-A Impact Review Committee, which would be set up under the bill. Bill ‘a little more palatable’ Sen. Donny Olson, D-Nome, said the bill was “a little more palatable” than the bill presented last year, but told the committee that the department had tightened its regulations, and there was no need for a legislative committee to review applications. Nobody likes to be singled out, he said, and this bill appears to single out the North Slope Borough, that has successfully used laws set up by people outside the borough. With the tightening of regulations by the department the bill appears to be “overkill,” he said. Olson said there are no committees set up for other grant programs. He objected to what he said appears to be “a very cumbersome process” set up under the bill.
Analysis to committee Wilken told Senate Finance Feb. 1 that the department had suggested that the committee take on the burden of analyzing the applications. The department’s function would be to advertise, receive applications and make sure they were in the right form.
The version of the bill adopted by the committee Feb. 1, he said, gives the authority to evaluate and rank grants to the committee. The department, he said, would continue to train communities in the program and make sure applications were complete.
The committee will have six members, three each from the House and Senate, including one minority member from each body. Wilken said that at Olson’s suggestion one of the six members will be from either House District 40 or Senate District T, “someone with boots on the ground,” who would provide hands-on representation on the committee.
Olson asked what the department’s attitude was to having their powers over this grant program taken away.
Mike Black, director of the Division of Community Advocacy for the department told the committee the grant program was not like other programs the department manages. This requires evaluation of not only the grant application, but whether there is impact. The grants the department normally administers are very clear cut as to what is applicable and what the guidelines are, he said. This program requires the department to not only administer the grant but to evaluate each application on the impact basis where there are no clear guidelines. The participation of the Legislature in evaluation of impacts is welcome, he told the committee. North Slope Borough Susan Burke, an attorney representing the North Slope Borough, told the committee that the borough appreciates the fact that the revised bill has addressed a lot of the concerns the borough brought to the table, but its position continues to be that the legislation is not necessary.
Sen. Lyman Hoffman, D-Bethel, asked Burke whether there was an inherent conflict between applications for grants and the state’s need for money.
Burke said it was a “huge concern” and that Congress had placed the Legislature in “a very, very difficult position.”
NPR-A oil is not a state resource, she said, it belongs to the federal government, which doesn’t have to share the revenues.
Congress decided to give Alaska a portion of those revenues with a priority to use the funds for impacted communities.
The Permanent Fund and other state needs are there and “there’s a huge tension” she said, but the state’s obligation is to provide priority to the impacted communities.
She said that since the lawsuit the state has done a good job of dealing with that tension. But it will be harder for the Legislature than for the department, because legislators represent jurisdictions while state employees don’t represent specific constituencies.
Ahead of the Permanent Fund Wilken said the legislation is important: this is the only place in state government “that anything jumps in front of the Permanent Fund.” The department is currently asked to evaluate impact, which has not been defined to date, he said.
Each of the six people on the committee will be asked how one place in the state gets in front of the state’s constitution, Wilken said. The answer will be the 1980 federal law and the time and effort the committee spends evaluating impact.
The committee will follow federal law, state law and state regulations, and will allocate for impacts reasonably attributable to impacts from NPR-A, he said.
Wilken said the difficulty the Legislature is struggling with now is that for 20 years it has allowed “a system that has been porous at best.” Money will be flowing from NPR-A in the future, he said, and the Legislature needs to set the path for the next generation.
Wilken said the system is clearly broken, and needs to be fixed for the future.
Finance Chair Lyda Green, R-Matanuska-Susitna, said she felt very badly for anyone who has to justify and approve of the present system, which she agreed was broken.
The bill now goes to Senate Rules.
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