Gov: Lease buyback an option

Posted: Sunday, November 16, 2003

Gov. Frank Murkowski said Thursday afternoon the state could consider buying back shallow natural gas leases sold earlier this year on more than 20,000 acres of state and private land around Homer if that was what residents wanted.

On another front, Kenai Penin-sula Borough Assembly member Milli Martin has sponsored a resolution calling on the Alaska Legislature to modify current state law that allows resource officials to waive local land-use regulations in favor of gas development projects, and which leaves final decisions about whether projects proceed in the hands of one unelected official the commissioner of the Department of Natural Resources.

In a press briefing Thursday, Murkowski responded to a question concerning growing public support in the Homer area for a state buyback, similar to one in the 1970s when the state repurchased offshore oil leases sold in Kachemak Bay. It was concerted public protest at the time that contributed to the 1976 buyback.

"We have had a history of buying back offshore leases down in the lower Cook Inlet area," the governor said, "and if that's what the people want, why that's clearly an alternative."

Many property owners on the lower Kenai Peninsula, like their counterparts in the Matanuska Valley where coal bed methane development (a type of shallow gas development) already is under way, were surprised to learn they did not own subsurface mineral rights to their land when the state sold eight leases to Lapp Resources Inc., an independent developer. Lapp has since subleased six of those leases to Unocal.

Though they held rights to the surface, owners learned the state could lease the subsurface rights to developers, even over their objections. The Alaska Statehood Act and the Alaska Constitution make subsurface mineral rights legally superior to surface rights. House Bill 69, which became law last spring, reaffirmed that reality.

The governor was asked if the state might consider buying back leases sold around Homer or elsewhere in the state.

"Well it is certainly a matter we want to be sensitive to because this is kind of an awakening call for all Alaskans who just assumed when they bought their property they owned their subsurface rights," he said.

"It has never been a major issue until we saw the situation in the Mat-Su where suddenly people who thought they owned their subsurface rights found that the state constitution simply provides that the subsurface shall be owned by the state government."

The governor noted genuine concerns expressed by residents in the valley and Homer and said the state would be sensitive to those concerns.

Murkowski's administration has focused on resource development as a way to meet the state's financial crunch, and the shallow gas development program of which coal bed methane is one example is one way to do that and provide gas in communities not near an existing natural gas pipeline.

He said one answer to environmental concerns expressed by residents in the valley and around Homer might be to seek shallow gas in uninhabited areas of the state. But he also said that, as yet, nowhere has a developer found a commercial reserve large enough to justify development.

At a crowded public meeting in Homer last week, residents voiced their concerns to state resource officials about the risks associated with coal bed methane extraction, about the lack of public notice that the sales were being held and about the lack of an adequate public comment period. Most people urged the state to consider buying back the leases.

The resolution (2003-123) sponsored by assembly member Martin, whose Southern Peninsula District covers the leased area, will appear on Tuesday's assembly agenda. It addresses some of those concerns. It asks the Legislature to amend state statutes that now authorize the commissioner of the Department of Natural Resources to waive compliance with local laws for shallow natural gas leases in limited cases.

The resolution also asks that gas lease sales include additional public notice requirements.

"While the development of natural resources in Alaska is important, it should be conducted with due regard for other affected property rights," she said in a memo to the assembly. She noted that a bill passed last session, House Bill 69, left final decisions whether a development proceeds over the objection of surface rights holders in the hands of the DNR commissioner.

She pointed to state statutes in Title 29 that give local communities the power to exercise control over surface uses.

"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 principals of local control and protection of private property interests," she said.

State regulations do make developers responsible for all damages, require them in some cases to post bonds against damages and require them to enter surface-use agreements with surface rights holders. Martin said that might not go far enough to cover the actual costs of potential future damages.

"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 the these provisions or the adoption of clear standards and public hearing requirements before compliance with local laws may be waived," she said.

Joel Cooper, a Homer resident active in the environmental community, said he was encouraged by the governor's comments.

"I think that it is great that the governor is listening to the concerns of all the people," he said. "He's hearing that people want control of surface and subsurface rights."

But Cooper also said the state should be looking into alternative energy and income-generating sources, because oil and gas will run out eventually.

"We can't do that overnight," he said. "We have to deal with it now. It is frustrating to me to see the state focusing on such things as coal bed methane development, which can have such devastating impacts on land, and not spending time and effort on tidal energy or hydrogen economies."

The rest of the world is doing that, he said, adding that it is time for Alaska to move in that direction.

Another Homer resident who has been vocally opposed to shallow gas development over surface rights, said he thought the governor's comments were a positive sign.

"I'm just about an inch taller than I was," said Mike McCarthy on hearing what Murkowski had said. "Maybe it is true, as Gov. Jay Hammond said, that Kachemak Bay is the conscience of Alaska." The gas issue "may have raised the rest of the state's consciousness level, as well."

He said he truly hoped a buyback would come to pass.

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