We are pleased to see some important elements in HB 395. I will go through those that are most important to our area and also add in our wish list:

Water issues

We are happy to see that the AOGCC may (under 395) require injection of produced water.

Suggested amendment #1:

Property owners are very concerned about the quality of their drinking water and how industrial activity will be near homes will affect our water supply now and in the future. Since the USGS has found that water wells in our area recharge every 25 years, we suggest that HB 395 be amended to require the reinjection of produced water so that we can feel more secure about the quality of our water in years to come when the companies have moved on and the bonds are no longer posted.

Suggested amendment #2:

Property owners and communities are also justifiably concerned about the use of toxic chemicals in drilling operations. Toxic fracturing fluids present a potential contamination risk to water supply when used in subsurface operations and through their transport through our neighborhoods and near our homes. This concern would be easily eliminated by the mandating the use of non-toxic fracturing fluids only. We are told that some companies, including Evergreen, already use only non-toxic fracturing fluids. If Evergreen can conduct CBM business economically without toxic fracs, then we should not settle for the lowest common denominator. We should simply require non-toxic fracturing fluids of all operators. This will serve the goal of keeping the less careful operators out of our neighborhoods.

Furthermore, the constituent list (not the recipes) for fracing and drilling material must be made public at the time of use instead of 2 years after "production" begins which is the case under existing AOGCC rules. HB 395 could enable this change.

Suggested amendment #3:

Since we have seen in the Lower 48 that although reinjection of produced water is the preferred disposal method, it is not fool proof. Produced water with toxic chemicals has been known to escape and occasionally migrate vertically into water wells. Property owners have a right to know what chemicals are being in their neighborhood and injected into the subsurface. The AOGCC should be required to test and make public the results of tests of the content of produced and reinjected water to assure that only those chemical allowed are being used.

Suggested amendment #4:

We urge the legislature to conduct baseline hydrological, geological, and methane seep studies to determine which areas are scientifically suitable for coal bed methane development. Scientists and state officials have indicated to Mat-Su Borough officials in Assembly work sessions that in the Matanuska Valley for example, our "tortured geology" is not advantageous and is potentially unsafe for CBM development. Studies should be done to determine areas that should not be leased. Such foresight will save citizens, industry, local state leaders much time, trouble and money in the years a head.

Suggested amendment #5:

A buyback mechanism should established to release companies from leases in areas where the geological, hydrological, and land use realities are not advantageous for CBM development.

Public Notice

As you are aware, 12,396 individual properties in the Mat-Su representing over $230 million in assessed value have been leased without "actual notice" to property owners. 96% of these parcels are privately owned. We are happy to see additional notice requirements in the present form of HB 395, especially the direct notice requirements to community councils and municipalities.

Suggested amendment #6:

After attending numerous public meetings including the DNR workshop on public notice last week in Wasilla, I can safely inform you that property owners overwhelmingly agree that public notice prior to the lease of the subsurface under their land should be in writing by mail to the individual property owner.

DNR does provide actual written notice to the surrounding property owners later in the process at the permitting stage AFTER the lease has been granted. It is inconsistent and unfair to property owners not to get actual notice at the leasing stage as well. The leasing stage is, after all, arguably the most important stage to the property owners - before the subsurface property right is conveyed away by the state and a binding contract is entered into with the driller. DNR must be required to inform land owners at the earliest stage.

Suggested amendment #7:

Communities may differ about whether CBM development will comport with the community goals, values, and geological realities. Given adequate notice, some would welcome CBM and while other may not. However, all seem to feel uniformly that affected communities should be active participants in the decisions about CBM development. But the utter failure of the system thus far to provide fair actual notice to property owners, renders the existing leases invalid in the eyes of thousands of property owners and many community leaders. This is the legislature’s opportunity and, I believe, responsibility to now rectify the situation with property owners and buyback the leases from the lessee. Then start over under fair notice rules.

Public Comment

We are glad to see some good changes with regard to public comment and the discretion of the director in Section 4 of HB 395. It is very important to the public that our comments are taken into account when leases are applied for. There are many possible and valuable uses for a given piece of land. The various uses, including existing and planned, should be balanced against coal bed methane development in order to correctly determine the best interest and best use to the community.

Suggested amendment #8:

We urge the legislature to take one step further and to formalize this balancing test by amending HB 395 to include a best interest finding.

Issuance of a Lease

We welcome the change in language in Section 4 of HB 395 that allows for discretionary leasing by the director to replace the mandatory leasing under the existing law.

Suggested amendment #9:

We suggest that specific standards be set forth in HB 395 that create guidelines for that discretionary decision.

Again, since the director did not have an option under the present law to deny the existing leases, we urge the legislature to buyback the leases and begin again with a more legitimate process.

Local Control

We applaud the provisions in HB 395 that repeals those provisions in HB 69 that gave the DNR Commission the power to override local authorities.

Suggested amendment #10:

We suggest validating local control further through encouragement of prudent local land use regulations for CBM development to protect public health and safety and property rights.

Property Rights

Section 5 of HB 395 begins to work out a scheme for compensating property owners and setting forth how CBM operations can go forward on private property. Setback and noise abatement requirements are a welcome addition to CBM law. This is a good beginning, but specifics are needed.

Suggested amendment #11:

The compressor station fee, though a good step for the property owner on whose land the compressor station will sit, will be problematic for surrounding property owners. Compressor stations are notoriously loud and obnoxious to quality of life. Surrounding landowners will be impacted - often to the same degree as the actual landowner - must be compensated, notified, and considered as well.

Suggested amendment #12:

If the landowner is required to "negotiate" to meet the terms of Section 5(f)(3) and to not "unreasonably withhold agreement" the parameters of these negotiations must be defined. Neutral third party legal assistance should be provided to citizens to even the legal playing field with billion dollar corporations.

Suggested amendments #13:

A higher bond should be set to cover possible damages to property. Economic values to the individual property should be set based on a realistic set of factors to be set forth in law.

The burden of proof to prove damages in court should be shifted to the driller rather than the property owner. Proving damages will be a financial impossibly for injured property owners without this provision. Any damages provisions are meaningless without this amendment.

Cost limits should be placed on legal fees by all parties to assure that the property owner is on even footing with the driller when damages must be proven in court.

Definition of CBM

The new definition of CBM in Section 3 changing the depth from 4000 ft to 3000 ft. is a good alteration that closes the loophole in the existing law which allows some deep gas drilling under the less stringent laws governing CBM.