1995-04-22                     Senate Journal                      Page 1190
SB 164                                                                       
SENATE BILL NO. 164 BY THE SENATE RULES COMMITTEE                              
BY REQUEST OF THE GOVERNOR, entitled:                                          
                                                                               
"An Act approving the sale of Prudhoe Bay Unit                                
royalty oil by the State of Alaska to Tesoro Alaska                            
Petroleum Company; and providing for an effective                              
date."                                                                         
                                                                               
was read the first time and referred to the Resources and Finance              
Committees.                                                                    
                                                                               
Zero fiscal notes published today from Department of Revenue,                  
Department of Natural Resources.                                               
                                                                               
Governor's transmittal letter dated April 22:                                  
                                                                               
Dear President Pearce:                                                         
                                                                               
Under the authority of art. III, sec. 18, of the Alaska Constitution,          
I am transmitting a bill that provides for legislative approval of a           
royalty oil contract between the state and Tesoro Alaska Petroleum             
Company for the sale of Prudhoe Bay Unit royalty oil.  Also                    
transmitted with this bill are copies of the resolution of the Alaska          
Royalty Oil and Gas Development Advisory Board recommending                    
approval of that contract in accordance with AS38.06.040(a)(3) and             
38.06.050(a), and the report required by AS38.06.070(c).                       
                                                                               
The contract is described in a final finding issued by the                     
commissioner of the Department of Natural Resources on April21,                
1995.  A copy of the commissioner's final finding and the signed               
contract are attached.  Copies of the commissioners preliminary                
finding and the draft contract previously were sent to the legislature         
and made available to the public for review.                                   
                                                                               
                                                                               

1995-04-22                     Senate Journal                      Page 1191
SB 164                                                                       
A bill approving the contract is being introduced for legislative              
approval for two reasons.  First, as a matter of comity, I respect the         
legislature's desire to have a direct voice in major disposals of              
royalty oil.  Therefore, although this and previous Administrations            
have consistently taken the position that the statutory requirement of         
legislative approval of royalty oil contracts (AS 38.06.055) is                
unconstitutional, the contract itself contains provisions requiring            
approval by the legislature before it can take effect.                         
                                                                               
Second, this legislation would ratify the royalty oil contract.  This          
ratification would cure any procedural defect that might have                  
occurred in the process of entering into this contract.                        
                                                                               
I urge your prompt consideration and passage of this bill.                     
                                                                               
						Sincerely,                                                               
						/s/                                                                      
						Tony Knowles                                                             
						Governor                                                                 
                                                                               
The following were received and will be published in House and                 
Senate Joint Journal Supplement No. 12:                                        
                                                                               
Agreement for the Sale and Purchase of State                                  
Royalty Oil to Tesoro Alaska Petroleum Company,                                
from the Department of Natural Resources                                       
                                                                               
Final Finding and Determination to Sell Royalty Oil                           
to Tesoro Alaska Petroleum Company, from the                                   
Department of Natural Resources                                                
                                                                               
The Alaska Royalty Oil and Gas Development                                    
Advisory Board, Resolution 95-1