Legislature(2005 - 2006)CAPITOL 124

04/01/2005 01:00 PM RESOURCES


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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ HB 142 OIL & GAS: REG. OF UNDERGROUND INJECTION TELECONFERENCED
Moved Out of Committee
+ HB 71 AK PENINSULA OIL & GAS LEASE SALE; TAXES TELECONFERENCED
Scheduled But Not Heard
Bills Previously Heard/Scheduled
= HJR 16 OPPOSE UN LAND DESIGNATIONS IN ALASKA
Moved CSHJR 16(RES) Out of Committee
= HB 174 FISHING PERMIT AND VESSEL LICENSE FEES
Moved CSHB 174(RES) Out of Committee
                    ALASKA STATE LEGISLATURE                                                                                  
               HOUSE RESOURCES STANDING COMMITTEE                                                                             
                         April 1, 2005                                                                                          
                           1:05 p.m.                                                                                            
                                                                                                                                
MEMBERS PRESENT                                                                                                               
                                                                                                                                
Representative Jay Ramras, Co-Chair                                                                                             
Representative Ralph Samuels, Co-Chair                                                                                          
Representative Jim Elkins                                                                                                       
Representative Carl Gatto                                                                                                       
Representative Gabrielle LeDoux                                                                                                 
Representative Kurt Olson                                                                                                       
Representative Paul Seaton                                                                                                      
Representative Harry Crawford                                                                                                   
                                                                                                                                
MEMBERS ABSENT                                                                                                                
                                                                                                                                
Representative Mary Kapsner                                                                                                     
                                                                                                                                
COMMITTEE CALENDAR                                                                                                            
                                                                                                                                
HOUSE JOINT RESOLUTION NO. 16                                                                                                   
Opposing the  designation of  any area  in the  state as  a world                                                               
heritage  site,   biosphere  reserve,   or  any  other   type  of                                                               
international  designation  without  the consent  of  the  Alaska                                                               
State Legislature.                                                                                                              
                                                                                                                                
     - MOVED CSHJR 16 (RES) OUT OF COMMITTEE                                                                                    
                                                                                                                                
HOUSE BILL NO. 174                                                                                                              
"An Act relating to commercial  fishing permit and vessel license                                                               
fees; and providing for an effective date."                                                                                     
                                                                                                                                
     - MOVED CSHB 174 (RES) OUT OF COMMITTEE                                                                                    
                                                                                                                                
HOUSE BILL NO. 142                                                                                                              
"An  Act relating  to regulation  of underground  injection under                                                               
the  federal  Safe  Drinking  Water Act;  and  providing  for  an                                                               
effective date."                                                                                                                
                                                                                                                                
     - MOVED HB 142 OUT OF COMMITTEE                                                                                            
                                                                                                                                
HOUSE BILL NO. 71                                                                                                               
"An Act  relating to  a credit  for certain  exploration expenses                                                               
against oil  and gas properties  production taxes on oil  and gas                                                               
produced from a  lease or property in the state;  relating to the                                                               
deadline  for certain  exploration expenditures  used as  credits                                                               
against production  tax on oil and  gas produced from a  lease or                                                               
property  in  the  Alaska  Peninsula   competitive  oil  and  gas                                                               
areawide lease  sale area after  July 1, 2004; and  providing for                                                               
an effective date."                                                                                                             
                                                                                                                                
     - SCHEDULED BUT NOT HEARD                                                                                                  
                                                                                                                                
PREVIOUS COMMITTEE ACTION                                                                                                     
                                                                                                                                
BILL: HJR 16                                                                                                                  
SHORT TITLE: OPPOSE UN LAND DESIGNATIONS IN ALASKA                                                                              
SPONSOR(s): REPRESENTATIVE(s) ELKINS                                                                                            
                                                                                                                                
03/14/05       (H)       READ THE FIRST TIME - REFERRALS                                                                        
03/14/05       (H)       RES                                                                                                    
03/30/05       (H)       RES AT 1:00 PM SENATE FINANCE 532                                                                      
03/30/05       (H)       Heard & Held                                                                                           
03/30/05       (H)       MINUTE(RES)                                                                                            
04/01/05       (H)       RES AT 1:00 PM CAPITOL 124                                                                             
                                                                                                                                
BILL: HB 174                                                                                                                  
SHORT TITLE: FISHING PERMIT AND VESSEL LICENSE FEES                                                                             
SPONSOR(s): REPRESENTATIVE(s) SAMUELS                                                                                           
                                                                                                                                
02/24/05       (H)       READ THE FIRST TIME - REFERRALS                                                                        
02/24/05       (H)       FSH, RES, FIN                                                                                          
03/23/05       (H)       FSH AT 8:30 AM CAPITOL 124                                                                             
03/23/05       (H)       Moved CSHB 174(FSH) Out of Committee                                                                   
03/23/05       (H)       MINUTE(FSH)                                                                                            
03/29/05       (H)       FSH RPT CS(FSH) 3DP 3NR                                                                                
03/29/05       (H)       DP: ELKINS, LEDOUX, THOMAS;                                                                            
03/29/05       (H)       NR: WILSON, KAPSNER, SALMON                                                                            
03/30/05       (H)       RES AT 1:00 PM SENATE FINANCE 532                                                                      
03/30/05       (H)       Scheduled But Not Heard                                                                                
04/01/05       (H)       RES AT 1:00 PM CAPITOL 124                                                                             
                                                                                                                                
BILL: HB 142                                                                                                                  
SHORT TITLE: OIL & GAS: REG. OF UNDERGROUND INJECTION                                                                           
SPONSOR(s): RULES BY REQUEST OF THE GOVERNOR                                                                                    
                                                                                                                                
02/14/05       (H)       READ THE FIRST TIME - REFERRALS                                                                        
02/14/05       (H)       O&G, RES, FIN                                                                                          
03/15/05       (H)       O&G AT 5:00 PM CAPITOL 124                                                                             
03/15/05       (H)       Moved Out of Committee                                                                                 
03/15/05       (H)       MINUTE(O&G)                                                                                            
03/16/05       (H)       O&G RPT 3DP 3NR                                                                                        
03/16/05       (H)       DP: GARDNER, ROKEBERG, KOHRING;                                                                        
03/16/05       (H)       NR: SAMUELS, KERTTULA, DAHLSTROM                                                                       
04/01/05       (H)       RES AT 1:00 PM CAPITOL 124                                                                             
                                                                                                                                
WITNESS REGISTER                                                                                                              
                                                                                                                                
JIM VAN HORN, Staff                                                                                                             
to Representative Jim Elkins                                                                                                    
Alaska State Legislature                                                                                                        
Juneau, Alaska                                                                                                                  
POSITION STATEMENT: Presented HJR  16 on behalf of Representative                                                               
Elkins, sponsor.                                                                                                                
                                                                                                                                
HENRY WEBB, Staff                                                                                                               
to Representative Ralph Samuels                                                                                                 
Alaska State Legislature                                                                                                        
Juneau, Alaska                                                                                                                  
POSITION STATEMENT: Presented HB  174 on behalf of Representative                                                               
Samuels, sponsor.                                                                                                               
                                                                                                                                
FRANK HOMAN, Commissioner                                                                                                       
Commercial Fisheries Entry Commission (CFEC)                                                                                    
Alaska Department of Fish & Game                                                                                                
Juneau, Alaska                                                                                                                  
POSITION STATEMENT: Answered questions regarding HB 174.                                                                        
                                                                                                                                
DAN SEAMOUNT, Commissioner,                                                                                                     
Alaska Oil and Gas Conservation Commission (AOGCC)                                                                              
Anchorage, Alaska                                                                                                               
POSITION STATEMENT: Testified in support of HB 142.                                                                             
                                                                                                                                
ACTION NARRATIVE                                                                                                              
                                                                                                                                
CO-CHAIR  JAY   RAMRAS  called   the  House   Resources  Standing                                                             
Committee  meeting  to  order at  1:05:07  PM.    Representatives                                                             
Ramras,  Elkins, LeDoux,  Crawford,  Samuels,  Seaton, and  Olson                                                               
were present at the call  to order.  Representative Gatto arrived                                                               
while the meeting was in progress.                                                                                              
HJR 16-OPPOSE UN LAND DESIGNATIONS IN ALASKA                                                                                  
                                                                                                                                
CO-CHAIR RAMRAS announced that the  first order of business would                                                               
be HOUSE  JOINT RESOLUTION NO.  16,  Opposing the  designation of                                                               
any  area  in the  state  as  a  world heritage  site,  biosphere                                                               
reserve, or  any other type of  international designation without                                                               
the consent of the Alaska State Legislature.                                                                                    
                                                                                                                                
CO-CHAIR  SAMUELS moved  to adopt  the committee  substitute (CS)                                                               
HJR 16,  labeled 24-LS0748\G, as  a work  draft.  There  being no                                                               
objection, it was so ordered.                                                                                                   
                                                                                                                                
1:05:50 PM                                                                                                                    
                                                                                                                                
JIM VAN  HORN, Staff to  Representative Jim Elkins,  Alaska State                                                               
Legislature, said that  the committee substitute (CS)  for HJR 16                                                               
added  language  to  request that  local  governments  also  give                                                               
consent prior to the designation of  a world heritage site by the                                                               
United Nations.                                                                                                                 
                                                                                                                                
1:07:34 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE ELKINS  moved to report  HJR 16 as amended  out of                                                               
committee  with individual  recommendations and  the accompanying                                                               
fiscal  notes.   There  being  no  objection, CSHJR  16(RES)  was                                                               
reported out of the House Resources Standing Committee.                                                                         
                                                                                                                                
HB 174-FISHING PERMIT AND VESSEL LICENSE FEES                                                                                 
1:08:16 PM                                                                                                                    
                                                                                                                                
CO-CHAIR SAMUELS announced that the  next order of business would                                                               
be HOUSE  BILL NO. 174   "An  Act relating to  commercial fishing                                                               
permit and  vessel license fees;  and providing for  an effective                                                               
date."                                                                                                                          
                                                                                                                                
REPRESENTATIVE OLSON  moved to adopt  CSHB 174(RES),  labeled 24-                                                               
LS0676\F, Utermohle, 3/29/05, as a work draft.                                                                                  
                                                                                                                                
The committee took an at-ease from 1:09 p.m. to 1:10 p.m.                                                                       
                                                                                                                                
1:10:19 PM                                                                                                                    
                                                                                                                                
CO-CHAIR SAMUELS said  the state was involved  in litigation, the                                                               
Carlson  case,   which  forbade  it  from   charging  nonresident                                                             
fishermen  three  times the  fee  charged  to residents.    Under                                                               
current  law, four  tenths of  one percent  of the  value of  the                                                               
fishery is divided up and charged  to the permit holder, he said.                                                               
It  is now  capped at  $300, and  the Commercial  Fisheries Entry                                                               
Commission  (CFEC)   is  not  getting  adequately   funded.    He                                                               
explained that the  original bill had no cap, but  in the current                                                               
committee substitute  (CS) there is  a $3,000  cap.  The  CS also                                                               
slightly  increases the  license fee  on a  vessel, dependent  on                                                               
length, he said.                                                                                                                
                                                                                                                                
HENRY WEBB,  Staff to Representative Ralph  Samuels, Alaska State                                                               
Legislature, said the  CS changes the original bill  in two ways.                                                               
It creates a cap of $3,000 for  an entry permit.  The vessel fees                                                               
in the original  bill had a compounding $15 increase,  but in the                                                               
CS, the  fees go up 20  percent across the board  for all classes                                                               
of vessels.                                                                                                                     
                                                                                                                                
1:13:06 PM                                                                                                                    
                                                                                                                                
MR. WEBB said  the vessel fees have been in  place for ten years,                                                               
so annually it is a two percent increase per year.                                                                              
                                                                                                                                
1:15:00 PM                                                                                                                    
                                                                                                                                
FRANK HOMAN, Commissioner,  Commercial Fisheries Entry Commission                                                               
(CFEC),  said  the Carlson case, the  consolidation of fisheries,                                                             
and  reduced permit  values have  created a  trend of  decreasing                                                               
revenues to  the CFEC.  There  are no general funds  in the CFEC,                                                               
and it has  obligations to the fishermen's fund  and the Division                                                               
of Commercial Fisheries in the  Alaska Department of Fish & Game.                                                               
The  CFEC predicts  staff layoffs  or general  fund requests,  he                                                               
said.   He  added that  this is  a good  opportunity to  increase                                                               
revenue, but  there will still  likely be  a downward trend.   He                                                               
predicted HB 174 will cover costs for another seven years.                                                                      
                                                                                                                                
MR. HOMAN  said the current  $300 cap  is artificial, and  the CS                                                               
would raise it  to $3,000.  He said high-value  fisheries will be                                                               
paying their  proportional share of  the fees.  The  statute says                                                               
that the fee  should reflect the economic return  of the fishery,                                                               
he added.   He also noted  that there is a  number plate required                                                               
for vessels,  and the CFEC  charges $2, but  it costs $7  to make                                                               
the  plate.   There  is  a spreadsheet  in  the committee  packet                                                               
showing the revenue generated by the legislation, he said.                                                                      
                                                                                                                                
1:19:58 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  SEATON expressed  concern  about equity,  because                                                               
the  cap only  affects the  highest value  fisheries who  will be                                                               
paying proportionally less than the smaller inshore fisheries.                                                                  
                                                                                                                                
MR. HOMAN said the original bill  had no cap, and "there was some                                                               
concern expressed  about a no-cap  that the commissions  would be                                                               
able to charge  the maximum ... where it would  actually fall.  I                                                               
think  there were  some concerns  by some  of the  fisheries that                                                               
that could  be unlimited."   The cap  at $3,000 only  affects the                                                               
highest value  fisheries, but all  those below it will  be paying                                                               
their proportional share.                                                                                                       
                                                                                                                                
REPRESENTATIVE SEATON  said it is not  truly proportional because                                                               
of  the cap,  because  a  "very wealthy  fishery"  won't pay  its                                                               
proportion and the burden will  be shifted to the less-profitable                                                               
fisheries.    He  noted  the growing  trend  and  possibility  of                                                               
consolidation of  fisheries, which means  fewer vessels.   So the                                                               
cap could extremely depress the amount of revenue, he said.                                                                     
                                                                                                                                
MR. HOMAN said  that is a correct assessment, and  that is why he                                                               
considers the downward trend will continued.                                                                                    
                                                                                                                                
CO-CHAIR SAMUELS said he had a  balancing act, and he could argue                                                               
either way  for or against  the cap.  The  cap won't cause  a big                                                               
loss  in revenue  because there  will  be higher  fees from  boat                                                               
length.   He said he  wants to make  the process go  forward, and                                                               
nobody wants the legislation killed.                                                                                            
                                                                                                                                
1:24:20 PM                                                                                                                    
                                                                                                                                
CO-CHAIR  SAMUELS  said  Representative Thomas  was  comfortable.                                                               
"We have done our juggling," he added.                                                                                          
                                                                                                                                
1:24:46 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE LEDOUX asked  how many boats will be  over the new                                                               
cap.                                                                                                                            
                                                                                                                                
1:25:07 PM                                                                                                                    
                                                                                                                                
MR. HOMAN  said out of  21,000 vessels,  265 will be  affected by                                                               
the cap.                                                                                                                        
                                                                                                                                
REPRESENTATIVE LEDOUX asked what  the additional revenue would be                                                               
without the cap.                                                                                                                
                                                                                                                                
MR. HOMAN guessed approximately $200,000.                                                                                       
                                                                                                                                
CO-CHAIR  SAMUELS noted  that  they  will also  pay  more in  the                                                               
vessel licensure.                                                                                                               
                                                                                                                                
MR. HOMAN  said the  original fiscal note  was $2.3  million, and                                                               
now it is about $1.9 million.                                                                                                   
                                                                                                                                
REPRESENTATIVE LEDOUX asked  if Mr. Homan was  still working with                                                               
boats that  may be in a  "higher end fishery, but  in a different                                                               
location,  for  example, boats  that  fish  around Kodiak  aren't                                                               
charged the same as boats that fish out at the Bering Sea."                                                                     
                                                                                                                                
MR.  HOMAN  said the  bill  will  simply  lift  the cap,  but  by                                                               
regulation the CFEC will establish a  new fee structure.  It will                                                               
be a  public process,  he said.   With a  $300 cap,  many vessels                                                               
were in the same category, and now larger vessels will pay more.                                                                
                                                                                                                                
REPRESENTATIVE  LEDOUX  asked  if   there  is  justification  for                                                               
eliminating  the  cap for  the  small  percentage of  very,  very                                                               
affluent vessels.                                                                                                               
                                                                                                                                
MR. HOMAN said the $3,000 cap  was put on after discussion and "a                                                               
lot of give and take." It was a balance, he said.                                                                               
                                                                                                                                
1:29:31 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  SEATON said  the  larger vessels  are going  from                                                               
$750 to $900,  so it doesn't seem  like a good balance  to try to                                                               
recoup the money lost by the cap  for only a $150 vessel fee.  He                                                               
said he  is glad  that the  commission is  looking at  the vessel                                                               
sizes.    He   suggested  a  per  foot  rate   instead  of  broad                                                               
categories.   A 76-foot vessel  will pay  the same as  a 149-foot                                                               
vessel, even though there is "hugely different fishing power."                                                                  
                                                                                                                                
MR. HOMAN said  there could be different ways to  do it, and said                                                               
the CFEC does not have any  ability to change it; the vessel fees                                                               
are  in statute.   He  said the  CFEC did  not come  up with  the                                                               
vessel lengths.  The lengths  went into statute "some years ago."                                                               
It would take time to make the statutory change, he added.                                                                      
                                                                                                                                
1:31:39 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE SEATON  said, "We  are making a  statutory change,                                                               
and it  seems like we've  got this inequity," of  76-foot vessels                                                               
in  the same  category as  150-foot vessels.   It  would be  more                                                               
equitable and consistent to tax by size, for example, $20/foot.                                                                 
                                                                                                                                
MR. HOMAN said the vessel license  fee is the smaller part of the                                                               
bill and the permit fee is  where the money will come in relation                                                               
to the  economic return  of the  fishery.   He said  the original                                                               
license fee was to just make  sure any vessel operating in Alaska                                                               
was  licensed.   It  hasn't  been the  major  contributor of  the                                                               
revenue, he added.                                                                                                              
                                                                                                                                
REPRESENTATIVE SEATON said  it may not be a  major contributor to                                                               
the revenue,  but it  is a  "major grouse  among fishermen."   He                                                               
repeated that  it might be more  appropriate to tax vessels  on a                                                               
per foot length.                                                                                                                
                                                                                                                                
CO-CHAIR SAMUELS said not today.                                                                                                
                                                                                                                                
REPRESENTATIVE SEATON said  he understands but he  wants the bill                                                               
drafters to consider it.                                                                                                        
                                                                                                                                
MR. HOMAN said, "We could look at that."                                                                                        
                                                                                                                                
1:35:12 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  ELKINS  moved  to  report CSHB  174(RES)  out  of                                                               
committee  with individual  recommendations and  the accompanying                                                               
fiscal notes.                                                                                                                   
                                                                                                                                
REPRESENTATIVE SEATON objected for discussion.   He said he has a                                                               
problem  with  the  cap  when   the  industry  is  becoming  more                                                               
consolidated.   He stated  that the "scallop  fishery is  now all                                                               
being taken by  three vessels--it may all be taken  by one vessel                                                               
because the person  doesn't have to be on  board."  Restructuring                                                               
now makes  it legal to  do an entire  fishery with one  boat, and                                                               
the total recovery will only be  $3,000, he noted.  With the cap,                                                               
"we are  setting ourselves up"  to repeat this  restructuring, so                                                               
why not do it now, he said.  He then removed his objection.                                                                     
                                                                                                                                
1:37:33 PM                                                                                                                    
                                                                                                                                
There being  no objection, CSHB  174(RES) moved out of  the House                                                               
Resources Standing Committee.                                                                                                   
                                                                                                                                
1:37:48 PM                                                                                                                    
HB 142-OIL & GAS: REG. OF UNDERGROUND INJECTION                                                                               
                                                                                                                                
CO-CHAIR SAMUELS announced that the  next order of business would                                                               
be  HOUSE  BILL NO.  142    "An  Act  relating to  regulation  of                                                               
underground injection under the  federal Safe Drinking Water Act;                                                               
and providing for an effective date."                                                                                           
                                                                                                                                
                                                                                                                                
1:39:23 PM                                                                                                                    
                                                                                                                                
DAN  SEAMOUNT,  Commissioner,  Alaska Oil  and  Gas  Conservation                                                               
Commission (AOGCC),  said HB  142 gives  the state  the authority                                                               
over  a  very small  number  of  waste  disposal wells  from  the                                                               
Environmental Protection  Agency (EPA), which will  probably save                                                               
money and time for the state, federal government, and industry.                                                                 
                                                                                                                                
MR. SEAMOUNT said  there is redundancy and  confusion between the                                                               
industry and  agencies.   There are  two agencies  regulating the                                                               
same kind  of wells, he said.   Much time is  spent deciding what                                                               
kind of waste  goes down which wells.  "The  AOGCC regulates what                                                               
goes on underneath  the ground," he said, and  the most important                                                               
mandate  is  protecting  underground  fresh  water.    The  state                                                               
currently oversees the  Class 2 program.  There  are five classes                                                               
he said, "but basically the best  place to put oil field waste is                                                               
deep underground near where it has been produced."                                                                              
                                                                                                                                
1:41:57 PM                                                                                                                    
                                                                                                                                
MR.  SEAMOUNT  said  injection wells  enhance  oil  recovery  and                                                               
generates billions  of dollars  to the  state.   Alaska's statute                                                               
gives the  state authority over  Class 2  wells.  The  bill gives                                                               
the state control over Class 1 wells.                                                                                           
                                                                                                                                
1:43:08 PM                                                                                                                    
                                                                                                                                
MR. SEAMOUNT said two agencies  are now protecting a non-existent                                                               
resource--underground  fresh  water.   The  North  Slope  has  no                                                               
underground fresh  water, he  said.  After  the bill  passes, the                                                               
AOGCC would like  to do away with  Class 1 wells.   He added that                                                               
EPA  supports this  effort  and  is trying  to  come  up with  an                                                               
ingenious way to give partial primacy to the state.                                                                             
                                                                                                                                
1:44:42 PM                                                                                                                    
                                                                                                                                
MR. SEAMOUNT said  there are five classes of  wells created under                                                               
the federal Safe  Drinking Water Act.  Wastes  are injected below                                                               
freshwater aquifers for Class 1  wells, the state has primacy for                                                               
Class 2  wells, there  are no  Class 3 wells  in Alaska,  Class 4                                                               
wells are  outlawed, and Class 5  wells are the most  numerous in                                                               
Alaska, and  they take any  waste that  doesn't fit in  the other                                                               
classes of  wells, and most  are septic  systems.  He  said there                                                               
are 1,150 Class 2 wells and only seven Class 1 wells in Alaska.                                                                 
                                                                                                                                
1:46:36 PM                                                                                                                    
                                                                                                                                
MR. SEAMOUNT noted that over  98 percent of injected materials go                                                               
into Class  2 wells.   The  biggest problem  is the  confusion by                                                               
operators of  what is allowed  in the  wells, and they  deal with                                                               
two agencies, which  is a waste of time.   Mr. Seamount said they                                                               
should all be Class 2 wells, but EPA does not agree with that.                                                                  
                                                                                                                                
1:47:36 PM                                                                                                                    
                                                                                                                                
MR. SEAMOUNT said there would not  be any waste for Class 1 wells                                                               
were  it  not  for  the North  Slope  infrastructure,  and  AOGCC                                                               
believes that means they all qualify  for Class 2 wells.  He said                                                               
often  the  same   type  of  fluids  go   down  different  wells.                                                               
Sometimes the wells are right next  to each other, and the fluids                                                               
end up in the same zone, he added.                                                                                              
                                                                                                                                
1:49:23 PM                                                                                                                    
                                                                                                                                
MR.  SEAMOUNT said  the current  system  protects a  non-existent                                                               
resource and is inefficient.  He  stated that the AOGCC is faster                                                               
than EPA because EPA staff have to be sent from Seattle.                                                                        
                                                                                                                                
CO-CHAIR SAMUELS asked about EPA's position.                                                                                    
                                                                                                                                
1:50:38 PM                                                                                                                    
                                                                                                                                
MR. SEAMOUNT said  EPA is supportive.  He explained  that Class 1                                                               
and 2  wells are  the same  construction, but  Class 2  wells are                                                               
deeper so  they are  better for the  environment.   "There really                                                               
isn't much  difference at all between  them," he said.   He noted                                                               
that it costs $1 more per barrel to operate a Class 1 well.                                                                     
                                                                                                                                
MR. SEAMOUNT  pointed out the  options: "We can  conduct business                                                               
as usual, which  means that we don't have to  put any more effort                                                               
into this initiative,  but we're going to continue  with the same                                                               
confusion, same cost  to taxpayer and industry,  two agencies are                                                               
going to be  doing the same work."   He said he  doesn't think it                                                               
is anybody's preference to continue that same way.                                                                              
                                                                                                                                
1:52:31 PM                                                                                                                    
                                                                                                                                
MR.  SEAMOUNT said  HB 142  would allow  AOGCC to  try to  obtain                                                               
primacy of  Class 1  and 2 wells.   In the  long run,  AOGCC sees                                                               
only  one  class of  wells  on  the  North Slope--Class  2  wells                                                               
overseen  by the  state--but not  until this  bill is  passed and                                                               
there is a favorable ruling by EPA.                                                                                             
                                                                                                                                
REPRESENTATIVE LEDOUX asked about the EPA ruling.                                                                               
                                                                                                                                
MR. SEAMOUNT said  there is a four-person task force  with EPA to                                                               
figure out how to make the change.                                                                                              
                                                                                                                                
REPRESENTATIVE  LEDOUX asked  if  the task  force  is already  in                                                               
place, why is there a need for the legislation.                                                                                 
                                                                                                                                
MR. SEAMOUNT  said the  state would need  language in  statute to                                                               
legally take over the program.                                                                                                  
                                                                                                                                
1:54:41 PM                                                                                                                    
                                                                                                                                
MR. SEAMOUNT  said if EPA  does not agree,  the bill will  not be                                                               
needed.                                                                                                                         
                                                                                                                                
REPRESENTATIVE LEDOUX asked about waiting  for the EPA to approve                                                               
the change, and then ask for legislative approval.                                                                              
                                                                                                                                
MR. SEAMOUNT answered that the AOGCC is trying to be prepared.                                                                  
                                                                                                                                
REPRESENTATIVE OLSON asked the view of the North Slope Borough.                                                                 
                                                                                                                                
MR. SEAMOUNT said he didn't know.                                                                                               
                                                                                                                                
REPRESENTATIVE GATTO  asked where  the North Slope  gets drinking                                                               
water.                                                                                                                          
                                                                                                                                
MR. SEAMOUNT said from surface water.                                                                                           
                                                                                                                                
1:57:08 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE GATTO asked about  surface contamination on top of                                                               
permafrost.                                                                                                                     
                                                                                                                                
MR.   SEAMOUNT  said   he  thinks   there   is  minimal   surface                                                               
contamination through disposal operations.                                                                                      
                                                                                                                                
1:57:47 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE ELKINS  moved to  report HB  142 out  of committee                                                               
with  individual  recommendations  and  the  accompanying  fiscal                                                               
notes.   There being no objection,  HB 142 was passed  out of the                                                               
House Resources Standing Committee.                                                                                             
                                                                                                                                
ADJOURNMENT                                                                                                                   
                                                                                                                                
There being no  further business before the  committee, the House                                                               
Resources Standing  Committee meeting was adjourned  at 1:58 p.m.                                                               
1:58:58 PM                                                                                                                    

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