Legislature(2017 - 2018)BARNES 124

03/13/2017 01:00 PM RESOURCES

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Audio Topic
01:47:17 PM Start
01:48:41 PM HB111
03:21:05 PM Adjourn
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
-- Recessed to 3/14/17 at 3:00 PM --
-- Delayed to 20 Minutes Following Recess --
+= HB 111 OIL & GAS PRODUCTION TAX;PAYMENTS;CREDITS TELECONFERENCED
<Bill Held Over from 3/11/17>
-- Testimony <Invitation Only> --
+ HB 87 CONFLICT OF INTEREST: BD FISHERIES/GAME TELECONFERENCED
-- Public Testimony --
+ HJR 12 OPPOSING GEN. ENGINEERED SALMON TELECONFERENCED
-- Public Testimony --
*+ HB 32 LABEL GENETICALLY MODIFIED FOOD TELECONFERENCED
-- Public Testimony --
**Streamed live on AKL.tv**
                    ALASKA STATE LEGISLATURE                                                                                  
               HOUSE RESOURCES STANDING COMMITTEE                                                                             
                         March 13, 2017                                                                                         
                           1:47 p.m.                                                                                            
                                                                                                                                
                             DRAFT                                                                                            
                                                                                                                                
MEMBERS PRESENT                                                                                                               
                                                                                                                                
Representative Andy Josephson, Co-Chair                                                                                         
Representative Geran Tarr, Co-Chair                                                                                             
Representative Dean Westlake, Vice Chair                                                                                        
Representative Harriet Drummond                                                                                                 
Representative Justin Parish                                                                                                    
Representative Chris Birch                                                                                                      
Representative DeLena Johnson                                                                                                   
Representative George Rauscher                                                                                                  
Representative David Talerico                                                                                                   
                                                                                                                                
MEMBERS ABSENT                                                                                                                
                                                                                                                                
Representative Mike Chenault (alternate)                                                                                        
Representative Chris Tuck (alternate)                                                                                           
                                                                                                                                
COMMITTEE CALENDAR                                                                                                            
                                                                                                                                
HOUSE BILL NO. 111                                                                                                              
"An  Act  relating  to  the  oil  and  gas  production  tax,  tax                                                               
payments,  and  credits;  relating   to  interest  applicable  to                                                               
delinquent  oil and  gas  production tax;  and  providing for  an                                                               
effective date."                                                                                                                
                                                                                                                                
     - HEARD AND HELD                                                                                                           
                                                                                                                                
PREVIOUS COMMITTEE ACTION                                                                                                     
                                                                                                                                
BILL: HB 111                                                                                                                  
SHORT TITLE: OIL & GAS PRODUCTION TAX;PAYMENTS;CREDITS                                                                          
SPONSOR(s): RESOURCES                                                                                                           
                                                                                                                                
02/08/17       (H)       READ THE FIRST TIME - REFERRALS                                                                        
02/08/17       (H)       RES, FIN                                                                                               
02/08/17       (H)       TALERICO OBJECTED TO INTRODUCTION                                                                      
02/08/17       (H)       INTRODUCTION RULED IN ORDER                                                                            
02/08/17       (H)       SUSTAINED RULING OF CHAIR Y23 N15 E2                                                                   
02/08/17       (H)       RES AT 1:00 PM BARNES 124                                                                              
02/08/17       (H)       Heard & Held                                                                                           
02/08/17       (H)       MINUTE(RES)                                                                                            
02/13/17       (H)       RES AT 1:00 PM BARNES 124                                                                              
02/13/17       (H)       Heard & Held                                                                                           
02/13/17       (H)       MINUTE(RES)                                                                                            
02/17/17       (H)       RES AT 1:00 PM BARNES 124                                                                              
02/17/17       (H)       Heard & Held                                                                                           
02/17/17       (H)       MINUTE(RES)                                                                                            
02/20/17       (H)       RES AT 1:00 PM BARNES 124                                                                              
02/20/17       (H)       Heard & Held                                                                                           
02/20/17       (H)       MINUTE(RES)                                                                                            
02/22/17       (H)       RES AT 1:00 PM BARNES 124                                                                              
02/22/17       (H)       Heard & Held                                                                                           
02/22/17       (H)       MINUTE(RES)                                                                                            
02/22/17       (H)       RES AT 6:30 PM BARNES 124                                                                              
02/22/17       (H)       Heard & Held                                                                                           
02/22/17       (H)       MINUTE(RES)                                                                                            
02/24/17       (H)       RES AT 1:00 PM BARNES 124                                                                              
02/24/17       (H)       Heard & Held                                                                                           
02/24/17       (H)       MINUTE(RES)                                                                                            
02/27/17       (H)       RES AT 1:00 PM BARNES 124                                                                              
02/27/17       (H)       Heard & Held                                                                                           
02/27/17       (H)       MINUTE(RES)                                                                                            
02/27/17       (H)       RES AT 7:00 PM CAPITOL 106                                                                             
02/27/17       (H)       Heard & Held                                                                                           
02/27/17       (H)       MINUTE(RES)                                                                                            
03/01/17       (H)       RES AT 1:00 PM BARNES 124                                                                              
03/01/17       (H)       Heard & Held                                                                                           
03/01/17       (H)       MINUTE(RES)                                                                                            
03/01/17       (H)       RES AT 6:00 PM BARNES 124                                                                              
03/01/17       (H)       Heard & Held                                                                                           
03/01/17       (H)       MINUTE(RES)                                                                                            
03/06/17       (H)       RES AT 1:00 PM BARNES 124                                                                              
03/06/17       (H)       Scheduled but Not Heard                                                                                
03/06/17       (H)       RES AT 6:30 PM BARNES 124                                                                              
03/06/17       (H)       Heard & Held                                                                                           
03/06/17       (H)       MINUTE(RES)                                                                                            
03/08/17       (H)       RES AT 1:00 PM BARNES 124                                                                              
03/08/17       (H)       Heard & Held                                                                                           
03/08/17       (H)       MINUTE(RES)                                                                                            
03/08/17       (H)       RES AT 6:00 PM BARNES 124                                                                              
03/08/17       (H)       Heard & Held                                                                                           
03/08/17       (H)       MINUTE(RES)                                                                                            
03/09/17       (H)       RES AT 5:00 PM BARNES 124                                                                              
03/09/17       (H)       -- MEETING CANCELED --                                                                                 
03/10/17       (H)       RES AT 1:00 PM BARNES 124                                                                              
03/10/17       (H)       Heard & Held                                                                                           
03/10/17       (H)       MINUTE(RES)                                                                                            
03/11/17       (H)       RES AT 12:00 AM BARNES 124                                                                             
03/11/17       (H)       -- MEETING CANCELED --                                                                                 
03/13/17       (H)       RES AT 1:00 PM BARNES 124                                                                              
                                                                                                                                
WITNESS REGISTER                                                                                                              
                                                                                                                                
ED KING, Legislative Liaison                                                                                                    
Office of the Commissioner                                                                                                      
Department of Natural Resources                                                                                                 
Juneau, Alaska                                                                                                                  
POSITION   STATEMENT:      Provided   information   regarding   a                                                             
forthcoming Department  of Natural  Resources fiscal  note during                                                               
the hearing of HB 111.                                                                                                          
                                                                                                                                
                                                                                                                                
ACTION NARRATIVE                                                                                                              
                                                                                                                                
                                                                                                                                
1:47:17 PM                                                                                                                    
                                                                                                                                
                                                                                                                                
CO-CHAIR  GERAN   TARR  called   the  House   Resources  Standing                                                             
                                                                                                                                
Committee meeting  to order at  1:47 p.m.   Representatives Tarr,                                                               
                                                                                                                                
Birch, Parish,  Talerico, Rauscher, Drummond,  Johnson, Westlake,                                                               
                                                                                                                                
and Josephson were present at the call to order.                                                                                
                                                                                                                                
                                                                                                                                
        HB 111-OIL & GAS PRODUCTION TAX;PAYMENTS;CREDITS                                                                    
                                                                                                                                
                                                                                                                                
1:48:41 PM                                                                                                                    
                                                                                                                                
                                                                                                                                
CO-CHAIR TARR  announced that the  first order of  business would                                                               
                                                                                                                                
be  HOUSE BILL  NO. 111,  "An  Act relating  to the  oil and  gas                                                               
                                                                                                                                
production tax,  tax payments, and credits;  relating to interest                                                               
                                                                                                                                
applicable  to  delinquent  oil   and  gas  production  tax;  and                                                               
                                                                                                                                
providing for an effective date."   [Before the committee was the                                                               
                                                                                                                                
committee  substitute  (CS)  for  HB  111,  Version  30-LS0450\N,                                                               
                                                                                                                                
Nauman,  3/10/17,  adopted  as  a  working  document  during  the                                                               
                                                                                                                                
3/10/17 House Resources Standing Committee meeting.]                                                                            
                                                                                                                                
                                                                                                                                
1:48:45 PM                                                                                                                    
                                                                                                                                
                                                                                                                                
CO-CHAIR TARR informed the committee  that although the committee                                                               
                                                                                                                                
substitute  (CS) for  HB  111,  Version N,  was  reviewed at  the                                                               
                                                                                                                                
meeting on  3/10/17, two  issues require  further review,  one of                                                               
                                                                                                                                
which is  how the concept  of uplift  is approached in  the bill.                                                               
                                                                                                                                
She  recalled  Richard  Ruggiero, Managing  Partner,  Castle  Gap                                                               
                                                                                                                                
Advisors,  Castle   Gap  Energy  Partners,  [consultant   to  the                                                               
                                                                                                                                
Legislative Budget and Audit Committee]  had advised that because                                                               
                                                                                                                                
the state  is considering  eliminating cash  credits in  favor of                                                               
                                                                                                                                
[net operating loss  (NOL)] deductions, uplift is  a concept that                                                               
                                                                                                                                
would  level the  playing field  for  non-producers.   Currently,                                                               
                                                                                                                                
producers generally  use their  losses within  the year  in which                                                               
                                                                                                                                
they are earned because they  have a tax liability, which enables                                                               
                                                                                                                                
them  to  use 100  percent  of  their  losses against  their  tax                                                               
                                                                                                                                
liability.   However, for non-producers, from  exploration to the                                                               
                                                                                                                                
start of production  - which is an average of  seven years - non-                                                               
                                                                                                                                
producers just  accumulate losses, thus  the state is  seeking to                                                               
                                                                                                                                
"offer [non-producers] something that's attractive," she said.                                                                  
                                                                                                                                
                                                                                                                                
CO-CHAIR  TARR   directed  attention  to  a   document  entitled,                                                               
                                                                                                                                
"Comparison of  CSHB 111  with Rauscher  Amendment N.1  and N.2,"                                                               
                                                                                                                                
dated 3/9/17.  She remarked:                                                                                                    
                                                                                                                                
                                                                                                                                
     With  a  50 percent  carry  forward  [of net  operating                                                                    
                                                                                                                                
     losses (NOLs), and] with the  8 percent interest ... by                                                                    
                                                                                                                                
     year  seven,  those   individuals  have  recovered  ...                                                                    
                                                                                                                                
     basically 85  percent of the  cost.  So, it's  not [100                                                                    
                                                                                                                                
     percent] but ...  we have to keep in mind  that what we                                                                    
                                                                                                                                
     also  offer   is  the  GVR  provision,   and  so  these                                                                    
                                                                                                                                
     individuals,  who are  not  in  production, after  year                                                                    
     seven, not only  will they get to carry  forward all of                                                                    
                                                                                                                                
     those losses, but then starting  in year one, from when                                                                    
                                                                                                                                
     they  become   producers,  they   also  have   the  GVR                                                                    
                                                                                                                                
     provision.                                                                                                                 
                                                                                                                                
                                                                                                                                
CO-CHAIR TARR  cautioned that if  the state is too  generous, the                                                               
                                                                                                                                
value [of state revenue] will  be eroded; for example, [Amendment                                                               
                                                                                                                                
N.1]  allows 100  percent of  the losses  to go  forward with  10                                                               
                                                                                                                                
percent  interest, which  equates to  giving 200  percent of  the                                                               
                                                                                                                                
value  by year  seven.   That, plus  GVR provisions  and the  per                                                               
                                                                                                                                
barrel  credit, would  result in  total erosion  of value  to the                                                               
                                                                                                                                
state.    She  reminded  the  committee  that  Mr.  Ruggiero  had                                                               
                                                                                                                                
recommended  a bracketed  tax  based on  profit,  along with  the                                                               
                                                                                                                                
elimination  of   both  the  per   barrel  credit  and   the  GVR                                                               
                                                                                                                                
provisions.    However, Version  N  does  not eliminate  the  per                                                               
                                                                                                                                
barrel credit  or GVR, but  has made modest modifications  on the                                                               
                                                                                                                                
per barrel  credit.   Further, she  warned of  "how all  of these                                                               
                                                                                                                                
sort of stack  up against each other  and so that is  why we felt                                                               
                                                                                                                                
like this is  [an] appropriate way to apply  this uplift, because                                                               
                                                                                                                                
we're not, at  the same time, doing away with  the GVR provisions                                                               
                                                                                                                                
that apply once they become a producer."                                                                                        
                                                                                                                                
                                                                                                                                
1:51:57 PM                                                                                                                    
                                                                                                                                
                                                                                                                                
CO-CHAIR TARR,  continuing to  changes made in  Version N  to the                                                               
                                                                                                                                
sliding  scale of  per  barrel credit,  directed  attention to  a                                                               
                                                                                                                                
slide provided by the Tax  Division, Department of Revenue (DOR),                                                               
                                                                                                                                
entitled,  "A  Net  Profits  Tax   is  very  Volatile  to  Price"                                                               
                                                                                                                                
[included in  the committee packet]  that showed the  current tax                                                               
                                                                                                                                
rate is  35 percent, but  the effective  tax rate is  much lower.                                                               
                                                                                                                                
Version  N recognizes  that as  oil price  falls below  $50, a  4                                                               
                                                                                                                                
percent  tax with  a hard  floor would  ensure the  state retains                                                               
some  value,  and  as  oil  prices  rise  above  $50,  Version  N                                                               
                                                                                                                                
increases the  minimum tax  to 5 percent  that would  ensure some                                                               
                                                                                                                                
value to  the state when oil  prices range from about  $50 to $70                                                               
                                                                                                                                
per  barrel.   She provided  an  example based  on production  of                                                               
                                                                                                                                
500,000 barrels per day, wherein  a 12.5 percent royalty share is                                                               
                                                                                                                                
subtracted  to arrive  at  437,000 barrels,  and  that number  is                                                               
                                                                                                                                
multiplied  by 365  days to  equal 160  million barrels  produced                                                               
                                                                                                                                
annually.  Based on this scenario  the minimum tax, at 4 percent,                                                               
                                                                                                                                
with an  oil price of about  $55, results in the  state receiving                                                               
                                                                                                                                
$1.80 per barrel:                                                                                                               
                                                                                                                                
                                                                                                                                
   · $55 less $10 for transportation = $45 gross value at point                                                                 
                                                                                                                                
     of production (GVPP)                                                                                                       
                                                                                                                                
   · $45 less $30.88 for lease expenditures = $14.12 for                                                                        
                                                                                                                                
     production tax value (PTV)                                                                                                 
                                                                                                                                
   · 35 percent tax on $14.12 = $4.94                                                                                           
                                                                                                                                
   · subtract $8 per barrel credit = minimum tax zone.                                                                          
                                                                                                                                
                                                                                                                                
CO-CHAIR TARR opined  the current tax of between  9-13 percent is                                                               
                                                                                                                                
too low.   Because oil prices  are now consistently in  the "mid-                                                               
                                                                                                                                
price range," raising the minimum  tax to 5 percent of production                                                               
                                                                                                                                
tax value, although a modest  change, is crucial at the mid-price                                                               
                                                                                                                                
range per  barrel; in  fact, at  an oil price  of about  $65, the                                                               
                                                                                                                                
effective tax rate would be about 10-15 percent.                                                                                
                                                                                                                                
                                                                                                                                
CO-CHAIR  TARR, recalling  suggestions  from  the consultant  and                                                               
                                                                                                                                
others,  said, "One  of the  ways that  we can  be a  little more                                                               
                                                                                                                                
generous on the low  side is if we take a little  bit more on the                                                               
                                                                                                                                
high side."   She pointed out under the current  tax system a per                                                               
                                                                                                                                
barrel credit  is available when  oil prices are $160  per barrel                                                               
                                                                                                                                
and  above; however,  oil  prices have  never  exceeded $147  per                                                               
barrel, thus  Version N lowers  the "windfall" price to  $120 per                                                               
                                                                                                                                
barrel, and the state would  collect higher revenues [because per                                                               
                                                                                                                                
barrel credits would no longer  apply] when oil prices are around                                                               
                                                                                                                                
$120 and more.   She urged the committee to  compute the modeling                                                               
                                                                                                                                
equations on  their own,  pointing out  that the  mathematics are                                                               
                                                                                                                                
not  complicated,  and  offered  to  provide  modeling  of  lease                                                               
                                                                                                                                
expenditures  at varying  price levels.   Lease  expenditures are                                                               
                                                                                                                                
expected  to increase  with the  price of  oil as  companies will                                                               
                                                                                                                                
begin to  recover from layoffs,  and in fact,  lease expenditures                                                               
                                                                                                                                
have  decreased from  $53-$54 per  barrel  in 2015  to $40.12  in                                                               
                                                                                                                                
2016.                                                                                                                           
                                                                                                                                
                                                                                                                                
CO-CHAIR TARR said an understanding  of the economics of oilfield                                                               
                                                                                                                                
operations  provides a  clear understanding  of  why a  discovery                                                               
                                                                                                                                
like  Smith Bay  will  not be  developed -  until  oil price  per                                                               
                                                                                                                                
barrel   increases   substantially   to  offset   the   cost   of                                                               
                                                                                                                                
development.   She concluded that  the changes made in  Version N                                                               
                                                                                                                                
are modest  and address  the current  low oil  price environment.                                                               
                                                                                                                                
Further,  although infrastructure  depreciates, Version  N allows                                                               
                                                                                                                                
100  percent of  the  value  of a  loss  to  be carried  forward,                                                               
                                                                                                                                
without  depreciation, thus  there is  generosity built  into the                                                               
                                                                                                                                
proposed legislation.                                                                                                           
                                                                                                                                
                                                                                                                                
1:59:39 PM                                                                                                                    
                                                                                                                                
                                                                                                                                
REPRESENTATIVE  JOHNSON referred  to the  recent Armstrong/Repsol                                                               
                                                                                                                                
discovery  and  asked  whether its  announcement  is  a  positive                                                               
                                                                                                                                
indication of how  the current tax policy is working.   She said,                                                               
                                                                                                                                
"Did that change your view on [HB 111] at all?"                                                                                 
                                                                                                                                
                                                                                                                                
CO-CHAIR TARR urged  further discussion about the  amount of loss                                                               
                                                                                                                                
the proposed  legislation allows  to be  carried forward  and how                                                               
much of the  value would be recovered.  She  stressed that [carry                                                               
                                                                                                                                
forward  losses]  are  allowed  for  the  first  seven  years  of                                                               
                                                                                                                                
development, and GVR provisions extend  further to seven years of                                                               
                                                                                                                                
production, therefore,  during the first fourteen  years of work,                                                               
                                                                                                                                
the state would be providing  very attractive opportunities.  And                                                               
                                                                                                                                
so, if  the state  is more generous,  announcements of  new finds                                                               
                                                                                                                                
will  not generate  "much  of  excitement for  the  state."   The                                                               
                                                                                                                                
consultant  suggested  if  the state  allows  100  percent  carry                                                               
                                                                                                                                
forward losses,  it should  eliminate GVR  and per  barrel credit                                                               
                                                                                                                                
because without  eliminating GVR and  per barrel credit,  the tax                                                               
                                                                                                                                
system leads to  "stackable credits"; for example,  at Smith Bay,                                                               
                                                                                                                                
stackable  credits  have  meant  that the  state  will  cover  85                                                               
                                                                                                                                
percent  of  the  work  conducted  thus far  at  Smith  Bay  -  a                                                               
                                                                                                                                
generosity  she opined  the  state  can no  longer  afford.   The                                                               
                                                                                                                                
preapproval provision  of the bill  will also allow the  state to                                                               
                                                                                                                                
have a better  handle on costs.  Co-Chair Tarr  stressed that the                                                               
                                                                                                                                
proposed legislation does  not change from a  net profits system,                                                               
                                                                                                                                
and will continue to recognize  the recovery of costs through net                                                               
                                                                                                                                
profits, as  well as  carry forward losses,  GVR, and  per barrel                                                               
                                                                                                                                
credits, a  system which she  characterized as generosity  on the                                                               
                                                                                                                                
part of  the state  and/or opportunities for  the industry.   She                                                               
                                                                                                                                
compared the  find at Smith  Bay, which is distant  from existing                                                               
                                                                                                                                
infrastructure,  to  the  Point  Thomson  development,  noting  a                                                               
                                                                                                                                
larger  diameter  pipeline  transporting  oil 124  miles  to  the                                                               
                                                                                                                                
Trans-Alaska Pipeline  System (TAPS)  would be prohibitive  at an                                                               
                                                                                                                                
oil price of $55 per barrel, and  said, "If the state is going to                                                               
                                                                                                                                
be  sort  of a  co-investor  by  allowing  these expenses  to  be                                                               
                                                                                                                                
deducted, I think  we want to be as strategic  as possible [with]                                                               
                                                                                                                                
the dollars that the state invests."                                                                                            
                                                                                                                                
                                                                                                                                
2:03:04 PM                                                                                                                    
                                                                                                                                
                                                                                                                                
REPRESENTATIVE  RAUSCHER,  referred  to [Version  N,  Section  26                                                               
                                                                                                                                
subsection (n)] that directs the  Department of Natural Resources                                                               
                                                                                                                                
(DNR)  to preapprove  costs that  will generate  a carry  forward                                                               
                                                                                                                                
annual loss, and asked how that provision will work.                                                                            
                                                                                                                                
                                                                                                                                
CO-CHAIR TARR responded that currently  a plan of development and                                                               
                                                                                                                                
a plan  of production are  submitted to  DNR, albeit late  in the                                                               
                                                                                                                                
process of developing  a project.  The proposed  bill directs DNR                                                               
                                                                                                                                
to  prepare draft  regulations [for  a  preapproval process],  on                                                               
                                                                                                                                
which  the  public,  stakeholders,  and industry  would  have  an                                                               
                                                                                                                                
opportunity  to  comment.   She  acknowledged  industry is  well-                                                               
                                                                                                                                
suited  to  participate  in the  adoption  of  said  regulations.                                                               
                                                                                                                                
Testimony by  Mr. Ruggiero touted  the benefit to all  parties of                                                               
                                                                                                                                
multiple  and timely  contacts with  the governmental  regime, in                                                               
                                                                                                                                
order to offer  incentives and provide oversight  to ensure every                                                               
                                                                                                                                
dollar is spent in a strategic manner.                                                                                          
                                                                                                                                
                                                                                                                                
REPRESENTATIVE RAUSCHER  pointed out this  is not a role  DNR has                                                               
                                                                                                                                
accepted in the past.                                                                                                           
                                                                                                                                
                                                                                                                                
CO-CHAIR  TARR   reported  that   representatives  of   DNR  have                                                               
                                                                                                                                
expressed interest  in having better oversight  because the state                                                               
                                                                                                                                
has no  ability to  "turn down  the work  once it  has happened."                                                               
                                                                                                                                
For example, if  a project does not stay on  schedule due to poor                                                               
                                                                                                                                
management,  the project  may be  delayed.   If DNR  participates                                                               
                                                                                                                                
earlier in the  development of a project, a delay  may be avoided                                                               
                                                                                                                                
and additional expenses  - to the state as  co-investor - avoided                                                               
                                                                                                                                
also.    Further,  DNR  may   choose  to  prioritize  nearer-term                                                               
                                                                                                                                
projects over distant projects.                                                                                                 
                                                                                                                                
                                                                                                                                
REPRESENTATIVE RAUSCHER suggested that  the committee should have                                                               
                                                                                                                                
an  opportunity  to  question DNR  directly  on  this  provision;                                                               
furthermore, if DNR is going  to accept this responsibility, then                                                               
                                                                                                                                
an  additional  fiscal  note  from  DNR may  be  warranted.    He                                                               
                                                                                                                                
cautioned there  would be costs  borne by DNR and  the Department                                                               
                                                                                                                                
of Revenue (DOR).                                                                                                               
                                                                                                                                
                                                                                                                                
CO-CHAIR TARR  said DOR  would continue  to receive  tax payments                                                               
                                                                                                                                
from   industry,   but   the  review   process   would   be   the                                                               
                                                                                                                                
responsibility of DNR.   She restated when  the draft regulations                                                               
                                                                                                                                
related  to the  review process  go out  for public  comment, the                                                               
                                                                                                                                
industry  will have  an opportunity  to comment  on how  specific                                                               
                                                                                                                                
companies  are affected.    Additional staffing  at  DNR was  not                                                               
                                                                                                                                
discussed, she recalled, and she agreed  that it would be good to                                                               
                                                                                                                                
have   the  department   respond  to   Representative  Rauscher's                                                               
                                                                                                                                
question.                                                                                                                       
                                                                                                                                
                                                                                                                                
REPRESENTATIVE  RAUSCHER further  questioned whether  DOR or  DNR                                                               
                                                                                                                                
has control over the allowable lease expenses.                                                                                  
                                                                                                                                
                                                                                                                                
CO-CHAIR TARR  responded that currently, nobody  has control over                                                               
                                                                                                                                
allowable   lease  expenditures.      In   further  response   to                                                               
                                                                                                                                
Representative Rauscher, she  said Version N would  direct DNR to                                                               
                                                                                                                                
develop regulations  and create a  standard system of  review for                                                               
                                                                                                                                
all  companies to  follow.   She  suggested the  review could  be                                                               
                                                                                                                                
informal or not, and guided by industry.                                                                                        
                                                                                                                                
                                                                                                                                
REPRESENTATIVE  RAUSCHER  asked  whether   a  taxpayer  would  be                                                               
                                                                                                                                
required  to  submit  an annual  lease  expenditure  estimate  on                                                               
                                                                                                                                
January 1, of each year, to get preapproval.                                                                                    
                                                                                                                                
                                                                                                                                
CO-CHAIR TARR said  that has not been determined  yet because the                                                               
                                                                                                                                
bill directs  DNR to develop regulations  through the established                                                               
                                                                                                                                
public process, which would involve industry participation.                                                                     
                                                                                                                                
                                                                                                                                
REPRESENTATIVE RAUSCHER  queried what  the consequences  would be                                                               
                                                                                                                                
if the taxpayers erred in their estimates.                                                                                      
                                                                                                                                
                                                                                                                                
CO-CHAIR TARR stated  the bill does not  propose punitive action;                                                               
                                                                                                                                
however,  the  provision  may  provide  DNR  the  opportunity  to                                                               
                                                                                                                                
identify and correct overspending.                                                                                              
                                                                                                                                
                                                                                                                                
REPRESENTATIVE  RAUSCHER predicted  that auditing  procedures may                                                               
                                                                                                                                
be challenging, duplicative, and expensive.                                                                                     
                                                                                                                                
                                                                                                                                
CO-CHAIR TARR clarified that DOR  is involved in a project "after                                                               
                                                                                                                                
the  spending has  taken  place," at  taxpayer  filing, and  this                                                               
                                                                                                                                
provision under  discussion would  provide an earlier  and better                                                               
                                                                                                                                
understanding of a project.                                                                                                     
                                                                                                                                
                                                                                                                                
2:14:03 PM                                                                                                                    
                                                                                                                                
                                                                                                                                
The committee took an at-ease from 2:14 p.m. to 2:19 p.m.                                                                       
                                                                                                                                
                                                                                                                                
2:19:34 PM                                                                                                                    
                                                                                                                                
                                                                                                                                
CO-CHAIR JOSEPHSON commented that when  Senate Bill 21 [passed in                                                               
                                                                                                                                
the  Twenty-Eighth Alaska  State Legislature]  was enacted  there                                                               
                                                                                                                                
was  the belief  that the  legislation created  a 4  percent hard                                                               
                                                                                                                                
floor; in fact, that does not exist.                                                                                            
                                                                                                                                
                                                                                                                                
[Due  to   technical  difficulties  the  remainder   of  Co-Chair                                                               
                                                                                                                                
Josephson's comments were not recorded  and the committee took an                                                               
                                                                                                                                
at-ease from 2:20 p.m. to 2:34 p.m. to relocate to Room 106.]                                                                   
                                                                                                                                
                                                                                                                                
2:34:17 PM                                                                                                                    
                                                                                                                                
                                                                                                                                
CO-CHAIR TARR called the House  Resources Standing Committee back                                                               
                                                                                                                                
to order.                                                                                                                       
                                                                                                                                
                                                                                                                                
CO-CHAIR JOSEPHSON recalled  that in early February  of last year                                                               
                                                                                                                                
the  legislature  learned  that the  credits,  particularly  when                                                               
                                                                                                                                
stacked  - and  in  a  low-price environment  -  could bring  the                                                               
                                                                                                                                
taxable  value  beneath  zero,   which  was  cause  for  concern.                                                               
                                                                                                                                
Further,  media   accounts  at  the  time   suggested  that  this                                                               
                                                                                                                                
consequence  of Senate  Bill 21  was  neither well-understood  by                                                               
                                                                                                                                
all, nor  had it  been sufficiently vetted  by either  chamber in                                                               
                                                                                                                                
2013.   He  acknowledged this  concern was  somewhat remedied  in                                                               
                                                                                                                                
House  Bill   247  [passed  in  the   Twenty-Ninth  Alaska  State                                                               
                                                                                                                                
Legislature].      The   proposed   provision   directing   DNR's                                                               
                                                                                                                                
involvement  [by preapproval  of an  oil and  gas project]  is in                                                               
                                                                                                                                
response  to the  belief  that  the public  is  entitled to  more                                                               
                                                                                                                                
information  about the  investments  Alaska has  made.   Although                                                               
                                                                                                                                
under  Version  N, those  investments  would  no longer  be  cash                                                               
                                                                                                                                
investments, the public is still  entitled to be informed because                                                               
                                                                                                                                
deductions are  taken against  tax liability,  and there  are net                                                               
                                                                                                                                
operating  losses  [both  resulting  in the  reduction  of  state                                                               
                                                                                                                                
revenue].   Co-Chair Josephson opined, due  to the aforementioned                                                               
                                                                                                                                
circumstances,  preapproval by  DNR is  warranted.   In addition,                                                               
                                                                                                                                
when operators  make a  decision to invest  in an  oilfield, they                                                               
                                                                                                                                
have already achieved their company's  internal approval, and the                                                               
                                                                                                                                
public  is  entitled  to know  and  understand  said  investments                                                               
                                                                                                                                
through   their  elected   officials.     This  is   particularly                                                               
                                                                                                                                
appropriate to ensure  against ring fencing, when  a company uses                                                               
                                                                                                                                
a  single unprofitable  location to  make itself  unprofitable in                                                               
                                                                                                                                
toto.                                                                                                                           
                                                                                                                                
                                                                                                                                
2:37:41 PM                                                                                                                    
                                                                                                                                
                                                                                                                                
REPRESENTATIVE BIRCH  posed the question of  whether the proposed                                                               
                                                                                                                                
legislation would attract investment  and exploration in order to                                                               
                                                                                                                                
put more oil in  TAPS.  He asserted that a  [page from the fiscal                                                               
                                                                                                                                
note, titled "Provisions in CSHB  111 (RES)\N and their Estimated                                                               
                                                                                                                                
Fiscal  Impact based  on Fall  2016 Forecast  ($millions) -  Fall                                                               
                                                                                                                                
2016  FC  PRICE,"  revised  3/13/17   by  DOR,  included  in  the                                                               
                                                                                                                                
committee  packet] attached  to  [Version N]  shows $190  million                                                               
                                                                                                                                
added in  expense to the  industry by  fiscal year 2020  (FY 20).                                                               
                                                                                                                                
Furthermore,  state   royalty  share   has  been  "lost   in  the                                                               
                                                                                                                                
discussion,"  and  more  information  is  also  needed  from  DNR                                                               
                                                                                                                                
related to Version  N.  Representative Birch  noted [the recently                                                               
                                                                                                                                
announced discovery at Smith Bay  by Armstrong and Repsol that is                                                               
                                                                                                                                
projected to  produce] 120,000  barrels per  day, at  a one-sixth                                                               
                                                                                                                                
royalty share,  would yield about  20,000 barrels of oil  per day                                                               
                                                                                                                                
for Alaska;  at $50  per barrel, this  one discovery  would bring                                                               
                                                                                                                                
the state  about $1 million  per day  - and between  $300 million                                                               
                                                                                                                                
and $400  million per year  - in  royalty.  He  cautioned against                                                               
                                                                                                                                
legislators  dismissing royalty  share,  but instead  to do  what                                                               
                                                                                                                                
they  can to  attract investment,  put oil  in TAPS,  and fulfill                                                               
                                                                                                                                
their fiduciary  responsibility to  the favorable  development of                                                               
                                                                                                                                
Alaska's resources.  Representative Birch  said, "I think we need                                                               
                                                                                                                                
to take  a real hard  look at,  if adding another  couple hundred                                                               
                                                                                                                                
million  a  year  in  cost  is  going  to  attract  the  kind  of                                                               
                                                                                                                                
investment that we  need to realize our oil and  gas potential in                                                               
                                                                                                                                
this state."                                                                                                                    
                                                                                                                                
                                                                                                                                
2:39:52 PM                                                                                                                    
                                                                                                                                
                                                                                                                                
REPRESENTATIVE  PARISH  declared  that  before he  became  an  85                                                               
                                                                                                                                
percent  investor,  he would  need  to  know  the nature  of  the                                                               
                                                                                                                                
investment and  the likelihood of  it paying  off in the  near or                                                               
distant  future.    He  opined that  under  the  current  system,                                                               
                                                                                                                                
legislators do not have that  assurance or the necessary level of                                                               
                                                                                                                                
oversight on their investments;  in fact, subsidizing behavior at                                                               
                                                                                                                                
85 percent skews behavior and  encourages behaviors which may not                                                               
                                                                                                                                
be economical or  rational in the absence of  a generous subsidy.                                                               
                                                                                                                                
He expressed his hope that  through the proposed legislation, DNR                                                               
                                                                                                                                
would  provide  the  needed  oversight.    Representative  Parish                                                               
                                                                                                                                
expressed his  support for the  bill, and reminded  the committee                                                               
                                                                                                                                
that the  initial development  of the  North Slope  oilfields was                                                               
                                                                                                                                
not subsidized.                                                                                                                 
                                                                                                                                
                                                                                                                                
2:42:00 PM                                                                                                                    
                                                                                                                                
                                                                                                                                
REPRESENTATIVE  TALERICO questioned  accuracy of  the 85  percent                                                               
                                                                                                                                
figure mentioned  by Representative  Parish, except in  regard to                                                               
                                                                                                                                
the tax  system currently in place  in Cook Inlet, which  will be                                                               
                                                                                                                                
reduced by  50 percent  on July 1,  and eliminated  completely on                                                               
                                                                                                                                
July 1, 2018, as a result of  House Bill 247; on the North Slope,                                                               
                                                                                                                                
the state's  level of investment does  not reach 85 percent.   He                                                               
                                                                                                                                
stated his biggest  concern is regarding throughput:   in January                                                               
                                                                                                                                
throughput was  about 554,000 barrels  per day, and  in February,                                                               
                                                                                                                                
was about  553,000 barrels per day.   Even with low  prices, this                                                               
                                                                                                                                
year and  last, Alaska  has seen an  increase in  throughput, and                                                               
                                                                                                                                
the trend is  for throughput to continue to rise.   He said, "...                                                               
                                                                                                                                
I think  [it's] really  important that  we've had  this increased                                                               
                                                                                                                                
throughput  which, of  course, is  good  for the  coffers of  the                                                               
                                                                                                                                
State of Alaska,  because we do ... well off  of royalty, royalty                                                               
                                                                                                                                
is a  thing that ... we  obviously felt that we  needed and we've                                                               
                                                                                                                                
always been  able to  collect, and the  more throughput  there is                                                               
                                                                                                                                
the more  oil there is  for the State of  Alaska."  He  turned to                                                               
                                                                                                                                
the  issue of  tax credits,  and said  last year  the legislature                                                               
                                                                                                                                
recognized  that Cook  Inlet tax  credits represented  about $411                                                               
million  of the  total $648  million  in tax  credits, and  since                                                               
                                                                                                                                
Alaska's  take from  Cook Inlet  is  nothing like  that from  the                                                               
                                                                                                                                
North  Slope, the  legislature addressed  the Cook  Inlet credits                                                               
                                                                                                                                
through House Bill 247.  The  provisions of House Bill 247 affect                                                               
                                                                                                                                
some companies  adversely, yet it provides  a transitional period                                                               
                                                                                                                                
so that companies can adjust to  the new provisions.  He stressed                                                               
                                                                                                                                
that  although provisions  in House  Bill  247 have  yet to  take                                                               
                                                                                                                                
effect, the  legislature is  discussing more  changes to  the tax                                                               
                                                                                                                                
regime.  Representative Talerico referred  to a graph - presented                                                               
                                                                                                                                
during  testimony  on  other   proposed  legislation  related  to                                                               
                                                                                                                                
production tax - which showed  that an increase in production tax                                                               
                                                                                                                                
would result in  a $25 million deficit;  however, projections for                                                               
                                                                                                                                
House Bill  247 indicate that  the following year there  would be                                                               
                                                                                                                                
production tax revenue in the  amount of $110 million, increasing                                                               
                                                                                                                                
to  $136 million  the  next  year [document  not  provided].   He                                                               
                                                                                                                                
opined House Bill 247 has put  Alaska on the right track for more                                                               
                                                                                                                                
production and  revenue - and  industry agrees - as  evidenced by                                                               
                                                                                                                                
more  production.     He   cautioned  legislative   actions  that                                                               
                                                                                                                                
unnecessarily  decrease  throughput  would  be  a  disservice  to                                                               
                                                                                                                                
Alaska.  Throughput in TAPS is  key, and he reiterated that House                                                               
                                                                                                                                
Bill 247  should be allowed to  take effect - the  current system                                                               
                                                                                                                                
will work.  He observed that it  is a matter of record that a few                                                               
                                                                                                                                
more people oppose the proposed  legislation than support it, and                                                               
                                                                                                                                
restated  his concerns  about  losing  both increased  production                                                               
                                                                                                                                
through TAPS and the current [improved] investment climate.                                                                     
                                                                                                                                
                                                                                                                                
2:46:55 PM                                                                                                                    
                                                                                                                                
                                                                                                                                
CO-CHAIR TARR  agreed that Alaska  wants to remain  an attractive                                                               
                                                                                                                                
place for  investment and to  increase the amount of  oil flowing                                                               
                                                                                                                                
into TAPS.  She  said Version N does not address  Cook Inlet - in                                                               
                                                                                                                                
part because  House Bill 247 does  so - but it  would establish a                                                               
Cook Inlet working  group to adjust the provisions  of House Bill                                                               
                                                                                                                                
247  that are  related to  oil tax,  as more  information becomes                                                               
                                                                                                                                
available.   Further,  establishing the  working group  now would                                                               
                                                                                                                                
ensure that the opportunity for recovering costs is addressed.                                                                  
                                                                                                                                
                                                                                                                                
CO-CHAIR  TARR, in  response to  Representative Birch's  previous                                                               
                                                                                                                                
comment on the aforementioned fiscal  note, directed attention to                                                               
                                                                                                                                
line D, under  "Total Revenue Impact," which  read "Budget impact                                                               
                                                                                                                                
of no cash  repurchase for net NOL credits  earned after 1/1/18."                                                               
                                                                                                                                
She said  that the fiscal  note shows that after  1/1/18, credits                                                               
                                                                                                                                
owed by  the state would  not be paid by  a check, but  are "just                                                               
                                                                                                                                
being  shifted to  the ...  revenue  side of  things, when  those                                                               
                                                                                                                                
people become  producers, and will  have reduced revenue."   Thus                                                               
                                                                                                                                
the  state's investment  is "realized  on the  other side  of the                                                               
                                                                                                                                
equation."  For example, the only  benefit to the state was shown                                                               
                                                                                                                                
on line 3  of the fiscal note, under  "Description of Provision,"                                                               
                                                                                                                                
which read "Minimum tax increased to  5% of GVPP at prices of $50                                                               
                                                                                                                                
and above ...,"  and for FY 18 the benefit  would be $20 million,                                                               
                                                                                                                                
which is a reduction from the original version of the bill.                                                                     
                                                                                                                                
                                                                                                                                
REPRESENTATIVE  BIRCH returned  attention  to the  aforementioned                                                               
                                                                                                                                
fiscal note on the line "Total  Fiscal Impact - (does not include                                                               
                                                                                                                                
potential changes in  investment)" and said the impact  for FY 20                                                               
                                                                                                                                
is $190  million.  He  asked if  the $190 million  signifies $190                                                               
                                                                                                                                
million more [emphasis on "more"] that the state would take.                                                                    
                                                                                                                                
                                                                                                                                
CO-CHAIR TARR  answered that on  the aforementioned  fiscal note,                                                               
                                                                                                                                
the amount for  FY 20 on line "Total Revenue  Impact" is added to                                                               
                                                                                                                                
the amount  for FY  20 on  the line "Total  Budget Impact":   $60                                                               
                                                                                                                                
million  plus $130  million equals  $190 million,  therefore, the                                                               
                                                                                                                                
substantial portion  of the $190  million comes in  "Total Budget                                                               
                                                                                                                                
Impact."  She continued as follows:                                                                                             
                                                                                                                                
                                                                                                                                
     And so, a  big portion of that ... where  we save money                                                                    
                                                                                                                                
     is by not writing the checks.   So, we won't be writing                                                                    
                                                                                                                                
     the checks;  however, when  they become  producers ...,                                                                    
                                                                                                                                
     it'll  become  reflected  in  reduced  revenue  to  the                                                                    
                                                                                                                                
     state, as  is the  case with the  big three  right now,                                                                    
                                                                                                                                
     that, as  taxpayers generally use  their losses  in the                                                                    
                                                                                                                                
     same year that they were earned.                                                                                           
                                                                                                                                
                                                                                                                                
REPRESENTATIVE BIRCH pointed out the  fiscal note shows an upward                                                               
                                                                                                                                
trend  to a  total fiscal  impact of  $260 million  in 2027.   He                                                               
                                                                                                                                
asked for confirmation  that this would be  additional revenue to                                                               
                                                                                                                                
the state over and above existing revenue.                                                                                      
                                                                                                                                
                                                                                                                                
CO-CHAIR TARR  answered, "Yes  and no."   She explained  that the                                                               
                                                                                                                                
revenue  - new  money coming  into the  state -  is shown  in the                                                               
                                                                                                                                
upper portion of the fiscal  note [Description of Provision]; the                                                               
                                                                                                                                
bottom half  [Total Revenue Impact]  shows "the budget  impact of                                                               
                                                                                                                                
us not paying out money."  She continued as follows:                                                                            
                                                                                                                                
                                                                                                                                
     It's just  a little  bit different,  in that  we're not                                                                    
                                                                                                                                
     writing  a check;  we're saying:   "Carry  forward your                                                                    
                                                                                                                                
     losses.   Once you become  a producer, that  money will                                                                    
                                                                                                                                
     be deducted  from your taxes."   So ...  whenever those                                                                    
                                                                                                                                
     companies  become  producers,  we'll  see  that  dollar                                                                    
                                                                                                                                
     amount shown as  a reduction in their  tax liability to                                                                    
                                                                                                                                
     the state.   So, not new dollars coming in,  but us not                                                                    
                                                                                                                                
     paying dollars out.                                                                                                        
                                                                                                                                
                                                                                                                                
CO-CHAIR TARR invited amendments for consideration.                                                                             
                                                                                                                                
                                                                                                                                
2:52:11 PM                                                                                                                    
                                                                                                                                
                                                                                                                                
REPRESENTATIVE RAUSCHER moved to adopt Amendment 1, labeled 30-                                                                 
                                                                                                                                
LS0450\N.3, Shutts/Nauman, 3/13/17, which read:                                                                                 
                                                                                                                                
                                                                                                                                
     Page 1, lines 1 - 7:                                                                                                       
                                                                                                                                
          Delete all material and insert:                                                                                       
                                                                                                                                
          ""An Act relating to the interest applicable to                                                                     
                                                                                                                                
     delinquent oil and gas production  tax; relating to the                                                                  
                                                                                                                                
     net  operating  loss credit  against  the  oil and  gas                                                                  
                                                                                                                                
     production   tax;  relating   to  lease   expenditures;                                                                  
                                                                                                                                
     creating a  credit against the  oil and  gas production                                                                  
                                                                                                                                
     tax  for certain  exploration  activity; and  providing                                                                  
                                                                                                                                
     for an effective date.""                                                                                                 
                                                                                                                                
                                                                                                                                
     Page 1, lines 9 - 13:                                                                                                      
                                                                                                                                
          Delete all material.                                                                                                  
                                                                                                                                
                                                                                                                                
     Page 2, line 2:                                                                                                            
                                                                                                                                
          Delete "Sec. 2"                                                                                                     
                                                                                                                                
          Insert "Section 1"                                                                                                  
                                                                                                                                
                                                                                                                                
     Renumber the following bill sections accordingly.                                                                          
                                                                                                                                
                                                                                                                                
     Page 2, line 27, through page 15, line 31:                                                                                 
                                                                                                                                
          Delete all material.                                                                                                  
                                                                                                                                
                                                                                                                                
     Renumber the following bill sections accordingly.                                                                          
                                                                                                                                
                                                                                                                                
     Page 17, line 4, through page 19, line 17:                                                                                 
                                                                                                                                
          Delete all material.                                                                                                  
                                                                                                                                
                                                                                                                                
     Renumber the following bill sections accordingly.                                                                          
                                                                                                                                
                                                                                                                                
     Page 19, lines 22 - 30:                                                                                                    
                                                                                                                                
          Delete all material.                                                                                                  
                                                                                                                                
                                                                                                                                
     Renumber the following bill sections accordingly.                                                                          
                                                                                                                                
                                                                                                                                
     Page 20, line 13, through page 23, line 31:                                                                                
                                                                                                                                
          Delete all material.                                                                                                  
                                                                                                                                
                                                                                                                                
     Renumber the following bill sections accordingly.                                                                          
                                                                                                                                
                                                                                                                              
                                                                                                                                
     Page 24, line 24, through page 25, line 2:                                                                                 
                                                                                                                                
          Delete all material and insert:                                                                                       
                                                                                                                                
               "(3)  lease expenditures, as adjusted under                                                                  
                                                                                                                                
     (m) of this section, that                                                                                              
                                                                                                                                
               (A)  met the requirements of AS 43.55.160(e)                                                                 
                                                                                                                                
     in the year that the lease expenditures were incurred;                                                                 
                                                                                                                                
               (B) were deductible in the immediately                                                                       
                                                                                                                                
     preceding 10 calendar years, not counting the year in                                                                  
                                                                                                                                
     which the expenditure was incurred;                                                                                    
                                                                                                                                
               (C)  have not been deducted in the                                                                           
                                                                                                                                
      determination of the production tax value of oil and                                                                  
                                                                                                                                
     gas under AS 43.55.160(a) in a previous calendar year;                                                                 
                                                                                                                                
               (D)  were not the basis of a credit under                                                                    
                                                                                                                                
     this title; and                                                                                                        
                                                                                                                                
               (E) were incurred to explore for, develop,                                                                   
                                                                                                                                
      or produce an oil or gas deposit located north of 68                                                                  
                                                                                                                                
     degrees North latitude."                                                                                               
                                                                                                                                
                                                                                                                              
                                                                                                                                
     Page 25, lines 3 - 23:                                                                                                     
                                                                                                                                
          Delete all material and insert:                                                                                       
        "* Sec. 6.  AS 43.55.165 is amended by  adding a new                                                                
                                                                                                                                
     subsection to read:                                                                                                        
                                                                                                                                
                                                                                                                                
          (m)  A loss carried forward under (a)(3) of this                                                                      
                                                                                                                                
     section  shall  increase  in  value at  a  rate  of  10                                                                    
                                                                                                                                
     percent,  compounded  annually.  An increase  in  value                                                                    
                                                                                                                                
     under this subsection begins to  accrue on January 1 of                                                                    
                                                                                                                                
     the  calendar year  immediately following  the calendar                                                                    
                                                                                                                                
     year  in  which the  loss  was  accrued and  no  longer                                                                    
                                                                                                                                
     accrues   on   December 31   of   the   calendar   year                                                                    
                                                                                                                                
     immediately  preceding the  calendar  year  in which  a                                                                    
                                                                                                                                
     carried-forward  annual loss  is applied.  The increase                                                                    
                                                                                                                                
     in  value accrued  under this  subsection has  no value                                                                    
                                                                                                                                
     except  as  applied in  this  section.  An increase  in                                                                    
                                                                                                                                
     value may not accrue                                                                                                       
                                                                                                                                
               (1)  for a partial calendar year;                                                                                
                                                                                                                                
               (2)  for more than 10 calendar years,                                                                            
                                                                                                                                
     consecutive or nonconsecutive; or                                                                                          
                                                                                                                                
               (3)  on a loss carried forward by a producer                                                                     
                                                                                                                                
     whose average amount of oil  and gas produced a day and                                                                    
                                                                                                                                
     taxable under  AS 43.55.011(e) is more than  50,000 BTU                                                                    
                                                                                                                                
     equivalent barrels  during the  calendar year  that the                                                                    
                                                                                                                                
     loss was accrued."                                                                                                         
                                                                                                                                
                                                                                                                                
     Page 25, line 24:                                                                                                          
                                                                                                                                
          Delete "and 43.55.029 are"                                                                                            
                                                                                                                                
          Insert "is"                                                                                                           
                                                                                                                                
                                                                                                                                
     Page 25, line 25, through page 28, line 12:                                                                                
                                                                                                                                
          Delete all material and insert:                                                                                       
                                                                                                                                
        "*  Sec.  8. The  uncodified  law  of the  State  of                                                                
                                                                                                                                
     Alaska is amended by adding a new section to read:                                                                         
          APPLICABILITY. (a) AS 43.55.023(b), as amended by                                                                     
                                                                                                                                
       sec. 2 of this Act, applies to lease expenditures                                                                        
                                                                                                                                
      incurred on or after the effective date of sec. 2 of                                                                      
                                                                                                                                
     this Act.                                                                                                                  
                                                                                                                                
          (b)  AS 43.55.165(a)(3) and 43.55.165(m), added                                                                       
                                                                                                                                
         by secs. 5 and 6 of this Act, apply to a lease                                                                         
                                                                                                                                
     expenditure incurred on or after the effective date of                                                                     
                                                                                                                                
     secs. 5 and 6 of this Act."                                                                                                
                                                                                                                                
                                                                                                                                
     Renumber the following bill sections accordingly.                                                                          
                                                                                                                                
                                                                                                                                
     Page 28, line 15:                                                                                                          
                                                                                                                                
          Delete "Section 2"                                                                                                    
                                                                                                                                
          Insert "Section 1"                                                                                                    
                                                                                                                                
                                                                                                                                
     Page 28, line 16:                                                                                                          
                                                                                                                                
          Delete "Sections 1, 2, 28, and 33"                                                                                    
                                                                                                                                
          Insert "Sections 1 and 9"                                                                                             
                                                                                                                                
                                                                                                                                
     Page 28, line 18:                                                                                                          
                                                                                                                                
          Delete "sec. 34"                                                                                                      
                                                                                                                                
     Insert "sec. 10"                                                                                                           
                                                                                                                                
                                                                                                                                
2:52:16 PM                                                                                                                    
                                                                                                                                
                                                                                                                                
CO-CHAIR TARR objected for discussion purposes.                                                                                 
                                                                                                                                
                                                                                                                                
REPRESENTATIVE  RAUSCHER spoke  to  Amendment 1.   He  reiterated                                                               
                                                                                                                                
that there has  been an increase in activity on  the North Slope,                                                               
                                                                                                                                
which  has led  to  finds; there  has also  been  an increase  in                                                               
                                                                                                                                
exploration.  Further, there has  been greater trust in the State                                                               
                                                                                                                                
of Alaska by  producers who are putting a  considerable amount of                                                               
money into  finding and extracting  oil.   A concern is  that the                                                               
                                                                                                                                
new  trust and  momentum could  be lost.   He  said the  proposed                                                               
                                                                                                                                
bill, as  written, is not  friendly to producers, so  Amendment 1                                                               
                                                                                                                                
would  delete  "the  lion's  share  of  the  bill,"  leaving  the                                                               
                                                                                                                                
sections that address  dry hole credits and  carry forward losses                                                               
                                                                                                                                
- the former unchanged and the  latter changed from 50 percent as                                                               
                                                                                                                                
proposed in  Version N to 100  percent.  He recalled  the state's                                                               
                                                                                                                                
consultant, Rich Ruggiero, said that  unless the state allows for                                                               
                                                                                                                                
100  percent of  the development  costs to  be recovered,  Alaska                                                               
                                                                                                                                
would be  "at the bottom of  the list globally, in  this regard,"                                                               
                                                                                                                                
and it would  be irresponsible for the legislature  to allow that                                                               
                                                                                                                                
to happen.   The amendment also changes uplift from  7 percent to                                                               
                                                                                                                                
10 percent, extends the period  of carry forwards and uplift from                                                               
                                                                                                                                
seven  to ten  years,  and leaves  in place  the  portion of  the                                                               
                                                                                                                                
current tax  structure that is  working and that has  resulted in                                                               
                                                                                                                                
greater   investment,  major   new  discoveries,   and  increased                                                               
                                                                                                                                
throughput  in TAPS.   Representative  Rauscher said  he did  not                                                               
                                                                                                                                
understand  how 50  percent carry  forward losses  and 7  percent                                                               
                                                                                                                                
uplift  could equal  a 100  percent  return on  loss, because  he                                                               
                                                                                                                                
calculated only  80 percent.   He urged the committee  to support                                                               
                                                                                                                                
Amendment 1.                                                                                                                    
                                                                                                                                
                                                                                                                                
CO-CHAIR TARR responded:                                                                                                        
                                                                                                                                
                                                                                                                                
     It is about  85 percent, and that's  what the left-hand                                                                    
                                                                                                                                
     column of  the [comparison]  shows that ...  the reason                                                                    
                                                                                                                                
     we used  that amount for  the uplift is that  is linked                                                                    
                                                                                                                                
     to the  interest rate associated with  delinquent taxes                                                                    
                                                                                                                                
     that  either  the  state  would  pay  if  the  taxpayer                                                                    
                                                                                                                                
     overpaid,  or  that we  would  charge  if the  taxpayer                                                                    
                                                                                                                                
     underpaid,  so for  consistency purposes  on that  [the                                                                    
                                                                                                                                
     sponsors set the interest rate].                                                                                           
                                                                                                                                
                                                                                                                                
CO-CHAIR  TARR  restated that  Mr.  Ruggiero  had also  suggested                                                               
                                                                                                                                
eliminating the GVR  and the per barrel credit.   Considering all                                                               
                                                                                                                                
three suggestions, she  stated concern about "how  many years ...                                                               
                                                                                                                                
these opportunities can be in place."   For example:  after seven                                                               
                                                                                                                                
years of  carry forward losses,  the taxpayer becomes  a producer                                                               
                                                                                                                                
and uses  their accumulated losses  against tax  liability, along                                                               
                                                                                                                                
with a GVR  20 percent reduction, and a $5  per barrel credit; by                                                               
                                                                                                                                
the  time all  that is  combined, much  of the  value is  eroded,                                                               
                                                                                                                                
which is the reason she cannot support Amendment 1.                                                                             
                                                                                                                                
                                                                                                                                
2:57:53 PM                                                                                                                    
                                                                                                                                
                                                                                                                                
CO-CHAIR JOSEPHSON  expressed concern  that offering  100 percent                                                               
                                                                                                                                
carry forward  deductions "would be  more impactful to  the state                                                               
                                                                                                                                
than current  law."  Further,  if a  dry hole credit  were added,                                                               
                                                                                                                                
along  with uplift  - particularly  at 10  percent -  the problem                                                               
                                                                                                                                
would be compounded.   He opined Amendment 1 would  put the state                                                               
                                                                                                                                
in a [fiscal] position more precarious than its current one.                                                                    
                                                                                                                                
                                                                                                                                
REPRESENTATIVE BIRCH  expressed his support  of Amendment 1.   He                                                               
                                                                                                                                
said  Mr. Ruggiero  informed the  committee that  virtually every                                                               
                                                                                                                                
business  in the  oil  and  gas industry  is  entitled  - by  its                                                               
                                                                                                                                
governing regime  - to recover  its costs, and Amendment  1 "sets                                                               
                                                                                                                                
that out," is reasonable, and "would encourage that option."                                                                    
                                                                                                                                
                                                                                                                                
REPRESENTATIVE  PARISH stated  that businesses  typically recover                                                               
                                                                                                                                
costs by  making a profit  off of  their product, which  has been                                                               
                                                                                                                                
done by the oil  industry for a long time.   He said he supported                                                               
                                                                                                                                
providing  a subsidy  in the  form of  a write-off  on industry's                                                               
                                                                                                                                
taxes, providing  a generous 8  percent rate of return  for seven                                                               
                                                                                                                                
years.  However, a 100  percent carry forward loss deduction with                                                               
10 percent interest  may encourage companies to drill  a dry hole                                                               
                                                                                                                                
and  be confident  that in  seven years,  their investment  would                                                               
                                                                                                                                
have doubled  in the form  of liabilities, thereby  enabling them                                                               
                                                                                                                                
to sell  out to  a larger  company that is  seeing a  profit, and                                                               
                                                                                                                                
transfer  nearly twice  the value  of the  initial investment  to                                                               
                                                                                                                                
that other  company, resulting in a  profit.  He stated,  "It's a                                                               
                                                                                                                                
recipe for  disaster and for  really perverse  market incentives.                                                               
                                                                                                                                
We should not  be interfering ... this intensely  and setting us,                                                               
                                                                                                                                
ourselves up  for this level  of failure.   I do not  support the                                                               
                                                                                                                                
amendment."                                                                                                                     
                                                                                                                                
                                                                                                                                
3:01:06 PM                                                                                                                    
                                                                                                                                
                                                                                                                                
REPRESENTATIVE JOHNSON  said she  would feel better  about moving                                                               
                                                                                                                                
Version N  out of  committee if Amendment  1 is  adopted, because                                                               
                                                                                                                                
Amendment 1 at  least attempts to change the bill  in response to                                                               
                                                                                                                                
the  public  testimony  and  the many  concerns  that  have  been                                                               
                                                                                                                                
brought forth.   She said  she does  not think the  committee has                                                               
                                                                                                                                
had time to address Version N, but she supports Amendment 1.                                                                    
                                                                                                                                
                                                                                                                                
REPRESENTATIVE RAUSCHER said:                                                                                                   
                                                                                                                                
                                                                                                                                
     ...  I  understand   where  [the]  Representative  from                                                                    
                                                                                                                                
     District  17 was  going  there, but  I  think each  one                                                                    
                                                                                                                                
     effect[s]  different ...  sections at  different times;                                                                    
                                                                                                                                
     they're  really  -- get  a  full  grasp of  what  we're                                                                    
                                                                                                                                
     saying there.   And I don't know whether,  you know, if                                                                    
                                                                                                                                
     you're not really excited about  100 percent [of NOLs],                                                                    
                                                                                                                                
     I  think somewhere  in between  the  50 percent  you're                                                                    
                                                                                                                                
     leaving them short.                                                                                                        
                                                                                                                                
                                                                                                                                
REPRESENTATIVE  RAUSCHER  expressed  his understanding  that  the                                                               
                                                                                                                                
Internal Revenue Service  (IRS) allows people to  use their costs                                                               
                                                                                                                                
incurred, and he is not certain  whether [the State of Alaska] is                                                               
                                                                                                                                
letting [oil  companies] use their  entire costs.   He said  as a                                                               
                                                                                                                                
result, he is  not certain the companies will  be incentivized to                                                               
                                                                                                                                
"dig in, go forward, [and] spend money."                                                                                        
                                                                                                                                
                                                                                                                                
3:03:00 PM                                                                                                                    
                                                                                                                                
                                                                                                                                
A  roll call  vote was  taken.   Representatives Birch,  Johnson,                                                               
                                                                                                                                
Rauscher,   and  Talerico   voted  in   favor  of   Amendment  1.                                                               
                                                                                                                                
Representatives Drummond,  Parish, Westlake, Josephson,  and Tarr                                                               
                                                                                                                                
voted against  it.  Therefore,  Amendment 1 failed to  be adopted                                                               
                                                                                                                                
by a vote of 4-5.                                                                                                               
                                                                                                                                
                                                                                                                                
3:03:52 PM                                                                                                                    
                                                                                                                                
                                                                                                                                
REPRESENTATIVE RAUSCHER  moved to adopt Amendment  2, labeled 30-                                                               
                                                                                                                                
LS0450\N.4, Shutts/Nauman, 3/13/17, which read:                                                                                 
                                                                                                                                
                                                                                                                                
     Page 24, line 24, through page 25, line 23:                                                                                
                                                                                                                                
          Delete all material and insert:                                                                                       
                                                                                                                                
               "(3)  lease expenditures, as adjusted under                                                                  
                                                                                                                                
     (m) of this section, that                                                                                              
                                                                                                                                
               (A)  met the requirements of AS 43.55.160(e)                                                                 
                                                                                                                                
     in the year that the lease expenditures were incurred;                                                                 
                                                                                                                                
               (B) were deductible in the immediately                                                                       
                                                                                                                                
     preceding 10 calendar years, not counting the year in                                                                  
                                                                                                                                
     which the expenditure was incurred;                                                                                    
                                                                                                                                
               (C)  have not been deducted in the                                                                           
                                                                                                                                
      determination of the production tax value of oil and                                                                  
                                                                                                                                
     gas under AS 43.55.160(a) in a previous calendar year;                                                                 
               (D)  were not the basis of a credit under                                                                    
                                                                                                                                
     this title; and                                                                                                        
                                                                                                                                
               (E) were incurred to explore for, develop,                                                                   
                                                                                                                                
     or produce  an oil or  gas deposit located north  of 68                                                                
                                                                                                                                
     degrees North latitude.                                                                                                
                                                                                                                                
        * Sec. 26.  AS 43.55.165 is amended by  adding a new                                                                  
                                                                                                                                
     subsection to read:                                                                                                        
                                                                                                                                
          (m)  A loss carried forward under (a)(3) of this                                                                      
                                                                                                                                
     section  shall  increase  in  value at  a  rate  of  10                                                                    
                                                                                                                                
     percent,  compounded  annually.  An increase  in  value                                                                    
                                                                                                                                
     under this subsection begins to  accrue on January 1 of                                                                    
                                                                                                                                
     the  calendar year  immediately following  the calendar                                                                    
                                                                                                                                
     year  in  which the  loss  was  accrued and  no  longer                                                                    
                                                                                                                                
     accrues   on   December 31   of   the   calendar   year                                                                    
                                                                                                                                
     immediately  preceding the  calendar  year  in which  a                                                                    
                                                                                                                                
     carried-forward  annual loss  is applied.  The increase                                                                    
                                                                                                                                
     in  value accrued  under this  subsection has  no value                                                                    
                                                                                                                                
     except  as  applied in  this  section.  An increase  in                                                                    
                                                                                                                                
     value may not accrue                                                                                                       
                                                                                                                                
               (1)  for a partial calendar year;                                                                                
                                                                                                                                
               (2)  for more than 10 calendar years,                                                                            
                                                                                                                                
     consecutive or nonconsecutive; or                                                                                          
                                                                                                                                
               (3)  on a loss carried forward by a producer                                                                     
                                                                                                                                
     whose average amount of oil  and gas produced a day and                                                                    
                                                                                                                                
     taxable under  AS 43.55.011(e) is more than  50,000 BTU                                                                    
                                                                                                                                
     equivalent barrels  during the  calendar year  that the                                                                    
                                                                                                                                
     loss was accrued."                                                                                                         
                                                                                                                                
                                                                                                                                
     Page 27, line 23:                                                                                                          
                                                                                                                                
     Delete "and (n)"                                                                                                           
                                                                                                                                
                                                                                                                                
3:03:54 PM                                                                                                                    
                                                                                                                                
                                                                                                                                
REPRESENTATIVE TARR objected for the discussion purposes.                                                                       
                                                                                                                                
                                                                                                                                
REPRESENTATIVE  RAUSCHER spoke  to  Amendment 2.   He  maintained                                                               
                                                                                                                                
that HB  111 would  not incentivize  producers whereas  plans the                                                               
                                                                                                                                
state has  put in place in  the past have inspired  oil companies                                                               
                                                                                                                                
to  do  business  with  the  state.    Furthermore,  the  changes                                                               
                                                                                                                                
proposed by HB 111 are too  severe, expect "a little bit too much                                                               
                                                                                                                                
from our  partners," and will  make them leery about  the future.                                                               
                                                                                                                                
He   observed  that   every  year   brings  another   change  and                                                               
                                                                                                                                
disappointment for  the industry, yet companies  continue to work                                                               
                                                                                                                                
with  the state;  in  fact,  it is  very  important  to keep  the                                                               
                                                                                                                                
companies as  partners and to work  hand-in-hand.  Representative                                                               
                                                                                                                                
Rauscher said Amendment 2 would  increase the carry forward [loss                                                               
                                                                                                                                
deduction]  from 50  percent  as  proposed in  Version  N to  100                                                               
                                                                                                                                
percent.   He  reiterated  Mr. Ruggiero's  caution that  industry                                                               
                                                                                                                                
should recover  100 percent  of its development  costs.   He said                                                               
                                                                                                                                
Amendment 2  would also change  the uplift  from 7 percent  to 10                                                               
                                                                                                                                
percent  and  would   expand  the  life  of   the  carry  forward                                                               
                                                                                                                                
deductions  from  seven  years  to  ten  years.    He  urged  the                                                               
                                                                                                                                
committee to support Amendment 2.                                                                                               
                                                                                                                                
                                                                                                                                
REPRESENTATIVE BIRCH  stated support  for Amendment  2.   He said                                                               
                                                                                                                                
Alaska is  an expensive place in  which to do business,  and long                                                               
                                                                                                                                
lead times created  by permitting delays have  affected even such                                                               
                                                                                                                                
an established area as that  in which ConocoPhillips Alaska, Inc.                                                               
                                                                                                                                
operates.  He said he thinks  Amendment 2 is "on track," and that                                                               
                                                                                                                                
the  state needs  to  provide  the opportunity  for  oil and  gas                                                               
                                                                                                                                
exploration companies to recover their costs.                                                                                   
                                                                                                                                
                                                                                                                                
CO-CHAIR TARR said  carrying forward losses is  a typical feature                                                               
                                                                                                                                
of an  income tax, and  she stressed  that companies are  able to                                                               
recover  100  percent of  their  carry  forward losses  on  their                                                               
                                                                                                                                
corporate  income tax;  furthermore, production  tax is  deducted                                                               
                                                                                                                                
against  corporate income  tax,  and corporate  income  tax is  a                                                               
                                                                                                                                
deduction against federal  taxes.  Thus there  are several places                                                               
                                                                                                                                
where  losses  are  recovered,  and   Version  N  would  make  no                                                               
                                                                                                                                
adjustments  in that  respect.    One of  the  challenges of  the                                                               
                                                                                                                                
Alaska severance  tax is that  it is  a combination of  gross tax                                                               
                                                                                                                                
and net  profits tax, and behaves  in some ways like  a corporate                                                               
                                                                                                                                
income tax.  She opined that  the combination of tax systems does                                                               
                                                                                                                                
not work well and the  state is overcommitted [by its obligations                                                               
                                                                                                                                
to pay  tax credits].   Because the  accumulation of  credits are                                                               
                                                                                                                                
obligations the state cannot meet,  and payments have been vetoed                                                               
                                                                                                                                
by  the governor,  she expressed  her  view that  the tax  credit                                                               
                                                                                                                                
program, "even  if it's scaled back  a little bit, but  we always                                                               
                                                                                                                                
meet that obligation,  that would be beneficial  to the industry,                                                               
                                                                                                                                
more than  having something that  ... potentially is  supposed to                                                               
                                                                                                                                
be  available,  and  then  is  not  available."    Co-Chair  Tarr                                                               
                                                                                                                                
cautioned  that  while the  legislature  has  the power  to  make                                                               
                                                                                                                                
appropriations,  the governor  will  always have  the ability  to                                                               
                                                                                                                                
veto  any   line  items  in   the  budget;  therefore,   if  [the                                                               
                                                                                                                                
legislature and governor]  are not in alignment,  then "that puts                                                               
                                                                                                                                
the  whole  system at  risk."    She  explained that  she  cannot                                                               
                                                                                                                                
support [Amendment 2], because she  does not want the legislature                                                               
                                                                                                                                
"to  be overcommitted  to something  that puts  us in  a position                                                               
                                                                                                                                
where we have to react again."   She stated the intent of Version                                                               
                                                                                                                                
N is to provide more stability to the system.                                                                                   
                                                                                                                                
                                                                                                                                
REPRESENTATIVE  RAUSCHER  said Amendment  2  would  take care  of                                                               
                                                                                                                                
cashable credits,  which he  agrees need to  be reevaluated.   He                                                               
                                                                                                                                
recalled  previous testimony  by  the consultant  and others  has                                                               
                                                                                                                                
consistently pointed out that tax  systems must be revisited, and                                                               
                                                                                                                                
characterized  Co-Chair  Tarr's  remarks about  not  wanting  [to                                                               
react  again] as  being an  excuse.   He stated  his belief  that                                                               
                                                                                                                                
Amendment  2  is good,  tame,  not  large-scale, and  garners  no                                                               
                                                                                                                                
repeated  analyzation  or  reaction,  and he  urged  everyone  to                                                               
                                                                                                                                
support it.                                                                                                                     
                                                                                                                                
                                                                                                                                
[A  roll call  vote was  taken, and  was subsequently  voided for                                                               
                                                                                                                                
being incomplete.]                                                                                                              
                                                                                                                                
                                                                                                                                
3:11:58 PM                                                                                                                    
                                                                                                                                
                                                                                                                                
The committee took an at-ease from 3:12 p.m. to 3:13 p.m.                                                                       
                                                                                                                                
                                                                                                                                
3:13:18 PM                                                                                                                    
                                                                                                                                
                                                                                                                                
CO-CHAIR TARR announced  that the roll call vote  on Amendment 2,                                                               
                                                                                                                                
taken before  the at-ease,  would be  voided, because  one member                                                               
                                                                                                                                
had not been called.                                                                                                            
                                                                                                                                
                                                                                                                                
3:13:25 PM                                                                                                                    
                                                                                                                                
                                                                                                                                
A roll  call vote  was taken.   Representatives  Talerico, Birch,                                                               
                                                                                                                                
Johnson,   and  Rauscher   voted   in  favor   of  Amendment   2.                                                               
                                                                                                                                
Representatives Westlake,  Drummond, Parish, Josephson,  and Tarr                                                               
                                                                                                                                
voted against  it.  Therefore,  Amendment 2 failed to  be adopted                                                               
                                                                                                                                
by a vote of 4-5.                                                                                                               
                                                                                                                                
                                                                                                                                
3:14:11 PM                                                                                                                    
                                                                                                                                
                                                                                                                                
ED KING,  Legislative Liaison, Office  of the  Commissioner, DNR,                                                               
                                                                                                                                
informed the  committee the department  needs additional  time to                                                               
                                                                                                                                
determine the fiscal  impacts of [HB 111, Version N]  on DNR.  In                                                               
                                                                                                                                
response to Co-Chair  Tarr, he said he  anticipated a forthcoming                                                               
positive  fiscal note,  because Version  N would  require of  the                                                               
                                                                                                                                
department  tasks  that  are  outside the  scope  of  its  normal                                                               
                                                                                                                                
function,  and  would require  the  expansion  of its  accounting                                                               
                                                                                                                                
section.   In response  to a  question from  Representative Birch                                                               
                                                                                                                                
about the timing  of the new information  requested under Version                                                               
                                                                                                                                
N, and how it  would impact the oil and gas  industry, he said it                                                               
                                                                                                                                
is typical for  a regulation packet to take about  one year to be                                                               
                                                                                                                                
implemented; therefore,  he speculated there  may be a  period of                                                               
                                                                                                                                
uncertainty  that  could "drive  differences  in  behavior."   He                                                               
                                                                                                                                
proffered the question would be best asked of the industry.                                                                     
                                                                                                                                
                                                                                                                                
REPRESENTATIVE BIRCH  said he is  keenly interested in  the issue                                                               
                                                                                                                                
and  would  like  an  assessment  by [DNR]  -  as  a  leaseholder                                                               
                                                                                                                                
"managing that relationship" - of  the significant impacts of the                                                               
                                                                                                                                
proposed legislation.                                                                                                           
                                                                                                                                
                                                                                                                                
CO-CHAIR TARR  asked for clarification  concerning the  amount of                                                               
                                                                                                                                
time Mr. King  thought the department would need  to complete its                                                               
                                                                                                                                
fiscal note.                                                                                                                    
                                                                                                                                
                                                                                                                                
MR.  KING said  staff at  the Division  of Oil  and Gas,  DNR, is                                                               
                                                                                                                                
currently working on [a fiscal  note] and making sure regulations                                                               
                                                                                                                                
could be  written in a way  that would not impede  the ability of                                                               
                                                                                                                                
auditors in  DOR to audit  the tax returns after  the preapproval                                                               
                                                                                                                                
process happens  through DNR.   He  anticipated the  process will                                                               
                                                                                                                                
take at  least through today, and  he said he would  get a fiscal                                                               
                                                                                                                                
note to the committee as soon as possible.                                                                                      
                                                                                                                                
                                                                                                                                
3:17:16 PM                                                                                                                    
                                                                                                                                
                                                                                                                                
The committee took an at-ease from 3:17 p.m. to 3:18 p.m.                                                                       
                                                                                                                                
                                                                                                                                
3:18:46 PM                                                                                                                    
                                                                                                                                
                                                                                                                                
CO-CHAIR TARR said she  would allow DNR to the end  of the day to                                                               
                                                                                                                                
work   up  some   preliminary   information   [pertaining  to   a                                                               
                                                                                                                                
forthcoming fiscal note].                                                                                                       
                                                                                                                                
                                                                                                                                
REPRESENTATIVE WESTLAKE surmised that  [Version N] would increase                                                               
                                                                                                                                
the  workload of  those in  accounting, who  are currently  years                                                               
                                                                                                                                
behind.  He said, "I'd hate  to set a precedent where we're doing                                                               
                                                                                                                                
exactly the same  thing, where ... we've made a  ruling here, and                                                               
                                                                                                                                
the  State of  Alaska, through  no  fault of  industry, is  years                                                               
                                                                                                                                
behind  on  this  thing."    He  asked if  there  is  a  way  the                                                               
                                                                                                                                
legislature can address this issue.                                                                                             
                                                                                                                                
                                                                                                                                
MR. KING  was unsure;  however, he did  confirm that  [Version N]                                                               
                                                                                                                                
would  require  a  different accounting  process  then  what  the                                                               
                                                                                                                                
department  currently has  in place,  and it  would take  time to                                                               
                                                                                                                                
implement such  a process.   He  said DNR  would seek  to combine                                                               
                                                                                                                                
efforts with  DOR, and  avoid duplications  and overlap,  to meet                                                               
                                                                                                                                
the  objectives   of  the  proposed   legislation;  DNR   is  not                                                               
                                                                                                                                
interested  in  expanding   its  [accounting]  department  unless                                                               
                                                                                                                                
absolutely necessary.                                                                                                           
                                                                                                                                
                                                                                                                                
CO-CHAIR  TARR said  she had  not anticipated  the challenge  the                                                               
                                                                                                                                
provision  created  in terms  of  a  fiscal  note from  DNR,  and                                                               
                                                                                                                                
appreciated  the opportunity  to work  through that  provision of                                                               
                                                                                                                                
the bill.                                                                                                                       
                                                                                                                                
                                                                                                                                
3:21:05 PM                                                                                                                    
                                                                                                                                
                                                                                                                                
ADJOURNMENT                                                                                                                   
                                                                                                                                
                                                                                                                                
The House Resources Standing Committee meeting was recessed at                                                                  
                                                                                                                                
3:21 p.m. to a call of the chair.  [The meeting reconvened at                                                                   
                                                                                                                                
3:20 p.m. on 3/14/17].                                                                                                          

Document Name Date/Time Subjects
HB087 Sponsor Statement ver R 3.10.17.pdf HRES 3/13/2017 1:00:00 PM
HRES 3/14/2017 3:00:00 PM
HRES 3/15/2017 1:00:00 PM
HRES 3/20/2017 7:00:00 PM
HB 87
HB111 Version N 3.10.17.pdf HRES 3/10/2017 1:00:00 PM
HRES 3/13/2017 1:00:00 PM
HRES 3/14/2017 3:00:00 PM
HB 111
HB 111- CS Ver N Comparison 3.10.17.pdf HRES 3/10/2017 1:00:00 PM
HRES 3/13/2017 1:00:00 PM
HRES 3/14/2017 3:00:00 PM
HB 111
HB111 Sponsor Statement 2.12.17.pdf HRES 2/13/2017 1:00:00 PM
HRES 2/17/2017 1:00:00 PM
HRES 2/20/2017 1:00:00 PM
HRES 2/22/2017 1:00:00 PM
HRES 2/22/2017 6:30:00 PM
HRES 2/24/2017 1:00:00 PM
HRES 2/27/2017 1:00:00 PM
HRES 3/1/2017 1:00:00 PM
HRES 3/1/2017 6:00:00 PM
HRES 3/6/2017 6:30:00 PM
HRES 3/8/2017 1:00:00 PM
HRES 3/13/2017 1:00:00 PM
HB 111
HB111 Fiscal Note DOR-TAX 2.12.17.pdf HRES 2/13/2017 1:00:00 PM
HRES 2/17/2017 1:00:00 PM
HRES 2/22/2017 1:00:00 PM
HRES 2/22/2017 6:30:00 PM
HRES 2/24/2017 1:00:00 PM
HRES 2/27/2017 1:00:00 PM
HRES 3/1/2017 1:00:00 PM
HRES 3/1/2017 6:00:00 PM
HRES 3/6/2017 6:30:00 PM
HRES 3/8/2017 1:00:00 PM
HRES 3/13/2017 1:00:00 PM
HB 111
HB111 Opposing Document - Letters in Opposition 3.12.17.pdf HRES 3/13/2017 1:00:00 PM
HB 111
HB111 Supporting Document - Letters in Support 3.12.17.pdf HRES 3/13/2017 1:00:00 PM
HB 111
HB111 Supporting Document - Petition in Support 3.12.17.pdf HRES 3/13/2017 1:00:00 PM
HB 111
HB111 Supporting Document - POM in Support 3.9.17.pdf HRES 3/13/2017 1:00:00 PM
HB 111
HB111 Supporting Document - Letter in Support 3.12.17.pdf HRES 3/13/2017 1:00:00 PM
HB 111
HB111 Opposition Document - Letter in Opposition from Kenai Chamber of Commerce 3.12.17.pdf HRES 3/13/2017 1:00:00 PM
HB 111
HB111 Opposing Document - Letter in Opposition from Armstrong Energy, LLC 3.7.17.pdf HRES 3/13/2017 1:00:00 PM
HB 111
HB087 Fiscal Note DFG-BBS-01-31-2017.pdf HFSH 2/9/2017 10:00:00 AM
HRES 3/13/2017 1:00:00 PM
HRES 3/20/2017 7:00:00 PM
HB 87
HB087 Supporting Document BOF BOG Information.pdf HFSH 2/9/2017 10:00:00 AM
HRES 3/13/2017 1:00:00 PM
HB 87
HB087 Support ATA.pdf HFSH 2/9/2017 10:00:00 AM
HRES 3/13/2017 1:00:00 PM
HRES 3/14/2017 3:00:00 PM
HRES 3/20/2017 7:00:00 PM
HB 87
HB087 Support ver O SEAFA.pdf HRES 3/13/2017 1:00:00 PM
HRES 3/20/2017 7:00:00 PM
HB 87
HB087 Support SPC.pdf HFSH 2/14/2017 10:00:00 AM
HRES 3/13/2017 1:00:00 PM
HRES 3/14/2017 3:00:00 PM
HRES 3/15/2017 1:00:00 PM
HRES 3/20/2017 7:00:00 PM
HB 87
HB087 Support CDFU.pdf HFSH 2/14/2017 10:00:00 AM
HRES 3/13/2017 1:00:00 PM
HRES 3/14/2017 3:00:00 PM
HRES 3/15/2017 1:00:00 PM
HRES 3/20/2017 7:00:00 PM
HB 87
HB087 Supporting Document Historic Bills.pdf HFSH 2/9/2017 10:00:00 AM
HRES 3/13/2017 1:00:00 PM
HRES 3/20/2017 7:00:00 PM
HB 87
HB087 ver R H FSH CS 3.12.17.PDF HRES 3/13/2017 1:00:00 PM
HRES 3/14/2017 3:00:00 PM
HRES 3/15/2017 1:00:00 PM
HRES 3/20/2017 7:00:00 PM
HB 87
HB087 Summary of Changes A to R 2.17.17.pdf HRES 3/13/2017 1:00:00 PM
HRES 3/15/2017 1:00:00 PM
HRES 3/20/2017 7:00:00 PM
HB 87
HB087 Oppose RHAK.pdf HRES 3/13/2017 1:00:00 PM
HRES 3/14/2017 3:00:00 PM
HRES 3/15/2017 1:00:00 PM
HRES 3/20/2017 7:00:00 PM
HB 87
HB087 Support Lynch.pdf HRES 3/13/2017 1:00:00 PM
HRES 3/14/2017 3:00:00 PM
HRES 3/15/2017 1:00:00 PM
HRES 3/20/2017 7:00:00 PM
HB 87
HJR012 Fiscal Note LEG-SESS-02-23-17.pdf HFSH 2/28/2017 10:00:00 AM
HRES 3/13/2017 1:00:00 PM
HRES 3/14/2017 3:00:00 PM
HRES 3/20/2017 7:00:00 PM
HRES 3/22/2017 6:00:00 PM
HJR 12
HJR012 Sponsor Statement 2.22.17.pdf HFSH 2/28/2017 10:00:00 AM
HRES 3/13/2017 1:00:00 PM
HRES 3/14/2017 3:00:00 PM
HRES 3/15/2017 1:00:00 PM
HRES 3/20/2017 7:00:00 PM
HRES 3/22/2017 6:00:00 PM
HJR 12
HJR012 Support - Alaska Trollers Association 2.27.17.pdf HFSH 2/28/2017 10:00:00 AM
HRES 3/13/2017 1:00:00 PM
HRES 3/14/2017 3:00:00 PM
HRES 3/15/2017 1:00:00 PM
HRES 3/20/2017 7:00:00 PM
HRES 3/22/2017 6:00:00 PM
HJR 12
HJR012 Support - Southeast Alaska Fishermen's Alliance 2.27.17.pdf HFSH 2/28/2017 10:00:00 AM
HRES 3/13/2017 1:00:00 PM
HRES 3/14/2017 3:00:00 PM
HRES 3/15/2017 1:00:00 PM
HRES 3/20/2017 7:00:00 PM
HRES 3/22/2017 6:00:00 PM
HJR 12
HJR012 Support - Petersburg Vessel Owners Association 2.27.17.pdf HFSH 2/28/2017 10:00:00 AM
HRES 3/13/2017 1:00:00 PM
HRES 3/14/2017 3:00:00 PM
HRES 3/15/2017 1:00:00 PM
HRES 3/20/2017 7:00:00 PM
HRES 3/22/2017 6:00:00 PM
HJR 12
HJR012 Support - Southeast Alaska Seiners Association 2.27.17.pdf HFSH 2/28/2017 10:00:00 AM
HRES 3/13/2017 1:00:00 PM
HRES 3/14/2017 3:00:00 PM
HRES 3/15/2017 1:00:00 PM
HRES 3/20/2017 7:00:00 PM
HRES 3/22/2017 6:00:00 PM
HJR 12
HJR012 Support - United Southeast Alaska Gillnetters 2.27.17.pdf HFSH 2/28/2017 10:00:00 AM
HRES 3/13/2017 1:00:00 PM
HRES 3/14/2017 3:00:00 PM
HRES 3/15/2017 1:00:00 PM
HRES 3/20/2017 7:00:00 PM
HRES 3/22/2017 6:00:00 PM
HJR 12
HJR012 Supporting Document-Alaska Dispatch News Article 2.22.17.pdf HFSH 2/28/2017 10:00:00 AM
HRES 3/13/2017 1:00:00 PM
HRES 3/14/2017 3:00:00 PM
HRES 3/15/2017 1:00:00 PM
HRES 3/20/2017 7:00:00 PM
HRES 3/22/2017 6:00:00 PM
HJR 12
HJR012 Supporting Document-Reps. Young and Defazio 2.22.17.pdf HFSH 2/28/2017 10:00:00 AM
HRES 3/13/2017 1:00:00 PM
HRES 3/14/2017 3:00:00 PM
HRES 3/15/2017 1:00:00 PM
HRES 3/20/2017 7:00:00 PM
HRES 3/22/2017 6:00:00 PM
HJR 12
HJR012 Supporting Document-Sen. Murkowski 2.22.17.pdf HFSH 2/28/2017 10:00:00 AM
HRES 3/13/2017 1:00:00 PM
HRES 3/14/2017 3:00:00 PM
HRES 3/15/2017 1:00:00 PM
HRES 3/20/2017 7:00:00 PM
HJR 12
HJR012 Supporting Document - Presentation House Resources Committee 3.12.17.pdf HFSH 2/28/2017 10:00:00 AM
HRES 3/13/2017 1:00:00 PM
HRES 3/14/2017 3:00:00 PM
HRES 3/15/2017 1:00:00 PM
HRES 3/20/2017 7:00:00 PM
HRES 3/22/2017 6:00:00 PM
HJR 12
HJR012 ver A 2.22.17.PDF HFSH 2/28/2017 10:00:00 AM
HRES 3/13/2017 1:00:00 PM
HRES 3/14/2017 3:00:00 PM
HRES 3/15/2017 1:00:00 PM
HRES 3/20/2017 7:00:00 PM
HRES 3/22/2017 6:00:00 PM
HJR 12
HJR012 Version D (FSH) 3.12.17.PDF HRES 3/13/2017 1:00:00 PM
HRES 3/14/2017 3:00:00 PM
HRES 3/15/2017 1:00:00 PM
HRES 3/20/2017 7:00:00 PM
HRES 3/22/2017 6:00:00 PM
HJR 12
HJR012 Supporting Document - Letter of Support from SalmonState.pdf HRES 3/13/2017 1:00:00 PM
HRES 3/14/2017 3:00:00 PM
HRES 3/15/2017 1:00:00 PM
HRES 3/20/2017 7:00:00 PM
HRES 3/22/2017 6:00:00 PM
HJR 12
HB032 Supporting Document - Sponsor Statement.pdf HRES 3/13/2017 1:00:00 PM
HRES 3/14/2017 3:00:00 PM
HRES 3/15/2017 1:00:00 PM
HRES 3/20/2017 7:00:00 PM
HRES 3/22/2017 6:00:00 PM
HB 32
HB032 version A 3.12.17.PDF HRES 3/13/2017 1:00:00 PM
HRES 3/14/2017 3:00:00 PM
HRES 3/15/2017 1:00:00 PM
HRES 3/20/2017 7:00:00 PM
HRES 3/22/2017 6:00:00 PM
HB 32
HB032 Fiscal Note - DEC 3.12.17.pdf HRES 3/13/2017 1:00:00 PM
HRES 3/14/2017 3:00:00 PM
HRES 3/15/2017 1:00:00 PM
HRES 3/20/2017 7:00:00 PM
HRES 3/22/2017 6:00:00 PM
HB 32
HB32 Supporting Document - GMO Q & A 3.12.17.pdf HRES 3/13/2017 1:00:00 PM
HRES 3/14/2017 3:00:00 PM
HRES 3/15/2017 1:00:00 PM
HRES 3/20/2017 7:00:00 PM
HRES 3/22/2017 6:00:00 PM
HB 32
HB32 Supporting Document - HB 92 - AK Trollers Association Letter of Support.pdf HRES 3/13/2017 1:00:00 PM
HRES 3/14/2017 3:00:00 PM
HRES 3/15/2017 1:00:00 PM
HRES 3/20/2017 7:00:00 PM
HRES 3/22/2017 6:00:00 PM
HB 32
HB32 Supporting Document - HB 92 Consolidated Letters of Support 3.12.17.pdf HRES 3/13/2017 1:00:00 PM
HRES 3/14/2017 3:00:00 PM
HRES 3/15/2017 1:00:00 PM
HRES 3/20/2017 7:00:00 PM
HRES 3/22/2017 6:00:00 PM
HB 32
HB32 Supporting Document - Info Graphic 3.12.17.pdf HRES 3/13/2017 1:00:00 PM
HRES 3/14/2017 3:00:00 PM
HRES 3/15/2017 1:00:00 PM
HRES 3/20/2017 7:00:00 PM
HRES 3/22/2017 6:00:00 PM
HB 32
HB32 Supporting Document - Letter of Support for HB 92 3.12.17.pdf HRES 3/13/2017 1:00:00 PM
HRES 3/14/2017 3:00:00 PM
HRES 3/15/2017 1:00:00 PM
HRES 3/20/2017 7:00:00 PM
HRES 3/22/2017 6:00:00 PM
HB 32
HB32 Supporting Document - News Article #2 3.12.17.pdf HRES 3/13/2017 1:00:00 PM
HRES 3/14/2017 3:00:00 PM
HRES 3/15/2017 1:00:00 PM
HRES 3/20/2017 7:00:00 PM
HRES 3/22/2017 6:00:00 PM
HB 32
HB32 Supporting Document - News Article #3 3.12.17.pdf HRES 3/13/2017 1:00:00 PM
HRES 3/14/2017 3:00:00 PM
HRES 3/15/2017 1:00:00 PM
HRES 3/20/2017 7:00:00 PM
HRES 3/22/2017 6:00:00 PM
HB 32
HB32 Supporting Document - News Article #4 3.12.17.pdf HRES 3/13/2017 1:00:00 PM
HRES 3/14/2017 3:00:00 PM
HRES 3/15/2017 1:00:00 PM
HRES 3/20/2017 7:00:00 PM
HRES 3/22/2017 6:00:00 PM
HB 32
HB32 Supporting Document - News Article #5 3.12.17.pdf HRES 3/13/2017 1:00:00 PM
HRES 3/14/2017 3:00:00 PM
HRES 3/15/2017 1:00:00 PM
HRES 3/20/2017 7:00:00 PM
HRES 3/22/2017 6:00:00 PM
HB 32
HB32 Supporting Document - NY Times Article 3.12.17.pdf HRES 3/13/2017 1:00:00 PM
HRES 3/14/2017 3:00:00 PM
HRES 3/15/2017 1:00:00 PM
HRES 3/20/2017 7:00:00 PM
HRES 3/22/2017 6:00:00 PM
HB 32
HB087 UFA Letter in Support.pdf HRES 3/13/2017 1:00:00 PM
HB087 UFA Letter in Support.pdf HRES 3/13/2017 1:00:00 PM
HB111 Amendment to CS N.2 3.13.17.pdf HRES 3/13/2017 1:00:00 PM
HB 111
HB111 Amendment to CS N.1 3.13.17.pdf HRES 3/13/2017 1:00:00 PM
HB 111
HB111 DOR Fiscal Note Back-Up for CSHB111(RES).pdf HRES 3/13/2017 1:00:00 PM
HRES 3/14/2017 3:00:00 PM
HB 111
HB087 UFA Letter in Support 2.pdf HRES 3/13/2017 1:00:00 PM
HB111 Amendments to CS N.4 - Amendment Two Rauscher 3.13.17.pdf HRES 3/13/2017 1:00:00 PM
HB 111
HB111 Amendment to CS N.3 -Amendment One - Rauscher 3.13.17.pdf HRES 3/13/2017 1:00:00 PM
HB 111
HB087 Supporting Document APHA 3.13.17.pdf HRES 3/13/2017 1:00:00 PM
HRES 3/14/2017 3:00:00 PM
HRES 3/15/2017 1:00:00 PM
HRES 3/20/2017 7:00:00 PM
HB 87
HJR012 Supporting Document - Letter of Support Nelson 3.13.17.pdf HRES 3/13/2017 1:00:00 PM
HRES 3/14/2017 3:00:00 PM
HRES 3/15/2017 1:00:00 PM
HRES 3/20/2017 7:00:00 PM
HRES 3/22/2017 6:00:00 PM
HJR 12
HB032 Supporting Document - Letter of Support UFA 3.13.17.pdf HRES 3/13/2017 1:00:00 PM
HRES 3/14/2017 3:00:00 PM
HRES 3/15/2017 1:00:00 PM
HRES 3/20/2017 7:00:00 PM
HRES 3/22/2017 6:00:00 PM
HB 32
HB087 Support USAG.pdf HRES 3/13/2017 1:00:00 PM
HB 87
HJR012 Supporting Document - Presentation House Fisheries Committee 2.28.17.pdf HRES 3/13/2017 1:00:00 PM
HJR 12