02/14/2014 03:30 PM Senate RESOURCES

                SJR 5-OFFSHORE OIL & GAS REVENUE                                                                            
                                                                                                                                
4:49:59 PM                                                                                                                    
CHAIR GIESSEL announced that the  next order of business would be                                                               
SJR 5.                                                                                                                          
                                                                                                                                
4:50:40 PM                                                                                                                    
MICHELLE SYDEMAN, staff to Senator  Bill Wielechowski, sponsor of                                                               
SJR 5, presented  it on behalf of the sponsor.  She said everyone                                                               
is aware of the vast oil  and gas potential in the federal waters                                                               
off our  coasts (OCS) -  more than a  billion acres on  more than                                                               
6,000 miles  of coastline. This  area is believed to  contain the                                                               
largest  undiscovered  energy  resources in  the  United  States,                                                               
estimated to  be 25  billion barrels of  oil and  132 tcf/natural                                                               
gas;  more  than  the  current estimates  for  the  Atlantic  and                                                               
Pacific  regions   of  the  OCS   combined.  The   potential  for                                                               
development is obviously enormous as  is the potential benefit to                                                               
the U.S. Treasury.                                                                                                              
                                                                                                                                
A University  of Alaska  study found  that energy  production off                                                               
Alaska could generate  35,000 jobs on average annually  over a 50                                                               
year period;  the total payroll  an estimated $80  billion. Since                                                               
statehood, the  federal government has held  numerous lease sales                                                               
off  our coasts  and collected  more  than $8  billion for  them.                                                               
Unfortunately, Alaska has received  little revenue in contrast to                                                               
what  happens  when  the federal  government  leases  within  the                                                               
state's  boundaries, in  which case  the host  state receives  50                                                               
percent of the  revenue - to compensate for any  impacts they may                                                               
bear  as a  result  of  that development.  This  is an  automatic                                                               
process that  occurs off-budget  at the  federal level.  The same                                                               
should hold true  for offshore development where  costs and risks                                                               
are often much greater.                                                                                                         
                                                                                                                                
MS. SYDEMAN said  in 2006, the federal  government recognized the                                                               
inequity and  gave four states  a 37.5 percent share  of revenues                                                               
generated  from  offshore  development;   that  did  not  include                                                               
Alaska.  It  did  include   Mississippi,  Louisiana,  Texas,  and                                                               
Alabama, and it makes  to no sense for us to be  left out of that                                                               
sort of arrangement.                                                                                                            
                                                                                                                                
She said fortunately the stars  are coming closer in alignment in                                                               
Washington,  D.C.   The  Senate  Energy  and   Natural  Resources                                                               
Committee is being by Senator Mary  Landrieu, who has been a huge                                                               
advocate  of OCS  revenue  sharing. She  has  joined forces  with                                                               
Senator  Lisa  Murkowski  and introduced  a  bill  called  Fixing                                                               
America's Inequities with  Review Act (FAIR). The  White House is                                                               
opposing this act and the primary  reason is the cost and concern                                                               
over the federal  deficit. Senator Murkowski said  this was short                                                               
sighted  because  revenue  sharing  will  enable  the  states  to                                                               
support offshore  development by  investing in roads,  ports, and                                                               
other necessary  facilities, and to invest  in the infrastructure                                                               
that will enable that development  to be safe and environmentally                                                               
responsible.  More off  shore development  will  lead to  greater                                                               
revenues for the federal government.                                                                                            
                                                                                                                                
4:55:22 PM                                                                                                                    
MS. SYDEMAN said  they had developed a  committee substitute (CS)                                                               
after  consulting with  Mr. Adrian  Herrera oh  Arctic Power  who                                                               
walked them  through the  White House's  main concerns  and those                                                               
were addressed in the CS. He  advised that action very soon would                                                               
be helpful because Senator Landrieu  would be pushing this in the                                                               
near  term; and  having a  resolution sponsored  by a  Democratic                                                               
member of  the state legislature  would be helpful,  because they                                                               
were trying to convince a Democratic administration.                                                                            
                                                                                                                                
SENATOR GIESSEL opened public testimony.                                                                                        
                                                                                                                                
4:57:03 PM                                                                                                                    
ADRIAN  HERRERA, Coordinator,  Arctic  Power, Anchorage,  Alaska,                                                               
testified in support  of SJR 5. He said their  sole purpose is to                                                               
argue  for the  environmentally  responsible  development of  the                                                               
federal lands  in the Alaska  Arctic, both  on and offshore.   He                                                               
cautioned  that the  resolution  must address  the White  House's                                                               
specific concerns as laid out  by the Congressional Budget Office                                                               
Secretary during the hearings for  the FAIR Act last year. Senior                                                               
members of  the committee support the  bill and he expects  it to                                                               
move this year. It is also  supported by Senator Begich who has a                                                               
similar bill on revenue sharing but it is region specific.                                                                      
                                                                                                                                
He said the FAIR  Act had one hearing last year  in July and will                                                               
need another  one. They have not  come up with $6  billion, which                                                               
the Congressional Budget  Office warns the bill asks  to pay, but                                                               
it is  spread over ten years.  The White House's argument  has to                                                               
do with  the reduction of  funds going to the  national Treasury.                                                               
The President  wants to  use offshore revenues  to fund  the Land                                                               
Water   Conservation    Fund   (LWCF)   nationwide    and   other                                                               
environmental projects.  But there is  no intent to take  a penny                                                               
away from LWCF; so  for SCR 5 to succeed, it  has to address this                                                               
concern.                                                                                                                        
                                                                                                                                
5:00:30 PM                                                                                                                    
He opined that both sides can be  aligned, but it's a case of the                                                               
state  providing  a  rebuttal  to  the  White  House's  arguments                                                               
against  this to  say we  understand your  concerns, but  you can                                                               
fund   LWCF  and   arrange  the   funding  to   states  so   that                                                               
environmental projects are mitigated.  He explained that the 37.5                                                               
percent  is made  up of  two sectors:  27.5 percent  goes to  the                                                               
state and then the state would  have to apply to the Treasury for                                                               
an  additional  10   percent,  which  could  only   be  spent  on                                                               
alternative  energy  development   or  environmental  mitigation.                                                               
Until the  Treasury was satisfied  of the projects  submitted for                                                               
money,  it  wouldn't award  that  10  percent.  He said  this  10                                                               
percent is going for projects that  are exactly the same as those                                                               
in  the LWCF  and the  President's other  environmental projects.                                                               
The new  chairwoman has stated  that these projects will  be much                                                               
better  mitigated  on a  state  level  than  by the  Treasury  of                                                               
Department  of Interior  on a  national level,  since states  are                                                               
much  more efficient  at  environmental  mitigation and  spending                                                               
money appropriately with regard to OCS development.                                                                             
                                                                                                                                
5:02:30 PM                                                                                                                    
SENATOR  GIESSEL,  finding  no questions,  thanked  him  for  his                                                               
testimony and closed public testimony.                                                                                          
                                                                                                                                
SENATOR GIESSEL  thanked Ms.  Sydeman for  updating them  on this                                                               
legislation  and  said  she   was  considering  some  amendments;                                                               
therefore, SJR 5 would be held in committee.                                                                                    
                                                                                                                                
SENATOR  MCGUIRE expressed  her frustration  about how  Alaska is                                                               
viewed by the federal government and  she would love to see a few                                                               
more whereases about  what has been done in the  state already to                                                               
relocating  villages  to  prevent coastal  erosion,  funding  the                                                               
Arctic  University  in  Fairbanks,  helping  look  at  affordable                                                               
housing  in  villages, and  looking  at  funding for  deep  water                                                               
ports.  It's important  to educate  the federal  government about                                                               
what the state  is doing with these funds and  what it is already                                                               
doing. For  20 years they had  been asking for a  Polar-class ice                                                               
breaker and haven't gotten one and  they had been asking for help                                                               
developing the Arctic. Alaska has dug  into its own coffers to do                                                               
this  and  it would  be  nice  to  have some  additional  revenue                                                               
sharing the way other Gulf Coast states have.                                                                                   
                                                                                                                                
She  said   $250  billion  in   infrastructure  needs   had  been                                                               
identified  for  the people  of  Alaska;  it  comes down  to  the                                                               
potential for  oil spills  occurring in the  Bering Sea  that has                                                               
fed the earth almost a billion tons of Pollock.                                                                                 
                                                                                                                                
SENATOR GIESSEL  said those were  excellent comments. [SJR  5 was                                                               
held in committee.]