Legislature(2019 - 2020)BUTROVICH 205
03/23/2020 03:30 PM RESOURCES
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SJR 15-STATE FULL SHARE OF PROFITS IN ANWR 3:58:24 PM CHAIR MICCICHE announced that the final order of business would be SENATE JOINT RESOLUTION NO. 15, requesting the United States Congress to repeal sec. 20001(b)(5) of the Tax Cuts and Jobs Act to honor the Alaska Statehood Act with respect to the state's share of bonuses, royalties, and rentals from exploration and development in the coastal plain of the Arctic National Wildlife Refuge. 3:58:42 PM SENATOR BILL WIELECHOWSKI, Alaska State Legislature, Juneau, Alaska, sponsor of SJR 15, thanked the committee for hearing SJR 15 and noted that his intern would present the resolution. 3:59:00 PM ALEXANDER SCHROEDER, Staff, Senator Wielechowski, Alaska State Legislature, Juneau, Alaska, said SJR 15 urges Congress to repeal section 20001(b)(5) of the Tax Cuts and Jobs Act of 2017, a bill that opened federally owned land in the Arctic National Wildlife Refuge (ANWR) for oil, gas, and mining leasing and exploration. That bill changed the revenue sharing promise made at statehood between the State of Alaska and the federal government from 90 percent to 50 percent. MR. SCHROEDER explained that the Alaska Statehood Act adopted part of the Mineral Leasing Act to protect the State's mineral rights. Section 28(b) in the Alaska Statehood Act asserts that the State would receive 90 percent of oil and gas revenue from federal land. Lawmakers appropriately decided to ensure Alaska realized its economic potential via passage of the Alaska Statehood Act. He said reducing Alaska's share from 90 percent to 50 percent already has projected consequences. While most revenues from ANWR are unprojectable, bonus lease sale revenues are already determined with certainty by the Congressional Budget Office (CBO) 2017 analysis. That analysis estimated that gross bonus lease sales from 800,000 acres out of the total 1.5 million acres would be approximately $2.2 billion over a 10-year period. The difference between the State receiving a 90 percent versus a 50 percent revenue share is $880 million. MR. SCHROEDER summarized that SJR 15 asks Congress to repeal section 20001(b)(5) of the Tax Cuts and Jobs Act and return revenue sharing to the 90/10 agreement. SJR 15 would show that the federal government recognizes the importance of why it made a promise to the people of Alaska when the State was admitted into the union. 4:02:34 PM SENATOR KAWASAKI said he does not understand why Congress changed the share percentage to 50 percent in the Tax Cuts and Jobs Act. He asked if there was anything in the congressional record that indicated whether the change was necessary or just an oversight. SENATOR WIELECHOWSKI said he presumes that the Alaska congressional delegation did what they needed to do to get the votes. However, the Alaska Statehood Act clearly states that Alaska is to get 90 percent. The U.S. Secretary of Interior during the statehood campaign said, "The Statehood Act reaffirms Alaska's preferential treatment in receiving 90 percent of all revenues from oil, gas, and coal leasing on the public domain." The people of Alaska voted on statehood based on the promise by the federal government and in the language of the Alaska Statehood Act that clearly gives the state 90 percent. It is something Congress should have considered. Congressional deals should not trump what was promised in the Alaska Statehood Act, he said. 4:04:14 PM CHAIR MICCICHE said the Alaska congressional delegation probably decided that 50 percent of something was better than 90 percent of nothing. He said he hates to second-guess that decision, but the resolution brings up a point that is worthy of discussion. SENATOR WIELECHOWSKI related that in a previous year he introduced a floor amendment urging Congress to honor what he is proposing. There was wide spread support, but Senate members recommended a resolution instead of an amendment and that's before the committee now. He said he believes that the State must constantly reassert its right to the promises that the federal government made or it could lose those rights under the theory in law called "laches or waiver." That is that rights that are not asserted may be lost. He said it's important for the State to assert its rights forestalling potential future federal rollbacks. CHAIR MICCICHE said he appreciates the resolution and the discussion. He agreed that Alaska needs to be vigilant to prevent further erosion of the State's rights. He asked Senator Coghill if he had any comments or questions since he has expertise in the areas of Alaska's constitution, statehood, and ANILCA. 4:07:00 PM SENATOR COGHILL thanked Senator Wielechowski for bringing the resolution forward and said he is exactly right. He said the resolution is totally appropriate as both a statement of fact and a political pressure point. He recalled that he struggled with the amendment that Senator Wielechowski referenced because the legislature was in the middle of asking the congressional delegation for help with something else. However, the legislature must continuously remind the delegation to bargain more for Alaska, especially when major banks are now bailing on the state's Arctic resource base while the federal government does not help. SENATOR COGHILL said he has not studied every word of SJR 15, but it is appropriate. Without the resolution, people will say Alaskans did not say anything when the federal government reduced the revenue sharing to 50 percent. 4:09:19 PM CHAIR MICCICHE said he would like to have a conversation with a staff member from the congressional delegation to provide their take on the Tax Cuts and Jobs Act. He noted that the committee will see what time it has during the legislative session based upon pending COVID-19 decisions. He remarked that he does not think the congressional delegation would relinquish the State's rights easily. He said he thinks it must have been their only solution, much like the public knowing why state legislators do the things they do. SENATOR COGHILL suggested that to expedite the resolution, the sponsor could further explain section 20001(b)(5) in the Tax Cuts and Jobs Act that the resolution requests for repeal. CHAIR MICCICHE replied that he did not know how realistic the request for expediting the resolution was due to the intent of legislators to leave Juneau within the next couple of days because of COVID-19. 4:11:10 PM SENATOR WIELECHOWSKI explained that section 20001(b)(5) in the Tax Cuts Act reduces the payment to the State of Alaska on rental and bonus receipts derived from oil and gas program operations on federal land from 90 percent to 50 percent. The section makes the change despite the Mineral Leasing Act that authorized the 90 percent payment. The Alaska Statehood Act relied on the Mineral Leasing Act. SENATOR COGHILL said with Chair Micciche's permission that the resolution could move up to Senate Rules, a committee he chairs. He noted that he addressed specific questions to prepare certain members before the resolution gets to the Senate floor. SENATOR COGHILL moved to report SJR 15 from committee. CHAIR MICCICHE stated that he did not mind the motion but emphasized that he wanted to be part of the discussion. He said he had a problem with the committee not involving the people that made the decision on the Tax Cuts and Jobs Act. SENATOR COGHILL conceded that the legislature should have said something last year, but the timing was bad due to a commitment he made to a congressional delegation member on another front. CHAIR MICCICHE noted that Senator Coghill previously made a motion on SJR 15. 4:13:26 PM SENATOR COGHILL restated his motion to report SJR 15, work order 31-LS1378\K, from committee with individual recommendations and attached fiscal note. CHAIR MICCICHE asked if anyone in the room or online wished to testify. Finding no one, he closed public testimony. 4:14:09 PM CHAIR MICCICHE found no objection to the motion and SJR 15 was reported from the Senate Resources Standing Committee.