Legislature(1995 - 1996)
04/13/1995 08:40 AM House FIN
| Audio | Topic |
|---|
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
HOUSE FINANCE COMMITTEE
APRIL 13, 1995
8:40 A.M.
TAPE HFC 95 - 84, Side 2, #000 - end.
TAPE HFC 95 - 85, Side 1, #000 - end.
TAPE HFC 95 - 85, Side 2, #000 - #217.
CALL TO ORDER
Co-Chair Mark Hanley called the House Finance Committee
meeting to order at 8:40 A.M.
PRESENT
Co-Chair Hanley Representative Kohring
Co-Chair Foster Representative Martin
Representative Kelly Representative Navarre
Representative Brown Representative Parnell
Representative Therriault
Representative Mulder and Representative Grussendorf were
not present for the meeting.
ALSO PRESENT
Rod Mourant, Staff, Representative Pete Kott; Catherine
Reardon, Director, Division of Occupational Licensing,
Department of Commerce and Economic Development; Randy
Welker, Legislative Auditor, Legislative Affairs;
Representative Norman Rokeberg; Patrick Coughlin, Assistant
Attorney General, Oil and Gas, Mining Section, Civil
Division, Department of Natural Resources; Ken Boyd, Acting
Director, Division of Oil and Gas, Department of Natural
Resources.
SUMMARY
HB 207 An Act relating to adjustments to royalty reserved
to the state to encourage otherwise uneconomic
production of oil and gas; relating to the
depositing of royalties and royalty sale proceeds
in the Alaska permanent fund; and providing for an
effective date.
CS HB 207 (FIN) was reported out of Committee with
a "do pass" recommendation and with fiscal notes
by the Department of Revenue dated 3/22/95, the
Department of Natural Resources dated 3/8/95 and a
1
zero fiscal notes by the Department of Revenue
dated 2/27/95.
HB 233 An Act extending until 1999 the termination date
of the Board of Clinical Social Work Examiners,
Board of Marital and Family Therapy, State Medical
Board, Board of Nursing, Board of Nursing Home
Administrators, Board of Psychologist and
Psychological Associate Examiners, Real Estate
Commission, and Hazardous Substance Spill
Technology Review Council; extending until 1996
the termination date of the Board of Marine Pilots
and the Correctional Industries Commission; and
providing for an effective date.
CS HB 233 (FIN) was reported out of Committee with
a "do pass" recommendation and with fiscal notes
by the Department of Commerce and Economic
Development and zero fiscal notes by the
Department of Administration dated 3/20/95 and the
Department of Transportation and Public Facilities
dated 3/20/95.
HOUSE BILL 233
"An Act extending until 1999 the termination date of
the Board of Clinical Social Work Examiners, Board of
Marital and Family Therapy, State Medical Board, Board
of Nursing, Board of Nursing Home Administrators, Board
of Psychologist and Psychological Associate Examiners,
Real Estate Commission, and Hazardous Substance Spill
Technology Review Council; extending until 1996 the
termination date of the Board of Marine Pilots and the
Correctional Industries Commission; and providing for
an effective date."
Co-Chair Hanley indicated that HB 233 would extend the
existence of numerous boards and commissions which are
either in their sunset or wind-down year. The affected
boards and commissions perform regulatory and licensure
services for the State of Alaska. A work draft #9-LS0682\R,
Lauterbach, 4/12/95, was distributed to Committee members.
[Copy on file]. The draft extends the boards and
commissions to the dates recommended by the audit.
ROD MOURANT, STAFF, REPRESENTATIVE PETE KOTT, testified that
the sunset dates on all sections match the recommendations
made by Legislative Audit. Representative Navarre asked if
complaints had been registered regarding the board process.
Mr. Mourant did not know of any. Representative Navarre
noted that he supported the board changes, although, he
pointed out that there currently exists a process
2
established for a final year audit.
Discussion followed between Representative Martin and
Representative Navarre regarding the audit process.
Representative Foster MOVED that the work draft be the
version before the Committee. Representative Therriault
OBJECTED, noting that he had introduced an amendment adopted
at a previous meeting [Amendment #1] which deleted the
Hazardous Technology Review Council. He remarked that
material remained in the work draft currently before the
Committee.
Representative Brown noted the letter on file from RCAC in
support of the Council. She pointed out that the Council
resulted from a recommendation from the Oil Spill Division,
following Exxon Valdez and the lack of oil spill technology.
Representative Therriault countered, through action taken on
the operating budget, their funding has been deleted from
the budget thus negating the need for the council.
Co-Chair Hanley recommended deleting Section 10 which would
include the appropriate change to the title before moving
the work draft. Representative Therriault WITHDREW his
MOTION. There being NO OBJECTION, it was withdrawn.
Representative Foster MOVED the work draft excluding Section
Representative Navarre MOVED to delete Section #9. There
being NO OBJECTION, it was deleted. Co-Chair Hanley asked
when the audits would begin.
RANDY WELKER, LEGISLATIVE AUDITOR, LEGISLATIVE AFFAIRS,
stated that the audits are required by statute and are
scheduled routinely.
CATHERINE REARDON, DIRECTOR, DIVISION OF OCCUPATIONAL
LICENSING, DEPARTMENT OF COMMERCE AND ECONOMIC DEVELOPMENT,
explained Section #2, the Board of Marine Pilots. She asked
the Committee to consider extending that board until 1999.
There currently exists legislation in both the House and the
Senate to change the statute regarding marine pilots which
could extend the marine pilot board until 1999. She
repeated that it would be easiest for the Department if all
the legislation had the same date. Also, the Board of
Marine Pilots is in it's wind-down year, so at the time that
the audit was prepared in 1993, Legislative Budget and Audit
had recommended a four year extension. She thought changing
the date to 1999 would not be against the general advice of
the audit group. Mr. Welker agreed.
Representative Navarre MOVED to amend Page 1, Line 13,
3
deleting "1998" and inserting "1999". There being NO
OBJECTION, it was adopted.
Representative Martin MOVED to report CS HB 233 (FIN) out of
Committee with individual recommendations and with the
accompanying fiscal notes. There being NO OBJECTIONS, it
was so ordered.
CS HB 233 (FIN) was reported out of Committee with a "do
pass" recommendations and with fiscal notes by the
Department of Commerce and Economic Development, the
Department of Education and zero fiscal notes by the
Department of Administration dated 3/20/95 and the
Department of Transportation and Public Facilities dated
3/20/95.
HOUSE BILL 207
An Act relating to adjustments to royalty reserved to
the state to encourage otherwise uneconomic production
of oil and gas; relating to the depositing of royalties
and royalty sale proceeds in the Alaska permanent fund;
and providing for an effective date."
Representative Therriault MOVED to adopt the work draft #9-
GH0039\H, Chenoweth, 4/12/95 as the version before the
Committee. There being NO OBJECTION, it was adopted.
Representative Therriault summarized the changes made at the
Subcommittee level.
KEN BOYD, ACTING DIRECTOR, DIVISION OF OIL AND GAS,
DEPARTMENT OF NATURAL RESOURCES, commented that the change
made to Page 3, Section B was the only one that the
Administration was not in support of. The Knowles
Administration wants the floor for the reduction to be
established at 75%.
REPRESENTATIVE ROKEBERG appreciated the Subcommittee's
effort, although noted concern with the oversight provision
indicated in Section #3. Representative Brown echoed her
concern with the lack of oversight proposed in the
legislation.
Representative Brown explained that Amendment #1 [Attachment
of the preliminary decision. Representative Brown MOVED to
adopt Amendment #1. Representative Therriault recommended a
conceptual amendment deleting "written" each time it appears
in the amendment. There being NO OBJECTION to the
conceptual amendment, it was adopted. Representative
Rokeberg recommended that consideration of Amendment #2
precede Amendment #1.
4
Representative Brown remarked that the Amendment #1 would
give the Legislature access to the "meat" of decisions and
underlining data. She pointed out, that information, as
the bill is currently written would be kept confidential.
Representative Brown urged the Committee to adopt the
amendment. There being NO OBJECTIONS, Amendment #1 was
adopted.
Representative Brown MOVED to adopt Amendment #2. She spoke
to the amendment in relationship to the "far reaching"
aspects of the legislation. The bill would provide more
discretion than had previously been given to the Department
of Natural Resource's Commissioner. She commented on the
merit of providing oversight by a separate branch of
government (Legislature) to prevent corruption. Co-Chair
Hanley questioned the legislative recourse proposed under
the amendment. Representative Brown explained that recourse
would be to allow public comment by individual legislators.
She acknowledged that the ultimate authority would rest with
the Commissioner of the Department of Natural Resources.
Representative Therriault thought that Amendment #2 would
create more frustration for the commissioner while at the
same time would provide information to the Legislature on
the findings and determination.
Representative Martin suggested that it would be difficult
for some legislators to keep private information
confidential. He supported continuing with the status quo.
Representative Parnell agreed, stating that he voted against
the amendment in Subcommittee for reasons of
confidentiality. He felt that there would be no incentive
to keep important information confidential.
(Tape Change, HFC 95-85, Side 1).
Representative Rokeberg concurred that public oversight was
needed. He pointed out that he supported Amendment #2,
although recommended deleting "the committee shall give
notice to all members of the legislature of the committee's
meeting in executive session with the commissioner...." He
felt with the removal of that language would protect the
confidentiality of the material while continuing to allow
Legislative Budget and Audit Committee (LBA) to call an
Executive Session.
Representative Rokeberg spoke strongly in favor of the
removal of the sunset provision. He indicated that there
has been significant testimony that the sunset provision
would not be workable for the bill. The process of applying
for a royalty reduction and receiving investment commitment
5
from the private sector would take years. He thought that
time frame would be detractive and with a five year sunset,
destroy the intent of the bill.
Co-Chair Hanley asked if there had been oversight provisions
in the Oil and Gas or House Resource Committee versions.
Representative Rokeberg stated there were. Before the bill
moved from Committee, the conflict of interest between the
Conservation Commission and the commissioner was addressed.
He noted that he supported the oversight capacity. Co-Chair
Hanley voiced his concern in deleting the executive session
portion.
Representative Navarre spoke against the sunset provision,
and in particular regarding information not made available
to legislators from the executive session. He felt that the
responsibility of the audit and the Legislature would be to
provide a check and balance for each body of government.
Representative Parnell asked what access the Legislature had
when the original royalty contracts were negotiated.
Representative Brown responded that the original royalties
were not negotiated. The original royalty was acquired in
an competitive sale. The competitive sale process provides
a great protection for the interests of the State. She
emphasized that a situation would be established through the
proposed legislation which would allow negotiations to
determine that royalty.
Representative Therriault asked if in the current royalty
process could be adjusted. Representative Brown responded
that royalties could only increase. Mr. Boyd agreed with
Representative Brown. He added that the legislation would
provide clear authority to the commissioner to lower the
royalty.
Representative Martin asked about past experience in
competitive sales. Mr. Boyd responded once a lease sale
exists, a provision then exists clarifying that royalties
could be reduced at some point. He added, a protection
within that concern, specifies that before one can receive a
reduction on a new field, the field must be delineated.
That process is time consuming and would consist of drilling
wells. Mr. Boyd concluded that the Department would not
object to having the legislative oversight.
A roll call was taken on the MOTION to adopt Amendment #2.
IN FAVOR: Navarre, Brown, Kelly
OPPOSED: Kohring, Martin, Parnell, Therriault,
Foster, Hanley
6
Representatives Mulder and Grussendorf were not present for
the vote.
The MOTION FAILED (3-6).
Representative Brown MOVED to adopt Amendment #3.
[Attachment #3]. She stated that the amendment would
clarify the actual situation with respect to appeals
received by the court. She added that Amendment #3 would
provide a standard of review. Mr. Boyd responded that an
appeal would be available with or without the recommended
language.
Co-Chair Hanley questioned if the precedence of appeal had
been established and if so, the language would cover all the
circumstances which could occur.
PATRICK COUGHLIN, ASSISTANT ATTORNEY GENERAL, OIL AND GAS,
MINING SECTION, CIVIL DIVISION, DEPARTMENT OF NATURAL
RESOURCES, responded that the language of the proposed
amendment accurately reflects what the court had previously
established: "The limited right to review agency decisions,
the court would apply where there is a provision which is
not appealable".
Discussion followed between Representative Parnell and
Representative Therriault regarding the need for the
language change.
A roll call was taken on the MOTION to adopt Amendment #3.
IN FAVOR: Brown
OPPOSED: Martin, Navarre, Parnell, Therriault,
Kelly, Kohring, Hanley, Foster.
Representatives Mulder and Grussendorf were not present for
the vote.
The MOTION FAILED (1-8).
Representative Brown MOVED to adopt Amendment #4.
[Attachment #4]. Representative Brown explained that
Amendment #4 would provide a clear standard of what the
commissioner's goals were. She felt that current language
establishes a "vague" concept of the "best interest" for the
State as the standard, whereas, the amendment would provide
that the natural resources be managed for their maximum
economic value.
Co-Chair Hanley OBJECTED. Mr. Boyd stressed that a standard
could not be met, and that consequently it could not be
proven as met. He added that language on Page 2, Line 8,
7
would clarify the existing law for older and newer fields.
That section explains that "the field or pool would not be
otherwise economic feasible".
Representative Brown pointed out that Page 4, Line 20
establishes the standard in law at this time. She did not
agree with Mr. Boyd, that the standard would be compatible
in order to provide the State a reasonable rate of return.
She pointed out that the Subcommittee members did not agree
that a rate of return could be determined. Representative
Navarre MOVED to amend Amendment #4 by deleting "maximum"
and inserting "best". There being NO OBJECTION, it was
changed.
A roll call was taken on the MOTION to adopt amended
Amendment #4.
IN FAVOR: Navarre, Brown
OPPOSED: Parnell, Therriault, Kelly, Kohring,
Martin, Foster, Hanley
Representatives Mulder and Grussendorf were not present for
the vote.
The MOTION FAILED (2-7).
Representative Brown spoke to Amendment #5. [Attachment
adding language to Line 5, following "shall" inserting "with
the applicants consent". She thought that the amendment
would provide the Legislature information regarding the
decision made by the commissioner. Representative Martin
OBJECTED.
Representative Rokeberg interjected that the language would
be a redundancy that the findings and the determination be
made public. Mr. Boyd agreed with Representative Rokeberg
although pointed out that the amendment would provide
additional information requiring the applicant to
demonstrate to the public confidential data.
A roll call was taken on the MOTION to adopt Amendment #5.
IN FAVOR: Brown
OPPOSED: Parnell, Therriault, Kelly, Kohring,
Martin, Hanley, Foster
Representatives Mulder, Grussendorf and Navarre were not
present for the vote.
The MOTION FAILED (1-7).
8
Representative Brown MOVED to adopt Amendment #6.
[Attachment #6]. She stated that Amendment #6 would change
the floor from 75% to 60%.
(Tape Change, HFC 95-85, Side 2).
Representative Brown summarized that 75% would provide a
royalty of 3.25% floor and would then set the floor at 5%
for those fields not previously producing. She thought that
would be in the best interested for the royalty owners.
Representative Therriault OBJECTED stating that the price
should be negotiable and would depend on new information
when made available. Representative Rokeberg agreed with
Representative Therriault.
A roll call was taken on the MOTION to adopt Amendment #6.
IN FAVOR: Brown
OPPOSED: Parnell, Therriault, Kelly, Kohring,
Martin, Navarre, Foster, Hanley
Representatives Mulder and Grussendorf were not present for
the vote.
The MOTION FAILED (1-8).
Representative Parnell advised that he had planned to offer
a sunset amendment, but based on Representative Rokeberg
statement, he would hold that proposal in order to gather
more information, and then offer it on the House floor.
Representative Therriault MOVED to report CS HB 207 (FIN)
out of Committee with individual recommendations and with
the accompanying fiscal notes. Representative Brown asked
if the bill had a fiscal note from the Department of Natural
Resources. Mr. Boyd stated that the fiscal note had been
removed in the House Resources Committee which amounted to
$105.6 thousand dollars. That amount would pay for a
Petroleum Engineer to provide the required in-house work.
Representative Brown referenced the reduction to the Oil and
Gas Division's budget in the Lease Sale Analysis component.
She asked how that reduction would affect the level of
professional staff in the Division in order to review
applications. Mr. Boyd explained that cuts would cause the
loss of at least one person from the team. Representative
Brown asked the Committee's reconsideration of the fiscal
note originally requested by the Department.
Representative Therriault MODIFIED THE MOTION to move only
the bill from Committee with individual recommendations.
There being NO OBJECTION, it was so ordered.
9
Representative Brown MOVED the original fiscal notes. There
being NO OBJECTION, it was so ordered.
CS HB 207 (FIN) was reported out of Committee with a "do
pass" recommendation and with fiscal notes by the Department
of Revenue dated 3/22/95, the Department of Natural
Resources dated 3/8/95, and a zero fiscal note by the
Department of Revenue dated 2/27/95.
ADJOURNMENT
The meeting adjourned at 10:15 A.M.
HOUSE FINANCE COMMITTEE
APRIL 13, 1995
8:40 A.M.
TAPE HFC 95 - 84, Side 2, #000 - end.
TAPE HFC 95 - 85, Side 1, #000 - end.
TAPE HFC 95 - 85, Side 2, #000 - #217.
CALL TO ORDER
Co-Chair Mark Hanley called the House Finance Committee
meeting to order at 8:40 A.M.
PRESENT
Co-Chair Hanley Representative Kohring
Co-Chair Foster Representative Martin
Representative Kelly Representative Navarre
Representative Brown Representative Parnell
Representative Therriault
Representative Mulder and Representative Grussendorf were
not present for the meeting.
ALSO PRESENT
Rod Mourant, Staff, Representative Pete Kott; Catherine
Reardon, Director, Division of Occupational Licensing,
Department of Commerce and Economic Development; Randy
Welker, Legislative Auditor, Legislative Affairs;
Representative Norman Rokeberg; Patrick Coughlin, Assistant
Attorney General, Oil and Gas, Mining Section, Civil
Division, Department of Natural Resources; Ken Boyd, Acting
Director, Division of Oil and Gas, Department of Natural
Resources.
10
SUMMARY
HB 207 An Act relating to adjustments to royalty reserved
to the state to encourage otherwise uneconomic
production of oil and gas; relating to the
depositing of royalties and royalty sale proceeds
in the Alaska permanent fund; and providing for an
effective date.
CS HB 207 (FIN) was reported out of Committee with
a "do pass" recommendation and with fiscal notes
by the Department of Revenue dated 3/22/95, the
Department of Natural Resources dated 3/8/95 and a
zero fiscal notes by the Department of Revenue
dated 2/27/95.
HB 233 An Act extending until 1999 the termination date
of the Board of Clinical Social Work Examiners,
Board of Marital and Family Therapy, State Medical
Board, Board of Nursing, Board of Nursing Home
Administrators, Board of Psychologist and
Psychological Associate Examiners, Real Estate
Commission, and Hazardous Substance Spill
Technology Review Council; extending until 1996
the termination date of the Board of Marine Pilots
and the Correctional Industries Commission; and
providing for an effective date.
CS HB 233 (FIN) was reported out of Committee with
a "do pass" recommendation and with fiscal notes
by the Department of Commerce and Economic
Development and zero fiscal notes by the
Department of Administration dated 3/20/95 and the
Department of Transportation and Public Facilities
dated 3/20/95.
HOUSE BILL 233
"An Act extending until 1999 the termination date of
the Board of Clinical Social Work Examiners, Board of
Marital and Family Therapy, State Medical Board, Board
of Nursing, Board of Nursing Home Administrators, Board
of Psychologist and Psychological Associate Examiners,
Real Estate Commission, and Hazardous Substance Spill
Technology Review Council; extending until 1996 the
termination date of the Board of Marine Pilots and the
Correctional Industries Commission; and providing for
an effective date."
Co-Chair Hanley indicated that HB 233 would extend the
existence of numerous boards and commissions which are
either in their sunset or wind-down year. The affected
11
boards and commissions perform regulatory and licensure
services for the State of Alaska. A work draft #9-LS0682\R,
Lauterbach, 4/12/95, was distributed to Committee members.
[Copy on file]. The draft extends the boards and
commissions to the dates recommended by the audit.
ROD MOURANT, STAFF, REPRESENTATIVE PETE KOTT, testified that
the sunset dates on all sections match the recommendations
made by Legislative Audit. Representative Navarre asked if
complaints had been registered regarding the board process.
Mr. Mourant did not know of any. Representative Navarre
noted that he supported the board changes, although, he
pointed out that there currently exists a process
established for a final year audit.
Discussion followed between Representative Martin and
Representative Navarre regarding the audit process.
Representative Foster MOVED that the work draft be the
version before the Committee. Representative Therriault
OBJECTED, noting that he had introduced an amendment adopted
at a previous meeting [Amendment #1] which deleted the
Hazardous Technology Review Council. He remarked that
material remained in the work draft currently before the
Committee.
Representative Brown noted the letter on file from RCAC in
support of the Council. She pointed out that the Council
resulted from a recommendation from the Oil Spill Division,
following Exxon Valdez and the lack of oil spill technology.
Representative Therriault countered, through action taken on
the operating budget, their funding has been deleted from
the budget thus negating the need for the council.
Co-Chair Hanley recommended deleting Section 10 which would
include the appropriate change to the title before moving
the work draft. Representative Therriault WITHDREW his
MOTION. There being NO OBJECTION, it was withdrawn.
Representative Foster MOVED the work draft excluding Section
Representative Navarre MOVED to delete Section #9. There
being NO OBJECTION, it was deleted. Co-Chair Hanley asked
when the audits would begin.
RANDY WELKER, LEGISLATIVE AUDITOR, LEGISLATIVE AFFAIRS,
stated that the audits are required by statute and are
scheduled routinely.
CATHERINE REARDON, DIRECTOR, DIVISION OF OCCUPATIONAL
LICENSING, DEPARTMENT OF COMMERCE AND ECONOMIC DEVELOPMENT,
explained Section #2, the Board of Marine Pilots. She asked
12
the Committee to consider extending that board until 1999.
There currently exists legislation in both the House and the
Senate to change the statute regarding marine pilots which
could extend the marine pilot board until 1999. She
repeated that it would be easiest for the Department if all
the legislation had the same date. Also, the Board of
Marine Pilots is in it's wind-down year, so at the time that
the audit was prepared in 1993, Legislative Budget and Audit
had recommended a four year extension. She thought changing
the date to 1999 would not be against the general advice of
the audit group. Mr. Welker agreed.
Representative Navarre MOVED to amend Page 1, Line 13,
deleting "1998" and inserting "1999". There being NO
OBJECTION, it was adopted.
Representative Martin MOVED to report CS HB 233 (FIN) out of
Committee with individual recommendations and with the
accompanying fiscal notes. There being NO OBJECTIONS, it
was so ordered.
CS HB 233 (FIN) was reported out of Committee with a "do
pass" recommendations and with fiscal notes by the
Department of Commerce and Economic Development, the
Department of Education and zero fiscal notes by the
Department of Administration dated 3/20/95 and the
Department of Transportation and Public Facilities dated
3/20/95.
HOUSE BILL 207
An Act relating to adjustments to royalty reserved to
the state to encourage otherwise uneconomic production
of oil and gas; relating to the depositing of royalties
and royalty sale proceeds in the Alaska permanent fund;
and providing for an effective date."
Representative Therriault MOVED to adopt the work draft #9-
GH0039\H, Chenoweth, 4/12/95 as the version before the
Committee. There being NO OBJECTION, it was adopted.
Representative Therriault summarized the changes made at the
Subcommittee level.
KEN BOYD, ACTING DIRECTOR, DIVISION OF OIL AND GAS,
DEPARTMENT OF NATURAL RESOURCES, commented that the change
made to Page 3, Section B was the only one that the
Administration was not in support of. The Knowles
Administration wants the floor for the reduction to be
established at 75%.
REPRESENTATIVE ROKEBERG appreciated the Subcommittee's
effort, although noted concern with the oversight provision
13
indicated in Section #3. Representative Brown echoed her
concern with the lack of oversight proposed in the
legislation.
Representative Brown explained that Amendment #1 [Attachment
of the preliminary decision. Representative Brown MOVED to
adopt Amendment #1. Representative Therriault recommended a
conceptual amendment deleting "written" each time it appears
in the amendment. There being NO OBJECTION to the
conceptual amendment, it was adopted. Representative
Rokeberg recommended that consideration of Amendment #2
precede Amendment #1.
Representative Brown remarked that the Amendment #1 would
give the Legislature access to the "meat" of decisions and
underlining data. She pointed out, that information, as
the bill is currently written would be kept confidential.
Representative Brown urged the Committee to adopt the
amendment. There being NO OBJECTIONS, Amendment #1 was
adopted.
Representative Brown MOVED to adopt Amendment #2. She spoke
to the amendment in relationship to the "far reaching"
aspects of the legislation. The bill would provide more
discretion than had previously been given to the Department
of Natural Resource's Commissioner. She commented on the
merit of providing oversight by a separate branch of
government (Legislature) to prevent corruption. Co-Chair
Hanley questioned the legislative recourse proposed under
the amendment. Representative Brown explained that recourse
would be to allow public comment by individual legislators.
She acknowledged that the ultimate authority would rest with
the Commissioner of the Department of Natural Resources.
Representative Therriault thought that Amendment #2 would
create more frustration for the commissioner while at the
same time would provide information to the Legislature on
the findings and determination.
Representative Martin suggested that it would be difficult
for some legislators to keep private information
confidential. He supported continuing with the status quo.
Representative Parnell agreed, stating that he voted against
the amendment in Subcommittee for reasons of
confidentiality. He felt that there would be no incentive
to keep important information confidential.
(Tape Change, HFC 95-85, Side 1).
Representative Rokeberg concurred that public oversight was
needed. He pointed out that he supported Amendment #2,
14
although recommended deleting "the committee shall give
notice to all members of the legislature of the committee's
meeting in executive session with the commissioner...." He
felt with the removal of that language would protect the
confidentiality of the material while continuing to allow
Legislative Budget and Audit Committee (LBA) to call an
Executive Session.
Representative Rokeberg spoke strongly in favor of the
removal of the sunset provision. He indicated that there
has been significant testimony that the sunset provision
would not be workable for the bill. The process of applying
for a royalty reduction and receiving investment commitment
from the private sector would take years. He thought that
time frame would be detractive and with a five year sunset,
destroy the intent of the bill.
Co-Chair Hanley asked if there had been oversight provisions
in the Oil and Gas or House Resource Committee versions.
Representative Rokeberg stated there were. Before the bill
moved from Committee, the conflict of interest between the
Conservation Commission and the commissioner was addressed.
He noted that he supported the oversight capacity. Co-Chair
Hanley voiced his concern in deleting the executive session
portion.
Representative Navarre spoke against the sunset provision,
and in particular regarding information not made available
to legislators from the executive session. He felt that the
responsibility of the audit and the Legislature would be to
provide a check and balance for each body of government.
Representative Parnell asked what access the Legislature had
when the original royalty contracts were negotiated.
Representative Brown responded that the original royalties
were not negotiated. The original royalty was acquired in
an competitive sale. The competitive sale process provides
a great protection for the interests of the State. She
emphasized that a situation would be established through the
proposed legislation which would allow negotiations to
determine that royalty.
Representative Therriault asked if in the current royalty
process could be adjusted. Representative Brown responded
that royalties could only increase. Mr. Boyd agreed with
Representative Brown. He added that the legislation would
provide clear authority to the commissioner to lower the
royalty.
Representative Martin asked about past experience in
competitive sales. Mr. Boyd responded once a lease sale
exists, a provision then exists clarifying that royalties
15
could be reduced at some point. He added, a protection
within that concern, specifies that before one can receive a
reduction on a new field, the field must be delineated.
That process is time consuming and would consist of drilling
wells. Mr. Boyd concluded that the Department would not
object to having the legislative oversight.
A roll call was taken on the MOTION to adopt Amendment #2.
IN FAVOR: Navarre, Brown, Kelly
OPPOSED: Kohring, Martin, Parnell, Therriault,
Foster, Hanley
Representatives Mulder and Grussendorf were not present for
the vote.
The MOTION FAILED (3-6).
Representative Brown MOVED to adopt Amendment #3.
[Attachment #3]. She stated that the amendment would
clarify the actual situation with respect to appeals
received by the court. She added that Amendment #3 would
provide a standard of review. Mr. Boyd responded that an
appeal would be available with or without the recommended
language.
Co-Chair Hanley questioned if the precedence of appeal had
been established and if so, the language would cover all the
circumstances which could occur.
PATRICK COUGHLIN, ASSISTANT ATTORNEY GENERAL, OIL AND GAS,
MINING SECTION, CIVIL DIVISION, DEPARTMENT OF NATURAL
RESOURCES, responded that the language of the proposed
amendment accurately reflects what the court had previously
established: "The limited right to review agency decisions,
the court would apply where there is a provision which is
not appealable".
Discussion followed between Representative Parnell and
Representative Therriault regarding the need for the
language change.
A roll call was taken on the MOTION to adopt Amendment #3.
IN FAVOR: Brown
OPPOSED: Martin, Navarre, Parnell, Therriault,
Kelly, Kohring, Hanley, Foster.
Representatives Mulder and Grussendorf were not present for
the vote.
The MOTION FAILED (1-8).
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Representative Brown MOVED to adopt Amendment #4.
[Attachment #4]. Representative Brown explained that
Amendment #4 would provide a clear standard of what the
commissioner's goals were. She felt that current language
establishes a "vague" concept of the "best interest" for the
State as the standard, whereas, the amendment would provide
that the natural resources be managed for their maximum
economic value.
Co-Chair Hanley OBJECTED. Mr. Boyd stressed that a standard
could not be met, and that consequently it could not be
proven as met. He added that language on Page 2, Line 8,
would clarify the existing law for older and newer fields.
That section explains that "the field or pool would not be
otherwise economic feasible".
Representative Brown pointed out that Page 4, Line 20
establishes the standard in law at this time. She did not
agree with Mr. Boyd, that the standard would be compatible
in order to provide the State a reasonable rate of return.
She pointed out that the Subcommittee members did not agree
that a rate of return could be determined. Representative
Navarre MOVED to amend Amendment #4 by deleting "maximum"
and inserting "best". There being NO OBJECTION, it was
changed.
A roll call was taken on the MOTION to adopt amended
Amendment #4.
IN FAVOR: Navarre, Brown
OPPOSED: Parnell, Therriault, Kelly, Kohring,
Martin, Foster, Hanley
Representatives Mulder and Grussendorf were not present for
the vote.
The MOTION FAILED (2-7).
Representative Brown spoke to Amendment #5. [Attachment
adding language to Line 5, following "shall" inserting "with
the applicants consent". She thought that the amendment
would provide the Legislature information regarding the
decision made by the commissioner. Representative Martin
OBJECTED.
Representative Rokeberg interjected that the language would
be a redundancy that the findings and the determination be
made public. Mr. Boyd agreed with Representative Rokeberg
although pointed out that the amendment would provide
additional information requiring the applicant to
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demonstrate to the public confidential data.
A roll call was taken on the MOTION to adopt Amendment #5.
IN FAVOR: Brown
OPPOSED: Parnell, Therriault, Kelly, Kohring,
Martin, Hanley, Foster
Representatives Mulder, Grussendorf and Navarre were not
present for the vote.
The MOTION FAILED (1-7).
Representative Brown MOVED to adopt Amendment #6.
[Attachment #6]. She stated that Amendment #6 would change
the floor from 75% to 60%.
(Tape Change, HFC 95-85, Side 2).
Representative Brown summarized that 75% would provide a
royalty of 3.25% floor and would then set the floor at 5%
for those fields not previously producing. She thought that
would be in the best interested for the royalty owners.
Representative Therriault OBJECTED stating that the price
should be negotiable and would depend on new information
when made available. Representative Rokeberg agreed with
Representative Therriault.
A roll call was taken on the MOTION to adopt Amendment #6.
IN FAVOR: Brown
OPPOSED: Parnell, Therriault, Kelly, Kohring,
Martin, Navarre, Foster, Hanley
Representatives Mulder and Grussendorf were not present for
the vote.
The MOTION FAILED (1-8).
Representative Parnell advised that he had planned to offer
a sunset amendment, but based on Representative Rokeberg
statement, he would hold that proposal in order to gather
more information, and then offer it on the House floor.
Representative Therriault MOVED to report CS HB 207 (FIN)
out of Committee with individual recommendations and with
the accompanying fiscal notes. Representative Brown asked
if the bill had a fiscal note from the Department of Natural
Resources. Mr. Boyd stated that the fiscal note had been
removed in the House Resources Committee which amounted to
$105.6 thousand dollars. That amount would pay for a
Petroleum Engineer to provide the required in-house work.
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Representative Brown referenced the reduction to the Oil and
Gas Division's budget in the Lease Sale Analysis component.
She asked how that reduction would affect the level of
professional staff in the Division in order to review
applications. Mr. Boyd explained that cuts would cause the
loss of at least one person from the team. Representative
Brown asked the Committee's reconsideration of the fiscal
note originally requested by the Department.
Representative Therriault MODIFIED THE MOTION to move only
the bill from Committee with individual recommendations.
There being NO OBJECTION, it was so ordered.
Representative Brown MOVED the original fiscal notes. There
being NO OBJECTION, it was so ordered.
CS HB 207 (FIN) was reported out of Committee with a "do
pass" recommendation and with fiscal notes by the Department
of Revenue dated 3/22/95, the Department of Natural
Resources dated 3/8/95, and a zero fiscal note by the
Department of Revenue dated 2/27/95.
ADJOURNMENT
The meeting adjourned at 10:15 A.M.
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