Legislature(2003 - 2004)
04/26/2004 02:18 PM House FIN
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* first hearing in first committee of referral
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+ teleconferenced
= bill was previously heard/scheduled
HOUSE FINANCE COMMITTEE
April 26, 2004
2:18 P.M.
TAPE HFC 04 - 98, Side A
CALL TO ORDER
Co-Chair Williams called the House Finance Committee meeting
to order at 2:18 P.M.
MEMBERS PRESENT
Representative John Harris, Co-Chair
Representative Bill Williams, Co-Chair
Representative Kevin Meyer, Vice-Chair
Representative Mike Chenault
Representative Eric Croft
Representative Hugh Fate
Representative Richard Foster
Representative Mike Hawker
Representative Carl Moses
Representative Bill Stoltze
MEMBERS ABSENT
Representative Reggie Joule
ALSO PRESENT
Representative Beverly Masek; Representative Carl Gatto;
Amanda Wilson, Staff to Representative Rokeberg
PRESENT VIA TELECONFERENCE
Mark Meyers, Director, Division of Oil and Gas, Department
of Natural Resources; Mryl Thompson, Representing Self;
Chris Whittington-Evans, Friends of Mat-Su
SUMMARY
HB 395 An Act relating to shallow natural gas leasing and
the regulation of shallow natural gas operations.
HB 395 was heard and HELD in Committee for further
consideration.
HB 531 An Act relating to natural gas exploration and
development and to nonconventional gas, and
amending the section under which shallow natural
gas leases may be issued; and providing for an
effective date.
HB 531 was heard and HELD in Committee for further
consideration.
HB 255 An Act amending the Alaska Wage and Hour Act as it
relates to flexible work hour plans, the provision
of training wages, and the definitions of certain
terms; and repealing the exemption in the Act from
the payment of minimum wages for learners.
HB 255 was Scheduled but not Heard.
HB 342 An Act relating to driving while intoxicated; and
providing for an effective date.
HB 342 was heard and HELD in Committee for further
consideration.
HOUSE BILL NO. 395
An Act relating to shallow natural gas leasing and
the regulation of shallow natural gas operations.
REPRESENTATIVE HARRIS, SPONSOR, explained that the Resources
Committee Substitute deals with shallow natural gas
development in the Matanuska Valley. The bill had been heard
in the Oil and Gas, Judiciary, and Resources Committees. He
stated his preference to hold the bill and work on it rather
than hear public testimony today.
HB 395 was heard and HELD in Committee for further
consideration.
HOUSE BILL NO. 531
An Act relating to natural gas exploration and
development and to nonconventional gas, and amending
the section under which shallow natural gas leases may
be issued; and providing for an effective date.
REPRESENTATIVE BEVERLY MASEK, SPONSOR, commented that the
House Oil and Gas and Resources Committees did a lot of work
on CSHB 531(RES) and there have been several versions of the
bill.
Representative Masek read the sponsor statement as follows:
"The intent of original shallow gas leasing legislation in
1995, HB 394, was to expand development of our state's
marketable natural gas resources, as well as to promote
private-sector employment, generate less expensive energy
alternatives for rural Alaskan consumers, and enhance local
tax bases for municipalities. Shallow gas legislation was
inspired by the need to tailor the particular economies of
this resource opportunity to available market opportunities.
This type of gas extraction does not conform to the same
economies of scale as conventional deep-hole oil and gas
drilling.
Original legislation provided for leasing on a first-come,
first-served basis so that development of the resource in
areas away from the energy grid could take place. With a
well-known shortage of natural gas development opportunities
in South Central Alaska, prospects of leasing on-shore
fields in the Cook Inlet Basin became very attractive. Two
unintended consequences of this sudden interest
materialized. One, it sparked leasing of the state-owned
subsurface mineral estate in uneconomic areas, and two, it
encouraged leasing in areas where divergent interests
between gas development and established local residential
and business activities came into conflict.
Without HB 531, a subsequent gas development entity could
immediately lease land relinquished by the original lessee.
In addition, land not currently leased remains subject to
current over-the-counter standards. This bill initiates a
permanent solution to these problems. It has been brought
forward in response to strong citizen interest in the Mat-Su
Valley and on the Kenai Peninsula, with input from several
public meetings held at one time or another by the Alaska
Department of Natural Resources (DNR), and the Senate
Resources Committee.
Legislation Highlights
Eliminates over-the-counter, first-come, first-served
shallow gas leases and replaces it with area-wide leasing or
exploration licensing.
Requires a best-interest finding before any oil and gas
leasing or exploration licensing. This will give DNR control
of what land is leased, avoiding unnecessary surface-owner
conflicts. Best-interest finds are a time-tested public
process.
Creates a gas-only section of area-wide leasing and
exploration licensing identified in a best-interest finding
by DNR.
Differentiates conventional and non-conventional gas
resources for the purposes of lease rentals.
Defines conventional and non-conventional gas development,
and treats each distinctly. Recognizes that lease rights
should not be determined by a depth criteria only. Enhances
production opportunities.
Encourages exploration licenses with a best-interest finding
as the method for nonconventional gas exploration outside of
the area-wide leasing in rural Alaska.
Makes leasing and regulatory criteria fit the appropriate
activity.
Ensures competitive processes, thereby, maximizing the
state's interests."
CHRIS WHITTINGTON-EVANS, FRIENDS OF MAT-SU, A NONPROFIT
CITIZENS GROUP, VIA TELECONFERENCE, expressed support for
the bill but voiced that it has problems that he would like
to see addressed. Currently there are 157,000 acres of land
that have been applied to be leased, with about 80,000 acres
located in the Mat-Su Valley. The land is not currently
under contract and a lease is not pending on it. He said
that the reforms in this bill are very important, but the
bill should not move forward with the additional 157,000
acres excluded from the provisions of the best interest
finding, adequate notice and other policy reforms in the
bill. It is in the best interest of the citizens living
adjacent to and on the leased lands that the bill includes
those lands as well. He implored the Committee not to
bifurcate the bill into an urban and rural divide by giving
a best interest finding in the Mat-Su, Kenai, Anchorage and
Fairbanks areas. He felt that it would create animosity in
rural areas. He noted that people are unhappy over the
Holitna River and Healy area lands that have been applied
for but are not active leases.
Co-Chair Harris asked where in the bill to include these
leases that are available but not yet acted upon by the
State. Mr. Whittington-Evans replied that the last part of
the bill in Section 59 relates to exclusion of active leases
and those that have been applied for.
Co-Chair Harris thought that leases issued under AS
38.05.177 and in effect on December 31, 2003 [Sec. 59, page
48, line 10] would be exempt under the provisions of this
bill.
MRYL THOMPSON, REPRESENTING SELF VIA TELECONFERENCE, agreed
with the comments of Mr. Whittington-Evans. He referred to
page 2, line 30 through page 3, line 1 regarding regulation
of hydraulic fluid. He explained that he had wanted to add
toxic fluid language to the bill but previous committees did
not support it. The 10% hydrochloric acid that is part of
every fracting load [hydrofracturing through acid or diesel]
amounts to half a gallon per load, and in some wells there
could be up to 26 seams of coal. He felt that it is a large
amount of toxic fluid that should be addressed by language
in the bill. He reiterated for the record that HB 531 does
not affect any portion of the Mat-Su Valley leases.
MARK MEYERS, DIRECTOR, DIVISION OF OIL AND GAS, DEPARTMENT
OF NATURAL RESOURCES (DNR), VIA TELECONFERENCE, ANCHORAGE,
clarified that retroactivity is in Sec. 59 on page 48, line
11, "(2) lease applications under AS 38.05.177 that were
received by the Department of Natural Resources before
January 1, 2004."
Mr. Meyers explained that the DNR slowed the process of
issuing leases on applications that were mostly filed prior
to the fall [of 2003]. The Department has not issued those
leases because its priority was the regulatory process in
the [Mat-Su] Valley. The lease applications were in the
Holitna Basin, the Matanuska Valley, and Healy. There are
currently no shallow gas leases in either the Healy or
Holitna areas although there are pending applications. The
logic behind the grandfather date of January 1, 2004 [page
48, line 12] was to allow for those applications to be
processed under the regulatory framework that will exist, at
least in case of Mat-Su, at the time the Department issues
the leases after the public process is complete.
Co-Chair Harris asked why the Department would oppose
changing to the best interest finding for the lease
applications that are still unprocessed, since there was
opposition to the prior process. Mr. Meyers replied that the
Department is not opposed to it, but because of the fairness
issue, it has slowed down the process by a self-imposed
moratorium. The concern would be in the Healy [Usibelli] and
Holitna [Holitna Energy] areas where there are efforts to
develop projects with power, and, to some degree,
Evergreen's operations in the Matanuska Valley. He stated
that it is a legislative policy issue.
Co-Chair Harris asked if the leases are all in areas with
mining operations. Mr. Meyers affirmed, with the exception
of the Evergreen Resources applications in the Matanuska
Valley, the Healy and Holitna areas. In response to a
question by Co-Chair Harris, Mr. Meyers explained that Healy
is populated around the mine site, but is less densely
populated than the Matanuska Valley, and Holitna has low
population density with no active coal leases.
Co-Chair Harris asked if the available leases in the
Matanuska Valley are in a populated area. Mr. Meyers
responded that it's moderately populated, with pockets of
higher density in subdivisions. In response to a question by
Co-Chair Harris, he said that eleven applications for
permits are pending in that area.
Co-Chair Harris advised that he is weighing the problems
with not going to the best interest findings, which he
supports, since there is so much difficulty with the current
program.
Representative Fate requested that someone be available at a
later hearing on the bill to answer technical questions
regarding the statutes pertaining to University lands.
Representative Masek pointed out that recently the DNR
closed out public notices in the Mat-Su Valley and provided
the Legislature with a draft review of their enforceable
standards for coal bed methane development of State-owned
resources in the Mat-Su Valley. She had reviewed the report
and felt that the public workshops led to good enforceable
standards that the Administration can implement. The draft
report clears up issues of concern to the public including
standards regarding public notice and standards for future
leases.
Co-Chair Harris commented that coal bed methane shallow gas
leasing is not new, and he felt that the Department has been
extremely slow in promulgating the needed regulations. He
asked if HB 531 requires a timetable for the DNR to write
regulations. Representative Masek answered that the bill
does not. The Department will hold more public hearings
before finalizing their standards.
HB 531 was heard and HELD in Committee for further
consideration.
HOUSE BILL NO. 342
An Act relating to driving while intoxicated; and
providing for an effective date.
Co-Chair Harris MOVED to ADOPT Work Draft Version V,
Luckhaupt dated 4-22-04. There being NO OBJECTION, it was
so ordered.
Co-Chair Harris asked if a person with a DUI conviction must
install a device [ignition interlock] so that the vehicle
will not start if the driver's breath contains alcohol.
REPRESENTATIVE CARL GATTO affirmed, and explained that it is
now virtually impossible for a good mechanic to defeat the
ignition interlock device.
Co-Chair Harris asked if this would place in statute that a
person convicted of an alcohol-related offense could drive
if he had an ignition interlock device in his vehicle.
Representative Gatto explained that historically penalties
for DUI were increased, with the State paying for jail time
and medical treatment. He conducted research on the laws in
other states, and he asserted that the single most effective
way to prevent drunks from driving cars is an interlock
device. He said that it had a good rate of reduction
although it didn't eliminate recidivism. In previous
versions of the bill, the penalties were "laddered."
AMANDA WILSON, STAFF TO REPRESENTATIVE ROKEBERG, explained
that the changes made to HB 342 dealt with the ignition
interlock device, and allowing limited licenses for people
in wellness courts or therapeutic courts, which are
intensive outpatient treatment programs. The participants
are monitored while taking Naltrexone, which prevents people
from consuming alcohol.
Ms. Wilson informed the Committee that the Wellness Court is
an 18-month program. Upon completion of it, people
currently may have portions of their sentence and fine
reduced, and under this bill, could get a limited license as
well. It is an effective tool and there is incentive to
enter the program and successfully complete it. She noted
that the Wellness Court has had tremendous success in
turning peoples' lives around. The court also closely
monitors the participants.
Ms. Wilson discussed the changes in Version V of the bill.
Section 2, subsections 2 and 3 [on page 3] refers to a
court-ordered treatment program described under AS 28.35.030
(p) and it is the Wellness Court program.
Ms. Wilson noted that Section 3, page 3, changes the "look
back laws" which are currently lifetime. The lifetime look
back at offenses was intended to nab the habitual offenders
who re-offended every four or five years. Currently the
license is suspended for a year and there is no ability to
get a limited driver's license. For equity, the bill
excludes offenses longer than fifteen years preceding the
date of the present offense, so that an offender is not
treated the same as someone with two DUI's within a few
years.
Ms. Wilson explained that Section 4 deals with the DUI
courts for the felony offender, and it allows for a limited
license if the offender has an ignition interlock as well.
Completion of the lengthy and intensive therapeutic court
program and treatment with Naltrexone is required. Ms.
Wilson concluded that punishment is not an effective tool,
and people must be socially reintegrated. The intent of the
bill is to assist people with reentering society, reaching
sobriety and maintaining a healthy lifestyle through finding
steady employment.
HB 342 was heard and HELD in Committee for further
consideration.
HOUSE BILL NO. 255
An Act amending the Alaska Wage and Hour Act as it
relates to flexible work hour plans, the provision of
training wages, and the definitions of certain terms;
and repealing the exemption in the Act from the payment
of minimum wages for learners.
HB 255 was Scheduled but not Heard.
ADJOURNMENT
The meeting was adjourned at 2:55 P.M.
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