Legislature(1995 - 1996)
02/28/1995 10:08 AM House O&G
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* first hearing in first committee of referral
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= bill was previously heard/scheduled
HOUSE SPECIAL COMMITTEE ON OIL AND GAS
February 28, 1995
10:08 a.m.
MEMBERS PRESENT
Representative Norman Rokeberg, Chairman
Representative Scott Ogan, Vice Chair
Representative Gary Davis
Representative Bill Williams
Representative Tom Brice
Representative Bettye Davis
Representative David Finkelstein
MEMBERS ABSENT
All Members Present
COMMITTEE CALENDAR
HJR 26: Urging the United States Congress to uphold Alaska's right
to 90 percent of the royalties from oil, gas, and coal
leasing on state land as provided by the Statehood Compact
adopted by a vote of the people of Alaska on April 24,
1956.
PASSED OUT OF COMMITTEE
WITNESS REGISTER
None
PREVIOUS ACTION
BILL: HJR 26
SHORT TITLE: OIL & GAS ROYALTIES
SPONSOR(S): REPRESENTATIVE(S) ROKEBERG, Ogan, Navarre
JRN-DATE JRN-PG ACTION
02/01/95 197 (H) READ THE FIRST TIME - REFERRAL(S)
02/01/95 197 (H) WTR, O&G
02/14/95 (H) WTR AT 05:00 PM CAPITOL 408
02/14/95 (H) MINUTE(WTR)
02/16/95 405 (H) WTR RPT CS(WTR) 6DP
02/16/95 406 (H) DP: PHILLIPS, KUBINA, G.DAVIS
02/16/95 406 (H) DP: WILLIAMS, MULDER, BARNES
02/16/95 406 (H) 2 ZERO FISCAL NOTES (DNR, REV)
02/28/95 (H) O&G AT 10:00 AM CAPITOL 124
ACTION NARRATIVE
TAPE 95-6, SIDE A
Number 000
The House Special Committee on Oil & Gas was called to order by
CHAIRMAN NORMAN ROKEBERG at 10:08 a.m. Members present at the call
to order were Representative(s) Rokeberg, Brice, G. Davis, B.
Davis, Finkelstein, Ogan, and Williams.
HJR 26 - OIL & GAS ROYALTIES
CHAIRMAN ROKEBERG stated there is a quorum was present and the
committee will hear HJR 26, a resolution supporting Alaska's right
to 90 percent of the royalties from oil, gas and coal leasing on
federal properties in the state of Alaska.
Number 011
CHAIRMAN ROKEBERG said as sponsor of the resolution, he will change
hats and give members an explanation of the resolution. He asked
if anyone was signed up to testify on the resolution and found
none. He then read the following sponsor statement for the record:
"HJR 26 is a statement by the Alaska Legislature that the United
States cannot unilaterally amend the Statehood Act. Alaska has
tried since statehood to avoid a confrontation over issues by
working with Congress to ensure that any post-statehood amendments
to the Statehood Act did not materially diminish the rights
conferred to the State of Alaska by the act of admission into the
United States.
"There is no question that an act of Congress admitting a new state
to the Union constitutes a compact, a legally enforceable contract,
between the citizens of the new state and the United States. The
first line of Section 4 of PL 85-508, the Alaska Statehood Act,
states in part, `As a compact with the United States said State and
its people do agree...' Provisions contained in this act that
conferred rights to the State of Alaska are valid and can be
enforced against the United States.
"Section 28, (a) Mines and Mining, of the Alaska Statehood Act
states clearly the formula for sharing business bonuses, royalties
and rentals under leases shall be distributed 90 percent to the
State of Alaska and 10 percent to the Treasury of the United
States. 48 U.S.C. 439 dated October 20,1914, was amended to
include the above formula.
"HJR 26 seeks to reinforce the people of Alaska's resolve to
protect our right to the 90-10 sharing formula granted by the
United States Congress on July 7, 1958."
Number 040
CHAIRMAN ROKEBERG said this issue is important to the committee
because of the committee's recent passage of a resolution
requesting the United States Congress to open area 1002 in the
Arctic National Wildlife Refuge (ANWR) area for oil and gas
exploration. At the time this resolution passed out of committee,
it was the belief of the chair and the Congressional delegation
that the resolution not mention the royalty provisions. There was
discussion at that time about the royalty issue and it was decided
that the royalty-sharing issue is extremely important to this
committee and this legislature, and that the original resolution to
open ANWR can be carried forward by the Congressional delegation.
He said the committee wishes them success.
Number 055
CHAIRMAN ROKEBERG mentioned the delegation should remember that the
statehood compact creating Alaska provided for the additional
sharing of revenues from federal lands to the state of Alaska.
There were specific exceptions made at the time to grant the state
of Alaska a greater share as provided for in Section 28, where the
Congress amended the Mineral Leasing Act under the citation 30
U.S.C. 191. Chairman Rokeberg reminded the committee that their
packets included both the existing code, as well as the historical
background on what the code was prior to its latest amendment.
Number 068
CHAIRMAN ROKEBERG requested the committee members turn to Appendix
A in the bill packet. He pointed out Section 2 in Appendix A of
the 1969 Opinion of the Attorney General Number 6, written by G.
Kent Edwards to Congressman Aspinall on September 5, 1969, which
includes language that was changed by the Statehood Act that
provided for the sharing of revenues on all federal property to go
37.5 percent to all the states specifically for the construction of
public schools, roads and other public educational institutions.
The following is Section 2 of Appendix A:
The federal legislation which was confirmed and amended by the
Statehood Act, Sec. 28 (b). It provides that the State
receives 90 percent of all money received by the United States
pursuant to the mineral leasing laws in Alaska, 37 1/2 percent
thereof for the construction of public roads or schools and
52 1/2 percent for the disposition of the State Legislature.
30 U.S.C. 191.
Number 082
REPRESENTATIVE ROKEBERG referred to the amendment and said at the
time of statehood, Congress reserved a special grant to the state
of Alaska, namely 52.5 percent by amending the Mineral Act, which
is 30 U.S.C. 191, so that the state could receive additional
amounts of money. He asked the members to turn to page 10 of
Opinion Number 6, and he then read the following two paragraphs of
the opinion into the record:
"The question which is raised by the conflict of the two percent
royalty with the Alaska Statehood Act is the following."
CHAIRMAN ROKEBERG interrupted the reading of the letter to say that
the various opinions revolved around the granting of a two percent
royalty in order for the state to move to the conclusion which
ultimately became Alaska Native Claims Settlement Act (ANCSA) and
resolved the sharing of revenues with the Native community of the
state. So all these opinions and the research that relates to this
act are focused on the two percent royalty sharing provision.
CHAIRMAN ROKEBERG continued reading from page 10 of the Attorney
Generals Opinion Number 6:
"May the United States unilaterally enact legislation in direct
conflict with the Statehood Act? The answer to this is that the
United States may not constitutionally enact effective legislation
in direct conflict with compact provisions of the Statehood Act
unless there is an amendment to the Constitution of the state of
Alaska because a Statehood Act constitutes a compact in the nature
of a contract between the two sovereign governments."
Number 123
CHAIRMAN ROKEBERG interpreted the opinion to say that the Congress
of the United States cannot unilaterally change the law, from 90-10
to 50 percent without a constitutional change. He then read from
a supplement to Opinion No. 6 which is not part of the package:
"For Congress to unilaterally rewrite those terms would be to
dishonor its grant of the royalty and to breach one of the
conditions on which Alaska consented to be bound by the Statehood
Act. This arrangement cannot be otherwise viewed than as a solemn
compact between Alaska and the United States, which is entitled to
the same constitutional protection afforded all such obligations."
Number 136
CHAIRMAN ROKEBERG added that the above citation only emphasizes the
nature of the compact. He noted that Opinion Number 6 was
conveniently lost at the time other Attorney General Opinions were
bound and then had to be located during the discussions surrounding
the creation of Alaska National Interest Lands Conservation Act
(ANILCA). An opinion from Attorney General Condon was included in
the committee packets, which explains why Opinion Number 6 was not
issued at the time John Havelock served as Attorney General.
CHAIRMAN ROKEBERG asked the committee members to refer to an April
2, 1981, letter from Attorney General Wilson Condon to Hugh Malone,
which states on page 2:
"What is clear is that the Unites States cannot unilaterally amend
the Statehood Act to the state's detriment without the state's
consent or acquiescence."
CHAIRMAN ROKEBERG then read from footnote 1, on page 2 of the
letter:
"No action was taken to ensure prompt resolution of pending Native
claims. Governor Egan, on behalf of the state, consented to those
amendments and the state did not litigate the issue within the time
specified by Section 10 of ANCSA."
CHAIRMAN ROKEBERG said that the Alaska Native Land Claims
Settlement Act could have been found to be unconstitutional, but
since the state acquiesced to it, there was no litigation and the
act went forward.
Number 186
CHAIRMAN ROKEBERG added that it is his opinion that if the 90-10
provision is not enforced, and if ANWR is ever opened up, a lawsuit
could be brought by any citizen of the state that could hold up
development of the refuge. He reminded the members that at the
time of statehood, the people of Alaska relied on the royalty
percentage in order to become a state.
CHAIRMAN ROKEBERG then turned to the historical provision of 30
U.S.C. 191, and explained that presently, 50 percent rather than
52.5 percent, of all revenues go to the reclamation funds of other
states and Alaska has reserved 40 percent in addition to that. The
37.5 percent which changed to 50 percent, and the 40 percent
received by the state of Alaska then become the exception because
of the change in the reclamation fund. He pointed out that Alaska
is the only state in the union with an exception to this code.
Number 217
CHAIRMAN ROKEBERG said that he, and Representatives Ogan and
Navarre have offered this resolution for the committee's
consideration. He then asked the members to refer to the second
fiscal note, which states:
"At current prices, discovery of a one billion barrel oil field
with a conventional 12.5 percent royalty and the 90 percent royalty
share would mean something on the order of $1.125 billion over the
life of the field or as much as $125 million a year at peak
production. A 50 percent share would reduce this to approximately
$70 million a year. Regardless of royalty share, the state would
continue to assess production taxes on any oil and gas produced
within state sovereign territory."
CHAIRMAN ROKEBERG noted that although this resolution would bring
in money to the state, because of the speculative nature of the
resolution, the fiscal note is zeroed out. He then closed his
testimony on the resolution and asked if there was testimony from
the audience. Hearing none, he closed the public testimony.
CHAIRMAN ROKEBERG introduced an amendment to the resolution.
Amendment 1: Page 1, line 3: delete "Statehood Compact" and insert
"Alaska Statehood Act, approved by the United States Congress on
July 7, 1958, in which the Congress accepted, ratified, and
confirmed the Constitution of the State of Alaska previously."
REPRESENTATIVE TOM BRICE expressed concern over whether the Mineral
Leasing Act should be included in the resolution, considering that
amendments were being made to the Mineral Leasing Act.
REPRESENTATIVE ROKEBERG suggested the amendment be amended to cite
the U.S. Code. He asked that the members label the second
amendment, Amendment 2 and clarified that Amendment 1 simply
clarifies the title of the resolution. He then asked if there was
any discussion on Amendment 1.
Number 288
REPRESENTATIVE OGAN moved to accept the first amendment as
introduced.
REPRESENTATIVE ROKEBERG said hearing no objections, it is so
ordered. Amendment 1 was adopted. He then introduced Amendment 2:
Page 2, Line 8, delete lines 8 and 9 and insert "WHEREAS, the
Congress intended the 37 1/2 percent royalty be paid by the Unites
States Treasury for the construction and maintenance of public
roads, support of public schools or other public educational
institutions; WHEREAS, the remaining 52 1/2 percent royalty shall
be paid directly to the state of Alaska for disposition by the
legislature in lieu of payment to the reclamation fund created by
Congress;"
Number 309
REPRESENTATIVE BRICE suggested the amendment be amended to add "(30
U.S.C. 191)" after the word "Congress" in paragraph one and insert
"as set forth in 30 U.S.C. 191" after the word "royalty" in the
second paragraph. He then suggested the first WHEREAS be amended
to mention that the Mineral Leasing Act is amended.
REPRESENTATIVE ROKEBERG added that the act is confusing and the
Mineral Leasing Act could be referred to in the resolution to
clarify it.
REPRESENTATIVE OGAN restated the amendments and REPRESENTATIVE
BRICE AND CHAIRMAN ROKEBERG clarified that the words "Mineral
Leasing Act (30 U.S.C. 191)" be inserted after line 7 of the
resolution.
Hearing no objections, it was so ordered. CHAIRMAN ROKEBERG
entertained a motion to move Amendment 2.
REPRESENTATIVE GARY DAVIS moved Amendment 2.
Hearing no objections, it was so ordered.
REPRESENTATIVE G. DAVIS asked why page 2 line 17 included the word
"coerce," because it implies that the United States is trying to be
coercive.
Number 419
REPRESENTATIVE BRICE said that line 16 clarifies the question
because it specifically states "in the attempt," meaning, in the
future, if there are attempts to coerce the state, versus present
or past.
CHAIRMAN ROKEBERG thanked REPRESENTATIVE BRICE for clarifying the
matter.
REPRESENTATIVE DAVIS asked REPRESENTATIVE ROKEBERG if use of the
word "coerce" was considered before he arrived at the committee
meeting or in the drafting of the resolution.
CHAIRMAN ROKEBERG responded that the word was considered while
drafting the resolution, but that any help in clarifying the
resolution would be appreciated.
REPRESENTATIVE G. DAVIS asked the committee to suggest adding less
threatening words to replace "coerce."
REPRESENTATIVE BRICE said that the word "coercion" has specific
implications that is "forcing the state to accept something less"
and that it doesn't have. The type of attempt to get the state to
accept revisions to the 90-10, could be described as an act of
coercion, such as, for example, if Congress tries to take away our
federal highway funds.
REPRESENTATIVE ROKEBERG asked for further discussion.
REPRESENTATIVE BETTYE DAVIS asked that REPRESENTATIVE G. DAVIS read
the statement he is considering might replace the word "coerce."
Number 482
REPRESENTATIVE G. DAVIS read his suggestion:
"Be it resolved that any attempts by the U.S. Congress or the
President of the United States to consider or impose on the state
of Alaska, anything less than what was promised at statehood,
penalizes the people of Alaska."
REPRESENTATIVE G. DAVIS said that the word "coerce" might give
other legislators concern on the floor.
CHAIRMAN ROKEBERG lead discussion about the merits of the words
"coerce" and "impose."
REPRESENTATIVE G. DAVIS moved that "to coerce" be deleted on Page
2, line 17, and the words "to impose" be added.
REPRESENTATIVE BRICE stated his objection to the amendment.
REPRESENTATIVE G. DAVIS clarified that the language would be "of
the United States, imposed on the state of Alaska anything less."
Number 560
CHAIRMAN ROKEBERG said hearing no objections, the amendment is
adopted. He asked if there were any additional amendments. He
then entertained a motion to move CS for HJR 26 (Oil & Gas), as
amended with individual recommendations, and accompanying fiscal
notes. Hearing no objections, the resolution was passed out of
committee.
ADJOURNMENT
CHAIRMAN ROKEBERG adjourned the meeting at 10:53 a.m.
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