Legislature(1995 - 1996)
03/18/1996 08:13 AM House RES
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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
HOUSE RESOURCES STANDING COMMITTEE
March 18, 1996
8:13 a.m.
MEMBERS PRESENT
Representative Joe Green, Co-Chairman
Representative William K. "Bill" Williams, Co-Chairman
Representative Scott Ogan, Vice Chairman
Representative Alan Austerman
Representative Ramona Barnes
Representative John Davies
Representative Pete Kott
Representative Don Long
Representative Irene Nicholia
MEMBERS ABSENT
All members present
COMMITTEE CALENDAR
HOUSE BILL 539
"An Act changing the name of the Alaska Soil and Water Conservation
Board."
- PASSED HB 539 OUT OF COMMITTEE
HOUSE BILL 537
"An Act renaming the division of geological and geophysical surveys
in the Department of Natural Resources as the department's division
of mining and geology, and revising the duties of the state
geologist within that division; and providing for an effective
date."
- HEARD AND HELD
HOUSE BILL 388
"An Act revising laws relating to oil and gas leasing to authorize
a program of areawide leasing."
- HEARD AND HELD
HOUSE BILL 469
"An Act relating to the University of Alaska and to assets of the
University of Alaska; authorizing the University of Alaska to
select additional state public domain land, designating that land
as `university trust land,' and describing the principles
applicable to the land's management; and defining the net income
from the University of Alaska's endowment trust fund as`university
receipts' subject to prior legislative appropriation."
- SCHEDULED BUT NOT HEARD
(* First Public Hearing)
PREVIOUS ACTION
BILL: HB 539
SHORT TITLE: NAME CHANGE FOR SOIL AND WATER BOARD
SPONSOR(S): RESOURCES
JRN-DATE JRN-PG ACTION
03/08/96 3029 (H) READ THE FIRST TIME - REFERRAL(S)
03/08/96 3029 (H) RESOURCES
03/18/96 (H) RES AT 8:00 AM CAPITOL 124
BILL: HB 537
SHORT TITLE: DIV. OF MINING & GEOLOGY/ STATE GEOLOGIST
SPONSOR(S): RESOURCES
JRN-DATE JRN-PG ACTION
02/29/96 2962 (H) READ THE FIRST TIME - REFERRAL(S)
02/29/96 2963 (H) RESOURCES, FINANCE
03/13/96 (H) RES AT 8:00 AM CAPITOL 124
03/13/96 (H) MINUTE(RES)
03/14/96 (H) RES AT 1:00 PM CAPITOL 124
03/14/96 (H) MINUTE(RES)
03/18/96 (H) RES AT 8:00 AM CAPITOL 124
BILL: HB 388
SHORT TITLE: OIL & GAS LEASING/ BEST INT. FINDINGS
SPONSOR(S): REPRESENTATIVE(S) ROKEBERG, B.Davis, Kohring
JRN-DATE JRN-PG ACTION
01/05/96 2368 (H) PREFILE RELEASED
01/08/96 2368 (H) READ THE FIRST TIME - REFERRAL(S)
01/08/96 2368 (H) O&G, RESOURCES, FINANCE
02/06/96 (H) O&G AT 10:00 AM CAPITOL 124
02/06/96 (H) MINUTE(O&G)
03/07/96 (H) O&G AT 10:00 AM CAPITOL 124
03/07/96 (H) MINUTE(O&G)
03/09/96 (H) O&G AT 1:00 PM CAPITOL 124
03/09/96 (H) MINUTE(O&G)
03/12/96 (H) O&G AT 5:00 PM CAPITOL 124
03/12/96 (H) MINUTE(O&G)
03/13/96 3110 (H) O&G RPT CS(O&G) NT 2DP 4NR
03/13/96 3111 (H) DP: ROKEBERG, OGAN
03/13/96 3111 (H) NR: BRICE, G.DAVIS, FINKELSTEIN
03/13/96 3111 (H) NR: WILLIAMS
03/13/96 3111 (H) FISCAL NOTE (DNR)
03/18/96 (H) RES AT 8:00 AM CAPITOL 124
WITNESS REGISTER
JEFF HARTMAN, Executive Director
Alaska Soil and Water Conservation Board
Department of Natural Resources
400 Willoughby Avenue
Juneau, Alaska 99801
Telephone: (907) 465-2495
POSITION STATEMENT: Testified in support of HB 539.
JEFF LOGAN, Legislative Assistant
to Representative Joe Green
Alaska State Legislature
Capitol Building, Room 24
Juneau, Alaska 99801
Telephone: (907) 465-3715
POSITION STATEMENT: Read sponsor statement for HB 537.
JERRY BOOTH, Chairman
Alaska Geological Mapping Advisory Board
Division of Geological and Geophysical Surveys
Department of Natural Resources
2525 "C" Street
Anchorage, Alaska 99503
Telephone: (907) 274-8638
POSITION STATEMENT: Testified against HB 537.
DR. DAVID HITE, Member
Alaska Geologic Mapping Advisory Board
Division of Geological and Geophysical Surveys
Department of Natural Resources
2250 Woodworth Circle
Anchorage, Alaska 99517
Telephone: (907) 258-9059
POSITION STATEMENT: Testified against HB 537.
TOM CRAFFORD
Alaska Miners Association;
North Pacific Mining Corporation
P. O. Box 93330
Anchorage, Alaska 99509
Telephone: (907) 274-8638
POSITION STATEMENT: Testified in opposition to HB 537.
SUSAN KARL, Officer
Alaska Geological Society
P. O. Box 101288
Anchorage, Alaska 99510
Telephone: (907) 786-7428
POSITION STATEMENT: Testified in opposition to HB 537.
RICH HUGHES, Chairman
Fairbanks Branch
Alaska Miners Association
2173 University Avenue
Fairbanks, Alaska 99709
Telephone: (907) 474-2080
POSITION STATEMENT: Testified in opposition to HB 537.
ROGER BURGGRAF, Miner
830 Sheep Creek
Fairbanks, Alaska 99709
Telephone: (907) 479-2596
POSITION STATEMENT: Testified in opposition to HB 537.
HELEN WARNER, Member
Alaska Miners Association
P. O. Box 80674
Fairbanks, Alaska 99708
Telephone: (907) 488-6058
POSITION STATEMENT: Testified in opposition of HB 537.
EARL BEISTLINE
P. O. Box 80148
Fairbanks, Alaska 99708
Telephone: (907) 479-6240
POSITION STATEMENT: Testified in opposition to HB 537.
NICO BUS, Acting Director
Division of Support Services
Department of Natural Resources
400 Willoughby Avenue
Telephone: (907) 465-2406
POSITION STATEMENT: Testified in opposition of HB 537.
REPRESENTATIVE NORMAN ROKEBERG
Alaska State Legislature
Capitol Building, Room 110
Juneau, Alaska 99801
Telephone: (907) 465-4968
POSITION STATEMENT: Prime sponsor HB 388.
PAT FOLEY, Chairman
Lands Exploration and Operations Committee
Alaska Oil and Gas Association
P. O. Box 100360
Anchorage, Alaska 99501
Telephone: (907) 265-6213
POSITION STATEMENT: Testified in support of HB 388.
SARA HANNAN, Executive Director
Alaska Environmental Lobby
419 Sixth Street
Juneau, Alaska 99801
Telephone: (907) 5586-3366
POSITION STATEMENT: Testified in opposition to HB 388.
KENNETH BOYD, Director
Division of Oil and Gas
Department of Natural Resources
3601 C Street, Suite 800
Anchorage, Alaska 99503
Telephone: (907) 269-8800
POSITION STATEMENT: Testified on HB 388.
ACTION NARRATIVE
TAPE 96-36, SIDE A
Number 000
CO-CHAIRMAN JOE GREEN called the House Resources Committee meeting
to order at 8:13 a.m. Members present at the call to order were
Representatives Austerman, Green, Davies Long and Williams.
Representatives Barnes, Kott, Nicholia and Ogan arrived late.
HB 539 - NAME CHANGE FOR SOIL AND WATER BOARD
CO-CHAIRMAN GREEN announced the first order of business would be HB
539, "An Act changing the name of the Alaska Soil and Water
Conservation Board."
Number 101
JEFF HARTMAN, Executive Director, Alaska Soil and Water
Conservation Board, Department of Natural Resources, came forward
to testify in support of HB 539. He said the board had a meeting
February 1, and at that time the perception of what the board did
wasn't clear with the present name of "Soil and Water
Conservation."
MR. HARTMAN pointed out that state statute defines the board's
function as development use and conservation. The board felt the
name change would more accurately reflect what the board views as
their function which is not only conservation, but the development
of resources, specifically in rural areas.
Number 200
REPRESENTATIVE JOHN DAVIES said he doesn't have a problem with
adding the word "development," but did have a problem with the
further name change to "Natural Resources Soil and Water." He said
in all the justification, that part of the name change is not
really addressed. He pointed out that this isn't the biggest issue
facing the state of Alaska, but to broaden the title to "Natural
Resources Conservation and Development Board" takes in many other
possible areas. When it said, "Soil and Water" we knew what the
board was supposed to be doing. Natural resources covers the whole
waterfront and could possibly include fish, game, oil and gas. He
suggested changing "Natural Resource" to something like,
"Agricultural and Forestry Conservation and Development Board."
Number 289
MR. HARTMAN said they didn't specifically consider that name
change, but the board is an advisory board to the Department of
Natural Resources. He explained the department doesn't cover fish
and game, but they represent the land owners. He said a lot of the
resources they deal with are more than just soil and water. He
said the soil and water conservation is the tradition that they
come from. Mr. Hartman said they are into forestry and developing
tourism related products using natural resources. He noted one of
the potentials for development in Aniak are wild berries. It is a
locally available resource. It currently isn't utilized, but it
would be a matter of coming up with a distribution system.
MR. HARTMAN briefed the committee about an ongoing project in
Fairbanks of converting dog waste into a usable fertilizer. He
also noted they are taking the ground water and making it into a
usable resource for the greenhouse industry. People in Aniak were
very interested in this project because they have to fly in all
their fertilizer.
MR. HARTMAN explained there were several reasons the wording
"Natural Resources" was chosen. One is their federal partners "The
Soil Conservation Service," changed their name a couple of years
ago to the "Natural Resource Conservation Service." He said,
"We're also one of the principle boards advising the commissioner
of Natural Resource. So, again, Natural Resource Conservation
Development we felt was in keeping with that."
Number 450
MR. HARTMAN said he wouldn't argue that the board's principle base
is agricultural, but it is broader and the board wants to reflect
that kind of change of emphasis because the whole resource
conservation development program in the Natural Resources
Conservation Service is relatively new to Alaska - about five years
old. It brings a lot of capabilities that some of the local people
aren't are aware of. For these reasons, that is why "Natural
Resource" was chosen as opposed to a more traditional name.
Number 495
CO-CHAIRMAN GREEN noted the arrival of Representatives Scott Ogan
and Irene Nicholia.
Number 518
REPRESENTATIVE ALAN AUSTERMAN moved to pass HB 539 from the House
Resources Committee with individual recommendations and the
attached fiscal notes. Hearing no objection, HB 539 passed out of
the House Resources Committee.
HB 537 - DIV. OF MINING AND GEOLOGY/ STATE GEOLOGIST
Number 544
CO-CHAIRMAN GREEN announced the next order of business would be HB
537, "An Act renaming the Division of Geological and Geophysical
Surveys in the Department of Natural Resources as the department's
Division of Mining and Geology, and revising the duties of the
state geologist within that division; and providing for an
effective date." He stated the bill would combine the Division of
Geological and Geophysical Surveys with the Division of Mining and
Water Management as a cost cutting venture. Last year, the state
geologist position was not funded and, currently, the division is
serving without a state geologist.
Number 604
JEFF LOGAN, Legislative Assistant to Representative Joe Green, read
the following statement into the record:
"House Bill 537 establishes in the Department of Natural Resources,
the Division of Mining and Geology. Earlier this year an attempt
was made to transfer DGGS (Division of Geological and Geophysical
Surveys) into the Division of Oil and Gas, and while we concur that
the cost of state government can be effectively accomplished -- or
lower cost of state government can be effectively accomplished by
combinations of certain agencies. Combining DGGS with DOG would
have been an inappropriate combination."
"The use of DGGS personnel to perform DOG oil and gas presale
analysis, as indicated by recent testimony by the DOG, would have
been an improper use, we believe, of DGGS personnel. We believe
that such activities, through that proposed combination, would not
only violate state statute, but lead to ultimate dissolution of
DGGS functions through the absorption in the DOG.
"Budget reductions have reduced funding to the DGGS and combining
it with another division is appropriate, but only if it is
functions are preserved and its personnel are appropriately
confined to the functions delineated in AS 41.08. Combining DGGS
with the Division of Mining and Water not only ensures statutory
compliance of its activities, but also its survival."
Number 730
JERRY BOOTH, Alaska Geologic Mapping and Advisory Board, Division
of Geological and Geophysical Surveys, Department of Natural
Resources, testified via teleconference from Anchorage. He
explained that the board was established in 1994, by former
Commissioner Noah, as an advisory group to the Division of
Geological and Geophysical Surveys. With the new Administration,
the advisory board offered to Commissioner Shively a recommendation
that the board look at the future of the Division of Geological and
Geophysical Surveys' mission, goal and function into the future on
how to improve its effectiveness and then provide a report
outlining these findings. This effort was lead by Dr. David Hite,
a member of the advisory board. He established a select committee
of geologists and engineers representing all users of the DGGS.
Number 791
MR. BOOTH explained that throughout 1995, the select committee held
numerous meetings and public hearings to gain as much information
as possible. He indicated a report was prepared in which the
committee should have a copy of. The report contained numerous
recommendations the committee made to the advisory board. Late in
1995, the advisory board approved their recommendations and
provided these to Commissioner Shively.
MR. BOOTH related that some of the recommendations included keeping
the Division of Geological and Geophysical Surveys intact and
expand its role to include a presence in Anchorage by the state
geologist; to conduct a nationwide search for a new state
geologist; provide a five year term for the position to make it a
nonpolitical position to maintain its scientific integrity;
recombine the hydrologist function back to DGGS; and to reinstate
basin analysis and oil and gas functions back to the survey. He
said all of these recommendations and ones not discussed, were to
maintain the DGGS as an independent group within the current Alaska
Statute AS 41.08.
Number 870
MR. BOOTH stated that the intent and the recommendations of the
advisory board regarding the DGGS is, respectfully, much different
that those proposed in HB 537. He said they feel that the
combining of DGGS with the Division of Mining and the removing of
the requirement to have the state geologist run the DGGS is not in
the best interest of the users of the state. The recommendations
of the advisory board are well stated in the report and they look
to this legislature to retain the current mission, role and
function of the Division of Geological and Geophysical Surveys.
MR. BOOTH pointed out that for a quarter of a century, Alaska has
had a geological survey and it has functioned very well under AS
41.08. The advisory board of the DGGS respectfully requests that
the House Resources Committee reconsider HB 537 and retain the DGGS
as an independent division. He thanked the committee for the
opportunity to testify.
Number 940
DR. DAVID HITE, Member, Alaska Geologic Mapping Advisory Board
Division of Geological and Geophysical Surveys, Department of
Natural Resources, testified via teleconference from Anchorage. He
stated that he echoed the comments made by Mr. Booth and was
strongly concerned about the requirements put fourth in HB 537 to
eliminate the qualifications for the state geologist. He offered
his assistance in answering questions relating to the report.
Number 1006
TOM CRAFFORD, representing the Alaska Miners Association and the
North Pacific Mining Corporation, a subsidiary of Cook Inlet
Region, Incorporated, testified via teleconference from Anchorage.
He said that he is a mineral exploration geologist and has been
active in the state since 1974. He stated he is well acquainted
with the Division of Geological and Geophysical Surveys and the
role it plays in Alaska. He stated he is respectful and
appreciative of the service that DGGS has provided over the years,
and he feels that its function needs to be preserved. Mr. Crafford
stated he is similarly in support of the Division of Mining and
Water Management. He indicated he has had good working
relationship with them over the years. He noted he doesn't want
his comments to be construed as any statement against the Division
of Mining and Water Management. It is, therefore, with reluctance
that he must express my opposition to HB 537.
MR. CRAFFORD said he potentially fears that HB 537 could politicize
the DGGS and it remove some of the statutorily mandated elements
that established the division and preserves the academic and
technical role that it was created to play. Mr. Crafford said HB
537 would create a geological (indisc.) which he fears could
potentially become geological and geophysical survey in name only.
It would relegate the position of state geologist to a subdirector
level position and remove any educational or experience of
qualifications for that position. He said those and other
provisions of HB 537 could weaken the protection for the objective
by (indisc.) regulatory role that was originally established for
DGGS. He said he feels that in a resource rich state like Alaska
that it is especially important to preserve the current functions
of the DGGS, particularly in light of recent federal budget
reductions that eliminated the Bureau of Mines and severely
impacted the U. S. Geological Survey. He stated he endorses the
recommendations of the Alaska Geologic Mapping Advisory Board which
advocates the retention of a strong and independent division.
Number 1170
SUSAN KARL, Officer, Alaska Geological Society (AGS), testified via
teleconference. She explained the AGS membership includes
professionals from oil and gas companies, mining companies,
environmental contractors, Native corporations, universities,
governmental agencies - statewide and outside of Alaska. She said
she would focus on two main concerns. One, is that Alaska is a
resource state and it is important to keep regulatory functions
separate from research functions. The state's economic health
depends on natural resources and the state also has significant
geological hazards such as earthquakes, volcanoes, environmental
hazards associated with human activities and the development of
transportation and resources. If any state needs a strong, dynamic
and independent geological survey, it is Alaska.
MS. KARL referred to the second concern and said it also essential
and critical that the state's leaders have solid scientific
knowledge as a basis for their constantly evolving policy
decisions. The state's health and welfare depend on these
decisions. HB 537 makes Alaska's state geologist a political
appointee with no required scientific credentials. It is
unthinkable that Alaska's leaders would be making resource and
environmental policy decisions without information from a
scientifically qualified state geologist.
MS. KARL said in conclusion, Alaska needs an independent, dynamic
and adequately funded geological survey and a knowledgeable,
credible and respected state geologist to contribute to informed
decisions by state policy makers. She thanked the committee for
listening to her testimony.
Number 1295
RICH HUGHES, Chairman, Fairbanks Branch, Alaska Miners Association,
testified via teleconference from Fairbanks. He asked to go on
record opposing HB 537. He stated that the combination won't
work. The minerals industry is reviving in the state very strongly
and this bill is sending the wrong message.
Number 1324
ROGER BURGGRAF, Miner, testified via teleconference from Fairbanks.
He asked to go on record opposing HB 537. He said he realizes
times are tough and cuts in government need to be made. The
Division of Geological and Geophysical Surveys is a technical,
scientific agency with a statutorily mandated mission. To have it
absorbed into a regulatory agency would weaken effect of their
mission. The work that DGGS has done over the years has been very
beneficial, not only to the state of Alaska, but to industry. With
the downsizing of the federal government, it is even more important
that Alaska, as a resource state, maintain DGGS in its present
format. It is important that DGGS maintain its scientific
integrity. The reports that DGGS has done has encouraged
investments of millions of dollars into the state of Alaska. Mr.
Burggraf requested that the committee reconsider its position with
respect to HB 537.
HELEN WARNER, Member, Alaska Miners Association, testified via
teleconference from Anchorage. She noted she is a graduate of the
University of Alaska with a degree in mathematics. Ms. Warner said
she doesn't think it is in the best interest of either the industry
or the state for the DGGS to be subordinated or included into the
Division of Mining. It is no diminution of the role of the
Division of Mining. She said she supports the testimony of Jerry
Booth, David Hite and Tom Crafford. She said she believes the DGGS
has a mission and it is to all the people in the state and several
other (indisc.) precise mineral industry. Ms. Warner urged the
committee members not to pass HB 537.
Number 1480
EARL BEISTLINE was next to testify from Fairbanks. He stated he is
a life-long Alaskan with the sole professional career in Alaska's
mineral education and mining industry fields. He said he supports
the previous testimony of Jerry Booth, David Hite and Tom Crafford.
He referred to the recommendations made by the Alaska Geological
Mapping Advisory Board and said they are very important and need to
be considered in detail and in their entirety.
MR. BEISTLINE said he would suggest the present organization of the
Division of Geological and Geophysical Surveys remain an
independent agency as it is at the present time for the benefit of
Alaska and its people. It is an agency that offers a fundamental
service to the economy of the state and identification of
geological hazards for appropriate resolution and safety of its
people overall.
MR. BEISTLINE said it is his opinion that any streamlining of DGGS
or a combination of other agencies for reducing costs of operation
of state agencies should be carefully studied in depth in concert
with appropriate personnel of Natural Resource agencies,
legislators, state administrators and private industry. He said a
strong Division of Geological and Geophysical Surveys agency is an
important foundation stone for the further enhancement of the
state's minerals resource. He said that concludes his statement.
Number 1615
NICO BUS, Acting Director, Division of Support Services, Department
of Natural Resources, came forward to give his testimony. He said
he wanted to comment that the Department of Natural Resources (DNR)
cannot support HB 537. He said basically, when DNR deliberated the
introduction of Executive Order 92, the department tried to
implement as many of the Alaska Geologic Mapping Advisory Board's
recommendations as possible. Although it was not a perfect fit,
they felt that Executive Order 92 met this purpose. House Bill
537, as proposed, strips many of the requirements the DGGS needs
and the department cannot support it.
Number 1663
MR. BUS distributed departmental sectional analysis outlining DNR's
points section by section. Also, administratively and budgetarily,
currently the department feels the Division of Mining is still
struggling with the combination with the Division of Water that
came about two years ago. He indicated the department doesn't feel
it is appropriate at this time to combine the DGGS and the Division
of Mining and Water.
Number 1692
CO-CHAIRMAN GREEN referred to Executive Order 92 and said the
attitude was that because there wasn't a state geologist position,
as it had been defunded last year, the DNR wanted to combine the
Division of Geological and Geophysical Surveys with the Division of
Oil and Gas.
CO-CHAIRMAN GREEN stated, "At the hearing of in front of the Oil
and Gas Special Committee that one of the functions that would be
done by DGGS would be to do presale analysis DOG and it was my
feeling, and I so testified at that meeting, that that was step one
of doing exactly what we've heard today as the objections to
combining it with the Division of Mines -- that it would erode the
statutory requirements of the DGGS. And so I submit to you that by
combining them, if they cannot exist without a state geologist,
which that function has been defunded, then they are far better off
with Division of Mines and Water because they then by the very
implement that would create that required to maintain and do those
functions outlined in statute and not get involved in another
division's activities. And so what I'm hearing as the objection
going in to the Division of Mines is the very purpose that it's
going there to prevent anything - any erosion of their functions,
delusions that might come about by a more powerful or better funded
division. And so that's the very reason that it was there. Plus
the fact that if you look at the description of the duties of the
Division of Geological and Geophysical Surveys, their functions fit
exactly with what the Division of Mining needs -- hard rock
minerals, tectonics, because along faults that is where
mineralization occurs. I mean it's nothing to do -- it's not even
mentioned other than was mentioned once before that fuel is used in
one word description of the things that they look at. But no where
is oil and gas mentioned, and yet, it was the department's decision
that they should be merged with Oil and Gas Division. And I'm
submitting that they far better matched with the Mining Division,
and their functions would be much better protected. I champion
that. I think it would be a travesty if we lost the functions as
outlined in statute, and that's exactly what this bill does. It
maintains those functions."
Number 1830
REPRESENTATIVE DAVIES respectfully submitted that House Bill 537 is
equivalent to discussions during the Vietnam War era in having to
destroy the village in order to save it. He said he thinks this
combination is a far worse match than the proposed one with oil and
gas. He said if we're not going to do the oil and gas one, then we
ought to just leave it alone. While the state geologist position
has been defunded, there still is an individual in the state survey
who is currently the acting state geologist, who is by training and
experience very qualified to be the state geologist. I think the
division would be far better, under a reduced budget, to simply
stay as it is to designate that individual as the state geologist
with no increase in funds for the division.
Number 1880
REPRESENTATIVE DAVIES said, "We went down this path - what was it
about ten years ago and made this combination, at one time, and it
was discovered to be unworkable. We've also had the testimony of
a representative sample of the `who's who' in the mining world and
the geology world; both from the companies, from the private
sector, from the university, people who have had experience in the
university world and people who had experience in the regulatory
world of mining and people who have had experience in the areas
that the state survey is statutorily charged to function. And out
of that testimony, one of the particular things that this bill
seems to ignore is that DGGS has a mission far broader than just
mining. I mean that's certainly is, I think, its `flag ship
mission,' but that it's much more than that. It's involved in the
analysis where gravel is, it has been involved in land selections
and making land selections. The state survey was one of the key
institutions that selected some of the most productive petroleum
rich land in the state of Alaska, in terms of land selection
process. So, to suggest that there is no match with oil and gas or
no necessity for them to maintain expertise in the basis analysis,
I think, is short sighted. It ignores the past and it is short
sighted with respect to the future."
Number 1955
REPRESENTATIVE DAVIES said that we've been down this path before.
We know that it's a mistake from history and the testimony. There
is unanimous opposition from a representative sample of "Who's Who"
in the mining and mineral industry in the state of Alaska. He
suggested that the bill be put into a subcommittee and rethink how
this proposal might fit into the Hite report.
C0-CHAIRMAN GREEN asked Representative Davies if he is familiar
with the description of the duties of the division as in statute.
REPRESENTATIVE DAVIES indicated he was familiar with the duties.
CO-CHAIRMAN GREEN asked if water and groundwater is one of the
issues that the division is charged with reviewing and tabulating.
He also asked it that isn't, in fact, the name of the division that
would be going in. So, it is not just mining, it is mining and
water and both of those are prime functions specified in the
description of the Division of Geological and Geophysical Surveys.
Co-Chairman Green said he maintains, again, it is a fear, it is a
speculation that they - going into a different regulatory body,
that their functions would be lost. While, in open testimony, it
was stated that part of their functions would be lost if they were
combined with the Division of Oil and Gas.
Number 2026
REPRESENTATIVE DAVIES contended, "Mr, Chairman, I think that is a
red herring. I opposed the combination with oil and gas. I don't
think that's a good idea either. I voted, as you recall, to over
turn 92. I think that, yes, I agree with you that reading the
statute, I think the hydrological functions ought to be put back
into the state survey, but the issue of regulatory agency and a
research oriented agency like DGGS statutory supposed to be, is the
paramount issue here in my mind. That's why the merger failed in
`86 and that's why many many people opposed it then and continue to
oppose it now. It's simply an inappropriate mix."
Number 2048
CO-CHAIRMAN GREEN said he was referring to the fact that
Representative Davis had stated in his prior testimony that he
thought that it would be better in DOG. Co-Chairman Green said he
would maintain that Representative Davies indicated it would be
better in the Division of Oil and Gas and he would maintain that
there is a better fit with the Division of Mines and Water.
Number 2070
REPRESENTATIVE SCOTT OGAN asked for more details about the
reference to the past merger of the two agencies.
CO-CHAIRMAN GREEN commented, "That is correct, briefly. Different
breed of cast, different attitude and it wasn't Division of Mines
and Water then, it was the Division of Mines. There was an attempt
made because -- while the testimony today has been unanimously
against this, there are several out there involved with these who
thought it was a good idea then, still think it is a good idea."
Number 2112
CO-CHAIRMAN GREEN asked Mr. Bus to inform the committee what the
cost would be to reinstall the state geologist to make the division
whole again.
Number 2127
MR. BUS said the director's salary is about $90,000. In the
budget, to accommodate Executive Order No. 92, they felt there was
some efficiency by merging the two divisions and sharing
administrative staff. To recreate the director of the Division of
Geology, you would need a director plus some support staff, so you
are talking about $150,000, including benefits.
Number 2155
CO-CHAIRMAN GREEN said, "To your chagrin, as well as mine, that
budgeting was felt everywhere - budget cuts, and one of those,
obviously, was the state geologist last year. A prior commissioner
of the Department of Natural Resources used to use the phrase
that's kind of like `eating your seed corn,' to which I do
subscribe. Nonetheless, the division was cut and the state
geologist position was lost and the concern, expressed by both the
Department of Natural Resources and myself, is that without a state
geologist, it is a vulnerable position and it has been cut. And
part of the funding there to try and get outside funding as well
and I think they have to some degree."
Number 2195
CO-CHAIRMAN GREEN emphasized that Representative Davies has
indicated that HB 537 should go into a subcommittee. He said if he
thought it would go to a subcommittee for constructive purposes, he
might be so inclined. He said he is afraid that it will be a
subcommittee to death.
Number 2212
CO-CHAIRMAN WILLIAM K. "BILL" WILLIAMS reminded Representative
Davies that this issue has been before the committee for quite some
time. He pointed out that Representative Davies did vote against
the executive order. He asked him if he could you give the
committee some ideas as to how he thinks this should be done.
Number 2224
REPRESENTATIVE DAVIES responded, "I think that I, pretty well,
outlined it. I don't think that either one of the mergers is
appropriate I think, you know, the comment from the previous
commissioner about `eating your seed corn' couldn't be more aptly
demonstrated by the -- I think it can only be described as a `gold
rush' that's going on in the Fairbanks area, right now and north of
the Alaska range, all the way to McGrath, all around. As a result,
I think as a direct result of the aero magnetic program that the
state survey heads up and is carried out under capital funding from
the state legislature. I think that's only one excellent example
of the kind of strong work that's important to our economic future
that results from having leadership from a strong state geologist."
Number 2266
REPRESENTATIVE DAVIES continued, "A second one in the news today,
there are scientists on the ground at Akutan Volcano, right now,
have flown there over the past week to advise whether the village
should be evacuated or not. The geological hazards function, both
from the ecological and earthquake hazards, is an important part of
that statutory mission. That's not something that comes under -
you know - the heading of `mining' in the state. And whenever I
say that kind of thing, I certainly do not mean to denigrate that.
I think that the mining function is extremely important."
Number 2316
REPRESENTATIVE DAVIES explained, "There is a philosophical problem
and it translates down into a very practical problem in reality
when you merge agencies that are supposed to have an objective
scientific view about land selections, an objective scientific view
about what the real hazards are and a proposal, for example, that
might impact some kind of development - to have some objective view
about what lands we ought to select for its oil and gas potential,
its mineral potential and gravel potential, those kinds of things.
There needs to be both the perception and the reality that the
advice the state government is getting from that agency is
independent of any advocacy group and independent from any
regulatory concern. And that's the problem with putting the
geologic mission and the geophysical mission under a regulatory
mantle that the Division of Mining has."
Number 2335
C0-CHAIRMAN WILLIAMS said he agrees about not wanting the
legislation stuck in subcommittee, but in view of the opposition
this bill is getting from industry, he can't debate the issue. He
said there should be a plan benefitting both industry and the
Administration. He asked Representative Davies if he had a plan or
direction.
Number 2381
REPRESENTATIVE DAVIES said he had not responded to a plan, with
respect to this particular bill, because he does not believe that
this bill is the right way to do it. He said he would be happy to
come back with a plan and noted he doesn't currently have one. He
said his overall view is that among the choices of combining it
with oil and gas, combining it with the Division of Mining, or
leaving it as it is, he strongly support the status quo. He said
leave it alone as it is. Representative Davies said he see the
legislature designate the person who is acting as the state
geologist to be the state geologist. He said his preferred
position is to put the $150,000 back in the budget to make it whole
again. Absent that, he would just leave it the way it is.
Number 2431
CO-CHAIRMAN GREEN clarified, "In the evaluation discussions, the
searching for what could be done, because I do champion the
activities that the Division of Geological and Geophysical Surveys
has been doing. One of the reasons in the decade preceding this
that it was combined when there wasn't the budget crunch that we
are suffering now - was told to me that while it is important that
a group, a think tank type of division such as DGGS is and should
be, the fear of them being involved with a regulatory function
where it's pretty much this type of one foot ahead of the other,
those don't necessarily go and you can inhibit creative thought if
it's over viewed - too much detail and I certainly subscribed to
that. On the other hand, there is the fear always with a strictly
theoretical group that they spend more time in theory than they do
in action and that there may have been from time to time, I'm not
[END OF TAPE]
TAPE 96-36, SIDE B
Number 000
CO-CHAIRMAN GREEN continued, " ....been removed, but another
benefit that would be derived from such a combination as outlined
in 537, might be an oversight to just review, on an ongoing basis,
what is actually accomplished and what is done in there rather than
the reports which to some degree, in the past, has been -- and I
think credit was given, done by USGS or done by some federal
agencies, or by university work that then gets published as DGGS
report. And So my point is that if they were combined briefly
before, the function that they were combined for, at least for what
I am talking about now, apparently was not done - that an oversight
could be done and maybe the best thing in all worlds would be that
this oversight comes back saying, `Yes, these people are extremely
efficient, they use their time to the utmost, they not only should
have their state geologist reinstated but they should be funded
greater.' And I think while we, in the majority, are in a cost
cutting mode, I do not think it is fair or appropriate to say that
we would want to see the demise of a very beneficial, streamlined,
well run, efficient organization. And if that comes back, if fact,
then I think you can extricate them from the Division of Mines and
reestablish them with their own state geologist far easier from the
Division of Mines than it would be if they got embroiled in, as has
been said, in presale analysis to the extent that was stated on the
record. And so from that standpoint, I can see the desire to have
them ultimately be an independent division. Right now, there is
some cloud, there is certainly, through the division, the
Department of Natural Resources, some indication that there should
be merger and I am just submitting to you that for all of those
reasons, I think that this merger will accomplish both the
efficiency, the overview and the potential extrication back as an
independent agency. If that is the best thing for the state - far
easier than it would be in any other kind of combination. So, for
that reason, I would still strongly support passage of HB 537."
Number 110
REPRESENTATIVE DAVIES explained, "The oversight and the analysis
that you are suggesting might somehow magically occur from a
director of the Division of Mining -- in fact, presently exists
from an advisory board that is largely comprised of members of the
industry. DGGS is not an `ivory tower' operation, it is not a
`think tank' operation. It is about the farthest thing from it
that you could imagine. It is a very `rubber meets the road'
practical state agency whose mission is to -- one of its largest
functions is to identify sand and gravel resources and that is not
`think tank' type of operations. It's mission is the day-to-day --
part of it's involved in the day-to-day advise of whether a village
should be evacuated or not. That's not `think tank,' that's about
as urgent a day-to-day kind of mission as you can imagine. It does
require, however, to make those kinds of analyses, to look into the
future and to make some assertions about that, it does require some
independent analytic ability. So, that is why it is important to
maintain the separation from the regulatory commission."
Number 183
REPRESENTATIVE DAVIES continued, "Mr. Chairman, my only -- the
reason why I left academia, why I left Columbia University, in New
York State, and came back to this state to be a member of the DGGS
was precisely because I did not want to be in an `ivory tower'
anymore. Precisely because I wanted to do something that affected
the people of the state of Alaska directly, and I felt at that
time, and I continue to believe now, that the state survey is one
of those agencies that does that. It's a `rubber meets the road'
operation. It's a very practical application of geological
analysis."
Number 215
REPRESENTATIVE AUSTERMAN explained he isn't an oil, gas or minerals
person. He said he sits in this legislature trying to learn
everything I am supposed to learn and be able to make decisions
that are good for the state of Alaska. He said, "In all due
respect to your knowledge and how you push this through, Mr.
Chairman, in other legislation that has come before this committee
I have respected your opinions and I have tried to follow a lot of
your leads because you do have the knowledge. Although, the
testimony that we've had today is also from people that I have a
lot of respect for in the industry and so I'm rather torn on this
thing right now and I think if we were to go to a vote right now I
would have to vote no to move it out of this committee until I have
more time to either to talk to these other people or really to
understand the issue a little bit more. But it seems to me that we
need a little more time on this."
Number 235
CO-CHAIRMAN GREEN asked the participants on the teleconference
network to rank their preference of the scenarios surrounding the
DGGS.
Number 283
MR. BOOTH reiterated that the advisory board recommends that the
DGGS stay as it is. He said it has been operating very
functionally with the acting state geologist. If it because of
budgetary concerns, it has to remain that way, he is sure that the
advisory board would concur to that as its number one priority. He
said he thinks that what they are attempting to try to do in the
DGGS is to `mount the tires, hit the road and screech a lot of
rubber' as has been stated. The advisory board has been looking
very closely at the functions of what DGGS is doing and making very
strong suggestions in what they follow through to provide to users
of Alaska with geology. Mr. Booth said that not only includes the
mapping, but the seismic and traditional geology that is very
important to try to get the hydro geologic function back in DGGS
and, certainly, to expand the (indisc.) and volcanic deserts. He
said he thinks that the advisory group certainly would support
having an independent agency.
CO-CHAIRMAN GREEN asked Mr. Booth if he shares the concern that if
it were combined that there would some sort of inhibition or some
sort of restriction imposed on the normal functions of the DGGS, if
the outlines of HB 537 were followed.
Number 386
MR. BOOTH answered, "Mr. Chairman, yes I think that is what the
advisory broad has felt as we've walked through this process the
latter part of last year. There was a lot of discussion very
similar to what we are hearing today on that particular issue and
I think there were some very very strong concerns, and we thought
the advisory board kind of filled the gap to make sure that we're
functioning as we're supposed to. Your concerns and what would
happen with DGGS if it went over to the DOG I think are much the
same concerns as we have heard from the advisory board. Although,
we were rest assured from DNR that the particular concern that you
had was not going to happen, but as we all know when these get put
into different groups, different things happen."
Number 427
CO-CHAIRMAN WILLIAMS referred to the situation with the budget and
trying to save money and said he thinks this was part of the
Administration's goal and part of the legislature's goal. He said
he would like some input from the industry as to whether they
currently have any ideas.
Number 439
REPRESENTATIVE AUSTERMAN responded to Representative Williams that
he believes the committee just heard their view. He said, "If we
are going to do anything with the budget constraints that we have
right now, then just leave it as status quo."
Number 470
CO-CHAIRMAN GREEN said that because there is a significant
difference of opinion on HB 537, the legislation will be held over
for further discussion.
HB 388 - OIL AND GAS LEASING; BEST INT. FINDINGS
Number 510
CO-CHAIRMAN GREEN announced that committee would hear CSHB
388(O&G), Version K, "An Act revising laws relating to oil and gas
leasing as related to land previously the subject of a written best
interest finding; amending provisions setting out exceptions to
sales, leases, or other disposals for which a revised written best
interest finding is not required; authorizing annual offer of land
for oil and gas leases if the land, or adjacent land, was the
subject of a best interest finding and if preparation of a
supplement to the best interest finding for that land is not
justified; and modifying the statement of purpose in the Alaska
Land Act as it applies to oil and gas leasing." He asked
Representative Rokeberg to explain the version before them.
Number 522
REPRESENTATIVE NORMAN ROKEBERG, Sponsor of HB 388, stated the bill
is known as the areawide leasing bill. This is, for the
information of everybody here, a House Majority priority bill for
the year.
REPRESENTATIVE ROKEBERG stated, "This bill has been combined with
HB 389 which is known as `areawide best interest findings.' So, we
have a hybrid bill that is the work of a substantial effort on the
part of the AOGA, the Alaska Oil and Gas Association, working in
conjunction with the director of Oil and Gas in DNR (Department of
Natural Resources) to come up a compromise bill that will
accomplish the purposes that we set out to do so. Early on, even
last year in the interim, we have had a number of work sessions and
hearings on this bill in the Oil and Gas Committee. And I am
really pleased to be able to bring this bill forward in front of
the Resources Committee and I'd like just briefly describe what it
does."
Number 590
REPRESENTATIVE ROKEBERG said, "Number one, the bill - and this is
the Version K, provides specific legislative intent language which
stipulates annual areawide lease sales. Now the director of Oil
and Gas indicates, and I agree, that presently he has the authority
to conduct these types of sales under the exempt and reoffered
provisions of the Title 38 statute. But what we've done here is
gone on step further and stipulated to that fact in statute.
Because what we've done - we've stipulated that the director may
conduct such sales annually. And the `may' or the permissiveness
in the statutory language is done intentionally to give the
director some flexibility. For example, the market conditions for
price were to be in a very low side, it may not be in the state's
best interests to pursue a lease sale on the annual basis. There
are provisions in this bill that allow for the flexibility to meet
the conditions that are in the discretion of the commissioner and
the director. I think that's a positive note."
Number 633
REPRESENTATIVE ROKEBERG pointed out that the provisions of this
bill in no way alter the five year leasing schedule, lease plans,
that the state presently conducts their oil and gas leases under.
REPRESENTATIVE ROKEBERG felt that one of the key components of this
bill is that we look at the best interest findings. The life span
of a best interest finding, which is a major document that has to
be prepared by the department before acreage is offered for sale,
under the exempt and reoffered provisions of Title 38 there is a
limitation on the life of these documents to five years. This bill
makes them ten years. I think this is a major step forward because
what this does should have a positive impact on the fiscal
responsibilities of the department and the need to reinvent the
wheel every five years when you want to offer this acreage out and
that is a very important factor.
Number 685
REPRESENTATIVE ROKEBERG said, the bill also sets up a new
supplemental process which is somewhat different than the word
"revision." It means a revision, but there is a supplemental
process if there is only new substantial information that would
require a supplement to the existing best interest finding (BIF).
So, in other words, if new major information comes forward, the
process that is stipulated in the bill to provide for a
modification of the existing BIF so that it can be brought up to
speed in terms of any technical or other necessary information that
is brought forward. Representative Rokeberg said the director uses
the "red headed owl" example that moves in and creates new habitat
within that area. There are clearly provisions for that and they
are somewhat more expedited. This is a very positive thing for the
state. The fact that this is just substantial new information to
create somewhat of a higher standard for the reopening of
supplementing the existing best interest findings.
REPRESENTATIVE ROKEBERG pointed out that only acreage that has a
best interest finding can be offered on this annualized basis.
Representative Rokeberg left the table to refer to maps showing
some of the acreage in the North Slope and Cook Inlet.
Representative Rokeberg explained that the bill is really an
areawide bill, it is a nonspecific area bill.
Number 790
REPRESENTATIVE ROKEBERG emphasized, "That the intention of this
bill, to overcome any statutory or any other provisions that may be
on the books now, to enable em to have more flexibility, offer more
land to a way to the industry so they can plan on and conduct their
capital budgets for further exploration and development of our very
important resource in the state."
REPRESENTATIVE ROKEBERG further stated, "One thing I would also
point out that this bill is really an areawide bill, it is
nonspecific area bill. In the past forms of this legislation, some
of it was endeavoring to stipulate as to areas. For example, the
Umiat baseline Kenny River Colville or what's called the `box' in
the Cook Inlet which was a legal description of an area in the Cook
Inlet - was under the, I think exploration licensing bill two years
ago defined a box in the Cook Inlet area. There was testimony that
there was controversy about this and so forth. There was some
reluctance on the part of people involved in the process to be
specific like that, but I think we have done artfully in this
compromise generated by AOGA and the director, nothing specific
about that. So we're taking existing power that the director has,
and giving him additional tools, setting up authority to do things
annually that he may not have wanted before but there is an
expression of legislative intent here that do these things annually
because these areas have been offered before."
REPRESENTATIVE ROKEBERG continued, "For example, a newcomer, a new
independent would come into an area and they could have
consultations with the director. Say they have an interest like
the nomination factor is now and they could provide for the exempt,
the reoffered sales that is done now, but this could be done on a
more regular basis. So, it is a real positive thing in that
regard."
Number 889
REPRESENTATIVE ROKEBERG proceeded, "As I mentioned, this is a
compromise bill. There was a memorandum issued to the chairmen of
this committee after the Oil and Gas Committee passed out our
Version K with some recommendations for some modifications."
REPRESENTATIVE ROKEBERG said in the committee member's packets,
there should be the amendments that the Oil and Gas Committee is
offering to overcome some of items listed in the Alaska Oil and Gas
Association memorandum dated March 15, 1996. He said most of the
objections in the AOGA memorandum are really technical statutory
drafting problems and there are only two substantive areas that he
would like to comment on.
Number 936
REPRESENTATIVE AUSTERMAN asked if the amendments are being offered
to the committee substitute, Version K.
REPRESENTATIVE ROKEBERG said that was correct and referred to the
specific AOGA amendment:
Page 5, lines 6 - 9:
Delete: ", together with any tract for which a written best
interest finding has not been prepared if the tract is located
within and is entirely surrounded by acreage described in
this subparagraph for which a best interest finding was
issued"
REPRESENTATIVE ROKEBERG repeated the proposed language deletion,
and walked away from the microphone to refer to map. He referred
to the wording in the amendment and said, "Which means, for
example, if there is like an inholding or land here that there was,
a lot of these may have been leased before. This particular map
doesn't necessarily speak to this particular issue, but this is
just an example. There might be an inholding within this whole
area - want to have an areawide lease sale on it. The language
that the Oil and Gas Committee inserted here would provide for
that."
REPRESENTATIVE ROKEBERG said there was a concern that there may be
some reasons that a particular tract of land may not want to be
(indisc.), so it has been requested by the Alaska Oil and Gas
Association that this language be removed. Representative Rokeberg
said that as the bill sponsor, he has agreed to do so. He stated
that is one of the major objections that AOGA, in their March 15,
1996, memorandum to the chairmen of this committee. He noted there
are a number of other technical questions that we've acceded to.
Number 1031
REPRESENTATIVE ROKEBERG directed committee attention to another
proposed amendment:
Page 6, lines 27-30 Delete: "(1) may annually offer to issue
oil and gas leases of the acreage described in
AS 38.05.035(e)(6)(G) unless the commissioner determines that
substantial new information has become available that
justifies preparation of a supplement to the best interest
finding for the area proposed to be leased;"
Insert: "(2) may annually offer to issue oil and gas leases
of the acreage described in AS 38.05.035(e)(6)(G) that is
subject to a written best interest finding issued within the
previous 10 years unless, under that subparagraph, the
commissioner determines that preparation of a supplement to
the best interest finding for the acreage proposed to be
leased is justified;"
REPRESENTATIVE ROKEBERG repeated the amendment beginning on line
27, he explained that AS 38.05.035(e)(6)(G) references the new
provision of this bill which is "the guts of this bill." He said
there were concerns raised about the language after that, "Unless
the commissioner determines that substantial new information has
become available that justifies preparation of a supplement to the
best interest finding for the area proposed to be leased."
Representative Rokeberg said, "The intention of myself and the
legal drafter was that this new language merely indicates that if
in fact new substantial information comes to light that there is a
need for a supplemental revision modification to the BIF that could
delay the annual basis. In other words, if there was a scheduled
annual sale under this provision then the commissioner, because
there was new information, could delay that."
Number 1103
REPRESENTATIVE ROKEBERG explained, "However, AOGA and some people
in industry feel that they don't understand the language, so we
have offered a new amendment here which basically says that -
that's the first page of the amendment that's presented to you for
different language which basically says the same thing that if
there is a new information that requires a supplement coming
forward, then there could be a delay in the annual sale."
Number 1129
REPRESENTATIVE ROKEBERG interpreted the word "may" on page 6, line
27. The word "may" is a permissive thing and is really really
important to understand. He said that all this bill is doing is
providing encouragement and authorization to the commissioner to do
this on an annual basis. Representative Rokeberg said we want the
commissioner to have that flexibility so that he/she will more land
out into the hands of industry. We want to see more "bits" turning
to the right and more down hole information.
Number 1162
REPRESENTATIVE ROKEBERG referred to remaining amendments proposed
by the AOGA and stated that those recommendations are strictly
statutory drafting problems where there is either a lack of
understanding or comfort just the way the language is drafted.
There is nothing substantive there.
Number 1192
REPRESENTATIVE ROKEBERG directed attention to the title of the bill
where the AOGA recommended addition of language "areawide leasing."
He pointed out the problem from a statutory drafting point is
notwithstanding the fact that the short title of the bill is
"areawide leasing," but because the commissioner presently has the
authority to conduct areawide leasing, there is nothing in the bill
that says we're doing areawide leasing. So it can't be included in
the title. He asked for the committee's consideration of the
proposed amendments and expeditious review of this legislative
priority.
Number 1247
REPRESENTATIVE OGAN noted that the updated fiscal note has been
decreased from $290,000 in fiscal year 97 to $8,000. He said he
wants to make sure that the $8,000 fiscal note replaces the
$290,000 fiscal note.
Number 1280
REPRESENTATIVE ROKEBERG explained that the original bill that was
brought forward in the House Special Committee on Oil and Gas, in
essence, established a new annual leasing program with the statute.
With the input of the director and the industry, in the AOGA
compromise, we're able to change the entire scope of the bill and
reduce its impact, financially, on the division.
REPRESENTATIVE ROKEBERG asked committee to keep in mind that the
acreage that is being offered, under this bill, is what is called
exempt and reoffered acreage which has always been able to be done
before, but now it will be done on a more consolidated basis. This
is not new frontier wildcat exploration acreage we are talking
about that should have a new best interest finding and all the
environmental concerns and things of that nature are taken care of.
Number 1424
CO-CHAIRMAN GREEN recalled earlier testimony from Representative
Rokeberg about the significant drop in the fiscal note and asked
what the department would not be able to do now.
Number 1468
REPRESENTATIVE ROKEBERG replied that the previous version of the
bill set up almost a statutory program which would have required
additional manpower, etc.
Number 1495
REPRESENTATIVE OGAN said he has worked on a bill that had a similar
situation where he was designing a program that was completely
outside of the scope of what their job is - whole new program. He
said he thinks that what has been done with this bill is that it
mirrors existing statute as much as possible, yet it makes the
substantive changes within the existing program statute and that is
why the fiscal note was reduced. They aren't reinventing the
wheel.
Number 1560
REPRESENTATIVE ROKEBERG responded to questions from Representative
Austerman relating that there are numerous lands that have been
leased before. He explained that their terms were typically ten
years. Those lease terms have now expired and they are being
reoffered. As we step out and offer more lands, we write best
interest findings for those parcels and then they are let out, but
then there is no bid on them. Under the five year leasing schedule
they get out of the loop. You could have a lease, for example,
that occurred five years ago and nobody bid on then, three years
later there may be some interest in that land, but it won't get
back on the schedule until the sale is rescheduled. The intent of
the bill is to short circuit that. If there is some interest, the
bill would allow the commissioner to put that parcel on a sale that
is different than a scheduled five year sale.
Number 1643
CO-CHAIRMAN GREEN said, "I might add to that that as Representative
Davies talked about the fact that the geological staffs of
companies, as well as the state, are looking at areas that maybe
are not in the current leasing schedule or not even contemplated,
but geologists are out of work and all of a sudden a
reinterpretation of the use of 3-D seismic various activities that
they do, suddenly they get a different picture, but because this
particular land if it were just not asked for in the current
leasing procedures, it would take six years because it would have
to get on the five year schedule that's already been published. So
in order to expedite that, this would cover it. As Representative
Rokeberg said, lands that have already been looked at before from
a best interest findings standpoint.
Number 1695
REPRESENTATIVE ROKEBERG informed that the $8,000 fiscal note is for
advertising as required in the statute, if they were to offer
leases. All their asking is to spend some more advertising money
so they can advertise the land which they are required to do. He
said it is a good fiscal note. He noted he could arguable say that
it should be a negative fiscal note, it is just common sense.
Number 1733
REPRESENTATIVE RAMONA BARNES referred to Representative Rokeberg
saying that believes that it should be a zero fiscal note and asked
Representative Rokeberg why he won't advocate for it.
Number 1770
REPRESENTATIVE ROKEBERG countered that because the fiscal note has
been significantly changed from the last fiscal note. He said this
is still statutorily required.
Number 1790
CO-CHAIRMAN GREEN commented that the $8,000 is merely an estimate.
Number 1850
PAT FOLEY, Chairman, Lands Exploration and Operations Committee
Alaska Oil and Gas Association, testified via teleconference, in
support of HB 388. He said, "The areawide leasing concept is
really rather simple. The Division of Oil and Gas must complete a
large best interest finding for the Central North Slope and the
core area of the Cook Inlet. Once a favorable best interest
finding is issued, the division must then offer all unused land in
these areas at the annual lease sales. The need to continually
review the current issue, the best interest findings in areas of
the state, which have repeatedly offered for lease since the 1960s,
is eliminated. We believe that regular, certain and predictable
schedule of annual lease sales, which offer the acreage of critical
exploration interests to the industry, will receive the continued
support of the current operators within the state. It may serve to
attract new explorers (indisc.) oil and gas operating environment."
MR. FOLEY continued, "We applaud the efforts of Representative
Rokeberg and the House Oil and Gas Committee to forward this bill
for your review. With the few changes, which I am now prepared to
discuss, AOGA unanimously supports this bill."
Number 1970
MR. FOLEY referred to the distinctive AOGA marked up copy of the
bill highlighted in multiple colors and said the highlighted colors
are a visual aid to help him walk through the bill. He pointed out
that there are four different types of changes, conceptually. The
yellow and the blue are each changes that AOGA is recommending in
addition to the bill. The orange and the pink are AOGA's
recommendations to delete two concepts which appear in Version K
for the first time.
Number 2027
MR. FOLEY directed attention to the yellow highlighted changes and
said, "The first which appears on page 1 and the second is on page
6. (Indisc.) this is an an areawide leasing bill and we proposed
that the words `areawide leasing' be (indisc.) throughout the bill
to emphasize this point. The words `areawide leasing' do appear in
the bill, as it is currently drafted, and they appear on page 6 on
line 22 of Section 2. (Indisc.) modified to let you (indisc.)
areawide lease sales are in the best interest of the state. So we
would simply add language to the title on page 1, at line 8, hoping
to make reference to a areawide leasing."
Number 2082
REPRESENTATIVE ROKEBERG interjected that he likes this amendment.
MR. FOLEY continued, "And then also on page 6, we would insert the
language in Section 3. I'm gunna have more comments on Section 3,
in fact, I recommend it be deleted entirely, but if your committee
feels compelled to leave it in - that language - the yellow block
which you see on line 27."
Number 2100
MR. FOLEY continued explanation of orange highlighted amendments
relating that it appeared that Representative Rokeberg's amendments
had incorporated all of the orange changes:
Page 1, line 5, Title
Delete: "or adjacent land,"
Page 5, line 6, Delete: "together with any tract for which a
written best interest finding has not been prepared if the
tract is located within and is entirely surrounded by acreage
described in the subparagraph for which a best interest
finding was issued"
Page 6, line 23 Delete: "or that is adjacent to and
surrounded by state land that has been the subject of a best
interest finding"
Number 2169
MR. FOLEY referred to the pink changes and said it is a more subtle
issue. He noted Representative Rokeberg touched on it and said he
wanted to add some points of clarification. He explained AOGA is
concerned that with this language the BIF is required. Mr. Foley
directed the committee to Section 3. AS 38.05.180 (d) on page 6:
Page 1, lines 6 and 7 Delete: "and if preparation of a
supplement to the best interest finding for that land is not
justified.
Page 6, lines 28 Delete: "unless the commission determines
that substantial new information has become available that
justifies preparation of a supplement to the best interest
finding for the area proposed to be leased."
Number 2272
MR. FOLEY discussed the distinctions between AS 38.05.180(b) and
(c) and (d). He referred members to page 6, line 25, Section 3,
AS 38.05.180(d) which exempts certain lands from the need to appear
on a five year lease sale scheduled and said by adding that
language it essentially negates the exclusion that created .180(d).
Mr. Foley said if you look at .180(b), this establishes the
requirements to include the land on a five year sale program. AS
38.05.180(c) says that you cannot offer land which (indisc.) appear
on that five year program. AS 28.05.180(d) sets forth the
exemption. If you include this language highlighted in pink on
page 6, it negated the exclusion created .180(d).
Number 2331
CO-CHAIRMAN GREEN asked Mr. Foley if he had received a copy of
Representative Rokeberg's proposed amendments.
MR. FOLEY acknowledged that he had a copy, but had the same problem
with the language that appears in his amendment.
Number 2374
REPRESENTATIVE DAVIES did not follow Mr. Foley's explanation that
having this language in here negates the whole exception. He said
it seem to him that this finding of substantial of new information
would be the exceptional case. In most cases, the underlying
exception would be in place. In the vast majority of instances,
the commissioner could annually offer areawide lease sales as long
as they had been subject to best interest finding within the last
ten years.
MR. FOLEY said, "If you look at the changes that we're making in
(G) and (H), which is now just (G), (indisc.) for a supplemental
best interest finding, if substantial new information is discovered
it throws you into that loop there that requires... [END OF TAPE]
TAPE 96-37, SIDE A
Number 000
REPRESENTATIVE ROKEBERG said he understands their concerns. He
explained it is not the intention of the sponsor, nor the drafter,
to create the result that has been brought to his intention.
Representative Rokeberg pointed out there is a fix at this stage,
particularly given the light to move this legislation along.
Representative Rokeberg indicated he is willing to accept the
"klink" change without deleting the balance of the statement in
Section 3, particularly with the addition of the words, "an
areawide lease sale," highlighted in yellow. He said he is more
than willing to accept that as a friendly amendment.
Representative Rokeberg stated he won't agree to the removal of the
first part of that sentence which has also been requested. That is
the only thing that authorizes anything about annual and it is the
only thing that says anything about areawide lease sales not that
it has been modified.
CO-CHAIRMAN GREEN asked Mr. Foley if it is still his feeling that
he would still have the conflict if just the first sentence and a
half was used.
MR. FOLEY indicated he wouldn't. He said the suggestion by
Representative Rokeberg satisfies his concern. He noted he still
believes that all of Section 3 and the amendment to .180(d) is
unnecessary. He stated he doesn't have an objection to the change
Representative Rokeberg has put forward.
Number 158
CO-CHAIRMAN GREEN said as he understands, Section 3 would have the
yellow in and the pink out.
MR. FOLEY indicated that was correct.
CO-CHAIRMAN GREEN noted there was an affirmative nod from the
sponsor.
Number 183
MR. FOLEY referred the committee to the title of the bill on page
1 and said there is a pink deletion. He said (indisc.) is
identical to what was just said.
CO-CHAIRMAN GREEN said, "So what I hear so far, I think the
committee is with us, that yellow, orange and pink, as proposed by
AOGA, is acceptable to the sponsor."
REPRESENTATIVE ROKEBERG indicated that is correct.
Number 237
MR. FOLEY referred the committee members to the changes that are
blue and said, "(Indisc.) are necessary to clarify some procedure
requirements. They're essentially legislative housekeeping, if you
will. On page 3, line 23, we've added language `except for sale
under (G)(6) of this subsection.' I would like it in this change
to (indisc.) put forward in Section 5 of this bill, which (indisc.)
AS 38.05.945(A), (indisc.) to clarify on the hearing or lease sales
are exempt from certain public notice requirements."
Number 300
REPRESENTATIVE ROKEBERG explained he spent substantial time
reviewing this and it is statutory drafting. He said, "Everything
that Mr. Foley says I agree with. We do not conceptually agree
with. It is just the matter if one looks up to the first page, on
line 11, there is a little `(e)' there and if you follow the whole
section - that subsection down, it's all inside the subsection.
And if you go beyond his change - requested blue change now on page
3, and keep going on page 4 and keep going on page 5, you end up
with `(G)' and `(H).' We're all in the same subsection, so the
statutory draft is you don't have to make the reference back
because it's right in the subsection."
Number 365
REPRESENTATIVE BARNS explained that sometimes it doesn't have
anything to do with the drafters, it has to do with people who read
it after you get through drafting it to understand what the intent
is. Perhaps that is the reason they want it put in so that it is
clearly followed in statute in the future.
REPRESENTATIVE BARNES said, "What I would do would entertain a
motion. I would move that all this colored language, I don't think
it's yellow - I think it's green where they calling it yellow -
orange, pink and blue be adopted into the committee substitute we
have before us."
CO-CHAIRMAN GREEN said he would presume the motion would cover page
1, line 4.
REPRESENTATIVE BARNES indicated that is correct.
Number 444
CO-CHAIRMAN asked if there was an objection.
REPRESENTATIVE DAVIES objected. He said he still doesn't
understand why the committee wants to make the change in Section 3
on page 6. Representative Davies indicated he doesn't understand
why it is necessary. He asked Representative Rokeberg if that
change were to be made, would there still be the requirement that
whenever such acreage is being offered and if there is substantial
new information, there would be a new best interest finding.
REPRESENTATIVE ROKEBERG said the reference to (e)(6)(G), which is
the actual operative clause, reviews the whole aspect creation of
the supplemental to the BIF. He noted it starts on page 4, line
29, (G) and go to page 5, line 11. He said the point Mr. Foley
made is correct. He referred to the language highlighted in pink
in Section 3 and said the only reason it was there was it is
modifier to indicate that there could be circumstances that would
necessitate a delay on the annual sale. Representative Rokeberg
said he thinks that by the statement on the record in going forward
with the deletion that they've requested should be adequate to
cover that because it is included in the new section (G).
Number 607
CO-CHAIRMAN GREEN asked Mr. Foley if he agrees with what
Representative Rokeberg had just stated.
MR. FOLEY indicated he does.
REPRESENTATIVE ROKEBERG stated that by putting it on the record,
the permissiveness under the new Section 3 is still there in case
things happen like the price changes. The director and
commissioner can take it into account. He noted it was added by
the drafter of the bill as qualification for additional
flexibility.
CO-CHAIRMAN GREEN asked Representative Rokeberg if he has a problem
with the wording on page 1, line 4.
REPRESENTATIVE ROKEBERG said that is a matter of statutory
drafting. He indicated he doesn't disagree with it and doesn't
have an objection.
CO-CHAIRMAN GREEN asked Representative Davies if he still maintains
his objection.
REPRESENTATIVE DAVIES said the bill is fairly complicated. He
asked for a brief at ease.
CO-CHAIR GREEN called the meeting back to order.
REPRESENTATIVE ROKEBERG said he would remove his amendments from
the table and would exceed to the ones requested.
Number 805
CO-CHAIRMAN asked Representative Davies if he still has an
objection.
REPRESENTATIVE DAVIES removed his objection.
CO-CHAIRMAN GREEN said, "Is there any objection to the motion to
move - it was this bill...
REPRESENTATIVE BARNES said, "...From the committee as amended."
CO-CHAIRMAN GREEN said, "As amended and with the new fiscal note.
Is there objection?"
An unidentified committee member said he thought the committee was
voting on an amendment.
CO-CHAIRMAN GREEN said, "Oh, well we can't. We have a motion on
the floor to accept these..."
REPRESENTATIVE BARNES said, "And you asked if there was any
objection and there was none. So the next motion is to move out of
committee, as amended, with individual recommendation.
CO-CHAIRMAN GREEN asked Representative Barnes if that is her
motion.
REPRESENTATIVE BARNES indicated it was.
CO-CHAIRMAN GREEN asked if there was an objection.
REPRESENTATIVE DAVIES objected. He said there is a new version and
several amendments that the committee hasn't had a chance to
digest. He said he would respectfully request the committee be
given a day to review the amendments.
CO-CHAIRMAN GREEN said, "If there are no other questions of the
sponsor, in fairness, we have Sara Hannan to speak on this bill.
I would ask you to be as brief as possible, Ms. Hannan."
SARA HANNAN, Executive Director, Alaska Environmental Lobby,
testified in opposition to HB 388. She said she has sat through
several hearings in the Senate and would like to discuss some of
the concerns and differentiations that she thinks the policy
implies that the committee members need to think about. Areawide
leasing, conceptually, is a good idea. Ms. Hannan referred to the
best interest finding mechanism and said it is the mechanism in
which local communities have input into the oil and gas lease
schedule. If a community feels that a lease sale dramatically
affects their fishing constituencies or their tourism development,
the best interest finding is the place where their testimony can
come into play and certain parcels can be exempted from leases and
non leases. When talking about areawide sales and the two areas
where we do lease sales, they vastly differ. The North Slope's oil
and gas leasing area, above the Umiat baseline between the Cannon
River and the Colville River, provide an area that is fairly
homogeneous in environment and fairly non populated. Conversely,
the Cook Inlet Basin is a very diverse area with a lot of different
economic interests. There are several communities and a variety of
constituencies with different economic concerns ranging from
tourism expansion in the area to a fishing constituency.
Additionally, most of the oil and gas in Cook Inlet is offshore.
All of the North Slope oil and gas leases are onshore leases. Some
are offshore with lateral drilling, but the lease sales are held on
shore. Ms. Hannan said for that reason, those two areas are vastly
different and she would argue that it should be differentiated
within the legislation. She said she would urge the committee to
evaluate those two areas differently because they are vastly
different. The North Slope and the Southcentral Cook Inlet Basin
don't look anything alike. Ms. Hannan said if you're taking
something that is data five years current, when you're talking
about developing fishing and tourism industries, things change
substantially in five years.
MS. HANNAN explained that when communities work for or against
lease sales in their area, if a parcel is not leased and not sold,
there should be some assurance to that community that they don't
need to spend a substantial amount of their community energy
evaluating the pending lease sale every year. What has been
provided through a five year sale mechanism is that if lease sale
"X," in front of their view shed affecting their fishing
development, doesn't sell they know that in five years it could
come back and they, again, will have an additional comment period.
Ms. Hannan informed the committee that exempting these sales from
additional comments creates an ongoing policy problem for local
communities. She thanked the committee members for listening to
her comments.
Number 1122
REPRESENTATIVE DAVIES referred to Ms. Hannan mentioning "five
years" several times in her comments and said he would like to make
sure Ms. Hannan was aware that the "five" had been changed to "ten"
in the bill.
MS. HANNAN said she was aware. Currently, it is a five year window
and most communities in the Cook Inlet Basin are dealing with a
five year mechanism. When that goes to a ten year mechanism, we
will be looking at even more changes.
REPRESENTATIVE DAVIES indicated Ms. Hannan said her concern was
that there could be substantial changes an a unit from one window
to the next when a lease sale may be offered. He said under the
terms of the bill, if there are substantial changes there would
then be a reiteration of the best interest finding process.
Representative Davies asked Ms. Hannan if she is not comfortable
with that provision.
MS. HANNAN indicated she isn't comfortable with the provision. She
noted she meant to substitute the word "substantial," as it is her
understanding that "substantial" has a legal definition of a
certain standard. Ms. Hannan referred to Homer and said if your
tourism expansion and growth has been 30 percent, does that meet
the legal definition of a substantial change? She pointed out
there are mixed opinions, amongst attorneys, as to what substantial
new information implies. They say it's a very high standard that
most local governments would have a hard time saying that this is
substantial new information, yet it is an expansion and the tourism
constituency has some concern, but can you prove it is substantial
new information or it is just an increase in economic value
annually.
REPRESENTATIVE DAVIES asked Ms. Hannan if she has another word to
substitute for "substantial."
MS. HANNAN indicated she didn't.
Number 1259
KENNETH BOYD, Director, Division of Oil and Gas, Department of
Natural Resources, was next to testify via teleconference from
Anchorage. He said he thinks the legislation has gone a long way
in the right direction. Mr. Boyd said Representative Rokeberg has
done a really nice job of working with the Division of Oil and Gas
and AOGA. He explained that he believes that the changes made are
valuable. He referred to page 1, line 4, relating to the title of
the bill and said there was talk about making changes to the
colored language - the yellow, blue, green and pink. The word
"authorizing" would be changed to "encouraging. He asked if there
was another word change.
Number 1310
REPRESENTATIVE BARNES said, "My motion, because we all have this
document, incorporated all the coloring and the - the...."
CO-CHAIRMAN GREEN said, "...that little blue area. If yours isn't
colored, mine is. Just a moment. There was to be the word
`encouraging' on line 4 was to be colored blue and the word
`encouraging' substituted there."
REPRESENTATIVE BARNES agreed.
REPRESENTATIVE DAVIES said it was his understanding that
Representative Barnes indicated the change on line 4, specifically.
He said it was understanding that when the amendment was moved,
that was what was being done.
CO-CHAIRMAN GREEN said the amendment has passed.
Number 1349
MR. BOYD said he is certainly in favor of the change. He said, "We
are authorized, as we've discussed many times, to do what we're
doing here, but encouraging those annual (indisc.) I think is a
very positive (indisc.) of the legislature to get on with it."
CO-CHAIRMAN GREEN said there was previous discussion that there was
significant changes to the bill and that there would be some time
to review the changes. He said those changes have been adopted and
he sees no problem with getting another draft of the bill for
review at the meeting on Wednesday. He said he would suggest that
Representative Rokeberg might want to consider a zero fiscal note.
Number 1398
REPRESENTATIVE BARNES made a motion to adopt a zero fiscal note.
REPRESENTATIVE DAVIES objected for the purpose of discussion. He
asked Mr. Boyd to comment.
MR. BOYD said, "If you want to zero it out, go ahead, but that
doesn't give (indisc.) that you want more lease sales and those
lease sales don't cost a lot of money, but a flight to (indisc.) to
do public testimony has a real cost to the division. I'm only
recognizing here that those costs are real. But I think
Representative Rokeberg was also correct in his earlier testimony
that at some point in time I think the cost begins to go down
because at some point I think is less necessity to reinvent that
wheel, but (indisc.) at some point in time (indisc.) and we have to
do public testimony, we have to advertise (indisc.), and it's in
addition to what we're doing now. I think it's a small cost to pay
for a program that gets an awful lot of land out, you know,
potentially in the hands of the (indisc.) user. This truly is an
administrative cost, but again, a flight to (indisc.) costs a
couple of thousand dollars to get people into that village to deal
with the local people. I think it's an important cost. The same
thing goes for flying to Kenai or flying to Homer. It's part of
the public process that's required and it does have a cost."
Number 1479
CO-CHAIRMAN GREEN asked if this is something that he didn't foresee
in the division's budget.
MR. BOYD said they always try to find things in their budget, but
would keep adding things. Mr. Boyd explained he couldn't say
whether or not he couldn't find the money. He stated he thinks
this is a fair and reasonable additional cost if there is an extra
sale, on a yearly basis.
Number 1500
REPRESENTATIVE DON LONG said, "I was just going to mention whether
or not it goes into the budget because notwithstanding the fact
that areawide leasing or a best of finding or whatever -- I mean if
there a lease or not a lease that's (indisc.). If there is, then
it shouldn't be an additional cost."
REPRESENTATIVE DAVIES said he thinks what the bill is intending to
do is authorize/encourage more sales. If there is going to be more
sales that are going to be offered more frequently, then there will
be an additional cost. He said he would also note that the budget
proposal is actually to reduce the division's budget by $150,000.
He said we can do all the encouraging we want, but nothing will
happen if the division doesn't have the fiscal tools to do the job.
He indicated he still maintains his objection.
Number 1552
CO-CHAIRMAN GREEN asked for a roll call vote on whether or not the
committee will submit a fiscal note from the House Resources
Committee. Representatives Austerman, Barnes, Kott, Long, Ogan,
Williams and Green in favor of the motion. Representatives Davies
and Nicholai voted against the motion. So the committee adopted a
zero fiscal note.
CO-CHAIRMAN GREEN announced the bill would be held over for review
of the amendments.
ADJOURNMENT
CO-CHAIRMAN GREEN adjourned the meeting at 10:12 a.m.
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