Legislature(1995 - 1996)

03/18/1996 08:13 AM RES

Audio Topic
* first hearing in first committee of referral
+ 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           
      - 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                
      - 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                                                               
 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                                                               
 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                         
 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           
 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                   
 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             
 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            
 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                  
 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                  
 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                
 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                
 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                 
 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             
      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                 
 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                       
 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                    
 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                  
 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                   
 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.                                                            
 CO-CHAIRMAN GREEN adjourned the meeting at 10:12 a.m.                         

Document Name Date/Time Subjects