Legislature(1995 - 1996)

04/26/1996 08:10 AM RES

Audio Topic
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
txt
               HOUSE RESOURCES STANDING COMMITTEE                              
                         April 26, 1996                                        
                           8:10 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                                                      
                                                                               
 MEMBERS ABSENT                                                                
                                                                               
 Representative Don Long                                                       
 Representative Irene Nicholia                                                 
                                                                               
 COMMITTEE CALENDAR                                                            
                                                                               
 CS FOR SENATE BILL NO. 307(FIN)                                               
 "An Act requiring the Department of Natural Resources to exchange             
 with the federal government state land within, and adjoining, Dude            
 Creek Critical Habitat Area for federal land adjacent to Fall                 
 Creek; and providing for an effective date."                                  
                                                                               
      - PASSED CSSB 307(FIN) OUT OF COMMITTEE                                  
                                                                               
 HOUSE BILL NO. 548                                                            
 "An Act authorizing, approving, and ratifying the amendment of                
 Northstar Unit oil and gas leases between the State of Alaska and             
 BP Exploration (Alaska) Inc.; and providing for an effective date."           
                                                                               
      - PASSED CSHB 548(RES) OUT OF COMMITTEE                                  
                                                                               
 CS FOR SENATE BILL NO. 112(RES)                                               
 "An Act establishing a discovery royalty credit for the lessees of            
 state land drilling exploratory wells and making the first                    
 discovery of oil or gas in an oil or gas pool in the Cook Inlet               
 sedimentary basin."                                                           
                                                                               
      - HEARD AND HELD                                                         
                                                                               
 CS FOR SENATE BILL NO. 262(RES)(ct rule fld)                                  
 "An Act relating to management of game populations for maximum                
 sustained yield for human harvest and providing for the replacement           
 of areas closed to consumptive uses of game; relating to management           
 of fish and game areas."                                                      
                                                                               
      - HEARD AND HELD                                                         
                                                                               
 CS FOR SENATE BILL NO. 247(RLS) am(efd fld)(ct rule fld)                      
 "An Act restricting the use of certain funds deposited in the fish            
 and game fund; and relating to the powers and duties of the                   
 commissioner of fish and game."                                               
                                                                               
      - SCHEDULED BUT NOT HEARD                                                
                                                                               
 SENATE BILL NO. 257 am                                                        
 "An Act relating to the taking of game or fish for public safety              
 purposes."                                                                    
                                                                               
      - SCHEDULED BUT NOT HEARD                                                
                                                                               
 PREVIOUS ACTION                                                               
                                                                               
 BILL:  SB 307                                                               
 SHORT TITLE: DUDE CREEK HABITAT AREA LAND EXCHANGE                            
 SPONSOR(S): FINANCE                                                           
                                                                               
 JRN-DATE     JRN-PG                  ACTION                                   
 03/12/96      2713    (S)   READ THE FIRST TIME - REFERRAL(S)                 
 03/12/96      2713    (S)   RESOURCES                                         
 03/29/96              (S)   RES AT  3:30 PM BUTROVICH ROOM 205                
 03/29/96              (S)   MINUTE(RES)                                       
 03/29/96      2972    (S)   FIN REFERRAL ADDED                                
 04/01/96      2991    (S)   RES RPT  5DP 1NR                                  
 04/01/96      2992    (S)   FISCAL NOTE (DNR)                                 
 04/10/96              (S)   FIN AT  9:00 AM SENATE FINANCE 532                
 04/10/96              (S)   MINUTE(FIN)                                       
 04/10/96      3110    (S)   FIN RPT  CS  6DP          SAME TITLE              
 04/11/96              (S)   RLS AT  2:35 PM FAHRENKAMP RM 203                 
 04/11/96              (S)   MINUTE(RLS)                                       
 04/11/96      3149    (S)   FISCAL NOTE TO CS (DNR)                           
 04/12/96      3193    (S)   RULES TO CALENDAR  4/12/96                        
 04/12/96      3196    (S)   READ THE SECOND TIME                              
 04/12/96      3196    (S)   FIN  CS ADOPTED UNAN CONSENT                      
 04/12/96      3196    (S)   ADVANCED TO THIRD READING UNAN CONSENT            
 04/12/96      3196    (S)   READ THE THIRD TIME  CSSB 307(FIN)                
 04/12/96      3197    (S)   PASSED Y20 N-                                     
 04/12/96      3197    (S)   EFFECTIVE DATES SAME AS PASSAGE                   
 04/12/96      3220    (S)   TRANSMITTED TO (H)                                
 04/15/96      3733    (H)   READ THE FIRST TIME - REFERRAL(S)                 
 04/15/96      3734    (H)   RESOURCES, FINANCE                                
 04/26/96              (H)   RES AT  8:00 AM CAPITOL 124                       
                                                                               
 BILL:  HB 548                                                               
 SHORT TITLE: NORTH STAR OIL & GAS LEASE AMENDMENT                             
 SPONSOR(S): RULES BY REQUEST OF THE GOVERNOR                                  
 JRN-DATE     JRN-PG                  ACTION                                   
 03/28/96      3434    (H)   READ THE FIRST TIME - REFERRAL(S)                 
 03/28/96      3434    (H)   RESOURCES, FINANCE                                
 03/28/96      3434    (H)   FISCAL NOTE (DNR)                                 
 03/28/96      3435    (H)   GOVERNOR'S TRANSMITTAL LETTER                     
 03/28/96      3436    (H)   ATTACHMENT                                        
 04/03/96              (H)   RES AT  8:00 AM CAPITOL 124                       
 04/03/96              (H)   MINUTE(RES)                                       
 04/10/96              (H)   RES AT  8:00 AM CAPITOL 124                       
 04/10/96              (H)   MINUTE(RES)                                       
 04/12/96              (H)   RES AT  8:00 AM CAPITOL 124                       
 04/15/96              (H)   RES AT  5:00 PM CAPITOL 124                       
 04/15/96              (H)   MINUTE(RES)                                       
 04/23/96              (H)   RES AT  3:00 PM CAPITOL 124                       
 04/24/96      4019    (H)   WTR REFERRAL ADDED                                
                                                                               
 BILL:  SB 262                                                               
 SHORT TITLE: MANAGEMENT OF FISH/GAME POPULATION & AREA                        
 SPONSOR(S): SENATOR(S) MILLER, Sharp, Pearce, Halford, Green,                 
             Frank, Taylor                                                     
                                                                               
 JRN-DATE     JRN-PG                  ACTION                                   
 02/02/96      2286    (S)   READ THE FIRST TIME - REFERRAL(S)                 
 02/02/96      2286    (S)   RES, JUD                                          
 02/05/96      2309    (S)   COSPONSOR(S): TAYLOR                              
 02/12/96              (S)   RES AT  3:30 PM BUTROVICH ROOM 205                
 02/12/96              (S)   MINUTE(RES)                                       
 03/08/96              (S)   RES AT  3:30 PM BUTROVICH ROOM 205                
 03/08/96              (S)   MINUTE(RES)                                       
 03/11/96              (S)   RES AT  3:30 PM BUTROVICH ROOM 205                
 03/11/96              (S)   MINUTE(RES)                                       
 03/12/96      2709    (S)   RES RPT  CS  5DP 1NR      SAME TITLE              
 03/12/96      2709    (S)   FISCAL NOTE TO SB & CS (F&G)                      
 03/18/96      2785    (S)   FIN REFERRAL ADDED                                
 03/26/96      2910    (S)   JUD REFERRAL WAIVED   Y12 N8                      
 04/03/96              (S)   FIN AT  9:00 AM SENATE FINANCE 532                
 04/03/96              (S)   MINUTE(FIN)                                       
 04/04/96      3065    (S)   FIN RPT  2DP 2NR  (RES)CS                         
 04/04/96      3065    (S)   PREVIOUS FN (F&G)                                 
 04/09/96              (S)   RLS AT 12:20 PM FAHRENKAMP RM 203                 
 04/09/96              (S)   MINUTE(RLS)                                       
 04/10/96      3112    (S)   RULES TO CAL & 1 NR    4/10/96                    
 04/10/96      3116    (S)   READ THE SECOND TIME                              
 04/10/96      3116    (S)   RES  CS ADOPTED UNAN CONSENT                      
 04/10/96      3116    (S)   ADVANCE TO THIRD READING FLD Y12 N8               
 04/10/96      3116    (S)   THIRD READING 4/11 CALENDAR                       
 04/11/96      3168    (S)   READ THE THIRD TIME  CSSB 262(RES)                
 04/11/96      3168    (S)   PASSED Y12 N8                                     
 04/11/96      3169    (S)   COURT RULE CHANGES FAILED  Y13 N7                 
 04/11/96      3176    (S)   TRANSMITTED TO (H)                                
 04/12/96      3690    (H)   READ THE FIRST TIME - REFERRAL(S)                 
 04/12/96      3690    (H)   RESOURCES, JUDICIARY                              
 04/26/96              (H)   RES AT  8:00 AM CAPITOL 124                       
                                                                               
 WITNESS REGISTER                                                              
                                                                               
 REPRESENTATIVE JERRY MACKIE                                                   
 Alaska State Legislature                                                      
 Capitol Building, Room 404                                                    
 Juneau, AK  99801                                                             
 Telephone:  (907) 465-4925                                                    
 POSITION STATEMENT:  Testified on SB 307.                                     
                                                                               
 KEVIN R. BANKS, Petroleum Economist                                           
 Division of Oil & Gas                                                         
 Department of Natural Resources                                               
 3601 C Street, Suite 1380                                                     
 Anchorage, AK  99503-5948                                                     
 Telephone:  (907) 269-8799                                                    
 POSITION STATEMENT:  Testified on HB 548.                                     
                                                                               
 KENNETH BOYD, Director                                                        
 Division of Oil & Gas                                                         
 Department of Natural Resources                                               
 3601 C Street, Suite 1380                                                     
 Anchorage, AK  99503-5948                                                     
 Telephone:  (907) 269-5948                                                    
 POSITION STATEMENT:  Testified on HB 548.                                     
                                                                               
 ERIC LUTTRELL, Vice President Exploration                                     
 BP Exploration (Alaska) Inc.                                                  
 P. O. Box 196612                                                              
 Anchorage, AK  99519-6612                                                     
 Telephone:  (907) 564-4892                                                    
 POSITION STATEMENT:  Available for questions HB 548.                          
                                                                               
 ANNETTE KREITZER, Legislative Assistant                                       
   to Senator Loren Leman                                                      
 Alaska State Legislature                                                      
 Capitol Building, Room 115                                                    
 Juneau, AK  99801                                                             
 Telephone:  (907) 465-2095                                                    
 POSITION STATEMENT:  Testified on behalf of sponsor SB 112.                   
                                                                               
 MARY GORE, Legislative Assistant                                              
   to Senator Mike Miller                                                      
 Alaska State Legislature                                                      
 Capitol Building, Room 125                                                    
 Juneau, AK  99801                                                             
 Telephone:  (907) 3770                                                        
 POSITION STATEMENT:  Testified on behalf of sponsor SB 262.                   
                                                                               
 JULIE PENN, Volunteer                                                         
 Alaska Environmental Lobby                                                    
 419 6th Street                                                                
 Juneau, AK  99801                                                             
 Telephone:  (907) 463-3366                                                    
 POSITION STATEMENT:  Testified against SB 262.                                
                                                                               
 WAYNE REGELIN, Director                                                       
 Division of Wildlife Conservation                                             
 Department of Fish and Game                                                   
 P. O. Box 25526                                                               
 Juneau, AK  99802-5526                                                        
 Telephone:  (907) 465-4190                                                    
 POSITION STATEMENT:  Testified against SB 262.                                
                                                                               
 ACTION NARRATIVE                                                              
                                                                               
 TAPE 96-69, SIDE A                                                            
 Number 000                                                                    
                                                                               
 CO-CHAIRMAN JOE GREEN called the House Resources Committee meeting            
 to order at 8:10 a.m.  Members present at the call to order were              
 Representatives Green, Williams, Ogan, Austerman, Barnes, Davies              
 and Kott.  Representatives Long and Nicholia were excused.                    
                                                                               
 SB 307 - DUDE CREEK HABITAT AREA LAND EXCHANGE                              
                                                                               
 REPRESENTATIVE JERRY MACKIE introduced SB 307 saying that the Fall            
 Creek hydropower project is located in his district about 20 miles            
 west of Juneau in the community of Gustavus, Alaska.                          
                                                                               
 REPRESENTATIVE MACKIE said SB 307 will facilitate the development             
 of the Fall Creek hydropower project by authorizing the state to              
 engage in a land exchange with the federal government, contingent             
 on Congress passing a land exchange authorization.  SB 307 will               
 play a vital role in the future economic health of the entire state           
 of Alaska.                                                                    
                                                                               
 REPRESENTATIVE MACKIE continued, "The Power Cost Equalization                 
 program has been cut $3,000,000 this fiscal year and we must                  
 continue to develop alternatives that will provide the state with             
 efficient cost savings power alternatives.                                    
                                                                               
 REPRESENTATIVE MACKIE stated, "It is vital that we work together to           
 develop and support alternative power resources throughout the                
 urban and rural areas of the state.  Alternative energy resource              
 development must be a priority for the state of Alaska and                    
 proposals such as SB 307 will minimize the impact of future state             
 and federal budget restrictions.                                              
                                                                               
 REPRESENTATIVE MACKIE proceeded, "This hydropower plant would be              
 constructed and operated solely from private capital and supply               
 power to the National Park Service, state of Alaska, and the                  
 community of Gustavus."                                                       
                                                                               
 REPRESENTATIVE MACKIE stated that SB 307 will potentially save up             
 to $118,750 per year in decreased power cost equalization costs,              
 and it would reduce the environmental impact of diesel generation             
 and bulk fuel storage.                                                        
                                                                               
 REPRESENTATIVE MACKIE related that SB 307 includes endorsements               
 from Gustavus Community Association, the Alaska Department of Fish            
 and Game and the Department of Community & Regional Affairs.  The             
 Department of Natural Resources fiscal note with the analyses which           
 accompanies SB 307 reflects a one time expenditure of $8,000.  This           
 is for one position for a two month period at a cost of $7,000 for            
 personnel services, $800.00 for travel and $200.00 for supplies.              
 This applies only if, and when, the federal legislation passes.               
                                                                               
 Number 209                                                                    
                                                                               
 REPRESENTATIVE MACKIE continued, "This bill passed the Senate                 
 unanimously 20-0.  The timely passage of SB 307 would provide a               
 strong message to Congress in regards to HR 2561, introduced by               
 Representative Don Young, which provides federal authority of this            
 land exchange.  This bill is strongly supported by the Governor and           
 this Administration, by the environmental community and by all the            
 people involved who work directly with the park service.  To my               
 knowledge there is no opposition whatsoever either on the federal             
 or the state side with the exception of the National Sierra Club              
 and one other wildlife organization whose policies include                    
 absolutely no land coming out of wilderness, period."                         
                                                                               
 REPRESENTATIVE MACKIE explained that a portion of Glacier Bay                 
 National Park will be transferred to the state and some critical              
 habitat area at Dude Creek, adjacent to Glacier Bay National Park,            
 will be transferred to the park in exchange.  The state would own             
 the property and this privately financed hydropower project can               
 then travel through the park.                                                 
                                                                               
 Number 359                                                                    
                                                                               
 REPRESENTATIVE JOHN DAVIES moved that CSSB 307(FIN) be passed out             
 of the House Resources Committee with individual recommendations              
 and attached fiscal notes.  Hearing no objection, CSSB 307(FIN)               
 moved from the House Resources Committee.                                     
                                                                               
 HB 548 - NORTHSTAR OIL & GAS LEASE PAYMENT                                  
                                                                               
 CO-CHAIRMAN GREEN announced the committee would hear HB 548 and he            
 asked Kevin Banks to come forward.                                            
                                                                               
 Number 413                                                                    
                                                                               
 KEVIN R. BANKS, Petroleum Economist, Division of Oil and Gas,                 
 Department of Natural Resources stated that he would address                  
 previously requested sensitivities of DNR's Illustrative Northstar           
 Model based on assumptions of higher production rates and high oil           
 prices and a 25 percent savings in capital expenditures.                      
                                                                               
 Number 448                                                                    
                                                                               
 MR. BANKS said, "Table I is the base case.  It is the numbers that            
 we have been talking about and the relevant differences are that in           
 the base case, we believe the proposal will produce $37 million in            
 1996 dollars in supplemental royalties versus in the case where the           
 leases are not amended, development would be delayed until 2002.              
 It is our intention, as a result, that the net profit shares would            
 be valued at about $41,000,000."                                              
                                                                               
 Number 492                                                                    
                                                                               
 MR. BANKS continued, "As you can see from Table II, changing some             
 of the assumptions as you requested, all I did was increase the               
 number of barrels without changing the peak production rate.  So,             
 it added about two years, or so, to the plateau of peak production.           
 As you can see, there is a significant increase in net profit                 
 shares under that kind of scenario, and an increase in supplemental           
 royalty associated with the increased volumes."                               
                                                                               
 Number 534                                                                    
                                                                               
 MR. BANKS referred to Tables III and IV illustrating similar kinds            
 of results.                                                                   
                                                                               
 MR. BANKS said, "To provide some kind of balance, I believe that it           
 is only fair to look at the down side, as well.  If production is             
 not what we expect, the net profit share goes to zero.  If the oil            
 prices are not as high as we would hope, both the net profit share            
 and the supplemental royalty fall to zero.  Likewise, if capital              
 expenditures increase by 25 percent, the net profit share basically           
 evaporates."                                                                  
                                                                               
 Number 584                                                                    
                                                                               
 MR. BANKS referred to graph provided by BP Exploration and stated             
 that he believed that the cut off for net profit shares occurs if             
 the capital expenditures are just 10 percent, or so, more than what           
 they are estimating.                                                          
                                                                               
 MR. BANKS summarized, "There is a bigger impact on net profit share           
 than on the supplemental royalty in the up side."                             
                                                                               
 Number 647                                                                    
                                                                               
 MR. BANKS recalled Representative Davies questions from the prior             
 meeting and said, "I was focusing on late life capital investments            
 but what he was really talking about was what happens at the end of           
 field life without further investment.  I believe, as an economist,           
 that as long as there is some positive cash flow in the field, the            
 field will go on producing.  I realize that BP is probably looking            
 at what the asset generates for the company, what contribution this           
 asset, that they show on their balance sheet, contributes to the              
 income of the company.  They have to make a decision, I believe,              
 that ... do we keep this asset or do we sell it?   While, I believe           
 that production would continue as long as there is a contribution             
 to stockholder equity, in any form, they may come to the conclusion           
 that it is an underperformer.  They would off load the prospect to            
 someone who could work with smaller margins."                                 
                                                                               
 Number 727                                                                    
                                                                               
 MR. BANKS proceeded, "As I have indicated in my letter, we see this           
 kind of thing happening in the Gulf of Mexico, as that basin has              
 matured.  On the other hand, and, I do add this caveat, the                   
 abandonment cost can go both ways.  If a company, or a producer,              
 recognizes that there is a fairly significant abandonment cost that           
 is looming in their future. If they can postpone the abandonment              
 cost, then the net present value of that cost has to be measured              
 against what kind of income stream they can ... or the losses that            
 they are going to have to incur, in the meantime.  There could be             
 some incentive to produce even beyond a positive cash flow after              
 the cash flows fall to negative."                                             
                                                                               
 Number 779                                                                    
                                                                               
 MR. BANKS further stated, "The state, however, has some say about             
 how leases will be dismantled and assigned at the end of field                
 life.  I think, it would be in our interest to make sure that                 
 whoever acquires it, if this hypothetical occurs, has the means to            
 dismantle and restore the leases to their original condition.  That           
 works the opposite way."                                                      
                                                                               
 Number 809                                                                    
                                                                               
 CO-CHAIRMAN GREEN thanked Mr. Brooks for his presentation and his             
 immediate response to committee questions.                                    
                                                                               
 Number 850                                                                    
                                                                               
 KEN BOYD, Director, Division of Oil and Gas, Department of Natural            
 Resources, came to the table.                                                 
                                                                               
 CO-CHAIRMAN GREEN interrupted to confirm that Eric Luttrell was on            
 the teleconference network from Anchorage.                                    
                                                                               
 Number 863                                                                    
                                                                               
 ERIC LUTTRELL, Vice President Exploration, BP Exploration (Alaska)            
 Inc., confirmed his presence assuring the chairman that he would              
 not hear any groans.                                                          
                                                                               
 Number 879                                                                    
                                                                               
 CO-CHAIRMAN GREEN addressed Mr. Boyd reiterating Representative               
 Davies question, .. "about what would happen on the abandonment and           
 the clean up portion, and I really do appreciate Eric's indicating            
 a likelihood of what might happen.  Do you have any formal                    
 requirements that would pass to a subsequent owner?"                          
                                                                               
 Number 907                                                                    
                                                                               
 MR. BOYD said, "I do not believe so.  I believe that what we have             
 is the commissioner, or the director, has broad authority as to               
 what will happen at the end of lease life and that policy has not             
 changed to anything specific, yet.  One of the things is that in              
 trying to make decisions today, about abandonment 15 years from               
 now, begs the question of what actually do we want to do.  You                
 think about Cook Inlet, this may be a frivolous example, take the             
 platforms in Cook Inlet, could you make them into casinos or                  
 prisons?  Do you really decide today to cut them to pieces and drag           
 them out of here at some extreme cost?  Is there some use for the             
 facilities on the North Slope other than what they are used for               
 now?  So, the short answer to your question is, there is no                   
 specific policy but, again, there is a broad authority to do                  
 something at the end of its life."                                            
                                                                               
 Number 957                                                                    
                                                                               
 CO-CHAIRMAN GREEN said, "For example, now we have drifted back on             
 shore ... with all the road systems, and so on ... if there could             
 be a beneficial use indicated, they would not necessarily require             
 that all that gravel be put back in pits ... there may be benefits            
 for the island at Northstar ... while the wells would be abandoned            
 they may not need to remove the gravel?"                                      
                                                                               
 Number 987                                                                    
                                                                               
 MR. BOYD stated, "That is correct, you have seen some of that                 
 already.  I am no expert on this, but I know that there has been              
 some gravel things that have been turned into fish habitat, for               
 example.  There are some beneficial uses, I think, even for caribou           
 for insect relief.  I, again, am not an expert on this, I just sort           
 of know this anecdotally.  Your case is the same."                            
                                                                               
 Number 1009                                                                   
                                                                               
 CO-CHAIRMAN GREEN recapitulated, "We have had, what I consider a              
 very reasonable and well presented economic evaluation.  Certainly,           
 at least, as a summary, from my point of view, if there is a                  
 significant increase in the amount of oil, or the rate at which oil           
 might be produced, or for the length of time that we might be able            
 to produce the maximum, it would behoove the state, perhaps, to               
 stay with the program as we have it now with the net profits rather           
 than a supplemental royalty."                                                 
                                                                               
 CO-CHAIRMAN GREEN continued overview, "On the other hand, I think,            
 the economic analysis has indicated that it could go the other way            
 and the state would tend to lose under a situation like that.  So,            
 I think that then, that brings us to the point where we should have           
 been all along, and it is not an easy decision, but I think it                
 should be then to the purview of the commissioner of the Department           
 of Natural Resources to ... whose staff is expert in this realm to            
 determine how we throw the dice.  Do we want to go for the big one?           
 Do we want to take the safer, middle of the road, kind of ... hedge           
 our bet or are we fearful that we may end up with a real poor                 
 situation and lose both ways?"                                                
                                                                               
 Number 1085                                                                   
                                                                               
 CO-CHAIRMAN GREEN summarized, "So, it would be my recommendation              
 from this committee then that we would accept the proposal as has             
 been agreed to between the Department of Natural Resources and the            
 operator.  My concern now shifts to the fact that there has been              
 statements, there have been verbal commitments that the operator              
 would exercise, to the utmost, their desire to try and hire                   
 locally. I do not want to get into the wrong nomenclature, so that            
 this could somehow be construed as going against the federal court.           
 But, whether you call it Alaska hire, or people who live in this              
 state would be hired as much as possible - that the construction of           
 modules would be done in state.  I think, that while the royalty              
 aspect, the income stream, certainly is of critical nature to the             
 state, I think the potential for being a staging area for the                 
 developing nations, Russia and the Pacific Rim, I think really                
 bodes well.  We will end up with a trained work force, technically            
 capable and skillfully trained.  I think that is equally important            
 to this legislature."                                                         
                                                                               
 Number 1174                                                                   
                                                                               
 CO-CHAIRMAN GREEN said, "Having said all that, there is before you            
 an amended version of this bill, version G.  In essence, what this            
 version does, it stays with the program that has been agreed to               
 between the applicant and the department.  However, it has expanded           
 that contract or that bill that was originally introduced.  HB 548            
 was fairly plain ... that was introduced on the 28th of March.                
 This bill follows that format but adds in ... and I will review the           
 portions that have been changed for your edification."                        
                                                                               
 Number 1224                                                                   
                                                                               
 CO-CHAIRMAN GREEN, "On page 2, line 14 through page 3, line 18.               
 That has been instituted at the suggestion of some of the                     
 leadership of the House.  Then, again, on page 3, lines 30 and 31             
 through page 4, line 23.  In essence, what that does, it actually             
 requires the applicant to make a good faith effort and it says that           
 they will hire at least 85 percent (page 4, line 6) and they will             
 construct all the necessary paraphernalia that would go with the              
 development of Northstar within the state of Alaska.  That, in                
 essence, is what is required with no change to agreement itself."             
                                                                               
 Number 1297                                                                   
                                                                               
 CO-CHAIRMAN WILLIAM K. "BILL" WILLIAMS moved to adopt CS HB 548,              
 version `G,' as the working document.  There were no objections.              
                                                                               
 Number 1320                                                                   
                                                                               
 CO-CHAIRMAN WILLIAMS noted that the first part of Co-Chairman                 
 Green's amendments were in the findings area and said he had no               
 question about that.  He did have a question on page 4, "How will             
 these areas be legally enforceable?"                                          
                                                                               
 Number 1344                                                                   
                                                                               
 CO-CHAIRMAN GREEN commented that that was a very good question.               
 "We have talked with the legal drafter and there is a                         
 `severability' that if there is challenge to this, as there may be,           
 if there is challenge and it fails, only that portion of the                  
 challenge would change and the rest of the document would stay                
 intact.  So, that if, for example, 85 percent is held by federal              
 court to be unconstitutional, for some reason, then the 85 percent            
 would drop but there would still be the desire to hire as many                
 locals as possible.  If that wording were held unconstitutional,              
 then it is just going to back off as much as would be held                    
 unconstitutional.  There is, perhaps, even a chance that to require           
 the applicant to construct their modules within the state.  Maybe             
 a restraint of trade that would not pass muster.  But, I think,               
 that too, would only be a severable portion of it and the rest of             
 the contract would hold."                                                     
                                                                               
 Number 1408                                                                   
                                                                               
 CO-CHAIRMAN GREEN continued, "In essence, what this says is, `Go do           
 your best,' and if there are individual challenges and lose, ...and           
 that is not to say they would, just because of challenge, lose - at           
 least, they would be severable and not the whole contract then                
 (indisc.) would not fall."                                                    
                                                                               
 Number 1425                                                                   
                                                                               
 REPRESENTATIVE PETE KOTT concurred with the Chairman's comments.              
 "In my opinion, I do not think that the section dealing with the 85           
 percent will hold in the court and make Section 3 a moot issue                
 because there will be no reporting provision.  If, in fact, I were            
 wrong, and the 85 percent is held up which would then trigger the             
 reporting provision.  What would the commissioner of the Department           
 of Labor do if, in fact, the report showed a 75 percent higher                
 rate, instate?  What is the ramifications of not meeting the                  
 threshold of 85 percent?"                                                     
                                                                               
 Number 1461                                                                   
                                                                               
 CO-CHAIRMAN GREEN said, "Well, that would be a condition that,                
 assuming that that 85 percent passed muster, then they would be               
 required to increase the number of local hire until it met 85                 
 percent of their work force, for that project."                               
                                                                               
 Number 1478                                                                   
                                                                               
 REPRESENTATIVE KOTT said, "My question is, what would happen if               
 they, ultimately, did not?"                                                   
                                                                               
 Number 1484                                                                   
                                                                               
 CO-CHAIRMAN GREEN replied, "I would think that would be a breach              
 and they would be held accountable to either modify their work                
 force or increase it to accomplish that.  That is one of the                  
 reasons for the reporting requirement.  So, that they can't get               
 themselves into a position like that.  As they develop their work             
 force which would be a ramp up, that they would stay with Alaskans            
 except for those few cases where there is no trained or trainable             
 work force timely enough to accomplish what needs to be done."                
                                                                               
 Number 1505                                                                   
                                                                               
 REPRESENTATIVE KOTT stated that he has no reason to believe that              
 the 85 percent threshold will not be met.  "I think we have enough            
 qualified people in the state.  I was just curious as to what the             
 potential ramification would be if, in fact, for whatever reason,             
 the 85 percent was not reached.  The project, I would not ... they            
 would just be stopped right in the middle.  I am sure there would             
 be some good faith effort to increase it, if possible.  I am sure             
 there would be some consideration, by the department, on the                  
 percentage."                                                                  
                                                                               
 Number 1530                                                                   
                                                                               
 CO-CHAIRMAN GREEN responded, "I think you bring up a good point               
 because there could be a `saw tooth effect' that during the period            
 of adjustment to get it to an operational ... or even during                  
 construction, that might go above 85 percent, and drop below it.              
 I think that is where we bring the Department of Labor involved to            
 go along with that, `Whoops, applicant you are down to around 65              
 percent, you had better do something,' because it does provide for            
 training, if necessary."                                                      
 Number 1551                                                                   
                                                                               
 REPRESENTATIVE DAVIES applauded the chairman's efforts to make the            
 collateral benefit more tangible, but, "I am concerned that because           
 of the kind of discussions that we have had, I guess I concur with            
 the Representative from Eagle River that the constitutionality of             
 this particular provision is problematic.  My understanding is that           
 these sorts of things can, sometimes, pass muster more easily if              
 they are couched in the terms of incentives.  I wondered if you               
 have considered structuring something so that, depending upon the             
 level of participation in Alaska hire, the supplemental royalty               
 might change to provide an incentive?"                                        
                                                                               
 Number 1603                                                                   
                                                                               
 CO-CHAIRMAN GREEN stated that he had not considered that.  "I think           
 that would have been a very good thing to discuss if this were                
 February, or last year, and we would not be in a time constraint              
 activity which if we don't do something then we have a whole                  
 interim period of time that may not be good.  So, I think that                
 brings up a very interesting point.  If this were to pass this way            
 then I would think that there would be a sudden movement between              
 the various parties to the situation to address just what you are             
 talking about.  Maybe there is a better way.  Or, they could be               
 saying, `Hey, we know that will be unconstitutional.'  I don't know           
 that nor did the drafter of this.  The legal expertise said, `Yes,            
 100 percent, we know won't work.'  Eighty-five percent or any                 
 percent, we tried to find out ... does the possibility of it                  
 passing improve with the decreased minimum number of local hires.             
 That is purely speculative, and I want to make sure that everybody            
 knows what I found out that, `Hey, having any number in there may             
 not pass muster.  So, what you are suggesting is maybe, in order to           
 keep that as high as possible, that if you do not do this, the                
 royalty goes up.  That too, may find because the court would ... I            
 am talking way out of school here because I am not legally trained,           
 but, I would think the court would look through that and say that,            
 too, ties to local hire and that is what we are holding as an                 
 unconstitutional restraint (indisc.).  It may have already been               
 discussed, Representative Davies, I do not know.  We were not privy           
 to, almost, a year of negotiation that has been going on between              
 the Department of Natural Resources and the applicant.  I have no             
 idea what all those things ... and this could certainly have been             
 one.  Were you involved in those negotiations, Ken, or was it the             
 commissioner?  I am sure they covered a wide swath of negotiations            
 and that is duly noted on the record that may be an alternative to            
 this.  Unless, are you suggesting to offer that as an amendment to            
 the amendment?"                                                               
                                                                               
 Number 1722                                                                   
                                                                               
 REPRESENTATIVE DAVIES, "In all due respect, Mr. Chairman, I got               
 this at 8:00 o'clock last night, so I have not had a lot of time to           
 think about it.  I, certainly, do not have an amendment prepared.             
 It would take some consideration to look at that.  What I am                  
 thinking right now, this is different than the version that came to           
 us from the other side in that there will be a requirement to ...             
                                                                               
 Number 1751                                                                   
                                                                               
 CO-CHAIRMAN GREEN interjected, "Are you saying the Senate version?            
 We do not have that yet.  We have, kind of, been following it."               
                                                                               
 Number 1761                                                                   
                                                                               
 REPRESENTATIVE DAVIES agreed that was correct, "I was just                    
 wondering if there might be some opportunity for a conference                 
 committee to have some further thought?"                                      
                                                                               
 Number 1770                                                                   
                                                                               
 CO-CHAIRMAN GREEN said, "Well, there would certainly be, there, and           
 this goes on to Finance and there would be a chance to do something           
 like you are saying in Finance, or on the Floor, and this also has            
 a referral to the World Trade Committee."                                     
                                                                               
 REPRESENTATIVE DAVIS commented that the World Trade Committee has             
 sort of global views ...                                                      
                                                                               
 Number 1788                                                                   
                                                                               
 REPRESENTATIVE ALAN AUSTERMAN recognized what Representative Davies           
 was saying and his concern, "I, also, do not know how you would               
 answer that question, and it has been a question throughout the               
 state for many, many years.  I am in favor of this draft and                  
 continuing on in trying to push it forward.  I think every step               
 that we take toward trying to solve, or answer, this question of              
 local hire, and every time it is going to end up in the courts,               
 whether we like it or not, that as long as we keep pursuing it and            
 pounding it, at some point in time, we may come up with the answer            
 that we are looking for.  But, just to draw back and say that we              
 feel it is unconstitutional and may not pass muster, does not get             
 us there either.  It is going to go to the courts and they are the            
 ones who are going to end up making the determination if somebody             
 takes it to court.  I am in favor of pursuing this, at this stage             
 of the game, and seeing if we can get an answer to it and come to             
 some resolve as to whether it is building a new school, in one of             
 the villages, or whether it is to drill for oil on the North Slope.           
 It is an issue that we need to continue to pursue and try to get an           
 answer to.  It is how we put our people to work."                             
                                                                               
 Number 1852                                                                   
                                                                               
 REPRESENTATIVE KOTT appreciated what his colleague from Kodiak is             
 saying but clarified that what Representative Davies was trying to            
 get at was, "If there are potential constitutionality problems with           
 this and this ends up in the court, it may delay the project from             
 going forward.  I, kind of, like the idea of some kind of incentive           
 mechanism to reach the same goal of hiring 85 percent and whatever            
 the numbers are that are maxed out in the proposal.  I think that             
 would, certainly, circumvent any potential court or litigation, in            
 the future.  I do not know how long litigation would occur if it              
 ended up in court.  I would certainly not want to prohibit this               
 project from commencing, at the earliest possible time, to benefit            
 all the state residents."                                                     
                                                                               
 Number 1886                                                                   
                                                                               
 CO-CHAIRMAN GREEN said, "Now, we are on a legal question.  I would            
 think that there is no way to know what the court might do.  But,             
 short of an injunction, it seems to me that the worst that could              
 happen is that the project could continue, but that the court may             
 strike down this saying, `While this is in litigation, because of             
 prior cases, you are not going to be held to this.'  If you want to           
 continue operating, we are going to remove that restriction and you           
 go ahead and build it the way you see.  But, do not use that as any           
 kind of, even an, legal opinion, let alone the court's decision.              
 I think that as Representative Austerman says, `It is up in the air           
 now,' and whether that would impact the development of this ... my            
 feeling would be, that it would not.  I think the state, in its               
 best interest, would find that it is better to move along with the            
 project and worry about this without it being held.  If it turns on           
 whether `85' is reasonable or if it turns on the fact that you can            
 not put a number there, I still think that the operator can be                
 allowed to go ahead and develop.  But, that certainly is not a                
 legal opinion."                                                               
                                                                               
 Number 1937                                                                   
                                                                               
 REPRESENTATIVE DAVIES said, "My concern is that it also gets to the           
 question of `sanctions.'  I do not know, even if it were to be held           
 legal, constitutional, I concur with the Representative from Eagle            
 River's concerns, again, about what you would do to enforce that.             
 Whereas, if you had an incentive mechanism, the enforcement would             
 be automatic.  You would determine, through the Department of                 
 Labor, what the numbers were, and that would determine what the               
 supplement royalty would be."                                                 
                                                                               
 CO-CHAIRMAN GREEN stated that Representative Davies certainly made            
 an interesting case.                                                          
                                                                               
 REPRESENTATIVE DAVIES stated that there was one other point that he           
 wanted to raise, "There is another constitutionality issue                    
 surrounding this whole bill and that has to do with whether we are            
 meeting the test in the constitution of getting the maximum value,            
 for the citizens of the state of Alaska, from the resource, maximum           
 reasonable value.  It is a bit of a judgement call.  Clearly, there           
 is no certainty in the world, if we do not know exactly what the              
 benefits of one course versus the other course are, and that takes            
 some judgement.  That is what we are being asked to do.  I think              
 that is a reasonable request."                                                
                                                                               
 REPRESENTATIVE DAVIES continued, "However, in the mean case ... the           
 best case scenarios, we are explicitly leaving $2,000,000 on the              
 table and the $41 million compared to the $37-39 million.  What we            
 are saying is that there is some other value to the state.  I think           
 if we were to let ... the other value is things like Alaska hire              
 which without some such things, what you are trying to do here is             
 pretty nebulous.  I think if we were not to put something like that           
 in, this thing could be challengeable on that ground.  So, there is           
 no requirement in here to get that other benefit.  Therefore, we              
 have not met our constitutional responsibility to get the best                
 value for the citizens of the state of Alaska.  Whereas, if there             
 were some such mechanism, as I have suggested, I think it would go            
 a long ways to meeting that challenge, as well."                              
                                                                               
 Number 2038                                                                   
                                                                               
 CO-CHAIRMAN GREEN acknowledged that Representative Davies made a              
 very good case, "Again, I would say in the interest of time, and              
 the fact that there are two more committees of referral, and the              
 other side, there are ample opportunities to put that in.  Also,              
 there would be time then for the applicant to react to that, too.             
 I would encourage you to pursue that because I think that you make            
 a very good point."                                                           
                                                                               
 Number 2069                                                                   
                                                                               
 CO-CHAIRMAN WILLIAMS commented, "You have, also, in here, entered             
 into contracts with Alaskan vendors?  How many Alaska licensed                
 firms are available to take ..."                                              
                                                                               
 Number 2099                                                                   
                                                                               
 C0-CHAIRMAN GREEN replied, "We actually sent out invitations to one           
 of our earlier meetings for vendors and contractors to come.  I               
 believe there were 30 or 40 ... there is a list, and we can make              
 that available ... oil contractors vendors list.  We had several,             
 we had 15 or 20 that actually came, of which, probably 10 or more             
 testified at one of our hearings.  We have several contractors, we            
 have several constructors and many employment labor forces.  I                
 think ... we have been told, at least, by one of the major                    
 participants in this that they will have the ability ... they even            
 went beyond what this would require which, I find, really bizarre.            
 They could construct, in the state of Alaska, things as large as a            
 seawater treating plant which `blows me away.'  Certainly, they can           
 construct modules large enough for this project."                             
                                                                               
 Number 2132                                                                   
 CO-CHAIRMAN GREEN asked the wish of the committee.                            
                                                                               
 Number 2137                                                                   
                                                                               
 CO-CHAIRMAN WILLIAMS made a motion to move CSHB 548(RES) from the             
 House Resources Committee with individual recommendations.  Hearing           
 no objection, CSHB 548(RES) passed out of committee.                          
                                                                               
 CO-CHAIRMAN GREEN asked Mr. Luttrell if he had anything to add.               
                                                                               
 MR. LUTTRELL was not available.                                               
                                                                               
 CO-CHAIRMAN GREEN asked for an at ease.                                       
                                                                               
 CO-CHAIRMAN GREEN reconvened the House Resources Committee at 9:01            
 a.m. announcing that the committee would hear from the                        
 subcommittee, Representative Ogan, Chair, Davies and Green, on SB
 112.                                                                          
                                                                               
 SB 112 - DISCOVERY ROYALTY CREDIT                                           
                                                                               
 Number 2230                                                                   
                                                                               
 REPRESENTATIVE SCOTT OGAN reported that the subcommittee had met              
 twice with lively discussions centering around, "On the discovery             
 royalty, making sure that we had very clearly defined who got there           
 first, what would be considered, the type of structure or pool of             
 oil that was discovered first.  Probably, the most important thing            
 was establishing when the clock starts ticking.  The main amendment           
 that was being discussed, which was actually divided into three               
 questions, which was one you offered.  We just recently came up               
 with what, we believe, is a good amendment to the bill that would             
 define, essentially, when the clock starts ticking.  The intent, I            
 believe, of the subcommittee, and, I believe that we should put on            
 the record in this committee, is that that person who first starts            
 producing the oil would be the one who gets the discovery royalty             
 break.  The intent of that would be to encourage ... keep someone             
 from, maybe, discovered a pool but they will sit on it for five or            
 ten years and discourage development.  The idea of giving the break           
 is to encourage oil to be developed and not be speculated upon."              
                                                                               
 Number 2295                                                                   
                                                                               
 REPRESENTATIVE OGAN continued, "Therefore, I think we should offer            
 up this amendment, we should call Amendment No. 1:                            
                                                                               
 Page 3, Lines 27-32                                                           
 with parallel language on Page 2, Lines 3-11                                  
                                                                               
 "the lessee under a lease issued in the Cook Inlet sedimentary                
 basin who is [CERTIFIED BY THE COMMISSIONER TO BE] the first to               
 file a nonconfidential sworn statement with the commissioner                 
 claiming to be and who is certified by the commissioner to be the             
 first to have drilled a well discovering oil or gas in a previously          
 undiscovered oil or gas pool and who is certified by the                     
 commissioner within one year of completion of the discovery well to           
 have drilled a well in that pool which is capable of producing in             
 paying quantities shall pay a royalty of five percent on all                 
 production of oil or gas from that pool attributable to that lease            
 for a period of ten years following the date of completion of the           
 discovery well in that pool, and thereafter the royalty payable on          
 all production of oil or gas from the pool attributable to that               
 lease shall be determined and payable as specified in the leases;             
 the reduced royalty authorized by this paragraph is subject to the            
 following:                                                                    
                                                                               
      [(A) A LESSEE IS ELIGIBLE TO PAY THE REDUCED ROYALTY                     
 AUTHORIZED BY THIS PARAGRAPH ONLY IF THE LESSEE IS THE FIRST TO               
 DRILL A WELL DISCOVERING OIL OR GAS IN A PREVIOUSLY UNDISCOVERED              
 OIL OR GAS POOL;]                                                             
                                                                               
      [(B)] (A) "                                                            
                                                                               
 Number 2306                                                                   
                                                                               
 REPRESENTATIVE AUSTERMAN asked, "Do we have a working draft in                
 front of us now?  Did we move to have a working draft in front of             
 us, and then it went to subcommittee, or did it just go to                    
 subcommittee?"                                                                
                                                                               
 Number 2313                                                                   
                                                                               
 CO-CHAIRMAN GREEN informed, "We did not request that they bring               
 back a working draft.  I wish I had."                                         
                                                                               
 REPRESENTATIVE AUSTERMAN clarified what he was saying, "The draft             
 I have before me is version `K,' and is that on the table now?"               
                                                                               
 CO-CHAIRMAN GREEN replied, "That is on the table."                            
                                                                               
 REPRESENTATIVE OGAN commented, "We did not draft a new committee              
 substitute just because of the short time frame and the fact that             
 working out the details of the amendment were worked into last                
 night and, actually, this morning.  So, we felt the best way to               
 handle it would be to strictly offer an amendment to version K."              
                                                                               
 REPRESENTATIVE AUSTERMAN responded that he just wanted to be sure             
 that the committee had moved version K, and that was the version              
 the committee was working from.                                               
                                                                               
 REPRESENTATIVE OGAN stated that was correct.                                  
                                                                               
 Number 2353                                                                   
                                                                               
 REPRESENTATIVE OGAN further stated that concluded his report.                 
                                                                               
 CO-CHAIRMAN GREEN recalled some discussion about certifying people            
 with commercial production on pages 3 and 4.                                  
                                                                               
 Number 2363                                                                   
                                                                               
 REPRESENTATIVE OGAN agreed, "Mr. Chairman, you are correct.  On the           
 amendment offered by you in the subcommittee, we divided the                  
 question on the amendment, actually, into three different subunits.           
 What we called numbers two and three which was page 3, line 29, and           
 on page 4, line 5, there was quite a bit of discussion about                  
 deleting the word `commercial,' and adding the words, `paying                 
 quantities.'  Paying quantities is defined in statute ... no, I               
 believe it is defined in regulation and we were ... there was some            
 discussion when we left as to which regulation.  There were three             
 different cites in regulation where paying quantities are (indisc.)           
 and this amendment...                                                         
                                                                               
 Number 2409                                                                   
                                                                               
 REPRESENTATIVE AUSTERMAN interrupted, "We are at a disadvantage               
 because we do not have the amendment that he is referring to, that            
 you made in subcommittee."                                                    
                                                                               
 CO-CHAIRMAN GREEN thought that amendment had been offered, "There             
 was one offered that had two ... there was one offered with my name           
 on it at committee before it went to subcommittee.  I think that is           
 what Representative Ogan is referring to."                                    
                                                                               
 Number 2433                                                                   
                                                                               
 REPRESENTATIVE DAVIES inquired, "Can we go back, what are we                  
 talking about?"                                                               
                                                                               
 CO-CHAIRMAN GREEN answered, "He is just giving us a report as to              
 what has happened in subcommittee.  Then, we have not offered any             
 amendments, yet.  Then, Representative Ogan, was there going to be            
 a choice made ...."(End Tape)                                                 
                                                                               
 TAPE 96-69, SIDE B                                                            
 Number 000                                                                    
                                                                               
 REPRESENTATIVE OGAN is saying...."privy to all the discussions of             
 what happened after the meeting as far as what the amendment was              
 going to come up with.  I believe that is what this amendment                 
 addressed."                                                                   
                                                                               
 CO-CHAIRMAN GREEN said, "I do not see the definition of `paying               
 quantities' here."                                                            
                                                                               
 REPRESENTATIVE OGAN said, "I don't either."                                   
 Number 024                                                                    
                                                                               
 REPRESENTATIVE DAVIES suggested that the chairman move an amendment           
 so the committee would have something to talk about.                          
                                                                               
 Number 030                                                                    
                                                                               
 CO-CHAIRMAN GREEN said, "What we are still trying to get through,             
 is the committee report.  When the committee report is through,               
 Representative Davies, I will say now, then we can go.  Just bear             
 with us."                                                                     
                                                                               
 CO-CHAIRMAN GREEN stated to Representative Ogan that members of the           
 Department of Natural Resources were present.                                 
                                                                               
 Number 046                                                                    
                                                                               
 REPRESENTATIVE OGAN explained, "What happened was that after the              
 committee ... the committee decided we were going to insert `paying           
 quantities' and we were going to cite regulation in statute.  We              
 were going to pick which ..."                                                 
                                                                               
 CO-CHAIRMAN GREEN said, "That is not a good idea."                            
                                                                               
 REPRESENTATIVE OGAN further explained, "That was one of the things            
 that we discussed.  However, after the committee adjourned there              
 was quite a bit of discussion that went on afterwards about the               
 best way to do that.  This is what we came up.  So, I think, maybe,           
 there needs to be some clarification."                                        
                                                                               
 REPRESENTATIVE OGAN requested an at ease.                                     
                                                                               
 CO-CHAIRMAN GREEN requested that the committee stand at ease and              
 reconvene at 9:20 a.m.                                                        
                                                                               
 CO-CHAIRMAN GREEN reconvened the meeting at 9:22 a.m.                         
                                                                               
 Number 077                                                                    
                                                                               
 REPRESENTATIVE OGAN apologized for the confusion.  "A lot happened            
 after the meeting.  Conceptually, what we agree to do was to adopt            
 these amendments, number two and three.  What the result of that              
 was what we are introducing as Amendment No. 1, today.  We would,             
 also, like to add language for the purposes of this paragraph or              
 this statute.  We would like to adopt the language from 11 AAC                
 83.395 and put that in statute and that would define the paying               
 quantities.  A copy of that is forthcoming, 11 AAC 83.395."                   
                                                                               
 REPRESENTATIVE DAVIES signified that he just wanted to make sure              
 that he understood what the committee is doing.                               
                                                                               
 Number 122                                                                    
 CO-CHAIRMAN GREEN clarified that Representative Ogan had offered              
 Amendment No. 1 , "and went further to say, in addition, to what you           
 see there, he is ... for the purpose of determining what `paying              
 quantities" is, what that term means."                                        
                                                                               
 REPRESENTATIVE DAVIES wondered if that should be Amendment No. 2.             
                                                                               
 REPRESENTATIVE OGAN stated that it is amendment to the amendment.             
                                                                               
 CO-CHAIRMAN GREEN said, "It is conceptually going to be as part of            
 ... we can do it either way. Did you have a question Representative           
 Barnes?"                                                                      
                                                                               
 REPRESENTATIVE RAMONA BARNES indicated that she was just listening.           
                                                                               
 REPRESENTATIVE DAVIES commented that she should listen carefully.             
                                                                               
 CO-CHAIRMAN GREEN continued, "The amendment language is being                 
 reproduced and what he is suggesting is that because there may be             
 some indication that paying quantities is a vague term.  For the              
 purpose of this paragraph in statute, there will be a definition.             
 That definition being the same definition that is included in the             
 regulations, at the current time.  Those words are coming down to             
 us.  We have representatives from the Department of Natural                   
 Resources here if you want to ... for this period of time that we             
 are talking about, he can tell us what those words are."                      
                                                                               
 Number 164                                                                    
                                                                               
 REPRESENTATIVE DAVIES stated that he was still trying to figure out           
 ... "I want to make sure that I understood exactly what Amendment             
 No. 1 is that is before us.  While we are waiting maybe we can have           
 another at ease until we get the other language.  It says `with               
 parallel language on page 2,' does that mean that it is to insert             
 all this stuff, also, on page 2, lines 3-11?                                  
                                                                               
 Number 187                                                                    
                                                                               
 REPRESENTATIVE AUSTERMAN interjected, "Before we go any further,              
 Mr. Chairman, I want to make sure ... have we got Amendment No. 1             
 on the table now?  In version K, on page 3, line 27, it starts,               
 `with the effective date of this Act.'  So, we are going to do what           
 here?  I do not understand the `with parallel language.'  Are we              
 going to just insert this language here starting on line 27 and               
 move everything down?  Are we removing anything out of this                   
 language on page 3?  I do not follow this."                                   
                                                                               
 Number 212                                                                    
                                                                               
 ANNETTE KREITZER, Legislative Assistant to Senator Loren Leman,               
 Chairman, Senate Resources Committee, joined the panel.  "Part of             
 this is due to time constraints in drafting the amendment, and I              
 apologize if it is not clear.  The amendment goes to page 3, lines            
 27-32 beginning on line 27 where it says `the lessee.'  So, we are            
 inserting this following the comma after Act,.  If you would like             
 to correct the amendment to read, `insert following the comma after           
 Act on that line.  That is the intention, of course, the lessee               
 under a lease issued in the Cook Inlet sedimentary basin.  Then,              
 also, if you will note on the amendment, it also goes over to page            
 4, and deletes (A), beginning on line 3 through line 5, because it            
 is not necessary after the amendment is made."                                
                                                                               
 Number 251                                                                    
                                                                               
 REPRESENTATIVE BARNES asked clarification, "Where does it end?"               
                                                                               
 MS. KREITZER answered, "It is inserted into the language that                 
 begins on line 27, and goes through line 32, and up to the top of             
 page 4.  Then we delete (A), on page 4."                                      
                                                                               
 Number 255                                                                    
                                                                               
 REPRESENTATIVE AUSTERMAN confirmed everything after the comma on              
 line 27.                                                                      
                                                                               
 Number 260                                                                    
                                                                               
 MS. KREITZER assented, "Is replaced with this amendment, and then             
 through the deletion of (A) on page 4, line 5.  Then on line 6, (B)           
 becomes (A).                                                                  
                                                                               
 CO-CHAIRMAN GREEN asked members if everyone was aware of what was             
 being deleted?                                                                
                                                                               
 REPRESENTATIVE BARNES wanted to go back to the top of the page to             
 make sure she understood everything clearly.  "You are deleting all           
 of (A) through line 5 to (B)?."                                               
                                                                               
 CO-CHAIRMAN GREEN agreed, "Yes, but we are actually deleting more             
 than that.  If we start over on page 3, line 27, after the word               
 Act, that whole part of the rest of the page, clear over through              
 line 5 on page 4, is all out.  Then this language goes in there."             
                                                                               
 MS. KREITZER explained, "Then the second part of this where it says           
 with parallel language on page 2, lines 3 through 11, this section            
 ... speaks to the exploration licensing because the sedimentary               
 basin (indisc. interference with the microphone) expected to be a             
 bit larger than the box created by the exploration licensing                  
 program.  It says `with parallel language' on page 2, lines 3-11,             
 because this is written slightly differently, and I did not have              
 the time to create the parallel language that would be necessary to           
 make it match.  If you can accept that, conceptually, the idea is             
 that you take the same language (indisc. more interference with the           
 microphone) on page 2 to make it fit.  They are written just a                
 little bit differently, so we could not make the exact amendment to           
 that section because of the way that this is phrased.  I apologize            
 to the committee for not having the time to make it complete there,           
 but if you can accept that conceptually...."                                  
                                                                               
 Number 356                                                                    
                                                                               
 REPRESENTATIVE AUSTERMAN said, "Let's go to page 2, line 3.  Where            
 in that line are we going to insert the language?                             
                                                                               
 Number 361                                                                    
                                                                               
 MS. KREITZER, "Well, it is going to have to be inserted where it              
 begins on line 3 ... and, if you could adopt that conceptually                
 because the drafter will have to make this language fit within that           
 paragraph.  It is written just slightly differently, the words                
 would be the same within that section, lines 3-11, it is just that            
 it is written slightly different than page 3."                                
                                                                               
 Number 399                                                                    
                                                                               
 CO-CHAIRMAN WILLIAMS wanted to know, "To make it clear then, we are           
 putting this language over here, also?"                                       
                                                                               
 MS. KREITZER responded, "Yes, Representative Williams, the only               
 thing that would not go, of course, is the deletion of (A) which is           
 at the bottom of this amendment."                                             
                                                                               
 Number 414                                                                    
                                                                               
 REPRESENTATIVE OGAN wanted to clarify for the record that what is             
 happening here is that when the subcommittee left, we agreed on               
 page ... to change, according to page 3, line 29 and page 4, line             
 5, on these amendments that you offered here.  In the meantime,               
 what has happened is that the drafter of the original bill on the             
 other body has gotten together with the Department of Natural                 
 Resources and has come up with language that, conceptually, does              
 the same thing.  That is what they are offering here, today.  I               
 just wanted to make that clear."                                              
                                                                               
 Number 441                                                                    
                                                                               
 CO-CHAIRMAN GREEN said, "Yes, I think that explains on pages 3 and            
 4, I think the concern now registered by Representative Austerman             
 is back on page 2.  The problem is that the conforming language,              
 the way it is drafted doesn't just `shoe horn in' to page 2 like it           
 does in pages 3 and 4.  Then it fits and you can just go from                 
 there, but over here it is parallel.  It is the same concept, but             
 there is going to have to be some massaging of the intro language.            
 Obviously, as stated, there is no elimination of (A) because there            
 is no (A) to eliminate.  So, this major paragraph will be massaged            
 in its entrance to where it can fit then on page 2.  So that they             
 are the same."                                                                
                                                                               
 Number 479                                                                    
                                                                               
 REPRESENTATIVE OGAN understood that stating that he simply wanted             
 to make the point of what happened at the meeting and why the                 
 committee is dealing with a little bit different amendment, today.            
 "Essentially, trying to get there ... and that is the issue that we           
 need to discuss at the meeting here, is if what we agreed on in the           
 subcommittee meeting, if this amendment, offered today,                       
 accomplishes, conceptually, what we are trying to achieve."                   
                                                                               
 CO-CHAIRMAN GREEN suggested that Representative Ogan might want to            
 speak to the amendment as to how that does accomplish that, or are            
 there any questions of the amendments?"                                       
                                                                               
 Number 504                                                                    
                                                                               
 REPRESENTATIVE OGAN said, "I believe that it is a good faith effort           
 to accomplish what we are trying to accomplish with our amendments            
 in subcommittee.  As they say, the `devil is in the details,' as              
 far as the wording goes, but, conceptually, I believe that it is              
 very similar."                                                                
                                                                               
 Number 527                                                                    
                                                                               
 REPRESENTATIVE BARNES requested that a working draft be prepared              
 and brought back so the committee could look at it in its context.            
                                                                               
 CO-CHAIRMAN GREEN replied, "We certainly can."                                
                                                                               
 CO-CHAIRMAN WILLIAMS asked to hear from the bill's sponsor.                   
                                                                               
 Number 543                                                                    
                                                                               
 MS. KREITZER apologized if she was confusing people, "It really is            
 not that difficult of an amendment.  I appreciate Representative              
 Barnes concern about wanting to make sure that she knows exactly              
 what she is moving out of committee.  I very much appreciate that,            
 but I will just attempt one more time to say, if you look at the              
 language on page 2, line 2, where it starts, `except that the                 
 lessee who, proceeding under AS 38.05.131 - 38.05.134, that sets              
 off, of course, this exploration licensing program.  My point,                
 only, was that we could not word-for-word insert Amendment No. 1 in           
 here because of the beginning of that phrase that says `except that           
 the lessee who proceeding under 131 to 134.  What I would love to             
 be able to do is to say after the comma, after 4, the lessee under            
 lease issued in Cook Inlet sedimentary basin.  Then, of course, it            
 would just fit perfectly into page 2.  I have to recognize that               
 that phrase, `except the lessee who, proceeding under 131-134' sits           
 there.  So, I do not know how the drafter will fit this in here.              
 I do not know if he would agree with the way that I would phrase it           
 or if he will change it slightly.  The intent, of course, is the              
 same that, `except the lessee who, proceeding under exploration               
 licensing under a lease issued in the Cook Inlet sedimentary basin            
 who is the first to file a nonconfidential sworn statement with the           
 commissioner, claiming to be and who is certified by the                      
 commissioner - take the amendment from there.  That is the intent,            
 Representative Barnes."                                                       
                                                                               
 Number 601                                                                    
                                                                               
 REPRESENTATIVE BARNES understood the intent, "But, I, also, want to           
 see what it is, in its context.  So, we can all have a clear                  
 reading of what it is that we are doing."                                     
                                                                               
 CO-CHAIRMAN GREEN replied, "Okay."                                            
                                                                               
 CO-CHAIRMAN WILLIAMS expressed concern, "In the interest of time,             
 I would agree with that, I know what our time schedule is."                   
                                                                               
 CO-CHAIRMAN GREEN said, "Well, we are constrained. I can understand           
 that Representative Barnes is a little reluctant to leave it to a             
 drafter... it is not an uncommon process."                                    
                                                                               
 REPRESENTATIVE BARNES agreed that it was not uncommon, but stated             
 that the chairman could make it a little more clear than what the             
 committee was doing, today.                                                   
                                                                               
 Number 630                                                                    
                                                                               
 CO-CHAIRMAN GREEN understood that Representative Davies concurred             
 with the fact that there is confusion.  "So, we will have a                   
 redrafted version ... and have it before us on Monday and it will,            
 essentially, be, as has been discussed.  Are there any other                  
 questions, so that when we do reconvene and look that over, we will           
 have that in your offices for review.  So, I would expect there               
 will be very little time taken on Monday (April 29)."                         
                                                                               
 Number 654                                                                    
                                                                               
 REPRESENTATIVE DAVIES requested that the draft be delivered with              
 time enough to review them before 8:00 o'clock Monday morning,                
 preferably, Saturday or by Sunday afternoon.                                  
                                                                               
 Number 674                                                                    
                                                                               
 REPRESENTATIVE AUSTERMAN asked if committee action had eliminated             
 paragraph (C) on page 4.                                                      
                                                                               
 CO-CHAIRMAN GREEN said that (C) has not been removed, "it was                 
 discussed earlier in amendments, but those were never accepted."              
                                                                               
 REPRESENTATIVE AUSTERMAN advised that the chairman, technically,              
 needed to make that change on the amendment.                                  
                                                                               
 REPRESENTATIVE BARNES discussed with the chairman the reordering of           
 paragraphs.                                                                   
                                                                               
 Number 716                                                                    
                                                                               
 CO-CHAIRMAN WILLIAMS asked if there any other amendments.                     
                                                                               
 CO-CHAIRMAN GREEN asked committee if there were other amendments to           
 consider.                                                                     
                                                                               
 Number 727                                                                    
                                                                               
 REPRESENTATIVE DAVIES observed, "This is probably a little bit                
 premature, but we did not actually get the amendment to the                   
 amendment, or Amendment No. 2 before us.  I presume that is going             
 to come as part of the work draft that we are going to get back.              
 I would like to say, right now, that I object to putting that                 
 language in statute.  My view is that we ought to leave `paying               
 quantities' and just let that be defined in the regulations.  For             
 the record, I wanted to let you know where I am on that."                     
                                                                               
 CO-CHAIRMAN GREEN commented that it sure is easier to strike than             
 to put in. "Any other comments about what you will be receiving               
 over the weekend and what we will be doing on Monday with this                
 bill?"                                                                        
                                                                               
 Number 759                                                                    
                                                                               
 REPRESENTATIVE OGAN suggested that the committee follow up on                 
 Representative Davies objection and discuss that out so we can move           
 it out expeditiously on Monday. "I guess he objected to putting the           
 language ... defining `paying quantities' in statute.  Maybe we               
 should discuss it in committee to find out ..."                               
                                                                               
 Number 788                                                                    
                                                                               
 CO-CHAIRMAN GREEN clarified that the committee did not have it                
 before them.  "So, what I am suggesting is that if we put it in, it           
 is easy to strike.  For the purposes of this paragraph, paying                
 quantities means `Wheeeet' (whistle) and we strike it if we do not            
 like it."                                                                     
                                                                               
 Number 805                                                                    
                                                                               
 CO-CHAIRMAN GREEN announced that SB 112 would be held until Monday,           
 April 29, 1996, 8:00 a.m.                                                     
                                                                               
 SB 262 - MANAGEMENT OF FISH/GAME POPULATION & AREA                          
                                                                               
 Number 875                                                                    
                                                                               
 MARY GORE, Legislative Assistant to Senator Mike Miller, testified            
 on behalf of the sponsor, "The quick and dirty explanation of this            
 bill, as Senator Miller likes to say, is to put more moose on the             
 table of Alaskans.  This bill guarantees that game populations in             
 the state will be managed for maximum sustained yield to allow for            
 hunting for consumptive use.  The bill requires that any land                 
 closed to hunting for consumptive use for subsistence or sport use            
 with the exception of a biological emergency, a new area three                
 times the size of the originally closed area will be opened to                
 allow for consumptive use harvest."                                           
                                                                               
 MS. GORE continued, "The bill also acknowledges that there is a               
 public trust created between the state and the sportsmen of Alaska.           
 The revenue generated from taxes, licenses and other fees paid by             
 sportsmen would be breached if public access was restricted on                
 state game refuges except when restriction on access is to protect            
 habitat from damage due to the method of access.  This trust would            
 also be breached if, by restricting hunting, fishing and trapping             
 opportunities in a manner inconsistent with maximum sustained                 
 yield.                                                                        
                                                                               
 MS. GORE read, "Further, revenue generated by sportsmen through               
 taxes and fees cannot be used in an area where consumptive use of             
 fish and game is not prohibited or for management of nongame                  
 species.  If the state breaches this trust, three times the acreage           
 will be opened and a civil suit can be brought against the state or           
 public official to compel compliance.                                         
                                                                               
 MS. GORE said, "Included in your packet was a sponsor statement, as           
 well as a sectional analysis of the bill.  I would like to draw               
 attention to the sectional.  It was created for the original                  
 version of the bill and was then modified by the Senate Resources             
 Committee.  There are no substantial changes to the sectional with            
 the exception of the state being required to open three times the             
 amount of land instead of five times the amount of land in the                
 original bill.  Also, the word `sport' before fishing was deleted             
 from the original bill to the Senate Resources bill.                          
                                                                               
 Number 1026                                                                   
                                                                               
 MS. GORE stated, "In the bill offered in the Senate Resources                 
 Committee, Senator Hoffman offered an amendment that would exempt             
 Board of Game members from being held liable and being sued.  That            
 was not cleaned up in the second section of the bill.  So, we have            
 an amendment today that we would like to offer that would exempt              
 the Board of Game members in the second section of the bill, to               
 clean it up and make it consistent all the way through.                       
                                                                               
 Number 1038                                                                   
                                                                               
 MS. GORE addressed the amendment:                                             
                                                                               
      Page 3, line 23, after "official" insert:                                
      "other than a member of the Board of Game"                             
                                                                               
      Page 3, line 25, after "official" insert:                                
      "other than a member of the Board of Game"                             
                                                                               
 REPRESENTATIVE DAVIES commented that he had the wrong version.                
                                                                               
 CO-CHAIRMAN GREEN remarked that the committee had the wrong draft,            
 it does not match.                                                            
                                                                               
 REPRESENTATIVE DAVIES verified version CS SB 262(RES) (ct rule                
 fld).                                                                         
                                                                               
 MS. GORE said that would be it.                                               
                                                                               
 CO-CHAIRMAN GREEN replied that something does not mesh with the               
 amendment.                                                                    
                                                                               
 MS. GORE said, "If you look on page 2 of the bill, subsection (c),            
 line 10, it says other than a member of the Board of Game."                   
                                                                               
 REPRESENTATIVE KOTT corrected the witness, "page 2, line 9."                  
                                                                               
 MS. GORE stated, "It would be on line 9 then.  That needs to be               
 inserted on page 3, line 19, after the word `official' then on line           
 21, also.                                                                     
                                                                               
 MS. GORE said, "The (Senate) Resources Committee decided that if a            
 member of the Board of Game was liable for suit, they would never             
 get anyone to be a member of the Board of Game.  So, it was                   
 probably a good thing to change."                                             
                                                                               
 Number 1174                                                                   
                                                                               
 CO-CHAIRMAN GREEN asked if there were questions about the verbal              
 addition on page 3, lines 19 and 21.                                          
                                                                               
 Number 1183                                                                   
                                                                               
 CO-CHAIRMAN WILLIAMS moved that the House Resources Committee                 
 substitute for CS SB 262 (RES) (ct rule fld), version K, be adopted           
 as the working document.                                                      
                                                                               
 Number 1199                                                                   
                                                                               
 CO-CHAIRMAN GREEN restated the motion to adopt CS SB 262 (RES) (ct            
 rule fld) as the working document.  Hearing no objection, it was so           
 ordered.                                                                      
                                                                               
 CO-CHAIRMAN GREEN asked if there was a motion to move the                     
 amendment.                                                                    
                                                                               
 Number 1222                                                                   
                                                                               
 CO-CHAIRMAN WILLIAMS so moved.                                                
                                                                               
 CO-CHAIRMAN GREEN said, "There has been a motion to move the                  
 amendment as presented and, also, amended the amendment to add the            
 same language on ... well, this one actually does not work.  It is            
 the verbal amendment now on lines 19 and 21 that the words other              
 than a member of the Board of Game, after the word `official' on              
 both lines.  Is there objection to that amendment?"   Hearing no              
 objection, it was so ordered.                                                 
                                                                               
 Number 1254                                                                   
                                                                               
 CO-CHAIRMAN GREEN stated to Ms. Gore that she has used the word               
 "trust."  "That conjures up the potential for litigation with,                
 perhaps, some bad vibes as what the consequences might be.  Is                
 there a reason that we established this trust and then the punitive           
 damage to the state would be three times the amount of area that is           
 blocked off?  Is that assuming that there might be some development           
 that the state might want to do, or make a park, or do something?"            
                                                                               
 Number 1288                                                                   
                                                                               
 MS. GORE replied, "The bottom line is that they want to make sure             
 that the money the sportsmen are paying into the Department of Fish           
 and Game is used strictly for consumptive use, to manage for                  
 consumptive use.  If the department does not manage for consumptive           
 use, they will be required to open an area three times the size,              
 and that the public trust of the people paying into the Department            
 of Fish and Game's budget would be breached if the money was not              
 use to manage for consumptive use."                                           
                                                                               
 Number 1326                                                                   
                                                                               
 CO-CHAIRMAN GREEN said, "There was some indication that if an area            
 were no longer available, there would also be that...                         
                                                                               
 Number 1339                                                                   
                                                                               
 MS. GORE noted that there were exceptions, "On pages 2 and 3,                 
 numbers (1) and (2).  Senator Halford wanted to make sure and added           
 an amendment, actually, that was line 28 and 29, on page 2, that              
 would sure that if access was inconsistent, it would still allow              
 ... that area could be closed if the land would be damaged or if              
 they needed to use the land for something else."                              
                                                                               
 Number 1386                                                                   
                                                                               
 CO-CHAIRMAN GREEN asked, "Okay, and that other land would be                  
 available."                                                                   
                                                                               
 MS. GORE answered, "No, that would be an exemption to this."                  
                                                                               
 CO-CHAIRMAN GREEN stated, "It says the public trust would be                  
 breached by restrictions."                                                    
                                                                               
 MS. GORE, "Except, when the restriction on access is necessary                
 solely for the purpose of protecting habitat from damage due to               
 method of access, or if it is inconsistent with maximum sustained             
 yield.  These are the exceptions."                                            
                                                                               
 Number 1415                                                                   
                                                                               
 CO-CHAIRMAN GREEN stated that his concern with the trust is, "If              
 there was a restriction other than habitat that we have breached              
 this trust, what are the consequences of that?"                               
                                                                               
 Number 1428                                                                   
                                                                               
 MS. GORE replied, "They will bring suit."                                     
                                                                               
 CO-CHAIRMAN GREEN queried, "What will they sue for?  What would be            
 the consequences that they would say, `Okay,' we can't have access            
 to this 40 acres; what am I suing for?"                                       
                                                                               
 MS. GORE answered, "I am suing for 120 acres in a different area of           
 the state."                                                                   
                                                                               
 CO-CHAIRMAN GREEN theorized, "And, if I do that, and this is right            
 next to this area that was a really good area ...so, there is three           
 times as much area of goat pasture, would this open the state to              
 litigation and damages, perhaps, because of the trust nature of               
 this?"                                                                        
                                                                               
 MS. GORE responded, "That, I can't answer."                                   
                                                                               
 CO-CHAIRMAN GREEN said, "I am not trying to manufacture a problem             
 but trust always incurs the fear of something nasty.  That is the             
 concern that I have.  Like for like, and you know that there is               
 never two people who can agree to that."                                      
                                                                               
 MS. GORE agreed.                                                              
                                                                               
 Number 1497                                                                   
                                                                               
 REPRESENTATIVE DAVIES expressed concern about allowing people to              
 bring suit against public officials, "even if we exclude people on            
 the fish and game boards. I mean, isn't it the same argument about            
 finding people to serve on the fish and game board would apply to             
 people who want to work as public officials when they are in a                
 capacity where they could be sued for making professional                     
 management decisions, personally.  Among a long list of other                 
 things that I have concerns with, that is one of them."                       
                                                                               
 REPRESENTATIVE DAVIES said, "By setting up this trust and inviting            
 people to sue us, as state agencies, and as public officials, that            
 we are creating a situation where there will be a lot of law suits.           
 Sort of like a lawyers employment bill."                                      
                                                                               
 CO-CHAIRMAN WILLIAMS commented, "By public officials, meaning                 
  us, right?"                                                                  
                                                                               
 CO-CHAIRMAN GREEN wondered who the bill drafter is and whether it             
 would be possible to get that person here to review some of these.            
                                                                               
 Number 1627                                                                   
                                                                               
 JULIE PENN representing the Alaska Environmental Lobby testified,             
 "SB 262 indicates that `game populations shall be managed solely on           
 a biological basis' and that `consumptive use of game is the                  
 highest and best use of game.'  But, `managing on a biological                
 basis' and `managing for maximum sustained yield for human                    
 consumption are mutually inconsistent terms.  In fact, all of the             
 terms used in this bill that sound biological, such as maximum                
 sustained yield and harvestable surplus, are not biological terms             
 at all.  You will not find them defined in any biology textbook the           
 way they are defined in this bill.  This bill is social engineering           
 with no foundation in biological science and no relationship to the           
 sound management of resources expected of the Department of Fish              
 and Game.                                                                     
                                                                               
 MS. PENN continued, "If we are managing Alaska's game populations             
 entirely on a biological basis, then why does SB 262 attempt to               
 manage our game by acreage rather than by the health of the                   
 ecosystem?  Mandating that the Board of Game open three acres for             
 every acre closed is management by map and ruler rather than by               
 biological principles.  It does not exemplify biologically sound              
 management.                                                                   
                                                                               
 MS. PENN proceeded, "Alaska Department of Fish and Game studies               
 show that nonconsumptive users of Alaska's wildlife spend 30                  
 percent more on its wildlife than consumptive users.  Placing into            
 law the assumption that human consumption is the highest and best             
 use of wildlife could cause the state to lose money as well as its            
 worldwide reputation as a haven for wild nature at its best.                  
                                                                               
 MS. PENN concluded, "Alaska and Alaska's wild resources deserve               
 better management than SB 262 provides.                                       
                                                                               
 MS. PENN further stated that the bill had not been amended to                 
 protect the members of the Board of Fisheries as well as other                
 public officials.  "It is, also, not clear in the bill whether                
 commercial fishing is included or excluded among fish.  So,                   
 closures of commercial areas could require areas three times larger           
 opened to commercial fishing which is a whole new way of managing             
 commercial fishing."                                                          
                                                                               
 Number 1805                                                                   
                                                                               
 WAYNE REGELIN, Director, Division of Wildlife Conservation,                   
 Department of Fish and Game testified that this legislation will              
 change quite a few existing statutes.  "It would mandate that game            
 populations, in most areas of the state, would be managed solely              
 for maximum sustained yield.  Then it goes on and defines what that           
 means ... It comes back to one third of all the animals born in a             
 year.  The department does its best, most places, to manage for               
 high harvest levels.  We also take other things into consideration            
 besides just maximum sustained yield.  The board has areas where              
 they manage areas slightly different because that is what the                 
 hunting public primarily has desired.  You have to also remember              
 that wildlife is a public resource owned by all residents of the              
 state ... and to say that only one use is the highest and best, I             
 am not sure that is very appropriate.  I think that hunting is one            
 of the most legitimate uses ... very legitimate uses of wildlife              
 resources and we do our very best to provide that opportunity.                
 But, there are other uses that are also legitimate."                          
                                                                               
 Number 1898                                                                   
                                                                               
 MR. REGELIN continued, "The section that mandates that the Board of           
 Game, if it closes an area or restricts an area ... hunting in an             
 area, that you open one three times larger or remove the                      
 restrictions of an area three times as large causes us some                   
 concerns. I think that the Board of Game would have real difficulty           
 closing any season under the provisions of the bill.  Most of the             
 time you are not going to find an area that the state has any                 
 jurisdiction over to open that is three times larger.  There are              
 very few areas in the state that are closed to hunting that have              
 been done by the Board of Game.  Most of the closed areas are                 
 federal areas that are national parks.  In the 14 years that I have           
 worked for the department, the board has only closed hunting in one           
 area.  That was for one species and that was in the McNeil River              
 area which was highly controversial decision but it was ... and               
 that maybe what this is referring to.  But, I certainly do not                
 think that is a very big problem and what I think you would end of            
 having is a lot of ... the board not being able to close areas or             
 reduce seasons or make restrictions when it is necessary because              
 they would not have an area to open up."                                      
                                                                               
 Number 2000                                                                   
                                                                               
 MR. REGELIN proceeded, "I think that there is another section of              
 the bill then that would forbid the restrictions of public access             
 on any refuge or sanctuary or critical habitat area.  That is the             
 part that says that they can sue me if that happens.  I do not like           
 that much.  It also gets then into the restrictions on how we can             
 spend our money which is the same language that was in SB 77, and             
 the identical language that is in SB 247."                                    
                                                                               
 MR. REGELIN said, "To reduce our ability to restrict public access            
 could really threaten some of our refuges, in my mind, and some of            
 our sanctuaries.  But, it could also really take away a tool that             
 the Board of Game uses to manage its wildlife in control use areas.           
 They have a lot of these areas where they control the method of               
 access to provide certain advantages to some people, like our                 
 trophy sheep areas in Tok, and in Delta, where access is restricted           
 and we have really some trophy areas.  We would not be allowed to             
 do that anymore, we would not be allowed to have controlled use               
 areas like the Koyukuk Control Use Area, out by Galena, which is              
 one of the premier moose hunting areas in the state, and it is                
 managed for access by boat. And, that gives ... for lots of reasons           
 the board has done that for years and I think it has worked out               
 extremely well.  Those things, I think, would be prohibited under             
 this law.  I think that the department has worked hard for a very             
 long time, since the ANILCA was passed in 1980, to identify 17B               
 easements so we can have access across federal lands and (indisc.)            
 for navigable waters, and other ways.  I think we are trying to               
 preserve our access rights to these areas.  But, I think there is             
 a real difference between trying to work preserving our rights for            
 access and guaranteeing rights to access in legislation."                     
                                                                               
 Number 2130                                                                   
                                                                               
 MR. REGELIN continued, "When you guarantee rights of access for               
 hunting to all of our refuges, critical habitat areas, and things             
 like that, which is the areas that it guarantees them for, it                 
 really raises some serious questions in my mind how we would do               
 that.  Would we be allowed to restrict the one area that was closed           
 that would be reopened under this would be McNeil River.  When that           
 was opened, we limited it to six permits every other year.  Under             
 this legislation, that would be reopened and we would not be able             
 to limit it by permits.  The way I read this legislation, our whole           
 permit system on these types of areas would be illegal because we             
 would be limiting access to hunts that is guaranteed in this                  
 legislation.  I think that there is just some really poor wildlife            
 policy in this bill.  I think it has some real problems technically           
 and some specifically.  But, also, the whole idea of it, I think,             
 is flawed policy that you are going to try to remove all of the               
 balance that the Division of Wildlife has, and our responsibility             
 to try to manage wildlife for all residents of the state.  So, we             
 are opposed."                                                                 
                                                                               
 Number 2277                                                                   
                                                                               
 REPRESENTATIVE DAVIES asked Mr. Regelin to address the way the                
 shifting of funds would go to cover costs in the current programs             
 that have been funded in fish and game federal aid funds and shift            
 to the general fund.                                                          
                                                                               
 MR. REGELIN replied that the only source of funds that the Division           
 of Wildlife gets is federal aid and license fees.  "It would                  
 prohibit us to expend those funds on any programs that are not                
 directly related to consumptive use.  Right now, we spend about a             
 little less than five percent of our budget, each year, on programs           
 for wildlife viewing and wildlife education.  In the broad sense,             
 I think they do benefit hunters and hunting in a large sense, very            
 significantly but, in a narrower sense, people say that everyone is           
 benefitting so the hunter should not have to pay.  That is what               
 this is trying to say.  We are working very hard to find                      
 alternative sources of funding to pay for these programs of viewing           
 and wildlife education and we have some things going on in Congress           
 and, also, working on some ideas on how to match that federal money           
 when it comes.  But, that is a couple of years down the line.  Our            
 feeling was that we have always had general funds until last year             
 to pay for these programs.  We lost all of our general funds last             
 year after ... the big reason was we have a $5.5 million surplus in           
 our dedicated fish and game fund.  So, it was hard to get general             
 funds and what I have done is to ask people to have some patience             
 while we find alternative sources.  I think that most hunters                 
 readily agree that wildlife education and teaching about hunting in           
 the schools is very important and most of them enjoy watching                 
 wildlife .....(END TAPE)                                                      
                                                                               
 TAPE 96-70, SIDE A                                                            
 Number 000                                                                    
                                                                               
 MR. REGELIN is saying ..."dollars from the federal government and             
 that is a tax on arms and ammunition and archery equipment, and a             
 whole lot of people buy guns and ammunition besides just hunters.             
 I do not want to argue against the dedicated fund, but, I think               
 they are taking a very narrow view of this issue."                            
                                                                               
 Number 037                                                                    
                                                                               
 CO-CHAIRMAN GREEN asked Mr. Regelin if he could appear before the             
 committee on Monday, April 29, for further discussion on SB 262.              
                                                                               
 MR. REGELIN indicated he would be in attendance.                              
                                                                               
 CO-CHAIRMAN GREEN suggested that the sponsor of SB 262 also request           
 the presence of the bill drafter to address legal consequences.               
                                                                               
 ADJOURNMENT                                                                   
                                                                               
 Number 076                                                                    
                                                                               
 There being no further business to come before the House Resources            
 Committee Co-Chairman Green adjourned the meeting at 10:00 a.m.               
                                                                               

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