Legislature(2003 - 2004)

05/05/2003 03:10 PM RES

Audio Topic
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
                    ALASKA STATE LEGISLATURE                                                                                  
               HOUSE RESOURCES STANDING COMMITTEE                                                                             
                          May 5, 2003                                                                                           
                           3:10 p.m.                                                                                            
                                                                                                                                
MEMBERS PRESENT                                                                                                               
                                                                                                                                
Representative Hugh Fate, Chair                                                                                                 
Representative Beverly Masek, Vice Chair                                                                                        
Representative Carl Gatto                                                                                                       
Representative Cheryll Heinze                                                                                                   
Representative Bob Lynn                                                                                                         
Representative Carl Morgan                                                                                                      
Representative Kelly Wolf                                                                                                       
                                                                                                                                
MEMBERS ABSENT                                                                                                                
                                                                                                                                
Representative Beth Kerttula                                                                                                    
Representative David Guttenberg                                                                                                 
                                                                                                                                
COMMITTEE CALENDAR                                                                                                            
                                                                                                                                
HOUSE CONCURRENT RESOLUTION NO. 10                                                                                              
Relating to restoration of riparian habitat that is vital to the                                                                
fisheries resources of the state.                                                                                               
                                                                                                                                
     - MOVED HCR 10 OUT OF COMMITTEE                                                                                            
                                                                                                                                
HOUSE BILL NO. 283                                                                                                              
"An Act relating to limitations on coal leases."                                                                                
                                                                                                                                
     - MOVED HB 283 OUT OF COMMITTEE                                                                                            
                                                                                                                                
HOUSE BILL NO. 208                                                                                                              
"An Act relating to hunting on the same day airborne; and                                                                       
providing for an effective date."                                                                                               
                                                                                                                                
     - SCHEDULED BUT NOT HEARD                                                                                                  
                                                                                                                                
HOUSE BILL NO. 87                                                                                                               
"An Act relating to mining."                                                                                                    
                                                                                                                                
     - SCHEDULED BUT NOT HEARD                                                                                                  
                                                                                                                                
SPONSOR SUBSTITUTE FOR HOUSE BILL NO. 28                                                                                        
"An Act relating to adjustments to royalty reserved to the state                                                                
to encourage otherwise uneconomic production of oil and gas; and                                                                
providing for an effective date."                                                                                               
                                                                                                                                
     - SCHEDULED BUT NOT HEARD                                                                                                  
                                                                                                                                
SPONSOR SUBSTITUTE FOR HOUSE BILL NO. 198                                                                                       
"An Act providing for a reduction of royalty on certain oil                                                                     
produced from Cook Inlet submerged land."                                                                                       
                                                                                                                                
     - SCHEDULED BUT NOT HEARD                                                                                                  
                                                                                                                                
CS FOR SENATE BILL NO. 151(L&C)                                                                                                 
"An Act relating to the regulation of natural gas pipelines                                                                     
under the Pipeline Act; and providing for an effective date."                                                                   
                                                                                                                                
     - BILL HEARING POSTPONED TO 5/07/03                                                                                        
                                                                                                                                
HOUSE BILL NO. 246                                                                                                              
"An Act relating to the limitation on upland acreage that a                                                                     
person may take or hold under oil and gas leases; and providing                                                                 
for an effective date."                                                                                                         
                                                                                                                                
     - BILL HEARING POSTPONED TO 5/07/03                                                                                        
                                                                                                                                
PREVIOUS ACTION                                                                                                               
                                                                                                                                
BILL: HCR 10                                                                                                                  
SHORT TITLE:RESTORATION OF RIPARIAN HABITAT                                                                                     
SPONSOR(S): REPRESENTATIVE(S)WOLF                                                                                               
                                                                                                                                
Jrn-Date   Jrn-Page                     Action                                                                                  
02/28/03     0338       (H)        READ THE FIRST TIME -                                                                        
                                   REFERRALS                                                                                    
02/28/03     0338       (H)        FSH, RES                                                                                     
03/17/03     0565       (H)        COSPONSOR(S): FOSTER                                                                         
03/19/03     0593       (H)        COSPONSOR(S): LYNN, MEYER                                                                    
03/26/03     0652       (H)        COSPONSOR(S): HEINZE,                                                                        
                                   CHENAULT                                                                                     
04/02/03     0749       (H)        COSPONSOR(S): MORGAN                                                                         
04/04/03     0798       (H)        COSPONSOR(S): WILSON                                                                         
04/04/03                (H)        FSH AT 8:30 AM CAPITOL 124                                                                   
04/04/03                (H)        Moved Out of Committee                                                                       
04/04/03                (H)        MINUTE(FSH)                                                                                  
04/07/03     0816       (H)        FSH RPT 4DP 1NR                                                                              
04/07/03     0816       (H)        DP: OGG, WILSON, SAMUELS,                                                                    
                                   SEATON;                                                                                      
04/07/03     0816       (H)        NR: GUTTENBERG                                                                               
04/07/03     0816       (H)        FN1: ZERO(LEG)                                                                               
04/17/03     1030       (H)        COSPONSOR(S): GATTO                                                                          
04/25/03                (H)        RES AT 1:00 PM CAPITOL 124                                                                   
04/25/03                (H)        -- Meeting Postponed --                                                                      
04/30/03                (H)        RES AT 1:00 PM CAPITOL 124                                                                   
04/30/03                (H)        -- Meeting Postponed --                                                                      
05/02/03                (H)        RES AT 1:00 PM CAPITOL 124                                                                   
05/02/03                (H)        -- Meeting Canceled --                                                                       
05/05/03                (H)        RES AT 1:00 PM CAPITOL 124                                                                   
                                                                                                                                
BILL: HB 283                                                                                                                  
SHORT TITLE:ACREAGE FOR COAL LEASES                                                                                             
SPONSOR(S): REPRESENTATIVE(S)FATE                                                                                               
                                                                                                                                
Jrn-Date   Jrn-Page                     Action                                                                                  
04/24/03     1094       (H)        READ THE FIRST TIME -                                                                        
                                   REFERRALS                                                                                    
04/24/03     1094       (H)        RES                                                                                          
04/30/03                (H)        RES AT 1:00 PM CAPITOL 124                                                                   
04/30/03                (H)        -- Meeting Postponed --                                                                      
05/02/03                (H)        RES AT 1:00 PM CAPITOL 124                                                                   
05/02/03                (H)        -- Meeting Canceled --                                                                       
05/05/03                (H)        RES AT 1:00 PM CAPITOL 124                                                                   
                                                                                                                                
WITNESS REGISTER                                                                                                              
                                                                                                                                
JIM POUND, Staff                                                                                                                
to Representative Hugh Fate                                                                                                     
Alaska State Legislature                                                                                                        
Juneau, Alaska                                                                                                                  
POSITION STATEMENT:  Presented HB 283 on behalf of                                                                              
Representative Fate, sponsor.                                                                                                   
                                                                                                                                
CHARLIE BODDY, Vice President of Governmental Relations                                                                         
Usibelli Coal Mine, Inc.                                                                                                        
Fairbanks, Alaska                                                                                                               
POSITION STATEMENT:  Testified in support of HB 283 and answered                                                                
questions.                                                                                                                      
                                                                                                                                
ACTION NARRATIVE                                                                                                              
                                                                                                                                
TAPE 03-36, SIDE A                                                                                                            
Number 0001                                                                                                                     
                                                                                                                                
CHAIR  HUGH FATE  called the  House Resources  Standing Committee                                                             
meeting  to order  at  3:10 p.m.    Representatives Fate,  Masek,                                                               
Gatto, Heinze, and Morgan were present at the call to order.                                                                    
                                                                                                                                
CHAIR FATE recessed the meeting to a call of the chair.                                                                         
                                                                                                                                
Number 0073                                                                                                                     
                                                                                                                                
CHAIR  FATE called  the meeting  back to  order at  approximately                                                               
7:15  p.m.    Present  were Representatives  Fate,  Masek,  Lynn,                                                               
Gatto, Heinze,  and Wolfe; Representative Morgan  arrived back as                                                               
the meeting was in progress.                                                                                                    
                                                                                                                                
HCR 10-RESTORATION OF RIPARIAN HABITAT                                                                                        
                                                                                                                                
Number 0162                                                                                                                     
                                                                                                                                
CHAIR FATE  announced that the  first order of business  would be                                                               
HOUSE CONCURRENT  RESOLUTION NO.  10, Relating to  restoration of                                                               
riparian habitat that is vital  to the fisheries resources of the                                                               
state.  [HCR 10 was sponsored by Representative Wolf.]                                                                          
                                                                                                                                
CHAIR FATE asked  whether anyone wished to testify  [there was no                                                               
response].                                                                                                                      
                                                                                                                                
Number 0207                                                                                                                     
                                                                                                                                
REPRESENTATIVE  MASEK moved  to report  HCR 10  out of  committee                                                               
with individual recommendations and  the accompanying zero fiscal                                                               
note(s);  she  asked  for  unanimous consent.    There  being  no                                                               
objection, HCR 10 was reported  from the House Resources Standing                                                               
Committee.                                                                                                                      
                                                                                                                                
HB 283-ACREAGE FOR COAL LEASES                                                                                                
                                                                                                                                
Number 0275                                                                                                                     
                                                                                                                                
CHAIR FATE  announced that  the next order  of business  would be                                                               
HOUSE  BILL NO.  283, "An  Act  relating to  limitations on  coal                                                               
leases."                                                                                                                        
                                                                                                                                
CHAIR FATE, sponsor, asked his staff to present the bill.                                                                       
                                                                                                                                
Number 0360                                                                                                                     
                                                                                                                                
JIM  POUND,  Staff  to Representative  Hugh  Fate,  Alaska  State                                                               
Legislature,  highlighted the  large amount  of coal  reserves in                                                               
Alaska,  noting  that  throughout  the years  this  resource  has                                                               
provided  power  for homes  and  employed  many people.    Today,                                                               
however, the  state is at a  juncture.  Intended to  increase the                                                               
amount  of state  acreage available  for coal  leases, HB  283 is                                                               
written  to open  the door  to economic  opportunity.   Companies                                                               
that currently are  working will be able to expand,  and new ones                                                               
will be more  feasible.  Suggesting the state will  gain from new                                                               
and expanded  leases, Mr. Pound  called this a  win-win situation                                                               
for  both the  state  and the  coal industry.    He concluded  by                                                               
saying   HB  283   doesn't   change   the  strict   environmental                                                               
requirements   for  companies,   but  simply   makes  more   land                                                               
available.                                                                                                                      
                                                                                                                                
Number 0478                                                                                                                     
                                                                                                                                
REPRESENTATIVE GATTO, expressing curiosity  as to how the numbers                                                               
were determined, asked:   If it's a win-win  situation and 92,160                                                               
acres is better than 46,080 acres, why is there any limitation?                                                                 
                                                                                                                                
CHAIR FATE suggested Charlie Boddy  could answer after presenting                                                               
his testimony.                                                                                                                  
                                                                                                                                
Number 0558                                                                                                                     
                                                                                                                                
CHARLIE   BODDY,  Vice   President  of   Governmental  Relations,                                                               
Usibelli  Coal Mine,  Inc.,  told  members HB  283  has the  full                                                               
support  of  his  company  as   well  as  other  resource-related                                                               
organizations around the state.  He explained:                                                                                  
                                                                                                                                
     This legislation is vital to  our company if we plan to                                                                    
     expand operations  outside of  the Interior  of Alaska.                                                                    
     Our  recently unveiled  200-megawatt  Emma Creek  coal-                                                                    
     fired  power-generation  facility   was  proposed  only                                                                    
     after we  secured additional leases  in the  Healy area                                                                    
     through a competitive sale just  over a year ago.  That                                                                    
     leasehold acquisition brought  our leased state acreage                                                                    
     holdings to 37,952 acres.                                                                                                  
                                                                                                                                
     It's  our belief  that Alaska  has great  potential for                                                                    
     export,  both  domestically  and  internationally,  and                                                                    
     that  this proposed  legislation will  accord ourselves                                                                    
     and others the opportunity to pursue those options.                                                                        
                                                                                                                                
Number 0668                                                                                                                     
                                                                                                                                
REPRESENTATIVE  MASEK observed  that  the fiscal  note [from  the                                                               
Department of  Natural Resources (DNR)] says  that the department                                                               
supports  the  bill; that  the  change  in allowable  acreage  is                                                               
consistent with  a recent  change in  federal law  that increased                                                               
the  aggregate  acreage  of  federal  coal  leases  held  by  one                                                               
company; and that there is  no fiscal impact [predicted for] this                                                               
bill.    She said  the  bill  will  create  a better  chance  for                                                               
businesses to develop resources, and spoke in support of it.                                                                    
                                                                                                                                
Number 0733                                                                                                                     
                                                                                                                                
REPRESENTATIVE GATTO asked  Mr. Boddy how the  92,160 [acres] was                                                               
arrived at.                                                                                                                     
                                                                                                                                
MR. BODDY answered that it  changes the leasable acreage from two                                                               
full townships to four.                                                                                                         
                                                                                                                                
REPRESENTATIVE GATTO  asked:  If  four is better than  two, isn't                                                               
six even  better?  And  isn't an  infinite amount better  than no                                                               
amount?                                                                                                                         
                                                                                                                                
MR. BODDY said Alaska is probably  one of the few states with any                                                               
limitations on  state leaseholds;  however, most  states couldn't                                                               
collectively put together  46,000 acres.  He added,  "Most of the                                                               
coal  that we  would be  competing against,  for example,  in the                                                               
Western  United States,  is the  Department of  the Interior,  is                                                               
federal coal.   And that ...  was the acreage that  was increased                                                               
in 2001."                                                                                                                       
                                                                                                                                
Number 0845                                                                                                                     
                                                                                                                                
CHAIR  FATE  asked Mr.  Boddy  whether  one  reason for  this  is                                                               
because of the competitive nature of  the ground opened up by the                                                               
Department of the Interior in the Lower 48.                                                                                     
                                                                                                                                
MR. BODDY  said that's correct.   Noting that he'd  discussed the                                                               
issue  with the  National Mining  Association in  March, he  said                                                               
some  of the  markets  that would  be looked  at  are West  Coast                                                               
markets currently supplied by some  Western states.  He indicated                                                               
that this  [bill] would  provide an  opportunity to  advance coal                                                               
that would  probably be  closer to  tidewater than  his company's                                                               
Healy operations.                                                                                                               
                                                                                                                                
CHAIR  FATE  surmised  that  the   acreage  doesn't  have  to  be                                                               
contiguous.                                                                                                                     
                                                                                                                                
MR. BODDY said that's correct.  He added:                                                                                       
                                                                                                                                
     I  don't think  it's  any great  secret  that after  17                                                                    
     years, we  had a hard time  continuing our relationship                                                                    
     with exporting  coal to South  Korea.  A large  part of                                                                    
     that was, we were having  to "rail" ... the product all                                                                    
     the way from Interior Alaska to  a port at Seward.  And                                                                    
     although Alaska  Railroad certainly  stayed ...  in the                                                                    
     hunt as  long as we  did, to  try to keep  that program                                                                    
     viable, we simply could not  meet the market conditions                                                                    
     by shipping coal from the Interior of Alaska.                                                                              
                                                                                                                                
Number 0981                                                                                                                     
                                                                                                                                
CHAIR FATE  asked, "In the  event that you  wanted to do  some of                                                               
your own  exploration for shallow-well  or coal bed  methane, you                                                               
would come  under different regulations  relative to  shallow gas                                                               
than you would to mining coal, would you not?"                                                                                  
                                                                                                                                
MR. BODDY answered in the affirmative.                                                                                          
                                                                                                                                
CHAIR FATE  offered his understanding,  "You would have  to still                                                               
get your  license or permit to  go after the gas;  it's just your                                                               
lease for coal ... wouldn't cover the gas."                                                                                     
                                                                                                                                
MR. BODDY said that's correct.                                                                                                  
                                                                                                                                
Number 1049                                                                                                                     
                                                                                                                                
REPRESENTATIVE  MASEK moved  to report  HB 283  out of  committee                                                               
with individual recommendations and  the accompanying zero fiscal                                                               
note;  she  asked   for  unanimous  consent.     There  being  no                                                               
objection, HB 283 was reported  from the House Resources Standing                                                               
Committee.                                                                                                                      
                                                                                                                                
ADJOURNMENT                                                                                                                   
                                                                                                                                
Number 1089                                                                                                                     
                                                                                                                                
The House Resources Standing Committee  meeting was recessed to a                                                               
call of  the chair at approximately  7:35 p.m.  [The  meeting was                                                               
reconvened May 7, 2003.]                                                                                                        
                                                                                                                                

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