Legislature(2011 - 2012)BARNES 124

03/12/2012 01:00 PM RESOURCES


Download Mp3. <- Right click and save file as

* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
*+ HB 325 COASTAL MANAGEMENT PROGRAM TELECONFERENCED
Heard & Held
+= HB 276 OIL/GAS PRODUCTION TAX CREDITS: NENANA TELECONFERENCED
Heard & Held
+ Bills Previously Heard/Scheduled TELECONFERENCED
                    ALASKA STATE LEGISLATURE                                                                                  
               HOUSE RESOURCES STANDING COMMITTEE                                                                             
                         March 12, 2012                                                                                         
                           1:04 p.m.                                                                                            
                                                                                                                                
MEMBERS PRESENT                                                                                                               
                                                                                                                                
Representative Eric Feige, Co-Chair                                                                                             
Representative Paul Seaton, Co-Chair                                                                                            
Representative Alan Dick                                                                                                        
Representative Neal Foster                                                                                                      
Representative Bob Herron                                                                                                       
Representative Cathy Engstrom Munoz                                                                                             
Representative Berta Gardner                                                                                                    
Representative Scott Kawasaki                                                                                                   
                                                                                                                                
MEMBERS ABSENT                                                                                                                
                                                                                                                                
Representative Peggy Wilson, Vice Chair                                                                                         
                                                                                                                                
COMMITTEE CALENDAR                                                                                                            
                                                                                                                                
HOUSE BILL NO. 325                                                                                                              
"An Act establishing an Alaska coastal management program."                                                                     
                                                                                                                                
     - HEARD & HELD                                                                                                             
                                                                                                                                
HOUSE BILL NO. 276                                                                                                              
"An Act providing for a credit against the oil and gas                                                                          
production tax for costs incurred in drilling certain oil or                                                                    
natural gas exploration wells in the Nenana Basin."                                                                             
                                                                                                                                
     - HEARD & HELD                                                                                                             
                                                                                                                                
PREVIOUS COMMITTEE ACTION                                                                                                     
                                                                                                                                
BILL: HB 325                                                                                                                  
SHORT TITLE: COASTAL MANAGEMENT PROGRAM                                                                                         
SPONSOR(s): REPRESENTATIVE(s) AUSTERMAN                                                                                         
                                                                                                                                
02/17/12       (H)       READ THE FIRST TIME - REFERRALS                                                                        
02/17/12       (H)       RES, FIN                                                                                               
03/12/12       (H)       RES AT 1:00 PM BARNES 124                                                                              
                                                                                                                                
BILL: HB 276                                                                                                                  
SHORT TITLE: OIL/GAS PROD. TAX CREDITS/RATES/VALUE                                                                              
SPONSOR(s): REPRESENTATIVE(s) THOMPSON, DICK, MILLETT, TUCK,                                                                    
MILLER                                                                                                                          
                                                                                                                                
01/17/12       (H)       PREFILE RELEASED 1/13/12                                                                               
01/17/12       (H)       READ THE FIRST TIME - REFERRALS                                                                        
01/17/12       (H)       RES, FIN                                                                                               
01/30/12       (H)       RES AT 1:00 PM BARNES 124                                                                              
01/30/12       (H)       Heard & Held                                                                                           
01/30/12       (H)       MINUTE(RES)                                                                                            
02/01/12       (H)       RES AT 1:00 PM BARNES 124                                                                              
02/01/12       (H)       Heard & Held                                                                                           
02/01/12       (H)       MINUTE(RES)                                                                                            
02/03/12       (H)       RES AT 1:00 PM BARNES 124                                                                              
02/03/12       (H)       Heard & Held                                                                                           
02/03/12       (H)       MINUTE(RES)                                                                                            
02/17/12       (H)       RES AT 1:00 PM BARNES 124                                                                              
02/17/12       (H)       Heard & Held                                                                                           
02/17/12       (H)       MINUTE(RES)                                                                                            
03/12/12       (H)       RES AT 1:00 PM BARNES 124                                                                              
                                                                                                                                
WITNESS REGISTER                                                                                                              
                                                                                                                                
REPRESENTATIVE ALAN AUSTERMAN                                                                                                   
Alaska State Legislature                                                                                                        
Juneau, Alaska                                                                                                                  
POSITION STATEMENT:  As the sponsor, introduced HB 325.                                                                     
                                                                                                                                
ERIN HARRINGTON, Staff                                                                                                          
Representative Alan Austerman                                                                                                   
Alaska State Legislature                                                                                                        
Juneau, Alaska                                                                                                                  
POSITION STATEMENT:  Reviewed the provisions of HB 325 on behalf                                                              
of the sponsor, Representative Austerman.                                                                                       
                                                                                                                                
ALPHEUS BULLARD, Attorney                                                                                                       
Legislative Legal Counsel                                                                                                       
Legislative Legal and Research Services                                                                                         
Legislative Affairs Agency                                                                                                      
Alaska State Legislature                                                                                                        
Juneau, Alaska                                                                                                                  
POSITION STATEMENT:  Provided a review of his 2/23/12 memorandum                                                              
regarding HB 325.                                                                                                               
                                                                                                                                
BRUCE BOTELHO, Chair                                                                                                            
Alaska Sea Party                                                                                                                
Juneau, Alaska                                                                                                                  
POSITION STATEMENT:  As chair  of the organization that sponsored                                                             
the Alaska Coastal Zone  Management Program citizens' initiative,                                                               
answered questions regarding  HB 325 and the  initiative on which                                                               
the bill is based.                                                                                                              
                                                                                                                                
REPRESENTATIVE STEVE THOMPSON                                                                                                   
Alaska State Legislature                                                                                                        
Juneau, Alaska                                                                                                                  
POSITION STATEMENT:  Testified as the sponsor of HB 276.                                                                      
                                                                                                                                
JANE PIERSON, Staff                                                                                                             
Representative Steve Thompson                                                                                                   
Alaska State Legislature                                                                                                        
Juneau, Alaska                                                                                                                  
POSITION STATEMENT:   Provided  a sectional  analysis of  HB 276,                                                             
Version  D, on  behalf  of Representative  Thompson, joint  prime                                                               
sponsor.                                                                                                                        
                                                                                                                                
                                                                                                                                
ACTION NARRATIVE                                                                                                              
                                                                                                                                
1:04:15 PM                                                                                                                    
                                                                                                                                
CO-CHAIR  PAUL   SEATON  called  the  House   Resources  Standing                                                             
Committee meeting  to order at  1:04 p.m.   Representatives Dick,                                                               
Kawasaki, Gardner, Foster, Munoz,  Feige, and Seaton were present                                                               
at  the call  to order.    Representative Herron  arrived as  the                                                               
meeting was in progress.                                                                                                        
                                                                                                                                
               HB 325-COASTAL MANAGEMENT PROGRAM                                                                            
                                                                                                                                
1:04:47 PM                                                                                                                    
                                                                                                                                
CO-CHAIR SEATON announced that the  first order of business would                                                               
be HOUSE  BILL NO.  325, "An Act  establishing an  Alaska coastal                                                               
management program."                                                                                                            
                                                                                                                                
1:06:38 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE   ALAN   AUSTERMAN,  Alaska   State   Legislature,                                                               
introduced HB 325  as the sponsor, saying that  the recent Alaska                                                               
Coastal Zone  Management Program  citizens' initiative  signed by                                                               
about 30,000 voters indicated to  him that the legislature should                                                               
have a  conversation about  what that meant.   Noting  there were                                                               
language  problems  in the  initiative  itself  in terms  of  how                                                               
Alaska's statutes  are done, he said  he had the bill  drafted to                                                               
comply with  the state's statutes.   While  HB 325 does  not look                                                               
like  the initiative  and  some  of it  does  not  talk like  the                                                               
initiative,  he said  it really  is the  initiative in  complying                                                               
with  the way  statutes  are written.    His goal  is  to have  a                                                               
conversation on the bill and that  today his intent is to present                                                               
the bill and the initiative so  there is an understanding of what                                                               
they are.   He said he hopes to have  conversations at some point                                                               
in time  as to whether the  legislature can draft a  bill that is                                                               
acceptable to everyone and that is substantially the same.                                                                      
                                                                                                                                
1:09:32 PM                                                                                                                    
                                                                                                                                
ERIN  HARRINGTON, Staff,  Representative  Alan Austerman,  Alaska                                                               
State Legislature,  reviewed the provisions  of HB 325  on behalf                                                               
of  the sponsor,  Representative Austerman.   She  explained that                                                               
the  act would  establish the  Alaska Coastal  Management Program                                                               
(ACMP), a program that was  previously in place for approximately                                                               
four  decades.   The program  was  eliminated in  2011 through  a                                                               
delayed  repealer  when  legislation necessary  to  continue  the                                                               
program  failed to  pass both  bodies of  the legislature  during                                                               
regular session  as well as  two subsequent special sessions.   A                                                               
citizens'  ballot initiative  process was  kicked off  in October                                                               
2011 and the  initiative was certified [on  3/9/12] by Lieutenant                                                               
Governor Mead  Treadwell.   With 29,991  valid signatures  and in                                                               
accordance  with the  Constitution of  the State  of Alaska,  the                                                               
initiative  will  appear  on  the  August  2012  primary  ballot.                                                               
Representative Austerman introduced HB 325 on 2/17/12.                                                                          
                                                                                                                                
1:11:16 PM                                                                                                                    
                                                                                                                                
MS. HARRINGTON  noted that HB  325 is essentially  the initiative                                                               
that  has   been  substantially   re-shaped  to  adhere   to  the                                                               
legislature's  own drafting  conventions.   However, there  are a                                                               
handful of tweaks from the  initiative, three of which stick out.                                                               
The first  is that the city  of Dillingham has been  added to the                                                               
list of  geographic areas  included in the  first portion  of the                                                               
bill;  it was  determined that  this city  was overlooked  in the                                                               
initial drafting.  The second is  a clarification of the role and                                                               
appointment process for  the public alternates and  the third was                                                               
a  change to  the number  of  affirmative votes  required for  an                                                               
action by the Coastal Policy Board.                                                                                             
                                                                                                                                
MS. HARRINGTON said there are  a couple of additional areas where                                                               
the drafter has  highlighted differences that may  be more subtle                                                               
and difficult for  the reader to pick out.   The bill was drafted                                                               
by Mr.  Alpheus Bullard who  has prepared a  memorandum outlining                                                               
the process he  went through in changing  the initiative language                                                               
to being  the language in HB  325.  Mr. Bullard  also highlighted                                                               
areas where it  might be confusing to the reader  when looking at                                                               
the  initiative  and  the  bill   side-by-side,  and  he  further                                                               
highlighted areas  to which he  wanted to draw  the legislature's                                                               
attention.                                                                                                                      
                                                                                                                                
1:13:17 PM                                                                                                                    
                                                                                                                                
MS.  HARRINGTON outlined  the three  possible paths  forward from                                                               
this point in regard to HB 325  and the initiative.  She said the                                                               
first  path  could  be  the   passing  of  legislation  that  the                                                               
legislature intends to be substantially  similar to the citizens'                                                               
initiative.   Determination of substantial similarity  would rest                                                               
with  the lieutenant  governor, although  that decision  could be                                                               
litigated.    If  the  legislature  passed  legislation  that  it                                                               
intended  to be  considered substantially  similar, the  governor                                                               
could veto that  legislation, in which case  the initiative would                                                               
appear  on the  [2012] August  primary ballot.   If  the governor                                                               
signed the legislation and the  lieutenant governor determined it                                                               
to be  substantially similar, per  Article XI, Section 4,  of the                                                               
state  constitution, the  initiative  would be  removed from  the                                                               
ballot and there would be no public vote on it.                                                                                 
                                                                                                                                
MS.  HARRINGTON said  the second  path  could be  the passing  of                                                               
legislation  that   the  legislature   does  not  intend   to  be                                                               
substantially  similar to  the  citizens'  initiative.   Assuming                                                               
such legislation was  not vetoed by the  governor, the lieutenant                                                               
governor would  still place the  initiative on the ballot  of the                                                               
[2012] August primary.  Once  on the ballot, the initiative could                                                               
either  fail or  pass.    An unknown  is  whether the  initiative                                                               
sponsors would  actively campaign  to see that  initiative passed                                                               
despite the  legislature passing  a version  of an  ACMP program.                                                               
She deferred  to Mr. Bullard  to address the resulting  gray area                                                               
for how to reconcile differences  between the enacted legislation                                                               
and the initiative passed by a vote of the people.                                                                              
                                                                                                                                
MS. HARRINGTON said the third  path could be that the legislature                                                               
declines to  or fails to  pass legislation  substantially similar                                                               
or otherwise,  in which  case the  citizens' initiative  would go                                                               
before the public on the August  [2012] primary ballot.  Were the                                                               
initiative to  pass, the  legislature would  have the  ability to                                                               
amend that new law in a future legislative session.                                                                             
                                                                                                                                
1:17:36 PM                                                                                                                    
                                                                                                                                
CO-CHAIR SEATON  requested Mr. Bullard to  review the differences                                                               
between HB  325 and the  citizens' initiative as outlined  in Mr.                                                               
Bullard's 2/23/12 memorandum to Representative Austerman.                                                                       
                                                                                                                                
ALPHEUS   BULLARD,    Attorney,   Legislative    Legal   Counsel,                                                               
Legislative  Legal  and  Research Services,  Legislative  Affairs                                                               
Agency,  Alaska  State   Legislature,  reiterated  Representative                                                               
Austerman's statement that  HB 325 really is the  initiative.  He                                                               
noted that under  the substantially similar test there  is a good                                                               
deal of latitude  to craft legislation that is  different, but HB                                                               
325  really is  the initiative.   Things  have been  reorganized,                                                               
clarified,  and  the  state's  [statute]  language  used.    Some                                                               
substantive changes  were made, the  first of which  is discussed                                                               
on  page 2  of  his 2/23/12  memorandum about  how  to deal  with                                                               
alternate members on the Alaska  Coastal Policy Board and how the                                                               
board  can  take action.    The  more  significant of  these  two                                                               
changes  is  the bill's  additional  provision  that this  Alaska                                                               
Coastal Policy  Board cannot take action  without the affirmative                                                               
votes of  at least six  members.  This  was not specified  in the                                                               
initiative  which provided  that a  quorum would  be five  public                                                               
members  and two  designated members  and which  would mean  that                                                               
only four  would be needed for  a majority.  This  really changes                                                               
the workings of the Alaska  Coastal Policy Board and somewhat the                                                               
direction,  neither  positive  nor negative,  but  is  different.                                                               
Regarding alternates  for the  members of the  board, he  said he                                                               
did  not know  how essential  these are,  but the  initiative was                                                               
silent  to how  the alternate  process would  work.   He said  he                                                               
filled in  those details that  he thought  would be the  way that                                                               
the  bill would  have been  interpreted to  have worked  to avoid                                                               
questions for when an alternative might  fill for a member of the                                                               
board.  Those  two changes are noted in terms  of the composition                                                               
and  the workings  of the  board scrolling  forward through  this                                                               
memorandum.                                                                                                                     
                                                                                                                                
1:20:28 PM                                                                                                                    
                                                                                                                                
CO-CHAIR  SEATON noted  that the  aforementioned are  included in                                                               
Section  46.40.310.   He asked  what the  designation is  for the                                                               
number 46.41.010 which  appears in parentheses on  the third line                                                               
of page 2 of the memorandum.                                                                                                    
                                                                                                                                
MR. BULLARD explained  that the numbers in  parentheses are where                                                               
those sections  are located in the  text of the initiative.   The                                                               
first  numbers that  are not  in parentheses  are the  numbers he                                                               
used [in the  bill].  Real estate inside the  state's statutes is                                                               
precious, so  in drafting  the bill  he kept  it within  the same                                                               
chapter,  46.40, to  conserve  room in  the  statutes for  future                                                               
legislative efforts.   The different  numerical designation  is a                                                               
matter of housekeeping and has no real legal substantive effect.                                                                
                                                                                                                                
MR. BULLARD  continued his  review of  the memorandum,  moving to                                                               
the  change regarding  Section 46.40.360  [page 3].   He  said he                                                               
removed a fairly significant portion  of the initiative text that                                                               
provided  when  an  enforceable   policy  of  an  Alaska  coastal                                                               
district  or  coastal  resource area  would  be  preempted;  that                                                               
section  of   the  initiative  stated   the  legal   doctrine  of                                                               
preemption.  However,  whether this was stated  in the initiative                                                               
or  not,  the  doctrine  would still  exist  and  therefore  that                                                               
language had no  real substantive effect.  Thus,  that section of                                                               
the initiative, 46.41.060, is removed from the text of the bill.                                                                
                                                                                                                                
1:22:34 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE FOSTER observed that [page  2, paragraph 5, of the                                                               
memorandum]  states  6 [affirmative]  votes  are  needed to  take                                                               
action.   He understood the  [Alaska Coastal Policy  Board] would                                                               
be comprised of nine members.                                                                                                   
                                                                                                                                
MR. BULLARD confirmed the aforementioned is correct.                                                                            
                                                                                                                                
REPRESENTATIVE  FOSTER  asked why  six  votes  would be  required                                                               
since a majority would be five.                                                                                                 
                                                                                                                                
MR.  BULLARD  responded  that different  boards  are  differently                                                               
organized and a quorum may not  necessarily be the same number of                                                               
votes  that  is  required  for affirmative  action  in  different                                                               
situations.  For different policy  reasons, policymakers find one                                                               
preferable to  another and in this  case it would take  that much                                                               
more.                                                                                                                           
                                                                                                                                
1:23:19 PM                                                                                                                    
                                                                                                                                
CO-CHAIR  SEATON  presumed this  to  mean  that the  five  public                                                               
members would  be unable to  pass something without at  least one                                                               
vote from one of the appointed members from a state agency.                                                                     
                                                                                                                                
MR. BULLARD replied  it is a thirteen-member board:   nine public                                                               
members  and four  [designated members]  from  the Department  of                                                               
Environmental  Conservation, Alaska  Department of  Fish &  Game,                                                               
Department  of Natural  Resources,  and  Department of  Commerce,                                                               
Community and Economic  Development.  If a quorum  is five public                                                               
members and two designated members,  the board could meet when it                                                               
has  seven members  present.   It would  still take  six and  for                                                               
action to have  occurred there would have had to  be at least two                                                               
designated members present.   So, it would be possible  that at a                                                               
meeting with six  public members and two  designated members, six                                                               
public members  could make an  affirmative choice without  any of                                                               
the designated members voting in favor.                                                                                         
                                                                                                                                
1:25:09 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  KAWASAKI,  regarding  Section  46.40.310  dealing                                                               
with  composition of  the board,  understood that  the initiative                                                               
was silent  on the  role of alternate  members and  therefore Mr.                                                               
Bullard  put  in his  own  language.    He inquired  whether  the                                                               
affirmative   vote   of   six   members   would   be   considered                                                               
substantially different by the attorney general.                                                                                
                                                                                                                                
MR. BULLARD answered that this  discrepancy would not be the sort                                                               
of  discrepancy  that  would  lead  anyone  to  believe  this  is                                                               
something other than substantially the  same.  When that analysis                                                               
occurs, the lieutenant governor, or  the courts if the lieutenant                                                               
governor's determination  is challenged,  will look at  the scope                                                               
and  subject  matter  of  the  initiative,  the  purpose  of  the                                                               
initiative, and  the means used  in the legislative bill  and the                                                               
initiative  to see  if the  means to  effectuate that  purpose is                                                               
substantially the  same.   This program is  a combined  regime of                                                               
federal,  state, and  local permitting  that deals  with Alaska's                                                               
coastal area and resource development.   Inside a program of this                                                               
magnitude, this  detail about the  number of board  members would                                                               
be nothing that would lead  anyone to quibble about substantially                                                               
the same.                                                                                                                       
                                                                                                                                
MR.  BULLARD  concluded  his  review  by  stating  that  the  six                                                               
affirmative  votes and  the alternates  [for  the Alaska  Coastal                                                               
Policy Board]  are the only  substantive changes that he  made to                                                               
the initiative.   He said he  is happy to answer  questions about                                                               
language,  grammar,  or why  things  were  moved to  a  different                                                               
place, but he would like to  leave the committee with the thought                                                               
that HB 325 is the initiative in bill form.                                                                                     
                                                                                                                                
1:27:54 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  MUNOZ  recalled that  one  of  the main  concerns                                                               
heard during  previous work on  this issue was the  Department of                                                               
Environmental  Conservation (DEC)  "carve-out".   Given that  the                                                               
initiative did not  incorporate the DEC carve-out,  she asked how                                                               
incorporating  the  carve-out  into  the bill  would  affect  the                                                               
substantially similar test.                                                                                                     
                                                                                                                                
MR.  BULLARD responded  that this  question of  substantially the                                                               
same has only been taken up  twice by the state's courts - Warren                                                             
v. Boucher and  State v. Trust the People -  and neither of those                                                           
instances  is readily  analogous to  the current  situation of  a                                                               
legislative bill  and an  initiative that  would enact  a massive                                                               
program.  Because of the size  and scope of the program, there is                                                               
significant  latitude for  the legislature  to  deviate from  the                                                               
initiative's exact  terms.  He said  that while he could  not say                                                               
with  certainty how  the  lieutenant governor  or  a court  might                                                               
decide, the initiative  contains a number of  guidelines in terms                                                               
of what a  coastal district or coastal resource  area can include                                                               
in its enforceable policies under a  plan.  A DEC carve-out would                                                               
impose more  conditions on  what could be  included in  a coastal                                                               
district plan and he is  unsure whether those added changes would                                                               
rise  to  the level  of  this  being substantially  different  or                                                               
substantially not  the same.  He  said his legal opinion  is that                                                               
in the  scope of a  program of this size,  if that were  the only                                                               
change  it  would  still  be a  program  establishing  a  coastal                                                               
management program  for the state  that involves  local residents                                                               
and the departments of the state,  and that would likely be ruled                                                               
as substantially the same.                                                                                                      
                                                                                                                                
1:30:34 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE MUNOZ  noted that those are  permitting issues for                                                               
water and  air that  DEC handles normally.   She  understood that                                                               
not incorporating  the DEC  carve-out would  enable the  board to                                                               
address  policies  that   are  under  the  purview   of  the  DEC                                                               
permitting function.                                                                                                            
                                                                                                                                
MR. BULLARD replied there is  one important caveat.  The statutes                                                               
providing  the  previous  DEC carve-out  specified  that  various                                                               
chapters - DEC and so forth  - were the sole source of permitting                                                               
authority having  to do with those.   But there was  also the way                                                               
that  that   carve-out  was  interpreted  and   enforced  by  the                                                               
Department  of Natural  Resources under  the prior  program.   He                                                               
therefore did  not know whether  including that  statutory carve-                                                               
out in this  same program beneath an Alaska  Coastal Policy Board                                                               
would be exactly the same  DEC carve-out that existed in practice                                                               
under  the prior  program.   If the  statutory provisions  of the                                                               
historical DEC carve-out were included  it might not be a change;                                                               
however, that  might not  be the same  DEC carve-out  in practice                                                               
underneath an Alaska Coastal Policy Board.                                                                                      
                                                                                                                                
1:33:09 PM                                                                                                                    
                                                                                                                                
CO-CHAIR  SEATON  pointed  out  that earlier  references  to  the                                                               
substantially  similar  analysis  were  in  regard  to  Mr.  Doug                                                               
Gardner's   March   5,   2012,  memorandum   [to   Representative                                                               
Austerman].  He  requested Ms. Harrington to  provide a sectional                                                               
analysis of HB 325.                                                                                                             
                                                                                                                                
MS.  HARRINGTON explained  that  the bill  is  structured on  the                                                               
initiative;  however, the  initiative  is all  one large  section                                                               
which makes  it difficult  to reference  where the  bill sections                                                               
are within the initiative.  She  said [Article 1 of] Section 1 of                                                               
the  bill   provides  for  development  of   the  Alaska  Coastal                                                               
Management  Program.    It would  establish  the  Alaska  Coastal                                                               
Policy  Board,  its responsibilities,  and  the  method by  which                                                               
board  members  would  be  appointed.     The  program  would  be                                                               
established  within the  Department  of  Commerce, Community  and                                                               
Economic Development  (DCCED), unlike the previous  program which                                                               
was  located  within  the Department  of  Natural  Resources  and                                                               
previous  to  that  it  was  located within  the  Office  of  the                                                               
Governor.  [Under  Section 46.40.310], the board  would have nine                                                               
public  members,   nine  alternate   public  members,   and  four                                                               
[designated  members]  who  would  be the  commissioners  of  the                                                               
Department   of   Environmental    Conservation   (DEC),   Alaska                                                               
Department  of  Fish  &  Game   (ADF&G),  Department  of  Natural                                                               
Resources  (DNR),  and  DCCED.   The  public  nominees  would  be                                                               
submitted by the coastal districts  of each region and they would                                                               
be appointed based on geographic diversity in the state.                                                                        
                                                                                                                                
1:35:19 PM                                                                                                                    
                                                                                                                                
MS. HARRINGTON  specified that Section  46.40.320 deals  with the                                                               
powers and duties of the board.   It would provide that the board                                                               
approve regulations  to implement  the Alaska  Coastal Management                                                               
Program  (ACMP)  in  conformity with  the  federal  Coastal  Zone                                                               
Management Act of  1972.  The board would  also initiate planning                                                               
work,  approve  coastal   district  management  plans,  establish                                                               
coordination  among   state  agencies  in  the   development  and                                                               
implementation  of  the  ACMP,   evaluate  the  effectiveness  of                                                               
district coastal management plans, and  direct DCCED to apply for                                                               
grants  and  other  funding that  become  available  for  coastal                                                               
planning and management.  Thus,  as envisioned in the initiative,                                                               
this board would have broad powers.                                                                                             
                                                                                                                                
MS. HARRINGTON stated that Section  46.40.330 would establish the                                                               
Division of  Ocean and Coastal  Management within  the Department                                                               
of Commerce, Community & Economic  Development (DCCED).  Division                                                               
responsibilities  would  include  rendering  federal  consistency                                                               
determinations and  state consistency  determinations; developing                                                               
and adopting  regulations that have  been approved by  the board;                                                               
ensuring  that  coastal districts  have  the  data necessary  for                                                               
executing their responsibilities;  and developing and maintaining                                                               
a financial  assistance program to  assist the  coastal districts                                                               
in their work.                                                                                                                  
                                                                                                                                
MS. HARRINGTON related that Section  46.40.340 would direct DCCED                                                               
to  develop   regulations  for  the  Alaska   Coastal  Management                                                               
Program.   The regulations would include  statewide standards for                                                               
the  ACMP  and district  plans,  as  well as  consistency  review                                                               
procedures,  including circumstances  under which  projects would                                                               
be excluded from the requirement of a consistency review.                                                                       
                                                                                                                                
1:37:18 PM                                                                                                                    
                                                                                                                                
MS.  HARRINGTON  said  Section   46.40.350  would  establish  the                                                               
objectives  with which  the  ACMP must  be  consistent.   Drawing                                                               
attention to page  5 of the bill, beginning on  line 24, she said                                                               
a number of  the listed objectives are from  the previous program                                                               
along with  some additional objectives.   She understood  that in                                                               
drafting the  bill the Division  of Legal and  Research Services,                                                               
in  places where  the initiative  closely resembled  statute that                                                               
had  been  in  place  under  the  previous  program  or  previous                                                               
iterations of  the program, tried  to use that language  as close                                                               
as possible for consistency with  what was previously approved by                                                               
the legislature.                                                                                                                
                                                                                                                                
MS.  HARRINGTON explained  that Section  46.40.370 describes  the                                                               
process  for implementation  of the  district coastal  management                                                               
plans.   Either the state  or municipalities would  implement the                                                               
plans  depending  on  whether   the  municipalities  have  zoning                                                               
authority.                                                                                                                      
                                                                                                                                
MS.   HARRINGTON  noted   that  Section   46.40.380  deals   with                                                               
compliance and enforcement and  would establish requirements that                                                               
the  municipalities and  state [agencies]  administer regulations                                                               
and control  in conformity of district  coastal management plans.                                                               
It would also provide that the  superior courts of the state have                                                               
jurisdiction  to   enforce  lawful   orders  of  the   board  and                                                               
department under  this chapter,  which is another  carryover from                                                               
the previous body of statute.                                                                                                   
                                                                                                                                
1:38:57 PM                                                                                                                    
                                                                                                                                
MS. HARRINGTON  specified that  Article 2  of Section  1 outlines                                                               
the procedure  that allows  areas of the  coastal regions  of the                                                               
state to  organize into Coastal  Resource Service Areas  [for the                                                               
purposes  of  developing   and  implementing  Coastal  Management                                                               
Plans].    She offered  her  belief  that  the intention  of  the                                                               
initiative  sponsors was  to create  a mechanism  in law  through                                                               
which  the coastal  districts that  previously  existed could  be                                                               
reconstituted, but  deferred to the initiative  sponsor to answer                                                               
any questions about that intention.                                                                                             
                                                                                                                                
MS. HARRINGTON said Article 3  of Section 1 is general provisions                                                               
and  definitions, and  includes  the many  small provisions  that                                                               
were further forward in the  initiative.  She explained that this                                                               
was done to conform to drafting standards.                                                                                      
                                                                                                                                
MS.  HARRINGTON  drew attention  to  the  transition language  in                                                               
Section 2,  page 17, starting  on line 8.   She pointed  out that                                                               
because this transition section is  new to the legislation, there                                                               
may be some  question as to whether the part  of the bill dealing                                                               
with reconstituting  the coastal  districts the  state previously                                                               
had [Article 2] is necessary  should this transition language, or                                                               
a version of  it, be passed.  She deferred  any questions in this                                                               
regard to Mr. Bullard.                                                                                                          
                                                                                                                                
1:42:14 PM                                                                                                                    
                                                                                                                                
CO-CHAIR SEATON  put forth several  questions for answers  by the                                                               
appropriate  person.   He requested  an explanation  for why  the                                                               
program was  put under  the Department  of Commerce,  Community &                                                               
Economic  Development  rather  than  the  Department  of  Natural                                                               
Resources or the  Office of the Governor.  Regarding  the part of                                                               
Section 46.40.320 that would give  the board the power to approve                                                               
regulations, he recalled  that in a similar  situation related to                                                               
fish groups in the state this  type of power was determined to be                                                               
non-legal because  it passed  an authority  for regulations  to a                                                               
separate body.   He  requested that  someone address  this issue.                                                               
Regarding Section  46.40.370 and municipalities having  zoning or                                                               
other   controls,   he   requested  an   explanation   of   those                                                               
municipalities that have  these Title 29 powers  and whether this                                                               
would change their current authorities  under that title, as well                                                               
as  how  it would  affect  those  that  have not  selected  those                                                               
powers.   He  further  asked that  someone  address the  question                                                               
about  what  would be  needed  if  the transition  language  were                                                               
incorporated into the bill.                                                                                                     
                                                                                                                                
1:45:15 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  MUNOZ  added another  question  to  those on  the                                                               
table, asking how  many enforceable policies there  were prior to                                                               
the  DEC carve-out.   She  further  asked whether  the number  of                                                               
enforceable  policies was  affected when  the DEC  carve-out came                                                               
into play.                                                                                                                      
                                                                                                                                
CO-CHAIR SEATON  inquired whether Representative Munoz  is asking                                                               
about  the enforceable  policies prior  to [the  changes made  by                                                               
Governor Frank Murkowski]  that changed a lot more  than just the                                                               
DEC carve-out.                                                                                                                  
                                                                                                                                
REPRESENTATIVE  MUNOZ replied  that she  would like  to know  the                                                               
approximate impact  to the number  of enforceable  policies after                                                               
the DEC carve-out came into play.                                                                                               
                                                                                                                                
CO-CHAIR SEATON  pointed out that  two questions are  being asked                                                               
by Representative  Munoz:  the approximate  number of enforceable                                                               
policies pre-  and post-change  by the  Murkowski Administration;                                                               
and the difference in numbers identified to the DEC carve-out.                                                                  
                                                                                                                                
REPRESENTATIVE MUNOZ concurred.                                                                                                 
                                                                                                                                
1:46:57 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE HERRON  said he would  like to talk with  the bill                                                               
drafter  about how  the  DEC carve-out  "morphed"  over the  last                                                               
several years.  He then asked  whether HB 325 would allow coastal                                                               
districts  to  veto projects,  and  whether  HB 325  would  allow                                                               
coastal   districts  to   establish  enforceable   policies  that                                                               
conflict with state and federal law.                                                                                            
                                                                                                                                
CO-CHAIR SEATON  noted that a  difference between pre-  and post-                                                               
Murkowski Administration  changes was third-party lawsuits.   One                                                               
of the changes was disallowing  nonparticipants from appealing or                                                               
filing lawsuits on stipulations  or conditions required under the                                                               
consistency review.  Offering his  belief that the bill is silent                                                               
in this regard,  he asked how this would be  handled under HB 325                                                               
and whether that silence is intentional.                                                                                        
                                                                                                                                
REPRESENTATIVE  GARDNER understood  that  HB  325 would  disallow                                                               
citizen petitions  or appeals.   She asked  whether there  is any                                                               
data  on  how  the  existence  of a  coastal  zone  plan  reduces                                                               
lawsuits and delays due to appeals and lawsuits.                                                                                
                                                                                                                                
1:50:02 PM                                                                                                                    
                                                                                                                                
MS. HARRINGTON  deferred answers to the  aforementioned questions                                                               
to either  the bill drafter or  the initiative sponsor.   For any                                                               
questions  not  answered,  she  said she  would  bring  back  the                                                               
answers at a future hearing.                                                                                                    
                                                                                                                                
CO-CHAIR  SEATON agreed  to that  approach, saying  the committee                                                               
was just getting the issues on the table.                                                                                       
                                                                                                                                
MR.  BULLARD deferred  to the  initiative sponsor  to answer  the                                                               
question about  why the program  is proposed for  placement under                                                               
the Department of Commerce, Community & Economic Development.                                                                   
                                                                                                                                
1:50:57 PM                                                                                                                    
                                                                                                                                
MR.  BULLARD, regarding  the  proposed  grant of  decision-making                                                               
power to the  Alaska Coastal Policy Board and  whether this would                                                               
be too great  a grant of legislative authority, said  he does not                                                               
see that the bill, or the  initiative on which the bill is based,                                                               
would  provide too  much authority  to  the board.   The  board's                                                               
authority is  prescribed in terms  of what  it is limited  to and                                                               
what  regulations and  coastal management  plans it  can approve.                                                               
Everything has to do only with  the projects in the coastal zone.                                                               
This is  also an  area where the  rest of state  law, as  well as                                                               
federal  law,  have  not  disappeared.   Since  the  board  could                                                               
approve  district management  plans  and procedures,  he said  he                                                               
does not think it too great a grant of legislative discretion.                                                                  
                                                                                                                                
1:52:11 PM                                                                                                                    
                                                                                                                                
MR. BULLARD  noted that the  zoning provision under  AS 46.40.370                                                               
existed under the  prior coastal zone management  program.  Given                                                               
there  is a  synthesis of  federal, state,  and local  permitting                                                               
under  the  Alaska  Coastal Management  Program,  it  would  just                                                               
provide that those municipalities  that exercise zoning authority                                                               
will  include  the  provisions  of   the  plan  in  their  zoning                                                               
regulations.   For  those districts  or Coastal  Resource Service                                                               
Areas having plans  but not exercising zoning  control, the state                                                               
agencies would be responsible for implementing the provisions.                                                                  
                                                                                                                                
1:52:53 PM                                                                                                                    
                                                                                                                                
MR.  BULLARD,   regarding  whether  enforceable   policies  could                                                               
interfere  with  state or  federal  law,  explained that  Section                                                               
46.40.360(b)  of  the  bill  provides  what  a  district  coastal                                                               
management plan  must include or  must not include whether  it is                                                               
to be  approved.   Referencing Section  46.40.360(b) of  the bill                                                               
[page 7], he said the enforceable  policies of the plan:  are not                                                               
allowed to duplicate, restate, or  incorporate by reference state                                                               
or federal statutes  or regulations; they cannot  be preempted by                                                               
federal  or state  law; they  cannot arbitrarily  or unreasonably                                                               
restrict a use  of state concern; they must be  clear and concise                                                               
as to  the activities  and persons affected  by the  policies and                                                               
requirements  of  the policies;  they  must  use prescriptive  or                                                               
performance-based  standards  that  are written  in  precise  and                                                               
enforceable  language; and  they must  address a  coastal use  or                                                               
resource of concern  to the residents of the  coastal district as                                                               
demonstrated  by  local  knowledge  or  supported  by  scientific                                                               
evidence."   Thus,  there are  already sideboards  on what  these                                                               
plans can or cannot include.                                                                                                    
                                                                                                                                
1:54:32 PM                                                                                                                    
                                                                                                                                
MR.  BULLARD, in  regard  to whether  the  Alaska Coastal  Policy                                                               
Board or  the local districts  could effectively veto  a project,                                                               
explained that  a district plan  could involve  requirements that                                                               
would have to  be approved by the coastal policy  board.  He said                                                               
he  does not  know if  that  would ever  amount  to a  veto of  a                                                               
project,  it  would depend  on  the  project and  the  permitting                                                               
requirements that were included.                                                                                                
                                                                                                                                
MR.  BULLARD,  regarding  lawsuits  and  standings,  offered  his                                                               
belief that  the bill and  the initiative  are silent on  who can                                                               
bring  suit  to  enforce  provisions   of  the  district  coastal                                                               
management policy or plan.                                                                                                      
                                                                                                                                
1:55:39 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE HERRON inquired whether  HB 325 would specifically                                                               
supersede other authorities of state agencies.                                                                                  
                                                                                                                                
MR. BULLARD answered  no.  If current law  provides another state                                                               
agency  or department  some sort  of authority,  a district  plan                                                               
that was adopted could not be  adopted if it interfered with that                                                               
agency's authority under those restrictions of 46.40.360(b).                                                                    
                                                                                                                                
1:57:08 PM                                                                                                                    
                                                                                                                                
BRUCE BOTELHO, Chair, Alaska Sea Party,  noted he is mayor of the                                                               
City and Borough of Juneau, but  is before the committee today in                                                               
his capacity  as chair of  the Alaska  Sea Party, sponsor  of the                                                               
Alaska Coastal Zone Management Program  citizens' initiative.  He                                                               
said  that  in  the  absence   of  action  by  the  Alaska  State                                                               
Legislature, the  Alaska Sea Party  will champion  the initiative                                                               
on the ballot later this year.                                                                                                  
                                                                                                                                
MR. BOTELHO  commended Ms. Harrington  and Mr. Bullard  for their                                                               
presentations, saying that Ms.  Harrington correctly outlined the                                                               
three  paths that  the legislature  has  before it  and that  she                                                               
provided an accurate summation of HB  325 and its tracking of the                                                               
initiative.   He said  Mr. Bullard's  representation that  HB 325                                                               
is,  in  essence,  the initiative  is  absolutely  correct,  even                                                               
though they are organized differently.   The change put in by Mr.                                                               
Bullard for the  minimum number of members needed to  vote in the                                                               
affirmative to take action by  the Alaska Coastal Policy Board is                                                               
a new  feature, he continued,  but one that makes  eminent sense.                                                               
In  regard   to  Mr.  Bullard's   removal  of   what  constitutes                                                               
preemption, he said Mr. Bullard  is correct that the provision in                                                               
the initiative  [46.41.060(c)] is a  restatement of the  law with                                                               
regard  to what  constitutes preemption.   The  Alaska Sea  Party                                                               
included  it  in  the  initiative  because it  has  been  a  very                                                               
important issue  of contention historically and  the party wanted                                                               
to  make  explicit that  coastal  policies  may  not in  any  way                                                               
preempt federal or state law.   However, its elimination does not                                                               
in any way change the  substantial similarity requirement were HB                                                               
325 to move forward.                                                                                                            
                                                                                                                                
1:59:52 PM                                                                                                                    
                                                                                                                                
MR.  BOTELHO, addressing  why the  initiative sponsor  placed the                                                               
program under  the Department of  Commerce, Community  & Economic                                                               
Development (DCCED),  pointed out  that the  grant administration                                                               
for  coastal districts  has  resided in  the DCCED.    In a  more                                                               
general sense  it is the  DCCED that  has had long  standing ties                                                               
and  responsibilities for  state/local  government relations,  so                                                               
that was  the preeminent  reason for  the initiative  placing the                                                               
program in  DCCED.   A secondary  concern for  some was  that the                                                               
Department of  Natural Resources  really performed  two functions                                                               
when  all  the  responsibilities   for  coastal  management  were                                                               
consolidated in that department:   one as a permitting agency and                                                               
the other  as the administrating  agency for  coastal management.                                                               
Coastal management itself  is not a permitting function,  it is a                                                               
coordinating function.   The agencies that  have historically had                                                               
permitting  responsibilities  -  DNR,   ADF&G,  and  DEC  -  will                                                               
continue to do the job they  have always done in terms of issuing                                                               
permits.   The function  of the  program in  broad strokes  is to                                                               
call  for coordination  of those  permitting  processes that  the                                                               
agencies  are  working  on  together  and  working  with  project                                                               
developers.                                                                                                                     
                                                                                                                                
MR. BOTELHO, regarding Representative  Munoz's question about the                                                               
DEC carve-out  and what  the initiative  sponsors were  hoping to                                                               
achieve, said the idea was that  all agencies that are issuers of                                                               
permits in the  coastal zone work together  in coordinating their                                                               
processes  and   working  with   project  developers   under  one                                                               
umbrella.  That includes state  agencies, but once the program is                                                               
reestablished it is hoped that there  will be the right to review                                                               
federal  projects and  thus there  would also  be federal  agency                                                               
participation in this process.                                                                                                  
                                                                                                                                
2:02:49 PM                                                                                                                    
                                                                                                                                
CO-CHAIR  SEATON recalled  that  under  the immediately  previous                                                               
program the only people who  could appeal were participants - the                                                               
coastal districts, agencies,  or project sponsor.   He asked what                                                               
is envisioned by the Alaska  Sea Party since the initiative seems                                                               
to be silent in this regard.                                                                                                    
                                                                                                                                
MR. BOTELHO  concurred the  initiative is  silent on  this issue.                                                               
He  explained that  because the  Alaska  Sea Party  was aware  of                                                               
concerns  about  the  earliest  program  that  allowed  virtually                                                               
unlimited ability  for individuals  to appeal actions  of coastal                                                               
policy  districts,   language  was  not  incorporated   into  the                                                               
initiative to authorize  that.  At the same  time, the initiative                                                               
expressly  grants what  would likely  be the  case in  any event,                                                               
which  is  the  power  of  the  superior  court  to  take  action                                                               
interpreting this  act.  In  that respect, it probably  would not                                                               
differ from the practices over the last decade.                                                                                 
                                                                                                                                
2:04:42 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE HERRON  noted that  the initiative  sponsors could                                                               
have chosen any time in the  timeline of the previous program for                                                               
use as  a program structure.   He asked why the  Alaska Sea Party                                                               
chose a "pre-Murkowski" structure.                                                                                              
                                                                                                                                
MR. BOTELHO  allowed it is probably  fair to view the  program as                                                               
having a  "pre-Murkowski" structure, though the  Alaska Sea Party                                                               
was  not consciously  emulating it  except to  the extent  of the                                                               
organization's  concern about  meaningful participation  of local                                                               
communities in  the development of  statewide policies  that were                                                               
to be applicable in the coastal  zone.  In the Alaska Sea Party's                                                               
view, the  most effective way was  some variant on what  had been                                                               
the Alaska  Coastal Policy Council,  a structure which  calls for                                                               
representatives  coming from  coastal  regions.   However, as  in                                                               
previous  iterations, the  ultimate appointing  authority remains                                                               
the governor,  both for  the commissioners  and the  actual board                                                               
members who are  appointed by the governor  from nominations made                                                               
from coastal policy districts.  The  Alaska Sea Party saw that as                                                               
an  important feature  of  providing for  local  input and  local                                                               
participation.   Aside from coastal  districts themselves,  it is                                                               
the  Alaska Sea  Party's  view  that this  is  probably the  most                                                               
important   distinguishing  element   about  the   initiative  in                                                               
comparison  to  those pieces  of  legislation  considered by  the                                                               
legislature last year in regular and special session.                                                                           
                                                                                                                                
2:07:09 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  MUNOZ asked  how  many  enforceable policies  the                                                               
Juneau district plan  had prior to and after the  changes put out                                                               
by the Murkowski Administration.                                                                                                
                                                                                                                                
MR. BOTELHO recollected  that at one point there  might have been                                                               
as  many 51,  most of  which were  struck.   The Juneau  district                                                               
appealed and  ultimately at least  13 of them were  reapproved by                                                               
the  administration.   In further  response,  he reiterated  that                                                               
this is  his recollection and  his numbers  may be a  little off,                                                               
but he  thought almost all  of the Juneau  district's enforceable                                                               
policies were  disallowed.   There was  a process  for appealing,                                                               
and his recollection is that, of those, 13 were reinstated.                                                                     
                                                                                                                                
2:08:16 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE MUNOZ,  regarding Mr. Botelho's  earlier statement                                                               
that the  ACMP process was  a coordinating process,  posited that                                                               
those enforceable  policies are necessary  for a project  to move                                                               
forward,  so  in  a  sense  it becomes  part  of  the  permitting                                                               
process.  She inquired whether Mr. Botelho agrees with that.                                                                    
                                                                                                                                
MR.  BOTELHO responded  that  to the  extent  there are  approved                                                               
coastal  district plans,  developments that  take place  in those                                                               
districts must  conform to those plans;  it is a species  of land                                                               
use planning.   So, the answer  is yes; there must  be conformity                                                               
to the plans.                                                                                                                   
                                                                                                                                
REPRESENTATIVE MUNOZ  postulated that  it is therefore  more than                                                               
coordination; it is  actually part of the permitting  process.  A                                                               
project must go  through the ACMP process and comply  with all of                                                               
the enforceable policies before it moves forward.                                                                               
                                                                                                                                
MR. BOTELHO replied correct.                                                                                                    
                                                                                                                                
2:09:32 PM                                                                                                                    
                                                                                                                                
CO-CHAIR  SEATON  asked whether  Juneau  adopted  those into  its                                                               
local  codes so  that currently  those enforceable  policies must                                                               
have a separate permit under the municipality to go forward.                                                                    
                                                                                                                                
MR. BOTELHO  confirmed that Juneau's  coastal management  plan is                                                               
part of its comprehensive plan.                                                                                                 
                                                                                                                                
2:09:54 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  HERRON recalled  that  last  year the  conference                                                               
committee substitute  for HB 106  failed the House [in  the first                                                               
special session] and  a House substitute for SB 46  failed in the                                                               
second  special session.   Surmising  that  Mr. Botelho's  answer                                                               
would be different than Mr.  Bullard's, he inquired whether those                                                               
bills could  be considered substantially  the same as  the ballot                                                               
initiative.                                                                                                                     
                                                                                                                                
MR. BOTELHO  noted he is a  lawyer, so his answer  will likely be                                                               
similar to  Mr. Bullard's.  He  said that Warren v.  Boucher, the                                                             
seminal case  for Alaska, basically  makes clear that as  long as                                                               
the  subject   matter  is   largely  the   same  the   manner  of                                                               
effectuating it can  differ in small respects and  the court even                                                               
has  language that  says  may  differ in  a  major  respect.   As                                                               
indicated by  Mr. Bullard,  the second case,  State v.  Trust the                                                             
People,  expanded  on this  slightly,  but  made clear  that  the                                                             
larger  the scope  of the  legislation being  considered, and  in                                                               
this case  it is a  fairly complex statutory scheme,  the greater                                                               
the latitude the  legislature has to deviate  from the initiative                                                               
language itself.   The second  test is  the degree of  which they                                                               
attempt  to  meet   the  same  purpose.    To   the  extent  that                                                               
reestablishing a coastal zone management  program is being looked                                                               
at,  there is  some degree  of latitude  about how  a court,  and                                                               
initially   the  lieutenant   governor,   might   look  at   past                                                               
legislation  quite apart  from this  piece of  legislation.   The                                                               
third  [test]  is  looking  at   whether  they  are  structurally                                                               
similar, and on this point  those measures offered in the special                                                               
sessions will have  a high barrier to overcome,  probably more in                                                               
terms  of the  coastal policy  board structure  than perhaps  the                                                               
issue of the DEC carve-out.                                                                                                     
                                                                                                                                
CO-CHAIR  SEATON  informed  members  that  the  committee  packet                                                               
includes  a  full  memorandum  from  Mr.  Bullard  regarding  the                                                               
aforementioned.                                                                                                                 
                                                                                                                                
2:13:44 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE HERRON  asked whether  the Alaska Sea  Party would                                                               
still pursue an  active campaign on the ballot  initiative if the                                                               
legislature  were to  pass a  bill  that overcomes  all the  high                                                               
barriers  and  is   supported  by  the  people   who  backed  the                                                               
initiative.                                                                                                                     
                                                                                                                                
MR. BOTELHO  replied he  is quite confident  that the  Alaska Sea                                                               
Party would  not actively pursue  the initiative if a  good piece                                                               
of  legislation  moved  forward  that is  not  identical  to  the                                                               
initiative.   The organization's  goal is to  see a  good program                                                               
and  the initiative  is  the organization's  best  effort to  put                                                               
together what  it thought would  be a good  program.  He  said he                                                               
thinks the  challenge to the legislature  is less to spend  a lot                                                               
of time worrying  about whether a proposed  bill is substantially                                                               
the  same and  a lot  more about  what makes  for a  good coastal                                                               
management program.                                                                                                             
                                                                                                                                
2:15:13 PM                                                                                                                    
                                                                                                                                
CO-CHAIR SEATON,  regarding the  transition in  Article 2  of the                                                               
bill   and  the   transition  language   in   [Section  2]   that                                                               
reestablishes  the previous  coastal districts,  inquired whether                                                               
reestablishment of  the previous coastal districts  would satisfy                                                               
the coastal district concerns of the initiative sponsor.                                                                        
                                                                                                                                
MR.  BOTELHO  answered yes,  provided  his  understanding of  the                                                               
question is correct.                                                                                                            
                                                                                                                                
2:15:54 PM                                                                                                                    
                                                                                                                                
CO-CHAIR  SEATON   said  the  previous  coastal   districts  were                                                               
adequate, so  if that transition  language did  reestablish those                                                               
districts then the rest of that  large amount of paperwork in the                                                               
bill could go away.                                                                                                             
                                                                                                                                
MR.  BOTELHO  responded there  is  a  reason for  including  this                                                               
language.   It would create  the opportunity  for one or  more of                                                               
the  existing  Coastal  Resource  Service  Areas  to  break  into                                                               
multiple districts,  and that  is the primary  import of  much of                                                               
the  language  which  is  there.     So,  it  is  anticipating  a                                                               
development  that, while  not anticipated  any  time soon,  would                                                               
provide flexibility for future generations.                                                                                     
                                                                                                                                
2:17:03 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE   MUNOZ   inquired   whether  the   remaining   13                                                               
enforceable policies from the previous  program have been adopted                                                               
into  Juneau's planning  and  zoning code,  and  if not,  whether                                                               
there the intent is to do so.                                                                                                   
                                                                                                                                
MR. BOTELHO  answered that Juneau's [coastal  management] plan is                                                               
incorporated  into  its comprehensive  plan,  so  it is  part  of                                                               
Juneau's overall approach.  A  question he cannot answer now, but                                                               
will follow up on,  is how Juneau has been making  use of that in                                                               
light of the July 2011 demise of the statewide program.                                                                         
                                                                                                                                
2:18:06 PM                                                                                                                    
                                                                                                                                
CO-CHAIR  FEIGE surmised  from Mr.  Botelho's earlier  statements                                                               
that  the Alaska  Sea  Party  would not  have  had a  significant                                                               
objection  to HB  106,  as passed  out of  the  House last  year,                                                               
because  it  would have  reestablished  the  Alaska Coastal  Zone                                                               
Management Program.                                                                                                             
                                                                                                                                
MR.  BOTELHO replied  he  wants  to make  clear  that  he is  not                                                               
endorsing any bill  that moved last year, but  indicating that if                                                               
a  good bill  passed, the  reference point  being the  Alaska Sea                                                               
Party's initiative.   He said he is not suggesting  that the bill                                                               
must be identical to  HB 325 or the initiative.  If  it is a good                                                               
bill and incorporates  among other elements the  local voice that                                                               
he has referred to, his guess  is that the Alaska Sea Party would                                                               
not  actively campaign  for the  initiative.   He added  that the                                                               
primary  point in  his comments  was to  say that  he thinks  the                                                               
focus of  the legislature should be  on passing the best  bill it                                                               
can and  to not  be driven  primarily by  substantial similarity.                                                               
Good legislation should stand on its own.                                                                                       
                                                                                                                                
2:19:40 PM                                                                                                                    
                                                                                                                                
CO-CHAIR  FEIGE stated  that  House members  thought  HB 106  was                                                               
pretty good,  given it passed  the House by a  vote of 40-0.   He                                                               
asked why  the Alaska  Sea Party  did not take  that bill  as the                                                               
boiler plate for the initiative,  but instead rolled the calendar                                                               
back 10 years or so.                                                                                                            
                                                                                                                                
MR. BOTELHO responded that in the  Alaska Sea Party's view it was                                                               
rolling it  forward in  terms of  looking at  the source  of this                                                               
initiative -  largely local  government, participants  who wanted                                                               
to  make   sure  that   there  was  a   viable  role   for  local                                                               
participation in shaping statewide policies.                                                                                    
                                                                                                                                
2:21:13 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE HERRON  reiterated his earlier question  about the                                                               
two pieces of  legislation, one in the first  special session and                                                               
one in the second special session.                                                                                              
                                                                                                                                
MR.  BULLARD  answered  there  are  two  cases  interpreting  the                                                               
substantially the  same standard and  neither of those  two dealt                                                               
with a  program as comprehensive and  large as this one.   Warren                                                             
v.  Boucher  dealt with  some  campaign  finance regulations  and                                                             
State v. Trust the People was  a very simple and narrow matter of                                                             
how  a  U.S.  senator  would  be  either  voted  in,  or  briefly                                                               
appointed,  or not  appointed at  all.   Regarding the  House and                                                               
Senate  vehicles  considered  during   the  first  half  of  this                                                               
legislature for  renewing the Alaska Coastal  Management Program,                                                               
it  is entirely  possible that  both of  them would  be found  or                                                               
either  of them  would be  found  to be  substantially the  same.                                                               
That said, there is an element  in the initiative that deals with                                                               
the Alaska  Coastal Policy Board,  the removal of the  DEC carve-                                                               
out, and  various other places  found in the added  objectives of                                                               
the program that have to  do with local participation and control                                                               
that are absent from  those bills.  He said he  does not know how                                                               
significant a  court would find  those elements and  whether they                                                               
are central.  The Alaska Coastal  Management Program does a lot -                                                               
it coordinates state/federal permitting  and brings federal money                                                               
to the  state for grants  for these  things.  How  important that                                                               
element of  local control is to  the larger program he  is unsure                                                               
how a  court would find.   He offered his suspicion  that had the                                                               
legislature  passed a  bill  that  did not  have  quite the  same                                                               
extent of local participation and  control as countenanced in the                                                               
initiative, it  would be found the  same.  However, he  added, it                                                               
is impossible to answer the question with any certainty.                                                                        
                                                                                                                                
CO-CHAIR SEATON held over HB 325.                                                                                               
                                                                                                                                
          HB 276-OIL/GAS PROD. TAX CREDITS/RATES/VALUE                                                                      
                                                                                                                                
2:23:38 PM                                                                                                                    
                                                                                                                                
CO-CHAIR SEATON announced  that the next order  of business would                                                               
be HOUSE  BILL NO. 276,  "An Act  providing for a  credit against                                                               
the oil  and gas  production tax for  costs incurred  in drilling                                                               
certain  oil  or natural  gas  exploration  wells in  the  Nenana                                                               
Basin."    [Before the  committee  was  Version M,  the  proposed                                                               
committee  substitute  labeled   27-LS1193\M,  Bullock,  1/18/12,                                                               
adopted as the working document on 1/30/12.]                                                                                    
                                                                                                                                
The committee took an at-ease from 2:23 p.m. to 2:28 p.m.                                                                       
                                                                                                                                
2:28:33 PM                                                                                                                    
                                                                                                                                
CO-CHAIR FEIGE moved to adopt  the proposed committee substitute,                                                               
version  27-LS1193\D,  Nauman/Bullock,  3/2/12,  as  the  working                                                               
document.   There being  no objection, Version  D was  before the                                                               
committee.                                                                                                                      
                                                                                                                                
2:29:07 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE STEVE THOMPSON, Alaska  State Legislature, said he                                                               
is before the  committee to present Version D of  HB 276 and that                                                               
the bill is a policy call for  the legislature.  He said the bill                                                               
would  provide incentives  that will  hopefully spur  investments                                                               
leading  to  seismic  and   drilling  exploration  in  unexplored                                                               
frontier  basins located  in close  proximity  to communities  in                                                               
need  of a  local energy  source.   He noted  that his  staff has                                                               
worked closely with the Department  of Natural Resources (DNR) to                                                               
identify  six areas  within the  state that  represent unexplored                                                               
basins   located  in   close  proximity   to  energy   challenged                                                               
communities.  The bill would  incentivize exploration by offering                                                               
four  tax  credits  for  seismic  exploration  within  the  [six]                                                               
different basins.   Explorers seeking  the credit would  agree to                                                               
the  data  becoming public  within  two  years of  receiving  the                                                               
credit.   The seismic credit would  be 75 percent of  the seismic                                                               
exploration cost  or $7.5 million,  whichever is less.   The bill                                                               
would  also  provide  a  drilling   credit  for  the  first  four                                                               
exploration  wells drilled  within the  identified areas  with no                                                               
more than  two wells  in any  single area.   The  drilling credit                                                               
would be  80 percent  of actual drilling  cost or  $22.5 million,                                                               
whichever is  less.   Both credits  under the  bill would  be for                                                               
work performed between June 1, 2012, and July 1, 2016.                                                                          
                                                                                                                                
REPRESENTATIVE  THOMPSON pointed  out  that  economic growth  and                                                               
development in Interior Alaska is  crippled by high energy prices                                                               
and the lack of renewable energy  supplies, and said HB 276 would                                                               
strongly  encourage companies  to  invest  in potential  frontier                                                               
basins.  During the committee's  discussion of the bill it became                                                               
evident  there  were more  communities  across  Alaska that  were                                                               
experiencing  similar  energy  challenges and  were  looking  for                                                               
possible solutions  in their own  backyard.  The  bill originally                                                               
dealt with  drilling incentives  in the Nenana  Basin only.   The                                                               
Nenana Basin  is located  50 miles from  Fairbanks and  has road,                                                               
rail,  and power  access  nearby.   As drafted,  HB  276 has  the                                                               
potential to  benefit not only  the Interior but all  Alaskans on                                                               
the Railbelt and beyond.                                                                                                        
                                                                                                                                
2:31:45 PM                                                                                                                    
                                                                                                                                
JANE PIERSON, Staff, Representative  Steve Thompson, Alaska State                                                               
Legislature, provided  a sectional analysis  of Version D  of the                                                               
bill on  behalf of joint prime  sponsor, Representative Thompson.                                                               
She explained  that Section 1  would [amend AS  43.55.025(a) to]:                                                               
make a  conforming amendment  to new section  (q); provide  a new                                                               
frontier basin  drilling credit  at the lesser  of 80  percent of                                                               
the  total drilling  expenditures or  $22.5 million  described in                                                               
(n) of this  section and that qualify under (b),  (c), and (p) of                                                               
this section; and provide a  new frontier basin seismic credit at                                                               
the  lesser  of  75  percent of  the  total  seismic  exploration                                                               
expenditures described  in (o) of  this section and  that qualify                                                               
under (b), (c), and (p) of  this section.  She offered her belief                                                               
that a friendly amendment will  be forthcoming to remove (c) from                                                               
the  qualifications   for  seismic  credits  because   (c)  deals                                                               
exclusively  with drilling  credits.   Addressing Section  2, she                                                               
said  it  would  make  a  conforming  amendment  to  include  new                                                               
subsections created in AS 43.55.025(a).                                                                                         
                                                                                                                                
2:32:56 PM                                                                                                                    
                                                                                                                                
MS. PIERSON  outlined Section 3,  which proposes to add  four new                                                               
subsections  -  (n),  (o),  (p),  and  (q)  -  to  AS  43.55.025.                                                               
Subsection  (n)  describes  the new  frontier  basin  exploration                                                               
drilling credits.   A person drilling the  first four exploration                                                               
wells  in an  area described  in subsection  (p) of  the bill  on                                                               
state or  private lands would  be eligible for  credits described                                                               
in subsection (a)(6) of the bill.   The proposed credit could not                                                               
be taken for  more than two exploration wells in  any single area                                                               
described in  subsection (p) of  the bill.  Subsection  (n) would                                                               
further require that  written consent be obtained  from the owner                                                               
of oil and gas interests on  private land for full public release                                                               
of  all well  data within  two  years after  receiving a  credit.                                                               
Data submission requirements would need  to be in compliance with                                                               
the requirements  in (f)(2) of  this statute.  A  person planning                                                               
to drill  an exploration well  would be required to  get approval                                                               
from  the  Department  of Natural  Resources  (DNR)  commissioner                                                               
prior to spudding  the well.  The DNR commissioner  would have to                                                               
make an affirmative  finding that the exploration well  is in the                                                               
best  interest of  the  state  based on  the  well location,  the                                                               
proximity to  a community in need  of a local energy  source, the                                                               
proximity to  existing infrastructure, the experience  and safety                                                               
record  of the  explorer in  conducting operations  in remote  or                                                               
roadless  areas, the  projected  cost  schedule, whether  seismic                                                               
data sufficiently identifies a  particular tract for exploration,                                                               
whether targeted  depth and range  are designed to  penetrate and                                                               
fully evaluate the hydrocarbon  potential below which hydrocarbon                                                               
reservoirs are  likely to be  found, and whether  the exploration                                                               
plan provides  for full  evaluation of the  well.   Credits under                                                               
this subsection would  be for work performed after  June 1, 2012.                                                               
The drilling and  exploration would need to be in  an area with a                                                               
basin described  under (p) of  this section.   If this  credit is                                                               
claimed, no other credits could  be claimed under this section or                                                               
AS 43.55.023 for the same expenditures.                                                                                         
                                                                                                                                
2:35:16 PM                                                                                                                    
                                                                                                                                
MS. PIERSON  said proposed new  subsection (o) describes  the new                                                               
frontier basin  seismic credit.   It would provide that  a person                                                               
conducting  the first  four seismic  exploration projects  in the                                                               
areas described in  proposed new subsection (p)  for the purposes                                                               
of discovering oil or gas in  a basin is eligible for the credit.                                                               
A  credit  could   not  be  taken  for  more   than  one  seismic                                                               
exploration  project  in an  area  described  in subsection  (p).                                                               
Exploration credits  would be available for  work performed after                                                               
June  1, 2012.    The person  conducting  seismic exploration  on                                                               
private land would have to  obtain written consent from the owner                                                               
of the oil  or gas interest for full release  of geophysical data                                                               
in compliance  with the submission  requirements of (f)(2).   The                                                               
commissioner  of  DNR would  have  to  give approval  before  the                                                               
commencement of seismic exploration  activities and would have to                                                               
make an  affirmative finding that  the seismic project is  in the                                                               
best  interest of  the  state based  on  location, project  cost,                                                               
schedule, data  acquisition and data processing  plan, the reason                                                               
for choosing  the area  for exploration,  and the  experience and                                                               
safety record of the person doing  the exploration in a remote or                                                               
roadless  area.    A  taxpayer  obtaining  a  credit  under  this                                                               
subsection could  not claim  a tax credit  under AS  43.55.023 or                                                               
another  provision  of  this section  for  the  same  exploration                                                               
expenditure.   She  added  that  these credits  would  go to  the                                                               
person  doing  the  drilling,  not  the  individuals  holding  an                                                               
interest within  a multiple party,  so a partner still  could get                                                               
the credit.                                                                                                                     
                                                                                                                                
2:37:09 PM                                                                                                                    
                                                                                                                                
MS. PIERSON said proposed new  subsection (p) states that credits                                                               
under (a)(6), (n),  (a)(7), and (o) must be for  exploration of a                                                               
basin  within  the  following areas  whose  criteria  points  are                                                               
determined by  using the World  Geographic System of  1984 datum.                                                               
These six  locations - Fairbanks, Kotzebue,  Emmonak, Glennallen,                                                               
Egegik, and  Port Moller  - were identified  by DNR  as potential                                                               
frontier basins  and they  were further  defined by  proximity to                                                               
communities that are  suffering from high energy  cost and supply                                                               
issues.                                                                                                                         
                                                                                                                                
MS. PIERSON explained that subsection (q)  was added to HB 276 in                                                               
response  to a  problem identified  by [oil  and gas  consultant]                                                               
Pedro van Meurs, which was that  if a current producer with a tax                                                               
liability at  high prices  would offset  the full  marginal rate,                                                               
plus the expanded exploration tax  credit, the state could end up                                                               
paying more than the 65  percent that is intended for exploratory                                                               
work.   This can  be seen  as an  inequity in  the design  of the                                                               
current tax credit wording.  The  intent is to set the amount for                                                               
exploration  credits   at  65  percent   and  not   dependent  on                                                               
particular  companies or  other operators.   The  limitations are                                                               
not applied  to the  Cook Inlet or  frontier basin  credits since                                                               
they are  credits geared for  creating a stampede  of exploration                                                               
in certain areas of the state  that will produce benefits for the                                                               
state and its residents.                                                                                                        
                                                                                                                                
2:38:39 PM                                                                                                                    
                                                                                                                                
CO-CHAIR  SEATON  understood that  this,  unlike  the Cook  Inlet                                                               
credit, was not  for a single entity drilling three  wells.  This                                                               
is multiple  persons could  either do  the multiple  seismics, or                                                               
multiple persons,  meaning multiple companies, could  qualify for                                                               
the  tax credit  by drilling  in one  basin and  someone else  in                                                               
another basin.   It is not  restricted to the same  person, it is                                                               
persons.                                                                                                                        
                                                                                                                                
MS.  PIERSON  confirmed  this understanding  to  be  correct  and                                                               
apologized for misspeaking earlier.                                                                                             
                                                                                                                                
2:39:24 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE KAWASAKI understood that  Section 3 identifies the                                                               
way  in  which  an  explorer  can  apply  for  drilling  credits.                                                               
Regarding  the best  interest  finding  on page  4,  line 15,  he                                                               
presumed that the  DNR commissioner would have  to have submitted                                                               
a best  interest finding and  agreed that the  [exploration well]                                                               
was  qualified for  the  credit prior  to  the drilling  actually                                                               
being done.                                                                                                                     
                                                                                                                                
MS. PIERSON confirmed this understanding to be correct.                                                                         
                                                                                                                                
REPRESENTATIVE KAWASAKI inquired whether  a best interest finding                                                               
is something that can readily be  done and asked how much time it                                                               
would  take.   He understood  that  a lot  would go  into a  best                                                               
interest finding before a credit could be applied for.                                                                          
                                                                                                                                
MS. PIERSON offered her belief  that (f)(2) of the statute, which                                                               
the committee  does not  have before it,  provides 30  days after                                                               
the date of request, unless a longer period is provided.                                                                        
                                                                                                                                
REPRESENTATIVE KAWASAKI,  regarding the condition under  the best                                                               
interest  finding  about  the explorer's  experience  and  safety                                                               
record,  inquired whether  that  record is  for  Alaska or  other                                                               
states, or would be up to the commissioner to decide.                                                                           
                                                                                                                                
MS. PIERSON  offered her  belief that  it would  be left  for the                                                               
commissioner  to decide,  but added  that she  believed it  would                                                               
also  be   whether  the  explorer's   agents  who   are  actually                                                               
conducting the  drilling or seismic  have had some  experience in                                                               
remote and roadless areas.                                                                                                      
                                                                                                                                
2:41:43 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE HERRON  offered his appreciation for  how the bill                                                               
has changed and  where the proposed committee  substitute (CS) is                                                               
going.   Noting  the map  shows six  basins, he  asked about  the                                                               
criteria  used [for  their  selection] such  that  there are  not                                                               
seven or eight basins.                                                                                                          
                                                                                                                                
MS. PIERSON replied that DNR  provided the initial basins and the                                                               
sponsor looked at  them in regards to being  close to communities                                                               
that could  actually use the  resources and  that had a  need for                                                               
the resources,  which is how  these six  areas were chosen.   The                                                               
other  three areas  provided  by  DNR were  either  not in  close                                                               
proximity to  a community that  would need  them or were  in such                                                               
close proximity  to the Cook  Inlet that they were  already being                                                               
taken care of.                                                                                                                  
                                                                                                                                
REPRESENTATIVE HERRON  surmised, then, that  there is no  need to                                                               
have a trigger  built into the statutes to open  up another basin                                                               
without going back to the legislature.                                                                                          
                                                                                                                                
MS. PIERSON responded  that extending this credit  until 2022 was                                                               
talked about  at one  time, along with  adding some  other things                                                               
discussed in  this committee.   However, due  to the  lateness of                                                               
the  session, she  said  she created  what she  hopes  is a  good                                                               
framework and  offered her belief that  if this works it  will be                                                               
looked at again before 2016.                                                                                                    
                                                                                                                                
2:43:39 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  GARDNER  related  she  has an  ongoing  theme  of                                                               
letting Alaskans  and legislators know  what the state  is buying                                                               
and spending and who is getting  and claiming credits.  She asked                                                               
which elements of  HB 276 are completely available  to the public                                                               
and which are not.  For  example, if the commissioner made a best                                                               
interest finding, she presumed the  public could read that and be                                                               
able to  estimate what the credit  would be.  She  said she would                                                               
like to  see, in principle, that  whenever a tax credit  is given                                                               
to someone the  information is available to all  Alaskans so they                                                               
know who the beneficiaries are, along with the amount.                                                                          
                                                                                                                                
MS.  PIERSON  answered that  the  sponsor  tried  to do  this  by                                                               
requiring the  data discovered be  made public within  two years.                                                               
Whether the explorer  actually has a lease or  has an exploration                                                               
area, it is almost like advertising.   If there is something good                                                               
going on  the explorer  is protected by  its exploration  area or                                                               
its lease.   If something  is found  it may bring  investors into                                                               
these areas, something that has  been problematic.  Therefore, in                                                               
making any data discovered for  this credit public and available,                                                               
the  sponsor is  trying  to  give the  state  more knowledge  and                                                               
something it can sink its teeth into.                                                                                           
                                                                                                                                
REPRESENTATIVE   GARDNER  offered   her   appreciation  for   the                                                               
aforementioned.                                                                                                                 
                                                                                                                                
2:45:45 PM                                                                                                                    
                                                                                                                                
CO-CHAIR  SEATON pointed  out that  under  existing programs  any                                                               
explorer can  qualify for the  65 percent credit  without sharing                                                               
data.  He  therefore understood that someone wishing  to take the                                                               
enhanced credits for  exploration in the proposed  areas under HB                                                               
276 would have to go through  the best interest finding and would                                                               
have to agree to release the data.                                                                                              
                                                                                                                                
MS. PIERSON confirmed that this is correct.                                                                                     
                                                                                                                                
2:46:26 PM                                                                                                                    
                                                                                                                                
CO-CHAIR  FEIGE understood  the  DNR commissioner  and his  staff                                                               
would  approve  where the  seismic  projects  or the  exploratory                                                               
drilling occurs.   He  asked whether there  is a  time constraint                                                               
from when the credit is approved and when the work must start.                                                                  
                                                                                                                                
MS. PIERSON replied that to  qualify for the [proposed] credit an                                                               
exploration  expenditure   would  have   to  incurred   for  work                                                               
performed after [June 1, 2012] and before July 1, 2016.                                                                         
                                                                                                                                
2:47:20 PM                                                                                                                    
                                                                                                                                
CO-CHAIR SEATON  understood that under the  bill's provisions the                                                               
person qualifying for  and receiving the credit would  be the one                                                               
actually turning the drill bit first.                                                                                           
                                                                                                                                
MS. PIERSON responded  "that is true and that is  really belt and                                                               
suspenders," but  as was  seen with Cook  Inlet that  became very                                                               
important.                                                                                                                      
                                                                                                                                
2:47:52 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  FOSTER noted  that  the second  paragraph of  the                                                               
sponsor statement  states that the  drilling credit would  be for                                                               
the "first  four exploration  wells in an  area described  in the                                                               
bill  with no  more  than two  wells  in any  single  area."   He                                                               
inquired whether  that means a total  of four wells or  means six                                                               
areas times no  more than two wells in each  area, which would be                                                               
twelve.                                                                                                                         
                                                                                                                                
MS. PIERSON,  noting that this has  been a hard one  to nail down                                                               
in legal writing, said it would be four total.                                                                                  
                                                                                                                                
2:48:31 PM                                                                                                                    
                                                                                                                                
CO-CHAIR  SEATON  opened  public  testimony on  HB  276.    After                                                               
ascertaining  that  no  one  wished  to  testify,  but  that  the                                                               
Resource Development  Council had submitted written  testimony in                                                               
favor of  the bill, he announced  that HB 276 would  be held over                                                               
for  public testimony  on 3/14/12  and that  people could  submit                                                               
written testimony as well.                                                                                                      
                                                                                                                                
2:49:29 PM                                                                                                                    
                                                                                                                                
CO-CHAIR SEATON  moved to adopt  Conceptual Amendment  1, written                                                               
as follows:                                                                                                                     
                                                                                                                                
     Page 2, Line 14:  Delete (c)                                                                                           
                                                                                                                                
CO-CHAIR SEATON  pointed out  that this  is the  amendment talked                                                               
about by the sponsor that would delete the reference to (c).                                                                    
                                                                                                                                
CO-CHAIR FEIGE objected for discussion purposes.                                                                                
                                                                                                                                
CO-CHAIR SEATON explained  that lines 12-14 on page  2 talk about                                                               
seismic  exploration  activities.     However,  (c)  specifically                                                               
references  only  exploration  wells,  so  reference  to  (c)  is                                                               
probably inappropriate.                                                                                                         
                                                                                                                                
CO-CHAIR FEIGE  withdrew his objection.   There being  no further                                                               
objection, Conceptual Amendment 1 was adopted.                                                                                  
                                                                                                                                
2:51:10 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  KAWASAKI recalled  Ms.  Pierson's statement  that                                                               
the proposed tax  credits would not be stackable.   He noted that                                                               
the research and  development tax credit is not in  Title 43, but                                                               
under a  different title.   He  requested clarification  on which                                                               
credits are stackable and which are not stackable.                                                                              
                                                                                                                                
MS. PIERSON said she will have  to get back to the committee with                                                               
an answer.                                                                                                                      
                                                                                                                                
CO-CHAIR SEATON  pointed out  that the two  fiscal notes  are for                                                               
the original bill  and said new fiscal notes  are anticipated for                                                               
Version D.                                                                                                                      
                                                                                                                                
2:53:04 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  KAWASAKI said  he will  submit written  questions                                                               
through  the co-chair  about the  dynamics of  the best  interest                                                               
findings, the  proximity to a  community in need,  the definition                                                               
of proximity to  existing infrastructure, and how  those would be                                                               
objectively  looked at  by the  commissioner in  a best  interest                                                               
finding.                                                                                                                        
                                                                                                                                
CO-CHAIR SEATON  offered his belief  that the bill  actually lays                                                               
out mileage around the points.                                                                                                  
                                                                                                                                
MS. PIERSON said  this can be found in subsection  (p) on page 6,                                                               
beginning on line 2.                                                                                                            
                                                                                                                                
CO-CHAIR SEATON added that  the aforementioned language describes                                                               
the areas the basins  would have to be in.   He recalled that DNR                                                               
had previously  said a  best interest finding  would be  based on                                                               
the prospectivity because  the state did not want to  spend a lot                                                               
of money if  there was not much prospectivity.   He asked whether                                                               
this language is adequate for Representative Kawasaki.                                                                          
                                                                                                                                
2:55:47 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  KAWASAKI commented  that  this  was originally  a                                                               
Nenana Basin bill and now  a number of different communities have                                                               
been added.   He recollected  a discussion led by  Co-Chair Feige                                                               
in which there  was talk about whether a community  would be able                                                               
to take  advantage of a  potential find.  For  example, Fairbanks                                                               
is close to  the road system and  has a need, but  in rural areas                                                               
with  a need  it  might not  be  cost effective  to  pay for  the                                                               
credits; therefore, it is a policy call that must be made.                                                                      
                                                                                                                                
MS. PIERSON  offered her belief that  that is the reason  for the                                                               
best  interest  finding.   She  said  a  problem of  these  being                                                               
frontier basins is that they  have never been actually solidified                                                               
in their  definitions, which  is the reason  for the  circles [on                                                               
the map depicting the six areas].   She imagined that if somebody                                                               
wanted  to drill  in an  area within  the circle  but not  in the                                                               
basin, there would  be a problem with that, and  that is the best                                                               
interest  finding.    The Department  of  Natural  Resources  was                                                               
concerned that there be a development plan.                                                                                     
                                                                                                                                
CO-CHAIR  SEATON offered  his appreciation  for  the colored  map                                                               
depicting  the proposed  areas that  are defined  in the  bill by                                                               
latitude and longitude.                                                                                                         
                                                                                                                                
2:57:45 PM                                                                                                                    
                                                                                                                                
CO-CHAIR SEATON understood  that the bill does  not include outer                                                               
continental shelf (OCS)  or federal land; thus  the credits would                                                               
be available for either state or private land.                                                                                  
                                                                                                                                
MS. PIERSON confirmed that this is correct.                                                                                     
                                                                                                                                
CO-CHAIR SEATON said  his previous statement was  to clarify that                                                               
the state  credit would not apply  to any work occurring  off the                                                               
Aleutian Islands in the OCS.                                                                                                    
                                                                                                                                
[HB 276 was held over.]                                                                                                         
                                                                                                                                
2:58:37 PM                                                                                                                    
                                                                                                                                
ADJOURNMENT                                                                                                                   
                                                                                                                                
There being no  further business before the  committee, the House                                                               
Resources Standing Committee meeting was adjourned at 2:58 p.m.                                                                 

Document Name Date/Time Subjects
HB0325A.pdf HRES 3/12/2012 1:00:00 PM
HB 325
HB 325 Sponsor Statement.pdf HRES 3/12/2012 1:00:00 PM
HB 325
HB276 Sponsor Statement version D.pdf HRES 3/12/2012 1:00:00 PM
HRES 3/14/2012 1:00:00 PM
HB 276
Sectional House Bill 276 version D.pdf HRES 3/12/2012 1:00:00 PM
HRES 3/14/2012 1:00:00 PM
HB 276
Oil Basin Final re areas version D 3.8.12.pdf HRES 3/12/2012 1:00:00 PM
HRES 3/14/2012 1:00:00 PM
HB 276
HB276 CS versiion D 3.7.12.pdf HRES 3/12/2012 1:00:00 PM
HRES 3/14/2012 1:00:00 PM
HB 276
HB 325 Legal Opinion.pdf HRES 3/12/2012 1:00:00 PM
HB 325
12-177ljw.pdf HRES 3/12/2012 1:00:00 PM
HB 325
Document1.docx HRES 3/12/2012 1:00:00 PM
HB 276
RDC CS HB276 Comments.pdf HRES 3/12/2012 1:00:00 PM
HB 276
HB 325 Sectional Analysis Version I.pdf HRES 3/12/2012 1:00:00 PM
HB 325