Legislature(2011 - 2012)BARNES 124

03/14/2012 01:00 PM RESOURCES


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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ SJR 17 ARCTIC COUNCIL TASK FORCE TELECONFERENCED
Moved Out of Committee
+= HB 361 DISPOSALS OF STATE RESOURCES TELECONFERENCED
Moved CSHB 361(RES) Out of Committee
+ Bills Previously Heard/Scheduled TELECONFERENCED
+= HB 276 OIL/GAS PRODUCTION TAX CREDITS: NENANA TELECONFERENCED
Moved CSHB 276(RES) Out of Committee
                    ALASKA STATE LEGISLATURE                                                                                  
               HOUSE RESOURCES STANDING COMMITTEE                                                                             
                         March 14, 2012                                                                                         
                           1:11 p.m.                                                                                            
                                                                                                                                
MEMBERS PRESENT                                                                                                               
                                                                                                                                
Representative Eric Feige, Co-Chair                                                                                             
Representative Paul Seaton, Co-Chair                                                                                            
Representative Alan Dick                                                                                                        
Representative Bob Herron                                                                                                       
Representative Cathy Engstrom Munoz                                                                                             
Representative Berta Gardner                                                                                                    
Representative Scott Kawasaki                                                                                                   
                                                                                                                                
MEMBERS ABSENT                                                                                                                
                                                                                                                                
Representative Peggy Wilson, Vice Chair                                                                                         
Representative Neal Foster                                                                                                      
                                                                                                                                
COMMITTEE CALENDAR                                                                                                            
                                                                                                                                
SENATE JOINT RESOLUTION NO. 17                                                                                                  
Welcoming the  Arctic Council  Task Force  for Arctic  Marine Oil                                                               
Pollution Preparedness  and Response to  the state for  its March                                                               
2012 meeting  and urging the  task force to  use its time  in the                                                               
state to inform and inspire the work of the task force.                                                                         
                                                                                                                                
     - MOVED SJR 17 OUT OF COMMITTEE                                                                                            
                                                                                                                                
HOUSE BILL NO. 361                                                                                                              
"An  Act  relating to  the  Alaska  Land Act,  including  certain                                                               
lease,  sale, and  other disposal  of state  land and  materials;                                                               
relating to production royalties  from miners; relating to rights                                                               
to use state water; and providing for an effective date."                                                                       
                                                                                                                                
     - MOVED CSHB 361(RES) OUT OF COMMITTEE                                                                                     
                                                                                                                                
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."                                                                             
                                                                                                                                
     - MOVED CSHB 276(RES) OUT OF COMMITTEE                                                                                     
                                                                                                                                
PREVIOUS COMMITTEE ACTION                                                                                                     
                                                                                                                                
BILL: SJR 17                                                                                                                  
SHORT TITLE: ARCTIC COUNCIL TASK FORCE                                                                                          
SPONSOR(s): SENATOR(s) MCGUIRE                                                                                                  
                                                                                                                                
02/06/12       (S)       READ THE FIRST TIME - REFERRALS                                                                        
02/06/12       (S)       STA                                                                                                    
02/28/12       (S)       STA AT 9:00 AM BUTROVICH 205                                                                           
02/28/12       (S)       Moved SJR 17 Out of Committee                                                                          
02/28/12       (S)       MINUTE(STA)                                                                                            
02/29/12       (S)       STA RPT 5DP                                                                                            
02/29/12       (S)       DP: WIELECHOWSKI, KOOKESH, PASKVAN,                                                                    
                         MEYER, GIESSEL                                                                                         
03/05/12       (S)       TRANSMITTED TO (H)                                                                                     
03/05/12       (S)       VERSION: SJR 17                                                                                        
03/05/12       (H)       READ THE FIRST TIME - REFERRALS                                                                        
03/05/12       (H)       RES                                                                                                    
03/14/12       (H)       RES AT 1:00 PM BARNES 124                                                                              
                                                                                                                                
BILL: HB 361                                                                                                                  
SHORT TITLE: DISPOSALS OF STATE RESOURCES/ROYALTIES                                                                             
SPONSOR(s): RULES BY REQUEST OF THE GOVERNOR                                                                                    
                                                                                                                                
02/29/12       (H)       READ THE FIRST TIME - REFERRALS                                                                        
02/29/12       (H)       RES, FIN                                                                                               
03/05/12       (H)       RES AT 1:00 PM BARNES 124                                                                              
03/05/12       (H)       Heard & Held                                                                                           
03/05/12       (H)       MINUTE(RES)                                                                                            
03/14/12       (H)       RES AT 1:00 PM BARNES 124                                                                              
                                                                                                                                
BILL: HB 276                                                                                                                  
SHORT TITLE: OIL/GAS PROD. TAX CREDITS/RATES/VALUE                                                                              
SPONSOR(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                                                                              
03/12/12       (H)       Heard & Held                                                                                           
03/12/12       (H)       MINUTE(RES)                                                                                            
03/14/12       (H)       RES AT 1:00 PM BARNES 124                                                                              
                                                                                                                                
WITNESS REGISTER                                                                                                              
                                                                                                                                
MICHAEL PAWLOWSKI, Staff                                                                                                        
Senator Lesil McGuire                                                                                                           
Alaska State Legislature                                                                                                        
Juneau, Alaska                                                                                                                  
POSITION STATEMENT:  Introduced SJR 17 on behalf of Senator                                                                   
McGuire, sponsor.                                                                                                               
                                                                                                                                
NILS ANDREASSEN, Managing Director                                                                                              
Institute of the North                                                                                                          
Anchorage, Alaska                                                                                                               
POSITION STATEMENT:  Testified in support of SJR 17.                                                                          
                                                                                                                                
WYN MENEFEE, Chief of Operations                                                                                                
Central Office                                                                                                                  
Division of Mining, Land and Water                                                                                              
Department of Natural Resources (DNR)                                                                                           
Anchorage, Alaska                                                                                                               
POSITION STATEMENT:  Explained proposed amendments to HB 361.                                                                 
                                                                                                                                
PAUL VERHAGEN, Staff                                                                                                            
Representative Alan Dick                                                                                                        
Alaska State Legislature                                                                                                        
Juneau, Alaska                                                                                                                  
POSITION STATEMENT:  Answered questions regarding a proposed                                                                  
amendment to HB 361 offered by Representative Dick.                                                                             
                                                                                                                                
JANE PIERSON, Staff                                                                                                             
Representative Steve Thompson                                                                                                   
Alaska State Legislature                                                                                                        
Juneau, Alaska                                                                                                                  
POSITION STATEMENT:  On behalf of Representative Thompson, joint                                                              
prime sponsor, answered questions regarding HB 276.                                                                             
                                                                                                                                
JOHN LARSEN, Audit Master                                                                                                       
Tax Division-Production Audit Group                                                                                             
Department of Revenue (DOR)                                                                                                     
Anchorage, Alaska                                                                                                               
POSITION STATEMENT:  Testified regarding HB 276.                                                                              
                                                                                                                                
MATTHEW FONDER, Director                                                                                                        
Anchorage Office                                                                                                                
Tax Division                                                                                                                    
Department of Revenue (DOR)                                                                                                     
Anchorage, Alaska                                                                                                               
POSITION STATEMENT:  Answered questions regarding HB 276.                                                                     
                                                                                                                                
ELIZABETH SAADULIK HENSLEY, Corporate and Public Policy Liaison                                                                 
NANA Regional Corporation                                                                                                       
Kotzebue, Alaska                                                                                                                
POSITION STATEMENT:  Testified in support of HB 276.                                                                          
                                                                                                                                
                                                                                                                                
ACTION NARRATIVE                                                                                                              
                                                                                                                                
1:11:01 PM                                                                                                                    
                                                                                                                                
CO-CHAIR  PAUL   SEATON  called  the  House   Resources  Standing                                                             
Committee meeting to order at  1:11 p.m.  Representatives Herron,                                                               
Gardner, Munoz,  Feige, and  Seaton were present  at the  call to                                                               
order.  Representatives Dick and  Kawasaki arrived as the meeting                                                               
was in progress.                                                                                                                
                                                                                                                                
                SJR 17-ARCTIC COUNCIL TASK FORCE                                                                            
                                                                                                                                
1:11:22 PM                                                                                                                    
                                                                                                                                
CO-CHAIR SEATON announced that the  first order of business would                                                               
be SENATE JOINT  RESOLUTION NO. 17, Welcoming  the Arctic Council                                                               
Task  Force  for Arctic  Marine  Oil  Pollution Preparedness  and                                                               
Response to the  state for its March 2012 meeting  and urging the                                                               
task force  to use its  time in the  state to inform  and inspire                                                               
the work of the task force.                                                                                                     
                                                                                                                                
1:11:49 PM                                                                                                                    
                                                                                                                                
MICHAEL  PAWLOWSKI, Staff,  Senator Lesil  McGuire, Alaska  State                                                               
Legislature,  introduced SJR  17  on behalf  of Senator  McGuire,                                                               
sponsor, reporting that on March  20-22, 2012, the Arctic Council                                                               
Task  Force  for Arctic  Marine  Oil  Pollution Preparedness  and                                                               
Response will be holding a hearing  in Girdwood, Alaska.  He said                                                               
the resolution is  designed to be presented to the  task force to                                                               
encourage them  to use their time  in the state to  inspire their                                                               
work on  this arctic instrument.   He  added that the  task force                                                               
was created under the Arctic Council.                                                                                           
                                                                                                                                
1:12:45 PM                                                                                                                    
                                                                                                                                
MR. PAWLOWSKI  explained that the  points of  particular interest                                                               
to Alaska start on  page 2, line 14, of the  resolution.  He said                                                               
lines 14-18  recognize that in terms  of shipping it is  not just                                                               
the Arctic region  of Alaska that will be affected,  but also the                                                               
Aleutian Islands;  therefore, the  Aleutian Islands  are included                                                               
throughout the resolution  as well.  According to page  16 of the                                                               
Aleutian Islands  Risk Assessment Project Phase  A Summary Report                                                             
[August 2011],  included in the  committee packet,  roughly 2,000                                                               
vessels  are  currently transiting  the  Aleutians.   The  [2004]                                                               
spill by  the M/V Selendang Ayu  was one of the  larger spills in                                                               
state history.  The  purpose of HJR 17 is to  express to the task                                                               
force -  which has  the responsibility  to create  the instrument                                                               
for Arctic cooperation  on oil spills and response  - that Alaska                                                               
would like  to see  vessels in  innocent passage  acknowledge the                                                               
critical  role   of  local  response   organizations,  indigenous                                                               
people, state  and local governments, and  response organizations                                                               
in preparedness  and response.   When  a vessel  in international                                                               
waters  loses control  and ends  up in  state waters,  it is  the                                                               
state that must respond and deal with the mess.                                                                                 
                                                                                                                                
1:14:11 PM                                                                                                                    
                                                                                                                                
MR. PAWLOWSKI noted that lines  19-22 of the resolution urge that                                                               
ships  in the  Bering  Strait and  Aleutians regions  voluntarily                                                               
engage local  authorities in contingency  planning, and  that the                                                               
Instrument on  Cooperation on  Marine Oil  Pollution Preparedness                                                               
and Response  in the  Arctic encourages that  engagement.   It is                                                               
putting the  point that while the  State of Alaska does  not have                                                               
jurisdiction, it can participate  through this resolution at this                                                               
international body  to encourage  items that  are in  the state's                                                               
interest.  He  related that Senator McGuire  sees this resolution                                                               
as  part of  the broader  strategy  of engaging  on these  Arctic                                                               
issues that the legislature has taken the lead on.                                                                              
                                                                                                                                
1:14:59 PM                                                                                                                    
                                                                                                                                
MR. PAWLOWSKI, in response  to Representative Gardner, understood                                                               
that  "innocent"  passage involves  ships  that  are outside  the                                                               
waters  of the  state and  transiting not  to a  port within  the                                                               
state.  Directing attention to the  map on page 16 of the summary                                                               
report, he said  the "great circle route" is one  of the shortest                                                               
distances between  Asia and the West  Coast of the U.S.  and runs                                                               
through the Aleutian  Islands.  A ship on this  route would be in                                                               
innocent passage because it is  not heading into the jurisdiction                                                               
of the State of Alaska.                                                                                                         
                                                                                                                                
1:15:50 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE GARDNER inquired as to  how confident the State of                                                               
Alaska is that  every vessel coming to an Alaska  port is meeting                                                               
the standards being  requested in SJR 17, aside from  oil and gas                                                               
which is carefully monitored in the state's waters.                                                                             
                                                                                                                                
MR. PAWLOWSKI  replied the standards requested  in the resolution                                                               
are voluntary.  He understood  that vessels coming into an Alaska                                                               
port must  comply with State  of Alaska rules.   However, vessels                                                               
currently  moving through  the Arctic  and the  Aleutians by  and                                                               
large do  not have to;  they are covered under  the International                                                               
Maritime Organization.   Through  these international  bodies the                                                               
state advocates  for stricter  standards.   For example,  the M/V                                                               
Selendang  Ayu was  a Malaysian  freighter that  functioned under                                                               
international  rules, not  State of  Alaska rules.   In  that the                                                               
Arctic nations  through the Arctic  Council are  getting together                                                               
to develop  a framework, the  State of  Alaska through SJR  17 is                                                               
expressing  an interest  in seeing  the  stricter standards  that                                                               
Alaska has  to protect its  coasts showcased at this  meeting and                                                               
encouraging  this  group  to adopt  stricter  standards  for  the                                                               
Arctic than currently exist.                                                                                                    
                                                                                                                                
1:17:15 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE HERRON inquired whether  Alaskans will be involved                                                               
in these discussions.                                                                                                           
                                                                                                                                
MR.  PAWLOWSKI  understood  Alaskans   would  not  officially  be                                                               
involved.   He directed  attention to page  2 of  the resolution,                                                               
beginning  on  line  30,  which   directs  where  copies  of  the                                                               
resolution are to be sent.   He said he does not believe Alaskans                                                               
are  on  the task  force  given  it  is an  international  group.                                                               
However, he  understood that Alaskans  will be at the  meeting to                                                               
advocate for issues that are in Alaska's interest.                                                                              
                                                                                                                                
REPRESENTATIVE HERRON  offered his support  for SJR 17  saying it                                                               
is artfully written to send a  memorandum to this group asking it                                                               
to  consider  Alaska's concerns  during  the  development of  its                                                               
comprehensive Arctic strategy.                                                                                                  
                                                                                                                                
MR. PAWLOWSKI,  in response  to Representative  Munoz, reiterated                                                               
that the  task force meeting  is taking place March  20-22, 2012,                                                               
at [Hotel Alyeska].                                                                                                             
                                                                                                                                
CO-CHAIR SEATON opened public testimony on SJR 17.                                                                              
                                                                                                                                
1:19:15 PM                                                                                                                    
                                                                                                                                
NILS  ANDREASSEN,  Managing  Director, Institute  of  the  North,                                                               
stated he is  testifying in his capacity as co-chair  of the host                                                               
committee  for the  coming Arctic  Council Oil  Spill Task  Force                                                               
meeting.   He  said the  Institute of  the North  has had  a long                                                               
history of interaction  with the Arctic Council -  it has chaired                                                               
projects  under  the  working  groups,  including  a  circumpolar                                                               
infrastructure  task  force,  and  was co-editor  of  the  [2009]                                                               
Arctic  Marine Shipping  Assessment Report,  which is  considered                                                               
the bible of Arctic marine  shipping.  The Arctic Marine Shipping                                                               
Assessment  Report  recommended  there  be a  search  and  rescue                                                               
agreement, which  was approved  [May 2011]  by the  senior Arctic                                                               
officials.   At that  May meeting the  Arctic Council  decided to                                                               
form the Task Force for  Arctic Marine Oil Pollution Preparedness                                                               
and Response.  That task force  has now met in Norway and Moscow.                                                               
Since  its intent  was to  next  meet in  America, some  Alaskans                                                               
successfully urged  that that meeting  be held in Alaska.   Eight                                                               
delegations from around the Arctic  are bringing nearly a hundred                                                               
experts on  oil spill response  and preparedness to  this meeting                                                               
in Alaska.   This is a  great opportunity for Alaskans  to take a                                                               
leadership  role in  welcoming these  delegations and  helping to                                                               
shape some of the negotiations that will be taking place.                                                                       
                                                                                                                                
1:21:04 PM                                                                                                                    
                                                                                                                                
MR. ANDREASSEN said this is  an important time for Alaska because                                                               
the U.S. will be  the chair of the Arctic Council  in a few years                                                               
and the U.S. is forming its  strategy for its chairmanship.  This                                                               
is a  good first opportunity  for Alaskans  to weigh in  on these                                                               
issues.   He  said the  host committee  is encouraged  by SJR  17                                                               
because it sends a great message  to these guests from around the                                                               
Arctic.   From the host  committee's perspective there will  be a                                                               
number  of  public  opportunities  for  engagement.    While  the                                                               
sessions themselves are  closed, he and several  Alaskans will be                                                               
observers  and  will have  opportunities  for  interaction.   The                                                               
Institute of  the North is  hosting a  reception on March  19 for                                                               
the attendees.  Ambassador [David]  Balton of the U.S. Department                                                               
of State will  host a debriefing of the three-day  session on the                                                               
afternoon of March  22.  He reiterated that  [the host committee]                                                               
is glad to  see SJR 17 as  it sends a great  welcoming message to                                                               
these foreign dignitaries  and experts.  In  response to Co-Chair                                                               
Seaton,  said   he  has   not  seen  a   full  list   of  meeting                                                               
participants,   but  U.S.   Senator  Begich's   office  will   be                                                               
represented at each of the public forums.                                                                                       
                                                                                                                                
1:23:18 PM                                                                                                                    
                                                                                                                                
CO-CHAIR SEATON  closed public testimony after  ascertaining that                                                               
no one else wished to testify.                                                                                                  
                                                                                                                                
REPRESENTATIVE  MUNOZ moved  to report  SJR 17  out of  committee                                                               
with individual recommendations and  the accompanying zero fiscal                                                               
note.  She  thanked the sponsor, saying Senator  McGuire has been                                                               
a leader in Arctic issues.   There being no objection, SJR 17 was                                                               
reported from the House Resources Standing Committee.                                                                           
                                                                                                                                
         HB 361-DISPOSALS OF STATE RESOURCES/ROYALTIES                                                                      
                                                                                                                                
1:24:15 PM                                                                                                                    
                                                                                                                                
CO-CHAIR SEATON announced  that the next order  of business would                                                               
be HOUSE BILL  NO. 361, "An Act relating to  the Alaska Land Act,                                                               
including certain lease,  sale, and other disposal  of state land                                                               
and  materials; relating  to  production  royalties from  miners;                                                               
relating  to rights  to use  state  water; and  providing for  an                                                               
effective date."                                                                                                                
                                                                                                                                
The committee took a brief at-ease.                                                                                             
                                                                                                                                
CO-CHAIR SEATON opened public testimony  on HB 361, but closed it                                                               
after  ascertaining  that  no  one  from  the  public  wished  to                                                               
testify.   He noted that  HB 361 is  by the House  Rules Standing                                                               
Committee at the request of the governor.                                                                                       
                                                                                                                                
1:26:53 PM                                                                                                                    
                                                                                                                                
CO-CHAIR  SEATON  moved  to  adopt  [Amendment  2],  labeled  27-                                                               
GH2717\A.5,  Bailey, 3/13/12,  which  read [original  punctuation                                                               
provided]:                                                                                                                      
                                                                                                                                
     Page 5, following line 19:                                                                                                 
     Insert a new bill section to read:                                                                                         
        "* Sec. 11. AS 38.05.115 is amended to read:                                                                        
          Sec. 38.05.115. Limitations and conditions of                                                                       
     sale. (a)  The commissioner  shall determine the timber                                                                  
     [AND  OTHER   MATERIALS]  to  be   sold  [,]   and  the                                                                    
     limitations,  conditions,   and  terms  of   sale.  The                                                                    
     limitations,  conditions, and  terms shall  include the                                                                    
     utilization,  development,   and  maintenance   of  the                                                                    
     sustained yield principle,  subject to preference among                                                                    
     other beneficial  uses. The commissioner  may negotiate                                                                    
     sales  of timber  [OR MATERIALS]  without advertisement                                                                    
     and on the limitations,  conditions, and terms that are                                                                    
     considered to  be in the  best interests of  the state.                                                                    
     Within  a one-year  period,  the  commissioner may  not                                                                    
     negotiate  a sale  without  advertisement  to the  same                                                                    
     purchaser of                                                                                                               
               [(1)]  more than 500 M.B.M. or equivalent                                                                        
     other measure of timber [;                                                                                                 
               (2)  EXCEPT AS PROVIDED IN (3) OF THIS                                                                           
     SUBSECTION, MORE THAN 25,000  CUBIC YARDS OF MATERIALS;                                                                    
     OR                                                                                                                         
               (3)  MORE THAN 100,000 CUBIC YARDS OF                                                                            
     MATERIALS  TO A  COMMON CARRIER  HOLDING A  LEASE UNDER                                                                    
     AS 38.35].                                                                                                                 
          (b)  Negotiated sales not exceeding 50 M.B.M. or                                                                      
     the equivalent other measure of  timber [OR 2,500 CUBIC                                                                    
     YARDS OF  MATERIALS] are exempt from  the provisions of                                                                    
     AS 34.15.150.                                                                                                              
          (c)  The limitations of this section are not                                                                          
     applicable  to   timber  that  [WHICH]   becomes  state                                                                
     property  under   the  provisions  of   AS 45.50.210  -                                                                    
     45.50.235."                                                                                                                
                                                                                                                                
     Renumber the following bill sections accordingly.                                                                          
                                                                                                                                
     Page 13, line 28:                                                                                                          
          Delete "sec. 18"                                                                                                      
          Insert "sec. 19"                                                                                                      
                                                                                                                                
     Page 16, line 9:                                                                                                           
          Delete "Section 19"                                                                                                   
          Insert "Section 20"                                                                                                   
                                                                                                                                
     Page 16, line 10:                                                                                                          
          Delete "sec. 23"                                                                                                      
          Insert "sec. 24"                                                                                                      
                                                                                                                                
CO-CHAIR FEIGE objected for discussion purposes.                                                                                
                                                                                                                                
CO-CHAIR SEATON invited Mr. Wyn Menefee of the Department of                                                                    
Natural Resources to explain the amendment.                                                                                     
                                                                                                                                
1:27:49 PM                                                                                                                    
                                                                                                                                
WYN  MENEFEE, Chief  of Operations,  Central Office,  Division of                                                               
Mining, Land  and Water, Department  of Natural  Resources (DNR),                                                               
reminded  members of  the committee's  [3/5/12] discussion  about                                                               
splitting  out the  statutes between  timber  sales and  material                                                               
sales  to  alleviate confusions.    However,  he explained,  this                                                               
proposed provision  was inadvertently  omitted from  the original                                                               
draft of  the bill.   Amendment 2 would  add a new  bill section,                                                               
Section 11,  to separate the  two by eliminating materials.   All                                                               
the  pertinent  aspects  on doing  materials  sales  are  already                                                               
covered by  what has  been submitted and  Amendment 2  would just                                                               
take it  out of  the portions  that remain  in AS  38.05.115 that                                                               
deal  with  timber sales.    Due  to  the  addition of  this  new                                                               
section, Section  11 would also  renumber the  following sections                                                               
in the bill.                                                                                                                    
                                                                                                                                
1:29:43 PM                                                                                                                    
                                                                                                                                
CO-CHAIR SEATON noted that "2,500  cubic yards of material" would                                                               
be removed  by the  amendment but not  inserted anywhere  else in                                                               
the bill.  He requested an explanation of that removal.                                                                         
                                                                                                                                
MR.  MENEFEE replied  that  the  bill would  add  a new  section,                                                               
Section  38.05.550,  which  would  establish  material  sites  or                                                               
disposal  areas  from  which  materials  would  be  sold  through                                                               
negotiated  sales.    Because the  division  would  have  already                                                               
notified  the public  with a  notice and  best interest  decision                                                               
that it  will be progressively  selling all of the  materials out                                                               
of an  area, a  volumetric restraint  is no  longer needed.   The                                                               
proposed new  Section 38.05.555  on page 7,  line 22,  deals with                                                               
negotiated  sales and  personal  use of  materials.   Under  this                                                               
proposed  section the  director  may negotiate  the  sale of  any                                                               
amount of  materials from  a source or  site designated  under AS                                                               
38.05.550(b), so once a site  was established the materials could                                                               
be extracted until  gone.  Therefore, this  restriction of volume                                                               
would not need to be re-referenced.                                                                                             
                                                                                                                                
CO-CHAIR FEIGE  removed his  objection.   There being  no further                                                               
objection, Amendment 2 was adopted.                                                                                             
                                                                                                                                
1:32:03 PM                                                                                                                    
                                                                                                                                
CO-CHAIR  SEATON   moved  to  adopt  Amendment   3,  labeled  27-                                                               
GH2717\A.6,  Bailey, 3/13/12,  which  read [original  punctuation                                                               
provided]:                                                                                                                      
                                                                                                                                
     Page 6, line 22:                                                                                                           
          Delete "in fee"                                                                                                       
                                                                                                                                
CO-CHAIR FEIGE objected.                                                                                                        
                                                                                                                                
1:32:24 PM                                                                                                                    
                                                                                                                                
MR. MENEFEE, at the request  of Co-Chair Seaton, said the purpose                                                               
of Amendment 3 is to make a  correction.  He explained there is a                                                               
two-step  process when  the  state receives  title  to the  land.                                                               
First,  is a  tentative approval  from  the U.S.  Bureau of  Land                                                               
Management (BLM); second, is that  after BLM surveys the land the                                                               
state  gets patent  to it.   The  connotation of  "in fee"  means                                                               
patented land and would not  include tentative approval land, yet                                                               
the state  sells material  from tentative  approval land  all the                                                               
time.  By  removing "in fee", line 22 would  state "All materials                                                               
owned by the  state ...."  This would  incorporate both tentative                                                               
approval lands and the patented lands.                                                                                          
                                                                                                                                
CO-CHAIR FEIGE  removed his  objection.   There being  no further                                                               
objection, Amendment 3 was adopted.                                                                                             
                                                                                                                                
1:33:45 PM                                                                                                                    
                                                                                                                                
CO-CHAIR  SEATON   moved  to  adopt  Amendment   4,  labeled  27-                                                               
GH2717\A.7,  Bailey, 3/13/12,  which  read [original  punctuation                                                               
provided]:                                                                                                                      
                                                                                                                                
     Page 15, line 23:                                                                                                          
          Delete "and quarry stone"                                                                                             
          Insert "stone, pumice, and common clay"                                                                               
                                                                                                                                
CO-CHAIR FEIGE objected.                                                                                                        
                                                                                                                                
1:34:01 PM                                                                                                                    
                                                                                                                                
MR. MENEFEE, at the request  of Co-Chair Seaton, said Amendment 4                                                               
deals with  the definition of  materials.  He explained  the word                                                               
"includes" [on  line 22] means  that the materials could  be more                                                               
than what is  listed on lines 22-23.  However,  the division felt                                                               
that by specifically stating "quarry  stone" people in the future                                                               
might  think there  was  an  obvious reason  why  it stated  only                                                               
quarry  stone.   Stone is  a  general term  that includes  quarry                                                               
stone, and use of the  word "stone" will preclude any connotation                                                               
that  the division  was purposely  trying to  get rid  of pumice,                                                               
common  clay, or  general  stone.   He  specified that  locatable                                                               
minerals are not  included as stone; for example, a  diamond is a                                                               
locatable mineral                                                                                                               
                                                                                                                                
CO-CHAIR FEIGE  removed his  objection.   There being  no further                                                               
objection, Amendment 4 was adopted.                                                                                             
                                                                                                                                
1:35:44 PM                                                                                                                    
                                                                                                                                
CO-CHAIR  SEATON   moved  to  adopt  Amendment   5,  labeled  27-                                                               
GH2717\A.8,  Bailey, 3/14/12,  which  read [original  punctuation                                                               
provided]:                                                                                                                      
                                                                                                                                
     Page 15, following line 23:                                                                                                
     Insert a new bill section to read:                                                                                         
        "* Sec. 21. AS 41.23.470(b) is amended to read:                                                                     
          (b)  The commissioner may conduct only a                                                                              
     negotiated    timber   [OR    MATERIAL]   sale    under                                                                    
     AS 38.05.115  to provide  for  personal use,  including                                                                    
     house logs  and firewood,  or for  a use  incidental to                                                                    
     the   construction   of    access,   or   for   habitat                                                                    
     enhancement."                                                                                                              
                                                                                                                                
     Renumber the following bill sections accordingly.                                                                          
                                                                                                                                
     Page 16, line 10:                                                                                                          
          Delete "sec. 23"                                                                                                      
          Insert "sec. 24"                                                                                                      
                                                                                                                                
CO-CHAIR FEIGE objected.                                                                                                        
                                                                                                                                
1:36:12 PM                                                                                                                    
                                                                                                                                
MR. MENEFEE,  at the request  of Co-Chair Seaton,  explained that                                                               
Legislative Legal  and Research Services brought  another statute                                                               
to the division's  attention that mixed references  of timber and                                                               
material sales  and that referred  back to the old  AS 38.05.115.                                                               
Because [the  old statute] included material  in that definition,                                                               
a new citation  for the new statute would have  to be referenced.                                                               
This  provision  sits  within   the  Susitna  Recreation  River's                                                               
section of  statute, so it  deals only with  recreational rivers.                                                               
The  division  would  not  need this  material  statute  here  to                                                               
conduct  negotiated material  sales because  it would  already be                                                               
addressed  under  the  proposed  new Section  550  to  AS  38.05.                                                               
Therefore,  this  would  not benefit  the  division  for  selling                                                               
materials even  in recreational rivers.   To eliminate confusion,                                                               
the division  proposes to take out  "or material" so there  is no                                                               
"or  material" referencing  back to  the old  AS 38.05.115;  thus                                                               
clarifying that there is not a conflict.                                                                                        
                                                                                                                                
CO-CHAIR FEIGE  removed his  objection.   There being  no further                                                               
objection, Amendment 5 was adopted.                                                                                             
                                                                                                                                
1:37:48 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  DICK  moved to  adopt  Amendment  6, labeled  27-                                                               
GH2717\A.4,  Bailey, 3/13/12,  which  read [original  punctuation                                                               
provided]:                                                                                                                      
                                                                                                                                
     Page 8, following line 17:                                                                                                 
          Insert a new subsection to read:                                                                                      
          "(f)  Notwithstanding (a) - (e) of this section,                                                                      
     for  the   purpose  of  creating  incentives   for  the                                                                    
     development of peat  as a source of heat  or power, the                                                                    
     director   shall  negotiate   the  sale   of  peat   to                                                                    
     individuals,  organized   or  unorganized  communities,                                                                    
     tribal  governments,  or  private profit  or  nonprofit                                                                    
     organizations.  Under  this  subsection,  the  director                                                                    
     shall provide,                                                                                                             
               (1)  for personal use by an individual or                                                                        
     for testing or product  development for commercial use,                                                                    
     not more than  20,000 cubic yards of peat a  year at no                                                                    
     cost for a period not to exceed 10 years; or                                                                               
               (2)  for users requiring more than 20,000                                                                        
     cubic yards a year, the  amount of peat required by the                                                                    
     user for a  period not to exceed 10 years  at the price                                                                    
     of                                                                                                                         
               (i)  20 percent of the representative                                                                            
     regional sales  price determined by the  director under                                                                    
     AS 38.05.550(d)(1); or                                                                                                     
               (ii)  20 percent of the fair market value                                                                        
     determined   by  an   appraisal   completed  under   AS                                                                    
     38.05.550(d)(2),   if   the  applicant   provides   the                                                                    
     appraisal at the applicant's  expense and the appraisal                                                                    
     is approved by the commissioner."                                                                                          
                                                                                                                                
CO-CHAIR FEIGE objected.                                                                                                        
                                                                                                                                
1:38:03 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  DICK  explained  that  his idea  is  to  make  it                                                               
possible  for  people   in  Western  Alaska,  one   of  the  most                                                               
economically  depressed areas  in the  state, to  explore whether                                                               
peat is  viable for  home heating  and for  economic development.                                                               
Peat  development  is currently  too  stringent;  for example,  a                                                               
person in McGrath has tried for  15 years to develop peat but the                                                               
obstacles have been too great.  This would lower the obstacles.                                                                 
                                                                                                                                
1:39:24 PM                                                                                                                    
                                                                                                                                
PAUL  VERHAGEN, Staff,  Representative  Alan  Dick, Alaska  State                                                               
Legislature,  explained   that  during  the   committee's  3/5/12                                                               
hearing on HB  361, Representative P. Wilson asked  how much peat                                                               
it would take to heat an  average home.  During that same meeting                                                               
Representative P.  Wilson talked  about a  man in  Petersburg who                                                               
heated  his  home with  peat.    Mr.  Verhagen reported  that  he                                                               
contacted the  man in Petersburg who  said he cuts his  peat into                                                               
six-inch cubes and  burns them in a Blaze King  stove but did not                                                               
know how much he burned on a  yearly basis.  Mr. Verhagen said he                                                               
therefore  did "a  very unscientific  calculation" with  how much                                                               
the man is  currently burning and extrapolated it out  to come up                                                               
with  a  figure of  13.5  cubic  yards per  year.    He did  this                                                               
calculation   because  he   understood  that   Representative  P.                                                               
Wilson's question was really going  to whether 20,000 cubic yards                                                               
is way  more than a  person would need to  heat his or  her home.                                                               
The  answer  is yes,  way  more.    However,  the purpose  is  to                                                               
incentivize the use  of peat as a  source of heat or  power.  The                                                               
sponsor's hope is that anyone wanting  to heat with peat would be                                                               
able to  harvest it  like a  person would do  with firewood.   An                                                               
additional hope  is that it  might dawn  on some of  those people                                                               
that with these large numbers  available they might want to start                                                               
a business  based on peat  and, further, that peat  pellets could                                                               
be  produced for  peat stoves.   Perhaps  on the  Kuskokwim River                                                               
someday, peat pellets  will be shipped downriver  for fuel rather                                                               
than bringing  fuel oil  upriver.   Perhaps biomass  boilers will                                                               
someday be installed to burn the  local peat.  This would provide                                                               
protection from what might happen  if oil prices continue to rise                                                               
and oil production continues to decline.                                                                                        
                                                                                                                                
1:41:34 PM                                                                                                                    
                                                                                                                                
MR. VERHAGEN added  that while doing research he  learned that 20                                                               
percent of all home heat  in Ireland comes exclusively from peat.                                                               
It would be nice if people  in rural Alaska could almost entirely                                                               
cut their dependency on oil.   He reiterated that the sponsor put                                                               
the  large numbers  in his  amendment as  an incentive  for those                                                               
wishing  to begin  experimenting  with whether  to  start a  peat                                                               
business.   This  way, the  significant expenditures  to do  this                                                               
would not have to include the  price of peat along with the price                                                               
of the other very expensive necessary equipment.                                                                                
                                                                                                                                
1:42:12 PM                                                                                                                    
                                                                                                                                
CO-CHAIR  SEATON  moved  to  adopt   Conceptual  Amendment  1  to                                                               
Amendment  6,   which  he  had   written  as   follows  [original                                                               
punctuation provided except for some formatting changes]:                                                                       
                                                                                                                                
     Line 7:  Delete material                                                                                                   
                                                                                                                                
     Insert:  (1) for personal use by an individual not to                                                                      
     exceed 200 cubic yards per year for personal use at no                                                                     
     cost                                                                                                                       
                                                                                                                                
     Line 8 and line 9:  Delete material                                                                                        
                                                                                                                                
      Insert:  (2) for testing or product development for                                                                       
       commercial use, not more than 2000 cubic yards per                                                                       
     year at no cost for a period not exceed 5 years                                                                            
                                                                                                                                
     Renumber accordingly                                                                                                       
                                                                                                                                
     Line 10:  Delete "20,000"                                                                                                  
                                                                                                                                
     Insert "2,000"                                                                                                             
                                                                                                                                
REPRESENTATIVE DICK objected for discussion purposes.                                                                           
                                                                                                                                
1:42:42 PM                                                                                                                    
                                                                                                                                
CO-CHAIR  SEATON  explained  he  has  expressed  his  concern  to                                                               
Representative Dick  that these  numbers are  so large  they will                                                               
hinder support  and passage of  the bill.   He said he  talked to                                                               
the person in  Petersburg who has been burning  about three cords                                                               
of wood.  He estimated that  in Interior Alaska about 10 cords of                                                               
wood would be burned.  Using  these figures he calculated that an                                                               
equivalent  amount of  peat would  be about  160 cubic  yards per                                                               
year.    Amendment 1  to  Amendment  6  would  add a  cushion  by                                                               
providing 200 cubic yards  of peat per year at no  cost.  He said                                                               
this figure for  personal use would prevent the  opening of other                                                               
unintended things.                                                                                                              
                                                                                                                                
1:44:21 PM                                                                                                                    
                                                                                                                                
CO-CHAIR   SEATON  continued   his   explanation  of   Conceptual                                                               
Amendment  1  to Amendment  6,  explaining  that his  reason  for                                                               
deleting lines 8 and 9 and  inserting "(2) for testing or product                                                               
development for  commercial use, not  more than 2000  cubic yards                                                               
per year at no  cost for a period not exceed  5 years" is because                                                               
anybody wanting to  develop commercial use would  have a prove-up                                                               
time along with  the free 2,000 cubic  yards of peat.   This is a                                                               
lot of peat  and would allow for product  and market development.                                                               
He  further  explained that  Amendment  1  to Amendment  6  would                                                               
replace "20,000" with "2,000" cubic  yards for the 10-year period                                                               
at 20 percent  of the regional sales price.   This would give the                                                               
person developing a  business a break for an  additional 10 years                                                               
after which time  the peat would be at the  regional sales price.                                                               
The  objective of  Conceptual Amendment  1 to  Amendment 6  is to                                                               
provide usage by  Alaskans to get development going  and to allow                                                               
a cushion  time for faster  recovery of expenses incurred  and to                                                               
encourage  future   business,  without  the  state   giving  away                                                               
commercially valuable materials all the time into the future.                                                                   
                                                                                                                                
1:46:55 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE DICK said these numbers  have been bantered around                                                               
quite  a bit.    He estimated  it would  take  about $150,000  in                                                               
equipment  and  a  good  quality   pellet  machine  to  begin  an                                                               
industrial operation.  Saying a  startup time of five years would                                                               
likely not  be enough  time to determine  whether it  would work,                                                               
he suggested a startup time of at least eight years.                                                                            
                                                                                                                                
CO-CHAIR SEATON  pointed out that  his proposed five  years would                                                               
be at no cost and then it would  go for another ten years at one-                                                               
fifth of the  regional sales price amount.  Thus,  there would be                                                               
state participation in  the commercial aspect.   He requested Mr.                                                               
Menefee to provide DNR's perspective on this.                                                                                   
                                                                                                                                
1:48:47 PM                                                                                                                    
                                                                                                                                
MR.  MENEFEE  agreed  that Co-Chair  Seaton's  recalculation  for                                                               
personal use is correct and  people probably would not exceed 200                                                               
cubic yards.   Regarding the number of years and  volume, he said                                                               
the committee can  decide what those thresholds are.   He said he                                                               
thinks  the  division would  interpret  "for  testing or  product                                                               
development for commercial  use" to be that  the individual would                                                               
have to see if the peat  can actually be manipulated into pellets                                                               
and packaged  for commercial  development.   As such,  the actual                                                               
physical  testing  would  obviously  not take  over  2,000  cubic                                                               
yards.    If  the  interpretation  of  "product  development  for                                                               
commercial use" includes  developing a market, it is  hard to say                                                               
exactly how long that  will take.  Once it is  figured out how to                                                               
harvest efficiently and  make the pellets, it  must be determined                                                               
who the  pellets will be sold  to, how far the  pellets will need                                                               
to be  shipped, and  other normal business  startup things.   The                                                               
real question  is how far  to go supporting  business development                                                               
versus just product testing, because  in his view 2,000 is plenty                                                               
sufficient  for  actual testing.    If  talking about  whether  a                                                               
business  can really  be developed,  then it  is the  committee's                                                               
call.   If  the committee  is trying  to give  the free  value to                                                               
develop the market, a longer  time period really does incentivize                                                               
it.   Since there  is no  market at this  point the  market value                                                               
right now  is going  to be  pretty low  and therefore  20 percent                                                               
will be  pretty near free to  start with.  Establishing  a market                                                               
could be for  one individual in one area, but  if talking about a                                                               
broader market it  is probably going to  take multiple developers                                                               
to do that.  If that is the  case it is going to take a while for                                                               
that  market  value  to  climb  to  start  making  a  significant                                                               
difference.                                                                                                                     
                                                                                                                                
1:52:00 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE MUNOZ asked  whether the division's interpretation                                                               
would  be  that  the  products   developed  during  that  product                                                               
development phase could be sold.                                                                                                
                                                                                                                                
MR. MENEFEE replied  he thinks the intention is that  it could be                                                               
sold because  the language says it  is for commercial use  and he                                                               
therefore thinks the  division would interpret it that  way.  The                                                               
real question  is how long  does product development  take versus                                                               
running a business and that is the part that is hard to call.                                                                   
                                                                                                                                
1:52:41 PM                                                                                                                    
                                                                                                                                
CO-CHAIR  SEATON  surmised  that  whatever the  number  of  years                                                               
chosen for  inclusion in the bill,  that number will be  the term                                                               
for  "at no  cost" for  the 2,000  cubic yards,  even if  product                                                               
development takes  less time.   He  asked whether  it would  be a                                                               
problem if  somebody did not  want to  use 2,000 cubic  yards and                                                               
would this require changing the language in some manner.                                                                        
                                                                                                                                
MR. MENEFEE responded  that the way the  language currently reads                                                               
in  [Amendment 6]  a person  wanting only  10,000 cubic  yards of                                                               
peat instead of 20,000 could do  that, and a person wanting a no-                                                               
cost time  period of 5 years  instead of 10 years  could do that.                                                               
The  division would  not necessarily  issue it  automatically for                                                               
the 10  year period;  it would  depend on  what the  person asked                                                               
for.   Moving on  to the  second provision  [in Amendment  6], he                                                               
said that  if somebody  wants the  peat at no  cost for  only two                                                               
years to figure out whether the  product will work and then wants                                                               
to begin paying the 20 percent  after the two years, the division                                                               
would  sell  it   for  20  percent.    The   division  would  not                                                               
automatically  make  the contract  for  10  years if  someone  is                                                               
asking for a shorter period of  time.  If, however, the committee                                                               
wants the  division to make  it an  automatic 10 years,  then the                                                               
language would need to say "will  issue for a period of 10 years"                                                               
rather than "a period not to exceed 10 years".                                                                                  
                                                                                                                                
1:55:27 PM                                                                                                                    
                                                                                                                                
MR.  MENEFEE,  in response  to  Co-Chair  Seaton, confirmed  that                                                               
under  the  current language  any  developer  could come  to  the                                                               
division and request whatever the developer desires.                                                                            
                                                                                                                                
CO-CHAIR SEATON  inquired whether the  language would need  to be                                                               
changed to accommodate somebody  requesting 1,000 cubic yards for                                                               
10 years instead of more than 20,000.                                                                                           
                                                                                                                                
MR. MENEFEE first  noted that there is  a differentiation between                                                               
personal  use and  commercial development.    If somebody  wanted                                                               
10,000 cubic yards  for commercial purposes for  a certain number                                                               
of years,  the division would  ask whether  it is for  testing or                                                               
product  development.   If not,  and the  person is  investing in                                                               
starting a business  in a market that already exists,  he said he                                                               
would interpret  the language  in Amendment 1  to Amendment  6 to                                                               
say that  the 2,000 cubic yards  would be sold at  the 20 percent                                                               
for another 10  years.  So, if the committee  wants a business to                                                               
get  that  20  percent  in  its first  10-year  cycle,  then  the                                                               
language probably would  need to be modified because  that is not                                                               
what it currently says.                                                                                                         
                                                                                                                                
1:58:26 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  DICK  related  his   conversation  with  Mr.  Jim                                                               
Vanderpool of McGrath in which  Mr. Vanderpool said it would take                                                               
at least 25,000-30,000 cubic yards  just to begin to test whether                                                               
this was viable, although Mr.  Vanderpool did not specify whether                                                               
this was  per year.  Therefore,  the intent of Amendment  6 is to                                                               
make it  wide open to  incentivize this without  jeopardizing the                                                               
bill itself.  He suggested  either increasing the cubic yards per                                                               
year and  the number of  years, or  saying that the  first 30,000                                                               
cubic yards  will be  for development  and everything  after that                                                               
will be at the 20 percent.                                                                                                      
                                                                                                                                
CO-CHAIR  SEATON asked  whether  Representative  Dick is  meaning                                                               
that after the  first 30,000 cubic yards the person  would pay 20                                                               
percent  of the  fair market  value of  the regional  sales price                                                               
instead of the regional sales price.                                                                                            
                                                                                                                                
REPRESENTATIVE  DICK replied  he is  suggesting the  first 30,000                                                               
cubic yards be free and after that  it would be at the 20 percent                                                               
for the next 10 years.                                                                                                          
                                                                                                                                
2:01:13 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  MUNOZ commented  it  is difficult  because it  is                                                               
unknown what amount  would be practical for a new  business.  She                                                               
inquired  whether  it could  be  left  up  to the  Department  of                                                               
Natural Resources to determine an appropriate price.                                                                            
                                                                                                                                
REPRESENTATIVE DICK  responded he  has had that  conversation and                                                               
the thought  was that as long  as the current staff  was in place                                                               
he would be  happy.  However, if the department  or staff changes                                                               
down the road then the whole  landscape might change.  He allowed                                                               
the  committee is  trying to  make  a decision  without any  real                                                               
facts.  If he  errs, he said he would like to err  on the side of                                                               
incentivizing because peat in the  ground does not make the state                                                               
any money  and it  would provide an  industry in  Western Alaska,                                                               
which currently has no industry.                                                                                                
                                                                                                                                
2:02:44 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE MUNOZ requested Representative  Dick to repeat his                                                               
conversation with [Mr. Jim Vanderpool of McGrath].                                                                              
                                                                                                                                
REPRESENTATIVE DICK  answered that  Mr. Vanderpool said  it would                                                               
take a minimum of 25,000-30,000 cubic  yards to find out what was                                                               
doable and whether it was marketable.                                                                                           
                                                                                                                                
REPRESENTATIVE MUNOZ asked what Mr. Vanderpool's background is.                                                                 
                                                                                                                                
REPRESENTATIVE DICK  replied Mr.  Vanderpool has  been passionate                                                               
about peat and  has studied it on the Internet,  but this has not                                                               
been done.   He added that Mr. Vanderpool has  only gotten as far                                                               
as sending out peat from McGrath to be pelletized.                                                                              
                                                                                                                                
2:03:57 PM                                                                                                                    
                                                                                                                                
MR. VERHAGEN said he is getting  the idea that maybe three things                                                               
are being  discussed when only  two things were being  asked for.                                                               
He inquired if Co-Chair Seaton  is asking whether after the first                                                               
30,000 [cubic  yards] suggested by Representative  Dick the price                                                               
would be at 20  percent forever.  He said he  does not think that                                                               
is what  the co-chair is referring  to; but rather after  it gets                                                               
to the end  of the second [10  years] it goes to  the fair market                                                               
value.                                                                                                                          
                                                                                                                                
CO-CHAIR SEATON responded  that that is not what  he heard, which                                                               
is why he was asking.                                                                                                           
                                                                                                                                
The committee took an at-ease from 2:04 p.m. to 2:06 p.m.                                                                       
                                                                                                                                
2:06:06 PM                                                                                                                    
                                                                                                                                
CO-CHAIR FEIGE  understood that under  Conceptual Amendment  1 to                                                               
Amendment 6,  an amount  under 200  cubic yards  a year  would be                                                               
considered  personal use,  above 200  and  up to  2,000 would  be                                                               
incentivized  a bit  more by  not requiring  a "royalty",  and an                                                               
amount  of  more than  2,000  would  be considered  a  commercial                                                               
operation.   He said  the quantity gates  seem to  be reasonable,                                                               
but suggested that  10 years is a more  reasonable timeframe than                                                               
5 years.   The  only other thing  is the  differentiation between                                                               
testing  or  product development  because  the  amendment to  the                                                               
amendment does  not cover a  situation of somebody  wanting 1,500                                                               
cubic yards  a year for a  small commercial sales operation.   To                                                               
address   this  he   suggested  deleting   "testing  or   product                                                               
development".                                                                                                                   
                                                                                                                                
CO-CHAIR  SEATON confirmed  there  is no  disagreement among  the                                                               
committee  members on  the personal  use issues  in the  proposed                                                               
Amendment 1  to Amendment 6.   Regarding product  development, he                                                               
understood the suggestion  is for less than 2,000  cubic yards to                                                               
be at no cost for 10 years  and more than 2,000 cubic yards would                                                               
cost the 20 percent.                                                                                                            
                                                                                                                                
2:08:23 PM                                                                                                                    
                                                                                                                                
CO-CHAIR FEIGE said  it would be fair to say  that somebody using                                                               
more than  200 but  less than  2,000 would  not necessarily  be a                                                               
full-blown sales operation and it  could reasonably be assumed to                                                               
be a testing or product development.   An individual in a village                                                               
may try  to supply  just that  village.   It therefore  should be                                                               
left open that it could be  for commercial use.  He asked whether                                                               
he  should  offer an  amendment  to  delete "testing  or  product                                                               
development" from Conceptual Amendment 1 to Amendment 6.                                                                        
                                                                                                                                
The committee took a brief at-ease.                                                                                             
                                                                                                                                
2:09:50 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  DICK  removed  his  objection.   There  being  no                                                               
further  objection, Conceptual  Amendment  1 to  Amendment 6  was                                                               
adopted.                                                                                                                        
                                                                                                                                
CO-CHAIR  FEIGE moved  to adopt  Amendment 2  to Amendment  6, as                                                               
amended.                                                                                                                        
                                                                                                                                
The committee took an at-ease from 2:10 p.m. to 2:11 p.m.                                                                       
                                                                                                                                
2:11:09 PM                                                                                                                    
                                                                                                                                
CO-CHAIR SEATON  clarified Amendment 6  has not yet  been adopted                                                               
and  the   committee  has  adopted  Conceptual   Amendment  1  to                                                               
Amendment 6.                                                                                                                    
                                                                                                                                
CO-CHAIR  FEIGE   moved  to  adopt  Conceptual   Amendment  2  to                                                               
Amendment 6  to:  remove from  (f)(2) the phrase "for  testing or                                                               
product development"; and replace "5" years with "10" years.                                                                    
                                                                                                                                
REPRESENTATIVE DICK objected for discussion purposes.                                                                           
                                                                                                                                
2:13:09 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE DICK maintained  that 2,000 cubic yards  a year is                                                               
not very much  - perhaps a couple hundred dump  trucks.  He asked                                                               
whether the committee would agree to 5,000 cubic yards.                                                                         
                                                                                                                                
REPRESENTATIVE GARDNER commented that  by taking out "for testing                                                               
or product development" this would  be purely for commercial use.                                                               
Allowing that  Amendment 6 is  to get something going,  she asked                                                               
at  what  point the  state  does  not  give something  away  that                                                               
belongs to everybody.                                                                                                           
                                                                                                                                
REPRESENTATIVE DICK conceded  it is blurry, but said  the idea is                                                               
to incentivize that  which does not yet exist.   Removing testing                                                               
and product  development from  the language does  not mean  it is                                                               
not going to happen; there is  going to be a tremendous amount of                                                               
testing  and product  development.   He can  see this  individual                                                               
investing  $150,000 in  real  equipment and  trying  to get  that                                                               
money  back through  this operation.   He  maintained that  2,000                                                               
cubic yards  would not be commercial  because it would only  be a                                                               
couple hundred dump trucks or less than one truck per day.                                                                      
                                                                                                                                
REPRESENTATIVE  GARDNER  said she  would  be  comfortable with  a                                                               
larger  quantity  for   a  shorter  time  because   if  that  was                                                               
inadequate the person could come make the case.                                                                                 
                                                                                                                                
REPRESENTATIVE DICK said he is willing to discuss numbers.                                                                      
                                                                                                                                
2:15:55 PM                                                                                                                    
                                                                                                                                
CO-CHAIR FEIGE  said the concept  he is pushing is  that anything                                                               
less  than 200  cubic yards  a year  is a  reasonable amount  for                                                               
personal use.   The next gate  above that is 2,000  cubic yards a                                                               
year.   The question is  where the  appropriate gate is  for what                                                               
would  be  considered  testing and  product  development  because                                                               
5,000 cubic  yards a year  is an awful  lot of testing.   Besides                                                               
testing it  would also include  establishing a market  and lining                                                               
out product  transportation to that  market.  Few people  live in                                                               
the region being  discussed, so 2,000 cubic yards a  year will go                                                               
a  long way.   Once  2,000 cubic  yards is  exceeded, it  will be                                                               
actual sales  to people and  it would therefore be  reasonable to                                                               
assess some kind of a royalty.                                                                                                  
                                                                                                                                
REPRESENTATIVE HERRON noted  that 2,000 cubic yards  per year for                                                               
10  years is  20,000 cubic  yards total.   A  friendly conceptual                                                               
amendment  could  be 4,000  cubic  yards  per  year for  5  years                                                               
because it would  still be a total of 20,000  cubic yards.  There                                                               
could be two categories.                                                                                                        
                                                                                                                                
REPRESENTATIVE MUNOZ reminded members  of Mr. Menefee's statement                                                               
that there is  currently not a commercial market for  peat, so 20                                                               
percent of  the [regional sales  price or fair market  value] for                                                               
that material is going to be very, very cheap.                                                                                  
                                                                                                                                
2:18:26 PM                                                                                                                    
                                                                                                                                
CO-CHAIR SEATON asked whether DNR  would interpret that the 2,000                                                               
cubic  yards would  be free  and anything  above that  would fall                                                               
into the 20 percent of the regional sales price.                                                                                
                                                                                                                                
MR.  MENEFEE said  his interpretation  would be  four categories,                                                               
provided  he is  understanding all  of the  amendments correctly:                                                               
personal use  of less than 200  would be free; up  to 2,000 would                                                               
be free  for a certain period  of time; 2,000-20,000 would  be at                                                               
20 percent of  the fair market value or regional  sales price for                                                               
a certain period  of time; and once any of  the aforementioned is                                                               
exceeded the price would be at full value.                                                                                      
                                                                                                                                
2:20:31 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE HERRON said he thinks  Co-Chair Feige is trying to                                                               
get  to 4,000  per  [year] for  5 years,  which  still keeps  the                                                               
20,000.     Addressing   Representative  Munoz's   comment  about                                                               
determining a value  for the peat given there is  not currently a                                                               
market, he  said the value  is going to  be the sweat  equity and                                                               
equipment put  in by the  investor to  get a business  going, not                                                               
the product.                                                                                                                    
                                                                                                                                
REPRESENTATIVE  DICK related  that Mr.  Vanderpool has  spoken to                                                               
DNR  in the  past, and  the problem  was that  DNR had  to set  a                                                               
value.  However,  there was only one person in  the state who was                                                               
able  to assess  the  value  of peat  and  that  person had  only                                                               
assessed peat in  regard to the road system.   The assessed value                                                               
given by that  person was prohibitive for Mr.  Vanderpool to even                                                               
get started.   Therefore, what is  being done here is  to come up                                                               
with something that is more  realistic that could function on the                                                               
Kuskokwim and Yukon rivers.                                                                                                     
                                                                                                                                
2:22:14 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  GARDNER asked  whether  Mr.  Vanderpool would  be                                                               
available to  provide an idea  of what these  proposed quantities                                                               
mean to him.   For example, how much he is likely  to need at the                                                               
outset and  what would  be a  successful amount  for him  to use.                                                               
She  further asked  whether Representative  Herron's proposal  is                                                               
for 2,000 [cubic yards]  a year for 10 years or  4,000 a year for                                                               
5 years, or  is the proposal that just one  of those two elements                                                               
be picked.                                                                                                                      
                                                                                                                                
REPRESENTATIVE  DICK  replied that  Mr.  Vanderpool  told him  it                                                               
would take a  minimum total of 25,000-30,000 cubic  yards to find                                                               
out whether it is doable.                                                                                                       
                                                                                                                                
REPRESENTATIVE GARDNER subsequently suggested  that the amount be                                                               
a total  of 20,000 cubic yards  without any mention of  number of                                                               
years.                                                                                                                          
                                                                                                                                
REPRESENTATIVE DICK said he could live  with a first sum total of                                                               
30,000 and everything after that to be paid at full value.                                                                      
                                                                                                                                
REPRESENTATIVE GARDNER  noted there would  then be no need  for a                                                               
time limit.                                                                                                                     
                                                                                                                                
2:23:59 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE KAWASAKI,  regarding royalty  provisions, inquired                                                               
whether there might be other  statutes where this amendment would                                                               
be more appropriate.                                                                                                            
                                                                                                                                
MR.  MENEFEE confirmed  there other  statutes that  have deferred                                                               
payments, but  said those statutes  are referring to  other types                                                               
of activities like oil and gas  leasing.  In looking at statutory                                                               
construction for  how division staff  would figure out  a process                                                               
and what to charge,  it would make sense to put  peat in the area                                                               
of material  and that is what  is at hand right  now.  Logically,                                                               
this  is  the  best  place  in statute  to  deal  with  the  peat                                                               
question.   He said  the real  issue is that  he cannot  tell the                                                               
committee whether now is a good time to do it.                                                                                  
                                                                                                                                
2:25:27 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE DICK said  he could live with 200  cubic yards per                                                               
year for  personal use, and  for commercial use the  first 30,000                                                               
free with everything after that at full market value.                                                                           
                                                                                                                                
CO-CHAIR  FEIGE withdrew  Conceptual Amendment  2 to  Amendment 6                                                               
and moved to  adopt Conceptual Amendment 3 to  Amendment 6, which                                                               
would  "in  [paragraph]  (2)  delete   'for  testing  or  product                                                               
development',  delete '2,000',  replace it  with '30,000  total',                                                               
delete 'per year'".                                                                                                             
                                                                                                                                
REPRESENTATIVE GARDNER objected.                                                                                                
                                                                                                                                
2:26:48 PM                                                                                                                    
                                                                                                                                
CO-CHAIR SEATON  clarified that  adopting Conceptual  Amendment 3                                                               
to  Amendment 6  would  amend  [paragraph 2  in  Amendment 6,  as                                                               
amended,]  to state  "for commercial  use, not  more than  30,000                                                               
total  cubic yards  at  no cost  for  a period  not  to exceed  5                                                               
years".                                                                                                                         
                                                                                                                                
REPRESENTATIVE DICK  objected, saying  10 years  would be  a more                                                               
realistic period.                                                                                                               
                                                                                                                                
2:27:36 PM                                                                                                                    
                                                                                                                                
CO-CHAIR FEIGE  modified his proposal for  Conceptual Amendment 3                                                               
to Amendment  6 to  state in paragraph  (2) "for  commercial use,                                                               
not more  than 30,000 total cubic  yards at no cost  for a period                                                               
not to exceed 10 years".                                                                                                        
                                                                                                                                
CO-CHAIR  SEATON  pointed  out  that Conceptual  Amendment  3  to                                                               
Amendment 6 would  eliminate the change from  "20,000" to "2,000"                                                               
cubic  yards  that  was  adopted in  Conceptual  Amendment  1  to                                                               
Amendment 6.                                                                                                                    
                                                                                                                                
2:28:22 PM                                                                                                                    
                                                                                                                                
MR.  MENEFEE inquired  whether  the 20  percent  in the  original                                                               
paragraph  (2) of  Amendment 6  would  still be  there under  the                                                               
modified Conceptual Amendment 3 to Amendment 6.                                                                                 
                                                                                                                                
CO-CHAIR FEIGE said  it is still there and needs  to be addressed                                                               
in the next conceptual amendment.                                                                                               
                                                                                                                                
There  being no  objection,  modified Conceptual  Amendment 3  to                                                               
Amendment 6 was adopted.                                                                                                        
                                                                                                                                
2:28:45 PM                                                                                                                    
                                                                                                                                
CO-CHAIR  SEATON noted  that modified  Conceptual Amendment  3 to                                                               
Amendment  6, as  adopted,  changes Amendment  6,  as amended  by                                                               
Conceptual Amendment  1, by:   deleting  "for testing  or product                                                               
development", deleting  "2,000" and substituting  "30,000 total",                                                               
deleting "per year", and changing "5" years to "10" years.                                                                      
                                                                                                                                
The committee took a brief at-ease.                                                                                             
                                                                                                                                
2:30:59 PM                                                                                                                    
                                                                                                                                
CO-CHAIR FEIGE maintained  the language needs to  be clarified to                                                               
delineate that these  are "either/or" propositions.   He moved to                                                               
adopt Conceptual  Amendment 4 to  Amendment 6 which  would insert                                                               
"or"  after [paragraph]  1,  as amended,  and  insert "or"  after                                                               
[paragraph] 2,  as amended.   Thus,  an individual  could receive                                                               
personal  use at  no cost;  or could  receive 30,000  cubic yards                                                               
over a period of [10] years;  or could receive no more than 2,000                                                               
cubic yards per year, not to exceed 10 years.                                                                                   
                                                                                                                                
CO-CHAIR FEIGE, in response  to Representative Gardner, explained                                                               
that if  a person  took a  total of  30,000 over  a period  of 10                                                               
years that is  3,000 a year.  However, the  next paragraph states                                                               
that for users  taking more than 2,000 cubic yards  a year the 20                                                               
percent must be paid.  Therefore,  it cannot be both of those; it                                                               
must be one or the other.                                                                                                       
                                                                                                                                
2:32:49 PM                                                                                                                    
                                                                                                                                
CO-CHAIR SEATON  objected for  discussion purposes,  stating that                                                               
quantity  amounts  are  now  being  used.   So,  to  make  things                                                               
consistent, the  first 30,000  cubic yards  would be  free, after                                                               
that first 30,000  the price would be 20 percent  for the next 10                                                               
years, and  after that 10 years  the price would be  the regional                                                               
sales price.                                                                                                                    
                                                                                                                                
CO-CHAIR FEIGE concurred.                                                                                                       
                                                                                                                                
CO-CHAIR SEATON  added that  with the change  in structure  a per                                                               
year amount  would conflict with  how everything would work.   He                                                               
said it is now 200 for an individual,  up to 30,000 is free for a                                                               
commercial operation, after 30,000 the  price would be 20 percent                                                               
for the next  10 years, and after those 10  years the price would                                                               
be the regional sales price.                                                                                                    
                                                                                                                                
CO-CHAIR FEIGE withdrew Conceptual Amendment 4 to Amendment 6.                                                                  
                                                                                                                                
2:34:31 PM                                                                                                                    
                                                                                                                                
CO-CHAIR SEATON  moved Conceptual Amendment  5 to Amendment  6 to                                                               
insert  "or" between  the [paragraphs].   He  said it  would then                                                               
read, "for  users requiring more  than 30,000 total  cubic yards,                                                               
the  amount of  peat required  by the  user for  a period  not to                                                               
exceed 10  years at  the price  of" and then  continue on  at "20                                                               
percent of the regional sales price".                                                                                           
                                                                                                                                
There being no  objection, Conceptual Amendment 5  to Amendment 6                                                               
was adopted.                                                                                                                    
                                                                                                                                
REPRESENTATIVE DICK  thanked the  committee for  its work  on his                                                               
proposed amendment.                                                                                                             
                                                                                                                                
2:35:29 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  KAWASAKI objected  to  Amendment  6, as  amended,                                                               
noting  that  the  entire  state  has  ownership  of  state-owned                                                               
materials.    He  pointed  out   that  AS  38.05.555  deals  with                                                               
negotiated sales  and personal use  of materials and that  all of                                                               
the  text in  this statute  states the  director "may"  negotiate                                                               
sales  and "may"  negotiate  sales  under certain  circumstances.                                                               
However,  Amendment  6  very clearly  states  that  the  director                                                               
"shall"  negotiate  the  sales  and  "shall"  provide  under  the                                                               
various circumstances which  the committee has just  amended.  He                                                               
said he  objects to that  sort of principle because  the director                                                               
should  have   some  latitude   in  making   those  discretionary                                                               
negotiations.    He moved  to  adopt  Conceptual Amendment  6  to                                                               
Amendment 6  that would strike "shall"  in line 4 and  line 6 and                                                               
insert "may".                                                                                                                   
                                                                                                                                
REPRESENTATIVE DICK objected  for discussion purposes, expressing                                                               
his fear  that future  DNR staff  may not be  as friendly  as the                                                               
current staff  in regard to  this issue; continuing  with "shall"                                                               
would  put  a  degree  of  certainty into  this  provision.    He                                                               
maintained that any loss to the  State of Alaska would be next to                                                               
nothing  and  if  any  problems   developed  in  the  future  the                                                               
legislature could step in.                                                                                                      
                                                                                                                                
2:39:05 PM                                                                                                                    
                                                                                                                                
CO-CHAIR SEATON requested  that DNR offer its  comment on "shall"                                                               
and  "may", given  that  peat sales  could  occur throughout  the                                                               
state, not  just in Representative  Dick's district.   He pointed                                                               
out that while the intent is  to incentivize this in rural Alaska                                                               
it would  apply to all  of Alaska,  so some discretion  is needed                                                               
because this could happen in an urban area like Fairbanks.                                                                      
                                                                                                                                
MR.  MENEFEE  replied that  DNR  would  prefer "may"  because  no                                                               
matter how much the department  tries it cannot anticipate all of                                                               
the scenarios than can play out.   For example, under "shall" the                                                               
indication  is that  DNR would  have to  provide peat  to someone                                                               
wanting to  develop it in an  area such as Juneau,  even though a                                                               
best  interest decision  must still  come in  which the  division                                                               
director must decide  whether it is in the  state's best interest                                                               
to  sell the  peat  in  the first  place;  there  could be  other                                                               
competing  uses for  the land.   "May"  gives the  flexibility to                                                               
determine  in the  best interest  decision whether  it is  a good                                                               
idea to sell the peat in the first place.                                                                                       
                                                                                                                                
2:42:08 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  DICK  removed  his  objection.   There  being  no                                                               
further  objection, Conceptual  Amendment  6 to  Amendment 6  was                                                               
adopted.                                                                                                                        
                                                                                                                                
The committee took a brief at-ease.                                                                                             
                                                                                                                                
CO-CHAIR  FEIGE  moved to  report  HB  361,  as amended,  out  of                                                               
committee  with individual  recommendations and  the accompanying                                                               
fiscal  notes.   There  being  no  objection, CSHB  361(RES)  was                                                               
reported from the House Resources Standing Committee.                                                                           
                                                                                                                                
The committee took an at-ease from 2:43 p.m. to 2:47 p.m.                                                                       
                                                                                                                                
          HB 276-OIL/GAS PROD. TAX CREDITS/RATES/VALUE                                                                      
                                                                                                                                
2:47:57 PM                                                                                                                    
                                                                                                                                
CO-CHAIR SEATON announced that the  final 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  the  proposed  committee                                                               
substitute,  Version  D,   labeled  27-LS1193\D,  Nauman/Bullock,                                                               
3/2/12,  adopted   as  the  working   document  and   amended  by                                                               
Conceptual Amendment 1 on 3/12/12.]                                                                                             
                                                                                                                                
2:48:21 PM                                                                                                                    
                                                                                                                                
JANE PIERSON, Staff, Representative  Steve Thompson, Alaska State                                                               
Legislature, on  behalf of  Representative Thompson,  joint prime                                                               
sponsor,  explained  that  Conceptual  Amendment  1,  adopted  on                                                               
3/12/12, would delete subsection "(c)" from line 17 of page 2.                                                                  
                                                                                                                                
CO-CHAIR  SEATON added  that Conceptual  Amendment  1 would  also                                                               
take out  "(7)" from  line 17 of  page 2.   He asked  whether Ms.                                                               
Pierson wished to offer any other amendments to the bill.                                                                       
                                                                                                                                
MS. PIERSON replied  she has no further amendments  to offer, but                                                               
reported that the Department of  Revenue (DOR) is working through                                                               
some  non-substantive  changes  to  provide  a  bit  of  clarity.                                                               
Otherwise, she added, DOR is in agreement with the wording.                                                                     
                                                                                                                                
2:49:20 PM                                                                                                                    
                                                                                                                                
CO-CHAIR  SEATON invited  the Department  of  Revenue to  provide                                                               
testimony.                                                                                                                      
                                                                                                                                
JOHN LARSEN,  Audit Master, Tax Division-Production  Audit Group,                                                               
Department of Revenue  (DOR), noted that in some  of the proposed                                                               
basin areas  there are existing  exploration licenses  that could                                                               
be converted  to a  lease without  a competitive  bid; therefore,                                                               
the  department would  like to  point out  that HB  276 could  be                                                               
perceived as special purpose legislation.   Also, he pointed out,                                                               
HB 276 was modeled after the  Cook Inlet jack-up rig credit which                                                               
had a 50  percent repayment provision, and while that  was in the                                                               
original version of HB 276 it is not in this current version.                                                                   
                                                                                                                                
REPRESENTATIVE  HERRON   requested  an  explanation   of  special                                                               
interest.                                                                                                                       
                                                                                                                                
MR. LARSEN  replied the word he  used was special "purpose".   He                                                               
said the  concern is that  in some of  the basin areas  there are                                                               
existing  exploration  licenses  issued   by  the  Department  of                                                               
Natural  Resources  (DNR)  and  an  exploration  license  can  be                                                               
converted  to   a  lease  without   having  to  go   through  the                                                               
competitive bid process.                                                                                                        
                                                                                                                                
2:51:51 PM                                                                                                                    
                                                                                                                                
CO-CHAIR  FEIGE  inquired which  basins  are  being talked  about                                                               
besides the Nenana Basin.                                                                                                       
                                                                                                                                
MR.  LARSEN  responded there  are  as  many as  four  exploration                                                               
licenses in the Nenana Basin.                                                                                                   
                                                                                                                                
CO-CHAIR SEATON clarified that HB  276 would not eliminate people                                                               
from  applying  for  exploration  licenses  which  can  then  get                                                               
converted to leases without a  competitive bid process.  The bill                                                               
would  not change  exploration  license  provisions or  eliminate                                                               
future exploration licenses from being applied for.                                                                             
                                                                                                                                
CO-CHAIR  FEIGE asked  whether there  are any  active exploration                                                               
licenses in basins designated by HB 276, other than the Nenana.                                                                 
                                                                                                                                
MR.  LARSEN said  he will  check  with DNR  and get  back to  the                                                               
committee.                                                                                                                      
                                                                                                                                
2:53:48 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE   KAWASAKI  inquired   whether  the   tax  credits                                                               
proposed by HB  276 can be stacked with credits  for research and                                                               
development  (R&D), corporate  income  tax  credits, and  credits                                                               
under AS 43.55.023.                                                                                                             
                                                                                                                                
MATTHEW  FONDER,   Director,  Anchorage  Office,   Tax  Division,                                                               
Department of  Revenue (DOR),  replied that  should HB  118 pass,                                                               
page 2,  subsection (d),  of the  that bill  specifies that  if a                                                               
credit is  taken for R&D the  person would be ineligible  for any                                                               
other credit under Title 43, which  would include any oil and gas                                                               
tax credits or any other tax credits.                                                                                           
                                                                                                                                
2:55:30 PM                                                                                                                    
                                                                                                                                
CO-CHAIR SEATON [opened public testimony].                                                                                      
                                                                                                                                
ELIZABETH SAADULIK HENSLEY, Corporate  and Public Policy Liaison,                                                               
NANA Regional Corporation, offered NANA's  support for HB 276 and                                                               
expressed  the corporation's  appreciation for  the collaboration                                                               
involved in creating the bill.                                                                                                  
                                                                                                                                
CO-CHAIR SEATON  closed public testimony after  ascertaining that                                                               
no one else wished to testify.                                                                                                  
                                                                                                                                
2:57:00 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE KAWASAKI  drew attention  to page 4,  lines 14-16,                                                               
and page  5, lines [21]-22,  and inquired  about use of  the word                                                               
"shall".                                                                                                                        
                                                                                                                                
CO-CHAIR SEATON  read aloud  from page 5,  lines 21-23:   "Before                                                               
approving a  seismic exploration project, the  commissioner shall                                                               
make an affirmative finding that  the seismic exploration project                                                               
is  in the  best  interest of  the state".    He understood  this                                                               
language   to  mean   that  the   commissioner  must   make  this                                                               
affirmative finding  before a seismic exploration  project can be                                                               
approved.                                                                                                                       
                                                                                                                                
MS. PIERSON interjected that the  language says this credit shall                                                               
be approved before the credit will be available.                                                                                
                                                                                                                                
CO-CHAIR FEIGE  added that the  intent and reason for  "shall" is                                                               
that  the applicant  is  being  asked to  apply  to  DNR and  the                                                               
department will approve  the proposal in order  for the applicant                                                               
to  get  a  credit,  as opposed  to  someone  conducting  seismic                                                               
anywhere around the state that he or  she wants to.  If the state                                                               
is going  to spend the money  to grant the credit  then the state                                                               
must make sure that  it is in the best interest  of the state and                                                               
that it is in a reasonable location.                                                                                            
                                                                                                                                
2:59:46 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  KAWASAKI pointed  out  that on  page  5 the  word                                                               
"shall" is used and  on page 4 the word "must"  is used, which he                                                               
said is confusing  if the language is basically the  same for the                                                               
best  interest  findings  for  both  exploration  wells  and  for                                                               
exploration drills.                                                                                                             
                                                                                                                                
CO-CHAIR  SEATON  agreed and  asked  whether  the sponsor  had  a                                                               
reason for this difference.                                                                                                     
                                                                                                                                
CO-CHAIR FEIGE said he thinks it means the same.                                                                                
                                                                                                                                
CO-CHAIR SEATON concurred.                                                                                                      
                                                                                                                                
MS. PIERSON confirmed  it means the same.  She  said she has been                                                               
working with  two different drafters  and it  is just use  of the                                                               
English language.                                                                                                               
                                                                                                                                
CO-CHAIR SEATON noted  this is a work draft and  that a committee                                                               
substitute (CS) will  be coming out in which the  language can be                                                               
made  parallel.   He asked  Representative Kawasaki  whether this                                                               
would be sufficient.                                                                                                            
                                                                                                                                
REPRESENTATIVE KAWASAKI responded that it would.                                                                                
                                                                                                                                
3:01:14 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE KAWASAKI drew attention  to the language regarding                                                               
experience and safety records on page  4, line 19, and on page 5,                                                               
line [26].   He asked how that would be  applied and whether that                                                               
is language used in other lease terms.                                                                                          
                                                                                                                                
MS.  PIERSON answered  that  this  language is  also  used in  AS                                                               
43.55.025.   She explained  DNR wants to  ensure that  the people                                                               
out there  are actually  qualified and  have background  in doing                                                               
this.                                                                                                                           
                                                                                                                                
3:02:51 PM                                                                                                                    
                                                                                                                                
CO-CHAIR  FEIGE  moved to  report  HB  276, version  27-LS1193\D,                                                               
Nauman/Bullock,  3/2/12,  as  amended,   out  of  committee  with                                                               
individual  recommendations  and   the  accompanying  two  fiscal                                                               
notes.   There  being no  objection, CSHB  276(RES) was  reported                                                               
from the House Resources Standing Committee.                                                                                    
                                                                                                                                
3:03:41 PM                                                                                                                    
                                                                                                                                
ADJOURNMENT                                                                                                                   
                                                                                                                                
There being no  further business before the  committee, the House                                                               
Resources Standing Committee meeting was adjourned at 3:03 p.m.                                                                 

Document Name Date/Time Subjects
SJR017A.pdf HRES 3/14/2012 1:00:00 PM
SJR 17
Sponsor Statement for SJR 17.pdf HRES 3/14/2012 1:00:00 PM
SJR 17
HB0361A.pdf HRES 3/5/2012 1:00:00 PM
HRES 3/14/2012 1:00:00 PM
HB 361
Sectional Analysis of HB 361.pdf HRES 3/5/2012 1:00:00 PM
HRES 3/14/2012 1:00:00 PM
HB 361
Briefing Paper_HB361_030512.pdf HRES 3/5/2012 1:00:00 PM
HRES 3/14/2012 1:00:00 PM
HB 361
Aleutian Island Risk Assessment.pdf HRES 3/14/2012 1:00:00 PM
SJR 17
SJR 17 Background-Pressing Issues in the Arctic.pdf HRES 3/14/2012 1:00:00 PM
SJR 17
SJR 17 Background Task Force on Oil Spill Preparedness and Response (3).pdf HRES 3/14/2012 1:00:00 PM
SJR 17
DEC Letter Feb 29, 2012.PDF HRES 3/14/2012 1:00:00 PM
SJR 17
SJR017-1-2-022912-STA-N.pdf HRES 3/14/2012 1:00:00 PM
SJR 17
HB0361-1-2-022912-DFG-N.pdf HRES 3/5/2012 1:00:00 PM
HRES 3/14/2012 1:00:00 PM
HB 361
HB0361-2-2-022912-DOT-N.pdf HRES 3/5/2012 1:00:00 PM
HRES 3/14/2012 1:00:00 PM
HB 361
HB0361-3-2-022912-DNR-Y.pdf HRES 3/5/2012 1:00:00 PM
HRES 3/14/2012 1:00:00 PM
HB 361
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 361 HRES 3-5-12 Responses.pdf HRES 3/14/2012 1:00:00 PM
HB 361
Leasing actions required by HB361.pdf HRES 3/14/2012 1:00:00 PM
HB 361