Legislature(2011 - 2012)BARNES 124

04/09/2012 01:00 PM RESOURCES


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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
*+ HB 295 CLOSING CERTAIN LAND TO MINERAL ENTRY TELECONFERENCED
Moved CSHB 295(RES) Out of Committee
+ SB 91 SPORT FISHING GUIDING SERVICES TELECONFERENCED
Moved Out of Committee
+= HB 328 OIL AND GAS CORPORATE TAXES TELECONFERENCED
Heard & Held
+= SB 192 OIL AND GAS PRODUCTION TAX RATES TELECONFERENCED
<Pending Referral>
+ Bills Previously Heard/Scheduled TELECONFERENCED
                    ALASKA STATE LEGISLATURE                                                                                  
               HOUSE RESOURCES STANDING COMMITTEE                                                                             
                         April 9, 2012                                                                                          
                           1:21 p.m.                                                                                            
                                                                                                                                
MEMBERS PRESENT                                                                                                               
                                                                                                                                
Representative Eric Feige, Co-Chair                                                                                             
Representative Paul Seaton, Co-Chair                                                                                            
Representative Peggy Wilson, Vice Chair                                                                                         
Representative Alan Dick                                                                                                        
Representative Neal Foster                                                                                                      
Representative Bob Herron                                                                                                       
Representative Cathy Engstrom Munoz                                                                                             
Representative Berta Gardner                                                                                                    
Representative Scott Kawasaki                                                                                                   
                                                                                                                                
MEMBERS ABSENT                                                                                                                
                                                                                                                                
All members present                                                                                                             
                                                                                                                                
COMMITTEE CALENDAR                                                                                                            
                                                                                                                                
HOUSE BILL NO. 295                                                                                                              
"An Act  approving an interim classification  by the commissioner                                                               
of  natural resources  closing certain  land  within the  Glacier                                                               
Creek  and  Winner Creek  drainages  to  new mineral  entry;  and                                                               
providing for an effective date."                                                                                               
                                                                                                                                
     - MOVED CSHB 295(RES) OUT OF COMMITTEE                                                                                     
                                                                                                                                
COMMITTEE SUBSTITUTE FOR SENATE BILL NO. 91(FIN)                                                                                
"An Act amending  the termination date of the  licensing of sport                                                               
fishing operators and sport fishing  guides; and providing for an                                                               
effective date."                                                                                                                
                                                                                                                                
     - MOVED CSSB 91(FIN) OUT OF COMMITTEE                                                                                      
                                                                                                                                
HOUSE BILL NO. 328                                                                                                              
"An  Act  relating to  the  oil  and  gas corporate  income  tax;                                                               
relating to the credits against  the oil and gas corporate income                                                               
tax;  making   conforming  amendments;   and  providing   for  an                                                               
effective date."                                                                                                                
                                                                                                                                
     - HEARD & HELD                                                                                                             
                                                                                                                                
SENATE BILL NO. 192                                                                                                             
"An Act relating to the oil and gas production tax; and                                                                         
providing for an effective date."                                                                                               
                                                                                                                                
     - SCHEDULED BUT NOT HEARD                                                                                                  
                                                                                                                                
PREVIOUS COMMITTEE ACTION                                                                                                     
                                                                                                                                
BILL: HB 295                                                                                                                  
SHORT TITLE: CLOSING CERTAIN LAND TO MINERAL ENTRY                                                                              
SPONSOR(s): REPRESENTATIVE(s) HAWKER                                                                                            
                                                                                                                                
01/25/12       (H)       READ THE FIRST TIME - REFERRALS                                                                        
01/25/12       (H)       RES                                                                                                    
04/09/12       (H)       RES AT 1:00 PM BARNES 124                                                                              
                                                                                                                                
BILL: SB 91                                                                                                                   
SHORT TITLE: SPORT FISHING GUIDING SERVICES                                                                                     
SPONSOR(s): SENATOR(s) MCGUIRE                                                                                                  
                                                                                                                                
02/16/11       (S)       READ THE FIRST TIME - REFERRALS                                                                        
02/16/11       (S)       RES, FIN                                                                                               
02/25/11       (S)       RES AT 3:30 PM BUTROVICH 205                                                                           
02/25/11       (S)       Heard & Held                                                                                           
02/25/11       (S)       MINUTE(RES)                                                                                            
02/28/11       (S)       RES AT 3:30 PM BUTROVICH 205                                                                           
02/28/11       (S)       Moved SB 91 Out of Committee                                                                           
02/28/11       (S)       MINUTE(RES)                                                                                            
03/01/11       (S)       RES RPT  4DP                                                                                           
03/01/11       (S)       DP: WAGONER, PASKVAN, MCGUIRE, FRENCH                                                                  
03/20/12       (S)       FIN AT 9:00 AM SENATE FINANCE 532                                                                      
03/20/12       (S)       Heard & Held                                                                                           
03/20/12       (S)       MINUTE(FIN)                                                                                            
03/30/12       (S)       FIN RPT CS 5DP 1NR     SAME TITLE                                                                      
03/30/12       (S)       DP: HOFFMAN, STEDMAN, THOMAS, EGAN,                                                                    
                         ELLIS                                                                                                  
03/30/12       (S)       NR: OLSON                                                                                              
03/30/12       (S)       FIN AT 9:00 AM SENATE FINANCE 532                                                                      
03/30/12       (S)       Moved CSSB  91(FIN) Out of Committee                                                                   
03/30/12       (S)       MINUTE(FIN)                                                                                            
04/04/12       (S)       TRANSMITTED TO (H)                                                                                     
04/04/12       (S)       VERSION: CSSB 91(FIN)                                                                                  
04/05/12       (H)       READ THE FIRST TIME - REFERRALS                                                                        
04/05/12       (H)       RES, FIN                                                                                               
04/09/12       (H)       RES AT 1:00 PM BARNES 124                                                                              
                                                                                                                                
BILL: HB 328                                                                                                                  
SHORT TITLE: OIL AND GAS CORPORATE TAXES                                                                                        
SPONSOR(s): REPRESENTATIVE(s) SEATON                                                                                            
                                                                                                                                
02/17/12       (H)       READ THE FIRST TIME - REFERRALS                                                                        
02/17/12       (H)       RES, FIN                                                                                               
02/29/12       (H)       RES AT 1:00 PM BARNES 124                                                                              
02/29/12       (H)       Heard & Held                                                                                           
02/29/12       (H)       MINUTE(RES)                                                                                            
03/16/12       (H)       RES AT 1:00 PM BARNES 124                                                                              
03/16/12       (H)       Heard & Held                                                                                           
03/16/12       (H)       MINUTE(RES)                                                                                            
03/28/12       (H)       RES AT 1:00 PM BARNES 124                                                                              
03/28/12       (H)       Heard & Held                                                                                           
03/28/12       (H)       MINUTE(RES)                                                                                            
04/06/12       (H)       RES AT 1:00 PM BARNES 124                                                                              
04/06/12       (H)       Heard & Held                                                                                           
04/06/12       (H)       MINUTE(RES)                                                                                            
04/09/12       (H)       RES AT 1:00 PM BARNES 124                                                                              
                                                                                                                                
WITNESS REGISTER                                                                                                              
                                                                                                                                
JULIE LUCKY, Staff                                                                                                              
Representative Mike Hawker                                                                                                      
Alaska State Legislature                                                                                                        
Juneau, Alaska                                                                                                                  
POSITION STATEMENT:  Introduced HB 295 on behalf of the prime                                                                 
sponsor of the bill, Representative Mike Hawker.                                                                                
                                                                                                                                
DIANA LIVINGSTON, Co-Chair                                                                                                      
Girdwood 2020                                                                                                                   
Girdwood, Alaska                                                                                                                
POSITION STATEMENT:  Testified in support of HB 295.                                                                          
                                                                                                                                
WYN MENAFEE, Chief of Operations                                                                                                
Division of Land, Mining and Water                                                                                              
Department of Natural Resources                                                                                                 
Anchorage, Alaska                                                                                                               
POSITION STATEMENT:  Answered questions during discussion of HB                                                               
295.                                                                                                                            
                                                                                                                                
SHYAN ELY, Intern                                                                                                               
Senator Lesil McGuire                                                                                                           
Alaska State Legislature                                                                                                        
Juneau, Alaska                                                                                                                  
POSITION STATEMENT:  Introduced SB 91 on behalf of the prime                                                                  
sponsor of the bill, Senator Lesil McGuire.                                                                                     
                                                                                                                                
LISA EVANS, Assistant Director                                                                                                  
Division of Sport Fishing                                                                                                       
Alaska Department of Fish & Game (ADF&G)                                                                                        
Anchorage, Alaska                                                                                                               
POSITION STATEMENT:   Answered questions during  discussion of SB                                                             
91.                                                                                                                             
                                                                                                                                
THOMAS K. WILLIAMS, Senior Tax and Royalty Counsel                                                                              
BP Exploration (Alaska) Inc.                                                                                                    
Anchorage, Alaska                                                                                                               
POSITION STATEMENT:  Testified during discussion of HB 328.                                                                   
                                                                                                                                
MICHAEL HURLEY, Lobbyist                                                                                                        
ConocoPhillips Alaska, Inc.                                                                                                     
Anchorage, Alaska                                                                                                               
POSITION STATEMENT:  Testified during discussion of HB 328.                                                                   
                                                                                                                                
MARIE EVANS, Lobbyist                                                                                                           
ConocoPhillips Alaska, Inc.                                                                                                     
Anchorage, Alaska                                                                                                               
POSITION STATEMENT:  Testified during discussion of HB 328.                                                                   
                                                                                                                                
                                                                                                                                
ACTION NARRATIVE                                                                                                              
                                                                                                                                
1:21:25 PM                                                                                                                    
                                                                                                                                
CO-CHAIR  PAUL   SEATON  called  the  House   Resources  Standing                                                             
Committee meeting  to order at  1:21 p.m.   Representatives Dick,                                                               
Feige, Herron,  P. Wilson,  Gardner, and  Seaton were  present at                                                               
the call to  order.  Representatives Kawasaki,  Foster, and Munoz                                                               
arrived as the meeting was in progress.                                                                                         
                                                                                                                                
          HB 295-CLOSING CERTAIN LAND TO MINERAL ENTRY                                                                      
                                                                                                                                
1:23:18 PM                                                                                                                    
                                                                                                                                
CO-CHAIR SEATON announced that the  first order of business would                                                               
be   HOUSE  BILL   NO.  295,   "An  Act   approving  an   interim                                                               
classification by  the commissioner of natural  resources closing                                                               
certain land within the Glacier  Creek and Winner Creek drainages                                                               
to new mineral entry; and providing for an effective date."                                                                     
                                                                                                                                
1:23:32 PM                                                                                                                    
                                                                                                                                
JULIE  LUCKY, Staff,  Representative  Mike  Hawker, Alaska  State                                                               
Legislature,  offered a  brief  overview of  proposed  HB 295  on                                                               
behalf  of   the  bill  sponsor,  Representative   Hawker.    She                                                               
paraphrased from the sponsor statement:                                                                                         
                                                                                                                                
     HB  295  approves  Mineral   Order  1121  which  closes                                                                    
     certain lands in the upper  Girdwood Valley area to new                                                                    
     mining  claims  and the  intent  of  that is  to  allow                                                                    
     recreational use in  these areas and to  make sure that                                                                    
     incompatible uses  aren't occurring  on the  same land.                                                                    
     The land  has been  historically used  for recreational                                                                    
     purposes.    I believe  mining  closures  have been  in                                                                    
     place  since the  90s, but  DNR [Department  of Natural                                                                    
     Resources] can  give us a  little bit  more information                                                                    
     on  that.   The state,  the Municipality  of Anchorage,                                                                    
     the  community of  Girdwood have  all designated  these                                                                    
     lands for  recreational use  in their  management plans                                                                    
     and  the approval  of  HB 295  and  Mineral Order  1121                                                                    
     would  allow more  long  range  plans for  recreational                                                                    
     opportunities to develop.                                                                                                  
                                                                                                                                
1:24:31 PM                                                                                                                    
                                                                                                                                
MS. LUCKY  stated that the  mining closure was also  supported by                                                               
the Alaska Miners Association.                                                                                                  
                                                                                                                                
1:24:44 PM                                                                                                                    
                                                                                                                                
MS.   LUCKY  directed   attention  to   the  proposed   Committee                                                               
Substitute (CS) and asked if the committee wanted to address it.                                                                
                                                                                                                                
[Co-Chair Seaton passed the gavel to Co-Chair Feige.]                                                                           
                                                                                                                                
1:24:55 PM                                                                                                                    
                                                                                                                                
CO-CHAIR FEIGE directed Ms. Lucky to discuss the proposed CS.                                                                   
                                                                                                                                
1:25:05 PM                                                                                                                    
                                                                                                                                
MS.   LUCKY  directed   attention  to   the  proposed   committee                                                               
substitute  (CS)  for  HB   295,  Version  27-LS1246\B,  Bullock,                                                               
4/4/12,  [Included  in  members'   packets]  and  explained  that                                                               
Version B  added Section 3  on page 3.   She detailed  that prior                                                               
legislation in 2003 had not  included two specific federal mining                                                               
claims  when  closing other  claims.    She clarified  that  this                                                               
amendment had  also required a title  change and a change  to the                                                               
intent language of proposed HB 295.                                                                                             
                                                                                                                                
1:26:04 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE P.  WILSON asked  if there  was any  opposition to                                                               
the proposed CS for HB 295.                                                                                                     
                                                                                                                                
MS.  LUCKY replied  that  no statements  to  opposition had  been                                                               
received by her  office, and that there was  no opposition during                                                               
the public  process for  the mineral closing  order.   She shared                                                               
that  there  had  been  expressed   concern  with  an  indefinite                                                               
closure,  as prior  closures  had all  been for  10  years.   She                                                               
pointed out that the temporary orders  had been to allow a review                                                               
of the  land use for  recreational activities.  She  stated that,                                                               
as  the   land  had  been   used  for   recreational  activities,                                                               
Department   of  Natural   Resources  (DNR)   had  supported   an                                                               
indefinite closure.                                                                                                             
                                                                                                                                
1:27:09 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  DICK, referring  to  the letter  from the  Alaska                                                               
Miners Association,  Inc., [Included  in members'  packets] asked                                                               
if the request  by the association to reverse  the closure orders                                                               
should recreational activity cease was included in Version B.                                                                   
                                                                                                                                
1:27:26 PM                                                                                                                    
                                                                                                                                
MS. LUCKY  deferred to DNR  for any discussion regarding  the re-                                                               
opening of  the area to  mining claims.   She offered  her belief                                                               
that there was  a process for this which  would require statutory                                                               
action.                                                                                                                         
                                                                                                                                
1:27:58 PM                                                                                                                    
                                                                                                                                
CO-CHAIR FEIGE opened public testimony.                                                                                         
                                                                                                                                
1:28:16 PM                                                                                                                    
                                                                                                                                
DIANA  LIVINGSTON,  Co-Chair,  Girdwood  2020,  referred  to  her                                                               
letter of  support from February  17, 2011 [Included  in members'                                                               
packets]  which  outlined the  support  by  Girdwood 2020.    She                                                               
stated that, during  the period of successive  tenure closures to                                                               
mining,  Girdwood 2020  had  always  supported recreational  use,                                                               
which  she declared  to have  intensified in  the past  10 years.                                                               
She declared support for proposed HB 295.                                                                                       
                                                                                                                                
1:30:02 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE P.  WILSON moved  to adopt the  proposed committee                                                               
substitute  (CS)  for  HB   295,  Version  27-LS1246\B,  Bullock,                                                               
4/4/12,  as the  working  document.   There  being no  objection,                                                               
Version B was before the committee.                                                                                             
                                                                                                                                
1:30:29 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  DICK   requested  to  hear  testimony   from  DNR                                                               
regarding  mineral development  should the  order for  closure be                                                               
reversed.                                                                                                                       
                                                                                                                                
1:30:52 PM                                                                                                                    
                                                                                                                                
WYN MENAFEE,  Chief of Operations,  Division of Land,  Mining and                                                               
Water,  Department  of  Natural Resources,  stated  that,  should                                                               
proposed HB 295  become law, it would take a  statutory change to                                                               
reverse.    He declared  that  mineral  closing orders  could  be                                                               
reversed  with an  administrative  action for  an interim  order,                                                               
which would then be brought to the legislature for approval.                                                                    
                                                                                                                                
1:31:41 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  MUNOZ asked  if  there was  any existing  mineral                                                               
activity that would be affected by proposed HB 295.                                                                             
                                                                                                                                
1:31:50 PM                                                                                                                    
                                                                                                                                
MR.  MENAFEE  replied  that  any existing  claims  would  not  be                                                               
affected, as this would only apply to new claims.                                                                               
                                                                                                                                
1:32:15 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE DICK asked  if the proposed bill  would create any                                                               
issues for access to the existing mineral claims.                                                                               
                                                                                                                                
1:32:30 PM                                                                                                                    
                                                                                                                                
MR.  MENAFEE  replied that  the  mineral  closing order  did  not                                                               
dictate how  the land would  be used,  other than to  prevent any                                                               
future claims  for mining.   In response to  Representative Dick,                                                               
he  declared that  there would  not be  any problems  with mining                                                               
equipment being transported in or out.                                                                                          
                                                                                                                                
1:33:18 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE P. WILSON moved to  report HB 295, as amended, out                                                               
of   committee   with    individual   recommendations   and   the                                                               
accompanying zero fiscal  notes.  There being  no objection, CSHB                                                               
295(RES) was reported from the House Resources Standing                                                                         
Committee.                                                                                                                      
                                                                                                                                
1:33:41 PM                                                                                                                    
                                                                                                                                
The committee took an at-ease from 1:33 p.m. to 1:35 p.m.                                                                       
                                                                                                                                
              SB 91-SPORT FISHING GUIDING SERVICES                                                                          
                                                                                                                                
1:35:31 PM                                                                                                                    
                                                                                                                                
CO-CHAIR FEIGE  announced that the  next order of  business would                                                               
be  CS  FOR  SENATE  BILL  NO.  91(FIN),  "An  Act  amending  the                                                               
termination date of the licensing  of sport fishing operators and                                                               
sport fishing guides; and providing for an effective date."                                                                     
                                                                                                                                
1:35:44 PM                                                                                                                    
                                                                                                                                
SHYAN ELY, Intern, Senator Lesil McGuire, Alaska State                                                                          
Legislature, explained the proposed bill:                                                                                       
                                                                                                                                
     SB [9]1  guarantees the continuation of  the sport fish                                                                    
     guide  licensing  and  reporting  program  as  well  as                                                                    
     provides an effective  date.  SB 91  extends the sunset                                                                    
     date  of  the  program   which  is  already  in  place.                                                                    
     Legislation for this program was  first passed in 2004.                                                                    
     This program has  proven to be beneficial  to the sport                                                                    
     fishing  industry as  well as  resource  managers.   It                                                                    
     requires  licensing  and  regulation of  sport  fishing                                                                    
     operators and  sport fishing  guides and  sport fishing                                                                    
     vessels.  The program has  provided an average of 1,541                                                                    
     sport  fishing   business  licenses  and   1,828  sport                                                                    
     fishing  guide licenses  annually.   Ninety percent  of                                                                    
     the license  holders are Alaska  residents.   The sport                                                                    
     fishing guide industry has taken  more than 2.6 million                                                                    
     clients fishing  from 2005 -  2010, totaling  more than                                                                    
     625,000 guided  fishing trips in Alaska.   Guided sport                                                                    
     fishing  has  become  an   integral  part  of  Alaska's                                                                    
     tourism economy.   In 2007, $1.39 billion  was spent on                                                                    
     licensing  and   stamps,  trip   related  expenditures,                                                                    
     fishing packages,  equipment, and  real estate  use for                                                                    
     the fishing.  This  spending supported more than 15,879                                                                    
     jobs in  Alaska and provided $545.3  million in income.                                                                    
     This  bill  has  provided an  accurate  accounting  for                                                                    
     Alaska's resources which are  being harvested.  Federal                                                                    
     law for  guided halibut  sport fishing  is tied  to the                                                                    
     Alaska  sport fishing  log books  and  failure to  keep                                                                    
     this  program  in  place would  likely  result  in  the                                                                    
     development  of  federal  log book  for  halibut  which                                                                    
     would create duplication of efforts at a later date.                                                                       
                                                                                                                                
1:37:39 PM                                                                                                                    
                                                                                                                                
MS. ELY pointed out that  Alaska was exempt from participation in                                                               
the NOAA  National Saltwater Angler  Registry as a result  of the                                                               
information collected from the guide  license program.  She urged                                                               
support for proposed SB 91.                                                                                                     
                                                                                                                                
1:38:02 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE GARDNER  asked about the function  of the National                                                               
Saltwater Angler Registry, and why Alaska should be exempt.                                                                     
                                                                                                                                
1:38:30 PM                                                                                                                    
                                                                                                                                
MS.  ELY  deferred  to  the  Alaska Department  of  Fish  &  Game                                                               
(ADF&G).                                                                                                                        
                                                                                                                                
1:38:45 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE MUNOZ  asked if the  logbooks were manual  or data                                                               
entry.                                                                                                                          
                                                                                                                                
MS.  ELY  offered her  belief  that  the  logs were  now  entered                                                               
electronically.                                                                                                                 
                                                                                                                                
REPRESENTATIVE  MUNOZ  opined  that  previously  there  had  been                                                               
additional cost  for ADF&G to  electronically enter the  log book                                                               
data.   She asked whether there  had been a savings  to the state                                                               
by going to  an electronic system instead of  the previous manual                                                               
entry.                                                                                                                          
                                                                                                                                
MS.  ELY  deferred  to  the  Alaska Department  of  Fish  &  Game                                                               
(ADF&G).                                                                                                                        
                                                                                                                                
1:39:33 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  KAWASAKI   observed  that  there   were  licenses                                                               
required  for many  occupations; however,  this industry  did not                                                               
have a licensing board.                                                                                                         
                                                                                                                                
MS. ELY replied that she would research this.                                                                                   
                                                                                                                                
1:40:19 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE   DICK,  directing   attention   to  the   sponsor                                                               
statement, asked what was included  in the estimated $650 million                                                               
spent on sport fishing in 2007.                                                                                                 
                                                                                                                                
MS. ELY  offered her belief  that it  was general spending.   She                                                               
offered to research the specific spending.                                                                                      
                                                                                                                                
REPRESENTATIVE DICK  questioned whether this entire  income would                                                               
disappear without sport fishing.                                                                                                
                                                                                                                                
MS.  ELY, in  response,  said  that she  would  get  back to  the                                                               
committee if ADF&G was unable to answer the question.                                                                           
                                                                                                                                
1:41:44 PM                                                                                                                    
                                                                                                                                
LISA  EVANS,  Assistant  Director,  Division  of  Sport  Fishing,                                                               
Alaska Department of  Fish & Game (ADF&G), stated  that the sport                                                               
fish  guide  licensing program  was  an  important tool  for  the                                                               
management  of   state  fisheries.    She   reported  that  ADF&G                                                               
collected  the  data  and  used  it  extensively  for  regulatory                                                               
options  and  decisions  by  the  International  Pacific  Halibut                                                               
Commission and the North Pacific  Fisheries Management Council to                                                               
maintain the "least  conservative regulatory structure possible."                                                               
She  added that  the  fisheries managers  documented the  harvest                                                               
patterns  within specific  time  frames, and  used  that data  to                                                               
evaluate and  update the ADF&G regulatory  structure for specific                                                               
species  to ensure  maximum opportunity  for fishing.   She  said                                                               
that  the  information  from  the  angler  harvest  logbooks  was                                                               
collected and  used in  decision making.   She gave  examples for                                                               
decisions  made  to the  Kodiak  and  Southeast Alaska  fisheries                                                               
based on logbook information.                                                                                                   
                                                                                                                                
MS. EVANS relayed  that ADF&G had responded to  the concerns from                                                               
the sport fish guides industry  for data turnaround time, however                                                               
there was  still not an electronic  logbook for the guides.   She                                                               
said that  the logbook information  was now scanned,  rather than                                                               
entered manually,  which had significantly improved  the time for                                                               
which the data  was now available, and that this  system would be                                                               
implemented  for  freshwater  data  entry, as  well,  during  the                                                               
upcoming season.  She shared  that the research for an electronic                                                               
system was ongoing.  She estimated  that sport fishing was a $1.4                                                               
billion industry in  Alaska in 2007, which  included trip related                                                               
expenditures  such  as  airfare, lodging,  equipment,  and  guide                                                               
services.   She declared that  the proposed bill was  a necessary                                                               
fisheries management tool.                                                                                                      
                                                                                                                                
1:45:23 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  GARDNER  inquired  whether the  funds  that  were                                                               
raised  through  the program  generated  a  sufficient amount  of                                                               
income.  She  asked for an explanation of  the National Saltwater                                                               
Angler  Registry  program,  and   the  reason  for  the  proposed                                                               
exemption.                                                                                                                      
                                                                                                                                
MS. EVANS replied that there  was a $400,000 fiscal note attached                                                               
to  proposed SB  91.   She  reported that  the program  generated                                                               
about $250,000  in receipts, with  the balance paid by  the ADF&G                                                               
sport  fish  license sales.    She  explained that  the  National                                                               
Saltwater  Angler  Registry  program  was a  new  NOAA  (National                                                               
Oceanic  and   Atmospheric  Administration)  program   which  now                                                               
required a saltwater fishing license  for harvest data collection                                                               
for  saltwater sport  fisheries.   She  relayed  that Alaska  had                                                               
received  an exemption  from  this NOAA  program  because of  its                                                               
existing statewide harvest survey and the guide logbook program.                                                                
                                                                                                                                
REPRESENTATIVE  GARDNER  asked  to  clarify  that,  as  the  NOAA                                                               
registry  was  mainly  for data  collection  and  Alaska  already                                                               
collected  this  data,  Alaska  could be  exempt  from  the  NOAA                                                               
registry.                                                                                                                       
                                                                                                                                
MS. EVANS concurred.                                                                                                            
                                                                                                                                
1:47:05 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  KAWASAKI asked  why  there was  not  yet a  fully                                                               
electronic log  book system, and  he questioned how  the proposed                                                               
funding would be used to attain this system.                                                                                    
                                                                                                                                
MS. EVANS  replied that the number  of staff on this  program had                                                               
not  been  reduced.    She expressed  the  possibility  for  more                                                               
efficiency  with  implementation  of   the  freshwater  log  book                                                               
system.   She stated that  an electronic program, which  was cost                                                               
effective, had not yet been found.   She relayed that the current                                                               
estimate for an  electronic system was up to $1.25  million.  She                                                               
noted an additional  obstacle, the sport fish  license system was                                                               
not yet completely electronic at point of sale.                                                                                 
                                                                                                                                
CO-CHAIR FEIGE  asked for  a description of  the format  that was                                                               
scanned.                                                                                                                        
                                                                                                                                
MS. EVANS  offered her belief that  it was a scanned  copy of the                                                               
actual  logbook  page, and  then  software  read the  sport  fish                                                               
license number, the individual, and  the number of fish released.                                                               
She said that she would get back to the committee to confirm.                                                                   
                                                                                                                                
CO-CHAIR FEIGE  inquired whether  the department had  looked into                                                               
application software.                                                                                                           
                                                                                                                                
MS.  EVANS  replied   that  the  department  had   a  small  team                                                               
researching options that had been implemented elsewhere.                                                                        
                                                                                                                                
CO-CHAIR FEIGE expressed  his agreement that the  data was useful                                                               
and allowed precise quantification of what was being taken.                                                                     
                                                                                                                                
MS.  EVANS, in  response to  Co-Chair Feige,  said that  80 -  85                                                               
percent  of  the public  and  the  sport  fish industry  were  in                                                               
supported of  the guide logbook  program.  She allowed  that some                                                               
had expressed that the program was cumbersome and not essential.                                                                
                                                                                                                                
CO-CHAIR FEIGE asked  if most complaints were for  not wanting to                                                               
participate, or just opposition on a general basis.                                                                             
                                                                                                                                
MS. EVANS allowed that it was  cumbersome to fill out the logbook                                                               
while on  the water  with clients  and that  there had  been some                                                               
objection to the $100 annual license fee.                                                                                       
                                                                                                                                
1:52:41 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE KAWASAKI  expressed that  his objection,  from the                                                               
very  beginning,  had  been  regarding   the  necessity  of  this                                                               
program.   Even though he  understood the  value of the  data, he                                                               
did not  like imposing any  additional licensing  requirements on                                                               
sport fish guides.  He questioned  whether there was a better way                                                               
to enforce compliance to collect the necessary information.                                                                     
                                                                                                                                
1:54:13 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  MUNOZ  moved  to   report  CSSB  91(FIN)  out  of                                                               
committee  with individual  recommendations and  the accompanying                                                               
fiscal  notes.    There  being no  objection,  CSSB  91(FIN)  was                                                               
reported from the House Resources Standing Committee.                                                                           
                                                                                                                                
1:55:49 PM                                                                                                                    
                                                                                                                                
The committee took an at-ease from 1:55 p.m. to 1:59 p.m.                                                                       
                                                                                                                                
               HB 328-OIL AND GAS CORPORATE TAXES                                                                           
                                                                                                                                
1:59:12 PM                                                                                                                    
                                                                                                                                
CO-CHAIR FEIGE announced  that the final order  of business would                                                               
be  HOUSE BILL  NO. 328,  "An  Act relating  to the  oil and  gas                                                               
corporate income  tax; relating  to the  credits against  the oil                                                               
and gas  corporate income tax; making  conforming amendments; and                                                               
providing for an effective date."   [Before the committee was the                                                               
proposed  committee  substitute  (CS),  Version  I,  labeled  27-                                                               
LS1142\I,  Nauman, 3/27/12,  adopted as  the working  document on                                                               
3/28/12.]                                                                                                                       
                                                                                                                                
1:59:16 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  MUNOZ  moved  to  adopt  the  proposed  committee                                                               
substitute  (CS) for  HB 328(RES),  Version 27-LS1142\E,  Nauman,                                                               
4/7/12,  as the  working  document.   There  being no  objection,                                                               
Version E was before the committee.                                                                                             
                                                                                                                                
1:59:31 PM                                                                                                                    
                                                                                                                                
CO-CHAIR FEIGE opened public testimony.                                                                                         
                                                                                                                                
2:00:16 PM                                                                                                                    
                                                                                                                                
THOMAS  K.   WILLIAMS,  Senior  Tax   and  Royalty   Counsel,  BP                                                               
Exploration  (Alaska) Inc.,  stated that  he had  worked for  the                                                               
State of Alaska as the Director  of Petroleum Revenue from 1975 -                                                               
1979, during the  years of separate accounting,  and he suggested                                                               
the reinstatement of several guidelines.                                                                                        
                                                                                                                                
2:02:00 PM                                                                                                                    
                                                                                                                                
CO-CHAIR  FEIGE asked  if Mr.  Williams had  created the  initial                                                               
separate accounting system.                                                                                                     
                                                                                                                                
MR.  WILLIAMS  replied  that  the   legislature  had  passed  the                                                               
separate accounting,  and the  commissioner of  DOR at  the time,                                                               
had assigned  this accounting to the  Petroleum Reserve division,                                                               
instead of the income tax  division which handled personal income                                                               
tax.   He pointed out that  consideration had been given  for the                                                               
difference between  a severance or  production tax and  an income                                                               
tax.   He explained that the  legislature could set any  tax rate                                                               
for production  within the state.   He noted that income  tax was                                                               
based on  income earned within the  state.  He declared  that the                                                               
fundamental approach within  the context of income  tax, how much                                                               
did  you make  in  Alaska, was  confronted  directly by  separate                                                               
accounting.     He  allowed  that  the   accounting  became  more                                                               
difficult  when a  business  included both  in-state  and out  of                                                               
state income.   He gave  an example of  a fisherman who  lived in                                                               
Canada, bought  fuel and  goods in Canada  and Alaska,  fished in                                                               
Alaska, Canada  and international  waters, and  sold his  fish in                                                               
the  State  of Washington.    He  questioned  a clear  means  for                                                               
determining the  amount of income from  each area, as it  was not                                                               
clear,  and  was  removed  from  "the pure  idea  of  taxing  the                                                               
business straight  as if  it's standing alone  in Alaska."   With                                                               
separate  accounting, assumptions  were  then made  for cost  and                                                               
income allocations, even  though it was not  straightforward.  He                                                               
offered another example  for the problem of  allocating the costs                                                               
and income  from gold  mining and  refining in  different states,                                                               
stating that it was difficult to determine the answers.                                                                         
                                                                                                                                
2:09:42 PM                                                                                                                    
                                                                                                                                
MR. WILLIAMS  explained that the apportionment  approach had been                                                               
in response  to the desire  for uniform  systems of laws  so that                                                               
each state did  not have a different  set of laws.   One of these                                                               
was called  the Uniform Division  of Income for Tax  Purposes Act                                                               
(UDITPA),  the formula  for which  was later  used in  the Multi-                                                               
State  Tax  Compact  (MTC).   He  explained  that  this  approach                                                               
attempted  to determine  the potential  to generate  income in  a                                                               
state, compared this to the  potential everywhere the company did                                                               
business, and then  allocated the actual overall  profits back to                                                               
each  of  the   states  in  proportion  to   the  state's  income                                                               
generating potential.   He opined  that Alaska, in 1959,  was the                                                               
first state to  adopt this approach.  He shared  that the current                                                               
statute divided income  on the basis of  three different measures                                                               
of income  generating potential:   amount of  property investment                                                               
in Alaska  should get  the same return  compared to  other areas;                                                               
sales should bring in the  same margin everywhere; and production                                                               
should have comparable  income potential.  He  declared that each                                                               
of those  in-state percentages was  averaged and  then multiplied                                                               
by the overall business to arrive at the present tax.                                                                           
                                                                                                                                
2:12:58 PM                                                                                                                    
                                                                                                                                
MR. WILLIAMS  pointed out  that this present  tax system  was not                                                               
free of issues as it was only  as good as the assumption that the                                                               
in-state  factors   were  representative  of   income  generating                                                               
potential out of state.  He  declared that, for every industry in                                                               
the extractive business,  it became more expensive  as the easier                                                               
product was removed,  until, ultimately, the cost  of removal and                                                               
the value  were equal, and then  the company would start  to lose                                                               
money.                                                                                                                          
                                                                                                                                
2:14:15 PM                                                                                                                    
                                                                                                                                
MR. WILLIAMS emphasized that for  every company producing oil and                                                               
gas or  coal, the  time would  come when  it would  want separate                                                               
accounting, as  the profitability  would be  less in  Alaska than                                                               
elsewhere.   He declared  separate accounting to  be a  good tool                                                               
for use at  the end of field  life.  He suggested  that the small                                                               
fields did  not have  the same  margins to  start with  and those                                                               
margins were  not at  all comparable to  the North  Slope fields.                                                               
He pointed out that the state  could not be sure whether it would                                                               
get more  or less money from  a particular tax system  because it                                                               
depended  on  where the  profit  margin  was in  each  individual                                                               
business.    He  summarized  that this  explained  the  differing                                                               
responses to the amount of money made by a business in Alaska.                                                                  
                                                                                                                                
2:16:04 PM                                                                                                                    
                                                                                                                                
MR.  WILLIAMS  spoke  about some  of  the  constitutional  issues                                                               
addressed  in 1978.   He  said that  ACES focused  on value  over                                                               
price, defining  price as what it  sold for and value  as what it                                                               
could have  sold for.   He declared  that, oftentimes,  the price                                                               
would fall short  of the value, and that  it was unconstitutional                                                               
to tax  income that had not  been recognized.  He  said that ACES                                                               
allowed a tariff to be  calculated on fair, just, and reasonable.                                                               
He went  on to  explain that,  to the extent  that the  state was                                                               
disregarding what was actually paid,  it would either be allowing                                                               
over-deduction, which  was not a constitutional  issue, or under-                                                               
deduction for actual  cost which was an issue as  it taxed income                                                               
that did  not exist.  He  declared that the state  could tax less                                                               
income than existed, but could not tax more income than existed.                                                                
                                                                                                                                
[Co-Chair Feige returned the gavel to Co-Chair Seaton.]                                                                         
                                                                                                                                
2:18:55 PM                                                                                                                    
                                                                                                                                
MR. WILLIAMS  reported that Alaska  followed the  Multi-State Tax                                                               
Compact  Formula  for ascertaining  the  size  of the  family  of                                                               
companies  to determine  the  taxable income.    He allowed  that                                                               
Alaska  chose a  two-pronged test:   if  there was  more than  50                                                               
percent ownership, or common control of  the group, then it was a                                                               
consolidated  business.   This was  included  in the  regulations                                                               
during the  time of  separate accounting in  Alaska.   He pointed                                                               
out that  this was  included in  proposed HB 328.   He  relayed a                                                               
story about  unitary business and  apportionment, which  was also                                                               
separate accounting,  and a determination  by the  Alaska Supreme                                                               
Court which rejected the UDIPTA  test for 50 percent ownership or                                                               
control  in  favor  of the  unitary  business  and  apportionment                                                               
concept.   He suggested that  the legislature consult  with their                                                               
attorneys for advice, as these  issues were contained in proposed                                                               
HB 328.                                                                                                                         
                                                                                                                                
2:22:22 PM                                                                                                                    
                                                                                                                                
MR. WILLIAMS questioned the reasoning  for separate accounting to                                                               
be implemented to  increase revenue.  He offered  his belief that                                                               
the taxation  in proposed  HB 328  would be  counterproductive in                                                               
the long  term as  an investment  for Alaska.   He  reported that                                                               
"the market  is betting  that we have  a temporary  situation" of                                                               
higher  oil prices.    He  allowed that  some  companies, as  oil                                                               
prices decreased, could request  separate accounting.  He pointed                                                               
out  that  the  Department  of  Revenue  (DOR)  already  had  the                                                               
discretion to offer separate accounting under the MTC.                                                                          
                                                                                                                                
2:24:53 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE GARDNER referenced the  increasing cost per barrel                                                               
that was  being experienced  from some of  the older  oil fields,                                                               
and  that there  was a  "tipping point"  where it  would be  more                                                               
advantageous  for  the  industry   to  have  separate  accounting                                                               
because  Alaska was  so  expensive.   She  asked  if the  current                                                               
opposition to  separate accounting  meant that  the profitability                                                               
in Alaska  ranked "well  compared to  the profitability  in other                                                               
places."                                                                                                                        
                                                                                                                                
MR.  WILLIAMS, in  response, said  that  although the  assumption                                                               
could be made he  was unsure if it was a  correct assumption.  He                                                               
questioned that the  purpose for the assumption was  to gain more                                                               
revenue,  and, if  so, the  long term  effect could  be to  deter                                                               
investments which would increase the  rate of production from its                                                               
current decline.                                                                                                                
                                                                                                                                
REPRESENTATIVE GARDNER  asked why, if the  oil industry currently                                                               
opposed  separate  accounting,  was  it a  fair  assumption  that                                                               
apportionment  benefited the  oil  industry.   She expressed  her                                                               
agreement  that  each oil  company  should  pursue its  own  best                                                               
interests.                                                                                                                      
                                                                                                                                
2:26:47 PM                                                                                                                    
                                                                                                                                
MR. WILLIAMS referred to earlier  testimony by Alaska Oil and Gas                                                               
Association (AOGAA)  which reflected unanimous opposition  by its                                                               
members  against  separate  accounting, which  could  offer  more                                                               
opportunities for business in Alaska.                                                                                           
                                                                                                                                
2:27:35 PM                                                                                                                    
                                                                                                                                
CO-CHAIR SEATON  pointed out that, although  the Alaska corporate                                                               
income  tax rate  was 9.4  percent, under  apportionment the  tax                                                               
rate was only  5.2 percent.  He asked what  the benefit to Alaska                                                               
was to  be perceived as  "less conducive to a  competitive fiscal                                                               
system," when, in  fact, the actual corporate tax  rate was lower                                                               
than recognized.                                                                                                                
                                                                                                                                
MR. WILLIAMS offered his belief  that the strongest attribute for                                                               
investing in Alaska  was its track record of  stability, as there                                                               
had been very few re-writes of oil  and gas taxes since 1981.  He                                                               
pointed out  that there could  be adjustments to  forecasting and                                                               
optimized investment if the platform  was stable.  He opined that                                                               
the level of taxation had "overshot the mark."                                                                                  
                                                                                                                                
CO-CHAIR   SEATON  pointed   to   the  competitive   calculations                                                               
presented during the PowerPoint  presentations, which stated that                                                               
the corporate  income tax in  Alaska was  9.4 percent.   He asked                                                               
how Alaska could be competitive  when the actual corporate income                                                               
tax based on apportionment was lower than the tax presented.                                                                    
                                                                                                                                
MR.  WILLIAMS stated  that he  disagreed,  declaring that  Alaska                                                               
always received 9.4  percent of any income  attributed to Alaska,                                                               
under both separate accounting and apportionment.                                                                               
                                                                                                                                
2:31:02 PM                                                                                                                    
                                                                                                                                
CO-CHAIR   SEATON   asked  how   a   formula   for  a   worldwide                                                               
apportionment, which arrived at  a significantly different result                                                               
than  what  was  presented,  would portray  Alaska  in  its  true                                                               
competitive nature.                                                                                                             
                                                                                                                                
MR.  WILLIAMS  replied  that  people  would  perceive  Alaska  as                                                               
accurately  as  they  could, which  combined  the  opportunities,                                                               
operating costs  and logistics,  and fiscal  regime.   This would                                                               
allow for  estimation as to  the profitability of  an investment,                                                               
and  he opined  that any  competitive investment  would be  made,                                                               
regardless of  the perception to  Alaska.  He offered  his belief                                                               
that the current  system, since ACES, did  not entice investment.                                                               
He pointed  out that  oil companies had  testified to  the Senate                                                               
Finance Committee with suggestions  for meaningful fiscal changes                                                               
to spur additional investment.                                                                                                  
                                                                                                                                
CO-CHAIR SEATON referred to Mr.  Williams' earlier reference that                                                               
the  basis of  worldwide  apportionment was  that  the margin  of                                                               
profit should be the same  worldwide.  He then directed attention                                                               
to  the  Legislative Legal  and  Research  Services report  dated                                                               
March 2012, which detailed that the  prior 10 years of per barrel                                                               
income  data  from  ConocoPhillips Alaska,  Inc.  reflected  that                                                               
Alaska  had a  higher margin  than other  states.   He asked  why                                                               
Alaska would not correct this fiscal system.                                                                                    
                                                                                                                                
MR. WILLIAMS declared that he was  not in the position to respond                                                               
to the  underlying principle  to apportionment  as it  applied to                                                               
ConocoPhillips Alaska,  Inc.  However,  he said that  this fiscal                                                               
principle was developed  by UDITPA in order  to standardize taxes                                                               
and codes.  He said that  he had also chaired the Multi-State Tax                                                               
Commission, which offered  this as an article of good  faith.  He                                                               
referenced that the  Alaska Supreme Court had  also accepted this                                                               
as an article of good  faith, expressing its reasoning in earlier                                                               
cases that "the  object of this formula approach,  slice the pie,                                                               
is not to get to perfection  in terms of measuring, but rather to                                                               
have it  represent fairly the  potential to generate  income over                                                               
time."   He  declared that  there was  sound underlying  economic                                                               
evidence  and  analysis for  UDITPA  with  which the  courts  had                                                               
expressed agreement.                                                                                                            
                                                                                                                                
CO-CHAIR SEATON  expressed his  appreciation for  the declaration                                                               
that this was  an article of good faith, but  then he stated that                                                               
his data  reflected that the  good faith  was not justified.   He                                                               
offered  to   provide  Mr.  Williams'  with   the  aforementioned                                                               
Legislative Legal and Research Services report.                                                                                 
                                                                                                                                
2:38:09 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE MUNOZ directed attention  to the earlier reference                                                               
that  the  department  had  the  ability  to  implement  separate                                                               
accounting, and  asked what level  would determine  when separate                                                               
accounting was  an option.   She  asked how  close Alaska  was to                                                               
this level.                                                                                                                     
                                                                                                                                
MR.  WILLIAMS relayed  that separate  accounting depended  on the                                                               
specific facts  and circumstances for  a particular company.   He                                                               
stated  that the  test in  the  statute was  whether the  formula                                                               
fairly  represented  the  extent  of the  business  activity  and                                                               
income.   He said that  "fairly representative" was  a subjective                                                               
term designed  to deal with many  types of conditions and  not to                                                               
be prescriptive.  He offered  his belief that the challenge would                                                               
need to be material and impugn,  which would lead to a full scale                                                               
investigation to determine whether it  was a temporary or ongoing                                                               
circumstance.                                                                                                                   
                                                                                                                                
2:40:52 PM                                                                                                                    
                                                                                                                                
MICHAEL HURLEY, Lobbyist,  ConocoPhillips Alaska, Inc., addressed                                                               
the  issues and  concerns that  had  come up  since he  testified                                                               
earlier on the  proposed bill.  He distributed the  2010 Index to                                                               
Financial Statement from ConocoPhillips  Alaska, Inc. that listed                                                               
the  jurisdiction breakdown  of income,  expenses, and  revenues.                                                               
He pointed  out that the aforementioned  legislative analysis was                                                               
incomplete,  as  numbers were  missing  that  were important  for                                                               
understanding relative margins between  different segments of the                                                               
company business.                                                                                                               
                                                                                                                                
CO-CHAIR   SEATON  expressed   his   desire  to   get  a   better                                                               
understanding of the intricacies.                                                                                               
                                                                                                                                
2:43:17 PM                                                                                                                    
                                                                                                                                
MR. HURLEY  directed attention to  the upcoming  repositioning of                                                               
ConocoPhillips  into  two  separate  publicly  traded  companies,                                                               
which was anticipated to occur on  May 1, 2012.  He reported that                                                               
these  two  companies would  be  taxed  differently, noting  that                                                               
although  the  company currently  paid  state  income tax  in  45                                                               
states, it  was still unclear what  would be the impact  for each                                                               
state.  He  offered to answer the earlier  question regarding the                                                               
perception of different corporate tax rates.                                                                                    
                                                                                                                                
2:45:12 PM                                                                                                                    
                                                                                                                                
MR. HURLEY  explained that evaluating  a business, for  example a                                                               
ConocoPhillips business in Alaska,  did not necessarily mean that                                                               
the 9.4  percent corporate income tax  was all paid to  the State                                                               
of  Alaska.     He   pointed  out  that,   as  other   states  do                                                               
apportionment, if ConocoPhillips earned  an incremental dollar of                                                               
income  in  Alaska,   that  dollar  would  be   included  in  the                                                               
ConocoPhillips  revenue  for  apportionment   by  all  the  other                                                               
states.   He observed that $1  invested on the North  Slope would                                                               
generate income which  would be taxed in 45  different states, so                                                               
that   the  ConocoPhillips   Alaska,   Inc.   state  income   tax                                                               
calculation must "have a blended  rate that reflects all of those                                                               
different  taxes that  are  going  to be  levied  on  that $1  of                                                               
incremental income."                                                                                                            
                                                                                                                                
2:47:30 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE P.  WILSON asked to  clarify that the tax  paid in                                                               
other states  was subtracted from  the Alaska corporate  tax rate                                                               
of 9.4 percent.                                                                                                                 
                                                                                                                                
MR.  HURLEY replied  that when  evaluating Alaska  investments or                                                               
its competitiveness,  it was necessary  to take into  account the                                                               
taxes paid  on incremental Alaska  income, which, he  opined, was                                                               
paid in  42 of the  45 jurisdictions in which  ConocoPhillips did                                                               
business.   He  stated that  it was  complex, and  he offered  an                                                               
example of the sales tax generated by a gas pipeline.                                                                           
                                                                                                                                
2:50:06 PM                                                                                                                    
                                                                                                                                
MR.  HURLEY   referred  back  to  the   ConocoPhillips  Index  to                                                               
Financial   Statements   and,    recalling   the   aforementioned                                                               
Legislative   Legal  and   Research  Services   report,  directed                                                               
attention to  the consolidated  operations.   He stated  that the                                                               
research  report only  referred to  the consolidated  operations,                                                               
but did  not include the  equity affiliates.  He  explained that,                                                               
although ConocoPhillips did not  have equity affiliates in Alaska                                                               
or the  Lower 48, for  legal reasons in many  jurisdictions there                                                               
were  separately  owned  equity  companies and  affiliates.    He                                                               
declared  that these  companies,  under  Securities and  Exchange                                                               
Commission (SEC) rules,  had to be accounted for  separately.  He                                                               
stated that the research report  ignored these companies although                                                               
their margins per  barrel of oil equivalent (BOE)  were higher in                                                               
Asia Pacific/Middle East and Europe, than in Alaska.                                                                            
                                                                                                                                
CO-CHAIR  SEATON asked  to clarify  that either  those should  be                                                               
factored in,  or ignored with the  focus on Alaska and  the Lower                                                               
48.                                                                                                                             
                                                                                                                                
MR. HURLEY expressed  his belief that the  equity affiliates were                                                               
appropriate to  include, as the  issue was with the  structure of                                                               
the ConocoPhillips business.                                                                                                    
                                                                                                                                
CO-CHAIR SEATON explained that, as  there were not any affiliates                                                               
in Alaska  or the Lower  48, it  would be appropriate  to compare                                                               
them  with each  other  for  net income  BOE,  but  not with  the                                                               
international  companies as  their  net income  BOE contained  an                                                               
additional factor.                                                                                                              
                                                                                                                                
MR. HURLEY expressed his agreement.                                                                                             
                                                                                                                                
2:53:28 PM                                                                                                                    
                                                                                                                                
MR. HURLEY  said that ConocoPhillips  Alaska, Inc.  supported the                                                               
earlier Department  of Revenue (DOR)  testimony to adopt  as much                                                               
of  the Internal  Revenue Code  as possible,  as the  further the                                                               
state  strayed  from  the  Internal  Revenue  code  for  defining                                                               
expenses,  revenue,  and   intercompany  transactions,  the  more                                                               
difficult it would be for DOR.                                                                                                  
                                                                                                                                
CO-CHAIR  SEATON  replied  that  the  DOR  suggestions  had  been                                                               
incorporated into Version  E of the proposed bill,  and asked Mr.                                                               
Hurley  to  address  any  further concerns  as  he  studied  this                                                               
version.                                                                                                                        
                                                                                                                                
2:56:30 PM                                                                                                                    
                                                                                                                                
MARIE  EVANS, Lobbyist,  ConocoPhillips  Alaska, Inc.,  suggested                                                               
that page  13, lines 7-8  did not  implement the intent  that the                                                               
co-chair had just stated.                                                                                                       
                                                                                                                                
CO-CHAIR SEATON  replied that  there was no  intent to  avoid the                                                               
issues, and he requested an e-mail or public testimony.                                                                         
                                                                                                                                
2:57:27 PM                                                                                                                    
                                                                                                                                
MR. HURLEY  concluded by saying that  ConocoPhillips Alaska, Inc.                                                               
did  not believe  that proposed  HB  328 would  make Alaska  more                                                               
competitive and attract  the capital which Alaska  needed to stem                                                               
the  decline of  oil  production.   He  opined  that this  policy                                                               
change would "make the state  actually more hostage to oil prices                                                               
than they are  today."  He declared that the  proposed bill would                                                               
exacerbate the situation and make  things more difficult when oil                                                               
prices went down.                                                                                                               
                                                                                                                                
2:58:34 PM                                                                                                                    
                                                                                                                                
CO-CHAIR SEATON, offering his  belief that ConocoPhillips Alaska,                                                               
Inc.  would remain  in Alaska  as an  upstream company  after the                                                               
"corporate split,"  asked if Phillips  66 would be  a participant                                                               
in Alaska.                                                                                                                      
                                                                                                                                
MR. HURLEY opined that there would  not be any Phillips 66 assets                                                               
in  Alaska,   and  that  all   the  assets  would  be   owned  by                                                               
ConocoPhillips Alaska, Inc.                                                                                                     
                                                                                                                                
CO-CHAIR SEATON asked to clarify  the reason that, as Phillips 66                                                               
and its downstream  assets were no longer to  pay corporate taxes                                                               
in  Alaska, the  price  of oil  in one  mechanism  was more  than                                                               
another if the only activity in Alaska was upstream.                                                                            
                                                                                                                                
MR. HURLEY  allowed that this  would be true from  the standpoint                                                               
of  ConocoPhillips  Alaska,  Inc.,   noting,  however,  that  his                                                               
company was only one of  the major companies operating in Alaska.                                                               
He  pointed  out  that  some  of  the  aforementioned  small  oil                                                               
companies  did not  pay any  state  corporate income  tax at  the                                                               
corporate level, as they were LLCs (Limited Liability Company).                                                                 
                                                                                                                                
CO-CHAIR SEATON offered  his belief that this  was also addressed                                                               
in Version  E, and  he stated  that there was  not an  attempt to                                                               
provide a loophole for not paying  corporate taxes to oil and gas                                                               
producing companies.                                                                                                            
                                                                                                                                
3:02:25 PM                                                                                                                    
                                                                                                                                
CO-CHAIR  SEATON announced  that public  testimony would  be held                                                               
open.                                                                                                                           
                                                                                                                                
[HB 328 was held over.]                                                                                                         
                                                                                                                                
3:02:43 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
Support Alyeska.pdf HRES 4/9/2012 1:00:00 PM
HB 295
HB295 Background - MO 1121.pdf HRES 4/9/2012 1:00:00 PM
HB 295
Work Draft 2012.04.04.pdf HRES 4/9/2012 1:00:00 PM
HB 295
HB295 Bill Text.pdf HRES 4/9/2012 1:00:00 PM
HB 295
HB295 Sponsor Statement.pdf HRES 4/9/2012 1:00:00 PM
HB 295
HB295 Support Letters.pdf HRES 4/9/2012 1:00:00 PM
HB 295
91 CSSB Verson M.pdf HRES 4/9/2012 1:00:00 PM
SB 91
HB 328 Workdraft Version E.pdf HRES 4/9/2012 1:00:00 PM
HB 328
SB 91_Sponsor Statement.pdf HRES 4/9/2012 1:00:00 PM
SB 91
SB 91 2010 Participation Effort and Harvest in the Sport Fish Business-Guide Licensing and Logbook Programs.pdf HRES 4/9/2012 1:00:00 PM
SB 91
SB 91 SWLogsheet_2012.pdf HRES 4/9/2012 1:00:00 PM
SB 91
SB091CS(FIN)-03-30-12.pdf HRES 4/9/2012 1:00:00 PM
SB 91
SB 91 2012 Freshwater Charter Logbook.pdf HRES 4/9/2012 1:00:00 PM
SB 91