Legislature(2017 - 2018)BARNES 124

01/20/2017 01:00 PM RESOURCES

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01:00:12 PM Start
01:02:21 PM Overview: Department of Natural Resources
03:03:00 PM Adjourn
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ Overview: Dept. of Natural Resources TELECONFERENCED
-- Testimony <Invitation Only> --
                    ALASKA STATE LEGISLATURE                                                                                  
               HOUSE RESOURCES STANDING COMMITTEE                                                                             
                        January 20, 2017                                                                                        
                           1:00 p.m.                                                                                            
                                                                                                                                
MEMBERS PRESENT                                                                                                               
                                                                                                                                
Representative Andy Josephson, Co-Chair                                                                                         
Representative Geran Tarr, Co-Chair                                                                                             
Representative Dean Westlake, Vice Chair                                                                                        
Representative Harriet Drummond                                                                                                 
Representative Justin Parish                                                                                                    
Representative Chris Birch                                                                                                      
Representative DeLena Johnson                                                                                                   
Representative George Rauscher                                                                                                  
Representative David Talerico                                                                                                   
                                                                                                                                
MEMBERS ABSENT                                                                                                                
                                                                                                                                
Representative Chris Tuck (alternate)                                                                                           
                                                                                                                                
COMMITTEE CALENDAR                                                                                                            
                                                                                                                                
OVERVIEW:  DEPARTMENT OF NATURAL RESOURCES                                                                                      
                                                                                                                                
     - HEARD                                                                                                                    
                                                                                                                                
PREVIOUS COMMITTEE ACTION                                                                                                     
                                                                                                                                
No previous action to record                                                                                                    
                                                                                                                                
WITNESS REGISTER                                                                                                              
                                                                                                                                
JOHN MORRISON, Executive Director                                                                                               
Mental Health Trust Land Office                                                                                                 
Office of the Commissioner                                                                                                      
Department of Natural Resources                                                                                                 
Anchorage, Alaska                                                                                                               
POSITION STATEMENT:   Provided an  overview of the  Mental Health                                                             
Trust Land  Office, and answered questions  during the PowerPoint                                                               
presentation entitled, "Department  of Natural Resources Overview                                                               
for House Resources Committee January 18, 2017."                                                                                
                                                                                                                                
ANDREW MACK, Commissioner                                                                                                       
Department of Natural Resources                                                                                                 
Anchorage, Alaska                                                                                                               
POSITION  STATEMENT:     Introduced  staff,  provided  additional                                                             
information,  and   answered  questions  during   the  PowerPoint                                                               
presentation entitled, "Department  of Natural Resources Overview                                                               
for House Resources Committee January 18, 2017."                                                                                
                                                                                                                                
MARK WIGGIN, Deputy Commissioner                                                                                                
Office of the Commissioner                                                                                                      
Department of Natural Resources                                                                                                 
Anchorage, Alaska                                                                                                               
POSITION   STATEMENT:     Provided   background  information   on                                                             
divisions  within   the  Department  of  Natural   Resources  and                                                               
answered questions  during the PowerPoint  presentation entitled,                                                               
"Department  of Natural  Resources Overview  for House  Resources                                                               
Committee January 18, 2017."                                                                                                    
                                                                                                                                
STEVEN MASTERMAND, Director                                                                                                     
Central Office                                                                                                                  
Division of Geological & Geophysical Surveys                                                                                    
Department of Natural Resources                                                                                                 
Fairbanks, Alaska                                                                                                               
POSITION  STATEMENT:   Provided  information on  the Division  of                                                             
Geological &  Geophysical Surveys  and answered  questions during                                                               
the  PowerPoint  presentation  entitled, "Department  of  Natural                                                               
Resources  Overview for  House  Resources  Committee January  18,                                                               
2017."                                                                                                                          
                                                                                                                                
ED FOGELS, Deputy Commissioner                                                                                                  
Office of the Commissioner                                                                                                      
Department of Natural Resources                                                                                                 
Anchorage, Alaska                                                                                                               
POSITION  STATEMENT:   Introduced  Mr. Goodrum,  director of  the                                                             
Division  of  Mining,  Land  and  Water,  Dr.  Longan,  Executive                                                               
Director  of  the  Office of  Project  Management  &  Permitting,                                                               
provided  additional information,  and answered  questions during                                                               
the  PowerPoint  presentation  entitled, "Department  of  Natural                                                               
Resources  Overview for  House  Resources  Committee January  18,                                                               
2017."                                                                                                                          
                                                                                                                                
BRENT GOODRUM, Director                                                                                                         
Central Office                                                                                                                  
Division of Mining, Land and Water                                                                                              
Department of Natural Resources                                                                                                 
Anchorage, Alaska                                                                                                               
POSITION  STATEMENT:   Provided  information on  the Division  of                                                             
Mining,  Land  and  Water,  and  answered  questions  during  the                                                               
PowerPoint   presentation   entitled,  "Department   of   Natural                                                               
Resources  Overview for  House  Resources  Committee January  18,                                                               
2017."                                                                                                                          
                                                                                                                                
CHANTAL WALSH, Director                                                                                                         
Central Office                                                                                                                  
Division of Oil and Gas                                                                                                         
Department of Natural Resources                                                                                                 
Anchorage, Alaska                                                                                                               
POSITION STATEMENT:  Provided information on the  Division of Oil                                                             
and   Gas   and   answered  questions   during   the   PowerPoint                                                               
presentation entitled, "Department  of Natural Resources Overview                                                               
for House Resources Committee January 18, 2017."                                                                                
                                                                                                                                
SARA LONGAN, Executive Director                                                                                                 
Office of Project Management & Permitting                                                                                       
Department of Natural Resources                                                                                                 
Anchorage, Alaska                                                                                                               
POSITION  STATEMENT:    Provided  information on  the  Office  of                                                             
Project  Management &  Permitting and  answered questions  during                                                               
the  PowerPoint  presentation  entitled, "Department  of  Natural                                                               
Resources  Overview for  House  Resources  Committee January  18,                                                               
2017."                                                                                                                          
                                                                                                                                
FABIENNE PETER-CONTESSE, Director                                                                                               
Central Office                                                                                                                  
Division of Support Services                                                                                                    
Department of Natural Resources                                                                                                 
Juneau, Alaska                                                                                                                  
POSITION  STATEMENT:   Provided  information on  the Division  of                                                             
Support  Services and  answered questions  during the  PowerPoint                                                               
presentation entitled, "Department  of Natural Resources Overview                                                               
for House Resources Committee January 18, 2017."                                                                                
                                                                                                                                
ACTION NARRATIVE                                                                                                              
                                                                                                                                
1:00:12 PM                                                                                                                    
                                                                                                                                
CO-CHAIR  ANDY  JOSEPHSON  called the  House  Resources  Standing                                                             
Committee  meeting  to  order  at   1:00  p.m.    Representatives                                                               
Josephson,   Rauscher,   Drummond,   Birch,   Parish,   Talerico,                                                               
Westlake,  and   Tarr  were  present   at  the  call   to  order.                                                               
Representative Johnson arrived as the meeting was in progress.                                                                  
                                                                                                                                
CO-CHAIR JOSEPHSON made opening remarks.                                                                                        
                                                                                                                                
^OVERVIEW:  DEPARTMENT OF NATURAL RESOURCES                                                                                     
           OVERVIEW:  DEPARTMENT OF NATURAL RESOURCES                                                                       
                                                                                                                              
1:02:21 PM                                                                                                                    
                                                                                                                                
CO-CHAIR  JOSEPHSON announced  that  the only  order of  business                                                               
would  be a  continuation of  the overview  by the  Department of                                                               
Natural Resources begun during the meeting of 1/18/17.                                                                          
                                                                                                                                
1:04:46 PM                                                                                                                    
                                                                                                                                
JOHN  MORRISON,  Executive  Director, Mental  Health  Trust  Land                                                               
Office, Office  of the Commissioner, DNR,  informed the committee                                                               
that  the  Mental  Health  Trust   ("Trust")  has  its  roots  in                                                               
territorial  days when  individuals  who were  found insane  were                                                               
shipped to  an institution  in Oregon "never  to be  seen again."                                                               
He characterized  this system  as an  inadequate level  of mental                                                               
health care for a territory  seeking statehood, thus in 1956, the                                                               
first federal  land grant of 1  million acres was granted  to the                                                               
territory of  Alaska to be  used to  generate income and  pay for                                                               
mental health  programs.    However, the  land base was  not used                                                               
for  the purpose  for which  it was  dedicated, and  in 1984  the                                                               
Trust was sued and the courts  determined that the land was being                                                               
given away  - designated as  parks and for  other uses -  but was                                                               
not generating revenue.  In  1994, a settlement reconstituted the                                                               
land trust  with a new  1 million  acre land grant  consisting of                                                               
about 4,500  parcels located  as far north  as Livengood,  as far                                                               
west as Ophir, and  as far south as Ketchikan.   The new trust is                                                               
governed  by a  seven-member  board  and two  offices:   1.)  The                                                               
Mental  Health  Trust  Authority, Department  of  Revenue  (DOR),                                                               
administers grants  and programs  for the  Trust; 2.)  The Mental                                                               
Health  Trust Land  Office  (TLO), DNR,  manages  land and  other                                                               
assets for  the Trust.  The  tenants of the Trust's  mission are:                                                               
maximize  the  long-term revenue  from  Trust  land; protect  the                                                               
corpus; protect  and enhance the long-term  productivity of Trust                                                               
land; encourage  a diversity of  revenue-producing uses  of Trust                                                               
land;  manage all  Trust land  prudently,  efficiently, and  with                                                               
accountability to the Trust and  its beneficiaries.  Mr. Morrison                                                               
stressed that all decisions are made  in the best interest of the                                                               
Trust  and its  beneficiaries.   The Trust  and TLO  generate two                                                               
types  of  revenue:   1.)  Principal  revenue, which  is  revenue                                                               
generated from a  divestiture of an interest in  Trust land, such                                                               
as  land and  timber  sales and  royalties;  2.) Income  revenue,                                                               
which is revenue  generated from interest, rent,  bonus bids, and                                                               
fees.   He  explained  that under  the terms  of  the Trust,  the                                                               
principal must  be reinvested in another  income-producing asset,                                                               
and the  income is  available for use  by trustees  for programs,                                                               
administrative  costs, and  for rebuilding  the land  base.   The                                                               
trustees have made a decision to  focus on both the generation of                                                               
income revenue and a diversification  of revenue streams, because                                                               
the land and  timber sales that have generated a  majority of the                                                               
Trust's principal are  diminishing.  The TLO  manages the Trust's                                                               
land  under a  resource management  strategy, which  is a  policy                                                               
that identifies  the highest and  best use of parcels,  and which                                                               
is  sometimes  difficult to  achieve.    The resource  management                                                               
strategy   divides    the   Trust's   land   base    into   seven                                                               
classifications,  one   of  which  is  minerals   and  materials,                                                               
including the  Fort Knox  Mine, the  Livengood Gold  Project, and                                                               
potential mineral  exploration at  Icy [Cape].   The  real estate                                                               
asset  classification   includes  the  main  sources   of  income                                                               
generation,   and  the   land  classification   relates  to   the                                                               
stewardship  of  land  not  otherwise  classified,  and  also  to                                                               
revenue generation.   The forestry  asset has waned to  almost no                                                               
activity.   At this  time, the largest  forestry initiative  is a                                                               
land  exchange   with  the  U.S.  Forest   Service  (USFS),  U.S.                                                               
Department  of Agriculture,  for many  parcels in  Southeast that                                                               
would  be   valuable  for  timber  harvest.     Although  federal                                                               
legislation is  needed to facilitate  the exchange,  the enabling                                                               
legislation  has  been  introduced  in  Congress  by  the  Alaska                                                               
congressional   delegation,  and   state  legislation   is  being                                                               
proposed.                                                                                                                       
                                                                                                                                
1:15:33 PM                                                                                                                    
                                                                                                                                
MR.  MORRISON continued  to explain  the  next classification  is                                                               
programmatic   real  estate   wherein  the   Trust  has   assumed                                                               
responsibility   to  participate   in  the   facility  needs   of                                                               
beneficiaries' programs,  such as providing  infrastructure, seed                                                               
capital, and in-house expertise  for beneficiaries.  Two examples                                                               
of   infrastructure  are   the  Gateway   to  Recovery   Enhanced                                                               
Detoxification  Center   in  Fairbanks  and  the   Asset's  Inc.,                                                               
facility  in Anchorage.    Mitigation marketing  is  a new  asset                                                               
classification for the Trust, and  Mr. Morrison said the Trust is                                                               
monitoring  the   potential  for  wetlands  and   carbon  credits                                                               
mitigation in  an effort  to protect  Trust land  while providing                                                               
immediate revenue.  The last category  is energy as the Trust has                                                               
coal resources, gas  and possible oil reserves in  the Kenai Loop                                                               
Field, and  gas potential in Nenana  and Cook Inlet.   He pointed                                                               
out  that  TLO   and  the  Trust  are   self-funded  and  provide                                                               
significant  funding  to  the state  through  grants  for  mental                                                               
health programs;  in fact, during  fiscal year 2017 (FY  17), TLO                                                               
will have  generated over  $200 million in  revenue from  a well-                                                               
diversified  stream,  which  protects the  Trust  from  commodity                                                               
markets.  Mr.  Morrison concluded, advising that  all the efforts                                                               
from the Trust and TLO benefit the Trust beneficiaries.                                                                         
                                                                                                                                
CO-CHAIR JOSEPHSON  stated that  an ongoing  audit of  the Mental                                                               
Health  Trust  is currently  examining  its  operations in  great                                                               
detail.                                                                                                                         
                                                                                                                                
1:20:09 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  BIRCH  recalled  there are  policies  related  to                                                               
investment  practices  - perhaps  tied  to  those of  the  Alaska                                                               
Permanent Fund  Corporation -  and asked  whether the  Trust uses                                                               
investment-qualified personnel  from other departments  in regard                                                               
to real estate investments.                                                                                                     
                                                                                                                                
MR.  MORRISON   responded  that  the  trustees   have  chosen  to                                                               
diversify  investment  by  using  principal  to  acquire  income-                                                               
producing property;  this process has  been ongoing for  the past                                                               
14 years.                                                                                                                       
                                                                                                                                
CO-CHAIR  TARR   noted  that  additional  information   could  be                                                               
presented to the House Natural  Resources Finance Subcommittee on                                                               
the Trust's most recent activity.                                                                                               
                                                                                                                                
REPRESENTATIVE BIRCH understood there  are concerns about whether                                                               
investment decisions follow best practices policy.                                                                              
                                                                                                                                
CO-CHAIR JOSEPHSON  offered to gather  questions in writing.   He                                                               
asked how  the Trust would utilize  land in the event  a proposed                                                               
mine was not permitted.                                                                                                         
                                                                                                                                
MR. MORRISON acknowledged that a  proposed mine may never produce                                                               
revenue;  other uses  for a  certain  parcel may  be wetlands  or                                                               
carbon  credit mitigation,  or the  land may  be returned  to the                                                               
state.   In further  response to Co-Chair Josephson, he confirmed                                                               
an exchange with the state may be with other DNR land sources.                                                                  
                                                                                                                                
1:24:26 PM                                                                                                                    
                                                                                                                                
ANDREW  MACK,  Commissioner,  Department  of  Natural  Resources,                                                               
suggested  the   DNR  overview  continue   to  the   Division  of                                                               
Geological & Geophysical Surveys  (DGGS), the Division of Mining,                                                               
Land &  Water (DMLW), the  Division of Oil  & Gas (DOG),  and the                                                               
Office of Project Management & Permitting (OPMP).                                                                               
                                                                                                                                
1:25:50 PM                                                                                                                    
                                                                                                                                
MARK  WIGGIN, Deputy  Commissioner, Office  of the  Commissioner,                                                               
Department  of  Natural  Resources, informed  the  committee  the                                                               
Division of Geological & Geophysical  Surveys is based largely in                                                               
Fairbanks  and is  comprised  of  geologists, geophysicists,  and                                                               
scientists with  expertise in mineral  resources and  in geologic                                                               
hazards throughout the state.   In addition, DGGS staff publishes                                                               
written and online geologic data for public access.                                                                             
                                                                                                                                
1:27:40 PM                                                                                                                    
                                                                                                                                
STEVEN MASTERMAND, Director, Central  Office, DGGS, DNR, directed                                                               
attention to  slide 11 of  the PowerPoint  presentation entitled,                                                               
"Department  of Natural  Resources Overview  for House  Resources                                                               
Committee January 18, 2017."   He informed the committee DGGS has                                                               
been in existence  since the formation of  the Alaska Territorial                                                               
Department  of Mines  in  1912.   The  division's  mission is  to                                                               
assess  Alaska  lands for  their  capability  to produce  metals,                                                               
minerals, fuels, geothermal resources,  sand, gravel, and riprap,                                                               
and  to   also  assess  geologic  hazards   such  as  landslides,                                                               
earthquakes, tsunamis,  volcanic activity,  permafrost, flooding,                                                               
erosion, and  others.   In  FY 17, the DGGS  operating budget was                                                               
$8.5  million,  and  about  one-half  of  that  was  unrestricted                                                               
general funds (UGF). The division  employs 51 positions and meets                                                               
its mission  by conducting  geological investigations  around the                                                               
state;  in  regard  to  metals,   oil  and  gas,  and  coal,  the                                                               
geologists primarily  focus on the potential  of those resources.                                                               
The  resulting maps,  reports, and  analyses  that are  generated                                                               
from investigations  are published and widely  used; furthermore,                                                               
DGGS makes  available physical materials  - such as  rock samples                                                               
and  core samples  -  to the  division's  new Geologic  Materials                                                               
Center (GMC) which  was relocated to Anchorage in  2015.  Samples                                                               
from  the facility  are  widely  used by  oil,  gas, and  mineral                                                               
industries,  and were  used to  lead  to new  discoveries on  the                                                               
North Slope  (slide 11).    In 2016, the division  generated 36.9                                                               
million  web  page views  and  almost  900,000 publications  were                                                               
downloaded  from  the  web  site, which  he  characterized  as  a                                                               
"pretty astounding number of publications,"  and is a substantial                                                               
increase  from prior  years.   Almost one-half  of the  inquiries                                                               
were related to  oil, gas, coal, and minerals,  proving that DGGS                                                               
information  is  being  used  to   develop  the  state's  natural                                                               
resources.   A key  role of the  division is  geological mapping,                                                               
and two grants  from the U.S. Geological  Survey, U.S. Department                                                               
of the Interior,  and funding from a capital  project allowed for                                                               
mapping in  Tok River  near recent  discoveries of  copper, lead,                                                               
zinc, silver, and  gold.  The area was  largely unknown; however,                                                               
DGGS completed  a geophysical survey  and a mapping  project, and                                                               
released  geochemical  information  that  spurred  mining  claims                                                               
staking  activity  in  the  area.   In  addition,  DGGS  provided                                                               
information  previously gathered  on the  Bonnifield district  to                                                               
the public, which  also led to mining claims  staking over 32,000                                                               
acres.   Mr. Mastermand turned  to geologic hazards,  noting that                                                               
Alaska has  54 active volcanos -  three have erupted in  the past                                                               
year - and DGGS monitors  volcanic activity and reports eruptions                                                               
to the  governor's office,  the Division  of Homeland  Security &                                                               
Emergency   Management,  Department   of  Military   &  Veterans'                                                               
Affairs,  and  to airports  and  aviation  organizations.   As  a                                                               
result of  the Pavlof  eruption in March  2016, 140  flights were                                                               
canceled and 6,200 people were  prevented from flying through the                                                               
volcanic ash.   Other seismic  activity is expected at  any time.                                                               
Also published  this year were  reports on  an area of  the North                                                               
Slope  known as  the  Nanushuk  formation, which  is  found in  a                                                               
sequence of  rocks that  have produced  recent discoveries.   The                                                               
DGGS reports documented the  petroleum geology characteristics of                                                               
a unit of  rocks at Wainwright as high  quality, suggesting there                                                               
is  exploration potential  between  Wainwright  and the  Colville                                                               
River area (slide 12).                                                                                                          
                                                                                                                                
1:37:23 PM                                                                                                                    
                                                                                                                                
CO-CHAIR  JOSEPHSON   surmised  there  is  oil   potential  "some                                                               
distance west of Barrow."                                                                                                       
                                                                                                                                
MR.  MASTERMAND  said  the report  indicates  that  the  Nanushuk                                                               
formation  rocks  beneath  Wainwright  have "some  of  the  right                                                               
characteristics."   Returning to  the topic of  geologic hazards,                                                               
he related that  DGGS, in conjunction with  the Alaska Earthquake                                                               
Center, University of Alaska Fairbanks,  and the National Oceanic                                                               
and  Atmospheric  Administration,  U.S. Department  of  Commerce,                                                               
produces  and distributes  tsunami  and  inundation reports  that                                                               
inform  coastal communities  of potential  danger and  evacuation                                                               
routes.                                                                                                                         
                                                                                                                                
CO-CHAIR  TARR recalled  that GMC  was  initially oversized,  and                                                               
questioned whether the facility is now at full capacity.                                                                        
                                                                                                                                
MR. MASTERMAND agreed and explained  that the facility was filled                                                               
by one-third when  the collection was moved, and  now the shelves                                                               
are 50 percent  full.  He said he expected  the rate of donations                                                               
to decline to  a level rate; on the other  hand, facility use has                                                               
increased to 600 visitors this year.   Senate Bill 170 [passed in                                                               
the 29th  Alaska State  Legislature] allowed  GMC to  charge fees                                                               
for services  in order  to become  less reliant  on UGF,  and the                                                               
fees are going to public notice shortly.                                                                                        
                                                                                                                                
MR.  MASTERMAND closed,  noting  that recent  analyses on  Alaska                                                               
coal differ  from accepted knowledge  that coal is a  good source                                                               
for gas but not  for oil; in fact, tests by  USGS and DGGS reveal                                                               
that  Alaska  coal  samples  successfully  produced  oil  in  the                                                               
laboratory  environment, which  suggests that  there may  be more                                                               
exploration opportunities for oil around the state.                                                                             
                                                                                                                                
1:42:52 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE PARISH asked for the  price point for oil at which                                                               
using coal to produce oil becomes economic.                                                                                     
                                                                                                                                
MR. MASTERMAND was  unsure.  The division envisions  that if coal                                                               
is heated in the right way and  oil migrates out of the coal, oil                                                               
would be  trapped in  conventional types of  oil traps,  thus the                                                               
economics would be similar.                                                                                                     
                                                                                                                                
                                                                                                                                
COMMISSIONER  MACK,  referring  to  DGGS data  on  the  Nanuschuk                                                               
structure,  noted  that the  data  is  very important  to  Alaska                                                               
because exploration  to the  west and  south of  existing fields,                                                               
and into the  National Petroleum Reserve -  Alaska (NPRA), reveal                                                               
"stronger  trends  of  ...  this   particular  structure."    The                                                               
department will utilize this data  in its management plan of NPRA                                                               
and new development west toward Wainwright.                                                                                     
                                                                                                                                
MR. WIGGIN added that the  aforementioned seismic data relates to                                                               
GMC [as  data and  materials are  stored there].   The  state has                                                               
accumulated - through the "capital  credit system" - credits that                                                               
have  supported  seismic shoots  of  approximately  49 data  sets                                                               
throughout the state.   This is a large volume  of data, and four                                                               
data sets are  due for release to the public  after being held by                                                               
DNR for ten  years as is directed by statute.   He cautioned that                                                               
it is not  an easy process to manage large  amounts of data sets,                                                               
spanning from the east side to  the west side of the North Slope,                                                               
throughout Cook  Inlet, and  perhaps some  areas of  Middle Earth                                                               
[areas of the state  not on the North Slope or  Cook Inlet].  Mr.                                                               
Wiggin said  the Division of Oil  & Gas (DOG) and  DGGS staff are                                                               
making efforts to  prepare and release the  data; subsequently, a                                                               
fee  package will  be developed  by  GMC.   He characterized  the                                                               
seismic data  as a tremendous  asset for new explorers  that will                                                               
create advantages for lease sales.                                                                                              
                                                                                                                                
1:49:07 PM                                                                                                                    
                                                                                                                                
CO-CHAIR JOSEPHSON  expressed his  understanding that there  is a                                                               
tension in that the state seeks  to release the data to encourage                                                               
development; however, the state has  made an investment to obtain                                                               
the data and has a  proprietary interest.  Further, he questioned                                                               
whether DNR is legally required to release the data.                                                                            
                                                                                                                                
MR. WIGGIN agreed  that the state has made an  investment in data                                                               
that is of  value to the public, to explorers,  and to investors.                                                               
The question is how to release  the data to stimulate desired oil                                                               
production and  not only exploration;  DNR is striving  to ensure                                                               
that the  fees charged for  the data  cover the state's  costs of                                                               
hardware and  personnel.  The value  of the data is  to stimulate                                                               
exploration  and production.    In further  response to  Co-Chair                                                               
Josephson, he opined DNR is required to release the data.                                                                       
                                                                                                                                
REPRESENTATIVE PARISH asked for the value of the data.                                                                          
                                                                                                                                
MR. WIGGINS  responded that the  state has invested  $0.5 billion                                                               
to   $1  billion   in  the   data.     In  further   response  to                                                               
Representative Parish, he  related that one data set  was shot by                                                               
a private individual  at a cost of approximately  $22 million and                                                               
the owner sold the data set for $14 million, twice.                                                                             
                                                                                                                                
REPRESENTATIVE PARISH expressed his  concern about the first user                                                               
selling the data for less than the state.                                                                                       
                                                                                                                                
MR.  WIGGIN  acknowledged that  the  state  has no  mechanism  to                                                               
prevent the  resale of data  after its  release.  He  opined that                                                               
DOG and DGGS  are not tasked to worry about  resales, but to seek                                                               
production and increased oil flowing  through TAPS.  He suggested                                                               
timing the release of data before lease sales.                                                                                  
                                                                                                                                
CO-CHAIR  JOSEPHSON questioned  whether  legislative changes  are                                                               
needed to  facilitate the aforementioned  timing [of  the release                                                               
of data before lease sales].                                                                                                    
                                                                                                                                
COMMISSIONER MACK answered that DNR  seeks an ongoing dialogue in                                                               
this regard.  The current  statutory language directs the release                                                               
of data but does not address  possible benefits to the state from                                                               
said release.                                                                                                                   
                                                                                                                                
1:56:50 PM                                                                                                                    
                                                                                                                                
ED FOGELS, Deputy Commissioner,  Office of the Commissioner, DNR,                                                               
informed the  committee the  Division of  Mining, Land  and Water                                                               
(DMLW) is a foundational division  for DNR and serves as Alaska's                                                               
real estate  agency.  The  division is responsible  for obtaining                                                               
the  state's land  entitlement from  the federal  government, and                                                               
managing  the  state's land  holdings,  water,  and mines.    The                                                               
division issues thousands of permits  ranging from material sales                                                               
and boat docks to placer  mines, and the division's present focus                                                               
is to improve its organizational efficiency.                                                                                    
                                                                                                                                
1:57:58 PM                                                                                                                    
                                                                                                                                
BRENT  GOODRUM, Director,  Central  Office,  Division of  Mining,                                                               
Land  and Water,  DNR,  gave  a short  personal  background.   He                                                               
informed  the  committee that  the  division  is responsible  for                                                               
managing almost 160 million acres,  and its core services include                                                               
acquiring land.   The state remains entitled to  5 million acres,                                                               
and the  division seeks  to make  good selections,  acquire clean                                                               
title,  and legal  public  access.   All  submerged land  beneath                                                               
navigable water bodies  are owned by the state,  and the division                                                               
creates  plans for  the intended  uses and  management of  lands,                                                               
which  are updated  every 20  years.   In addition,  the division                                                               
transfers  land  into  municipal  and  private  ownership,  which                                                               
provides   opportunities  for   Alaskans.      The  division   is                                                               
responsible for  short- and long-term authorizations  for the use                                                               
of land and  water, and regulates water  use, safety, unorganized                                                               
platting  review,  and  activities  related to  coal  and  mining                                                               
reclamation.   The division provides  active stewardship  of land                                                               
and  waters and  collects  revenues  for the  use  of state  land                                                               
(slide 13).   In  2016, the division  generated $28.4  million in                                                               
revenue.   One of  its projects  on the  North Slope  was issuing                                                               
authorizations to  facilitate a  major fiber-optic  cable project                                                               
to  improve  communications.   Currently  underway  is the  North                                                               
Slope Area  Plan that  is being prepared  for public  review, and                                                               
which  is  important  to  the  North  Slope  Borough's  municipal                                                               
entitlements.   Further, the division adopted  the Eastern Tanana                                                               
Area Plan which  provided guidance for over 2.3  million acres of                                                               
state  land.    Recently,  the   division  issued  a  preliminary                                                               
decision   for  the   Lake   and   Peninsula  Borough   municipal                                                               
entitlement.                                                                                                                    
                                                                                                                                
MR. GOODRUM continued,  noting that the division  filed an action                                                               
against  the  federal  government  to establish  clear  title  to                                                               
submerged lands  beneath navigable water bodies,  and was awarded                                                               
attorney's fees and costs in the amount of $600,000.                                                                            
                                                                                                                                
REPRESENTATIVE JOHNSON  asked how much municipal  land remains to                                                               
be conveyed from the federal government.                                                                                        
                                                                                                                                
MR. GOODRUM said the North  Slope [Borough] is owed a significant                                                               
amount  of land;  the  total  amount that  may  be  granted to  a                                                               
municipality  is  identified by  statute  and  regulation, and  a                                                               
formula   determines  the   amount.     The   state  works   with                                                               
municipalities   and  boroughs   to  identify   lands  that   are                                                               
appropriate to convey.  He  clarified that the federal government                                                               
owes  the  state  over  5.3 million  acres;  however,  the  state                                                               
conveys municipal entitlement land to municipalities.                                                                           
                                                                                                                                
2:06:59 PM                                                                                                                    
                                                                                                                                
MR. FOGELS  offered to provide  the committee with the  status of                                                               
[pending] municipal entitlements.                                                                                               
                                                                                                                                
CO-CHAIR  JOSEPHSON said  he was  interested in  the entitlements                                                               
that are due Nikiski.                                                                                                           
                                                                                                                                
2:07:40 PM                                                                                                                    
                                                                                                                                
MR.   GOODRUM   continued,   stating   that   the   division   is                                                               
investigating state  land on  the North Slope  east of  the Point                                                               
Thomson Unit.   The state has the authority  to select additional                                                               
land, however,  there are disagreements  with BLM on  the mapping                                                               
and  survey   techniques  that  are   utilized  by   the  federal                                                               
government.  The division also worked  with BLM on BLM's offer to                                                               
convey land  based on  "a unique survey  methodology ...  at this                                                               
point ...  it's a  continuing dialogue."   Mr.  Goodrum expressed                                                               
his  interest in  finding good  solutions as  to how  the state's                                                               
remaining  land  entitlements  will  be surveyed.    Finally,  he                                                               
pointed out  that the division  is tasked with  conducting tundra                                                               
travel  openings -  which are  determined by  weather and  ground                                                               
conditions - and  announced that the eastern  and western coastal                                                               
areas are  open for certain travel  methods.  In 2016,  173 miles                                                               
of ice  roads and  additional snow  roads were  authorized (slide                                                               
14).                                                                                                                            
                                                                                                                                
REPRESENTATIVE  PARISH asked  whether  remaining land  selections                                                               
will be based on the aforementioned seismic mapping.                                                                            
                                                                                                                                
MR. GOODRUM  confirmed that the  division considers  many factors                                                               
prior to  selecting land.   At  one point in  time the  state was                                                               
required to  identify possible selections, thus  approximately 20                                                               
million  acres have  been  [tentatively]  selected, and  selected                                                               
lands will  have known and  potential resources.   Unfortunately,                                                               
some of the  land the state seeks is not  currently available due                                                               
to  public orders  that  withdraw land  from  the public  domain.                                                               
This  issue   remains  under   discussion  between   the  [state]                                                               
administration, the Alaska  congressional delegation, and federal                                                               
agencies.                                                                                                                       
                                                                                                                                
REPRESENTATIVE RAUSCHER asked  for an estimate of  how many miles                                                               
of ice roads will be built this year.                                                                                           
                                                                                                                                
MR.  GOODRUM was  unsure.   He explained  that the  need for  ice                                                               
roads varies  with oil companies' winter  activities, and offered                                                               
to provide an estimate.                                                                                                         
                                                                                                                                
2:13:18 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE RAUSCHER  recalled that the federal  government is                                                               
looking into  the [Wishbone  Hill Mine], and  he asked  for DNR's                                                               
present position on the project.                                                                                            
                                                                                                                                
MR. FOGELS  responded that  DNR has on  ongoing dispute  with the                                                               
Office  of  Surface  Mining  Reclamation  and  Enforcement,  U.S.                                                               
Department of the Interior, regarding  permitting at the Wishbone                                                               
Hill Mine.   The federal  office alleges  that an error  in DNR's                                                               
permit  15  years  ago  invalidated   the  permit,  although  the                                                               
operator was informed  by the state and  federal governments that                                                               
the permit was  valid, thus the operator has been  acting in good                                                               
faith.   The mine  is not  in production;  DNR has  been "pushing                                                               
back on that" and is evaluating  an appeal of the permit decision                                                               
at this time.                                                                                                                   
                                                                                                                                
MR.  FOGELS  returned  attention  to  an  earlier  question,  and                                                               
emphasized  that 5  million acres  are left  in the  state's land                                                               
entitlement from the  federal government.  He  cautioned that the                                                               
state should not  rush, but be careful and select  the best land.                                                               
Federal encumbrances  prevent the selection  of some of  the best                                                               
known land; however, much of  the land available remains unknown,                                                               
and he urged for the state to make measured choices.                                                                            
                                                                                                                                
REPRESENTATIVE  PARISH  questioned  how  the  data  available  is                                                               
analyzed,  and whether  additional land  grants from  the federal                                                               
government are forthcoming.                                                                                                     
                                                                                                                                
MR.  FOGELS   advised  that  division  staff   is  analyzing  and                                                               
publishing  the data.   In  response to  the second  question, he                                                               
said  more land  from the  federal  government would  need to  be                                                               
authorized by Congress.                                                                                                         
                                                                                                                                
COMMISSIONER  MACK  and  Mr.  Wiggin  provided  brief  background                                                               
information on Ms. Walsh, Director, Division of Oil & Gas (DOG).                                                                
                                                                                                                                
2:19:58 PM                                                                                                                    
                                                                                                                                
CHANTAL  WALSH,  Director,  Central  Office,  DOG,  informed  the                                                               
committee the  Division of  Oil &  Gas has  112 employees  and an                                                               
operating  budget of  over $22  million, of  which 40  percent is                                                               
UGF.   The  responsibility of  the division  is to  conduct lease                                                               
sales, collect  royalties, authorize oil and  gas activities, and                                                               
regulate common-carrier pipelines  for the state.   In support of                                                               
its  objective,   DOG  provides  commercial   analysis,  economic                                                               
modeling, financial  risk assessments, and audits,  following its                                                               
mission,  which  is  to  maximize  prudent  use  of  the  state's                                                               
petroleum  resources for  the greatest  benefit  of all  Alaskans                                                               
(slide 15).   In 2016,  DOG held  the second largest  North Slope                                                               
lease sale by acreage, leasing  approximately 600,000 acres.  The                                                               
lease sale  also generated  the third  largest amount  of revenue                                                               
since  1998.   Adding the  Beaufort Sea  to the  lease sale,  the                                                               
state  received  $17.8 million  and  added  33,000 acres  in  the                                                               
Beaufort  Sea  area.   Next,  she  turned to  the  aforementioned                                                               
release of  seismic data, adding that  in the lease sale  of 2016                                                               
were two seismic parcels, one in  Cook Inlet and one on the North                                                               
Slope,  which was  "picked  up  by a  new  player  for the  North                                                               
Slope."  For  the first time, DOG prepared  a production forecast                                                               
in use  by the  Department of Revenue  (DOR), which  DOG strongly                                                               
believes  is a  probabilistic approach  to previous  performance,                                                               
and  that reveals  a more  accurate view  of near-  and long-term                                                               
production.  Ms. Walsh opined  that the aforementioned production                                                               
forecast  is  a  lean  -  but not  a  conservative  -  production                                                               
forecast,  as many  factors  have driven  production  up late  in                                                               
2016;  however, the  state  is  "riding the  wave  of some  great                                                               
activity on the North Slope in  2014 and [2015] and there's a lag                                                               
period for  that."   She cautioned that  2016 has  less activity,                                                               
thus the  forecast is  an average  forecast.   Also in  2016, DOG                                                               
verified and received almost $1  billion in royalties, rents, and                                                               
bonus  bids on  lease  sales, and  issued  seven royalty  audits,                                                               
three of  which were for  the federal government, and  others for                                                               
ConocoPhillips Alaska, Inc. and  BP, that contributed $27 million                                                               
to state revenues.                                                                                                              
                                                                                                                                
MS. WALSH  continued, noting that  the Federal  Energy Regulatory                                                               
Commission (FERC)  issued an order for  the Trans-Alaska Pipeline                                                               
System (TAPS) to  reduce its tariffs for the period  from 2009 to                                                               
2016, resulting in  $90 million in additional  royalty revenue to                                                               
the state.                                                                                                                      
                                                                                                                                
2:25:09 PM                                                                                                                    
                                                                                                                                
CO-CHAIR   JOSEPHSON  requested   further   information  on   the                                                               
aforementioned federal  audits, and  inquired as to  whether FERC                                                               
concluded that TAPS tariffs were too high.                                                                                      
                                                                                                                                
MS. WALSH  said yes.   The transportation tariffs were  too high,                                                               
thus  less  money  should  have   been  taken  from  the  state's                                                               
royalties.  In  further response to Co-Chair  Josephson, she said                                                               
the state  was a "passive entity";  in fact, the request  to FERC                                                               
to  investigate  the tariffs  was  initiated  by carriers.    She                                                               
returned  to the  presentation, and  stated that  additionally in                                                               
2016, DOG  coordinated state agencies  in processing  permits and                                                               
finalized  [FERC] Resource  Reports  for the  Alaska LNG  Project                                                               
(AKLGN)  and  the  Alaska  Stand   Alone  Pipeline  (ASAP).    In                                                               
addition,  DOG  negotiated  two royalty-in-kind  (RIK)  contracts                                                               
which  sell state  oil  to  Petro Star  Inc.,  and  Tesoro.   She                                                               
clarified that through  RIK contracts, the state  takes the value                                                               
of its royalty in barrels of  oil, which is a financial advantage                                                               
to the state, protects local jobs, and provides fuel.                                                                           
                                                                                                                                
REPRESENTATIVE  PARISH surmised  that the  state was  shorted $90                                                               
million [in regards to the FERC TAPS tariff revision].                                                                          
                                                                                                                                
MS.  WALSH explained  that to  get  its royalty  value the  state                                                               
removes  transportation  costs;  after  carriers  asked  FERC  to                                                               
reassess the  tariff, FERC lowered  the value  of transportation,                                                               
thus the state was owed royalty and interest.                                                                                   
                                                                                                                                
2:29:06 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  PARISH referred  to the  advantages to  the state                                                               
related to  its [RIK contracts]  with Petro Star and  Tesoro, and                                                               
questioned  whether  there  are  similar  opportunities  in  this                                                               
regard.                                                                                                                         
                                                                                                                                
MS. WALSH assured  the committee that the  division will continue                                                               
to explore all similar avenues.                                                                                                 
                                                                                                                                
CO-CHAIR JOSEPHSON  expressed his  understanding that there  is a                                                               
limited domestic need for instate RIK.                                                                                          
                                                                                                                                
2:30:14 PM                                                                                                                    
                                                                                                                                
COMMISSIONER MACK  informed the  committee that a  certain amount                                                               
of   royalty  comes   from  TAPS   throughput,   and  the   state                                                               
historically  has  provided  oil  to the  facilities  of  instate                                                               
processors  such as  Petro  Star  and Tesoro.    Although not  in                                                               
statute, DNR  makes oil available  and has negotiated  a previous                                                               
contract  with   Tesoro.    The   department  will   present  new                                                               
legislation for  a contract providing  crude oil to  Petro Star's                                                               
facility so  that it can  continue refining instate.   He advised                                                               
that  many sources  of oil  are needed  for a  refining business.                                                               
Commissioner Mack  stated that DNR  will explain this  process in                                                               
detail at a later date.                                                                                                         
                                                                                                                                
MS. WALSH  returned attention to  RIK contracts, and  pointed out                                                               
that with the addition of  the Petro Star [contract], the portion                                                               
of  RIK that  the state  takes  is 95  percent of  its portion  -                                                               
leaving 5  percent of that as  royalty in value -  which is close                                                               
to the maximum RIK that can be taken from the pipeline.                                                                         
                                                                                                                                
CO-CHAIR  JOSEPHSON asked  for  clarification  and observed  that                                                               
most of the  state's royalty oil is converted to  cash for either                                                               
the general  fund or the  Alaska Permanent Fund Corporation.   He                                                               
surmised that a  small portion becomes RIK, and  said "95 percent                                                               
of that opportunity has been used up ...."                                                                                      
                                                                                                                                
COMMISSIONER MACK said correct.   The department seeks what is in                                                               
the best  interests for the  state: to take  the oil in  kind and                                                               
sell it on the  market, or ROV, which is selling  the oil back to                                                               
the producers.   The administration's policy is  to evaluate both                                                               
options,  and instate  refiners  employ many,  but he  emphasized                                                               
that the  state has  "maxed out  the sale of  royalty oil  to two                                                               
instate refiners ...."                                                                                                          
                                                                                                                                
REPRESENTATIVE PARISH surmised the state  can have a bigger share                                                               
of  RIK   oil  through  contract  negotiations   with  individual                                                               
producers.  He asked whether  jobs produced and economic activity                                                               
are factored  into the advantages to  the state - in  addition to                                                               
cash value - in RIK transactions.                                                                                               
                                                                                                                                
MS.  WALSH advised  that  when the  state sells  RIK  oil out  of                                                               
Valdez,  it is  not  burdened with  transportation  costs to  the                                                               
Lower 48, as it would be  with ROV, and savings on transportation                                                               
costs create a small financial benefit to the state.                                                                            
                                                                                                                                
REPRESENTATIVE   PARISH   concluded  that   removing   additional                                                               
transportation  costs creates  a higher  value for  the resource,                                                               
and economic activity and jobs created thereby are a bonus.                                                                     
                                                                                                                                
MS. WALSH  said correct.   She returned  to the  presentation and                                                               
said the  final accomplishment for  DOG in 2016  was finalization                                                               
of the  dismantlement, removal, and restoration  (DR&R) agreement                                                               
with Chugach  Electric Association Inc., and  Anchorage Municipal                                                               
Light and Power (ML&P), purchasers  of Beluga River [Unit] assets                                                               
from ConocoPhillips  Alaska, Inc.   The purchasers  have acquired                                                               
additional  liabilities for  DR&R,  and DOG  and DNR  established                                                               
liability accounts in this regard.                                                                                              
                                                                                                                                
MR. FOGELS introduced  Dr. Longan, the director of  the Office of                                                               
Project Management & Permitting,  and informed the committee that                                                               
this  division's central  role  is to  coordinate permitting  for                                                               
large, complex, resource development projects within the state.                                                                 
                                                                                                                                
2:38:35 PM                                                                                                                    
                                                                                                                                
SARA LONGAN,  Executive Director, Office of  Project Management &                                                               
Permitting, DNR, stated  that the Office of  Project Management &                                                               
Permitting (OPMP) supports private  industry, regulators, and the                                                               
general  public by  implementing  a one-stop  permit-coordination                                                               
shop to help secure a consistent  and timely permit process.  The                                                               
office is  "rather self-sufficient" with  the majority of  its FY                                                               
17  $7.8  million  budget paid  through  revenue  generated  from                                                               
private  sources.     This  is  accomplished   through  voluntary                                                               
agreements with mining or oil  companies and thereby, OPMP covers                                                               
its  operational  expenses  and   distributes  funding  to  other                                                               
affected   state   agencies    with   similar   responsibilities.                                                               
Continuing  in FY  17, OPMP  has 15  employees who  earn "a  high                                                               
level  of praise  and acceptance"  for OPMP's  coordination model                                                               
which is unique  to Alaska, and was developed in  the '90s during                                                               
the onset  of the Fort Knox  Mine.  This model  assures companies                                                               
that permit  reviews are robust,  transparent, and  timely (slide                                                               
19).   In 2016, OPMP provided  service in support of  the state's                                                               
most  critical oil  and  gas projects  including:   the  Nanushuk                                                               
Project by Armstrong, which could  produce 120,000 barrels of oil                                                               
per  day   into  TAPS;  Greater   Moose's  Tooth  1  and   2,  by                                                               
ConocoPhillips   Alaska,   Inc.;   Point  Thomson   projects   by                                                               
ExxonMobil Corporation;  the Liberty  project for  Hilcorp, which                                                               
could be the  first production from federal  offshore leases; the                                                               
Smith Bay discovery by Caelus  Energy; and the Nikaitchuq project                                                               
by Eni.                                                                                                                         
                                                                                                                                
DR.  LONGAN,  turning to  mining,  said  that  OPMP has  a  well-                                                               
established mining team which  coordinates proposed and operating                                                               
mines such as:   Donlin Gold, Fort Knox,  Kensington, Nixon Fork,                                                               
Pogo, Red  Dog, and Chuitna.   She explained that  OPMP dedicates                                                               
time and resources to its  role engaging with federal agencies in                                                               
regard to  the National Environmental  Policy Act  (NEPA) reviews                                                               
for energy  and mining projects.   Further, the division  acts as                                                               
the  state's  lead agency  related  to  reviews of  federal  land                                                               
management plans  such as development  in the  National Petroleum                                                               
Reserve-Alaska   (NPR-A),    outer   continental    shelf   (OCS)                                                               
activities, and  issues related to  the Alaska  National Wildlife                                                               
Reserve,  area   1002  (ANWR-1002).     With  support   from  the                                                               
legislature,  agencies,  and  the  public,  OPMP  is  seeking  to                                                               
establish  a  statewide  wetlands mitigation  program,  which  is                                                               
currently under review by the U.S.  Army Corps of Engineers.  She                                                               
explained  that [Section  404] of  the Clean  Water Act  requires                                                               
that  developers  complete  "a major  federal  authorization  and                                                               
regulatory process."   Although the cost of  mitigation to offset                                                               
unavoidable  impacts  to  aquatic resources  is  increasing,  the                                                               
financing  options   for  mitigation  have  been   reduced.    If                                                               
successful,  a statewide  mitigation program  will lower  project                                                               
development  costs and  generate state  revenue.   Also in  2016,                                                               
OPMP renewed a  memorandum of understanding (MOU)  with the North                                                               
Slope Borough  to address issues  related to North Slope  oil and                                                               
gas development, and  to commit both agencies  to collaborate and                                                               
communicate.   Another successful program is  OPMP's coordination                                                               
of  the  Alaska  Geospatial  Council's   efforts  to  develop  an                                                               
accurate topographic base  map of Alaska.  At  this time, mapping                                                               
covers 77 percent  of the state, and she  stressed the importance                                                               
of mapping to explorers and local entities.                                                                                     
                                                                                                                                
2:46:36 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE   RAUSCHER  questioned   whether  the   geospatial                                                               
project is a light detection and ranging (LIDAR) project.                                                                       
                                                                                                                                
DR. LONGAN said yes.                                                                                                            
                                                                                                                                
REPRESENTATIVE  PARISH recalled  the Alaska  Mental Health  Trust                                                               
Authority  is considering  mitigation marketing  and sales  [for]                                                               
carbon  credits,  and asked  whether  OPMP  is working  with  the                                                               
Trust.                                                                                                                          
                                                                                                                                
DR.  LONGAN said  yes.    The division  is  working with  various                                                               
stakeholders to  understand their mitigation needs,  not only for                                                               
the oil and gas industry.                                                                                                       
                                                                                                                                
MR. FOGELS, returning to an  earlier question, clarified that the                                                               
technology used  in geospatial mapping  is similar to  LIDAR, but                                                               
the interferometric  synthetic aperture  (IfSAR) imagery  used is                                                               
taken from 30,000 feet and provides five-meter accuracy.                                                                        
                                                                                                                                
CO-CHAIR TARR  returned attention to OPMP's  [proposed] statewide                                                               
mitigation  program  and  expressed her  understanding  that  404                                                               
permits currently come  through BLM.  She  questioned whether the                                                               
state  would establish  primacy over  BLM though  another federal                                                               
agency.                                                                                                                         
                                                                                                                                
2:49:15 PM                                                                                                                    
                                                                                                                                
DR.  LONGAN answered  that 404  permits are  administered by  the                                                               
U.S.  Army  Corps  of  Engineers.   At  the  time  ConocoPhillips                                                               
Alaska, Inc.,  sought a  404 permit from  the Corps  of Engineers                                                               
and a right-of-way from BLM within  NPR-A, it was required to pay                                                               
additional mitigation costs  because of the Clean  Water Act "404                                                               
program."    There  has  been   momentum  from  Washington,  D.C.                                                               
requiring  the  Corps  of  Engineers,   BLM,  and  other  federal                                                               
agencies  to  establish  individual  mitigation  policies.    She                                                               
advised  that additional  mitigation  policies  will probably  be                                                               
reevaluated  by the  incoming federal  administration.   Further,                                                               
over  two  years  ago,  DNR  partnered  with  the  Department  of                                                               
Environmental Conservation  (DEC) to  evaluate whether  the state                                                               
should  seek  Clean Water  Act  jurisdiction  from the  Corps  of                                                               
Engineers.   In  this regard,  research showed  that the  state's                                                               
assumption  of  this  federal  function  is  complicated  by  the                                                               
proposed Waters of the United  States (WOTUS) rules that have now                                                               
been issued.  Dr. Longan remarked:                                                                                              
                                                                                                                                
     The intent was clarification  of what types of wetlands                                                                    
     and  water bodies  would  be  jurisdictional under  the                                                                    
     Clean  Water  Act  ....     It  generated  a  lot  more                                                                    
     confusion,  it was  litigated  almost immediately,  and                                                                    
     the  WOTUS  rule   ...  is  sort  of   in  ...  lawsuit                                                                    
     purgatory.    It's  another rule  that  I  believe  the                                                                    
     incoming administration  will be  asked to take  a look                                                                    
     at.                                                                                                                        
                                                                                                                                
2:52:17 PM                                                                                                                    
                                                                                                                                
CO-CHAIR TARR surmised Alaska would  have been the first state to                                                               
pursue [assumption of the federal function of 404 permits].                                                                     
                                                                                                                                
MR.  FOGELS  noted  that  Alaska  would be  the  third  state  to                                                               
establish primacy.                                                                                                              
                                                                                                                                
CO-CHAIR TARR  understood that the  state does not have  funds to                                                               
continue the effort, but has the information gleaned.                                                                           
                                                                                                                                
DR. LONGAN  said correct.   Further, DEC discovered from  the two                                                               
states  that  have  assumed   jurisdiction  that  the  regulatory                                                               
program is  sizable and expensive  to administer.   Therefore, in                                                               
order to address  the problem of additional  mitigation costs and                                                               
less  opportunity for  companies to  acquire mitigation  credits,                                                               
OPMP believes a more direct  solution is to pursue development of                                                               
the statewide wetlands mitigation program.                                                                                      
                                                                                                                                
2:55:10 PM                                                                                                                    
                                                                                                                                
FABIENNE  PETER-CONTESSE, Director,  Central Office,  Division of                                                               
Support Services,  DNR, gave brief  background information.   She                                                               
informed  the committee  the Division  of Support  Services (SSD)                                                               
differs from  other administrative services divisions  in that it                                                               
has the following three components:                                                                                             
                                                                                                                                
   ·  The information resource management (IT) section, which is                                                                
      the keeper of the land records for the state, provides                                                                    
      desktop   and   network   support,   business   application                                                               
     development, and geographic information systems (GIS)                                                                      
                                                                                                                                
   ·  The recorder's office of uniform commercial code, which                                                                   
      records documents in the state permanent record                                                                           
                                                                                                                                
   ·  The administrative services section, which provides                                                                       
      management  to help  with  the budget  for the  department,                                                               
      financial  management,  procurement, human  resources,  and                                                               
      also processes the revenue that  flows to the state through                                                               
      DNR.                                                                                                                      
                                                                                                                                
MS.  PETER-CONTESSE noted  that in  2016, the  division continued                                                               
work on  a consolidation of  desktop support with  the Department                                                               
of  Administration   (DOA),  saving  DOA  about   $200,000.    In                                                               
addition,  the  division's  IT   component  is  streamlining  the                                                               
permitting process  with the Division  of Mining, Land  and Water                                                               
to  implement  the uniform  permitting  system.   The  recorder's                                                               
office  component has  provided  electronic recording  statewide,                                                               
reducing  costs  by  $450,000, eliminated  eight  positions,  and                                                               
closed six offices,  all without loss in state  revenue.  Finally                                                               
in 2016,  the administrative  services component  participated in                                                               
the  shared statewide  initiative to  consolidate and  streamline                                                               
processes related to travel and accounting.                                                                                     
                                                                                                                                
REPRESENTATIVE BIRCH asked how land  status related to rights-of-                                                               
way is monitored.                                                                                                               
                                                                                                                                
MR. FOGELS responded that the  division tracks state land records                                                               
after  the  land  becomes  state   land.    The  Bureau  of  Land                                                               
Management  tracks,   for  example,   land  records   for  Native                                                               
corporation land  that is conveyed  from the  federal government.                                                               
As DMLW sells a subdivision, the  information is sent to SSD thus                                                               
the management  conveyances happen in  DMLW, and are  recorded by                                                               
SSD.  In  further response to Representative  Birch, he explained                                                               
that a  legally established right-of-way  or lease on  state land                                                               
would  be noted  on the  land  plats, and  subsequently would  be                                                               
excluded from sale by DMLW.                                                                                                     
                                                                                                                                
3:03:00 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
2017 DNR Overview for House Resources.pdf HRES 1/20/2017 1:00:00 PM
Department Overview: Alaska Department of Natural Resources
House Resources Bill Hearing Request Requirements.pdf HRES 1/20/2017 1:00:00 PM
House Resources Housekeeping
House Resources Committee Amendment Process.pdf HRES 1/20/2017 1:00:00 PM
House Resources Housekeeping
2013 Division of Agriculture Revolving Loan Fund Legislative Audit.pdf HRES 1/20/2017 1:00:00 PM
Department of Natural Resources Overview
A Performance Audit of the Alaska Agriculture and Fisheries Products Preference.pdf HRES 1/20/2017 1:00:00 PM
Department of Natural Resources Overview
16_11_10_EIRMP_GCR_Appeal_SOA.pdf HRES 1/20/2017 1:00:00 PM
2016-11-08 Neil Kornze BLM ltr.pdf HRES 1/20/2017 1:00:00 PM
2017 DNR Overview for House Resources.pdf HRES 1/20/2017 1:00:00 PM
AIWFMP Short Brief w Pics.pdf HRES 1/20/2017 1:00:00 PM
Liquid_hydrocarbon_potential_white_paper_simplified_final.pdf HRES 1/20/2017 1:00:00 PM
MunicipalEntitlementSummary-rev1.pdf HRES 1/20/2017 1:00:00 PM
Responses to Questions from House Resources during DNR overview.pdf HRES 1/20/2017 1:00:00 PM