Legislature(2017 - 2018)BARNES 124

03/05/2018 01:00 PM House RESOURCES

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Audio Topic
01:04:45 PM Start
01:05:22 PM HB355
01:32:38 PM Presentation(s): Food Security in Alaska
02:26:24 PM Presentation(s): Alaska Oil and Gas Conservation Commission
03:12:51 PM Adjourn
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ Presentation: How do we use AK's rich resources TELECONFERENCED
to create jobs, promote health & healthy
communities & keep our food traditions &
cultures alive?
- Dr. Gary Ferguson
- Danny Consenstein
- Ken Meter
-- Testimony <Invitation Only> --
+ Presentation: AK Oil & Gas Conservation TELECONFERENCED
- Hollis French
- Kathy Foerster
-- Testimony <Invitation Only> --
Heard & Held
-- Testimony <Invitation Only> --
+ Bills Previously Heard/Scheduled TELECONFERENCED
                    ALASKA STATE LEGISLATURE                                                                                  
               HOUSE RESOURCES STANDING COMMITTEE                                                                             
                         March 5, 2018                                                                                          
                           1:04 p.m.                                                                                            
MEMBERS PRESENT                                                                                                               
Representative Andy Josephson, Co-Chair                                                                                         
Representative Geran Tarr, Co-Chair                                                                                             
Representative Harriet Drummond                                                                                                 
Representative Justin Parish                                                                                                    
Representative Chris Birch                                                                                                      
Representative DeLena Johnson                                                                                                   
Representative George Rauscher                                                                                                  
Representative David Talerico                                                                                                   
Representative Chris Tuck (alternate)                                                                                           
MEMBERS ABSENT                                                                                                                
Representative John Lincoln, Vice Chair                                                                                         
Representative Mike Chenault (alternate)                                                                                        
COMMITTEE CALENDAR                                                                                                            
HOUSE BILL NO. 355                                                                                                              
"An Act  relating to the  crime of criminally  negligent burning;                                                               
relating to protection  of and fire management  on forested land;                                                               
relating to prohibited acts and  penalties for prohibited acts on                                                               
forested land; and providing for an effective date."                                                                            
     - HEARD & HELD                                                                                                             
PRESENTATION(S):  FOOD SECURITY IN ALASKA                                                                                       
     - HEARD                                                                                                                    
PRESENTATION(S):  ALASKA OIL AND GAS CONSERVATION COMMISSION                                                                    
     - HEARD                                                                                                                    
PREVIOUS COMMITTEE ACTION                                                                                                     
BILL: HB 355                                                                                                                  
SHORT TITLE: FIRE;FOREST LAND; CRIMES;FIRE PREVENTION                                                                           
SPONSOR(s): REPRESENTATIVE(s) GUTTENBERG                                                                                        
02/16/18       (H)       READ THE FIRST TIME - REFERRALS                                                                        
02/16/18       (H)       RES, JUD                                                                                               
02/28/18       (H)       RES AT 1:00 PM BARNES 124                                                                              
02/28/18       (H)       Heard & Held                                                                                           
02/28/18       (H)       MINUTE(RES)                                                                                            
02/28/18       (H)       RES AT 6:00 PM BARNES 124                                                                              
02/28/18       (H)       Heard & Held                                                                                           
02/28/18       (H)       MINUTE(RES)                                                                                            
03/05/18       (H)       RES AT 1:00 PM BARNES 124                                                                              
WITNESS REGISTER                                                                                                              
REPRESENTATIVE DAVID GUTTENBERG                                                                                                 
Alaska State Legislature                                                                                                        
Juneau, Alaska                                                                                                                  
POSITION STATEMENT:  As prime sponsor, presented HB 355.                                                                      
ANNE NELSON, Senior Assistant Attorney General                                                                                  
Natural Resources Section                                                                                                       
Civil Division (Anchorage)                                                                                                      
Department of Law (DOL)                                                                                                         
Anchorage, Alaska                                                                                                               
POSITION STATEMENT:  Answered a question regarding HB 355.                                                                    
DARRELL BREESE, Staff                                                                                                           
Representative George Rauscher                                                                                                  
Alaska State Legislature                                                                                                        
Juneau, Alaska                                                                                                                  
POSITION STATEMENT:  Speaking on behalf of Representative                                                                     
Rauscher, explained Amendment 1 to HB 355.                                                                                      
CHRIS MAISCH, State Forester, Director                                                                                          
Division of Forestry                                                                                                            
Department of Natural Resources (DNR)                                                                                           
Fairbanks, Alaska                                                                                                               
POSITION STATEMENT:  Answered questions regarding HB 355.                                                                     
DANNY CONSENSTEIN, Board Member                                                                                                 
Alaska Food Policy Council (AFPC)                                                                                               
Anchorage, Alaska                                                                                                               
POSITION STATEMENT:  Presented the Alaska Food Policy Council                                                                 
Strategic Plan dated 1/12/12.                                                                                                   
KEN METER, Consultant                                                                                                           
Crossroads Resource Center (CRC)                                                                                                
Minneapolis, Minnesota                                                                                                          
POSITION   STATEMENT:     Provided   a  PowerPoint   presentation                                                             
entitled, "Building  Food Security in Alaska,"  dated 3/5/18, and                                                               
answered questions.                                                                                                             
GARY FERGUSON, BS, ND                                                                                                           
Healthy Communities Consultant                                                                                                  
Anchorage, Alaska                                                                                                               
POSITION   STATEMENT:     Provided   a  PowerPoint   presentation                                                             
entitled,  "Addressing  Nutrition   Insecurity  with  Traditional                                                               
Foods," undated.                                                                                                                
HOLLIS FRENCH, Commissioner, Chair                                                                                              
Alaska Oil and Gas Conservation Commission (AOGCC)                                                                              
Anchorage, Alaska                                                                                                               
POSITION  STATEMENT:    Provided a  PowerPoint  presentation  and                                                             
expressed AOGCC's  opinion that  legislation is  needed regarding                                                               
plugging liability for oil and gas wells in Alaska.                                                                             
CATHY FOERSTER, Commissioner                                                                                                    
Alaska Oil and Gas Conservation Commission (AOGCC)                                                                              
Anchorage, Alaska                                                                                                               
POSITION  STATEMENT:    Answered  questions  related  to  AOGCC's                                                             
opinion that  legislation is needed regarding  plugging liability                                                               
for oil and gas wells in Alaska.                                                                                                
ACTION NARRATIVE                                                                                                              
1:04:45 PM                                                                                                                    
CO-CHAIR  GERAN   TARR  called   the  House   Resources  Standing                                                             
Committee  meeting to  order at  1:04 p.m.  Representatives Tarr,                                                               
Josephson, Birch, Parish, Talerico,  Rauscher, Drummond, and Tuck                                                               
(alternate) were  present at the  call to order.   Representative                                                               
Johnson arrived as the meeting was in progress.                                                                                 
        HB 355-FIRE;FOREST LAND; CRIMES;FIRE PREVENTION                                                                     
1:05:22 PM                                                                                                                    
CO-CHAIR TARR  announced that the  first order of  business would                                                               
be  HOUSE  BILL  NO.  355,  "An Act  relating  to  the  crime  of                                                               
criminally negligent burning; relating  to protection of and fire                                                               
management  on forested  land; relating  to  prohibited acts  and                                                               
penalties  for prohibited  acts on  forested land;  and providing                                                               
for an effective date."                                                                                                         
1:06:22 PM                                                                                                                    
REPRESENTATIVE  DAVID GUTTENBERG,  Alaska  State Legislature,  as                                                               
prime  sponsor, presented  HB  355.   He  explained  that HB  355                                                               
addresses  fire safety,  suppression,  and education.   The  bill                                                               
seeks to  restructure the  way fines are  levied, called  a bail,                                                               
which is  whether a person receives  a ticket, or goes  to court,                                                               
or is pursued because of  deliberately setting a fire that caused                                                               
considerable  damage.    The  bill   also  includes  a  component                                                               
addressing fire  safety, as  well as  clarifies the  authority of                                                               
fire   prevention  officers   to   enter   private  property   to                                                               
investigate  fires.   Currently,  if  it  is post-fire  and  fire                                                               
prevention officers  need to investigate,  they must  receive the                                                               
property  owner's permission  and without  said permission,  they                                                               
need to obtain a warrant for access.                                                                                            
1:07:36 PM                                                                                                                    
REPRESENTATIVE TUCK asked if a subpoena is required for access.                                                                 
REPRESENTATIVE GUTTENBERG replied that  if a [wildland] fire goes                                                               
through  private property,  fire prevention  officers can  access                                                               
the  property  to  suppress,  control,  and  put  out  the  fire.                                                               
However,  to further  investigate after  the fire,  officers must                                                               
have  the property  owner's  permission or  obtain  a warrant  if                                                               
permission is denied.                                                                                                           
1:09:10 PM                                                                                                                    
REPRESENTATIVE RAUSCHER  moved to adopt Amendment  1, labeled 30-                                                               
LS1382\D.2, Radford, 3/1/18, which read:                                                                                        
     Page 2, lines 10 - 11:                                                                                                     
          Delete "or a destructive agent"                                                                                       
          Insert "[OR A DESTRUCTIVE AGENT]"                                                                                     
     Page 2, line 12:                                                                                                           
          Delete "at any time"                                                                                                  
          Insert ", when responding to a wildland fire or                                                                   
     suspected fire, [AT ANY TIME]"                                                                                         
     Page 2, lines 14 - 15:                                                                                                     
          Delete "or a destructive agent"                                                                                       
          Insert "[OR A DESTRUCTIVE AGENT]"                                                                                     
CO-CHAIR JOSEPHSON objected for discussion purposes.                                                                            
1:09:35 PM                                                                                                                    
REPRESENTATIVE RAUSCHER  explained Amendment  1 limits  the times                                                               
when forestry  officials can enter  private property  by deleting                                                               
the  words "at  any time"  and  inserting "when  responding to  a                                                               
wildland fire or  suspected fire," and deletes  "or a destructive                                                               
agent."  He said the  amendment preserves the property rights and                                                               
the privacy of  property owners.  He  acknowledged officials need                                                               
to investigate  nearby properties  during a fire  and immediately                                                               
after, but [without the amendment]  officials could enter private                                                               
properties at a much later time.                                                                                                
1:11:35 PM                                                                                                                    
REPRESENTATIVE JOSEPHSON  questioned why Amendment 1  deletes and                                                               
inserts "or a destructive agent."                                                                                               
REPRESENTATIVE RAUSCHER said the  definition of destructive agent                                                               
includes  bugs, which  is  not  a valid  reason  to access  one's                                                               
private property at any time.                                                                                                   
1:12:38 PM                                                                                                                    
ANNE   NELSON,  Senior   Assistant   Attorney  General,   Natural                                                               
Resources Section, Civil Division  (Anchorage), Department of Law                                                               
(DOL), stated she was also confused  by whether the intent of the                                                               
amendment was to remove "destructive agent".                                                                                    
The committee took a brief at-ease.                                                                                             
1:14:18 PM                                                                                                                    
DARRELL  BREESE, Staff,  Representative  George Rauscher,  Alaska                                                               
State Legislature,  said the definition  of destructive  agent is                                                               
found in AS 41.15.170 as follows:                                                                                               
      destructive agent means an insect, pathogen or other                                                                      
       environmental agent that causes damage to a forest                                                                       
MR.   BREESE  further   explained  that   Division  of   Forestry                                                               
regulation  41 AAC  9595 places  the onus  for addressing  insect                                                               
infestation  wholly on  the property  owner  with the  division's                                                               
approval  or disapproval  of  the method  the  property owner  is                                                               
using.   As  written, the  amendment would  delete language  from                                                               
both HB 355 and from existing statute by the bracketed language.                                                                
1:15:40 PM                                                                                                                    
CO-CHAIR  TARR  requested  Mr.  Chris  Maisch  to  speak  to  why                                                               
"destructive agent"  is in current  statute and  whether removing                                                               
that term would be a problem.                                                                                                   
1:15:40 PM                                                                                                                    
CHRIS  MAISCH, State  Forester, Director,  Division of  Forestry,                                                               
Department of  Natural Resources (DNR), stated  that AS 41.15.020                                                               
gives the DNR commissioner the  power to make regulations related                                                               
to fires  and destructive agents  and that this definition  [of a                                                               
destructive agent]  is used in  numerous places in statute.   For                                                               
example, in an  emergency the commissioner can declare  a zone of                                                               
infestation and  then emergency regulations to  address something                                                               
such as a  bark beetle outbreak.  He advised  that in its history                                                               
the  Division of  Forestry has  not needed  to make  use of  this                                                               
statutory authority, but it exists for that reason.                                                                             
1:17:13 PM                                                                                                                    
CO-CHAIR  JOSEPHSON posited  that the  amendment would  prevent a                                                               
fire  officer  right of  entry  to  forested  land to  address  a                                                               
destructive agent, and an officer  would only have right of entry                                                               
when  responding to  a wildland  fire or  a suspected  fire.   He                                                               
surmised  the  amendment's  goal  of protecting  the  privacy  of                                                               
private property owners reaches across public lands.                                                                            
MR.  MAISCH  replied  that  his comments  were  narrowed  to  the                                                               
"destructive agent"  piece, but that the  aforementioned would be                                                               
a concern.   He said the division has other  authority to declare                                                               
a zone of infestation to address  an issue of insects or disease,                                                               
although  he  would  read  the  amendment  narrowly  as  Co-Chair                                                               
Josephson described when it refers  to wildland fire or suspected                                                               
fire and  that there  could be  some potential  conflicts between                                                               
the two.                                                                                                                        
CO-CHAIR  JOSEPHSON  stated  he   has  some  concerns  about  the                                                               
expansiveness of  this section under  the bill and  under current                                                               
law.  He  said his understanding of criminal procedure  is that a                                                               
person could  still file motion practice  and say notwithstanding                                                               
this  statute  or  this  bill,  something  should  be  suppressed                                                               
because  someone's  rights weren't  read  to  them or  a  warrant                                                               
should  have issued,  although one  would think  that this  might                                                               
support  the  state's  argument  that  a  warrant  wasn't  always                                                               
necessary.   He  said he  is making  the point  that there  could                                                               
still  be an  assortment  of motion  practice  in criminal  court                                                               
1:19:46 PM                                                                                                                    
REPRESENTATIVE BIRCH observed the  term destructive agent appears                                                               
in  multiple locations  in the  bill and  the bill  title relates                                                               
generally to  burning, negligent burning, and  everything related                                                               
to fire.   He asked whether the division  can quarantine property                                                               
due to  issues such as dead  standing trees on public  or private                                                               
land, without consent of the property owner.                                                                                    
MR. MAISCH responded  he could not envision a  unilateral case in                                                               
which  the  division would  enter  property  without first  going                                                               
through  forest  practices   statutory  authority  involving  the                                                               
commissioner and a  best interest finding to establish  a zone of                                                               
infestation,  which   could  be   insects,  diseases,   or  other                                                               
pathogens,  and then  enacting emergency  regulations on  how the                                                               
division  would  intend  to  deal with  that,  which  could  mean                                                               
treatments on  private lands.   There would be a  more exhaustive                                                               
process  for the  division to  go through  besides just  making a                                                               
unilateral  decision  that  it   would  take  action  under  this                                                               
statute.  This statute is really focused on the fire piece.                                                                     
REPRESENTATIVE  BIRCH   surmised  this   accommodation  currently                                                               
MR. MAISCH answered correct.                                                                                                    
MR. BREESE pointed out that the  section that would be amended by                                                               
Amendment 1, AS  41.15.040, deals specifically with  the right of                                                               
entry to control  and to suppress fires.  So,  if this section is                                                               
amended, the  Division of  Forestry would still  have a  right to                                                               
enter for  any other  reasons, such as  insect infestation.   The                                                               
changes suggested  by the amendment  are to limit the  entry when                                                               
[the division] is controlling and suppressing fires.                                                                            
1:22:49 PM                                                                                                                    
REPRESENTATIVE PARISH expressed his  concern about denying [state                                                               
fire officers] access  to land to prevent a  fire, to investigate                                                               
a  negligent fire,  or  to investigate  after a  fire.   He  said                                                               
Amendment 1 is overly restrictive and he cannot support it.                                                                     
REPRESENTATIVE  DRUMMOND   noted  the  state  forester   did  not                                                               
indicate a destructive agent has  been an issue for the division.                                                               
Furthermore,  she  said,  if   insects,  diseases,  or  pathogens                                                               
contribute  to  fire danger  by  killing  trees, the  destructive                                                               
agent language must be part  of the assessment in fire prevention                                                               
by the division, and  there is no reason to remove  it.  She said                                                               
she therefore cannot support Amendment 1.                                                                                       
REPRESENTATIVE JOSEPHSON stated he opposes  Amendment 1.  The law                                                               
as  written allows  a fire  officer to  enter public  and private                                                               
land to  prevent prospective fires because  of destructive agents                                                               
such as  bug infestations,  he said, and  he doesn't  have enough                                                               
knowledge  to say  that that  should be  prohibited.   He further                                                               
cautioned  against  encumbering  a  fire  official's  ability  to                                                               
access and inspect public land.                                                                                                 
1:26:19 PM                                                                                                                    
REPRESENTATIVE TUCK  asked whether  a destructive agent  could be                                                               
something   that   may   be  administered   to   prevent   insect                                                               
infestation.    He  requested  clarification  on  the  intent  of                                                               
existing statute regarding destructive agent.                                                                                   
MR.  MAISCH  responded  that  destructive  agent  is  defined  in                                                               
statute  and means  insect pathogen  or environmental  agent that                                                               
can cause  damage to  the forest resource.   Whatever  the cause,                                                               
standing  dead timber  is  a more  receptive  and dangerous  fuel                                                               
source  to  wildland  fire  than  is  a  standing  green  forest.                                                               
Destructive  agent  is  rather  broad,  but  in  the  context  of                                                               
forestry  operations,  it  would  primarily be  for  spruce  bark                                                               
beetle infestations.   He reminded  members that the  spruce bark                                                               
beetle  infestation on  the Kenai  Peninsula was  substantial and                                                               
crossed public and  private ownership.  He  advised that prevent,                                                               
control, and suppress all have specific meanings in forestry.                                                                   
1:28:43 PM                                                                                                                    
REPRESENTATIVE TUCK surmised the  purpose of having this language                                                               
in  this section  is to  allow the  division to  check whether  a                                                               
property  owner  is  applying  flammable  agents  and/or  whether                                                               
something needs  to be applied  to prevent the trees  from drying                                                               
out and becoming a fire hazard.                                                                                                 
MR. MAISCH answered the division would  not be checking on what a                                                               
property  owner is  applying.   He explained  that if  a property                                                               
owner  has  cut a  lot  of  timber  on  his/her land  and  hasn't                                                               
properly  treated  the  slash  or disposed  of  the  material  it                                                               
becomes a  breeding source for  the insects and then  the insects                                                               
can spread  onto adjoining private  or public lands.   Therefore,                                                               
that would be  the reason why forestry division  staff would need                                                               
access to a piece of property.                                                                                                  
1:29:41 PM                                                                                                                    
REPRESENTATIVE  TUCK offered  his  understanding  that there  are                                                               
regulations which require  downed trees be treated  with a proper                                                               
destructive  agent and  the  purpose of  this is  to  be able  to                                                               
inspect  whether the  downed  trees have  been  treated with  the                                                               
proper destructive agent.                                                                                                       
MR. MAISCH  replied correct, it  would be  a control method.   He                                                               
explained  there  are numerous  control  methods  for keeping  an                                                               
insect infestation  or potential  infestation under control.   It                                                               
is how the  slash is treated - which could  be chemical treatment                                                               
or  physical  treatment  such as  bucking,  burning,  or  burial.                                                               
There are many ways to do  that and those are addressed under the                                                               
separate Alaska Forest Resources and Practices Act statute.                                                                     
1:30:47 PM                                                                                                                    
REPRESENTATIVE  DRUMMOND  said  any  organization  authorized  to                                                               
prevent,  control, or  suppress a  fire includes  any one  of the                                                               
volunteer or  paid fire departments  in the  state's communities.                                                               
She  noted the  Anchorage fire  department has  been working  for                                                               
years to remove excess dry  timber on "the hillside" in Anchorage                                                               
because it is  extremely difficult or impossible to  get water to                                                               
that area  given the  size of  the roads.   Therefore,  she said,                                                               
close  attention must  be paid  to  who would  be prevented  from                                                               
getting to the source of a fire or potential source of a fire.                                                                  
1:31:48 PM                                                                                                                    
CO-CHAIR  TARR held  over HB  355  with Amendment  1 pending  for                                                               
further discussion.                                                                                                             
^PRESENTATION(S):  FOOD SECURITY IN ALASKA                                                                                      
           PRESENTATION(S):  FOOD SECURITY IN ALASKA                                                                        
1:32:38 PM                                                                                                                    
CO-CHAIR TARR announced that the  next order of business would be                                                               
presentations on food security in Alaska.                                                                                       
1:34:15 PM                                                                                                                    
DANNY  CONSENSTEIN,  Board  Member, Alaska  Food  Policy  Council                                                               
(AFPC),  informed  the  committee  that the  Alaska  Food  Policy                                                               
Council (AFPC)  is a  coalition of Alaskans  working to  create a                                                               
healthier and  more secure, self-reliant Alaska  by improving its                                                               
food system.  He said a food  system is a term that describes how                                                               
food is  acquired and used  in a region,  from the source  of the                                                               
food to  how it  is stored, distributed,  and consumed,  which is                                                               
also known as a foodshed.                                                                                                       
MR. CONSENSTEIN provided a brief  background of farming in Alaska                                                               
and the role  agriculture has played in the growth  of the state.                                                               
He stressed farming's  impact on the state's  economy, the health                                                               
of  its  residents,  and  in  supporting  diverse  cultures,  but                                                               
questioned  whether  the  Alaska  food system  is  working  well.                                                               
Therefore, he  said, the  AFPC decided to  explore what  a strong                                                               
food system would look like.   Drawing attention to pages 8-11 of                                                               
the AFPC Strategic Plan dated  1/12/12, he reported that AFPC set                                                               
five goals to strengthen the food  system.  Goal 1, he explained,                                                               
is that  all Alaskans should  have access to  affordable, healthy                                                               
(preferably local) foods.   Goal 2 is  that Alaska's food-related                                                               
industries  should  have a  strong  workforce  and operate  in  a                                                               
supportive business environment.   Goal 3 is to  ensure that food                                                               
is  safe and  protected as  it is  distributed.   Goal 4  is that                                                               
Alaska should have  a sustainable food system,  meaning the state                                                               
can keep  growing food and  growing enough food to  feed Alaskans                                                               
in the future.  Goal 5 is  that Alaskans should be engaged in the                                                               
state's food  system.  While  those are the goals,  he continued,                                                               
the hard part about building a  stronger food system is how to do                                                               
it; for example, whether policies need to be changed.                                                                           
1:39:37 PM                                                                                                                    
MR. CONSENSTEIN related that the  Alaska Food Policy Council took                                                               
some early  steps, one being  related to procurement, which  is a                                                               
big  driver.   While consumers  are already  purchasing a  lot of                                                               
Alaska grown products and want  to buy Alaska grown, the question                                                               
is whether  Alaska's institutions  are buying  Alaska grown.   He                                                               
stated  that if  the engine  of procurement  was working  and the                                                               
state  and school  districts were  purchasing Alaska  grown, then                                                               
the private  sector food producers  would fill that gap  from the                                                               
supply  side.   For  example, AFPC  encouraged  more programs  in                                                               
schools - the  Nutritional Alaska Food in  Schools Program helped                                                               
schools purchase from  the farm - and AFPC  supported the product                                                               
preference, or  7 percent, statute.   The AFPC worked  with local                                                               
communities on  emergency planning  because thinking  about being                                                               
prepared for the next emergency is a step towards food security.                                                                
MR. CONSENSTEIN,  regarding the  goal of engaging  Alaskans, said                                                               
AFPC has  sponsored three statewide  conferences to  bring people                                                               
together to  learn more.   He related that AFPC  also facilitated                                                               
dialog  in the  communities of  Nome, Fairbanks,  Palmer, Bethel,                                                               
Juneau,  Homer,  and Anchorage.    Further,  AFPC encouraged  the                                                               
state administration to form a  work group so that state agencies                                                               
with  different responsibilities  around  food could  communicate                                                               
and coordinate better  and become more efficient,  which was done                                                               
under Governor Parnell.                                                                                                         
MR.  CONSENSTEIN stated  AFPC is  now looking  at members  of the                                                               
legislature to think  about changes in policy that  could build a                                                               
stronger  food system.    To move  forward,  he explained,  there                                                               
needs to  be an  understanding of  where the state  is now.   The                                                               
AFPC hired  Ken Meter, an  economist from Minnesota who  has done                                                               
this for  other regions and  states, to  do a food  assessment of                                                               
Alaska  and  the executive  summary  of  his  report [is  in  the                                                               
committee packet].                                                                                                              
1:42:53 PM                                                                                                                    
REPRESENTATIVE   BIRCH   inquired   whether   Mr.   Consenstein's                                                               
presentation is related to any legislation before the body.                                                                     
MR. CONSENSTEIN replied  his presentation is not  in reference to                                                               
any  particular legislation,  but that  several bills  are before                                                               
the body that AFPC supports and  that would go towards building a                                                               
stronger food system.  The point  of his presentation and that of                                                               
others today,  he explained,  is to  provide an  understanding of                                                               
how  the  state's  food  system  impacts  Alaskans,  the  state's                                                               
economic development, the health  of Alaskans, and food security.                                                               
He offered  his hope that the  committee or other members  of the                                                               
legislature might work  with AFPC, a nonprofit  think tank around                                                               
food  and food  policy,  to  come up  with  some legislation  for                                                               
introduction in the  next session that would  strengthen the food                                                               
1:44:32 PM                                                                                                                    
KEN   METER,  Consultant,   Crossroads  Resource   Center  (CRC),                                                               
provided  a  PowerPoint  presentation  entitled,  "Building  Food                                                               
Security in  Alaska," dated 3/5/18.   He explained his  study was                                                               
conducted by  talking to several  dozen people around  Alaska and                                                               
doing economic  research.  He turned  to a picture of  the Juneau                                                               
airport on  slide 1 and reminded  members that the food  for many                                                               
Alaskans comes  by airplane.   He said the  map on slide  2 lists                                                               
the studies he has  done - 136 regional studies in  a total of 40                                                               
states  and  2 Canadian  provinces,  as  well  as studies  for  3                                                               
tribes.    The  list,  he noted,  indicates  how  widespread  the                                                               
discussion is about food and his role in that.                                                                                  
MR.  METER  stated the  next  three  slides show  some  different                                                               
approaches in  Alaska to food security.   Slide 3, he  said, is a                                                               
picture of the  Chena Hot Springs greenhouse,  which taps surplus                                                               
heat from  the hot springs to  raise vegetables that are  sold to                                                               
the people  visiting the hot  springs.  Slide  4 is a  picture of                                                               
traditional  salmon  drying  in  Kotzebue.   Slide  5  shows  the                                                               
greenhouse at Tim Meyer's farm  in Bethel above the Arctic Circle                                                               
where he grows vegetables to sell to Bethel residents.                                                                          
1:46:37 PM                                                                                                                    
MR. METER  displayed slide  6 and  noted Alaska's  population has                                                               
grown from  about 300,000  in 1969  to over  700,000 in  2016, an                                                               
increase of 151 percent over 48  years (slide 7).  Addressing the                                                               
graph on  slide 8 he related  that the personal income  in Alaska                                                               
has gone from $10 billion in  1969 to over $40 billion [in 2016],                                                               
an  increase  of 304  percent  (slide  9).    He said  these  two                                                               
datapoints pose  an interesting question because  one would think                                                               
that the economics of farming  would be improving since there are                                                               
more people  with more money to  spend to buy food.   However, he                                                               
stated, that is not really the case.                                                                                            
MR. METER turned  to slide 10 and reported his  study showed that                                                               
Alaska residents buy  about $2.1 billion of food  every year, but                                                               
about $2  billion of  that is  sourced outside  of Alaska  and so                                                               
leaves the state.   He qualified, however, that  the $2.1 billion                                                               
is  not very  accurate  [see Mr.  Meter's  explanation under  the                                                               
1:54:30 p.m. timestamp].   He noted the rising  income and rising                                                               
population present  a challenge to  look for ways that  the state                                                               
could retrieve some  of those dollars and keep them  in the state                                                               
to work  for other  purposes and  to pay  taxes within  the state                                                               
government.   Moving  to slide  11, Mr.  Meter noted  that Alaska                                                               
farmers only sell  about $12 million of food  products each year.                                                               
He advised that this large  gap between production by the state's                                                               
700-plus farmers and the demand for food could be filled.                                                                       
1:48:27 PM                                                                                                                    
MR. METER  displayed slide  12 and  noted it  lists the  top farm                                                               
products in Alaska  according to the 2012  census of agriculture.                                                               
He pointed  out that  although land  is at  a premium  in Alaska,                                                               
most of the  farm product sales do not go  toward feeding people.                                                               
[The  number  one product]  is  nursery  crops (ornamentals)  for                                                               
landscaping and number two is hay.   Vegetables sold to humans is                                                               
number three.   So, he continued, while the  production in Alaska                                                               
is important, it doesn't do much to feed the state's population.                                                                
MR. METER  turned to slide 13  and discussed the history  of farm                                                               
income in  Alaska from 1969-2016.   He explained the  orange line                                                               
on the  graph shows the money  that all the farms  in Alaska have                                                               
earned by  selling products  since 1969.   The maroon  line shows                                                               
how much  it cost those  farmers to  produce those products.   He                                                               
pointed out  that in 2007  the cost  of producing food  and other                                                               
commodities  rose   substantially  and  has  continued   to  rise                                                               
steadily since  then.  Alaska  has a strange situation  where the                                                               
returns  being earned  by  farmers are  staying  steady, but  the                                                               
expenses have gone  up.  Why this is happening  is a conundrum he                                                               
cannot answer, he  said, and it is a big  challenge to the future                                                               
of eating  food from  Alaska farms.   Subtracting  the production                                                               
expenses from the  cash receipts is depicted by the  red line, he                                                               
noted, which shows that the net  cash income for farmers has been                                                               
declining steadily  since 2002 and  has been negative  every year                                                               
since 2005.   Alaska farmers  have had significant  losses trying                                                               
to produce both food products and ornaments for state residents.                                                                
MR.  METER displayed  the graph  on  slide 14  and spoke  further                                                               
about the net cash income for  Alaska farmers from 1969-2016.  He                                                               
explained the numbers  are the same data as used  on the previous                                                               
slide but  are adjusted for inflation  - the value of  the dollar                                                               
is now one-sixth of the value  it was when the previous chart was                                                               
started.   The  graph shows  that, when  adjusted for  inflation,                                                               
quite a  bit more money was  earned in the 1970's  when the value                                                               
of the dollar was higher, and  the earnings in 1997 and 2001 also                                                               
look a bit higher, but the losses are still the same since 2005.                                                                
1:51:04 PM                                                                                                                    
REPRESENTATIVE  PARISH  asked  what attributed  to  the  enormous                                                               
spike in expenses for farmers in 2007.                                                                                          
MR.  METER replied  he doesn't  really know,  but the  data shows                                                               
what farmers  are spending  their money  on and  much of  this is                                                               
increased  labor costs.   He  said he  doesn't have  the time  or                                                               
resources to answer the question  adequately or reliably, but his                                                               
assumption is that  many farmers have an off-farm job  to pay for                                                               
the  cost of  their farm  operations.   As the  farmer's expenses                                                               
keep  rising, the  farmer keeps  selling what  he/she can  on the                                                               
farm and makes up for that income with an off-farm job.                                                                         
MR.  METER  drew  attention  to  the  peak  in  the  orange  line                                                               
representing  cash receipts  for the  years 1991-2003.   He  said                                                               
some of the peak is due to  the State of Alaska starting to count                                                               
what he  considers to  be non-farm items  as part  of agriculture                                                               
income.    When that  stopped  in  2003  the income  for  farmers                                                               
leveled off and  so it could be said that  the positive income in                                                               
that era  is more of  a statistical  question than a  reality for                                                               
farmers.   If  that bump  is taken  out, he  continued, a  steady                                                               
decline would be seen since 1989 to the present.                                                                                
MR. METER  moved to  slide 15  and pointed  out that  farmers are                                                               
making $33 million  less farming today than in 1969.   Since 1989                                                               
farmers have spent $119 million  more raising crops and livestock                                                               
than they received  from the market.  These  are severe questions                                                               
for the  future of  agriculture, he  said, especially  when there                                                               
are hundreds of thousands of people  to feed and there is so much                                                               
of a past tradition of agriculture in the state.                                                                                
1:53:28 PM                                                                                                                    
REPRESENTATIVE  RAUSCHER requested  examples  of  what Mr.  Meter                                                               
considered non-farm items during the years 1991-2003.                                                                           
MR. METER  replied his understanding  from staff at  the Division                                                               
of Agriculture is  that there was a time when  some of the farmed                                                               
seafood  products  were  considered  agriculture.    However,  he                                                               
explained,  that  statistical move  to  claim  those as  part  of                                                               
agriculture was,  over time, disallowed because  it really didn't                                                               
conform to  federal practices,  so those  higher number  of sales                                                               
were essentially  because of an  accounting shift.  It  went back                                                               
to the  more standard accounting  system in 2003, and  since then                                                               
the cash receipts have remained steady in adjusted dollars.                                                                     
1:54:30 PM                                                                                                                    
REPRESENTATIVE TUCK  inquired whether  the $2.1 billion  spent on                                                               
food by Alaskans  is strictly for farmed  agriculture products or                                                               
also includes seafood.                                                                                                          
MR. METER  explained that to get  this number he used  an average                                                               
for the western  U.S. states where the cost of  food is less than                                                               
in  Alaska.    Also,  Alaska  has more  people  who  depend  upon                                                               
subsistence  or  other  personal  use gathering  of  wild  foods.                                                               
Therefore, he said, it isn't a  very accurate number in the sense                                                               
that he cannot  prove it is exactly $2.1 billion  and $2 billion.                                                               
Additionally,  he  continued,  he  cannot  prove  there  is  $100                                                               
million  of trade  from Alaska  farms to  Alaska consumers.   The                                                               
data he  has would  show that  the direct  sales from  farmers to                                                               
household customers is  about $2.2 million in 2012,  which is all                                                               
the  hard data  he would  have to  show how  much food  is moving                                                               
directly  from farms  to  household customers.    That would  not                                                               
include  food that  goes  to  a grocery  store  or  food that  is                                                               
processed on the  way to Alaska consumers, he added,  so it is an                                                               
inadequate total measure.  The flow  of food from Alaska farms to                                                               
Alaska consumers is  quite small, and there is not  a lot of food                                                               
processing in the state either.                                                                                                 
1:56:17 PM                                                                                                                    
MR. METER resumed  his presentation.  He said  slide 16 addresses                                                               
the benefits  coming into Alaska from  the [federal government's]                                                               
Supplemental Nutrition  Assistance Program (SNAP).   He explained                                                               
the red line on  the graph is the same red  line seen before, but                                                               
it  looks much  shallower because  the  scale has  changed.   The                                                               
orange  line is  the  amount  of federal  payments  coming in  to                                                               
support farmers,  which have  been rising in  the last  few years                                                               
commensurate with the decline in  farm income.  However, he said,                                                               
the startling story here is that  the SNAP benefits to low income                                                               
people went up  to $200 million in  2011.  While it  fell to $160                                                               
million [in 2016],  it is still 13 times the  amount of food that                                                               
[Alaska] farmers  sell.   He pointed out  that SNAP  benefits are                                                               
often the  number one source of  money for food in  Alaska and it                                                               
could  be  argued  that  all those  subsidies  from  the  federal                                                               
government are  more important in  feeding Alaskans  than farmers                                                               
are  themselves.   That  is  a challenge  for  the longevity  and                                                               
health of people who live in the state, he opined.                                                                              
MR. METER  moved to  slide 17  and noted  the state  spends about                                                               
$450 million  every year to  cover the medical costs  of diabetes                                                               
and related  conditions, which is  another flow of  money leaving                                                               
Alaska every  year.   This is  tied to  eating improper  foods as                                                               
well  as improper  exercise, he  said, and  is another  reason to                                                               
think  about having  more Alaskans  more closely  connected to  a                                                               
source for healthy food.                                                                                                        
1:57:55 PM                                                                                                                    
MR. METER displayed slide 18 and  said CRC has calculated that if                                                               
every person in Alaska were to  buy $5 of food directly from some                                                               
farm in the  state (a hypothetical calculation  since those farms                                                               
don't  currently  exist in  the  state),  farms would  earn  $193                                                               
million of income,  which is 16 times the  current cash receipts.                                                               
Specific  changes like  that, he  continued, could  make a  large                                                               
difference  in terms  of farm  income.   Turning to  slide 19  he                                                               
related that  the State of  Alaska took CRC's suggestion  and [in                                                               
2017]  started a  buy $5  Alaska Grown  challenge in  which [six]                                                               
retailers],  the Alaska  Farm Bureau,  and farmers  collaborated.                                                               
Carrs Safeway won an award for  its displays around the state and                                                               
Walmart came  in second.   Several producers said  they increased                                                               
their sales and reach in  selling food because of that challenge.                                                               
He  suggested that  continuing the  Alaska Grown  challenge could                                                               
make a big  impact by publicizing to Alaskans why  it is in their                                                               
interest to buy more food from local farmers.                                                                                   
MR. METER drew attention to slide  20 and noted that one of every                                                               
three  farms in  Alaska sells  direct to  customers.   This ranks                                                               
Alaska up  with states like  Vermont and New Hampshire,  he said,                                                               
as one of the  top states in the nation for  how many farms reach                                                               
out directly to their customers.                                                                                                
MR. METER  turned to slide  21 and  said CRC calculated  how much                                                               
land  would be  required to  provide all  of Alaska's  demand [at                                                               
current rates  of consumption] for  a few select  vegetables that                                                               
are easy to grow in Alaska.   The acreages are as follows:  4,700                                                               
acres for  potatoes, 200  for carrots, 200  for cabbage,  and 600                                                               
for lettuce.   Even  though the  state has given  up much  of its                                                               
best land for urban development,  he continued, it does have land                                                               
suitable for farming if new farmers  can be brought on and if the                                                               
fertility can be improved.                                                                                                      
2:00:02 PM                                                                                                                    
MR. METER moved  to slide 22 and discussed a  CRC project done in                                                               
South Carolina in 2013.   Ironically, he noted, South Carolina is                                                               
importing almost as  much food as does Alaska even  though it has                                                               
four growing seasons.   He said CRC's approach was  to say that a                                                               
whole  web of  facilities is  needed.   This "food  web" includes                                                               
aggregation  points  like  the one  existing  in  Charleston,  he                                                               
explained,   as  well   as  places   on  farms   that  have   the                                                               
infrastructure to safely  wash and package food and to  get it on                                                               
pallets  for  loading  into  storage  or  selling  to  individual                                                               
household customers.  This model  would work very well in Alaska,                                                               
he advised.   He drew attention to the picture  of a packing barn                                                               
on slide 23 and  said it is on a farm in Wisconsin  and is a good                                                               
example of  infrastructure built  on a farm  to make  local foods                                                               
much more efficient, from the boxes  shown in the picture back to                                                               
a micro-van that conveys the product to buyers.                                                                                 
MR. METER displayed slide 24 and  said public investment is a key                                                               
role in addition to publicizing the  need to buy food from Alaska                                                               
farms   and  building   infrastructure  that   creates  community                                                               
efficiencies.  He  pointed out that the heavy  investment in good                                                               
auto and air  transport enables food to travel  rapidly from long                                                               
distances, but food has trouble  going the short distances within                                                               
the state.    Warehouses  need to be  built along with  an entire                                                               
system of  relationships that will  convey food from  local farms                                                               
to local  consumers, he said, and  that would be a  good role for                                                               
the state to  take on.  He concluded by  drawing attention to his                                                               
contact information shown on slide 25.                                                                                          
2:01:57 PM                                                                                                                    
REPRESENTATIVE  BIRCH  [observed  from  slide 15]  that  in  2016                                                               
farmers lost $30  million on $40 million worth  of cash receipts.                                                               
He asked  what Mr. Meter would  advise the State of  Alaska to do                                                               
to mitigate this.                                                                                                               
MR. METER replied  his answer is what  he said at the  end of his                                                               
presentation -  creating infrastructure,  such as food  caches in                                                               
rural areas, warehouses with freezer  and cooler space so that it                                                               
becomes more  efficient to  get food from  farms to  customers in                                                               
the state,  advertising the  need for consumers  to buy  food and                                                               
keep the  money in  the state,  and supporting  new farms  so the                                                               
state has people with the skills  of agriculture.  Since 1950 the                                                               
number of people  with those skills has declined, he  noted.  The                                                               
state needs  to build  the support  system around  agriculture to                                                               
make  it feasible  for people  to make  a better  livelihood than                                                               
they currently are making.                                                                                                      
REPRESENTATIVE  BIRCH  commented  that  in  looking  at  the  raw                                                               
numbers it appears  that a doubling of the receipts  is needed to                                                               
at least break  even.  He said  most of the people  he knows shop                                                               
at Costco or  Walmart because in an urban area  people shop where                                                               
the groceries  show up.   While he appreciates fresh  carrots, he                                                               
said there  is a huge hole  to be dug out  of.  He asked  what is                                                               
being looked for, short of a straight-up subsidy.                                                                               
2:04:37 PM                                                                                                                    
CO-CHAIR  TARR stated  she is  unsure whether  CRC looked  at the                                                               
number of new  farms during that time.  Addressing  the [net cash                                                               
income]  line,  she  noted  that  starting a  new  farm  is  cost                                                               
intensive and Alaska  has had lots of growth in  that industry in                                                               
the more recent years.   She asked whether CRC evaluated anything                                                               
like that,  given a new  farm would  be "upside down"  with costs                                                               
like purchasing equipment.                                                                                                      
MR. METER  responded, "Not  in any  great detail,"  and concurred                                                               
with Co-Chair Tarr.  A dilemma  had by Alaska farmers is the move                                                               
towards importing  more inputs,  he said.   Oil pumped  in Alaska                                                               
goes to  Seattle for refining and  then comes back to  the state.                                                               
Fertilizers  are  purchased from  Outside.    Alaska has  a  real                                                               
challenge because all  the inputs essentially must  be brought in                                                               
from  outside Alaska,  adding cost  to the  farming.   The rising                                                               
cost of  living means it is  more expensive for labor  and so on.                                                               
Some of the refinements, he suggested,  could be to use the waste                                                               
food  generated  by manufacturers  and  the  tourist industry  to                                                               
create  more  fertility  rather than  purchasing  chemicals  from                                                               
Outside.    An  infrastructure  can  be  had  that  is  based  on                                                               
materials  that  can be  harvested  and  grown inside  the  state                                                               
instead of  importing.   In some  ways, he  added, it  has become                                                               
less   economical  precisely   because   of   investing  in   the                                                               
infrastructure that  made it so easy  to get food to  a store but                                                               
didn't make it easy to get food from a farm to a consumer.                                                                      
CO-CHAIR  TARR  noted the  committee  has  jurisdiction over  the                                                               
Department of Natural Resources (DNR)  and has spent much time on                                                               
the Division of Oil  & Gas but much less time  on the Division of                                                               
Lands, Mining  and Water and  the Division of Agriculture.   Over                                                               
the past  few years, she said,  the committee has been  trying to                                                               
look  at  the  other  opportunities  relative  to  that  type  of                                                               
resource development.   The $2  billion economic  opportunity for                                                               
Alaska stood out to her and prompted having these hearings.                                                                     
2:08:25 PM                                                                                                                    
GARY FERGUSON,  BS, ND, Healthy Communities  Consultant, provided                                                               
a   PowerPoint  presentation   entitled,  "Addressing   Nutrition                                                               
Insecurity with Traditional  Foods," undated.  He said  he has 16                                                               
years  of experience  in the  health  system, has  served on  the                                                               
Alaska  Food Policy  Council, and  has been  working on  food and                                                               
nutrition  security  issues  across  the state  for  many  years,                                                               
primarily in the Alaska tribal health system.                                                                                   
DR. FERGUSON displayed slide 2, a  picture of a river system.  He                                                               
said a  lot of his  work has  been around addressing  the social,                                                               
economic, cultural, and environmental  factors that contribute to                                                               
health  and wellbeing.   He  explained slide  3 shows  the social                                                               
determinants of  health and having  to move upstream to  stem the                                                               
tide  of  some  of  these long-term  issues  to  prevent  chronic                                                               
disease.   Nutrition is  an important  part of  that as  food and                                                               
food systems  are addressed and  ensuring that there  are vibrant                                                               
local food economies, as well as traditional foods.                                                                             
DR.  FERGUSON moved  to  slide  4 and  discussed  the domains  of                                                               
health influence.   Noting  he is  also a  clinician, he  said an                                                               
important  part  of health  care  is  to keep  communities  whole                                                               
through great public  health and clinics.  Clinical  care is only                                                               
about 20  percent of the  domain of health influence,  he stated.                                                               
Health behaviors are about 30  percent and healthy eating is part                                                               
of that.   Social and economic conditions, such  as education and                                                               
employment,   are  key   indicators,   he   continued,  and   the                                                               
environment is another domain.   Having healthy food available is                                                               
important to health and wellbeing in communities.                                                                               
2:10:42 PM                                                                                                                    
DR. FERGUSON  turned to slide  5 depicting a diagram  of Maslow's                                                               
hierarchy  of needs.   He  explained  it is  a theoretical  model                                                               
looking  at addressing  the  basic needs  of  foods, safety,  and                                                               
security from the western perspective  and from the First Nations                                                               
perspective as informed by the  Blackfoot Nation.  As these needs                                                               
are  addressed, communities  and individuals  can be  actualized.                                                               
The First Nations  model, he pointed out,  is interesting because                                                               
it is  not just  about individual  actualization, but  also about                                                               
cultural perpetuity of which food is  a basis - healthy foods and                                                               
foods locally available.                                                                                                        
DR. FERGUSON  drew attention  to slide 6  depicting the  cover of                                                               
Alaska Magazine from  the early 2000's with  an article entitled,                                                             
"The  Store  Outside Their  Door,"  which  looked at  subsistence                                                               
lifestyles  and  the  importance   of  these  foods  to  Alaska's                                                               
communities.    He  said  it isn't  just  about  addressing  food                                                               
security by shipping food into  villages, it's also about looking                                                               
at  how these  local and  traditional  foods are  valued.   These                                                               
foods are important nutritionally and culturally.                                                                               
DR.  FERGUSON  explained  slide  7  focuses  on  the  decline  of                                                               
traditional foods,  with this slide  being about at study  on the                                                               
decline in traditional  marine food intake and  vitamin D levels.                                                               
Historically,  Alaska  Native  people  had very  high  levels  of                                                               
vitamin  from their  marine  food intake  and  this study  showed                                                               
there has  been a consistent decline  because of the change  to a                                                               
more western  diet and the giving  up of some of  these important                                                               
traditional foods.                                                                                                              
2:12:24 PM                                                                                                                    
DR. FERGUSON  turned to  slide 8  relating to  a study  of Alaska                                                               
Native traditional  foods in  the Norton Sound  region.   He said                                                               
the study  found that  traditional foods of  seal oil  and salmon                                                               
improved  pre-diabetes and  prevented diabetes,  and that  people                                                               
who ate  traditional diets had  less cardiovascular disease.   He                                                               
moved to slide 9 and said  another study found that Alaska Native                                                               
people are hardwired  for these traditional foods and  may not do                                                               
so  well   with  western  foods   such  as  grains,   sugar,  and                                                               
carbohydrates.   Congenital sucrase-isomaltase  deficiency (CSID)                                                               
affects  upwards of  10 percent  of  the Inuit  population.   For                                                               
Native people, he continued, the  traditional foods that are high                                                               
fat, high protein, and low carbohydrate are good medicine.                                                                      
DR. FERGUSON displayed slide 10  and related that chronic disease                                                               
is a very  expensive hit on the health care  system.  Obesity and                                                               
some chronic diseases  are preventable by eating  a healthy diet,                                                               
including traditional  foods, he  noted, and therefore  a healthy                                                               
diet provides  cost savings to  health care systems.   Addressing                                                               
slide 11, he said Hippocrates,  the father of medicine, stated it                                                               
well  when he  said that  food is  truly medicine  and the  first                                                               
medicine should be food.                                                                                                        
DR.  FERGUSON drew  attention  to slide  12  depicting the  Store                                                               
Outside Your  Door Program, which  he has helped  co-produce over                                                               
the years.   While at Alaska Native Tribal  Health Consortium, he                                                               
said, he worked with many  tribes and tribal health organizations                                                               
to  capture  how to  hunt,  fish,  gather,  and  grow food  in  a                                                               
person's  community.    Many  resources   show  how  resilient  a                                                               
community can  be when it focuses  on the store outside  its door                                                               
versus  the store  that is  locally available  and often  doesn't                                                               
have healthy, nutrient dense foods on the store shelves.                                                                        
2:14:50 PM                                                                                                                    
DR. FERGUSON turned to slide  13 and discussed picking foods from                                                               
the beach.  He said badarki  [chiton] salad is a traditional food                                                               
that he  ate while growing up  in Sand Point on  Shumagin Island.                                                               
He related that  the picture on slide 14 is  taken at The Siglauq                                                               
in  Kotzebue  where amazing  work  is  being done  around  having                                                               
traditional foods  such as caribou  and seal served to  elders at                                                               
the  Siglauq  facility.   These  nutrient  dense foods  help  the                                                               
elders feel  good, he stated,  and serve as  cultural connections                                                               
and comfort foods for the elders.                                                                                               
DR. FERGUSON displayed  slide 15 and pointed out  that a person's                                                               
taste preferences start in the womb  in that what the mother eats                                                               
is craved by  her baby later in  life.  Moving slide  16 he noted                                                               
the mother  is feeding her  son traditional whale food,  which is                                                               
very iron rich  and nutrient dense.  This will  set her son right                                                               
as  he starts  his life,  he said,  and will  ideally give  him a                                                               
preference for  such local foods.   Dr. Ferguson said  the photos                                                               
on  slides  17  and  18  depict  a  traditional  salmon  food  in                                                               
Metlakatla.   This  traditional food  can  be used  to help  with                                                               
teething and to  help children develop a taste  for salmon, which                                                               
is rich in vitamin D and calcium.                                                                                               
2:17:06 PM                                                                                                                    
DR.  FERGUSON displayed  slides  19-23 and  noted  fireweed is  a                                                               
nutrient  dense,  traditional  green  that  is  gathered  in  the                                                               
spring.   One  cup of  fireweed  leaves or  shoots provides  more                                                               
vitamin A than the  daily need and is a good  source of vitamin C                                                               
and  fiber.     He  said  studies  show  that   the  harsher  the                                                               
environment the more nutrient dense  Alaska plants become because                                                               
they  form  antioxidants, which  also  benefit  people.   Another                                                               
nutrient dense  green is  sour dock.   Many people  don't realize                                                               
there are  so many foods  in the  landscape that people  can live                                                               
off and  the ancestors of  Native Alaskans  thrived nutritionally                                                               
because of  living off the land.   Ensuring that these  foods are                                                               
available for the next generation is important, he stressed.                                                                    
DR. FERGUSON  turned to  slides 24-25 and  pointed out  that iron                                                               
deficiency  anemia is  a  challenge faced  by  young and  elderly                                                               
Native Alaskans  and is a big  issue in the statewide  Head Start                                                               
Program. He  said the  iron content of  a three-ounce  portion of                                                               
seal meat  is equal  to two portions  of caribou/reindeer,  or to                                                               
six  hamburgers, or  to 56  hotdogs.   Whale  contains about  two                                                               
times the  amount of iron  in seal,  he added.   These incredibly                                                               
nutrient  dense foods  are important  to Native  Alaskans from  a                                                               
health promotion and obese prevention standpoint.                                                                               
2:19:20 PM                                                                                                                    
DR. FERGUSON discussed slides 26-27,  noting that the traditional                                                               
berries  harvested in  Alaska are  three to  six times  higher in                                                               
antioxidants  than commercially  harvested  berries.   Displaying                                                               
slide 28 he  said the Centers for Disease  Control and Prevention                                                               
(CDC)  and the  National Institutes  of Health  (NIH) have  shown                                                               
interest in how  the traditional foods of  [Native Americans] are                                                               
important for  the future of  indigenous peoples when  looking at                                                               
chronic disease prevention and health promotion.                                                                                
DR. FERGUSON noted slide 29 depicts  some of the work done in his                                                               
home region  by the Aleutian Pribilof  Islands Association, Inc.,                                                               
to  address  traditional foods  in  Head  Start facilities.    He                                                               
explained  that "qaqamiigux"  is the  traditional foods  eaten in                                                               
the Aleutian and Pribilof island region.                                                                                        
DR. FERGUSON said  slide 30 depicts what some  of the communities                                                               
are  doing to  help people  understand the  value of  traditional                                                               
foods  and  the  importance  of  passing  that  on  to  the  next                                                               
generation.  For  example, the village of Igiugig  did a six-week                                                               
traditional food  challenge as a health  experiment that measured                                                               
biometrics like  weight, blood pressure,  blood sugar,  and heart                                                               
rate to see how traditional foods impacted people's health.                                                                     
DR. FERGUSON displayed  slide 31, a picture of a  culture camp in                                                               
Atka.  He said culture camps  are held all over Alaska every year                                                               
to  help the  next  generations  to be  connected  to their  food                                                               
system and  how to live  off the  land.  Additionally,  the camps                                                               
provide  physical activity  and connect  the next  generations to                                                               
their culture and elders.                                                                                                       
2:21:03 PM                                                                                                                    
DR. FERGUSON stated  that the quote on slide 32  is from Dr. Rita                                                               
Pitka   Blumenstein,  a   great  supporter   of  the   work  with                                                               
traditional foods and traditional medicines:                                                                                    
     We are free to  be who we are - to  create our own life                                                                    
     out of  our past, and out  of the present.   We are our                                                                    
     ancestors.   When we heal  ourselves, we also  heal our                                                                    
     ancestors  - our  grandmothers,  our grandfathers,  and                                                                    
     our children.   When we heal ourselves,  we heal Mother                                                                    
DR. FERGUSON  added that  tackling food  and [food]  security and                                                               
helping the  next generations  to grow up  healthy will  save the                                                               
State of  Alaska money  and effort at  trying to  address chronic                                                               
disease once  fully manifested  versus preventing  these diseases                                                               
with healthy foods in the first place.                                                                                          
2:21:58 PM                                                                                                                    
CO-CHAIR   TARR  remarked   that   Dr.  Ferguson's   presentation                                                               
highlights  the challenge  the legislature  has in  public policy                                                               
when  making  decisions about  natural  resources,  such as  land                                                               
management and access.   She said legislators  should be thinking                                                               
about the foods people will be able to access as a result.                                                                      
DR. FERGUSON  stated Co-Chair Tarr's  remark is  about protecting                                                               
food  systems through  looking at  baseline environmental  impact                                                               
statements  (EIS's)  and  looking  at  communities  and  resource                                                               
development.  He said good  baseline surveys of traditional foods                                                               
and where  people get their foods  from are an important  part of                                                               
protecting  and ensuring  there are  healthy vital  food systems.                                                               
Much of  his work has  been about, "How do  we live off  the land                                                               
and  be  vibrant   people?"  and  "How  do  we   connect  to  the                                                               
understanding that  our ancestors had of  these important foods?"                                                               
Environmental stewardship is a cultural  value, he continued, and                                                               
these important  foods that  are truly medicine  will go  away if                                                               
they aren't  protected as economies and  resources are developed.                                                               
As  stated by  Mr. Meter,  the fertile  lands where  food can  be                                                               
grown must be incorporated into the thinking.                                                                                   
2:25:06 PM                                                                                                                    
MR. CONSENSTEIN added  that he looks forward to  working with the                                                               
committee over  the interim  on some  options for  policy changes                                                               
that would strengthen the state's food system.                                                                                  
CO-CHAIR TARR  noted there  has been  talk about  [the committee]                                                               
convening a task force or caucus.                                                                                               
^PRESENTATION(S):  ALASKA OIL AND GAS CONSERVATION COMMISSION                                                                   
  PRESENTATION(S):  ALASKA OIL AND GAS CONSERVATION COMMISSION                                                              
2:26:24 PM                                                                                                                    
CO-CHAIR TARR  announced that the  final order of  business would                                                               
be  a  presentation  by  the  Alaska  Oil  and  Gas  Conservation                                                               
2:27:23 PM                                                                                                                    
HOLLIS   FRENCH,  Commissioner,   Chair,  Alaska   Oil  and   Gas                                                               
Conservation  Commission  (AOGCC),   began  his  presentation  by                                                               
discussing workover activities depicted in  charts on a series of                                                               
seven  PowerPoint   slides.    Displaying  the   slide  entitled,                                                               
"Workover  Activities (2003-2017*),"  he noted  the 2017  numbers                                                               
[are preliminary] and  said the trend is the same  as it has been                                                               
for the last few years with no aberration historically.                                                                         
2:27:55 PM                                                                                                                    
CO-CHAIR  JOSEPHSON  surmised the  chart  reflects  an effort  to                                                               
double-down and get more resource out  of the ground and so, in a                                                               
sense, reflects resources available and economic strength.                                                                      
MR. FRENCH replied he would  be cautious about commenting on what                                                               
it means.  He said he is  giving the numbers so the committee can                                                               
look at them  and draw its own conclusions.   A certain number of                                                               
workovers took place  last year, he explained,  and workovers are                                                               
something short of  drilling a new well and  are usually downhole                                                               
well repairs.                                                                                                                   
2:29:00 PM                                                                                                                    
REPRESENTATIVE PARISH observed  from the chart that  2009 was the                                                               
most active year.  He said  he doesn't see any connection between                                                               
these  and  a dollar  value  for  the  workover activities.    He                                                               
inquired whether  the chart shows  only the number  of instances,                                                               
which appear to be between a low  of 650 and a high of just under                                                               
1,800.   He further inquired whether  it would be useful  to know                                                               
the expense of each workover.                                                                                                   
MR.  FRENCH responded  he doesn't  have  access to  the cost  per                                                               
workover, or the  cost per job, because billing  receipts are not                                                               
submitted to AOGCC.  The  commission just permits the actual work                                                               
and out it goes to the field.                                                                                                   
2:29:57 PM                                                                                                                    
REPRESENTATIVE BIRCH  asked whether  workovers are  a contributor                                                               
to the uptick in production seen over the last three years.                                                                     
MR. FRENCH answered  the way to look  at it is that  if this work                                                               
is not done, the decline is going to be a lot worse.                                                                            
REPRESENTATIVE BIRCH said there is no decline.                                                                                  
MR. FRENCH  agreed, but explained  that without this  work things                                                               
get worse.   The uptick in  production is due to  several factors                                                               
and certainly the work done in  2014 and 2015 has something to do                                                               
with that.  These are  wells that have been stimulated, repaired,                                                               
and operated on to work better, and the results are being seen.                                                                 
REPRESENTATIVE BIRCH  concluded that workover investment  has had                                                               
a positive impact on production.                                                                                                
MR. FRENCH replied the short answer is yes.                                                                                     
2:31:53 PM                                                                                                                    
MR. FRENCH returned to his  presentation and reviewed exploration                                                               
wells using another series of  seven PowerPoint slides.  He noted                                                               
explorations wells  aren't always a popular  activity, the number                                                               
of  exploration wells  always being  relatively  low compared  to                                                               
other wells.   But, he added, as a harbinger  of the future AOGCC                                                               
knew the committee would be interested.                                                                                         
MR. FRENCH  moved to  a series of  three PowerPoint  slides about                                                               
the number of development wells that  have been drilled.  He said                                                               
he calls  these "regular"  or "normal"  wells and  explained they                                                               
are non-exploration  wells drilled  in a known  field in  a known                                                               
location.   He pointed out  that the number of  development wells                                                               
drilled has remained remarkably steady over the years.                                                                          
2:32:50 PM                                                                                                                    
REPRESENTATIVE  BIRCH noted  much  has been  said  about oil  tax                                                               
credits,  for which  the state  still  has a  billion dollars  of                                                               
liability to  pay down.  He  asked whether the wells  depicted in                                                               
the  slide  [entitled, "EXPLORATORY  (WILDCAT/DELINEATION)  WELLS                                                               
AND WELL  BRANCHES, Statewide, Oil and  Gas: Completed, Suspended                                                               
or  Abandoned   (2003-2017*)],  would   be  represented   in  the                                                               
investment that the industry has  made, such as the wells drilled                                                               
in the Colville River and Smith Bay areas by Caelus Energy, LLC.                                                                
MR. FRENCH  answered that a well  would be represented if  it has                                                               
been  actually drilled.    He  said the  Smith  Bay and  Nanushuk                                                               
wells,  and the  wells being  drilled in  the National  Petroleum                                                               
Reserve-Alaska (NPR-A), are represented.                                                                                        
2:34:21 PM                                                                                                                    
REPRESENTATIVE  PARISH, regarding  the same  slide, observed  the                                                               
statement, "Total Wells and Well  Branches Drilled and Completed,                                                               
Suspended, or  Abandoned since 2003."   He asked  what proportion                                                               
of these would be abandoned wells.                                                                                              
MR. FRENCH  replied he doesn't  know the number but  abandoning a                                                               
well happens with regularity.   Frequently an exploration well is                                                               
drilled  and  analyzed,  he  explained,   and  then  plugged  and                                                               
abandoned shortly  thereafter because there is  no immediate plan                                                               
to re-enter that wellbore and do something with it.                                                                             
2:35:17 PM                                                                                                                    
CO-CHAIR TARR, regarding  the same slide, observed  the number of                                                               
operators and inquired whether these  are the operators in active                                                               
exploration work and not just the lessee.                                                                                       
MR. FRENCH  responded that these  are wells actually drilled.   A                                                               
company may be  leasing property, or may be expanding,  or may be                                                               
making plans  or announcing  plans, he  added, but  AOGCC doesn't                                                               
count it until a drill bit goes in the earth and a well drilled.                                                                
CO-CHAIR  TARR  noted the  committee  packet  includes a  similar                                                               
slide that is specifically for the Arctic Slope.                                                                                
2:36:11 PM                                                                                                                    
MR.  FRENCH  returned  to  his presentation  and  said  he  would                                                               
discuss AOGCC's effort to update  its bonding practices and would                                                               
present  an idea  AOGCC  would like  the  committee to  consider.                                                               
Speaking   from  a   paper  entitled,   "Presentation  to   House                                                               
Resources,  Monday, March  5,  2018,  he read  a  quote from  the                                                               
publication, "RISKS  OF ACQUIRING AGING OILFIELDS,"  published by                                                               
the Rocky Mountain Mineral Law Foundation:                                                                                      
     As sure  as death  is the great  certainty of  life, so                                                                    
     too  is  plugging  the  great  certainty  of  petroleum                                                                    
     development:   every well will  - at some  future point                                                                    
     unknown  - cease  to produce  in paying  quantities and                                                                    
     require  plugging.    In transactions  involving  aging                                                                    
     oilfield properties, both the  seller and the purchaser                                                                    
     must  understand and  appreciate their  respective risk                                                                    
     of plugging liability.                                                                                                     
MR. FRENCH, to  make members aware of the size  of the liability,                                                               
reported there  are about 5,200  wells in  Alaska.  Most  are oil                                                               
producers, some are  injectors of either gas,  water, or miscible                                                               
injectant to  help sweep  the reservoir, and  a few  are disposal                                                               
wells.   While 5,200 is  a large  number, he said,  Louisiana has                                                               
over 200,000 wells and Texas has  over 500,000.  While Alaska has                                                               
a long  way to go  to get to  those numbers, he  continued, AOGCC                                                               
wants to stay on top of this issue from the get-go.                                                                             
MR.  FRENCH related  that AOGCC  holds bonds  to ensure  that the                                                               
operator of a  lease plugs and abandons its  wells when finished.                                                               
He  said AOGCC  has begun  the  process of  updating its  bonding                                                               
practices, which  was brought to  the committee's  attention last                                                               
year.  At that time AOGCC  pointed out its regulations that say a                                                               
bond "must not be less than  $100,000" for a single well and "not                                                               
less  than  $200,000   for  a  blanket  bond   covering"  all  an                                                               
operator's  wells  in  the  state.    He  noted  that  AOGCC  has                                                               
historically required  no more than  $100,000 for the  first well                                                               
and $200,000 for  all subsequent wells.  All of  BP's 1,900 wells                                                               
on the  North Slope are covered  by a $200,000 bond;  the same is                                                               
true of ConocoPhillips.   He recalled that  year's headline about                                                               
those hearings  stated, "'Paltry' bonding for  oil operators puts                                                               
Alaska at risk," and said AOGCC thinks that sums it up well.                                                                    
2:39:04 PM                                                                                                                    
MR. FRENCH  noted AOGCC  held a workshop  last summer  to discuss                                                               
the issue with industry and  to solicit industry's input directly                                                               
and through written  submissions.  He reminded  members that last                                                               
year AOGCC stated  its belief that it doesn't  need any statutory                                                               
authority to  act.   He related that  comments received  by AOGCC                                                               
after  the  workshop from  the  Alaska  Oil and  Gas  Association                                                               
(AOGA)  and ConocoPhillips  also  said a  new  law isn't  needed;                                                               
AOGCC has the authority it needs to take action.                                                                                
MR.  FRENCH pointed  out that  AOGCC is  not the  only holder  of                                                               
bonds in the state.  He  said the Department of Natural Resources                                                               
(DNR) holds  bonds for Dismantlement, Removal  and Rehabilitation                                                               
(DR&R),  which are  monies held  to  remove surface  improvements                                                               
such as pipelines, facilities, and tanks.                                                                                       
MR. FRENCH  said AOGCC has not  arrived at a cookbook  answer for                                                               
this bonding  effort.  Earlier this  year AOGCC sent a  letter to                                                               
every operator  in the state  requiring them to give  AOGCC their                                                               
estimates [by 3/7/18] of what it  would cost to properly plug and                                                               
abandon (P&A) their wells.                                                                                                      
MR.  FRENCH  related  that  informing   AOGCC's  effort  was  the                                                               
bankruptcy of Aurora Gas LLC,  a small company/operator of 19 gas                                                               
wells all  located on the  west side of  Cook Inlet.   Alaska has                                                               
seen oil  companies bankrupt in the  past, he said, but  this one                                                               
was  different in  that  no one  stepped forward  to  buy all  of                                                               
Aurora Gas's  assets.   Of the  19 wells Aurora  Gas had  when it                                                               
went  into  bankruptcy, only  the  6  best producing  wells  were                                                               
acquired by  a new  company, Aurora Exploration.   He  noted that                                                               
while  those names  seem very  similar, they  are distinct  legal                                                               
entities.   From its  time spent in  bankruptcy court  last fall,                                                               
AOGCC learned  a lot  about that  process.   Of the  13 remaining                                                               
wells, 10  are on land  owned by Cook Inlet  Region, Incorporated                                                               
(CIRI).   This  turns out  to be  a big  break for  the State  of                                                               
Alaska,  he explained,  because  under AOGCC  regulations if  the                                                               
operator disappears  AOGCC looks  to the landowner  for following                                                               
through on plugging and abandoning  those wells.  Thus, CIRI will                                                               
have to pay to  plug and abandon those 10 dead  wells.  The other                                                               
three wells  will fall on  DNR.  He  offered his belief  that DNR                                                               
will come  to the legislature  for money  to make the  wells safe                                                               
and to plug and abandon them.                                                                                                   
2:41:33 PM                                                                                                                    
MR. FRENCH reported that last fall  AOGCC held a hearing to get a                                                               
better  handle on  what  it costs  to plug  and  abandon a  well.                                                               
There is no simple answer, he  reported.  The first question that                                                               
must be asked is  about the well's location.  Is  it on the North                                                               
Slope, in  Cook Inlet, on  or off the  road system?   Last summer                                                               
AOGCC dealt  with [NordAq  Energy Inc.], a  company that  had two                                                               
wells - one on the west side of  Cook Inlet near the mouth of the                                                               
Kustutan  River  and  the  other  off-road  on  the  north  Kenai                                                               
Peninsula where a snow road had to be built to access the well.                                                                 
MR. FRENCH pointed out that  for bonding purposes the question is                                                               
not what  it's going  to cost  the operator to  do the  P&A work.                                                               
The bond is  in case the operator fails to  do its obligation and                                                               
the state  must step in  and do the  work.  Therefore,  the state                                                               
must figure out the amount of  money it needs to hold as security                                                               
should it get handed the P&A  job.  He said AOGCC's best estimate                                                               
for plugging  and abandoning the wells  on the west side  of Cook                                                               
Inlet, off the road system, is around $600,000 each.                                                                            
MR. FRENCH  said all this  information brings him to  the impetus                                                               
for this  hearing.  While working  on this issue, it  has come to                                                               
AOGCC's attention that in at  least two jurisdictions, California                                                               
and Kansas,  the regulating authorities  are armed  with statutes                                                               
that  allow them  to  pursue former  operators  for plugging  and                                                               
abandonment costs in the event  a current operator is financially                                                               
unable to  do so.   He noted  the statutes do  not get  much use,                                                               
they are  there as  a form  of backstop.   One  high-profile case                                                               
involved  an oil  platform  in Santa  Barbara  where the  current                                                               
operator  [Venoco LLC]  went  bankrupt,  potentially leaving  the                                                               
State  of California  on  the  hook for  millions  of dollars  of                                                               
costs.   California's  prior  operator law  allowed  it to  enter                                                               
negotiations  with Exxon,  the operator  of the  platform at  the                                                               
time the law went into effect,  and the state and Exxon reached a                                                               
2:43:41 PM                                                                                                                    
MR.  FRENCH said  the  language  of the  laws  in California  and                                                               
Kansas are simple.  He read aloud from the laws, which state:                                                                   
     (c)(1)  The  current  operator, as  determined  by  the                                                                    
     records  of the  supervisor,  of a  deserted well  that                                                                    
     produced oil,  gas, or other  hydrocarbons or  was used                                                                    
     for injection  is responsible  for the  proper plugging                                                                    
     and abandonment  of the well or  the decommissioning of                                                                    
     deserted  production  facilities.   If  the  supervisor                                                                    
     determines that the current operator  does not have the                                                                    
     financial  resources   to  fully  cover  the   cost  of                                                                    
     plugging    and   abandoning    the    well   or    the                                                                    
     decommissioning of deserted  production facilities, the                                                                    
     immediately  preceding  operator shall  be  responsible                                                                    
     for the  cost of  plugging and  abandoning the  well or                                                                    
     the decommissioning of deserted production facilities.                                                                     
     (2)  The supervisor  may continue  to look  seriatim to                                                                    
     previous operators until an operator  is found that the                                                                    
     supervisor  determines has  the financial  resources to                                                                    
     cover the cost  of plugging and abandoning  the well or                                                                    
     decommissioning    deserted   production    facilities.                                                                    
     However,  the  supervisor  may  not  hold  an  operator                                                                    
     responsible that made a valid  transfer of ownership of                                                                    
     the well prior to January 1, 1996.                                                                                         
     Kansas (Kan. Stat. Ann Section 55-179 (2014):                                                                              
     For  the purposes  of  this section,  a  person who  is                                                                    
     legally responsible for the proper  care and control of                                                                    
     an  abandoned well  shall include,  but is  not limited                                                                    
     to, one or  more of the following: [1]  Any operator of                                                                    
     a  waterflood  or  other pressure  maintenance  program                                                                    
     deemed  to  be  causing  pollution or  loss  of  usable                                                                    
     water; [2]  the current or  last operator of  the lease                                                                    
     upon  which  such  well  is  located,  irrespective  of                                                                    
     whether such  operator plugged or abandoned  such well;                                                                    
     [3]  the original  operator  who  plugged or  abandoned                                                                    
     such   well;   and   [4]   any   person   who   without                                                                    
     authorization   tampers   with   or   removes   surface                                                                    
     equipment  or  downhole  equipment  from  an  abandoned                                                                    
MR. FRENCH pointed  out that these laws are two  approaches - one                                                               
keeps going back in time until  finding someone who can afford to                                                               
plug and  abandon the wells  and one goes  back just to  the last                                                               
operator.  He said both  approaches capture the concept that this                                                               
is  an enormous  liability and  that it  will not  go away  soon.                                                               
Referring  to  his  previous quote,  "In  transactions  involving                                                               
aging  oilfield properties,"  Mr.  French stated  he thinks  [the                                                               
buyer and  the seller] both know  there is something at  risk for                                                               
all that liability.                                                                                                             
2:46:00 PM                                                                                                                    
REPRESENTATIVE  RAUSCHER  offered  his understanding  that  [DNR]                                                               
would  be asking  for bonding  for the  three abandoned  wells on                                                               
state land, not the ten abandoned wells on CIRI land.                                                                           
MR. FRENCH replied  CIRI will to have to pay  to plug and abandon                                                               
the ten wells that  are on CIRI land, and the  state will have to                                                               
pay to plug and abandon the three wells that are on state land.                                                                 
2:47:04 PM                                                                                                                    
CO-CHAIR  JOSEPHSON  inquired  as  to  how  much  cash  would  be                                                               
required from the bond holder for a $600,000 bond.                                                                              
CATHY  FOERSTER, Commissioner,  Alaska Oil  and Gas  Conservation                                                               
Commission  (AOGCC),  responded  that  the  cost  of  a  bond  is                                                               
dependent  upon the  financial  stability of  the  company.   For                                                               
example, she continued,  it costs BP and Exxon much  less than it                                                               
does a little company.                                                                                                          
CO-CHAIR JOSEPHSON, regarding Aurora  Gas and Aurora Exploration,                                                               
asked  whether accidentally  both  were called  Aurora  or was  a                                                               
situation  where one  was a  sub-corporation and  therefore could                                                               
only be touched in some limited way.                                                                                            
MR.  FRENCH answered  they  are two  distinct  corporations.   He                                                               
allowed that even  AOGCC was confused by that and  thought it saw                                                               
the same actors on both sides,  but that was wrong.  He explained                                                               
it  is a  very powerful  concept in  bankruptcy law  that once  a                                                               
company  goes bankrupt,  it  is done  and over.    He said  AOGCC                                                               
thought  about  trying to  get  Aurora  Exploration to  plug  and                                                               
abandon those  old wells  because that's  all AOGCC  cared about,                                                               
but that is contrary to bankruptcy law and couldn't be done.                                                                    
CO-CHAIR  JOSEPHSON  offered  his  understanding  the  state  can                                                               
capture $300,000  and is  therefore short  about $1.5  million on                                                               
these three wells.                                                                                                              
MR.  FRENCH  replied  the  state  has  $200,000  because  AOGCC's                                                               
practice  has  been to  take  $100,000  for  the first  well  and                                                               
$100,000 for the second well  and that constitutes the operator's                                                               
statewide  bond.   Therefore,  most  companies  have $200,000  on                                                               
account with AOGCC.                                                                                                             
CO-CHAIR JOSEPHSON,  regarding the  approximate $1.5  million the                                                               
state will  be out  in general fund  dollars, surmised  the state                                                               
would try  to seek  a judgment through  the attorney  general and                                                               
notwithstanding  the bankruptcy  filing  the state  would try  to                                                               
become a creditor and try to get in the queue in some way.                                                                      
MR.  FRENCH responded  that  that is  a dead  end,  based on  the                                                               
bankruptcy hearings  he sat through  and getting a feel  for what                                                               
is coming  in versus  what is  going out.   He related  that when                                                               
California dealt  with the [Santa  Barbara] platform, one  of the                                                               
more  humorous  lines in  the  letter  of intent  signed  between                                                               
[California] and Exxon is that  the parties anticipate the former                                                               
operator, Venoco LLC, is not going  to comply with the order from                                                               
the state to  plug and abandon those wells.   The reality is that                                                               
nothing can be squeezed from a [bankrupt] operator.                                                                             
2:50:53 PM                                                                                                                    
REPRESENTATIVE  PARISH calculated  that an  overall liability  of                                                               
almost  $8 million  was ducked  by this  oil company  folding, of                                                               
which the State of Alaska is  on the hook for $1.6 million unless                                                               
the bonding is also  used to offset the costs of  CIRI.  He asked                                                               
whether there would be any division there.                                                                                      
MR. FRENCH  answered CIRI is  on its own,  but that CIRI  had the                                                               
foresight  to have  purchased an  insurance  policy against  this                                                               
MS. FORESTER  advised that  while worrying  about three  wells is                                                               
important because it  is real money, the question is  how much to                                                               
worry about 5,300  wells.  The big picture, she  advised, is that                                                               
AOGCC needs  to improve  its bonding, however  that will  not get                                                               
AOGCC there.   A bill  is needed that says  AOGCC can go  back on                                                               
old operators.  Plus, other things  need to be done that AOGCC is                                                               
working on  and that  DNR is  working on.   She  said she  is not                                                               
worried about three wells, she is worried about 5,300 wells.                                                                    
2:52:43 PM                                                                                                                    
REPRESENTATIVE PARISH posed a scenario  in which an operator owns                                                               
1,000 wells of  which 800 will not  be useful in the  future.  He                                                               
inquired  whether the  operator could  sell off  the [800]  wells                                                               
without any  adjustment to its  bonding as well as  no adjustment                                                               
to the bonding of someone who owns two wells.                                                                                   
MR. FRENCH  replied AOGCC focuses  on operators.  If  an operator                                                               
were to sell  those wells and someone stepped  forward to operate                                                               
them,  AOGCC would  analyze that  [new]  operator's strength  and                                                               
make that  operator post  a bond before  it became  the operator.                                                               
That  change   of  operatorship   is  controlled  by   AOGCC,  he                                                               
continued,  and  AOGCC's  moment  to  act is  when  a  change  of                                                               
operator form  is submitted and that  is when AOGCC would  say it                                                               
needs  some bonding.   Ms.  Foerster's  point is  well taken,  he                                                               
added, it is  the big picture and that  huge number, particularly                                                               
aging Prudhoe  Bay wells.  He  related he has taken  two or three                                                               
trips to  Prudhoe Bay  since starting  his AOGCC  job and  he was                                                               
deeply  impressed  with how  much  that  infrastructure has  aged                                                               
since when he worked there from 1984-1992.                                                                                      
2:54:07 PM                                                                                                                    
REPRESENTATIVE PARISH offered his  understanding that an operator                                                               
going  bankrupt after  acquiring a  great number  of aging  wells                                                               
would leave [the State of Alaska] without further recourse.                                                                     
MR.  FRENCH responded  that he  and Ms.  Foerster are  before the                                                               
committee because  AOGCC sees  a danger  where a  strong presence                                                               
could  exit, and  a financially  less strong  company could  take                                                               
over  some assets  and  leave  much more  exposure  to the  state                                                               
treasury in the form of taking care of a known obligation.                                                                      
MS. FOERSTER posed  a scenario in which a big  company leaves, it                                                               
sells to  a little company, and  the little company is  unable to                                                               
plug those thousands  of wells.  She said [the  state] would have                                                               
three choices:   1)  the legislature could  pass a  backstop bill                                                               
that allows  AOGCC to go back  on the former operator,  an option                                                               
she likes;  2) the state's  coffer could be dug into for billions                                                               
of dollars that  it doesn't have, an option she  doesn't like; or                                                               
3)  [the abandoned  equipment and  pollutants] could  be left  in                                                               
place and the state turned into  [a mess like what was done with]                                                               
the federal government's legacy wells on the NPR-A.                                                                             
2:56:11 PM                                                                                                                    
REPRESENTATIVE BIRCH, relating to  cost, asked what mechanics are                                                               
involved in plugging and abandoning  a well; for example, whether                                                               
a big  rig would be  set up over the  hole and grout  pumped into                                                               
it.  He further asked how many wells have been abandoned.                                                                       
MS. FOERSTER  answered that  every well will  have its  own cost.                                                               
Some wells  will need only a  little grout pumped into  them, but                                                               
these will  be the exception.   Many wells will require  a rig on                                                               
them -  some of those are  in the middle of  infrastructure where                                                               
there are  already rigs that can  just be driven over  and set up                                                               
to  do the  work,  and then  there  are wells  in  the middle  of                                                               
nowhere that will require a rig  to be helicoptered in, one piece                                                               
at a time, and  this can only be done after an  ice road has been                                                               
built.    So,  she  continued,  the cost  can  be  as  simple  as                                                               
attaching a hose and pumping in grout or it can be huge.                                                                        
2:57:35 PM                                                                                                                    
REPRESENTATIVE DRUMMOND remarked this is  scary.  She offered her                                                               
understanding that not all the  32 operators listed on the slides                                                               
are operating  right now.   She presumed  that each  operator has                                                               
drilled two  or more  wells and therefore  the state  collected a                                                               
$200,000 bond  from each one,  which is  only $6.4 million.   She                                                               
further presumed that  not all the [5,200] wells  were created by                                                               
those  32 operators,  which is  a  big problem  [for the  state].                                                               
Regarding Aurora  Gas, she inquired  as to what happens  with the                                                               
$200,000 bond in bankruptcy.                                                                                                    
MR. FRENCH  replied the bond  is made  payable to AOGCC  and only                                                               
AOGCC can collect  it.  For Aurora Gas, he  said, it is basically                                                               
a certificate of  deposit at a local bank.   When the time comes,                                                               
AOGCC will seize  the bond and hand it over  to the Department of                                                               
Administration for  deposit in the  general fund.  He  added that                                                               
AOGCC has only seized a bond  once to help pay for P&A liability.                                                               
Mr. French  explained the statute  says AOGCC can require  a bond                                                               
and AOGCC's regulations  say not less than $100,000  and not less                                                               
than $200,000, so there is no  upper limit.  But, he advised, the                                                               
committee will  hear from industry  that every dollar out  of its                                                               
pocket for bonding is one less  capital dollar it will spend next                                                               
year.   That is the  industry's negotiating posture, so  AOGCC is                                                               
faced with a delicate balancing act of hitting the right number.                                                                
MS. FORESTER pointed  out that bonding is not going  to solve the                                                               
problem because  AOGCC is not  going to collect $1  billion worth                                                               
of bonds.                                                                                                                       
MR. FRENCH agreed.                                                                                                              
2:59:57 PM                                                                                                                    
REPRESENTATIVE DRUMMOND  asked whether  the state could  take the                                                               
$200,000 bond and buy an insurance policy with it.                                                                              
MR. FRENCH responded it might  be possible the state could engage                                                               
in  the  same  business  CIRI  engaged in,  which  is  buying  an                                                               
insurance policy for that liability.   But, he continued, that is                                                               
MS. FOERSTER  added that to  say CIRI bought an  insurance policy                                                               
is a  very simplistic approach.   She explained that  before CIRI                                                               
approved the sale to Aurora Gas  from the old operator, CIRI made                                                               
the  old operator  sign  a promissory  agreement  saying the  old                                                               
operator  would be  responsible for  plugging and  abandoning the                                                               
wells  should the  buyer  be  unable.   That  old operator  still                                                               
exists and  still has  money and  CIRI has gone  back on  the old                                                               
operator and that  old operator is going to plug  the wells.  So,                                                               
it is kind of  like an insurance, but is more  like what AOGCC is                                                               
asking the  committee to consider,  which is to have  the ability                                                               
to go back on the old operator.                                                                                                 
3:01:00 PM                                                                                                                    
CO-CHAIR JOSEPHSON surmised  that if BP has 1,900  wells the cost                                                               
is not going to be a few thousand  per bond because BP is sort of                                                               
self-insured.  Given the  cost of P&A has gone up,  he said he is                                                               
trying to determine  what the retort could be other  than it is a                                                               
dollar that cannot go somewhere else.                                                                                           
MR. FRENCH  posited that  the industry  will say  to look  at its                                                               
history and  that it has  taken care  of its responsibility.   In                                                               
the history of the state, he  said, there have been few instances                                                               
where it has  fallen back on the state.   The nature of insurance                                                               
and the  nature of long-range  issues is  that they don't  pop up                                                               
every day.   It is a matter  of [the state] trying  to be careful                                                               
and trying  to stay  ahead of  something.   Industry is  aware of                                                               
this and  is not neglecting it,  but AOGCC believes it  is a much                                                               
bigger  liability  than  gets  discussed  at  regular  intervals.                                                               
Therefore, AOGCC appreciates the  opportunity to discuss it today                                                               
and thinks  it prudent for the  state to have that  backstop of a                                                               
law that lets the last guy be looked at.                                                                                        
3:02:57 PM                                                                                                                    
CO-CHAIR  JOSEPHSON  surmised the  bond  would  apply to  private                                                               
land, such  as CIRI, and  that CIRI would  have to have  the same                                                               
$600,000 requirement prospectively.                                                                                             
MR. FRENCH replied that AOGCC  doesn't have a "cookbook" response                                                               
and is going to take each operator one  at a time.  He said he is                                                               
unsure whether AOGCC  will multiply wells times  $600,000 to come                                                               
up with a number.                                                                                                               
CO-CHAIR TARR  noted 5,000 wells  times $600,000 is a  $3 billion                                                               
3:03:36 PM                                                                                                                    
REPRESENTATIVE JOHNSON,  regarding multiplying $600,000  by every                                                               
well in  the state, inquired whether  the goal is to  have a bond                                                               
that will  be sizeable enough for  people to act if  they want to                                                               
get back  their bond,  or whether  it is to  cover the  state for                                                               
every dime  it might possibly  cost in  the future.   She offered                                                               
her interpretation  that at  first this was  portrayed as  a very                                                               
dark and  huge problem, but  then it  was heard that  [AOGCC] has                                                               
only gone after a bond once.                                                                                                    
MS. FOERSTER responded that AOGCC has  only had cause to go after                                                               
the bond one time and did,  and now AOGCC has another opportunity                                                               
to do  that with Aurora  Gas and will.   But, she  explained, the                                                               
problem isn't going to be solved  by a bond and the problem isn't                                                               
going to  be solved by a  bill.  The problem  of having thousands                                                               
of wells  in the  state, all  of which will  become an  idle well                                                               
eventually if  not plugged,  is going  to require  several steps.                                                               
She  said one  step that  AOGCC  has already  instituted is  that                                                               
every operator comes in once a  year and reviews with AOGCC every                                                               
idle  well the  operator  has  and what  the  future utility  and                                                               
mechanical condition is for each  idle well.  After those reviews                                                               
an  agreement  is  made  on  which  wells  will  be  plugged  and                                                               
abandoned over  the next year.   The commission is  going through                                                               
each operator's idle  well inventory and trying to  lower it year                                                               
by  year.   Ms.  Foerster  said another  step  will be  reviewing                                                               
AOGCC's bonding  process and  trying to  make it  more realistic.                                                               
But bonding is not going to  be the solution by itself, she said.                                                               
Another part of the solution  is working with legislators to pass                                                               
a bill that lets AOGCC go back on other operators.                                                                              
MS.  FOERSTER  added that  another  part  of the  solution  which                                                               
hasn't been mentioned and which she  would like to see is an idle                                                               
well  fund.   She  outlined how  this  fund would  work:   If  an                                                               
operator has,  say, 100 idle  wells, then  the next year  it will                                                               
cost the operator,  say, $100 per well for each  of the 100 wells                                                               
that is  still idle.   If any of those  wells are still  idle the                                                               
following year  it will cost the  operator $500 per well  and the                                                               
next year  it will cost  $1,000 and so on.   That money  would be                                                               
put  into  an  idle  well  fund  to  be  used  for  plugging  and                                                               
abandoning wells.  This fund  would do two things, she continued.                                                               
It would  start to build a  fund that AOGCC can  use for plugging                                                               
and  abandoning  wells  and will  disincentivize  operators  from                                                               
leaving  their wells  idle.   She described  this issue  as being                                                               
like  a  patient  that requires  several  doctors  doing  several                                                               
different things -  legislators are one of the  doctors, AOGCC is                                                               
another, and DNR  is another.  When DNR allows  operators to sell                                                               
properties to new operators, they  must work DR&R agreements that                                                               
are more creative and inclusive.                                                                                                
3:07:47 PM                                                                                                                    
REPRESENTATIVE JOHNSON  inquired whether AOGCC is  having trouble                                                               
with  companies doing  their due  diligence when  AOGCC asks  for                                                               
their compliance.                                                                                                               
MR. FRENCH answered NordAq Energy  Inc. has plugged and abandoned                                                               
its well on the  far side of Cook Inlet but  hasn't yet gotten to                                                               
its well on  the Kenai Peninsula.  NordAq is  not a multi-million                                                               
dollar  or  multi-national  company   and  is  trying  to  scrape                                                               
together the money  to do this job,  he said.  But part  of it is                                                               
AOGCC and DNR putting the heat on  NordAq to push it in the right                                                               
direction.   He  noted AOGCC  probably spends  80 percent  of its                                                               
effort  working with  20 percent  of these  companies.   He added                                                               
that while AOGCC  does worry about the large number  of wells had                                                               
by ConocoPhillips, BP, and Hilcorp,  they are huge companies that                                                               
have an amazing  amount of people putting energy into  these.  It                                                               
is the little outfits that give AOGCC a lot of fits.                                                                            
REPRESENTATIVE  JOHNSON asked  how much  the settlement  was with                                                               
MR. FRENCH  replied he  will get  back to  Representative Johnson                                                               
after the hearing.                                                                                                              
REPRESENTATIVE JOHNSON  commented that  while maybe  there should                                                               
be concern on  this, she feels there won't be  5,200 wells coming                                                               
in at one  point.  She said  there must be good  operators in the                                                               
state  and surmised  the "big  three" are  working with  [AOGCC].                                                               
She stated  there needs to be  a spectrum of concern  and how the                                                               
amount of  the bonds is chosen,  there must be awareness  of what                                                               
that could do as far as development.                                                                                            
MR. FRENCH  agreed it is a  valid point and said  it is something                                                               
AOGCC is struggling  with.  The number cannot be  too high, or it                                                               
is  a penalty;  and the  number cannot  be too  low, or  it isn't                                                               
meaningful.  It  is part of policy setting, he  continued, and it                                                               
isn't easy.                                                                                                                     
3:10:40 PM                                                                                                                    
REPRESENTATIVE TALERICO said  this should be looked at  as a risk                                                               
assessment.   Although he can  appreciate the number of  wells in                                                               
the state,  he continued,  he also realizes  that some  have been                                                               
plugged and taken care of.   Some of these companies are probably                                                               
very  responsible  and work  at  taking  care  of  that.   It  is                                                               
difficult when it  is said [the state] has X  number of wells and                                                               
[the  state] is  going to  cover the  expense for  all of  those,                                                               
although there are  those smaller companies that do  that.  There                                                               
are different  costs associated with  different wells.   He asked                                                               
whether AOGCC,  via the Administrative  Code, will have  a tiered                                                               
system for  the bonding so  that AOGCC recognizes  that something                                                               
way in  the outback  that requires  an ice  road is  a completely                                                               
different cost than something that is on the road system.                                                                       
MR. FRENCH  agreed each company is  different.  He said  the well                                                               
Caelus drilled  at Smith Bay  is wildly different than  a Swanson                                                               
River  well that  a truck  can  be driven  to, and  that the  old                                                               
Swanson River  field is  in a very  different landscape  than the                                                               
North Slope landscape.                                                                                                          
3:12:18 PM                                                                                                                    
CO-CHAIR  TARR summarized  that  there are  two different  issues                                                               
here.  One is the bonding  authority issue that AOGCC can address                                                               
independent of  the legislature.   The other is a  committee bill                                                               
providing  statutory language  to  allow AOGCC  to  go after  the                                                               
previous operator.  She ascertained  that no one on the committee                                                               
was opposed to considering a committee bill in this regard.                                                                     
3:12:51 PM                                                                                                                    
There being no  further business before the  committee, the House                                                               
Resources Standing Committee meeting was adjourned at 3:12 p.m.                                                                 

Document Name Date/Time Subjects
HB 355 Opposition-Squyres Graphic.pdf HRES 3/5/2018 1:00:00 PM
HRES 3/9/2018 1:00:00 PM
HB 355
HB 355 Opposition-Squyres Testimony.pdf HRES 3/5/2018 1:00:00 PM
HRES 3/9/2018 1:00:00 PM
HB 355
HB 355 Sectional Analysis 2.21.18.pdf HRES 2/28/2018 1:00:00 PM
HRES 2/28/2018 6:00:00 PM
HRES 3/5/2018 1:00:00 PM
HRES 3/9/2018 1:00:00 PM
HB 355
HB 355 Sponsor Statement 2.21.18.pdf HRES 2/28/2018 1:00:00 PM
HRES 2/28/2018 6:00:00 PM
HRES 3/5/2018 1:00:00 PM
HRES 3/9/2018 1:00:00 PM
HB 355
HB 355 Supporting Document- Expanded One Pager 2.21.18.pdf HRES 2/28/2018 1:00:00 PM
HRES 2/28/2018 6:00:00 PM
HRES 3/5/2018 1:00:00 PM
HRES 3/9/2018 1:00:00 PM
HB 355
HB 355 Ver A 2.21.18.pdf HRES 2/28/2018 1:00:00 PM
HRES 2/28/2018 6:00:00 PM
HRES 3/5/2018 1:00:00 PM
HRES 3/9/2018 1:00:00 PM
HB 355
DNR Fiscal Note, HB 355.pdf HRES 2/28/2018 1:00:00 PM
HRES 2/28/2018 6:00:00 PM
HRES 3/5/2018 1:00:00 PM
HB 355
Law Fiscal Note, HB 355.pdf HRES 2/28/2018 1:00:00 PM
HRES 2/28/2018 6:00:00 PM
HRES 3/5/2018 1:00:00 PM
HRES 3/9/2018 1:00:00 PM
HB 355
HB 355 Supporting Document- Alaska Fire Chiefs Letter of Support 2.28.18.pdf HRES 2/28/2018 1:00:00 PM
HRES 2/28/2018 6:00:00 PM
HRES 3/5/2018 1:00:00 PM
HRES 3/9/2018 1:00:00 PM
HB 355
HB 355 Amendment One - D.2 - Rep. Rauscher 3.1.18.pdf HRES 3/5/2018 1:00:00 PM
HRES 3/9/2018 1:00:00 PM
HB 355
HB 355 Amendment Two - D.3 - Rep Rauscher 3.1.18.pdf HRES 3/5/2018 1:00:00 PM
HRES 3/9/2018 1:00:00 PM
HB 355
HB 355 Amendment Three - D.4 - Rep. Rauscher 3.1.18.pdf HRES 3/5/2018 1:00:00 PM
HRES 3/9/2018 1:00:00 PM
HB 355
HB 355 Amendment Four - D.6 - Rep. Rauscher 3.2.18.pdf HRES 3/5/2018 1:00:00 PM
HB 355
HB 355 Amendment Five - D.7 - 3.2.18.pdf HRES 3/5/2018 1:00:00 PM
HB 355
HRES AOGCC Presentation Notes - Protecting the state from P and A liability 3.5.18.pdf HRES 3/5/2018 1:00:00 PM
HRES AOGCC Presentation - CHART_Workover_Activities_Statewide_(2003-2017)_20180228 3.5.18.pdf HRES 3/5/2018 1:00:00 PM
HRES AOGCC Presentation - CHARTS_Avg_Daily_Oil_NGL_Production_Rates_Statewide_(1960-2017)_20180228 3.5.18.pdf HRES 3/5/2018 1:00:00 PM
HRES AOGCC Presentation - CHARTS_Wells_Drilled_DEV-SER_Oil-Gas_State_(2003-2017)_Bar_Chart_20180301 3.5.18.pdf HRES 3/5/2018 1:00:00 PM
HRES AOGCC Presentation - CHARTS_Wells_Drilled_EXP_Oil-Gas_Statewide_(2003-2017)_Bar_Chart 3.5.18.pdf HRES 3/5/2018 1:00:00 PM
HRES Food Security Presentation_Meter 3.5.18.pdf HRES 3/5/2018 1:00:00 PM
Food Security
HRES Food Is Medicine 2018 Alaska Legislature - Ferguson 3.5.18.pdf HRES 3/5/2018 1:00:00 PM
Food Security
HRES Food Is Medicine 2018 Alaska Legislature - Ferguson 3.5.18.pdf HRES 3/5/2018 1:00:00 PM