Legislature(2001 - 2002)
04/11/2001 01:10 PM House RES
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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
ALASKA STATE LEGISLATURE
HOUSE RESOURCES STANDING COMMITTEE
April 11, 2001
1:10 p.m.
MEMBERS PRESENT
Representative Beverly Masek, Co-Chair
Representative Drew Scalzi, Co-Chair
Representative Hugh Fate, Vice Chair
Representative Joe Green
Representative Mike Chenault
Representative Lesil McGuire
Representative Gary Stevens
Representative Beth Kerttula
MEMBERS ABSENT
Representative Mary Kapsner
COMMITTEE CALENDAR
HOUSE BILL NO. 129
"An Act relating to lifetime state park developed campsite
permits."
- MOVED HB 129 OUT OF COMMITTEE
HOUSE BILL NO. 205
"An Act relating to resource development and to grants for the
purpose of promoting resource development from appropriations of
a portion of the revenue derived from the extraction of certain
state natural resources."
- MOVED CSHB 205(RES) OUT OF COMMITTEE
SPONSOR SUBSTITUTE FOR SENATE BILL NO. 76
"An Act relating to the Alaska Right-of-Way Leasing Act; and
providing for an effective date."
- MOVED SSSB 76 OUT OF COMMITTEE
SENATE BILL NO. 164
"An Act prohibiting leases under the Right-of-Way Leasing Act on
state land in or adjacent to the Beaufort Sea; and providing for
an effective date."
- MOVED HCS SB 164(O&G) OUT OF COMMITTEE
HOUSE BILL NO. 232
"An Act permitting state residents to purchase remote
recreational cabin sites."
- BILL HEARING POSTPONED
PREVIOUS ACTION
BILL: HB 129
SHORT TITLE:FREE PARK PERMITS: DISABLED VETS/SR. CIT
SPONSOR(S): REPRESENTATIVE(S)MASEK BY REQUEST
Jrn-Date Jrn-Page Action
02/16/01 0344 (H) READ THE FIRST TIME -
REFERRALS
02/16/01 0344 (H) RES, FIN
04/11/01 (H) RES AT 1:00 PM CAPITOL 124
BILL: HB 205
SHORT TITLE:RESOURCE DEVELOPMENT: BD./GRANTS/FUND
SPONSOR(S): REPRESENTATIVE(S)FATE
Jrn-Date Jrn-Page Action
03/22/01 0690 (H) READ THE FIRST TIME -
REFERRALS
03/22/01 0690 (H) RES, FIN
04/11/01 (H) RES AT 1:00 PM CAPITOL 124
BILL: SB 76
SHORT TITLE:RIGHT-OF-WAY LEASING ACT: TERM & RENEWAL
SPONSOR(S): SENATOR(S) THERRIAULT
Jrn-Date Jrn-Page Action
02/07/01 0301 (S) READ THE FIRST TIME -
REFERRALS
02/07/01 0301 (S) RES
03/29/01 0859 (S) SPONSOR SUBSTITUTE
INTRODUCED-REFERRALS
03/29/01 0859 (S) RES
04/02/01 (S) RES AT 3:30 PM BUTROVICH 205
04/02/01 (S) Moved Out of Committee
MINUTE(RES)
04/03/01 0919 (S) RES RPT 3DP 2NR
04/03/01 0919 (S) DP: TORGERSON, PEARCE,
HALFORD;
04/03/01 0919 (S) NR: LINCOLN, ELTON
04/03/01 0919 (S) FN1: INDETERMINATE(DNR)
04/04/01 0932 (S) RULES TO CALENDAR 4/4/01
04/04/01 0943 (S) READ THE SECOND TIME
04/04/01 0943 (S) ADVANCED TO THIRD READING
UNAN CONSENT
04/04/01 0943 (S) READ THE THIRD TIME SSSB 76
04/04/01 0943 (S) PASSED Y19 N- E1
04/04/01 0943 (S) EFFECTIVE DATE(S) SAME AS
PASSAGE
04/04/01 0946 (S) TRANSMITTED TO (H)
04/04/01 0946 (S) VERSION: SSSB 76
04/04/01 (S) RLS AT 10:45 AM FAHRENKAMP
203
04/05/01 0852 (H) READ THE FIRST TIME -
REFERRALS
04/05/01 0852 (H) O&G, RES
04/05/01 0870 (H) CROSS SPONSOR(S): HARRIS
04/10/01 (H) O&G AT 5:00 PM CAPITOL 124
04/10/01 (H) Moved Out of Committee
MINUTE(O&G)
04/11/01 0955 (H) O&G RPT 5DP
04/11/01 0955 (H) DP: KOHRING, DYSON, JOULE,
GUESS, FATE
04/11/01 0955 (H) FN1: INDETERMINATE(DNR)
04/11/01 (H) RES AT 1:00 PM CAPITOL 124
BILL: SB 164
SHORT TITLE:NO GAS PIPELINE OVER BEAUFORT SEA
SPONSOR(S): SENATOR(S) TORGERSON
Jrn-Date Jrn-Page Action
03/23/01 0786 (S) READ THE FIRST TIME -
REFERRALS
03/23/01 0787 (S) RES
03/28/01 (S) RES AT 3:30 PM BUTROVICH 205
03/28/01 (S) Moved Out of Committee
MINUTE(RES)
03/29/01 0856 (S) RES RPT 7DP
03/29/01 0856 (S) DP: TORGERSON, TAYLOR,
HALFORD, PEARCE,
03/29/01 0856 (S) KELLY, LINCOLN, ELTON
03/29/01 0856 (S) FN1: ZERO(DNR)
03/30/01 (S) RLS AT 10:45 AM FAHRENKAMP
203
04/02/01 0903 (S) RULES TO CALENDAR 4/2/01
04/02/01 0906 (S) READ THE SECOND TIME
04/02/01 0906 (S) ADVANCED TO THIRD READING
UNAN CONSENT
04/02/01 0906 (S) READ THE THIRD TIME SB 164
04/02/01 0907 (S) PASSED Y18 N- A1 E1
04/02/01 0907 (S) EFFECTIVE DATE(S) SAME AS
PASSAGE
04/02/01 0908 (S) TRANSMITTED TO (H)
04/02/01 0908 (S) VERSION: SB 164
04/03/01 0821 (H) READ THE FIRST TIME -
REFERRALS
04/03/01 0821 (H) O&G, RES
04/03/01 0831 (H) CROSS SPONSOR(S): CROFT,
WHITAKER
04/10/01 (H) O&G AT 5:00 PM CAPITOL 124
04/10/01 (H) Moved HCS SB 164(O&G) Out of
Committee
04/10/01 (H) MINUTE(O&G)
04/11/01 0957 (H) O&G RPT HCS(O&G) 5DP
04/11/01 0957 (H) DP: DYSON, GUESS, JOULE,
CHENAULT, FATE
04/11/01 0957 (H) FN1: ZERO(DNR)
04/11/01 (H) RES AT 1:00 PM CAPITOL 124
WITNESS REGISTER
JENNIFER YUHAS, Staff
to Representative Beverly Masek
Alaska State Legislature
Capitol Building, Room 128
Juneau, Alaska 99801
POSITION STATEMENT: Spoke on behalf of Representative Masek,
sponsor (by request) of HB 129.
CAROL CARROLL, Director
Division of Support Services
Department of Natural Resources (DNR)
400 Willoughby Avenue, Fifth Floor
Juneau, Alaska 99801-1724
POSITION STATEMENT: Suggested an amendment to HB 129 changing
the lifetime pass to an annual pass.
PETER PANARESE, Field Operations
Central Office
Division of Parks & Outdoor Recreation
Department of Natural Resources (DNR)
550 West Seventh Avenue, Suite 1380
Anchorage, Alaska 99501-3561
POSITION STATEMENT: Answered questions regarding HB 129.
KRISTY TIBBLES, Staff
to Senator Drue Pearce
Alaska State Legislature
Capitol Building, Room 119
Juneau, Alaska 99801
POSITION STATEMENT: Answered questions relating to HB 205 on
behalf of the Senate Resources Standing Committee, sponsor of SB
136, the companion bill.
EDWARD C. FURMAN
PO Box 2367
Cordova, Alaska 99574
POSITION STATEMENT: Testified in support of HB 205.
PAMELA LaBOLLE, President
Alaska State Chamber of Commerce (ASCC)
217 Second Street, Suite 201
Juneau, Alaska 99801
POSITION STATEMENT: Testified on behalf of the ASCC in support
of HB 205.
WILDA RODMAN, Staff
to Senator Gene Therriault
Alaska State Legislature
Capitol Building, Room 121
Juneau, Alaska 99801
POSITION STATEMENT: Spoke on behalf of Senator Therriault,
sponsor of SSSB 76.
STEVEN (ph) JONES, Manager
TAPS [Trans Alaska Pipeline System] Right-of-Way Renewal Project
(No address provided)
POSITION STATEMENT: Testified in support of SSSB 76.
SENATOR JOHN TORGERSON
Alaska State Legislature
Capitol Building, Room 427
Juneau, Alaska 99801
POSITION STATEMENT: Spoke as sponsor of SB 164.
MICHAEL HURLEY
Government Relations
North American Natural Gas Pipeline Group (NANGPG)
601 West 5th Avenue, Suite 500
Anchorage, Alaska 99501
POSITION STATEMENT: Spoke in opposition to SB 164, expressing
concern that it is premature.
JACK GRIFFIN, Assistant Attorney General
Oil, Gas & Mining Section
Civil Division (Anchorage)
Department of Law
1031 West 4th Avenue, Suite 200
Anchorage, Alaska 99501-1994
POSITION STATEMENT: Recommended amendments to SB 164.
ACTION NARRATIVE
TAPE 01-34, SIDE A
Number 0001
CO-CHAIR BEVERLY MASEK called the House Resources Standing
Committee meeting to order at 1:10 pm. Representatives Fate,
McGuire, Chenault, Stevens, Kerttula, Masek, and Scalzi were
present at the call to order. Representative Green arrived as
the meeting was in progress.
HB 129-FREE PARK PERMITS: DISABLED VETS/SR. CIT
CO-CHAIR MASEK announced that the first order of business would
be HOUSE BILL NO. 129, "An Act relating to lifetime state park
developed campsite permits."
Number 0142
JENNIFER YUHAS, Staff to Representative Beverly Masek, Alaska
State Legislature, came before the committee to testify on
behalf of Representative Masek, the sponsor (by request) of HB
129. She paraphrased the sponsor statement [included in the
committee packet], which read:
This bill was introduced to support [our] older
Alaskans. Seniors have every right to enjoy the
beauty of our great state. Many have made a [long-
term] contribution to Alaska's economy and community.
Senior citizens generally find [themselves] on a fixed
income. The Alaska Commission on Aging reports that
the average annual income of an Alaskan senior citizen
is $8,097.
Alaska has many other programs that recognize this.
Persons sixty years and older are able to receive a
hunting and fishing license at no charge. [Renters']
rebates are available for those sixty-five and over,
as well as auto tax exemptions, exemptions for fees
for property appraisals, food distribution, financial
and medical assistance, energy assistance, rental
assistance, and free college tuition. Giving our
older Alaskans use of our parks would encourage their
participation in wholesome outdoor activities that
will enhance their quality of life. House Bill 129 is
a reasonable recognition of our elders' contribution
to our state.
[Also included in the committee packet was Ms. Yuhas's written
testimony, which was handed out to the committee members.]
Number 0423
CAROL CARROLL, Director, Division of Support Services,
Department of Natural Resources (DNR), told the committee the
department certainly does not oppose HB 129 and recognizes that
it is the policy of the legislature to set benefits to seniors;
however, the Division of Parks & Outdoor Recreation ("State
Parks") is 32 percent funded from fees and the bill would
increase the cost of the department.
MS. CARROLL suggested many costs reflected in the fiscal note
could be eliminated if the sponsor would accept an amendment
changing the permit from a lifetime pass to an annual one. The
process used for everybody now would remain the same: "We could
sell them the same decal, et cetera, and they would just come in
yearly for their free pass." Conversely, the lifetime pass
would involve setting up another decal and "tracking."
MS. CARROLL told the committee that anytime the department does
away with fees, there will be some impact. Although [DNR] has
attempted to estimate the fiscal impact, the figures represent a
"best guess" since the department does not count people or ask
their age.
MS. CARROLL explained that with an amendment to change the
process to an annual one, there would be the following: a zero
fiscal note, with a funding source switched between program
receipts and the general fund; a best estimate of which fees
would no longer be coming to the department; and [an estimate]
of how much of the general funds would be required to replace
[program receipts] in order to avoid a service impact on the
parks.
MS. CARROLL cautioned that the department is only appropriated a
certain amount; therefore, any fees coming in over the amount
estimated would go into the general fund. She emphasized that
there would be a net zero revenue impact on the bill.
Number 0700
CO-CHAIR MASEK referred to the DNR's fiscal note [in committee
packets] provided by Jim Stratton, Director, Division of Parks &
Outdoor Recreation. She asked Ms. Yuhas to answer some of the
concerns mentioned by Ms. Carroll.
Number 0728
MS. YUHAS stated her belief that Ms. Carroll had reviewed [the
fiscal note] directly before the meeting and had addressed some
of her own concerns regarding the fiscal note. She said, "One
of the things that I had brought up was changing the way they
did the pass to eliminate the printing and the other fees
associated in the fiscal note." Ms. Yuhas explained that the
DNR's original fiscal note included fees for creating and
printing a brand-new pass. She agreed with Ms. Carroll that if
[the department] issued an annual pass, then everything would
not have to be restructured.
MS. YUHAS offered her belief that an entirely new database
wouldn't be necessary to track the information. She said she
would like someone to research what it would cost to track the
following two items: issuing park passes at no charge, and
[checking] that people are over 65 years old.
MS. YUHAS mentioned State Parks' RSA [reimbursable services
agreement], a public information center, and printing costs.
Pointing out that nothing in the bill gives an effective date,
she said the committee has the liberty to decide when it would
be effective, and could do so in conjunction with the printing
schedule of the department to save on costs, or else the
department could wait until it's time to reprint.
MS. YUHAS suggested if a new database is not being created, then
there will not be a fee for maintenance of the database. She
said there are a number of statistics that State Parks and [the
Department of] Fish and Game supplied [regarding lost program
receipts]. She commented, "I don't know how we can project lost
program receipts [from having free permits] if we can't identify
how many people are using the service to begin with." She
estimated, from her own observations, that a "generous" 15-20
percent [of people using the state's campgrounds] are seniors.
MS. YUHAS mentioned possible concern that the bill may encourage
people who are not already using the service to seek permits,
thereby causing overcrowding of parks; however, she argued that
although there are times when the campgrounds are full, multiple
open spaces are available the majority of the time. She
concluded by saying she would like to see a much smaller fiscal
note and to see the bill pass.
Number 1006
MS. CARROLL responded that if there is an impact and the program
receipts do "disappear," as the department thinks they may, then
there will be an impact on service. It is difficult to estimate
something that has not been tracked. The department estimates
that approximately 15-20 percent of the people in the parks are
seniors, and that 30-40 percent of those who buy yearly annual
passes are seniors. She emphasized that there will be an impact
on the program receipts being collected by DNR.
Number 1075
REPRESENTATIVE CHENAULT asked Ms. Carroll if the annual senior
passes are for residents only, or are also for use by
nonresidents.
MS. CARROLL answered residents. The department has done away
with the nonresident passes.
REPRESENTATIVE CHENAULT first commented that nobody would know
how many of the senior citizens in the state's campgrounds
during the summer are actually residents or nonresidents. He
then surmised that the number of nonresidents would be higher
and asked Ms. Carroll if she had information regarding that.
MS. CARROLL replied that she did not have any firm numbers
because those statistics have not been tracked. She restated
that if the amendment is made, making the permit an annual one
instead of a lifetime one, the amount in the fiscal note will be
zero but there will be a funding source switch.
Number 1168
REPRESENTATIVE FATE asked if it would be onerous to have seniors
apply every year.
MS. CARROLL said that may be; it's a choice the committee needs
to make.
Number 1272
MS. YUHAS conceded that the fiscal note may not be zero, but
asked the committee to pass the bill anyway "as a reasonable
gesture to honor our older ... Alaskans."
Number 1330
CO-CHAIR MASEK closed public testimony.
Number 1367
REPRESENTATIVE FATE recommended the committee leave "lifetime"
permit in the bill.
CO-CHAIR MASEK read some statistics from Ms. Yuhas's written
testimony that were provided by the Alaska Department of Fish &
Game: In the fiscal year 2000, 3,997 permanent identification
cards were issued to senior citizens to hunt and fish, and 466
licenses were issued to disabled veterans. She added, "The
numbers would probably be a little less for a lot of our
seniors." She said she would like the permit to be a lifetime
one.
Number 1540
REPRESENTATIVE KERTTULA said she liked the idea of a lifetime
pass, but asked whether there was a way to get around the cost
of the printing. For example, a person could obtain one annual
pass and then only have to prove his or her age.
Number 1497
MS. CARROLL responded that she couldn't think of any language.
She added that one of the things found in other states is that
once a person has a lifetime pass - if it's a decal on a car or
a piece of paper - it can be passed around. It's difficult to
figure out how to offer a lifetime pass and not have it be
misused.
Number 1540
REPRESENTATIVE KERTTULA reiterated that she would like to figure
out a way to issue a "one-time annual pass," thereby avoiding
printing costs and the necessity for seniors to apply more than
once.
Number 1593
PETER PANARESE, Field Operations, Central Office, Division of
Parks & Outdoor Recreation, Department of Natural Resources
(DNR), testified via teleconference. He reported that one
challenge in managing State Parks' campgrounds is identifying
people who have paid their fees and then collecting fees from
those who haven't yet paid.
MR. PANARESE explained that the system now used is to provide
decals for display on vehicles; those people may partake in
recreational activities without being stopped each time by park
management, because the decals are readily visible. Mr.
Panarese pointed out that state employees and volunteers should
not be put in the position of having to contact people in
vehicles without decals just to find out if they are over 60.
He indicated the request in the fiscal note is to come up with a
system whereby State Parks personnel wouldn't have to contact a
person directly once the pass is issued, but would be able to
tell whether a person had a pass because it would be visible on
the vehicle or on the person.
Number 1705
REPRESENTATIVE KERTTULA said perhaps the committee should wait
to work this issue out, but she did not understand why "we can't
just get a bunch of orange stickers and put them on top of the
decal and be done with it." She stated that she didn't see the
purpose of "bringing seniors in," and said there must be some
way to overcome having to print a new decal.
Number 1751
CO-CHAIR MASEK said she plans to have her staff work with the
department. Meanwhile, she would leave the bill as it is and
send it on to the House Finance Standing Committee, where
changes can be made to make the bill work.
Number 1765
REPRESENTATIVE FATE moved to report HB 129 out of committee with
individual recommendations and the accompanying fiscal notes.
There being no objection, HB 129 was moved out of the House
Resources Standing Committee.
HB 205-RESOURCE DEVELOPMENT: BD./GRANTS/FUND
[Contains discussion relating to SB 136, the companion bill]
Number 1815
CO-CHAIR MASEK announced that the next order of business would
be HOUSE BILL NO. 205, "An Act relating to resource development
and to grants for the purpose of promoting resource development
from appropriations of a portion of the revenue derived from the
extraction of certain state natural resources."
Number 1850
REPRESENTATIVE GREEN made a motion to adopt the proposed
committee substitute (CS) [version 22-LS0803\C, Chenoweth,
4/5/01] for purposes of discussion. [No objection was stated.]
Number 1860
REPRESENTATIVE FATE, speaking as the sponsor, explained for the
committee members that HB 205 is a companion to SB 136. He
paraphrased his sponsor statement [included in the committee
packet], which read as follows:
House Bill 205 will establish the Resource Development
Board [RDB], which will be tasked with the primary
duties of facilitating public education and promoting
responsible resource development. The board will have
authority to award matching grants to private
nonprofit corporations for projects such as conducting
marketing research, advertising, publishing, and
distributing information related to responsible
resource extraction. Grants may not be used for an
election or a ballot proposition, nor can they be used
for influencing issue-specific legislation at the
state or local government level.
House Bill 205 also establishes the Resource
Development Fund from which the board may award
grants. The fund will be created within the general
fund and will be subject to legislative appropriation
from revenues received from the extraction of the
state's natural resources. 20 percent of the balance,
after administrative costs, will also be appropriated
to the New Business Incentive Fund to attract
companies to Alaska that build on our resource base.
In his annual address to the legislature, [U.S.]
Senator Frank Murkowski advised that "the state must
do its part to promote economic development of its own
lands, irrespective of the prevailing federal attitude
and political landscape at the federal level."
House Bill 205 represents an investment in Alaska's
future. Alaska has been, and will be, dependent on
natural resource extraction to fuel our economic
engine for the foreseeable future. We need to
continue to promote responsible development of our
resources while protecting the environment. The best
way to protect Alaska's environment is to have a
strong diversified economy. The majority of
environmental groups apparently do not agree with this
concept, as they continue to oppose nearly all
development while offering no alternative economic
plan. Alaska's environmental protection laws are
among the strongest in the world, yet by opposing
development of Alaska's natural resources,
environmentalists push development offshore to Third
World countries, ensuring exploitative development in
the absence of adequate environmental protection laws.
There are now more than 90 environmental groups with
offices in Alaska, and the vast majority of their
money comes from the Lower 48. These organizations
spend millions of dollars in Alaska attempting to sway
public opinion, drive public policy, and inhibit the
development of our natural resources. Because of the
virtually unlimited funds available to these
environmental groups, Alaska-based resource
development advocates are unable to compete
effectively in presenting a balanced message to the
public and are overwhelmed by a one-sided message.
House Bill 205 will provide assistance in
disseminating a balanced message regarding responsible
resource development.
Alaska invests in marketing our tourism and seafood
industries and in supporting the opening of ANWR
[Arctic National Wildlife Refuge] to petroleum
exploration in order to benefit our economy. We also
need to invest in the promotion of our diverse mineral
resources, timber, and oil and gas development.
Creating the Resource Development Board will promote
responsible resource development in Alaska and assist
us in meeting our constitutional mandate of developing
our resources by making them available for maximum use
consistent with the public interest.
REPRESENTATIVE FATE commented that the last statement was taken
out of the constitution. He indicated the sectional analysis
[in the committee packet] reflects the proposed CS, Version C.
Number 2145
REPRESENTATIVE FATE referred to [Amendment 1], which read as
follows [original punctuation provided]:
Page 1, line 13:
After "amount"
Insert "based on the gross revenues but
appropriated after the transfer of payments required
by law to the Permanent Fund, School Fund,"
Number 2190
REPRESENTATIVE KERTTULA suggested a friendly amendment to
proposed Amendment 1 as follows: after "the Permanent Fund,
School Fund," add "and Constitutional Budget Reserve Fund,".
REPRESENTATIVE KERTTULA explained that there currently is not
much being added to the Constitutional Budget Reserve Fund
(CBRF) because "we are not getting those big settlements." She
stated her belief that since an overall fiscal plan had not yet
been made, it may make sense to "maintain where we're at right
at the moment."
REPRESENTATIVE FATE expressed concern because the CBRF requires
a three-quarters vote. He also expressed concern about using
those types of funds in this effort.
REPRESENTATIVE KERTTULA agreed about the three-quarters vote to
withdraw from the fund, but offered her belief that this bill
would change how the money goes into the fund.
REPRESENTATIVE FATE responded that at some point the funds would
have to be taken out to use for grants and to put into the
Resource Development Board. Just for argument's sake,
Representative Fate said, if the funds were locked up, a three-
quarters vote would be required in order to use them.
REPRESENTATIVE KERTTULA responded, "It's just that we're getting
the money equal to whatever those amounts are. So it'll never
take a three-quarters vote to ... get that money to this fund."
She said money would never be appropriated back out of the CBRF
for this fund.
Number 2347
KRISTY TIBBLES, Staff to Senator Drue Pearce, Alaska State
Legislature, spoke on behalf of the Senate Resources Standing
Committee, sponsor of SB 136, the companion bill to HB 205. She
informed members that the same amendment is being offered on the
Senate side with consideration to adding the CBRF, based upon
the fiscal note provided by DNR. She told the committee the
drafter of the bill had stated his opinion that the money in
question does not pertain to the CBRF because [the bills] don't
say "oil settlement money."
REPRESENTATIVE KERTTULA stated her understanding, "So it's
simply because the money never is going to deal with the money
that goes through the CBR anyway. ... So actually, then, the
fiscal note may be somewhat misleading ... because it mentions
the CBR."
MS. TIBBLES responded in the affirmative.
REPRESENTATIVE FATE stated that he had no personal objection to
[Representative Kerttula's friendly amendment], but would like
the issue clarified.
REPRESENTATIVE KERTTULA agreed that if the money isn't ever
going to come from the CBR, there is no reason to mention it;
however, it is mentioned in the fiscal note.
Number 2423
MS. CARROLL responded:
Yes, our fiscal note does do that. What this amount
is: it calculates this, based on the gross amount of
revenues from our mineral estate. ... So that's ...
how you get the $2.6 million. All of the
distributions happen after that, and the appropriation
comes out of the general fund. The amount that comes
out of the general fund is what you're worried about,
and that's based on gross revenue. So that is
essentially just a calculation. The revenue stream
goes its merry way, the way that it always has. And
then the appropriation that you make into this fund
comes out of the general fund, based on that amount
that the Department of Natural Resources has
calculated.
MS. CARROLL, in response to a question from Representative
Chenault, clarified that it is current gross receipts from the
end of fiscal year 2000.
Number 2488
REPRESENTATIVE KERTTULA read from page 1, lines 12-14,
continuing through page 2, line 1:
(b) From the money received in the administration
of the resources of the state under AS 38.05, the
legislature may appropriate an amount equal to one-
quarter of one percent of all mineral lease rentals,
royalties, royalty sale proceeds, federal mineral
revenue sharing payments, and bonuses received by the
state as follows:
REPRESENTATIVE KERTTULA said, "It may be under 'bonuses.'" She
stated her belief that Ms. Tibbles had been testifying to the
fact that the money that would go into the CBR does not fit
within that definition. She added, "And I guess that's the
question."
Number 2508
MS. CARROLL responded:
In this fiscal note we calculated based on gross
revenues, which, in my understanding, [include] those
settlement amounts that go directly into the
constitutional budget reserve because they are based
on an error that was made on the revenue that we got -
the receipts that we were supposed to receive in prior
years. So that's how we did the calculations - the
Department of Natural Resources. That's one way of
doing it.
Number 2543
REPRESENTATIVE CHENAULT asked Ms. Carroll if the one-quarter [of
one] percent is based on the latest revenue reports. He also
asked if future resource development would be taxed at the
current rate and the one-quarter [of one] percent would come out
of the gross. In the alternative, would this be an added one-
quarter percent increase in future revenue receipts?
Number 2588
MS. CARROLL answered that this doesn't increase any royalties
that might need to be paid by industry; however, if there is
further development "in there" for the royalties that are paid,
it will be a part of the calculation, because those would be
revenues that [DNR] receives. Addressing a follow-up question,
Ms. Carroll clarified that if there is an increase in revenue
coming from the mineral estate, this calculation would be done
on the increased amount of revenue received. She stated her
expectation that this calculation would be made annually.
Number 2682
CO-CHAIR MASEK asked whether there was any objection to the
adoption of Amendment 1 with Representative Kerttula's amendment
to it. There being no objection, Amendment 1, as amended, was
adopted.
Number 2705
EDWARD C. FURMAN came before the committee to testify in support
of HB 205. He said it was too bad that in the past, the
government gave eight of our islands to Russia. He mentioned
land sold by the federal government without legislative
permission. Mr. Furman thanked the committee for taking time to
listen to "this 65-year-old retired veteran." He passed out a
newsletter [included in the committee packet] describing the
things he frowns on about the government.
Number 2823
PAMELA LaBOLLE, President, Alaska State Chamber of Commerce
(ASCC), testified on behalf of the ASCC in support of HB 205.
She told the committee it is important that the state, which has
ownership of its resources and is a "business partner at the
table," needs help in marketing the importance of resource
development. She asserted that resource development was the
basis upon which Alaska was allowed into statehood. She said:
It's very important at this time, when there is so
much effort and false information that is perpetrated
by those who would have Alaska be a park, instead of a
self-sufficient state of the Union, that has the
ability to be on equal footing in the world market as
other states do.
Number 2924
CO-CHAIR MASEK closed public testimony.
Number 2930
REPRESENTATIVE GREEN mentioned the existence of the Resource
Development Council (RDC) and asked how the proposed Resource
Development Board (RDB) would go to operators and excite them
about using Alaska's resources [any differently than the RDC
would]. He also mentioned AOGA [Alaska Oil and Gas
Association].
TAPE 01-34, SIDE B
REPRESENTATIVE FATE explained that the purpose of the RDB would
be to not only support, but to promote - to act as a public
relations [entity] and to be actively involved in the placement
of funds. For example, the RDB might choose to use funds to
support tourism, promote the development of resources, and fight
the environmentalists who are opposed to it. The RBD could
disseminate funds to aid the efforts of other established
groups.
REPRESENTATIVE GREEN agreed that resources should be marketed.
He mentioned the existence of fish marketing, including that by
ASMI [Alaska Seafood Marketing Institute] and other existing
organizations. He also mentioned approximately $2.7 million in
fiscal notes. He said, "From a commerce point of view, I just
don't ... see where they're going to go that we're not already
going." Representative Green stated his belief that an oil
company, for example, would most likely talk to other oil
companies, or approach DNR [for funds]. He named a fictitious
oil company in Texas and asked how it would be notified to come
to Alaska through the RDB.
REPRESENTATIVE FATE said that wouldn't be the purpose of the
RDB.
Number 2833
CO-CHAIR MASEK referred to the sponsor statement and the
proposed CS, which specifies that nonprofit corporations
organized under the Alaska Nonprofit Corporation Act will be
given preference for receiving grants. She asked Representative
Green if the council he'd mentioned gives grants as well.
Number 2805
REPRESENTATIVE GREEN answered that the council does not give
grants. He questioned whether there would be enough money
available to give grants, to create that kind of an activity for
something of any consequence regarding natural resources.
CO-CHAIR MASEK pointed out AS 44.33.917 in the proposed CS. She
remarked, "From what I see here, this is another tool to help
nonprofit organizations to develop our state's resources."
Number 2689
REPRESENTATIVE FATE said he understood Representative Green's
concern regarding a possible duplication of process, which is a
waste of money. He remarked that many times nonprofit
corporations could be a benefit to the state by getting out the
desired messages of the legislature and "other members of the
state," which cannot get those messages out because of political
correctness, for instance. Representative Fate said he
envisions those funds as nonprofit funds that can promote
economic development, especially in the extraction of resources.
Number 2625
REPRESENTATIVE GREEN said, "Rather than actually distribute the
money to a nonprofit who might then try and extract, ... it's
for an information dissemination, primarily, like Arctic Power."
REPRESENTATIVE FATE concurred.
REPRESENTATIVE GREEN stated that that was his point: another
[entity] is already doing this.
REPRESENTATIVE FATE said the exception is that Arctic Power has
not come under this purview; had this been in place, it might
have. However, it has received funds from other sources. He
said he hadn't cited Arctic Power because [legislators] felt the
necessity for a nonprofit organization to carry a message. He
alluded to the fact that Arctic Power had been funded,
partially, by the legislature recently [in its efforts to open
ANWR]. He added, "Had this been in place, they would have had
to go through those procedures that have been prescribed in this
bill in order to get any grant funds from this organization, and
I would suspect that they would have done that."
CO-CHAIR MASEK clarified that Arctic Power is solely promoting
the opening of ANWR, whereas the bill refers to "many other
resource entities."
Number 2527
REPRESENTATIVE KERTTULA said she must echo some of the same
concerns Representative Green had offered. She referred to
earlier mention of tourism and stated that if tourism were added
[to the bill], she would "have to come pretty close to
supporting an idea like this."
REPRESENTATIVE KERTTULA indicated [people involved in tourism]
are struggling to "put it together to come back up with their
marketing scheme." She also mentioned "responsible resource
extraction" and expressed concern that there is not a balance
with some of the other industries. Noting that differing
statistics regarding tourism, fishing, and oil as leading
industries, she concluded by saying, "This money stream is
either going to be way up or possibly way down, and that kind of
worries me too."
Number 2453
CO-CHAIR MASEK asked if the Department of Community and Economic
Development (DCED) would "fall under" tourism. She noted that
[the bill] states that the commissioner [of DCED] shall be on
the board.
REPRESENTATIVE KERTTULA stated her interpretation that tourism
is under that department; however, it is not being funded that
way, because there is a private nonprofit board. She pointed
out that tourism would never be able to get a grant, because
it's not an extractive industry.
Number 2419
REPRESENTATIVE FATE said he does not preclude tourism; however,
it is not the thrust of this legislation.
REPRESENTATIVE KERTTULA clarified that she had brought up the
issue of tourism because neither the title of the bill nor the
thrust includes it; however, unless the sponsor of the bill
wanted to redo the whole idea, [she was not asking for an
amendment.]
Number 2365
REPRESENTATIVE FATE noted that in Denver, in the mineral
industry at large, it takes 7-15 years to get a project through.
He said:
If we have somebody who is going to bat for the state,
wherein sometimes we can't, and we have a nonprofit
organization that needs some funds to help facilitate
reducing the time it gets something [going], we should
take advantage of that.
REPRESENTATIVE FATE told the committee Alaska's problem is worse
than that of many of states in the Lower 48. For example, a gas
pipeline from Prudhoe Bay to the Lower 48, by way of Chicago and
California, was authorized, with all certificates, as long ago
as 1978.
Number 2274
REPRESENTATIVE KERTTULA stated her belief, regarding promoting
development in Alaska, that the money would be better spent by
aiding the company itself, for example, or developing a good
permitting system. She mentioned Red Dog [Mine], air [quality]
violations, and a six-month lag in communication. She said she
respects where Representative Fate is going, but respectfully
disagrees that that is where the money is best spent.
Number 2229
REPRESENTATIVE McGUIRE drew attention to page 2, lines 4-7, of
the proposed CS, which read:
(2) after allowance for the expenses
described in (1) of this subsection, not more than 20
percent of the remaining estimated balance of the
amount authorized for appropriation under this
subsection to the new business incentive fund for
purposes authorized by AS 45.81.010 - 45.81.050;
REPRESENTATIVE McGUIRE remarked that she liked the idea. She
offered her belief that one current problem is attracting new
business to Alaska. She said she would like to see that
[percentage] increase, although she did not know how that might
affect the makeup of the rest of the bill. Representative
McGuire said she thought new business incentives were one of the
key elements of the bill.
REPRESENTATIVE FATE responded that there might be other
problems, of which he is unaware, with increasing the
percentage; however, he had no personal objection to the
suggestion. He added that the next committee of referral would
be a proper place to look at that.
Number 2142
REPRESENTATIVE GREEN asked how much of the $2.7 million would be
available to pass out, after the agencies that are writing these
[grants] extract their [expenses]. He asked if anything would
be gained by this, other than having some additional literature
going somewhere. He said it is difficult to see how much more
money will actually be required in order to do some good.
Number 2042
REPRESENTATIVE FATE told Representative Green he could not
answer his questions at this point because there has been no
experience with this to determine projected expenses.
REPRESENTATIVE GREEN responded that he loves the goal if it is
certain it would work as planned. He agreed Alaska needs to
extract its resources. He said some problems with permitting
stem directly or indirectly from the EPA [Environmental
Protection Agency]; therefore, if this [legislation] were going
to go towards education and the EPA, he could be more easily
persuaded, because it is a major stumbling block in need of
correction. He suggested that striking a deal with the EPA may
be an incentive for other companies to come to Alaska. He said
[Alaska] operates in a more environmentally sound manner than
any other place in the world. He added, "If we could strike a
deal with EPA, because of that history, then ... let's go to ...
two percent."
REPRESENTATIVE FATE asked Representative Green if he was
suggesting an amendment.
REPRESENTATIVE GREEN answered, "If I knew where it was going."
Number 1931
MS. TIBBLES offered an example: the Alaska Miners Association
could apply for a grant to produce new information regarding
mining in Alaska.
REPRESENTATIVE GREEN said they produce the information now,
without the grant. He mentioned a Canadian company that got Red
Dog [Mine] started. He asked if "we" had talked to any of the
people who might be looking for funding.
Number 1859
REPRESENTATIVE FATE restated that he understood Representative
Green's concerns. This would be a reinforcement for things that
already exist; the bill addresses the nonprofit aspect. He said
there is a process to follow, and the grants would not be given
out indiscriminately. Although there may be overlap, it may be
very beneficial.
Number 1768
REPRESENTATIVE GREEN stated that the tourism business is in need
of money every year; it competes with [businesses] that are
"being subsidized by other states, by other countries." He said
their marketing council has really helped. He also mentioned
the battle to open ANWR and spoke of "specific need" and
"specific issue." To illustrate his point, Representative Green
told the committee that his children were given money when they
were specific about what they wanted, rather than vague.
Number 1695
CO-CHAIR MASEK explained that the proposed board would be made
up of [five] people: [one each] from the forestry, mining, oil,
and gas industries [through their respective trade
associations], as well as the commissioner of DCED. She
indicated those people would be the ones to issue the grant
money and that grants would help [groups] promote themselves.
Number 1614
REPRESENTATIVE FATE referred to the first line of his sponsor
statement, which read:
House Bill 205 will establish the Resource Development
Board, which will be tasked with the primary duties of
facilitating public education and promoting
responsible resource development.
REPRESENTATIVE FATE said to Representative Green:
If you consider that, I suppose, some of the beauty of
this land is a resource, then I would assume also that
you would say that this could help develop that
resource through tourism, which both you and
Representative Kerttula have been talking about. It
does not, as I have said before, ... negate advancing
any funds from ... going in that direction, but that's
going to be a process that we'll have to go through
from the applicant and from the review of each
application.
Number 1523
REPRESENTATIVE KERTTULA emphasized, however, that there cannot
be tourism under this. It is for the development of resources
having commercial promise, using methods of responsible resource
extraction. It cannot be used for tourism.
Number 1493
REPRESENTATIVE FATE moved to report CSHB 205 [version 22-
LS0803\C, Chenoweth, 4/5/01, as amended] out of committee [with
individual recommendations and the accompanying fiscal notes].
[Representative Kerttula first objected, then withdrew her
objection.] There being no objection, CSHB 205(RES) was moved
out of the House Resources Standing Committee.
SB 76 - RIGHT-OF-WAY LEASING ACT
CO-CHAIR MASEK announced that the next order of business would
be SPONSOR SUBSTITUTE FOR SENATE BILL NO. 76, "An Act relating
to the Alaska Right-of-Way Leasing Act; and providing for an
effective date."
Number 1295
WILDA RODMAN, Staff to Senator Gene Therriault, Alaska State
Legislature, gave a brief overview of the bill by paraphrasing
the sponsor statement, which read:
Senate Bill 76 makes three important changes to the
1972 Alaska Right-of-Way Leasing Act, which gives the
Department of Natural Resources [DNR] the authority to
lease state land for oil and gas pipelines.
First, SB 76 increases the maximum term of right-of-
way lease renewals from the current 10 years to 30
years. Leases for several pipelines, including the
Trans-Alaska Pipeline System, Endicott, Kuparuk,
Oliktok and Milne Point all expire in May, 2004. SB
76 changes the length of terms for renewals only, not
the length of the original lease term, so the renewal
process for the pipelines with leases that expire in
2004 will proceed uninterrupted. The 30-year term of
renewal is consistent with that of federal grants of
right-of-way for oil and gas pipelines, and will
result in significant savings of time and money to
industry and the state.
A section of the bill allows for existing leases to be
amended, upon request, to incorporate the new
provision for renewal periods of up to 30 years. The
bill also places in statute a provision allowing for
the extension of leases under their existing terms if
the lessee has applied for renewal, but the terms of
the lease are still under negotiation at the date of
expiration. The language proposed in AS 385.110(b)
states that the leases shall be continued until the
commissioner issues a final determination on renewal.
Although current statutes give the commissioner leeway
to extend a right-of-way lease or grant an interim
lease pending finalization of a renewal determination,
I believe the procedure for extending a lease pending
renewal needs to be set out in statute. Although DNR
believes it can adhere t a self-imposed deadline for
renewing leases before they expire, I think such
rationale injects unnecessary uncertainty into the
renewal process.
Second, the bill amends the definition of "state land"
for purposes of the right-of-way leasing Act to
include only land in which the interest owned by the
state is sufficient to permit the state to lease it
under the authority of the Department of Natural
Resources.
Third, the bill requires lessees under new and renewed
right-of-way leases to reimburse the stated for costs
associated with monitoring the operation, maintenance
and termination of pipelines on state right-of-way
leases. The bill requires the commissioner to use
best efforts to reach agreement with the lessee on the
cost reimbursement and to provide the lessee with an
annual estimate of the projected costs and scope of
the work.
Number 1021
STEVEN (ph) JONES, Manager, TAPS [Trans Alaska Pipeline System]
Right-of-Way Renewal Project, thanked the committee for
considering the bill. He said SSSB 76 contains language agreed
upon among TAPS, the administration, and the DNR. He offered
that SSSB 76 is "a good solution to a few relatively minor
administrative issues that we had on renewal."
Number 0965
REPRESENTATIVE GREEN asked Mr. Jones if renewals in other states
are typically of this magnitude, and rather than being every ten
years, are over an extended period of time.
MR. JONES replied that he could not say what the common
situation is in other states; however, the federal provisions,
which have frequently been used over the years for renewal in
the Lower 48, are for a maximum 30-year period.
REPRESENTATIVE GREEN said it has been rumored - because of the
concern about environment-related challenges - that if there
isn't an EIS [environmental impact statement] prepared, there
could be court challenges and [the process] could get "tied up."
He asked Mr. Jones whether he thought that if the renewal period
were over a lesser period of time - ten years, for example -
"this same sort of thing would have to be gone through every
time." He stated his understanding that "multiple millions of
dollars" are involved in getting this renewal.
MR. JONES said the reason there is a need to go through NEPA
[National Environmental Policy Act of 1969] compliance is
because of a federal requirement. He stated his understanding
that the Secretary of the Interior has determined an EIS would
be necessary. He noted there is no state requirement to do an
EIS or comply with NEPA. He continued:
The federal rules, again, provide for a 30-year
renewal, so ... depending on the determination that
was made by, in this case, the Bureau of Land
Management, [which] administers the federal grant, we
could have to go through another renewal in a lesser
period of time than 30 years; but that's one of the
decisions that the Secretary has to make in
determining whether or not to renew the right-of-way,
is the duration of the lease.
The main reason that we ... suggested the amendment to
the state statute is because we're regulated by the
Joint Pipeline Office, which, of course, is a combined
federal and state office. And really it was just to
put the two offices on similar footing, so that we
didn't have the state looking at a renewal over a more
frequent period of time than the federal renewal
period, since the two of them work together and we
work together with them.
Number 0662
REPRESENTATIVE KERTTULA asked how long TAPS is projected to run
and what the production levels are projected to be for the next
30 years.
MR. JONES answered that "we" plan to submit an application
called a "duration report." He offered the belief - based upon
reports from the U.S. Department of Energy, for example, and
just associated with the existing areas, not ANWR [Arctic
National Wildlife Refuge] or NPRA [National Petroleum Reserve of
Alaska] - that "we'll" have sufficient oil in commercial
qualities to transport off the Slope, through TAPS, for at least
another 30 years. He added, "Granted, no one can predict the
price of oil, so this is with some caveat there."
Number 0490
REPRESENTATIVE FATE noted that Mr. Jones had mentioned the
request of the Secretary of the Interior for an EIS. He asked
if that had been under a different administration and whether
there had been an opportunity to reverse that.
MR. JONES replied that the decision had been made under a
different administration by, he believed, an assistant
secretary. He said there was also a solicitor's opinion issued
on the applicability of NEPA to the renewal decision. It is a
decision that was made and that is subject to review by the new
Secretary [of the Interior]; however "we" have to comply with
the existing one made in 1999.
REPRESENTATIVE FATE said based upon Representative Green's
earlier suggestion, it might be more prudent to do the EIS,
rather than to run the risk of eventual environmental
litigation.
Number 0299
REPRESENTATIVE FATE moved to report SSSB 76 out of committee
with individual recommendations and the accompanying fiscal
notes. There being no objection, SSSB 76 was moved out of the
House Resources Standing Committee.
SB 164-NO GAS PIPELINE OVER BEAUFORT SEA
CO-CHAIR MASEK announced that the next order of business would
be SENATE BILL NO. 164, "An Act prohibiting leases under the
Right-of-Way Leasing Act on state land in or adjacent to the
Beaufort Sea; and providing for an effective date." [Before the
committee was HCS SB 164(O&G).]
[There was a motion to adopt the bill for discussion purposes,
but it was already before the committee.]
Number 0103
SENATOR JOHN TORGERSON, Alaska State Legislature, sponsor of SB
164, indicated the "over-the-top" route does not serve the best
interests of the state. He listed some benefits of a pipeline
that would not exist with the over-the-top route: in-state use
of natural gas; maximum benefits for short-term and long-term
jobs; a significant long-term property tax base for the state;
and value-added industries.
TAPE 01-35, SIDE A
Number 0001
SENATOR TORGERSON paraphrased an excerpt from page 3, lines 11-
14, which read in part:
(b) Consistent with the legislative policy and
goals set out in (a) of this section, the commissioner
may not grant a lease across state land that is in or
adjacent to the Beaufort Sea for pipeline right-of-way
purposes to authorize construction and operation of a
natural gas pipeline following a "northern" or "over-
the-top" route ...
(c) The limitation on leasing set out in (b) of
this section does not apply on and after the date on
which a natural gas pipeline following a "southern"
route that parallels the Trans Alaska Pipeline System
and the Alaska Highway to transport North Slope
natural gas to North American markets or Alaska
tidewater for delivery to foreign and domestic markets
has been completed and has begun operation.
SENATOR TORGERSON pointed out the new language of HCS SB
164(O&G) on page 2 [lines 15-22], saying it originates from "the
"Northstar bill" and deals with the effectiveness of having
maximum local hire.
Number 0210
REPRESENTATIVE GREEN inquired if SB 164 had been subjected to
legal review regarding the issue of the legislature's limiting
the commissioner's leasing authority.
SENATOR TORGERSON replied:
I do have a legal opinion that basically talks about
three issues that were raised in earlier hearings:
one is equal protection; one is a commerce clause; and
one is separation of powers. And our legal department
has found all of them not to be valid.
REPRESENTATIVE GREEN clarified that Senator Torgerson meant all
language in the bill passes muster.
Number 0312
REPRESENTATIVE KERTTULA asked Senator Torgerson if his legal
sources considered whether the companies had to study any
alternative routes.
SENATOR TORGERSON said that question had not been raised. He
mentioned that the committee might hear in upcoming testimony
that [the companies] are required to do alternative studies on a
particular route. He offered his personal opinion:
The route has already been chosen by the President of
the United States and by Congress. It's ratified by
treaty between Canada and the United States. That is
the route. So if they wanted to lay the pipe in the
route that's already authorized, an alternative route
- alternative methodology - is not required. If they
wanted to select a different route, no matter what it
was, then they would ... be required to do studies,
unless they could prove cause that that route was the
only route that is feasible and no other route could
be. But in any event, they'd probably be involved in
doing other studies.
REPRESENTATIVE KERTTULA clarified that she had asked out of
curiosity, not because she objected to SB 164.
Number 0430
REPRESENTATIVE SCALZI expressed concern that although he likes
the route, he has "just a little bit of reservation about tying
our hands completely on this." He mentioned a resolution
recently passed by the House, but said [SB 164] states more than
the resolution; it "says this is the only way you're going to
go." He asked Senator Torgerson if he could predict any future,
detrimental consequences of closing the options, even though the
intent of the bill seems clear today.
SENATOR TORGERSON answered that the "over-the-top" route is the
option being closed off, for the reason that there will be no
value-added industry in Alaska on "gas we can't get," and
because jobs and tax valuations wouldn't be spread across the
state to the maximum benefit. He added that LNG [liquefied
natural gas] routes are still open and said this is just one
buried pipe in the Beaufort Sea that [the legislature] is saying
"no" to.
SENATOR TORGERSON mentioned a route proposed in 1977 that was
"onshore ANWR." Although [the Alaska State Legislature] did not
act on that, Senator Torgerson said Congress and the government
of Canada did, because the proposed area was too environmentally
sensitive. He remarked, "So, if a pipeline's environmentally
sensitive onshore, heaven knows what it's going to be called
offshore, buried under the ice." He added that the only benefit
of this route might be to the treasury, but overall it would not
be good for the State of Alaska.
Number 0705
MICHAEL HURLEY, Government Relations, North American Natural Gas
Pipeline Group (NANGPG), stated that he must respectfully
disagree with Senator Torgerson. He mentioned that his written
testimony was very similar to the testimony he gave the previous
week for [HCR 8]; therefore, he would not read it to the House
Resources Standing Committee today. [A copy of Mr. Hurley's
written testimony is included in the committee packet and can be
found in the minutes for HCR 8.] He specified that [NANGPG]
believes passage of SB 164 at this time - removing options from
the table - is not a good idea and is premature.
Number 0789
CO-CHAIR MASEK noted for the record a letter [included in the
committee packet] from Commonwealth North. She said it appeared
[Commonwealth North] would like to have adequate opportunity to
evaluate all options prior to making this bill law.
Number 0850
REPRESENTATIVE FATE asked Mr. Hurley when an opportune time to
pass this legislation would be.
MR. HURLEY replied that NANGPG is currently engaged in studies
throughout this year, spending in excess of $75 million to do
the engineering work and to study the attributes of both routes.
He suggested that the committee wait for NANGPG's input from its
economic, socioeconomic, and environmental studies, as well as
input from the U.S. federal government and the Canadian
government.
REPRESENTATIVE FATE responded that although he is a strong
proponent of the oil and gas industry, "input" means to him that
[the legislators] are not really players at the table. He
mentioned a recent energy meeting where "the considerations of
the exploration of the gas were so prolific" that there may not
be time to wait for NANGPG to produce a report that has no
timeline, because the market may close.
REPRESENTATIVE FATE characterized the state's responsibility to
its "shareholders" as similar to the responsibilities of
companies to their shareholders. He expressed hope that SB 164
would be taken by the industry as "piece of legislation that
mirrors our concern about these timelines." He also expressed
hope that it would galvanize the producers into making some
decisions that would speed up the process.
Number 1113
REPRESENTATIVE GREEN expressed his commitment to a pipeline that
comes down through the middle of the state; however, he said he
thought it was premature to determine now that the [over-the-
top] route will not work, even though he is against it now.
Representative Green said he wants to know what he is saying
"no" to, rather than saying "no" to something that is just
feared. Representative Green said although he thought the
timing of SB 164 was wrong, however, he would support it.
Number 1218
CO-CHAIR MASEK said she shared Representative Green's concerns.
Number 1236
JACK GRIFFIN, Assistant Attorney General, Oil, Gas & Mining
Section, Civil Division (Anchorage), Department of Law,
testified via teleconference. He indicated some potential legal
issues within the language of SB 164. He reminded members that
neither he nor [Legislative Legal Services] could rule upon
whether a particular legal objective was valid, however, because
that is the courts' functional; he surmised, therefore, that
counsel from [Legislative Legal Services] had probably said that
if presented with "these legal arguments," the courts should
rule that this law will withstand constitutional review. He
went on to say:
At least with respect to the commerce clause issue
[and equal] protection clause issue, I would like to
say that I would agree with [Legislative Legal
Services] on that. It would also be my view that, if
the court were presented with the commerce clause
issue and equal protection issues that I've identified
previously in testimony, they should find that the
laws withstand challenges under those clauses. But I
don't think that's the case.
MR. GRIFFIN indicated the question to ask is whether any
relatively simple changes could be made to the bill that would
strengthen [the state's] position on these types of crucial
issues. From his perspective and that of the Department of Law,
several relatively simple changes could be made without changing
the ultimate intent of the legislature in any way, but which
would help in defending any legal challenges that might
ultimately be brought by those who might disagree with the
legislature's policy choice in this case.
MR. GRIFFIN noted that he had been speaking to Senator
Torgerson's staff and would make himself available to the
Senator and the committee to explore possible changes to the
language of the bill.
Number 1464
CO-CHAIR MASEK asked Mr. Griffin to share his ideas for amending
the language. [Co-Chair Masek had a copy of the latest version
faxed to Mr. Griffin; meanwhile, she called Senator Torgerson
back to the witness table.]
Number 1636
SENATOR TORGERSON told the committee that Mr. Griffin has
repeatedly proposed changes to SB 164 during his testimony at
several committee meetings. Senator Torgerson stated that he
will not be in favor of making the changes proposed by Mr.
Griffin until he hears from [the governor's office] that they
are in agreement to the bill. He explained that the governor
has expressed dislike for SB 164 in his public speeches and
other comments. He remarked on the difference between the Mr.
Griffin's opinion and that of [Legislative Legal Services].
Number 1725
MR. GRIFFIN responded that he didn't think there was a
difference between his opinion and that of [Legislative Legal
Services], at least in regard to the commerce clause and the
equal protection issue. Rather, the question is whether there
is a better way to present [SB 164], ultimately, to the court.
Number 1822
MR. GRIFFIN informed the committee that he'd received the latest
version of SB 164. He recommended the following amendments: On
page 3, Section 3, subparagraph (b), lines 14-17, after
"operation of a natural gas pipeline", delete "following a
'northern' or 'over-the-top' route running east from the North
Slope to Canada's Mackenzie River Valley, then south to link to
existing pipeline networks to transport North Slope natural gas
to North American markets."; and add "for distribution of
natural gas market".
MR. GRIFFIN articulated the rationale for that change, saying at
this time a route through the state's submerged lands off the
coast of ANWR is not in the best interest of the state, given
that there is another federally approved route to get North
Slope gas to foreign and interstate markets. The reason for the
change is to generalize the language as much as possible while
still accomplishing the legislative purpose at hand. Mr.
Griffin cautioned, "By identifying the project so specifically,
you open the door to technical legal arguments."
MR. GRIFFIN also recommended the elimination of subparagraph
(c), lines 18-22, from page 3 of the bill, because he said he
did not think that language was necessary to accomplish the
present legislative purpose. He explained:
It may very well be that even after the construction
and operation of a southern pipeline, the legislature
might feel that it's not in the state's best interest
to have a sub-sea pipeline off the coast of Alaska
that spans 100 or 150 miles. We don't have all the
facts ... today to know whether that's going to be in
the state's best interest or not.
MR. GRIFFIN recommended sticking with the legislative policy
choice articulated in [his amended] subparagraph (b) until the
legislature is presented with enough evidence to prove that the
over-the-top route is in the state's best interest.
Number 2140
REPRESENTATIVE GREEN asked whether Mr. Griffin's concern
regarding subsection (b) is that "without this indication of 'to
market'" it could jeopardize or preclude a line, say, from Point
Thomson, which would be onshore but would very likely be
handling gas.
MR. GRIFFIN responded:
I would not see the language, as I proposed it, as in
any way prohibiting development of Point Thomson gas,
unless for some reason it was necessary to run the
Point Thompson pipeline immediately adjacent to the
Beaufort Sea or off the coast of the North Slope.
REPRESENTATIVE GREEN clarified that his concern was with the way
(b) is written now. He asked Mr. Griffin if his concern was
that the result of passing the bill without the modification
under discussion would be to jeopardize "shipping gas adjacent
to the shoreline."
MR. GRIFFIN replied that the concern centered around arguments
that might be raised under the commerce clause and the equal
protection clause for a gas project that fits the definition
currently in subsection (b), whether that project involved Point
Thomson or Prudhoe Bay.
Number 2235
REPRESENTATIVE GREEN continued his line of questioning:
It may ... seem foolish now, but it's possible, with
the gas accumulation at Point Thomson, there could be
significantly more gas in that immediate area that may
ultimately prove better to go east and still have the
Prudhoe Bay gas [in] a pipeline coming down through
the state.
And so I'm wondering if, because of the way this is
written, would that preclude Point Thomson,
subsequently to a gas line coming through the state -
subsequent development at Point Thompson - going east
and down the Mackenzie? Would (b) prevent that as
it's written now?
MR. GRIFFIN responded that he believed it would.
Number 2296
REPRESENTATIVE KERTTULA pinpointed that the new language of Mr.
Griffin's proposed amendment preserves the intent of the
original legislation, uses general rather specific language,
does not interfere with any other projects, and protects the
right to have offshore pipelines. She described Mr. Griffin's
amendment as an effort to "get away from an attack on the face
of the legislation." She asked Mr. Griffin to confirm that.
MR. GRIFFIN concurred, saying he was trying to avoid a potential
"facial" challenge to the bill, based on either the commerce
clause or an equal protection argument.
REPRESENTATIVE KERTTULA asked Mr. Griffin to confirm the
following statement:
Without this language, ... if you were a company and
you were seeking ... an alternative route, you
wouldn't even have to come in and apply for a permit,
potentially. You could just go straight to court.
You'd never even have to come through and try, because
you'd already be foreclosed.
MR. GRIFFITH answered that it could be a risk.
Number 2370
SENATOR TORGERSON offered excerpts of a legal opinion that he
said was "on point" to Mr. Griffin's memo to another legislator.
He said he would supply copies to members of the House Resources
Standing Committee only, for confidentiality reasons. He
mentioned the significance of the federal government having
spoken in regard to the gas pipeline issue, and how SB 164 and
the objectives of federal policy are congruent, according to the
author of the letter. Senator Torgerson added that he didn't
think Mr. Griffin believed in the fundamental policies that
this legislature was trying to set.
Number 2440
REPRESENTATIVE KERTTULA asked Senator Torgerson what adverse
effect would come from adopting Mr. Griffin's amendment. She
also asked whether it wouldn't be preferable to "give ourselves
the chance to stand up to that kind of a legal challenge?"
SENATOR TORGERSON replied that the language without the
amendment was very clear and he liked it.
REPRESENTATIVE KERTTULA made a motion to adopt Mr. Griffin's
amendment. She explained that she didn't believe it would
change the intent of "this very good idea." Instead, she told
members, it "protects us against facial challenges, puts us on
better footing in the courts, and, with due respect to the
sponsor, ... [follows] very good legal advice."
SENATOR TORGERSON reiterated that he opposed it.
Number 2604
CO-CHAIR MASEK called an at-ease. She called the meeting back
to order.
A roll call vote was taken. Representative Kerttula voted in
favor of the amendment. Representatives Fate, Chenault, Green,
McGuire, Stevens, Masek, and Scalzi voted against it.
[Representative Kapsner was absent.] Therefore, the amendment
failed by a vote of 1-7.
Number 2660
REPRESENTATIVE McGUIRE moved to report HCS SB 164(O&G) out of
committee with individual recommendations and the accompanying
fiscal notes. There being no objection, HCS SB 164(O&G) was
moved out of the House Resources Standing Committee.
ADJOURNMENT
There being no further business before the committee, the House
Resources Standing Committee meeting was adjourned at 3:30 p.m.
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