Legislature(2023 - 2024)BARNES 124

03/08/2024 01:00 PM House RESOURCES

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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+= HB 359 ONE-TIME PFD PAYMENT TELECONFERENCED
Heard & Held
-- Public Testimony --
+= HB 388 COOK INLET RESERVE-BASED LENDING TELECONFERENCED
<Bill Hearing Canceled>
-- Public Testimony --
+= HB 387 OIL & GAS TAX CREDIT: JACK-UP RIG TELECONFERENCED
Heard & Held
-- Public Testimony --
*+ HB 349 RENEWABLE ENERGY PROJECT LEASES TELECONFERENCED
Heard & Held
+ Bills Previously Heard/Scheduled TELECONFERENCED
                 ALASKA STATE LEGISLATURE                                                                                     
            HOUSE RESOURCES STANDING COMMITTEE                                                                                
                      March 8, 2024                                                                                             
                        1:08 p.m.                                                                                               
                                                                                                                                
MEMBERS PRESENT                                                                                                               
                                                                                                                                
Representative Tom McKay, Chair                                                                                                 
Representative Kevin McCabe                                                                                                     
Representative Dan Saddler                                                                                                      
Representative Donna Mears                                                                                                      
                                                                                                                                
MEMBERS ABSENT                                                                                                                
                                                                                                                                
Representative George Rauscher, Vice Chair                                                                                      
Representative Thomas Baker                                                                                                     
Representative Stanley Wright                                                                                                   
Representative Jennie Armstrong                                                                                                 
Representative Maxine Dibert                                                                                                    
                                                                                                                                
COMMITTEE CALENDAR                                                                                                            
                                                                                                                                
HOUSE BILL NO. 359                                                                                                              
"An Act relating to the permanent fund dividend and a one-                                                                      
time permanent fund dividend payment and land voucher; and                                                                      
providing for an effective date."                                                                                               
                                                                                                                                
     - HEARD & HELD                                                                                                             
                                                                                                                                
HOUSE BILL NO. 387                                                                                                              
"An Act relating to a tax credit for certain oil and gas                                                                        
equipment in the Cook Inlet sedimentary basin; and                                                                              
providing for an effective date."                                                                                               
                                                                                                                                
     - HEARD & HELD                                                                                                             
                                                                                                                                
HOUSE BILL NO. 349                                                                                                              
"An Act relating to leases of public land for renewable                                                                         
energy projects; and providing for an effective date."                                                                          
                                                                                                                                
     - HEARD & HELD                                                                                                             
                                                                                                                                
HOUSE BILL NO. 388                                                                                                              
"An Act relating to state loans for oil and gas projects                                                                        
in the Cook Inlet sedimentary basin; relating to the                                                                            
Alaska Energy Authority; relating to the Alaska Industrial                                                                      
Development and Export Authority; and providing for an                                                                          
effective date."                                                                                                                
                                                                                                                                
     - BILL HEARING CANCELED                                                                                                    
                                                                                                                                
PREVIOUS COMMITTEE ACTION                                                                                                     
                                                                                                                                
BILL: HB 359                                                                                                                  
SHORT TITLE: ONE-TIME PFD PAYMENT                                                                                               
SPONSOR(s): REPRESENTATIVE(s) CRONK                                                                                             
                                                                                                                                
02/20/24       (H)       READ THE FIRST TIME - REFERRALS                                                                        
02/20/24       (H)       RES, FIN                                                                                               
03/01/24       (H)       RES AT 1:00 PM BARNES 124                                                                              
03/01/24       (H)       Heard & Held                                                                                           
03/01/24       (H)       MINUTE(RES)                                                                                            
03/08/24       (H)       RES AT 1:00 PM BARNES 124                                                                              
                                                                                                                                
BILL: HB 387                                                                                                                  
SHORT TITLE: OIL & GAS TAX CREDIT: JACK-UP RIG                                                                                  
SPONSOR(s): RESOURCES                                                                                                           
                                                                                                                                
02/26/24       (H)       READ THE FIRST TIME - REFERRALS                                                                        
02/26/24       (H)       RES, FIN                                                                                               
03/06/24       (H)       RES AT 1:00 PM BARNES 124                                                                              
03/06/24       (H)       Heard & Held                                                                                           
03/06/24       (H)       MINUTE(RES)                                                                                            
03/08/24       (H)       RES AT 1:00 PM BARNES 124                                                                              
                                                                                                                                
BILL: HB 349                                                                                                                  
SHORT TITLE: RENEWABLE ENERGY PROJECT LEASES                                                                                    
SPONSOR(s): GROH                                                                                                                
                                                                                                                                
02/20/24       (H)       READ THE FIRST TIME - REFERRALS                                                                        
02/20/24       (H)       RES, ENE, FIN                                                                                          
03/08/24       (H)       RES AT 1:00 PM BARNES 124                                                                              
                                                                                                                                
WITNESS REGISTER                                                                                                              
                                                                                                                                
JAMES SQUYRES, representing self                                                                                                
Deltana, Alaska                                                                                                                 
POSITION STATEMENT:  Testified in opposition to HB 359.                                                                       
                                                                                                                                
REPRESENTATIVE MIKE CRONK                                                                                                       
Alaska State Legislature                                                                                                        
Juneau, Alaska                                                                                                                  
POSITION STATEMENT:   As  prime sponsor,  gave introductory                                                                   
remarks and answered questions on HB 359.                                                                                       
                                                                                                                                
DAVE STANCLIFF, Staff                                                                                                           
Representative Mike Cronk                                                                                                       
Alaska State Legislature                                                                                                        
Juneau, Alaska                                                                                                                  
POSITION  STATEMENT:   Answered  questions  on  HB 359,  on                                                                   
behalf of Representative Cronk, prime sponsor.                                                                                  
                                                                                                                                
REPRESENTATIVE CLIFF GROH                                                                                                       
Alaska State Legislature                                                                                                        
Juneau, Alaska                                                                                                                  
POSITION STATEMENT:   As prime  sponsor, introduced  HB 349                                                                   
and co-presented a PowerPoint presentation.                                                                                     
                                                                                                                                
CAMERON EBERSBOLD, Staff                                                                                                        
Representative Cliff Groh                                                                                                       
Alaska State Legislature                                                                                                        
Juneau, Alaska                                                                                                                  
POSITION    STATEMENT:       Co-presented   a    PowerPoint                                                                   
presentation on  HB 349 on  behalf of  Representative Groh,                                                                     
prime sponsor.                                                                                                                  
                                                                                                                                
CHRISTY COLLES, Director                                                                                                        
Division of Mining, Land, and Water                                                                                             
Department of Natural Resources                                                                                                 
Anchorage, Alaska                                                                                                               
POSITION STATEMENT:  Answered questions regarding HB 349.                                                                     
                                                                                                                                
MATTHEW PERKINS, CEO                                                                                                            
Alaska Renewables                                                                                                               
Fairbanks, Alaska                                                                                                               
POSITION  STATEMENT:    Addressed   concerns  and  answered                                                                   
questions  about  renewable  energy in  Alaska  during  the                                                                     
hearing on HB 349.                                                                                                              
                                                                                                                                
ACTION NARRATIVE                                                                                                              
                                                                                                                                
1:08:42 PM                                                                                                                    
                                                                                                                                
CHAIR MCKAY  called the House Resources  Standing Committee                                                                     
meeting  to order  at  1:08  p.m.   Representatives  Mears,                                                                     
McCabe,  Saddler, and  McKay were  present at  the call  to                                                                     
order.                                                                                                                          
                                                                                                                                
               HB 359-ONE-TIME PFD PAYMENT                                                                                  
                                                                                                                                
1:09:49 PM                                                                                                                    
                                                                                                                                
CHAIR  MCKAY announced  that  the first  order of  business                                                                     
would  be HOUSE  BILL  NO. 359,  "An  Act  relating to  the                                                                     
permanent  fund  dividend  and a  one-time  permanent  fund                                                                     
dividend  payment and land  voucher;  and providing  for an                                                                     
effective date."                                                                                                                
                                                                                                                                
1:10:09 PM                                                                                                                    
                                                                                                                                
CHAIR MCKAY opened public testimony on HB 359.                                                                                  
                                                                                                                                
1:10:31 PM                                                                                                                    
                                                                                                                                
JAMES SQUYRES, representing  self, opined that  the bill is                                                                     
poorly  thought  out and  needs  to  be  sent back  to  the                                                                     
drawing  board.   He  compared the  outcome  of the  bill's                                                                     
provisions  to a  game  of musical  chairs  where the  last                                                                     
participant will  be left out,  and future  generations are                                                                     
penalized.   He  discussed  market  value, prorations,  the                                                                     
earnings   reserve,   dedicated    funds,   and   statutory                                                                     
requirements.                                                                                                                   
                                                                                                                                
1:13:27 PM                                                                                                                    
                                                                                                                                
CHAIR MCKAY, after ascertaining  that no one else wished to                                                                     
testify, closed testimony on HB 359.                                                                                            
                                                                                                                                
1:14:30 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  MIKE CRONK,  Alaska  State Legislature,  as                                                                     
prime  sponsor, expressed  appreciation  for the  questions                                                                     
and the testimony on HB 359.                                                                                                    
                                                                                                                                
1:15:00 PM                                                                                                                    
                                                                                                                                
DAVE STANCLIFF,  Staff, Representative  Mike Cronk,  Alaska                                                                     
State  Legislature,  on  behalf  of  Representative  Cronk,                                                                     
prime sponsor,  explained that  the sponsor and  staff were                                                                     
working  with  Legislative  Legal Services  and  the  House                                                                     
Resources Standing Committee on  a number of issues such as                                                                     
appropriations,    remainder    dividends,    felons    and                                                                     
relocators,  questions  regarding  Pick  Click  Give,  jury                                                                     
lists,  eligibility   for  other   programs,  minors,   and                                                                     
"incapacitated" [individuals].  The  sponsor and staff were                                                                     
in discussion  regarding people  who come  to Alaska  for a                                                                     
year  and  leave  with  a "wallet  full  of  money."    The                                                                     
distribution  could  be  over  three or  five  years.    He                                                                     
referred to the  work of Cody Rice in  the Speaker's Office                                                                     
and  explained that  Mr. Rice  would be  presenting to  the                                                                     
committee regarding  the possibilities for metrics  such as                                                                     
a  three-year or  five-year  distribution  and the  amount.                                                                     
Questions regarding  the land credit are  being considered.                                                                     
He said these matters would  be thoroughly discussed before                                                                     
the bill comes before the committee again.                                                                                      
                                                                                                                                
1:16:26 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE SADDLER  referred to  Section 3,  lines 5-8,                                                                     
on page  2 of  the bill  and asked  whether a person  would                                                                     
have  to apply  for a  dividend  every year  after 2026  to                                                                     
maintain their residency.                                                                                                       
                                                                                                                                
1:17:08 PM                                                                                                                    
                                                                                                                                
MR. STANCLIFF acknowledged that  was one of the issues they                                                                     
are dealing  with.   He gave  the example  of a person  who                                                                     
cashed out, taking the dividend  over a three- or five-year                                                                     
period, and how that person would  have to re-apply for the                                                                     
dividend  each year.    He said  it  will  be necessary  to                                                                     
resolve questions  about programs that springboard  off the                                                                     
dividend language and dividend statistics.                                                                                      
                                                                                                                                
1:17:54 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  MEARS  pointed  out that  constituents  are                                                                     
raising  many  questions  and  requested  that  Legislative                                                                     
Legal Services be on the line  at future hearings to answer                                                                     
those concerns.                                                                                                                 
                                                                                                                                
1:18:29 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE   CRONK  stated   that  all  questions   and                                                                     
comments are valuable  and said his office  will be working                                                                     
to address those concerns.                                                                                                      
                                                                                                                                
1:18:55 PM                                                                                                                    
                                                                                                                                
CHAIR MCKAY announced that HB 359 would be held over.                                                                           
                                                                                                                                
         HB 387-OIL & GAS TAX CREDIT: JACK-UP RIG                                                                           
                                                                                                                                
1:19:05 PM                                                                                                                    
                                                                                                                                
CHAIR  MCKAY announced  that  the  next order  of  business                                                                     
would be  HOUSE BILL  NO. 387,  "An Act  relating to  a tax                                                                     
credit for certain oil and gas  equipment in the Cook Inlet                                                                     
sedimentary basin; and providing for an effective date."                                                                        
                                                                                                                                
1:19:19 PM                                                                                                                    
                                                                                                                                
CHAIR  MCKAY opened  public  testimony on  HB  387.   After                                                                     
ascertaining there  was no  one who  wished to  testify, he                                                                     
closed public testimony.                                                                                                        
                                                                                                                                
1:19:54 PM                                                                                                                    
                                                                                                                                
CHAIR MCKAY announced HB 387 would be held over.                                                                                
                                                                                                                                
          HB 349-RENEWABLE ENERGY PROJECT LEASES                                                                            
                                                                                                                                
1:19:59 PM                                                                                                                    
                                                                                                                                
CHAIR  MCKAY announced  that  the final  order of  business                                                                     
would be HOUSE BILL NO. 349,  "An Act relating to leases of                                                                     
public land  for renewable  energy projects;  and providing                                                                     
for an effective date."                                                                                                         
                                                                                                                                
1:20:17 PM                                                                                                                    
                                                                                                                                
The committee took an at-ease from 1:20 p.m. to 1:24 p.m.                                                                       
                                                                                                                                
1:24:10 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  CLIFF GROH,  Alaska  State Legislature,  as                                                                     
prime sponsor,  explained the  purpose of  the bill  was to                                                                     
create more energy options for  Alaska and aid investors to                                                                     
bring more energy  to Alaskans.  It would  create standards                                                                     
for leasing  of state land  for renewable  energy projects,                                                                     
creating the  same framework as  for oil and  gas projects.                                                                     
In  this way,  there would  be  a level  playing field  for                                                                     
investors.  The  state needs energy of  all types including                                                                     
oil and  gas and  renewables.   He explained that  Governor                                                                     
Dunlevy has  stated that Alaska  needs a  uniform framework                                                                     
for all types of energy.                                                                                                        
                                                                                                                                
1:26:00 PM                                                                                                                    
                                                                                                                                
CAMERON  EBERSBOLD,   Staff,  Representative   Cliff  Groh,                                                                     
Alaska  State  Legislature,  on  behalf  of  Representative                                                                     
Groh,    prime   sponsor,    introduced   the    PowerPoint                                                                     
presentation  on   HB  349  [hard  copy  included   in  the                                                                     
committee  packet],  entitled,  "HOUSE  BILL  349,  Leasing                                                                     
State Land  for Renewable  Energy Projects,  Representative                                                                     
Cliff Groh, HD 18."                                                                                                             
                                                                                                                                
REPRESENTATIVE  GROH brought  attention to  slide 2,  which                                                                     
read as follows [original punctuation provided]:                                                                                
                                                                                                                                
     CURRENT PROBLEM                                                                                                            
     • Alaska has a looming energy shortage                                                                                     
     • Alaska is largely dependent on a single energy                                                                           
     source                                                                                                                     
        • We need to encourage all types of energy                                                                              
     development in our state                                                                                                   
          Renewable Energy projects are held to                                                                                 
     different standards, discouraging investment                                                                               
     • Each project must be handled on a case-by-case                                                                           
     basis by the state                                                                                                         
                                                                                                                                
REPRESENTATIVE GROH  reiterated and expanded on  the points                                                                     
summarized on slide  2, pointing out that  renewable energy                                                                     
is  an  additive approach.    Currently,  renewable  energy                                                                     
projects  are   handled  differently   than  oil   and  gas                                                                     
projects.   The case-by-case  basis discourages  investors,                                                                     
he said.                                                                                                                        
                                                                                                                                
1:26:53 PM                                                                                                                    
                                                                                                                                
MR. EBERSBOLD moved to slide 3, the sectional analysis for                                                                      
HB 349, which read as follows [original punctuation                                                                             
provided]:                                                                                                                      
                                                                                                                                
     Section   1:    AS   38.05.075(a)    states   the                                                                          
     commissioner   of  the   department  of   natural                                                                          
     resources may,  after a public auction  or sealed                                                                          
     bid, enter the State into  a lease agreement when                                                                          
     they  have demonstrated  there  is a  competitive                                                                          
     interest in  the land and  it is in  state's best                                                                          
     interest. This section adds  AS 38.05.084 to this                                                                          
     list  of  statutes  that  contain  exceptions  to                                                                          
     this.                                                                                                                      
                                                                                                                                
     Section 2: Amends  AS 38.05 to add  a new section                                                                          
     38.05.084, which:                                                                                                          
     (a)   Enables   the   commissioner   of   natural                                                                          
     resources  to  lease  state  land  for  renewable                                                                          
     energy projects.                                                                                                           
     (b)  Requires  a  person seeking  this  lease  to                                                                          
     submit   an   application   to   the   department                                                                          
     including  the specifics  of the  parcel of  land                                                                          
     they are seeking to lease,  a detailed summary of                                                                          
     the proposal for  the how the land  will be used,                                                                          
     and  additional   information  and   requirements                                                                          
     established by department regulations.                                                                                     
     (c)   Requires   the    department   to   solicit                                                                          
     competitive interest by issuing public notice.                                                                             
     (d) Creates  requirements  for the department  to                                                                          
     act if  there are  multiple applications  for the                                                                          
     same piece of land.                                                                                                        
     (e) Creates an initial lease  term of 10 years to                                                                          
     determine  feasibility  and  research.  Following                                                                          
     this 10-year  period, the lease is valid  for the                                                                          
     duration   of   commercial  production   of   the                                                                          
     renewable   energy   project.  20   years   after                                                                          
     commercial  production  begins   and  at  10-year                                                                          
     intervals    after,    the    commissioner    may                                                                          
     renegotiate the rentals and  royalties due on the                                                                          
     renewable energy project lease.                                                                                            
     (f) Requires  the lessee to make  progress toward                                                                          
     developing or  maintenance of the leased  land to                                                                          
     meet  the renewable energy  project purpose.  The                                                                          
     commissioner may terminate the lease if                                                                                    
     (1) The  leased land  is not  being used for  the                                                                          
     energy project,                                                                                                            
     (2) The lessee fails to  meet the requirements of                                                                          
     the lease.                                                                                                                 
     (g) Specifies that the  lessee is not entitled to                                                                          
     a preference right to purchase the leased land.                                                                            
     (h) States that compensation for the lease:                                                                                
     (1) Shall maximize return to the state,                                                                                    
     (2) Shall be separately accounted for,                                                                                     
     (3) May be appropriated by the legislature                                                                                 
     (i) States  that the  AS 38.05.070 and  38.05.095                                                                          
     concerning subleasing apply in this section.                                                                               
     (j) Requires  the director, before  entering into                                                                          
     the lease, to                                                                                                              
     (1)  Evaluate  information  received  during  the                                                                          
     solicitation of the competitive bid and                                                                                    
     (2)  Find whether  the  proposal is  in the  best                                                                          
     interest of the state, including                                                                                           
     (A) Reasonably  foreseeable effects on  the state                                                                          
     or  local   economy,  including   other  resource                                                                          
     utilization,                                                                                                               
     (B)  Anticipated revenue  to the  state from  the                                                                          
     lease,                                                                                                                     
     (C) Assessment  of known mineral  potential, Page                                                                          
     2                                                                                                                          
     (D)  Potential   monetary  value  to   the  state                                                                          
     including other revenue to the state,                                                                                      
     (E) A summary of public comments received.                                                                                 
     (k) If practical, requires  state land leased for                                                                          
     a renewable energy project to remain open for                                                                              
     (1) access to hunting,  fishing and other allowed                                                                          
     public uses,                                                                                                               
     (2) resource development, including mining.                                                                                
     (l) So  long as  it does  not interfere with  the                                                                          
     renewable  project, the  state  land must  remain                                                                          
     open to mineral exploration and development.                                                                               
     (m)   By  February   1st   of   each  year,   the                                                                          
     commissioner  must  prepare  a  report  on  lease                                                                          
     agreements entered into  and transmit that report                                                                          
     to each body of the  legislature. The report must                                                                          
     contain                                                                                                                    
     (1) The number of leases                                                                                                   
     (2)   A  complete  list   of  lease   information                                                                          
     including                                                                                                                  
     (A) General  description of  the location  of the                                                                          
     lease;                                                                                                                     
     (B) The date the lease was executed;                                                                                       
     (C) Identity of each person on the lease;                                                                                  
     (D) A summary of the project;                                                                                              
     (E) Current status of the project;                                                                                         
     (F) A summery  of the compensation for  the lease                                                                          
     and  an  explanation  of   how  that  amount  was                                                                          
     determined;                                                                                                                
     (G)  The identity  of each  individual having  an                                                                          
     ownership interest in an entity on the lease;                                                                              
     (3)  A complete list  of leases  that expired  or                                                                          
     were terminated  during the current  or preceding                                                                          
     fiscal year; and                                                                                                           
     (4)  A  description  of  the  cumulative  revenue                                                                          
     received by the state from  leases in the current                                                                          
     year and  previous year, and  anticipated revenue                                                                          
     in the next fiscal year.                                                                                                   
     (n)  The  commission shall  conduct  research  to                                                                          
     identify  state   land  suitable   for  renewable                                                                          
     projects.                                                                                                                  
                                                                                                                                
     Section 3:  Adds AS  38.05.084 to the  exceptions                                                                          
     for lessee preference.                                                                                                     
                                                                                                                                
     Section 4: Amends AS  38.05.945(a) to include the                                                                          
     new section  of 38.05.84(c)  in requiring  notice                                                                          
     to   be  given   by   the   department  for   the                                                                          
     solicitation of competitive interest.                                                                                      
                                                                                                                                
     Section  5:  Amends  uncodified  law  to  so  the                                                                          
     sections of AS 38.05.075(a),  AS 38.05.084(b), AS                                                                          
     38.05.102  and  AS 38.05.945(a)  amended  by  the                                                                          
     bill apply  to leases on  or after  the effective                                                                          
     date.                                                                                                                      
                                                                                                                                
     Section  6: Provides for  an immediate  effective                                                                          
     date.                                                                                                                      
                                                                                                                                
1:31:33 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE MCCABE referred to the sectional analysis                                                                        
and asked for clarification regarding the words "if                                                                             
practical" [in Section 2, subsection (k)].                                                                                      
                                                                                                                                
REPRESENTATIVE  GROH  referred   the  question  to  Christy                                                                     
Colles.                                                                                                                         
                                                                                                                                
1:32:44 PM                                                                                                                    
                                                                                                                                
CHRISTY  COLLES, Director,  Division of  Mining, Land,  and                                                                     
Water,  Department of  Natural  Resources (DNR),  responded                                                                     
with an  example of the land  around a wind  tower possibly                                                                     
needing to be closed to public use.                                                                                             
                                                                                                                                
REPRESENTATIVE GROH  added that the language  would allow a                                                                     
variety of uses that could be compatible on the same land.                                                                      
                                                                                                                                
1:34:10 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  MCCABE followed  up with  a question  about                                                                     
slide 1, which  read that Alaska is largely  dependent on a                                                                     
single source of  energy.  He asked what type  of energy is                                                                     
being referenced.                                                                                                               
                                                                                                                                
REPRESENTATIVE GROH responded that it was oil and gas.                                                                          
                                                                                                                                
REPRESENTATIVE  MCCABE questioned  whether coal or  biomass                                                                     
or other types of energy were included.                                                                                         
                                                                                                                                
REPRESENTATIVE GROH  reiterated that oil and  gas have been                                                                     
heavily used in  Alaska for a long time  but explained that                                                                     
Alaska would need energy of  all types, including renewable                                                                     
energy ("renewables"), to deal with the energy problems.                                                                        
                                                                                                                                
REPRESENTATIVE   MCCABE   asked   for   a   definition   of                                                                     
renewables.                                                                                                                     
                                                                                                                                
REPRESENTATIVE  GROH  responded  that there  is  a  current                                                                     
definition in Title  42, Public Utilities and  Carriers and                                                                     
Energy Programs.   However, an amendment to  the bill would                                                                     
more  completely define  renewable  energy resources  under                                                                     
Title 38, Public Lands.                                                                                                         
                                                                                                                                
REPRESENTATIVE MCCABE asked whether  hydroelectric power is                                                                     
considered one  of the "single  energy sources"  or whether                                                                     
it is a renewable.                                                                                                              
                                                                                                                                
REPRESENTATIVE  GROH  explained  that under  Title  42  [AS                                                                     
42.45.045  (2)(A)],  hydroelectric  is  referred  to  as  a                                                                     
renewable energy source and it  would be included under the                                                                     
new law.                                                                                                                        
                                                                                                                                
1:36:58 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  SADDLER   asked  Ms.  Colles   whether  the                                                                     
proposed  legislation would  create a  level playing  field                                                                     
for  renewables compared  to oil  and gas  and whether  the                                                                     
leasing agreements would, in fact, be equitable.                                                                                
                                                                                                                                
MS. COLLES responded that she  had not done a full analysis                                                                     
yet.   Notwithstanding that,  she remarked that  an initial                                                                     
look seems  to show  that oil  and gas licenses  apparently                                                                     
provide more "tools in their toolbox" for exploration.                                                                          
                                                                                                                                
1:38:17 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  SADDLER  referenced  a 10-year  period  for                                                                     
renewable energy  investors to do research  and feasibility                                                                     
studies  and questioned  whether oil  and gas  explorations                                                                     
were  given the  same allowances.    He also  pointed to  a                                                                     
provision  in the  bill  where  in issuing  the  renewables                                                                     
lease,  the  commissioner  would   evaluate  some  specific                                                                     
details about  the project  which may  not be available  at                                                                     
the "front end  of the lease."   He suggested it  was not a                                                                     
feasible provision.                                                                                                             
                                                                                                                                
1:39:38 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  GROH finished  his presentation with  slide                                                                     
5,  "HB 349:  An "All-Of-The  Above"  Approach To  Energy,"                                                                     
which read as follows [original punctuation provided]:                                                                          
                                                                                                                                
      • Statutory certainty is attractive to private                                                                            
     investment                                                                                                                 
      • More players in the market means more energy                                                                            
     and lower rates                                                                                                            
      • A uniform policy environment for renewables                                                                             
     and extractives enables market to allocate state                                                                           
     land to most productive type of energy                                                                                     
                                                                                                                                
REPRESENTATIVE GROH  explained that this  legislation would                                                                     
help  move   to  a   more  stable   framework  for   energy                                                                     
development.                                                                                                                    
                                                                                                                                
1:40:54 PM                                                                                                                    
                                                                                                                                
MR.  EBERSBOLD  addressed   questions  from  Representative                                                                     
Saddler regarding  the time  requirements, explaining  that                                                                     
the goal  was to  identify sections  of statutes  elsewhere                                                                     
that specified requirements and  tried to replicate or find                                                                     
applicable parallel structure for parity.                                                                                       
                                                                                                                                
1:41:45 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE SADDLER  asked what  "parity" means  in this                                                                     
instance.                                                                                                                       
                                                                                                                                
1:41:50 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  GROH responded that  it would  be a  set of                                                                     
statutes that  would create an  equal playing field  to oil                                                                     
and  gas leasing  on  state lands.    Currently, DNR  makes                                                                     
decisions  for renewables  applications  on a  case-by-case                                                                     
basis  when they  get  applications for  leases  for a  new                                                                     
energy  project.    The legislation  would  create  a  more                                                                     
predictable  framework, a structure  under which  investors                                                                     
could  operate  and  feel more  confident  in  the  leasing                                                                     
process.                                                                                                                        
                                                                                                                                
1:42:32 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  SADDLER  expressed  concern  about  lessees                                                                     
basically  squatting  on state  lands  for 10  years  while                                                                     
thinking  about  developing  a  project.   He  referred  to                                                                     
language  in  the  bill which  lacked  the  specificity  to                                                                     
create sideboards for lessees.   He additionally questioned                                                                     
whether the  timelines equated to  10 years to  think about                                                                     
the  project and  20  years to  lease  the  land after  the                                                                     
project is developed.                                                                                                           
                                                                                                                                
REPRESENTATIVE  GROH  acknowledged  that  is  a  legitimate                                                                     
concern.                                                                                                                        
                                                                                                                                
1:44:03 PM                                                                                                                    
                                                                                                                                
MR.  EBERSBOLD   directed  the  committee's   attention  to                                                                     
Section 2,  subsection (f) which outlines  requirements the                                                                     
lessee would have to fulfil.   If they do not make progress                                                                     
toward development or maintenance  of the leased land, then                                                                     
the  commissioner would  be  able to  terminate the  lease.                                                                     
This  provision  is  similar  to  the  oil  and  gas  lease                                                                     
requirements.                                                                                                                   
                                                                                                                                
1:44:49 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE   MCCABE    inquired   about    Section   2,                                                                     
specifically  the term  "practical".    He questioned  what                                                                     
types of  activities would  be compatible with  renewables,                                                                     
using the  example of solar arrays.   He then  followed his                                                                     
earlier  line of  questions  regarding  hydroelectric as  a                                                                     
renewable resource.                                                                                                             
                                                                                                                                
1:46:04 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  GROH   responded  to  the   comments  about                                                                     
hunting and  what was taken  into consideration  during the                                                                     
development of  the legislation.   He explained  the intent                                                                     
was to accommodate various  uses, referring specifically to                                                                     
Representative  McCabe's  example  of  moose  hunting  near                                                                     
solar arrays.                                                                                                                   
                                                                                                                                
1:47:18 PM                                                                                                                    
                                                                                                                                
MR.   EBERSBOLD   returned   to   Representative   McCabe's                                                                     
questions  about   hydroelectric  power,   explaining  that                                                                     
weighing the  pros and cons of  a specific project  and how                                                                     
it would interact with other  uses would be better answered                                                                     
by DNR.                                                                                                                         
                                                                                                                                
1:47:54 PM                                                                                                                    
                                                                                                                                
MS. COLLES  responded to  Representative McCabe's  question                                                                     
about generating hydroelectric power  on leased state land.                                                                     
She  referred to  factors that  needed to  be weighed  when                                                                     
making  a  decision  regarding specific  projects  such  as                                                                     
public use,  traditional use, and  area use.   All projects                                                                     
are evaluated and go through  a rigorous public process and                                                                     
agency review before  a decision is made.   She pointed out                                                                     
that those decisions are appealable.                                                                                            
                                                                                                                                
1:48:36 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE MCCABE  commented that  it was not  clear in                                                                     
the proposed legislation whether  hydro would be considered                                                                     
a renewable.  Returning to the  subject of solar energy, he                                                                     
expressed   concern  regarding   whether  Lower   48  solar                                                                     
companies would  take farming  land.   He referred  to best                                                                     
use practices and the need to  retain farming land for food                                                                     
security.  He  suggested the best use concept  needed to be                                                                     
more specifically defined under the proposed legislation.                                                                       
                                                                                                                                
1:50:24 PM                                                                                                                    
                                                                                                                                
MR. EBERSBOLD  described how  best use would  be considered                                                                     
in the application  process.  The availability  of farmland                                                                     
or  other  practical purposes  is  very  much part  of  the                                                                     
intent of HB 349.                                                                                                               
                                                                                                                                
1:51:12 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  MEARS  commented  that  energy  is  a  high                                                                     
priority and pointed  out that the committee  has looked at                                                                     
a number of bills that free up  state land for a variety of                                                                     
purposes.  She  referenced work being done in  the Lower 48                                                                     
exploring  types  of  compatibility  with  agriculture  and                                                                     
solar farms.                                                                                                                    
                                                                                                                                
1:51:59 PM                                                                                                                    
                                                                                                                                
CHAIR MCKAY  questioned  the steps  required in starting  a                                                                     
solar or  wind farm.   He then referenced  how oil  and gas                                                                     
royalties go  into the Alaska  Permanent Fund  and inquired                                                                     
whether any part  of the revenue stream of a  wind or solar                                                                     
farm would go into the fund.                                                                                                    
                                                                                                                                
1:53:09 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  GROH  responded  that the  state  does  get                                                                     
revenues  from renewable  energy  through corporate  income                                                                     
taxes.                                                                                                                          
                                                                                                                                
1:53:43 PM                                                                                                                    
                                                                                                                                
MR. EBERSBOLD  explained his  understanding of  the section                                                                     
of the Constitution of the State  of Alaska that applies to                                                                     
the  fund which  specifies royalties  from mineral  leases.                                                                     
He pointed  out that wind and  solar energy would  not fall                                                                     
under the category of mineral leases.                                                                                           
                                                                                                                                
1:54:13 PM                                                                                                                    
                                                                                                                                
CHAIR  MCKAY  commented  that  wind  and  solar  would  not                                                                     
apparently contribute to the fund.   He then inquired about                                                                     
how much employment a solar farm  would provide after it is                                                                     
up and running.                                                                                                                 
                                                                                                                                
1:55:01 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE GROH  said there would be  construction jobs                                                                     
and operating  jobs.   He observed  that  there were  a lot                                                                     
more people who built the  Trans-Alaska Pipeline than those                                                                     
who operate it.                                                                                                                 
                                                                                                                                
CHAIR  MCKAY stated  that Alaska  does  not have  hazardous                                                                     
disposal  plants  and  that   solar  panels  contain  toxic                                                                     
substances  as   do  parts  of  wind  towers   and  storage                                                                     
batteries.   He asked what  happens to that  equipment when                                                                     
it  wears out,  who is  going to  pay for  it, and  whether                                                                     
someone would  be bonded  so the  public is protected  from                                                                     
worn  out equipment  being  discarded  and toxic  materials                                                                     
getting into the water and air.                                                                                                 
                                                                                                                                
REPRESENTATIVE  GROH  acknowledged Chair  McKay's  concerns                                                                     
and said he would like to work with him on these issues.                                                                        
                                                                                                                                
1:58:01 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  SADDLER expressed  interest in the  genesis                                                                     
of  HB 349,  particularly  the  leasing requirements.    He                                                                     
asked  whether  any  renewable projects  have  been  denied                                                                     
under the current statutes.                                                                                                     
                                                                                                                                
REPRESENTATIVE GROH responded that  as a legislator, he has                                                                     
been  interested in  doing what  he could  to help  promote                                                                     
energy development and economic activity in Alaska.                                                                             
                                                                                                                                
1:59:06 PM                                                                                                                    
                                                                                                                                
MS. COLLES  said the  Division of  Mining, Land,  and Water                                                                     
("the  division") can  currently  issue authorizations  for                                                                     
renewable projects.  She pointed  out there are a number of                                                                     
wind farms  in Alaska  on state  land that were  authorized                                                                     
under the  current leasing plan.   However,  some companies                                                                     
do not  feel they  can invest in  Alaska until  the process                                                                     
provides  more  surety as  they  are  doing research  on  a                                                                     
specific piece of land.                                                                                                         
                                                                                                                                
2:00:27 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  GROH noted  that the  oil and gas  industry                                                                     
has   a  procedure   called   "DR&R,"   which  stands   for                                                                     
"dismantle, remove, and restore,"  and the renewables would                                                                     
have a similar process.                                                                                                         
                                                                                                                                
2:01:14 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE SADDLER restated  his earlier question about                                                                     
whether  any renewable  project tried  to lease state  land                                                                     
and  was  subsequently  denied   under  current  rules  and                                                                     
procedures outlined by state law.                                                                                               
                                                                                                                                
2:01:41 PM                                                                                                                    
                                                                                                                                
MS. COLLES was unaware of any  company being denied a lease                                                                     
based on the framework they were looking for.                                                                                   
                                                                                                                                
2:01:57 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE SADDLER  directed the  same question  to the                                                                     
sponsor of the bill, asking  Representative Groh whether he                                                                     
was aware of any company being  denied a lease based on the                                                                     
current statute.                                                                                                                
                                                                                                                                
2:02:08 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE GROH  responded that he  was not aware  of a                                                                     
lease being denied under these  circumstances.  He deferred                                                                     
this question to Mr. Perkins of Alaska Renewables.                                                                              
                                                                                                                                
2:02:57 PM                                                                                                                    
                                                                                                                                
MATTHEW  PERKINS,  CEO,  Alaska  Renewables,  responded  to                                                                     
Representative  Saddler's question,  explaining that  under                                                                     
the current  process his  company has  not been  denied the                                                                     
entry  authorizations  and  subsequent   leases  for  three                                                                     
separate assets they are pursuing  with the department.  He                                                                     
noted that they  were still in the process  of working with                                                                     
Director Colles and her team.                                                                                                   
                                                                                                                                
2:04:03 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE GROH  explained that Mr. Perkins  is the CEO                                                                     
of a  company that is  developing Little Mount  Susitna and                                                                     
Shovel Creek wind  projects and is working on a  third.  He                                                                     
asked Mr. Perkins for his thoughts regarding HB 349.                                                                            
                                                                                                                                
2:04:47 PM                                                                                                                    
                                                                                                                                
MR.  PERKINS  provided  some  background  regarding  Alaska                                                                     
Renewables.   He explained  that his  company is  an Alaska                                                                     
based powerplant  developer working with three  of the four                                                                     
Railbelt  utilities to  solve the  energy security  crisis.                                                                     
The team  has a background in  coal, gas, solar,  wind, and                                                                     
energy  storage  over  the  past two  decades.    They  are                                                                     
specifically  focused  on  what  the  capital  market  will                                                                     
finance  today according  to  three  tenets:   reliability,                                                                     
constructability, and  competitiveness.   Alaska Renewables                                                                     
is  working   with  companies  to  engineer,   finance  and                                                                     
construct the cheapest,  most reliable power  possible.  He                                                                     
referred  to   a  recent   Anchorage  Daily   News  article                                                                     
regarding  an analysis  by Chugach  Electricity and  third-                                                                     
party engineers  which showed  that one of  their projects,                                                                     
the Little  Mount Susitna  Wind Farm,  would have  provided                                                                     
twenty percent of  South Central's energy needs  during the                                                                     
recent  cold snap  crisis.  He  explained  that one of  the                                                                     
criticisms   regarding   renewables   is   the   investment                                                                     
structure   is  entirely   different  from   oil  and   gas                                                                     
investment.  He  encouraged the committee to  focus less on                                                                     
comparing these technologies.                                                                                                   
                                                                                                                                
2:06:59 PM                                                                                                                    
                                                                                                                                
MR.  PERKINS echoed  the  comments  of Representative  Groh                                                                     
that   regulatory  certainty   is   critical  for   prudent                                                                     
financial investing.   He emphasized  that the  product his                                                                     
company sells is  an anti-volatility product.   The upfront                                                                     
cost is  known.  In  addition, remediation  and reclamation                                                                     
is  already in  state statute  that the  leasehold must  be                                                                     
restored  to a good  and marketable  condition within  less                                                                     
than a year  after termination of the lease.   Wind turbine                                                                     
blades are  highly recyclable,  and  one company is  making                                                                     
cement from  recycled turbine  blades although this  is not                                                                     
currently available in Alaska.                                                                                                  
                                                                                                                                
MR. PERKINS recommended language  that allows a feasibility                                                                     
lease to  transfer a little  more quickly to  generation of                                                                     
electricity.     A   ten-year   period   for  research   is                                                                     
unnecessarily long.   Regarding the topic of  royalties, he                                                                     
pointed  out that  electricity  is not  a  product that  is                                                                     
exported out of  Alaska.  One hundred percent  of the power                                                                     
goes  to  not-for-profit  electric   cooperatives,  so  the                                                                     
financial  metric  is  to provide  the  lowest  power  cost                                                                     
possible  to  Alaskans  in  addition  to  providing  energy                                                                     
security.   Lastly,  he  explained  that Alaska  Renewables                                                                     
already competitively  bids for state assets,  so the state                                                                     
can  make the  best decision  about the  use of  land.   He                                                                     
further  emphasized  the  emerging   business  models  that                                                                     
combine agriculture  on wind  farms and agrivoltaics  which                                                                     
combine agriculture and solar  energy generation.  Finally,                                                                     
an  earlier effective  date  than that  proposed under  the                                                                     
current bill would be advisable.                                                                                                
                                                                                                                                
2:11:01 PM                                                                                                                    
                                                                                                                                
CHAIR MCKAY announced that HB 349 was held over.                                                                                
                                                                                                                                
2:12:06 PM                                                                                                                    
                                                                                                                                
ADJOURNMENT                                                                                                                   
                                                                                                                                
There being no  further business before the  committee, the                                                                     
House Resources  Standing Committee  meeting was  adjourned                                                                     
at 2:12 p.m.                                                                                                                    

Document Name Date/Time Subjects
HB349.Sponsor Statement.pdf HRES 3/8/2024 1:00:00 PM
HB 349
HB0349A.pdf HRES 3/8/2024 1:00:00 PM
HB 349
HB349.HRES.Sectional.pdf HRES 3/8/2024 1:00:00 PM
HB 349
HB349.HRES-Hearing Presentation.pdf HRES 3/8/2024 1:00:00 PM
HB 349