Legislature(1993 - 1994)

04/18/1993 01:20 PM FIN

Audio Topic
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
txt
                                                                               
                             MINUTES                                           
                    SENATE FINANCE COMMITTEE                                   
                         April 18, 1993                                        
                            1:20 P.M.                                          
  TAPES                                                                        
                                                                               
  SFC-93, #65, Side 1 (042-end)                                                
  SFC-93, #65, Side 2 (575-end)                                                
  SFC-93, #67, Side 1 (000-454)                                                
                                                                               
  CALL TO ORDER                                                                
                                                                               
  Senator Drue  Pearce,  Co-chair,  convened  the  meeting  at                 
  approximately 1:20 p.m.                                                      
                                                                               
  PRESENT                                                                      
                                                                               
  In  addition  to  Co-chair  Pearce,  Senators  Jacko, Kelly,                 
  Kerttula, and Sharp were present. Co-chair Frank and Senator                 
  Rieger arrived soon after the meeting began.                                 
                                                                               
  ALSO ATTENDING:   Senator Loren Leman; Kim  Elton, Executive                 
  Director, Alaska  Seafood  Marketing  Institute;  Ken  Boyd,                 
  Deputy Director, Division  of Oil and Gas,  Dept. of Natural                 
  Resources; Paul Quesnel, lobbyist for BP Exploration,  Inc.;                 
  Mike  Ford and  Jack Chenoweth,  Legislative Counsel,  Legal                 
  Services, Legislative Affairs Agency; Dave Skidmore, aide to                 
  Senator Frank; Annette Kreitzer, Aide  to Senator Leman; and                 
  aides  to  committee  members  and   other  members  of  the                 
  legislature.                                                                 
                                                                               
  SUMMARY INFORMATION                                                          
                                                                               
  SB  58    -    PHASE OUT LONGEVITY BONUS                                     
                                                                               
                 The  committee   rescinded  previous   action                 
                 adopting the "E" version of CSSB 58 (Fin) and                 
                 instead adopted  and  REPORTED  OUT  the  "J"                 
                 version of  CSSB 58  (Fin) with  a "do  pass"                 
                 recommendation,  a  fiscal  note  from  DH&SS                 
                 showing  a ($5.3)  savings  in hold  harmless                 
                 payments, and two notes from DOA, one showing                 
                 a longevity bonus  grant savings of  ($500.0)                 
                 and   the   other    evidencing   $11.6    in                 
                 administrative costs.                                         
                                                                               
  SB  73    -    LIABILITY OF DESIGN/CONSTRUCTION PROS                         
                                                                               
                 Brief discussion was had  with Senator Leman.                 
                 CSSB 73 (Fin) was  REPORTED OUT of  committee                 
                 with  individual  recommendations   and  zero                 
                 fiscal notes from the Dept. of Law and Alaska                 
                 Court System.                                                 
                                                                               
                                                                               
  SB 145    -    POSITION OF STATE MEDICAL EXAMINER                            
                                                                               
                 Brief  discussion  was  had.   The  bill  was                 
                 subsequently   HELD   in   committee  pending                 
                 resolution of concerns  regarding the  fiscal                 
                 note.                                                         
                                                                               
  SB 150    -    OIL & GAS EXPLORATION LICENSES/LEASES                         
                                                                               
                 Discussion  was  had   with  Senator   Leman,                 
                 Annette Kreitzer, Ken Boyd, and Paul Quesnel.                 
                 Amendments  1 through  5 were  ADOPTED.   The                 
                 bill was  subsequently HELD  in committee  at                 
                 the request of Co-chair Frank.                                
                                                                               
  SB 151    -    OIL & GAS EXPLORATION INCENTIVE CREDITS                       
                                                                               
                 Discussion was had with Senator Leman and Ken                 
                 Boyd.  The bill was REPORTED OUT of committee                 
                 with a  "do  pass"  recommendation  and  zero                 
                 fiscal notes from  the Dept.  of Revenue  and                 
                 Dept. of Natural Resources.                                   
                                                                               
  SB 155    -    USE OF RENTED PROPERTY/LAW VIOLATIONS                         
                                                                               
                 Discussion  was had  with  Dave Skidmore  and                 
                 Jack  Chenoweth.  CSSB 155 (Jud) was REPORTED                 
                 OUT   of   committee   with   a   "do   pass"                 
                 recommendation,  a  $19.0  fiscal  note  from                 
                 Dept. of Public Safety, a $10.0 note from the                 
                 Dept. of Law, and a zero note from the Alaska                 
                 Court System.                                                 
                                                                               
  SB 176    -    MUNICIPAL INVENTORY TAX EXEMPTION:EXPORTS                     
                                                                               
                 Brief  testimony  was  presented  by  Senator                 
                 Leman.   The bill  was then  REPORTED OUT  of                 
                 committee with individual  recommendations, a                 
                 zero Senate State Affairs fiscal note for the                 
                 Dept.  of  Commerce and  Economic Development                 
                 and a zero  note from the Dept.  of Community                 
                 and Regional Affairs.                                         
                                                                               
  SB 177    -    SALMON MARKETING, TAX;ASMI BOARD & DUTIES                     
                                                                               
                 Brief discussion was had with Kim Elton.  The                 
                 bill  was HELD  in  committee for  additional                 
                 review.                                                       
                                                                               
                                                                               
  SENATE BILL NO. 58                                                           
                                                                               
       An Act relating to the longevity bonus program.                         
                                                                               
                                                                               
  Upon convening the meeting, Co-chair Pearce directed that SB
  58  be  brought  on  for discussion.    She  then referenced                 
  adoption of CSSB  58 (Fin)  (8-GS1022\E, Cook, 4/16/93)  and                 
  noted need to rescind  that action.  Senator Sharp  MOVED to                 
  rescind committee  action adopting  CSSB  58 (Fin),  version                 
  "E."  No objection having been raised, IT WAS SO ORDERED.                    
                                                                               
  (Co-chair Frank and Senator Rieger arrived at this time.)                    
                                                                               
  Senator  Sharp  MOVED for  adoption  of  CSSB 58  (Fin)  (8-                 
  GS1022\J, Cook/Chenoweth, 4/17/93).   Co-chair Pearce voiced                 
  her  understanding  that  the  difference  between  the  two                 
  versions consists of  inclusion of a severability  clause in                 
  the new  "J" version.   Senator  Sharp concurred,  directing                 
  attention to language within Section 4.  No objection to the                 
  motion  having been raised, CSSB 58  (Fin), version "J," was                 
  ADOPTED.  Co-chair  Pearce referenced new fiscal  notes from                 
  the Dept. of Administration for  the longevity bonus program                 
  and pioneer benefits program as well as a ($5.3) fiscal note                 
  from  the Dept. of  Health and  Social Services  and advised                 
  that they should accompany the bill.                                         
                                                                               
  Senator  Sharp  MOVED  that  CSSB  58  (Finance)  pass  from                 
  committee   with   individual   recommendations    and   the                 
  appropriate fiscal notes.   Senator Kerttula OBJECTED.   Co-                 
  chair Pearce called for a show of hands.  The motion carried                 
  on a vote of 6  to 1, and CSSB 58 (Fin) was  REPORTED OUT of                 
  committee  with  a  $11.6  fiscal note  from  the  Dept.  of                 
  Administration for the pioneer benefits program; a note from                 
  the Dept. of Administration, longevity bonus grants, showing                 
  a savings of ($500.0); and a  note from the Dept. of  Health                 
  and Social Services  indicating a  hold harmless savings  of                 
  $5.3).                                                                       
                                                                               
                                                                               
  SENATE BILL NO. 73                                                           
                                                                               
       An Act relating  to the time  for filing certain  civil                 
       actions; and providing for an effective date.                           
                                                                               
  Co-chair  Pearce  directed  that SB  73  be  brought on  for                 
  discussion and  referenced a work  draft CSSB  73 (Fin)  (8-                 
  LS0446\J, Ford, 4/17/93).  Co-chair Frank MOVED for adoption                 
  of the work draft.  No objection having been raised, CSSB 73                 
  (Fin) was ADOPTED.                                                           
                                                                               
  SENATOR LOREN LEMAN came before committee in support of  the                 
  bill.     He  explained  that  CSSB  73  (Fin)  removes  two                 
  amendments added  in the  Senate Judiciary  Committee.   The                 
  first  amendment essentially  defeated  the  purpose of  the                 
  statute of  repose.  The  second was  either unnecessary  or                 
  unconstitutional.  Senator Leman recommended passage of CSSB
  73 (Fin).                                                                    
                                                                               
  Senator Rieger  inquired concerning  a six-year  versus ten-                 
  year limit.  Senator Leman explained that the ten-year limit                 
  applies to construction and actions by design professionals.                 
  The six-year limit covers other actions.  The ten-year limit                 
  is an exception  from the  six-year provision.   MIKE  FORD,                 
  legal counsel,  Legal Services, Legislative  Affairs Agency,                 
  came before committee.   He explained that language  in Sec.                 
  2,  relating  to the  six-year  limitation, is  necessary to                 
  impose the ten-year limit in Sec. 3.  Sec. 3 is the heart of                 
  the bill.   Sec. 2 is  a technical  amendment to conform  to                 
  requirements of Sec. 3.                                                      
                                                                               
  Co-chair Pearce called for additional questions or comments.                 
  None were forthcoming.                                                       
                                                                               
  Senator  Rieger MOVED that CSSB 73 (Fin) pass from committee                 
  with  individual  recommendations  and  accompanying  fiscal                 
  notes.  No objection  having been raised, CSSB 73  (Fin) was                 
  REPORTED  OUT of committee  with zero fiscal  notes from the                 
  Dept. of Law and Alaska Court  System.  Co-chairs Pearce and                 
  Frank and Senator Kelly  signed the committee report with  a                 
  "do pass" recommendation.  Senators Rieger, Jacko, and Sharp                 
  signed "no recommendation." Senator Kerttula signed "Do  not                 
  pass."                                                                       
                                                                               
                                                                               
  SENATE BILL NO. 150                                                          
                                                                               
       An Act providing for oil  and gas exploration licenses,                 
       and oil and gas leases, in  certain areas of the state;                 
       and providing for an effective date.                                    
                                                                               
  Co-chair Pearce  directed  that SB  150  be brought  on  for                 
  discussion and further directed attention  to CSSB 150 (O&G)                 
  and Amendments 1 through 5.                                                  
                                                                               
  SENATOR LOREN LEMAN and ANNETTE KREITZER, aide to the Senate                 
  Oil and  Gas Committee, came before committee.  Ms. Kreitzer                 
  said that  as backup  material she  was providing  testimony                 
  from five Senate Oil and Gas Committee hearings as well as a                 
  synopsis  of the  differences  between SB  150 and  CSSB 150                 
  (O&G).                                                                       
                                                                               
  Co-chair  Pearce  directed  that   the  meeting  be  briefly                 
  recessed.                                                                    
                                                                               
                       RECESS - 1:30 P.M.                                      
                      RECONVENE - 1:38 P.M.                                    
                                                                               
  Senator Leman explained  that the  Governor's bill, SB  150,                 
  presents  an   alternative  approach  for   exploration  and                 
                                                                               
                                                                               
  exploration  licensing.   It  expands  available exploration                 
  options.    It  does not  replace  the  existing competitive                 
  leasing  program; it merely  adds another option.   The main                 
  objective of the bill is to  "get exploration going in areas                 
  of the state  that have drawn  little or no attention  under                 
  current leasing  programs."   The  methodology would  remove                 
  leasing requirements calling for "up-front cash" and instead                 
  devote  financial input  to  exploration.    Companies  will                 
  propose a site for  licensing and a work plan  for the site.                 
  Licenses would issue based on the highest work commitment.                   
                                                                               
  Senator Leman next outlined differences between the original                 
  bill and CSSB 150 (O&G):                                                     
                                                                               
       1.   While  the  original  bill  placed  no  geographic                 
  restrictions on application  of the  bill, the  Oil and  Gas                 
  version excludes the North Slope and portions of Cook Inlet.                 
  Areas  north  of  the Umiat  baseline  remain  available for                 
  leasing under the  regular lease program.   The feeling  was                 
  that excluded areas would not  meet the requirement that the                 
  new license arrangement  apply to  large tracts about  which                 
  little is known.                                                             
                                                                               
       2.   The original bill allowed the licensee to hold the                 
  entire licensed area for  up to ten years.  The  Oil and Gas                 
  version requires relinquishment of 25% after the fourth year                 
  and 10% of  the total  land each year  thereafter.   Senator                 
  Leman  acknowledged  that the  committee  considered  a less                 
  aggressive relinquishment  schedule of 10% of remaining land                 
  but,  in  the  end,  opted  for more  rapid  relinquishment.                 
  Relinquishment  provisions  are  intended   to  prevent  the                 
  hoarding of large tracts of land.                                            
                                                                               
       3.   The original bill called for  bonding of the total                 
  work  commitment.  The Oil and  Gas version requires bonding                 
  of  only  10% of  the  annual  work  commitment.   Testimony                 
  indicated   that   bonding   is   extremely  difficult   for                 
  independent exploration to obtain.  The state does not stand                 
  to lose  much.  If  a licensee  defaults, the tract  of land                 
  would merely be available for license to someone else.                       
                                                                               
       4.   The  original  bill provided  for  an  oral outcry                 
  auction and award on the highest  work commitment.  CSSB 150                 
  (O&G) requires  sealed competitive  bids.   It also  defines                 
  what  expenses   can  be   charged  as   direct  exploration                 
  expenditures.      Concern  was   expressed   that  indirect                 
  exploration work performed somewhere outside the state could                 
  be charged.                                                                  
                                                                               
       5.   The original bill provided that  up to 30,000 acre                 
  leases  would  not  count  against  the existing  1  million                 
  aggregate limit.   CSSB 150 (O&G)  would count these  leases                 
  against that limit.                                                          
                                                                               
                                                                               
       6.   The original bill  set the license fee at $1 acre.                 
  The Oil and Gas version says "up to $1/acre."  That provides                 
  the commissioner flexibility to allow for less  than that in                 
  areas  where   it  is  difficult   to  attract  exploration.                 
  Interior basins were specifically noted.   The committee did                 
  not  want  to restrict  exploration  because of  the license                 
  rental cost.                                                                 
                                                                               
       7.   Proof   of   financial   responsibility  was   not                 
  addressed in the  original bill.   Requirements proposed  by                 
  Senator Sharp for  inclusion in CSSB 150  (O&G) define these                 
  requirements based on  the size of the  production facility.                 
  It also reduces  proof of financial provisions  for on-shore                 
  exploration to $1 million.                                                   
                                                                               
  Discussion followed between Senator Rieger and Senator Leman                 
  concerning opportunities for speculation under the  proposed                 
  bill.  Senator  Leman stressed that  in order to receive  an                 
  exploration license,  the applicant  must make  a commitment                 
  for  a  total amount  of  work  broken down  in  annual work                 
  commitments.  The  commissioner will then decide  whether or                 
  not to  issue the license.   If  there is competition  for a                 
  particular tract of land,  the license will issue on  a best                 
  interest finding to the proposal  offering the greatest work                 
  commitment.  If the proposal is not in the best interest  of                 
  the state, and  there is no  competition for the tract,  the                 
  commissioner will not issue the license.  Senator Leman also                 
  noted bond requirements attached to annual work commitments.                 
                                                                               
                                                                               
  Further  discussion  followed  between  Senator  Rieger  and                 
  Senator Leman regarding conversion of an exploration license                 
  to a lease under the existing lease program.   Senator Leman                 
  noted  that  areas converted  to lease  would be  "very much                 
  smaller" than exploration license areas.   Leases are likely                 
  to encompass areas of discovery.                                             
                                                                               
  Responding  to an  additional  question  by Senator  Rieger,                 
  Senator Leman explained  that the  public process (the  best                 
  interest  finding)  is conducted  prior  to issuance  of the                 
  exploration license.                                                         
                                                                               
  Co-chair  Frank   inquired  concerning   need  for   license                 
  provisions allowing for  exclusive right to explore  an area                 
  as opposed  to an  arrangement analogous  to mineral  entry.                 
  Senator Leman  voiced his understanding  that something must                 
  be  provided  in return  for  the commitment  to exploratory                 
  work.   The actual value of such work might be comparable to                 
  what one would bid at a lease sale.                                          
                                                                               
  KEN BOYD, Deputy Director, Division of Oil and Gas, Dept. of                 
  Natural Resources, came  before committee  in response to  a                 
  question from Co-chair Frank.  Mr. Boyd attested to need for                 
  lease  arrangements to  prevent chaos  in administration  of                 
                                                                               
                                                                               
  state lands.  The five-year oil  and gas leasing schedule is                 
  the most orderly  and predictable  nationwide.  It  provides                 
  industry  a   means  of  planning,  allows   the  department                 
  opportunity to establish  terms and  conditions in the  best                 
  interest of the state, and allows  ample time for the public                 
  process.  A helter-skelter approach where companies  explore                 
  at will and subsequently  lease areas of discovery  would be                 
  extremely disorderly.   It would  also be difficult  for the                 
  state  to  determine  the value  of  the  land  in the  best                 
  interest  of the  people.   An orderly  schedule  allows the                 
  department to  systematically evaluate  lands as  technology                 
  changes.  It also provides  the additional benefit of  being                 
  able  to  review seismic  data  in  the same  time  frame as                 
  industry.                                                                    
                                                                               
  Extended discussion followed between Co-chair Frank  and Mr.                 
  Boyd regarding differences between  mineral drilling and oil                 
  and gas exploration.                                                         
                                                                               
  In  the   course  of   further   discussion  of   conversion                 
  provisions, Mr. Boyd explained that  a royalty--a minimum of                 
  12.5%-- would be established, up front, in the lease.                        
                                                                               
  Responding  to further  questions from  Co-chair Frank,  Mr.                 
  Boyd spoke at  length to the  workings of the current  lease                 
  program.  Additional discussion  followed regarding the size                 
  of  lease and exploration  areas as well  as existing fields                 
  and productive zones.                                                        
                                                                               
  End, SFC-93, #65, Side 1                                                     
  Begin, SFC-93, #65, Side 2                                                   
                                                                               
  Co-chair  Frank continued  to voice  concern over  exclusive                 
  right  provisions  of  the bill,  asking  if  the department                 
  envisioned problems associated  with interest  by more  than                 
  one entity in a particular area if exclusive provisions were                 
  removed.  Mr. Boyd stressed  that interested companies would                 
  all  have  the  opportunity to  compete  for  an exploration                 
  license.  The one that commits to the most work on an annual                 
  basis  would  earn  the  right  to  explore.    Minimal work                 
  commitment levels  and a  method for  valuing proposed  work                 
  will be established in regulations.                                          
                                                                               
  Mr.  Boyd explained  that  the bill  is designed  to attract                 
  "anyone  who  wants   to  do  work  in  Alaska."     Bonding                 
  requirements and  the small up-front  application fee should                 
  accommodate small companies.  Small  companies also have the                 
  opportunity  to  compete in  the  state's five-year  leasing                 
  schedule.   Senator  Leman added that  CSSB 150  (O&G) makes                 
  exploration licensing  more attractive to  smaller companies                 
  without disadvantaging larger companies.   The intent of the                 
  legislation  is  to make  the  opportunity available  to any                 
  company wishing to do the work.  Annette  Kreitzer explained                 
  that relinquishment provisions,  bonding of only 10%  of the                 
                                                                               
                                                                               
  annual work  commitment, and definition of what expenditures                 
  would be allowed  under competitive bid made  the bill "more                 
  palatable" to smaller companies.                                             
                                                                               
  Discussion  followed between  Co-chair  Frank  and Mr.  Boyd                 
  regarding  philosophies associated  with  the current  lease                 
  program  versus  proposed exploration  licensing.   Mr. Boyd                 
  noted  that leasing works well in  areas of high potential--                 
  known oil and gas.   He attested to benefits  of exploration                 
  licensing in remote areas where companies may have differing                 
  ideas on methods of exploration.                                             
                                                                               
  Co-chair Frank spoke to proposals from constituents that the                 
  department lower  the lease and bonus bid, reduce the annual                 
  lease rental,  and lease more land.  Mr. Boyd said that such                 
  a proposal was not discussed when the bill was before Senate                 
  Oil and  Gas  Committee.    He then  questioned  ability  to                 
  compete without the  bonus bid and  noted that leases at  $5                 
  and $10 an acre are the lowest available anywhere.                           
                                                                               
  Senator Sharp voiced  his understanding that, under  the Oil                 
  and Gas version  of the  bill, a company  or individual  may                 
  apply for an exploration license on lands anywhere in Alaska                 
  (with the exception of the North Slope and Cook  Inlet) at a                 
  cost  of  $1 an  acre or  $3  per acre  when the  license is                 
  converted  to  a  lease.     He  noted  that  relinquishment                 
  provisions  allow the licensee,  after ten years,  to end up                 
  with as much acreage as an original federal lease.                           
                                                                               
  Senator Sharp said he was more  comfortable with the Oil and                 
  Gas  version  than  the original  bill  because  it promotes                 
  commitments of exploration  dollars in areas where  there is                 
  presently no activity.                                                       
                                                                               
  In  response to  a  question from  Senator Rieger,  Mr. Boyd                 
  acknowledged that leases are assignable with permission from                 
  the Dept. of Natural Resources.                                              
                                                                               
  Further discussion ensued regarding costs and operations  of                 
  the current lease program and statutory provisions contained                 
  within AS 38.05.180(m) and (t).  Referring back to the bill,                 
  Senator Rieger voiced his understanding that the exploration                 
  license would not  entail a plan  of development.  Mr.  Boyd                 
  concurred.   Since  the  license applies  to tracts  of land                 
  about  which  little is  known,  it  would  be difficult  to                 
  develop such a plan.                                                         
                                                                               
  In response to comments by  Senator Kerttula regarding lease                 
  rates, Mr. Boyd stressed that the  philosophy is to allow as                 
  many dollars as  possible to be "put into the  ground."  The                 
  goal of the program is exploration rather than collection of                 
  fees.                                                                        
                                                                               
  Co-chair Pearce directed attention to  Amendment No. 1 which                 
                                                                               
                                                                               
  she  explained  was  proposed by  the  administration.   She                 
  further directed attention to associated correspondence from                 
  James  Eason,  Director  of  the division  of  oil  and gas.                 
  Senator Sharp  MOVED for  adoption  of Amendment  No. 1  for                 
  discussion purposes.   Senator Kerttula OBJECTED.   Mr. Boyd                 
  explained that under  provisions of the current  oil and gas                 
  lease program, if  a sale is  postponed past the quarter  in                 
  which it  was scheduled to  occur, the  department must  "go                 
  through the whole process  again."  It thus takes  two years                 
  to  get  the  sale back  on  the  schedule.   The  amendment                 
  provides the commissioner  a 90-day period in  which to move                 
  the sale.  The statute was originally written in response to                 
  oil company concern that the commissioner might remove lease                 
  sales  from  the  schedule.    In actuality,  under  current                 
  provisions, those with  no interest  in the state's  leasing                 
  program, in  a  pro-development sense,  could  litigate  and                 
  cause  the  state to  miss its  scheduled  date.   Once that                 
  occurs, the sale is effectively delayed for two years.                       
                                                                               
  Co-chair Pearce asked if the  title of the legislation would                 
  have to be  amended to  accommodate Amendment No.  1.   Both                 
  Senator  Sharp and  Mr.  Boyd  responded  affirmatively  and                 
  directed attention to Amendment No. 4 which would effect the                 
  needed title change.                                                         
                                                                               
  Senator  Sharp  then  AMENDED  his  motion for  adoption  of                 
  Amendment no. 1 to include the title change within Amendment                 
  No. 4.                                                                       
                                                                               
  Senator Kerttula asked  that representatives of the  oil and                 
  gas industries speak  to the amendment.   PAUL QUESNEL, B  P                 
  Exploration, came before committee, voicing support for both                 
  CSSB 150 (O&G) and the  proposed amendment.  Co-chair Pearce                 
  called for a  show of hands  on the  motion for adoption  of                 
  Amendments 1 and 4.  The motion carried on a vote of 4 to 1,                 
  and Amendments 1 and 4 were ADOPTED.                                         
                                                                               
  Senator  Sharp  MOVED  for  adoption  of  Amendment  No.  2.                 
  Senator Leman explained that it would  add "in total and for                 
  each year of the license" to  commitment language at page 3,                 
  line 11.  The amending language  was actually adopted by the                 
  Senate Oil and Gas Committee  but inadvertently omitted from                 
  CSSB 150 (O&G).   Co-chair Pearce  called for objections  to                 
  the motion.  No objection having been raised,  Amendment No.                 
  2 was ADOPTED.                                                               
                                                                               
  Senator  Sharp  MOVED  for  adoption  of  Amendment  No.  3.                 
  Senator Leman explained that deletion  of the word "minimum"                 
  at page 7, line  12, would conform language relating  to the                 
  annual work commitment to like language throughout the bill.                 
  No  objection  having  been  raised,  Amendment  No.  3  was                 
  ADOPTED.                                                                     
                                                                               
  Senator  Sharp  MOVED for  adoption of  Amendment  No. 5.                    
                                                                               
                                                                               
  Senator  Leman  indicated  that deletion  of  "the remaining                 
  land"  at page  5, line  4, would  apply 10%  relinquishment                 
  provisions  to  the total  land area.    It provides  a more                 
  aggressive relinquishment schedule.  Senator Rieger inquired                 
  concerning   whether   relinquishment    percentages   could                 
  mathematically  be  accomplished   over  the  ten-year  time                 
  period.  Senator  Leman explained  that at the  end of  nine                 
  years,  a licensee would have relinquished  75% of the tract                 
  and 85% at  the end of the  tenth year.  The  licensee could                 
  then  convert the remaining acreage  to lease.  No objection                 
  having been raised, Amendment No. 5 was ADOPTED.                             
                                                                               
  Senator Rieger directed  attention to conversion  provisions                 
  at page 7, line 19, and inquired regarding application of AS                 
  38.05.180  subsections not  spelled  out  within  the  bill.                 
  Annette Kreitzer said that she advised the drafter of Senate                 
  Oil and Gas Committee  intent that leases not be  subject to                 
  subsections  other than those cited in the legislation.  The                 
  drafter did not indicate need for specific exclusions within                 
  the bill.                                                                    
                                                                               
  Co-chair Pearce called for additional testimony on the bill.                 
  None  was  forthcoming.   She  then announced  that Co-chair                 
  Frank  had  asked  that SB  150  be  HELD  in committee  for                 
  additional review.                                                           
                                                                               
                                                                               
  SENATE BILL NO. 151                                                          
                                                                               
       An Act providing for oil  and gas exploration incentive                 
       credits for certain  activities on certain land  in the                 
       state; and providing for an effective date.                             
                                                                               
  Co-chair  Pearce directed  that  SB 151  be  brought on  for                 
  discussion  and  noted  accompany zero  fiscal  notes  and a                 
  letter from the  Governor.  SENATOR  LOREN LEMAN again  came                 
  before committee.   He explained  that SB 151  was heard  by                 
  Senate Oil and Gas and passed from committee in its original                 
  form.  KEN BOYD, Director, Division of Oil and Gas, Dept. of                 
  Natural  Resources, spoke  in  support  of  the  bill.    He                 
  explained that exploration incentive credits for state lands                 
  presently  exist  in  Title 38.    They  have  been used  to                 
  encourage  exploration.   The  program  allows the  state to                 
  provide  relief  for the  cost of  drilling  wells, up  to a                 
  maximum of 50%.   In the ten  years the program has  been in                 
  place, the state  has forgiven approximately $40  million in                 
  revenue.    The  incentive  credit  can be  applied  against                 
  certain  taxes and  royalty  or  rental  payments.   SB  151                 
  extends  exploration  incentive  credits  to  all  lands  in                 
  Alaska--federal, state, private, etc.                                        
                                                                               
  End, SFC-93, #65, Side 2                                                     
  Begin, SFC-93, #67, Side 1                                                   
                                                                               
                                                                               
  Mr. Boyd noted that well data received by the state would be                 
  held confidential for 25 months from the date of receipt and                 
  then released.   That  is a  departure from  Title 38  which                 
  allows  for  extended  confidentiality.   Seismic  or  other                 
  geophysical data provided  to the state  may be used by  the                 
  state  and  shown by  the  state  (in a  marketing  sense to                 
  promote state lands) but may not be given away.                              
                                                                               
  At the present time, the amount of the exploration incentive                 
  credit is up to 50%.  Under SB 151 it is 50% on  state-owned                 
  land and 25% on  other land.  Exploration on  non-state land                 
  would not be as beneficial to the state.                                     
                                                                               
  Co-chair Pearce  asked if  opposition to  the bill  had been                 
  raised when it was before Senate Oil and Gas.  Senator Leman                 
  responded  negatively but  advised  that  Senator Adams  had                 
  moved  to amend the  bill to apply  up to 50%  credit to all                 
  lands.  That amendment did not pass.                                         
                                                                               
  Co-chair Pearce called for additional testimony on the bill.                 
  None was forthcoming.                                                        
                                                                               
  Senator Sharp  MOVED that  SB 151  pass from  committee with                 
  individual  recommendations  and  accompanying  zero  fiscal                 
  notes.  No objection having been raised, SB 151 was REPORTED                 
  OUT of committee with  zero notes from the Dept.  of Revenue                 
  and  Dept.  of  Natural  Resources.    Co-chair  Pearce  and                 
  Senators  Jacko,  Kelly,  Rieger,   and  Sharp  signed   the                 
  committee report with  a "do pass" recommendation.   Senator                 
  Kerttula  signed  "Do   not  pass."    Co-chair   Frank  was                 
  temporarily absent from the meeting and did not sign.                        
                                                                               
  Co-chair   Pearce  directed  that  the  meeting  be  briefly                 
  recessed.                                                                    
                                                                               
                       RECESS - 3:00 P.M.                                      
                      RECONVENE - 3:20 P.M.                                    
                                                                               
                                                                               
  SENATE BILL NO. 176                                                          
                                                                               
       An  Act  relating to  the  municipal tax  exemption for                 
       inventories intended for export.                                        
                                                                               
  Upon reconvening the meeting,  Co-chair Pearce directed that                 
  SB 176 be  brought on for  discussion.  SENATOR LOREN  LEMAN                 
  again  came  before  committee.   He  explained  that, under                 
  current statutes, municipalities may provide tax  exemptions                 
  on  personal  property   inventories  intended  for  export.                 
  However, the exemption is limited to  the portion of the tax                 
  to  accrue to the municipality and may not be applied to tax                 
  dollars that would  flow to school districts.   The proposed                 
                                                                               
                                                                               
  bill would  delete that prohibition and allow municipalities                 
  to exempt the  full amount  of tax on  inventories held  for                 
  export outside of Alaska.  This  change was requested by the                 
  Anchorage Development Corporation because it feels the state                 
  will not  be able  to attract  export  business unless  this                 
  impediment is removed.                                                       
                                                                               
  Co-chair Pearce called  for additional testimony.   None was                 
  forthcoming.                                                                 
                                                                               
  Senator Sharp  MOVED that  SB 176  pass from  committee with                 
  individual  recommendations.     No  objection  having  been                 
  raised, SB 176  was REPORTED  OUT of committee  with a  zero                 
  fiscal note from the Dept. of Community and Regional Affairs                 
  and  a  zero Senate  State  Affairs  note for  the  Dept. of                 
  Commerce and  Economic  Development.   Co-chairs Pearce  and                 
  Frank  signed  the   committee  report  with  a   "do  pass"                 
  recommendation.   Senators Jacko, Kelly,  Rieger, and  Sharp                 
  signed  "no recommendation."   Senator  Kerttula was  absent                 
  from the meeting and did not sign.                                           
                                                                               
                                                                               
  SENATE BILL NO. 145                                                          
                                                                               
       An  Act  establishing  the position  of  state  medical                 
       examiner;   and  relating   to  preparation   of  death                 
       certificates.                                                           
                                                                               
  Co-chair Pearce  directed  that SB  145  be brought  on  for                 
  discussion.   Senator Rieger  explained that  responsibility                 
  for autopsies presently  rests with  a coroner.   He or  she                 
  determines  whether the  autopsy is  necessary, a  physician                 
  performs the examination, and the Dept. of Health and Social                 
  Services  pays  associated  costs.   Courts  may  also order                 
  autopsies.    In instances  where  it  seems  clear that  an                 
  autopsy  is  not warranted,  there is  no  one to  say "no."                 
  Courts are in a bind because the benefit of the doubt favors                 
  performing the autopsy.                                                      
                                                                               
  SB 145 would  allow a physician  in the Dept. of  Health and                 
  Social Services to  perform autopsies and decide  whether or                 
  not to perform  them.   This approach will  reduce costs  by                 
  eliminating unnecessary exams.  The FY 94 Senate  budget for                 
  the Dept. of  Health and Social Services is  predicated upon                 
  passage of SB 145.                                                           
                                                                               
  Co-chair Pearce  referenced a  $429.0 fiscal  note from  the                 
  Dept. of Health and Social Services and asked if it would be                 
  in addition  to funding  included in  the  budget.   Senator                 
  Rieger responded affirmatively but acknowledged that  he was                 
  not comfortable with the note.   He concurred, however, that                 
  the full amount of the medical examiner position  would have                 
  to be paid.  The request in the H&SS budget was reduced from                 
                                                                               
                                                                               
  over $900.0 to approximately $450.0.  Senator Rieger and Co-                 
  chair Frank agreed  upon need to work  on the note.   SB 145                 
  was HELD in committee pending that effort.                                   
                                                                               
                                                                               
  SENATE BILL NO. 155                                                          
                                                                               
       An  Act   relating   to  landlords   and  tenants,   to                 
       termination  of  tenancies   and  recovery  of   rental                 
       premises, to  tenant  responsibilities,  to  the  civil                 
       remedies of  forcible entry  and detainer  and nuisance                 
       abatement,  and  to  the duties  of  peace  officers to                 
       notify landlords  of arrests involving  certain illegal                 
       activity on rental premises.                                            
                                                                               
  Co-chair  Pearce directed  that  SB 155  be  brought on  for                 
  discussion.                                                                  
  Co-chair Frank  explained that  the bill  was introduced  to                 
  continue  previous legislative  work on landlord  tenant law                 
  and in response to constituent  requests for greater balance                 
  in the law.  The proposed would make the following changes:                  
                                                                               
       1.  It  reduces from ten days  to five days the  time a                 
  landlord must wait prior to  commencing the eviction process                 
  when a tenant fails to pay rent.                                             
                                                                               
       2.   It amends nuisance  abatement statutes to  include                 
  drug and alcohol offenses as grounds for relief.                             
                                                                               
       3.   It requires peace officers  to notify landlords if                 
  a tenant has been arrested for  a drug and/or alcohol crime.                 
                                                                               
                                                                               
       4.   It  makes   legal  obligations  of   tenants  more                 
  stringent and rewords the statutory definition of damages.                   
                                                                               
       5.   It adds to a landlord's ability to seek removal of                 
  an abusive tenant through inclusion  of a premises condition                 
  statement  and contents  inventory in  the rental  agreement                 
  through   the  summary   eviction   process  for   extremely                 
  destructive tenants.                                                         
                                                                               
  Co-chair   Frank   acknowledged   that    some   individuals                 
  characterize  any   changes  in   landlord  tenant   law  as                 
  detrimental  to  tenants.   He  voiced his  belief  that the                 
  foregoing is not true and  cautioned that statutes making it                 
  difficult for landlords  to remove nonpaying  or destructive                 
  tenants  result  in higher  security deposits  and increased                 
  background and credit scrutiny.   Restrictions on  landlords                 
  result in less availability for low-income tenants and young                 
  people seeking to rent.                                                      
                                                                               
  Senator Rieger asked for an explanation of Sec. 9 provisions                 
                                                                               
                                                                               
  relating to "action against tenant occupying premises abated                 
  as   nuisance."    JACK   CHENOWETH,  legal  counsel,  Legal                 
  Services, Legislative Affairs Agency, came before committee.                 
  He  explained  that the  bill  opens up  forcible  entry and                 
  detainer provisions and  allows a landlord to  evict tenants                 
  if the premises  is used for purposes  such as prostitution,                 
  illegal drug or alcohol activity, etc.   In situations where                 
  a  tenant  is  illegally  using  the premises  or  condoning                 
  illegal  use  of  the premises  for  one  or  more of  those                 
  purposes, the landlord  may take advantage of  the abatement                 
  mechanism.  Under  that mechanism the landlord  may ask that                 
  use of the premises be abated as a nuisance.  Section 9 says                 
  that when  such an  order is  obtained from  the court,  the                 
  landlord  may  use  the order  as  prima  facie  evidence in                 
  eviction proceedings.                                                        
                                                                               
  Senator Rieger voiced need to review SB 178  (CIVIL NUISANCE                 
  ACTIONS)  to  ensure  that  provisions  therein  would   not                 
  preclude an action  to evict a  tenant as a  nuisance.   Mr.                 
  Chenoweth  said he  had  not reviewed  the  bill.   Co-chair                 
  Pearce directed  that the  meeting be  briefly recessed  for                 
  that review.                                                                 
                                                                               
                       RECESS - 3:00 P.M.                                      
                      RECONVENE - 3:10 P.M.                                    
                                                                               
  Upon   reconvening,  Mr.  Chenoweth  observed  that  SB  178                 
  substantially changes the  law relating to private  nuisance                 
  actions.   An exception  is made,  however, for  abatements.                 
  Mr.  Chenoweth  advised  that  his  reading  indicates  that                 
  abatement law, AS 09.51.070-240 is not affected by CSSB  178                 
  (Jud).                                                                       
                                                                               
  Co-chair Pearce called for additional questions or testimony                 
  on SB 155.  None were forthcoming.                                           
                                                                               
  Co-chair  Frank MOVED  for passage  of CSSB  155  (Jud) with                 
  individual recommendations  and the accompany  fiscal notes.                 
  Senator Sharp OBJECTED  for the purpose  of a question.   He                 
  then  REMOVED his  objection.    Senator Jacko  subsequently                 
  voiced his OBJECTION.  Co-chair Pearce  called for a show of                 
  hands.  The motion carried on a vote of 5 to 1, and CSSB 155                 
  (Jud) was REPORTED OUT  of committee with a $19.0  note from                 
  the Dept. of  Public Safety,  $10.0 note from  the Dept.  of                 
  Law, and zero note from the  Alaska Court System.  Co-chairs                 
  Pearce  and  Frank  and Senators  Kelly,  Rieger,  and Sharp                 
  signed the committee report with a "do pass" recommendation.                 
  Senator  Jacko signed "Do  not pass."   Senator Kerttula was                 
  absent from the meeting and did not sign.                                    
                                                                               
                                                                               
  SENATE BILL NO. 177                                                          
                                                                               
                                                                               
       An Act relating to salmon marketing, a salmon marketing                 
       tax,  and the Alaska  Seafood Marketing  Institute; and                 
       providing for an effective date.                                        
                                                                               
  Co-chair  Pearce directed  that  SB 177  be  brought on  for                 
  discussion and  noted that it  was introduced by  the Senate                 
  Finance Committee.   It relates  to an additional  marketing                 
  tax in  an  effort  to  make the  Alaska  Seafood  Marketing                 
  Institute  fully self-supporting.   The legislation  is also                 
  tied to the  Senate version  of the operating  budget.   Co-                 
  chair Pearce  voiced her further  understanding that general                 
  fund  moneys  for  ASMI  were  originally deleted  from  the                 
  Governor's budget.    The  Dept.  of  Commerce  subsequently                 
  requested that they be reinstated while the department works                 
  with  fishing  groups  in  an  effort  to  make  ASMI  self-                 
  supporting.  The general fund dollars  were thus returned to                 
  the budget with  the expectation that something  will happen                 
  within the year.                                                             
                                                                               
  KIM ELTON,  Executive  Director,  Alaska  Seafood  Marketing                 
  Institute,  came before committee.   He  said that  the bill                 
  would establish  a 1%  tax on  salmon processors.   The  tax                 
  would   flow   to   the   general   fund   for   legislative                 
  reappropriation back to  ASMI.   At least 90%  of the  funds                 
  would be used  for domestic marketing of salmon.   Up to 10%                 
  would  establish  a  market price  information  service  for                 
  salmon fishermen.   The legislation also increases  the ASMI                 
  board of directors from eighteen to twenty-five to establish                 
  equity  (12 fishermen  and 12  processors).   The bill  also                 
  includes provisions for a public member on the board.  Since                 
  the  effective date is July 1, 1993, most of the 1993 salmon                 
  fishing  season would  be  covered by  the  bill.   Expected                 
  revenue is estimated  at between  $3 to $5.7  million.   Mr.                 
  Elton concluded his  remarks by  observing that the  impetus                 
  for the bill  comes from the  previous legislature.  It  has                 
  substantially evolved since  that time due, largely,  to the                 
  efforts  of individuals in  the salmon harvesting community.                 
  He advised that he was  comfortable with the legislation and                 
  voiced his understanding that the United Fishermen of Alaska                 
  are  also.    He  acknowledged  that  the  industry  is  not                 
  completely united behind the tax bill.                                       
                                                                               
  Senator Kelly asked how passage or  failure to pass the bill                 
  would impact the budget.  Co-chair Pearce explained that the                 
  Senate  budget  for  the  Dept.  of  Commerce  and  Economic                 
  Development  is  predicated  upon  passage.    It   replaces                 
  approximately $900.0 in general funds with revenues from the                 
  proposed tax.  The House did not proceed in that manner.   A                 
  final  decision  on  funding  will  be made  at  conference.                 
  Similar House legislation is presently in House Rules.                       
                                                                               
  Co-chair Pearce directed  that SB 177  be HELD in  committee                 
  for additional review.                                                       
                                                                               
                                                                               
  ADJOURNMENT                                                                  
                                                                               
  The meeting was adjourned at approximately 3:50 p.m.                         
                                                                               

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