Legislature(1995 - 1996)
03/08/1995 03:45 PM Senate RES
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SENATE RESOURCES COMMITTEE
March 8, 1995
3:45 P.M.
MEMBERS PRESENT
Senator Loren Leman, Chairman
Senator Drue Pearce, Vice Chairman
Senator Steve Frank
Senator Rick Halford
Senator Robin Taylor
Senator Georgianna Lincoln
Senator Lyman Hoffman
COMMITTEE MEMBERS ABSENT
All members present
COMMITTEE CALENDAR
CS FOR SENATE BILL NO. 56(RES)
"An Act allowing the Department of Natural Resources to quitclaim
land or interests in land, including submerged or shore land, to a
municipality to correct errors or omissions of the municipality
when inequitable detriment would result to a person due to that
person's reliance upon the errors or omissions of the municipality;
relating to conveyance of certain tide and submerged land to
municipalities; and providing for an effective date."
SENATE BILL NO. 112
"An Act establishing a discovery royalty credit for the lessees of
state land drilling exploratory wells and making the first
discovery of oil or gas in commercial quantities."
SENATE BILL NO. 113
"An Act authorizing a reduction in coal, oil, and gas royalty for
the producers of those minerals used in certain projects."
SENATE BILL NO. 114
"An Act relating to high cost marginal oil wells."
PREVIOUS ACTION
SB 56 - See Community & Regional Affairs minutes dated
2/20/95.
See Resources minutes dated 3/6/95.
SB 112 - No previous action to record.
SB 113 - No previous action to record.
SB 114 - No previous action to record.
WITNESS REGISTER
Geron Bruce, Legislative Liaison
Department of Fish and Game
P.O. Box 25526
Juneau, AK 99802-5526
POSITION STATEMENT: Commented on SB 56.
Nico Bus, Legislative Liaison
Department of Natural Resources
400 Willoughby Ave.
Juneau, AK 99801-1796
POSITION STATEMENT: Commented on SB 56.
Jack Chenoweth, Attorney
Legislative Affairs Agency
130 Seward St., Suite 409
Juneau, AK 99801-2105
POSITION STATEMENT: Commented on SB 112, SB 113, and SB 114.
ACTION NARRATIVE
TAPE 95-21, SIDE A
Number 001
SRES 3/08/95
SB 56 RIGHTS IN TIDE/SUBMERGED LAND
CHAIRMAN LEMAN called the Senate Resources Committee meeting to
order at 3:40 p.m. and announced CSSB 56 (Res) to be up for
consideration.
GERON BRUCE, Department of Fish and Game, said he had reviewed the
fiscal note with staff and that it is reflective of the true
workload that would be associated with this bill.
SENATOR LEMAN asked him to estimate how many applications they
would see on an annual basis. MR. BRUCE replied that a large
number of communities qualify under this bill and thought the
volume would be large initially, but, he said, the fiscal note was
not built on a specific number of applications. Staffing is needed
for the approximately 1.2 million acres of tidelands and submerged
wetlands in the legislatively designated areas. On the Kenai
River, for instance, they have one third of one person per year
assigned to it.
SENATOR TAYLOR said he thought they were referring to the
Commissioner of Natural Resources, because he is the one who
conveys land. MR. BRUCE explained that ADF&G becomes involved in
the process by providing information to the Commissioner of DNR for
his decisions.
SENATOR TAYLOR said he was trying to figure out why it took ADF&G
seven times as much money to figure out whether or not to sell a
piece of land to a municipality as it would the Commissioner who
would be selling it.
MR. BRUCE pointed out that the language, "or the proposed use of
the land is consistent or compatible with the land use plan adopted
by the municipality, the department, or the Alaska Coastal Policy
Council," listed possibilities about how it could be classified for
conveyance.
In response to Senator Taylor's question, he said the ADF&G's job
is not to advise about the cost of the sale, the platting, or the
kinds of things DNR does, but to advise about the impacts on fish
and wildlife habitat, the public use of the fish and wildlife that
might occupy that area, and to protect the public access for the
use of that fish and wildlife. It's a different and more complex
function.
Number 185
SENATOR TAYLOR said he was confused with language on page 4, lines
17 - 18. He couldn't figure out why they wanted to establish a
standard that says they have to meet all these tests, including
subtests (seven in all), and then within the third test the use of
the land you're requesting has to be consistent with or compatible
with a land use plan adopted by a municipality, the department, or
the Alaska Coastal Policy Council - all three of which could have
absolutely incompatible decisions based on that same chunk of land.
SENATOR LEMAN explained that you don't have to be consistent with
all of them because of the "or." SENATOR TAYLOR said Ketchikan had
been trying to develop a property called Lewis Reef, zoned water
front property, and hadn't been able to go anywhere because of
total inconsistencies between National Marine Fisheries and Habitat
Division of ADF&G.
SENATOR HOFFMAN moved to rescind the motion to adopt amendment #1
and requested DNR to answer one question before the vote.
SENATOR PEARCE objected.
SENATOR HOFFMAN explained that amendment #1 eliminated the best
interest finding and asked the department's position on this
legislation.
NICO BUS, Department of Natural Resources, said the department
could not support this legislation with that modification.
Number 269
SENATOR FRANK clarified that the City of Juneau, for instance,
could preclude development by acquiring tidelands on Gastineau
Channel. SENATOR LEMAN noted that a certain amount of this has
already taken place and it has corrected some inequities.
SENATOR FRANK said it was one thing if it was a city, but there
were broader ramifications if it were a borough. SENATOR LEMAN
said it still had to meet one of the four tests. SENATOR HOFFMAN
said it's not even in the best interests of the state without the
language that was deleted as amendment #1.
SENATOR HALFORD asked if the state currently sold tide and
submerged land in any way. MR. BUS said the department doesn't.
SENATOR HALFORD asked if a municipality, under this bill, could
sell and alienate title to tide and submerged lands. MR. BUS
replied that it could.
SENATOR LEMAN asked if there was an objection to the motion to
rescind the action. SENATOR TAYLOR objected.
SENATOR LEMAN asked for the roll to be called. SENATORS LEMAN,
PEARCE, and TAYLOR voted no; SENATORS FRANK, HALFORD, LINCOLN, and
HOFFMAN voted yes; and the motion passed.
Number 412
SENATOR LINCOLN proposed amendment #2 which she passed to the
committee members.
SENATOR FRANK asked if a municipality meant boroughs, cities,
city/boroughs, and unified municipalities. MR. BUS said that was
correct.
SENATOR FRANK asked which department decides if the use is
compatible with the use proposed by a municipality. MR. BUS
answered that it depends on which application it is.
SENATOR FRANK asked what happens if there is a conflict between
what the borough says as a land use planner and what the state says
in their land use plan. MR. BUS said he didn't know the answer to
that.
SENATOR LEMAN asked for a roll call on the amendment. SENATORS
LINCOLN, HOFFMAN, and FRANK voted no; SENATORS LEMAN, PEARCE,
HALFORD, and TAYLOR voted yes; and the motion passed.
Number 438
SENATOR LINCOLN asked what the DNR fiscal notes meant. MR. BUS
explained that the $0 fiscal note is from the Division of Lands
with a loss of revenue of $50,000. The loss is for those areas
having revenue producing leases to the state that would be
transferred to the municipality. He added that the estimate is now
$50,000 - $100,000.
Regarding the other fiscal note, in order for the state to track
all the land conveyed to the municipalities under this bill, the
department would have to develop a case type in their computer
system. This would be a one time expenditure for a program change.
SENATOR TAYLOR asked what formula they used to determine the price
of these lands. MR. BUS replied that in the case of shore
fisheries, there are regulations to be used as a guideline.
SENATOR LINCOLN moved to adopt amendment #2 which are two
recommendations from ADF&G which would improve this legislation.
SENATOR LEMAN noted there was objection to the amendment. MR.
BRUCE clarified that the amendment addresses their concern with
legislatively designated areas such as game refuges, critical
habitats, and the 1.2 million acres of tidelands and submerged
lands that were designated to be managed with a priority for the
protection and maintenance of the fish and wildlife habitat and for
the use by people of the fish and wildlife and habitat that was in
that area. The amendment would allow the Commissioner of ADF&G to
also have a role in deciding whether or not to convey tidelands or
submerged lands out of the legislatively designated areas.
SENATOR TAYLOR said he thought the department forgot who originally
designated the areas; and that this bill merely undesignates those
areas.
SENATOR HOFFMAN said the legislature reviewed all the areas that
were designated and they should be left that way to be consistent
until they are undesignated at the legislative level.
SENATOR LEMAN asked for the roll call on amendment #2. SENATORS
PEARCE, LEMAN, FRANK, HALFORD, and TAYLOR voted no; SENATORS
LINCOLN and HOFFMAN voted yes; and the motion failed.
SENATOR FRANK said he would like to understand it better before
moving it from committee, because it has serious ramifications as
far as governmental coordination being increased. If it were
limited to cities, he wouldn't have a problem with it, he said.
Number 526
SENATOR PEARCE moved to pass CSSB 56 (Res) with the appropriate
fiscal notes from committee with individual recommendations. She
noted that it would be picking up a Finance Committee referral.
There were no objections and it was so ordered.
Number 533
SRES 3/8/95
SB 112 DISCOVERY ROYALTY CREDIT
SENATOR LEMAN said there was not enough time to adequately notify
people of a hearing on these bills, so they would just be having a
work session.
JACK CHENOWETH, Legislative Affairs Attorney, said SB 112 was a
bill putting back a discovery royalty credit which existed in the
state's laws up until 1969 and came off the books with extensive
redrafting of AS 38.05.180. He said on the bottom of page 3 he
basically cribbed the old language of the old discovery royalty.
SENATOR LEMAN asked if it applied only to the discovery well. MR.
CHENOWETH replied that it did, then corrected himself to say that
it would apply to the entire lease. He pointed out on page 1,
lines 8 - 10 that it says the commissioner is obligated to convert
based upon what the licensee represents.
SENATOR HALFORD said this bill doesn't have an effective date and
asked if it applies to a well that is already in progress if the
actual discovery doesn't occur until 90 days from today. MR.
CHENOWETH replied that if a well is under way, the department has
to try to ascertain if that area has oil or gas in commercial
quantities, and after this takes affect, and the holder of the
lease determines that it does, yes, that lease would qualify under
those circumstances.
SENATOR HALFORD asked how many wells there are with decisions
already made.
TAPE 95-21, SIDE B
MR. CHENOWETH didn't know that answer. SENATOR LEMAN said they
would ask the Division of Oil and Gas.
SRES 3/8/95
SB 113 REDUCTION IN ROYALTY FOR CERTAIN USES
MR. CHENOWETH said that SB 113 is also the approach of reducing
royalty that is payable. The changes are divided between coal and
oil and gas. The royalty is reduced if the oil or gas is
developed, produced, and sold to a project that qualifies under
(dd) of this section which sets out what a qualifying project is.
For example, a project that is intended to make the oil and gas
available as an energy resource for use by the public. It is
supposed to be one that is, in a sense, remote, that is, not tied
to the existing pipeline system and that is owned/operated by a
municipality or village.
There is the same kind of adjustment, as with exploration
licensing, for materials from a well that you obtained as a lessee,
because you were the holder of a successful exploration license.
MR. CHENOWETH said that Sections 2 and 3 adjust the royalty payable
for coal.
SRES 3/8/95
SB 114 HIGH COST MARGINAL OIL WELLS
MR. CHENOWETH said that SB 114 is legislation on high cost marginal
oil wells. It turns over to the Alaska Oil and Gas Conservation
Commission (AOGCC) the ability to determine that a producing oil
well is, in fact, a high cost marginal oil well and adjusts the
royalty as set out.
SENATOR LEMAN thanked him very much and said he would schedule
hearings on these bills next week.
SENATOR LEMAN adjourned the meeting at 4:40 p.m.
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