Legislature(1995 - 1996)
03/08/1995 03:45 PM RES
* first hearing in first committee of referral
= bill was previously heard/scheduled
= bill was previously heard/scheduled
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.