Legislature(1995 - 1996)

05/03/1995 03:45 PM RES

Audio Topic
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
CONTINUED UPON ADJOURNMENT OF RULES MEETING
HB 195
HJR 44
SJR 23
HJR 43
<TELECONFERENCE ON ABOVE BILL - LISTEN ONLY>
--FOLLOWING BILLS PREVIOUSLY HEARD
HB 207
<TELECONFERENCE ON ABOVE BILL - LISTEN ONLY>
HB 141
txt
                   SENATE RESOURCES COMMITTEE                                  
                          May 3, 1995                                          
                           3:45 p.m.                                           
                                                                               
                                                                               
 MEMBERS PRESENT                                                               
                                                                               
 Senator Loren Leman, Chairman                                                 
 Senator Drue Pearce, Vice Chairman                                            
 Senator Rick Halford                                                          
 Senator Robin Taylor                                                          
 Senator Georgianna Lincoln                                                    
 Senator Lyman Hoffman                                                         
                                                                               
  MEMBERS ABSENT                                                               
                                                                               
 Senator Steve Frank                                                           
                                                                               
  ALSO IN ATTENDANCE                                                           
                                                                               
 Senator John Torgerson                                                        
                                                                               
  COMMITTEE CALENDAR                                                           
                                                                               
 CS FOR HOUSE BILL NO. 195(RES)                                                
 "An Act repealing the laws authorizing milk marketing orders."                
                                                                               
 HOUSE JOINT RESOLUTION NO. 44                                                 
 Proposing postage stamps honoring wild Alaska salmon and centuries            
 of continued use of wild Alaska salmon for subsistence, sport, and            
 commercial fish harvesters.                                                   
                                                                               
 CS FOR HOUSE JOINT RESOLUTION NO. 43(FSH)                                     
 Relating to commercial fishing and subsistence use in Glacier Bay             
 National Park.                                                                
                                                                               
 CS FOR HOUSE BILL NO. 207(FIN) am                                             
 "An Act relating to adjustments to royalty reserved to the state to           
 encourage otherwise uneconomic production of oil and gas; and                 
 providing for an effective date."                                             
                                                                               
 CS FOR HOUSE BILL NO. 141(FSH)                                                
 "An Act relating to the appointment of members of the Board of                
 Fisheries."                                                                   
                                                                               
  PREVIOUS SENATE COMMITTEE ACTION                                             
                                                                               
 HB 195 - No previous action to record.                                        
                                                                               
 HJR 44 - No previous action to record.                                        
                                                                               
 HJR 43 - No previous action to record.                                        
 HB 207 - See Resources minutes dated 4/22/95, 4/26/95, 4/28/95,               
          5/1/95.                                                              
                                                                               
 HB 141 - See Resources minutes dated 4/22/95.                                 
                                                                               
  WITNESS REGISTER                                                             
                                                                               
 Odette Foster, Staff to Representative Kim Elton                              
 State Capitol                                                                 
 Juneau, AK 99801-1182                                                         
  POSITION STATEMENT:   Offered information on HJR 44                          
                                                                               
 Amy Daugherty, Staff to Representative Alan Austerman                         
 State Capitol                                                                 
 Juneau, AK 99801-1182                                                         
  POSITION STATEMENT:   Offered information on HJR 43                          
                                                                               
 Ron Sommerville                                                               
 Juneau, AK                                                                    
  POSITION STATEMENT:   Offered information on HJR 43                          
                                                                               
 Bruce Weyhrauch                                                               
 302 Gold St.                                                                  
 Juneau, AK 99801                                                              
  POSITION STATEMENT:   Offered information in support of HJR 43               
                                                                               
 Commissioner John Shively                                                     
 Department of Natural Resources                                               
 400 Willoughby Ave.                                                           
 Juneau, AK 99801-1796                                                         
  POSITION STATEMENT:   Offered information on CSHB 207(FIN) am                
                  and SCS CSHB 207(RES)                                        
                                                                               
 Ken Boyd, Director                                                            
 Division of Oil & Gas                                                         
 Department of Natural Resources                                               
 3601 C St., Suite 1380                                                        
 Anchorage, AK 99503-5948                                                      
  POSITION STATEMENT:   Offered information on CSHB 207(FIN) am                
                  and SCS CSHB 207(RES)                                        
                                                                               
 Steve Lewis, Chairman & CEO                                                   
 Petro Star Refinery                                                           
 201 Arctic Slope Ave., #200                                                   
 Anchorage, AK 99518-3030                                                      
  POSITION STATEMENT:   Testified in support of CSHB 207(FIN) am               
                                                                               
 Pam Neal, President                                                           
 Alaska State Chamber of Commerce                                              
 217 2nd St., #201                                                             
 Juneau, AK 99801                                                              
  POSITION STATEMENT:   Testified in support of CSHB 207(FIN) am               
  ACTION NARRATIVE                                                             
                                                                               
  TAPE 95-54, SIDE A                                                           
 Number 001                                                                    
          HJR 44 POSTAGE STAMP HONORING ALASKA SALMON                         
                                                                            
  CHAIRMAN LEMAN  called the Senate Resources Committee meeting to             
 order at 3:45 p.m.  He brought  HJR 44  before the committee as the           
 first order of business.                                                      
                                                                               
 ODETTE FOSTER, staff to Representative Kim Elton, who is prime                
 sponsor of HJR 44, said the resolution requests the U.S. Postmaster           
 to issue a series of five postage stamps, each depicting one of               
 Alaska's salmon species.  The postage stamp series will focus                 
 national attention on Alaska's thriving and healthy salmon fishery.           
 Representative Elton believes that by creating more awareness of              
 Alaska wild salmon it is easier to educate those outside of Alaska            
 about one of our most important and economically viable resources.            
                                                                               
 SENATOR LEMAN stated HJR 44 would be held until a quorum of the               
 committee was established.                                                    
 Number 080                                                                    
      CSHJR 43(FSH) FISHING AND SUBSISTENCE IN GLACIER BAY                    
                                                                              
  CSHJR 43(FSH)  was before the committee as the next order of                 
 business.                                                                     
                                                                               
 AMY DAUGHERTY, staff to the House Special Committee on Fisheries,             
 said the resolution was introduced by the committee in response to            
 concerns expressed by commercial fishermen and subsistence users.             
                                                                               
 In 1991 the National Park Service promulgated draft regulations               
 that would phase out commercial fishing in and around Glacier Bay             
 within seven years and completely prohibit subsistence fishing.               
 Last year a federal judge ruled that ANILCA did not prohibit                  
 commercial fishing in Glacier Bay National Park, but that ruling              
 has been appealed to the Ninth Circuit Court of Appeals.                      
                                                                               
 Ms. Daugherty said elimination of the commercial and subsistence              
 fisheries in a vast area contained in the Glacier Bay National Park           
 would significantly harm the coastal communities of northern                  
 Southeast Alaska.                                                             
                                                                               
 Number 110                                                                    
                                                                               
 RON SOMMERVILLE said there is still a conflict over state                     
 jurisdiction of navigable waters although the state has never filed           
 quiet title to the submerged lands within the boundaries of Glacier           
 Bay National Park.  The state has consistently taken the position             
 in the past that it reserved the rights to file quiet title, and at           
 the same time, exercise some jurisdiction over the resources in the           
 water column.                                                                 
                                                                               
 Mr. Sommerville said the conflict is over transient resources which           
 are not really part of the park.  Both the subsistence and                    
 commercial uses in there provide very little, if any, jeopardy to             
 park resources.  However, the National Park has consistently taken            
 the position that it can regulate or eliminate commercial fishing             
 and subsistence fishing within the park boundaries.  So far, the              
 courts have shown that the Park Service has and can allow                     
 commercial and subsistence within the boundaries of the park.                 
                                                                               
 Mr. Sommerville said it is hoped that as the National Park Service            
 goes forward with its regulations that commercial fishing and                 
 subsistence are allowed uses in the park.                                     
                                                                               
 Number 166                                                                    
                                                                               
 SENATOR LINCOLN asked Mr. Sommerville how he would define                     
 "subsistence use" as used in the resolution.  RON SOMMERVILLE                 
 responded that the definition is exactly the same as the                      
 subsistence priority in Title 8 of federal law.                               
                                                                               
 Number 214                                                                    
                                                                               
 SENATOR HOFFMAN noted that one of the resolve clauses in the                  
 resolution also speaks to sport fishing, and he asked what sport              
 fishing issue there is in Glacier Bay.  RON SOMMERVILLE replied               
 that the National Park Service allows sport fishing within its                
 boundaries, but they have always taken the position that commercial           
 fishing and subsistence use have to be specifically authorized by             
 Congress.  This has consistently created a problem within Glacier             
 Bay.                                                                          
                                                                               
 Number 230                                                                    
                                                                               
 BRUCE WEYHRAUCH, representing Allied Fishermen of Southeast Alaska,           
 explained he represented that group when they intervened in a case            
 entitled "Alaska Wildlife Alliance versus Jensen." The fishermen              
 wanted to intervene in the case because if they were excluded from            
 those waters it would mean several things:  they would have to move           
 operations to other fisheries and other grounds elsewhere in                  
 Southeast Alaska, which would mean increasing pressure on those               
 other fisheries; it would have a serious social effect on the small           
 communities in the area that have relied on that fishery; and it              
 would have a tremendous economic effect on the region.                        
                                                                               
 Mr. Weyhrauch said when Allied Fishermen of Southeast Alaska                  
 intervened in this case, the only decision that Judge Holland ruled           
 on was whether ANILCA prohibited commercial fishing in the marine             
 waters of Glacier Bay National Park.  The judge ruled that it did             
 not and that is now on appeal to the Ninth Circuit Court.  He said            
 the Ninth Circuit Court may rule on the case at the end of the                
 current year or early next year.                                              
                                                                               
 Number 275                                                                    
                                                                               
 SENATOR LINCOLN asked if in Judge Holland's ruling there was any              
 discussion on subsistence use and sport fishing in the area, and              
 BRUCE WEYHRAUCH answered that just commercial fishing was briefed             
 in the ruling.                                                                
                                                                               
 Number 297                                                                    
                                                                               
 There being no further discussion on CSHJR 43(FSH), SENATOR LEMAN             
 asked for the pleasure of the committee.                                      
                                                                               
 SENATOR PEARCE moved that CSHJR 43(FSH) be passed out of committee            
 with individual recommendations.  Hearing no objection, it was so             
 ordered.                                                                      
 SENATOR LEMAN brought  HJR 44  back before the committee and asked            
 for the pleasure of the committee.                                            
                                                                               
 SENATOR PEARCE moved that HJR 44 be passed out of committee with              
 individual recommendations.  Hearing no objection, it was so                  
 ordered.                                                                      
            CSHB 195(RES) REPEAL MILK MARKETING LAWS                          
                                                                              
 SENATOR LEMAN brought  CSHB 195(RES)  before the committee as the             
 next order of business.                                                       
                                                                               
 SENATOR PEARCE read into the record a statement that the Milk                 
 Marketing Board was repealed by the 18th Legislature and this will            
 get rid of an overabundance of useless statutes.                              
                                                                               
 SENATOR PEARCE moved that CSHB 195(RES) be passed out of committee            
 with individual recommendations.  Hearing no objection, it was so             
 ordered.                                                                      
 Number 325                                                                    
    CSHB 207(FIN) am ADJUSTMENTS TO OIL AND GAS ROYALTIES                    
                                                                               
 SENATOR LEMAN brought CSHB 207(FIN) am before the committee and               
 requested a motion to adopt the Resources SCS.                                
                                                                               
 SENATOR PEARCE moved that SCS CSHB 207(RES), version "B", dated               
 4/29/95, be adopted as a working document.  SENATOR LINCOLN                   
 objected.  There not being sufficient votes present to adopt the              
 Resources SCS, SENATOR LEMAN stated the committee would continue              
 with testimony on the legislation.                                            
                                                                               
 Number 335                                                                    
                                                                               
 STEVE LEWIS, Chairman of the Board & CEO of Petro Star, testified             
 on behalf of Petro Star and the Arctic Slope Regional Corporation.            
                                                                               
 Mr. Lewis stated there are several areas of concern with changing             
 the legislation that passed the House, which they believe is a good           
 bill and should be before the Senate for a vote.                              
                                                                               
 Mr. Lewis outlined the following major areas of concern which are:            
                                                                               
  (1)  Legislative oversight and approval of the commissioner's                
 decisions, which they believe is adequate as it exists now.  They             
 believe it will create confidentiality problems.                              
                                                                               
  (2)  Pools or portions of pools in a field is of particular                  
 importance to them and they feel this is an area that should not be           
 amended.                                                                      
  (3)  They believe the sunset provision is bad public policy                  
 and will send an adverse signal to the oil industry worldwide, not            
 only the existing industry that exists in the state now, but any              
 new industry as well.                                                         
                                                                               
 Concluding his comments, Mr. Lewis requested that the committee               
 pass out the House version of the bill.                                       
                                                                               
 Number 420                                                                    
                                                                               
 SENATOR LEMAN asked Mr. Lewis if he is aware of anywhere else in              
 the world where previously leased and undeveloped properties become           
 eligible for negotiated adjustments of royalties.  STEVE LEWIS                
 answered that he believes Alberta may have a similar provision on             
 leasing.  He said there is an upside and downside to this; it is              
 asking the state to help develop marginal fields, but if those                
 fields turn out to be much more profitable or if the price of oil             
 changes, then the state benefits.  He added that throughout the               
 rest of the world the oil industry is going in and developing those           
 fields, so the incentives are there over Alaska or they would be              
 here.                                                                         
                                                                               
 SENATOR LEMAN asked Mr. Lewis if he was aware that the state of               
 Alaska has sunsets on nearly all of its boards and commissions.               
 STEVE LEWIS responded that the boards and commissions are not                 
 trying to intrigue outside investors to put basically billions of             
 dollars into this economy and try to develop fields when they can             
 go elsewhere to invest their money.                                           
                                                                               
 Number 455                                                                    
                                                                               
 SENATOR PEARCE pointed out that countries, whether it is Mexico,              
 Columbia, Peru, China, etc., don't have democracies like ours and             
 the sunset is the next time there is a new government.  They try              
 things and they see how they work, then they may go back and change           
 them, or they may get rid of them altogether.  She does not believe           
 having a sunset on legislation sends the wrong signal to the world;           
 it says we're willing to try it and then we're willing to come back           
 to whether or not it worked.  STEVE LEWIS agreed that some of these           
 countries are more unstable as far as politics go, but they are at            
 least offering something as far as rewards, or the returns are                
 there.  He added the state will not entice money and develop a                
 field in three and a half years.  SENATOR PEARCE said the                     
 legislature is being told that if this legislation is not passed in           
 the next 10 days, there is not going to be a Badami field.  The               
 fields we are talking about are already there, and we're not                  
 talking about new exploration in this royalty reduction section,              
 she said.                                                                     
                                                                               
 Number 500                                                                    
                                                                               
 SENATOR LEMAN stated he has long been an advocate for royalty                 
 flexibility, continues to be so, and thinks we need to do things to           
 help encourage the industry to invest in Alaska, but it needs to be           
 done in such a way that it also protects the interests of Alaska.             
 That is the purpose of the bill and the work that has been done --            
 trying to create adequate guidance so this can be done.                       
                                                                               
 SENATOR LEMAN asked Mr. Lewis if he has any particular problems               
 with a committee of the legislature being briefed on the details of           
 an agreement where they could go into executive session when there            
 was information that should not be revealed to the public, and                
 information that should not be revealed to legislators could be               
 revealed with agents of the Legislative Budget & Audit Committee,             
 which has a confidentiality requirement.  STEVE LEWIS responded               
 that he was more comfortable with Legislative Budget & Audit than             
 with the legislators, who may be here for two years and then be               
 back out in the public.                                                       
                                                                               
 Number 548                                                                    
                                                                               
 PAM NEAL, President, Alaska State Chamber of Commerce, voiced their           
 support for CSHB 207(FIN) am.  The Chamber is concerned that jobs             
 are leaving the state due to the declining activity within the oil            
 industry, and they believe the House version would encourage the              
 state's largest industry to spend more of its dollars creating more           
 activity and businesses in the support industries that supply so              
 many of the jobs in the state today.                                          
                                                                               
  TAPE 95-54, SIDE B                                                           
 Number 030                                                                    
                                                                               
 SENATOR LINCOLN asked if the State Chamber is supporting the House            
 version because that's what the oil industry wants.  PAM NEAL                 
 replied that they are not supporting it because it is what the oil            
 industry wants.  They are doing it because they understand that the           
 oil industry is going to base a lot of its decisions as to how much           
 money to invest in this state in the future based on this                     
 legislation.                                                                  
                                                                               
 Number 085                                                                    
                                                                               
 SENATOR LEMAN invited Commissioner Shively and Ken Boyd of the                
 Department of Natural Resources to join the committee at the table.           
                                                                               
 SENATOR LEMAN said the governor's proposal for existing oil fields            
 was to set the floor at a maximum royalty reduction of 3.8 percent,           
 which the House reduced to 1.25 percent, and the Resources SCS                
 brings it back up to 3 percent.  He asked the administration's                
 position on where they would like to see that floor set.                      
 COMMISSIONER SHIVELY                                                          
 responded that they believe that the floors in the proposed                   
 committee substitute are more in line with their thinking than in             
 the House bill, and it is a change they had suggested in the House.           
                                                                               
 Number 130                                                                    
                                                                               
 SENATOR PEARCE said as far as she can see, the issue boils down to            
 three things:  the first is oversight, the second is sunset, and              
 the third is pool versus field.  She asked if the governor opposes            
 the sunset clause, and COMMISSIONER SHIVELY responded that he does.           
                                                                               
                                                                               
 There was extensive discussion on the issue of a pool versus a                
 field.  KEN BOYD explained that a field can be composed of two                
 pools.  Under current law, those two pools cannot be distinguished,           
 and the royalty reduction would have to be granted to the entire              
 field.  Under the House version, the royalty reduction could be               
 granted to either pool or to both pools.  He said it is a matter of           
 flexibility, and being able to grant this on a lease by lease basis           
 gives the commissioner more latitude to make a real sensible                  
 decision.  COMMISSIONER SHIVELY added that right now, if it wasn't            
 economic and they really wanted to produce a field, they would be             
 forced under the Senate bill to give a royalty to both pools in a             
 field, but the House bill allows them to make a distinction.                  
 Proving the economics on parts of the field that are at the edges             
 that deserve royalty reduction are going to much more difficult               
 than looking at separate pools in the same lease where you really             
 have economics relating right to that pool.  SENATOR PEARCE said              
 she agrees with having pool by pool latitude, but she does not want           
 to see a different royalty at the edge of a field than we've got at           
 the middle of a field.                                                        
                                                                               
 Number 290                                                                    
                                                                               
 SENATOR LEMAN said the immediate impetus for the (1)(A) provisions,           
 according to testimony, is Badami and, perhaps, North Star.  He               
 asked if we didn't change that to the pool or portion of the field            
 or pool, is there anything in the Resources SCS that would affect             
 that project.  KEN BOYD answered that wells that are drilling at              
 Badami now are held confidential and he didn't want to comment on             
 it, but he acknowledged that it is possible.                                  
                                                                               
 Number 330                                                                    
                                                                               
 The committee took an at ease at 5:02 p.m. and was called back to             
 order at 5:50 p.m.                                                            
                                                                               
 Number 335                                                                    
                                                                               
 SENATOR LINCOLN moved and unanimous consent that CSHB 207(FIN) be             
 passed out of committee with individual recommendations.  SENATOR             
 PEARCE objected.                                                              
                                                                               
 Speaking to her motion, SENATOR LINCOLN stated a lot of testimony             
 has been taken on the bill and people are overwhelmingly leaning              
 towards that version of the bill.  She added that amendments could            
 be made to the House version to improve it, but she suggested it              
 could be the vehicle in which amendments could be tacked on in the            
 Senate Finance Committee.  SENATOR LEMAN disagreed and said he                
 thought it would slow the legislation down and may cause it to not            
 be moved this year.                                                           
                                                                               
 SENATOR LEMAN stated there would be a roll call vote on Senator               
 Lincoln's motion to move CSHB 207(FIN) out of committee.  The roll            
 was taken with the following result:  Senators Lincoln and Hoffman            
 voted "Yea" and Senators Leman, Pearce and Taylor voted "Nay."  The           
 motion failed.                                                                
                                                                               
 Number 400                                                                    
                                                                               
 SENATOR PEARCE moved that SCS CSHB 207(RES), version "B", dated               
 4/29/95, be adopted as a working document.  Hearing no objection,             
 the motion carried.                                                           
                                                                               
 SENATOR LEMAN stated the committee would take up amendments                   
 prepared by himself and Senator Pearce.                                       
                                                                             
 Number 430                                                                    
                                                                               
 SENATOR PEARCE moved adoption of the following Amendment No. 1 to             
 SCS CSHB 207(RES).  She said the effect of the amendment is to                
 leave out the disclosure of financial and technical data related to           
 marketing, which is an area of concern.                                       
                                                                               
 Amendment No. 1                                                             
                                                                               
 Page 4, line 14:  Delete " production, transportation, and                   
 marketing "                                                                  
                                                                               
                                                                               
       Insert " production, and transportation "                             
                                                                               
 Hearing no objection to Amendment No. 1, SENATOR LEMAN stated it              
 was adopted.                                                                  
                                                                               
 Number 455                                                                    
                                                                               
 SENATOR PEARCE moved adoption of the following Amendment No. 2.               
 She said there was a concern with trying to define "social effects"           
 and that if you tried to delineate everything that has to be in the           
 findings and determinations, leaving the word "social" in would               
 only lead to a lawsuit. COMMISSIONER SHIVELY stated it was the                
 department's recommendation to delete all of paragraph (9).                   
                                                                               
 Amendment No. 2                                                             
                                                                               
 Page 5, line 13:  Delete " social "                                         
                                                                               
 Page 5, line 14:  Delete" ,including its effects "                          
                                                                               
 Hearing no objection to Amendment No. 2, SENATOR LEMAN stated it              
 was adopted.                                                                  
                                                                               
 Number 515                                                                    
                                                                               
 SENATOR PEARCE moved adoption of the following Amendment No. 3,               
 which was suggested by the Department of Natural Resources.                   
 COMMISSIONER SHIVELY stated support for the amendment.                        
                                                                              
 Amendment No. 3                                                              
                                                                               
 Page 8, line 29:  Delete " increase or "                                    
       Delete " or otherwise adjust "                                        
                                                                               
 Page 9, line 11:  Delete " increase or "                                    
                                                                               
 Page 9, line 12:  Delete " or otherwise adjust "                            
                                                                               
 Page 9, line 21:  Delete " increase or "                                    
       Delete " or otherwise adjust "                                        
                                                                               
 Hearing no objection, SENATOR LEMAN stated Amendment No. 3 was                
 adopted.                                                                      
                                                                               
 Number 545                                                                    
                                                                               
 SENATOR PEARCE moved adoption of the following Amendment No. 4.               
                                                                               
  Amendment No. 4                                                            
                                                                               
 Page 1, line  8:  Delete "marketing"                                          
                                                                               
 Page 2, line 19:  Delete " increase ,"                                      
                                                                               
 Page 2, line 20:  After " decrease " delete " , "                         
                                                                               
 Page 3, line  5:  After " including " insert " price, "                   
                                                                               
   Page 3, line  6:  After " recovery, " delete " or " & insert "         
       After " development " delete " and " & insert " , "               
       After " operating " insert " , and transportation "                 
                                                                               
 Page 3, line  9:  Delete " a share of net profits, "                        
                                                                               
 Page 4, line 26:  Delete " marketing "                                      
                                                                               
 After brief discussion on the amendment and no objection to its               
 adoption, SENATOR LEMAN stated Amendment No. 4 was adopted.                   
                                                                               
                                                                               
  TAPE 95-55, SIDE A                                                           
 Number 001                                                                    
                                                                               
 SENATOR LEMAN stated Amendment No. 5 was before the committee.                
                                                                              
 Amendment No. 5                                                              
                                                                               
 Page 3, line 19:                                                              
  Delete " (i) "                                                             
                                                                               
 Page 3, line 22:                                                              
  Delete " or "                                                              
                                                                               
 Page 3, lines 23 - 29:                                                        
  Delete all material.                                                         
                                                                               
 Page 4, lines 18 - 22:                                                        
  Delete all material and insert:                                              
   " (B)  keep the data described in (A) of this                            
 paragraph confidential under AS38.05.035(a)(9) at the                         
 request of the lessee or lessees making application for                       
 the royalty increase or decrease or other royalty                             
 adjustment; the data                                                          
   (i)  at the direction of the majority of                                 
 the members of the Legislative Budget and Audit                               
 Committee,  may be disclosed by the commissioner                              
 only to the legislative auditor, the director of                              
 the division of legislative finance, and the                                  
 permanent employees of their respective divisions,                            
 and to agents or contractors of the legislative                               
 auditor or the legislative finance division                                   
 director who are engaged under contract to evaluate                           
 the royalty increase, decrease, or other royalty                              
 adjustment;                                                                   
   (ii)  may not be disclosed to                                            
 legislators; "                                                               
                                                                               
 Page 4, line 30, through page 5, line 2:                                      
  Delete all material and insert:                                              
   " (8)  shall                                                              
   (A)  make and publish a preliminary findings                              
 and determination on the royalty increase, decrease, or                       
 other adjustment application; if the preliminary findings                     
 and determination concerns a royalty increase, decrease,                      
 or other adjustment under (1)(A) of this subsection, the                      
 preliminary findings and determination shall also be                          
 presented to the governor for the governor's approval or                      
 disapproval; the governor may not delegate a                                  
 determination to approve or disapprove a preliminary                          
 findings and determination under this subparagraph;                           
   (B)  if the governor approves the preliminary                             
 findings and determination under (A) of this paragraph,                       
   (i)  give reasonable public notice of the                                
 preliminary findings and determination;                                       
   (ii)  concurrently with the issuance of                                  
 the public notice, if directed by the Legislative                             
 Budget and Audit Committee, make available copies                             
 of the commissioner's preliminary findings and                                
 determination on the royalty increase, decrease, or                           
 other adjustment application and the supporting                               
 financial and technical data, including the work                              
 papers, analyses, and recommendations of any                                  
 contractors retained under (7) of this subsection,                            
 to persons authorized under (6)(B) of this                                    
 subsection to review the data; and                                            
   (iii)  invite public comment on the                                      
 preliminary findings and determination during a 30-                           
 day period for receipt of public comment; "                                  
                                                                               
 Page 5, line 21, through page 6, line 15:                                     
  Delete all material and insert:                                              
   " (10)  shall offer to appear before the Legislative                      
 Budget and Audit Committee on a day that is not earlier than                  
 10 days and not later than 20 days after giving public notice                 
 under (8) of this subsection, to provide the committee a                      
 review of the commissioner's preliminary findings and                         
 determination on the royalty increase, decrease, or other                     
 adjustment application and the supporting financial and                       
 technical data; if the Legislative Budget and Audit Committee                 
 accepts the commissioner's offer, the committee shall give                    
 notice of the committee's meeting to all members of the                       
 legislature; if, under (6)(B) of this subsection, the                         
 financial and technical data must be kept confidential at the                 
 request of a lessee or lessees making application for the                     
 royalty increase or decrease or other royalty adjustment, the                 
 commissioner may appear before the committee in executive                     
 session; "                                                                   
                                                                               
 Page 6, line 31, through page 8, line 4:                                      
  Delete all material and insert:                                              
   " (12)  shall, within 30 days after the close of the                      
 public comment period under (8) of this subsection,                           
   (A)  prepare a summary of the public response                             
 to the commissioner's preliminary findings and                                
 determination;                                                                
   (B)  except as to a final findings and                                    
 determination proposed for a royalty increase, decrease,                      
 or other adjustment under  (1)(A) of this subsection,                         
 make a final findings and determination; the                                  
 commissioner's final findings and determination prepared                      
 under this subparagraph regarding a royalty increase,                         
 decrease, or other adjustment is, as to the lessee or                         
 lessees applying for the royalty increase, decrease, or                       
 other adjustment, final and not appealable to the court;                      
   (C)   as to a final findings and determination                            
 prepared for a royalty increase, decrease, or other                           
 adjustment under (1)(A) of this subsection, make a final                      
 findings and determination and present it to the governor                     
 for the governor's approval or disapproval; the governor                      
 may not delegate a decision to approve or disapprove a                        
 final findings and decision presented under this                              
 subparagraph; the commissioner's final findings and                           
 determination regarding a royalty increase, decrease, or                      
 other adjustment prepared under this subparagraph, if                         
 approved by the governor, is, as to the lessee or lessees                     
 applying for the royalty increase, decrease, or other                         
 adjustment, final and not appealable to the court; "                         
                                                                               
 Reletter the following subparagraphs accordingly.                             
                                                                               
 Page 8, line 6:                                                               
  Delete " (A) or (B) "                                                      
  Insert " (B) or (C) "                                                      
                                                                               
 SENATOR PEARCE, speaking to Amendment No. 5, which she had drafted,           
 explained that the amendment changes the scheme for royalty                   
 adjustments in fields that have never been produced, but does not             
 require legislative oversight.  Instead, the preliminary findings             
 have to be developed by the commissioner and then approved by the             
 governor, and that approval cannot be delegated to any other                  
 individual.  Those findings then go to public comment, as was                 
 already in the scheme, and they also go to the Legislative Budget             
 Audit Committee.  After the public comment period and everybody               
 comes back with a final determination and a final decision, once              
 again, the decision on that royalty reduction is signed by the                
 governor and that authority cannot be delegated.  If any                      
 confidential information comes along with the preliminary findings,           
 it would be available to the staff who would fit under the same               
 confidentiality laws that the commissioner's staff fits under.                
 However, that confidential information would not be available                 
 directly to the legislature, but the legislature would still be               
 privy to the same amount of information that it would normally hear           
 on tax matters in an executive session.                                       
                                                                               
 SENATOR PEARCE moved adoption of Amendment No. 5.  SENATOR LINCOLN            
 objected and stated that she had not have time to review the                  
 amendment.                                                                    
                                                                               
 Number 050                                                                    
                                                                               
 COMMISSIONER SHIVELY commented that the administration has not had            
 an opportunity to discuss the concept outlined by Senator Pearce,             
 and he is personally unaware of other decisions that are made in              
 government that the governor signs.  He was unsure of what the                
 legal ramifications of the amendment would be.                                
                                                                               
 Number 100                                                                    
                                                                               
 SENATOR LEMAN clarified that the amendment does not totally remove            
 legislative oversight.  It removes the ability of the legislature             
 to approve or disapprove, but it keeps oversight in through the               
 Legislative Budget & Audit Committee.  It provides further                    
 protections regarding confidential information.  It addresses the             
 four concerns that have been identified to the committee by those             
 in the oil industry.  He added that he believes the amendment                 
 crafts a solution that is acceptable.                                         
                                                                               
 There being no further discussion on Amendment No. 5, SENATOR LEMAN           
 stated a roll call vote on its adoption would be taken.  The roll             
 was taken with the following result:  Senators Leman, Pearce and              
 Taylor voted "Yea" and Senators Hoffman and Lincoln voted "Nay."              
 SENATOR LEMAN stated Amendment No. 5 was adopted.                             
                                                                               
 Number 160                                                                    
                                                                               
 SENATOR PEARCE restated her concern with a royalty reduction for a            
 well just because it is on the fringe of a field that is a highly             
 profitable field.  She said the commissioner has told her that                
 language is needed to fix the problem so that he would have the               
 ability to go in and take care of a pool, but not a field.                    
                                                                               
 SENATOR PEARCE then moved the adoption of the following Amendment             
 No. 6 with conforming amendments where "or pool" may have to be               
 added throughout the document.                                                
                                                                               
 Amendment No. 6                                                             
 Page 2, lines 10, 11, 14, 16 & 18:  After "field" add "or pool"           
                                                                               
 Hearing no objection to Senator Pearce's motion, SENATOR LEMAN                
 stated Amendment No. 6 was adopted.                                           
                                                                               
 Number 200                                                                    
                                                                               
                                                                               
 SENATOR PEARCE stated she supports a sunset date, but realizes that           
 the governor does not.  However, she thinks the March 15, 1999 date           
 is perhaps too early and she suggested changing the date to July 1,           
 2000, which she believes will give ample time for the fields that             
 are not presently under production.  She then moved adoption of the           
 following Amendment No. 7.                                                    
                                                                               
 Amendment No. 7                                                             
                                                                               
 Page 2, line 10:  Delete "March 15, 1999" and insert "July 1, 2000        
                                                                               
 Number 250                                                                    
                                                                               
 SENATOR LINCOLN requested Commissioner Shively's comments on the              
 amendment.                                                                    
                                                                               
 COMMISSIONER SHIVELY responded that this is one of areas where they           
 have some disagreement with Senator Pearce and others.  He added              
 that he understands the arguments of the senators to want to                  
 revisit this, but on the other hand, timing in oil fields is not              
 quick.  They do know of some fields, today, that are delineated,              
 that they think could qualify under this legislation if the                   
 economics were there.  But for fields that are far out in the                 
 future, or even fields that would be leased relatively soon, they             
 are really far out in the future in terms of their development, and           
 they believe that this sunset date would send a message to the oil            
 industry that the state is not receptive to the industry's needs.             
                                                                               
                                                                               
 SENATOR PEARCE said with this bill she is not necessarily trying to           
 encourage new exploration; she is trying to encourage the                     
 development of fields that we already have.  She believes we should           
 focus this year on keeping the people and the work that we already            
 have in Alaska here, and to continue working on exploration                   
 elsewhere.                                                                    
                                                                               
 Number 340                                                                    
                                                                               
 SENATOR HOFFMAN moved to amend Amendment No. 7 to eliminate the               
 sunset provision.  SENATOR PEARCE objected to the amendment to                
 Amendment No. 7.  SENATOR LEMAN called for a hand vote.  Senators             
 Hoffman and Lincoln voted "Yea" and Senators Pearce, Taylor and               
 Leman voted "Nay." SENATOR LEMAN stated the motion failed.                    
                                                                               
 Number 376                                                                    
                                                                               
 SENATOR LEMAN then called for a hand vote on the adoption of                  
 Amendment No. 7.  Senators Taylor, Pearce and Leman voted "Yea" and           
 Senators Lincoln and Hoffman voted "Nay."  SENATOR LEMAN stated               
 Amendment No. 7 was adopted.                                                  
                                                                               
 Number 385                                                                    
                                                                               
 SENATOR PEARCE then moved the adoption of Amendment No. 8 as                  
 proposed by Senator Leman.  SENATOR LEMAN explained the amendment           
 shortens up the phraseology and makes it much clearer.                        
                                                                               
 Amendment No. 8                                                             
                                                                               
 Page 7, line 6 - 11:  Change sub-subparagraph (ii) to read as                 
                       follows:                                                
                                                                               
  (ii)  make a final findings and determination which is final              
 and not appealable to the court by the lessee or lessees;                    
                                                                               
 COMMISSIONER SHIVELY stated the administration has no objection to            
 the amendment.                                                                
                                                                               
 Hearing no objection to Amendment No. 8, SENATOR LEMAN stated it              
 was adopted.                                                                  
                                                                               
 Number 425                                                                    
                                                                               
 SENATOR TORGERSON stated that although he did not have a proposed             
 amendment, he has concern with subparagraph (B) on page 5, lines 7            
 - 12.  He said it speaks to actual capital investment or other                
 beneficial spending.  In some cases, such as platforms in Cook                
 Inlet where the production levels might be very low, they might               
 request reductions in royalties to keep alive without making an               
 increased capital investment or beneficial spending.  His concern             
 is that these areas also be eligible for royalty reduction if they            
 were to maintain the status quo to keep that field going.  SENATOR            
 LEMAN responded his intent is that the Cook Inlet fields and the              
 continued extension of them would qualify just the same as if doing           
 new projects.  COMMISSIONER SHIVELY agreed, but said that this was            
 exactly why they wanted to delete paragraph (9) altogether.  In               
 looking at this in the House, it was found that when trying to set            
 these kinds of standards for the commissioner to look at, there are           
 different kinds of decisions, different kinds of fields, pools,               
 etc., and it results in the same kind of problem that Senator                 
 Torgerson pointed out.                                                        
                                                                               
 SENATOR PEARCE proposed a conceptual Amendment No. 9 to page 5,               
 lines 3 - 20, that the delineation of what needs to be addressed in           
 the  findings and determination would apply only to the adjustments           
 under subparagraph (A) on page 2, which are the oil or gas fields             
 that have been delineated but have not previously produced oil or             
 gas.  She explained this would take care of Senator Torgerson's               
 concern about aged Cook Inlet fields, and it will make the                    
 commissioner's job less onerous but still give the public the                 
 understanding and the faith that there will be a complete                     
 determination and findings.                                                   
                                                                               
                                                                               
 SENATOR PEARCE moved her conceptual Amendment No. 9.  SENATOR                 
 TAYLOR objected and asked if the amendment would resolve Senator              
 Torgerson's problem.  COMMISSIONER SHIVELY acknowledged that the              
 amendment would address Senator Torgerson's concern, but there                
 still could be problems with subparagraph (B) on page 2.                      
                                                                               
  TAPE 95-55, SIDE B                                                           
                                                                               
 Number 025                                                                    
                                                                               
 After extensive discussion on the amendment, SENATOR TAYLOR removed           
 his objection.  SENATOR LEMAN stated a hand vote would be taken.              
 The roll was taken with the following result:  Senators Lincoln,              
 Hoffman and Pearce voted "Yea"  and Senator Leman voted "Nay."                
 SENATOR LEMAN stated conceptual Amendment No. 9 was adopted.                  
                                                                               
 The committee then took an at ease at 7:00 p.m. and was called back           
 to order at 7:30 p.m.                                                         
                                                                               
 Number 045                                                                    
                                                                               
 SENATOR PEARCE moved that the committee rescind it previous action            
 in adopting conceptual Amendment No. 9.  Hearing no objection,                
 SENATOR LEMAN stated the committee had rescinded it action in                 
 adopting Amendment No. 9, which brought the amendment back before             
 the committee.                                                                
                                                                               
 SENATOR PEARCE moved and asked unanimous consent that she be                  
 allowed to withdraw conceptual Amendment No. 9.  Hearing no                   
 objection, the motion carried.                                                
                                                                               
 Number 055                                                                    
                                                                               
 SENATOR PEARCE moved the following Amendment No. 10.                          
                                                                               
 Amendment No. 10                                                            
                                                                               
 Page 5, line 6:  After "adjustment" delete ; and add "on the          
                  state's revenue;                                           
                                                                               
 Hearing no objection to Amendment No. 10, SENATOR LEMAN stated it             
 was adopted.                                                                  
                                                                               
 Number 070                                                                    
 SENATOR PEARCE moved the following Amendment No. 11.                          
                                                                               
 Amendment No. 11                                                            
                                                                               
 Page 2, lines 18 - 20:  Delete existing language and replace with             
                        the following language:                                
                                                                               
  (B)  to prolong the economic life of an oil or gas field or                 
 pool as cost per barrel or per barrel equivalent increase such that           
 future production would not otherwise be economically feasible; or           
                                                                               
 Hearing no objection to Amendment No. 11, SENATOR LEMAN stated it             
 was adopted.                                                                  
                                                                               
 Number 090                                                                    
                                                                               
 SENATOR LINCOLN offered the following Amendment No. 12.                       
                                                                               
 Amendment No. 12                                                            
                                                                               
 Page 5, line 3 - 20:  Delete paragraph (9) in its entirety and                
       renumber accordingly.                                                   
                                                                               
 SENATOR LINCOLN moved Amendment No. 12 and SENATOR PEARCE objected.           
 A hand vote was taken with the following result:  Senators Hoffman            
 and Lincoln voted "Yea" and Senators Leman, Taylor and Pearce voted           
 "Nay."  SENATOR LEMAN stated the motion failed.                               
                                                                               
 Number 115                                                                    
                                                                               
 There being no further amendments to SCS CSHB 207(RES), SENATOR               
 LEMAN asked for the pleasure of the committee.                                
                                                                               
 SENATOR PEARCE moved that SCS CSHB 207(RES), as amended, be passed            
 out of committee with individual recommendations.  SENATOR LINCOLN            
 objected and stated the committee had not addressed the minority's            
 concerns with the sunset clause and the legislative oversight.                
 SENATOR LEMAN responded that the committee had been working for               
 four hours on the bill and had addressed every one of the major               
 concerns.  He then called for a roll call vote.  The roll was taken           
 with the following result:  Senators Pearce, Taylor and Leman voted           
 "Yea" and Senators Lincoln and Hoffman voted "Nay."  SENATOR LEMAN            
 stated the motion to move SCS CSHB 207(RES) from committee failed             
 because it lacked the necessary four votes to move it.                        
                                                                               
 SENATOR TAYLOR moved that the committee reconsider its action in              
 failing to move SCS CSHB 207(RES), as amended, from committee.                
 Hearing no objection, SENATOR LEMAN stated the motion to move SCS             
 CSHB 207(RES), as amended, from committee was back before the                 
 committee.  SENATOR LINCOLN objected.  The roll was taken with the            
 following result:  Senators Halford, Taylor and Leman voted "Yea"             
 and Senators Lincoln, Hoffman and Pearce voted "Nay."  SENATOR                
 LEMAN stated the motion failed and that the bill would be set                 
 aside.                                                                        
 Number 190                                                                    
            CSHB 141(FSH) TERM OF FISH BOARD MEMBERS                           
                                                                               
 SENATOR LEMAN brought CSHB 141(FSH) before the committee as the               
 next order of business.  However, there being no witnesses present            
 to testify on the bill, he stated it would be set aside.                      
 Number 200                                                                    
 SENATOR LEMAN stated the committee would stand in recess to a call            
 of the Chairman.  He then recessed the meeting at 7:40 p.m.                   
                                                                               
 The meeting was called back to order at 11:35 p.m.  However,                  
 because only Senator Leman and Senator Taylor were in attendance              
 and lacked a quorum to deal with HB 207 and HB 141,  SENATOR LEMAN            
 recessed the meeting at 11:36 p.m. until the following day to a               
 call of the Chairman.                                                         
                                                                               
  TAPE 95-56, SIDE A                                                           
 Number 001                                                                    
                                                                               
 The meeting was called back to order at 2:10 p.m. on May 4.                   
                                                                               
 SENATOR TAYLOR moved that SCS CSHB 207(RES), as amended, be passed            
 out of committee with individual recommendations.  SENATOR HOFFMAN            
 objected.  The roll was taken with the following result:  Senators            
 Pearce, Taylor and Leman voted "Yea" and Senator Hoffman voted                
 "Nay."  SENATOR LEMAN stated the motion failed.                               
                                                                               
 SENATOR LEMAN stated the committee would stand in recess at 2:12              
 p.m.                                                                          
                                                                               
 The May 3 Senate Resources Committee meeting was formally adjourned           
 on May 5.                                                                     
                                                                               

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